____________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
_________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Earliest Event Reported: December 31, 1997
TAURUS ENTERTAINMENT COMPANIES, INC.
(Exact name of registrant as specified in its charter)
formerly, Taurus Petroleum, Inc.
Colorado 0-8835 84-0736215
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation or organization) Identification No.)
2016 Main Street, Suite 109
Houston, Texas 77002
(Address of principal executive offices, including zip code)
(713) 650-0161
(Registrant's telephone number, including area code)
____________________________________________________________________________
<PAGE>
Item 2. Acquisition or Disposition of Assets
On December 31, 1997, Taurus Entertainment Companies, Inc. (the
"Company"), entered into an Asset Purchase Agreement (the "Enigma Agreement")
with The Enigma Group, Inc. ("Enigma") which provided for the acquisition by
the Company of substantially all of the assets of Enigma (the "Enigma
Assets"). The Enigma Assets consisted of: (i) certain real estate commonly
known as 410 N. Sam Houston Parkway E. Houston, Texas 77060 (the "Enigma
Location"); (ii) furniture, fixtures, equipment, goods, and other personal
property of Enigma as such existed on December 31, 1997, located at the Enigma
Location (the "Personal Property"); (iii) Enigma's lease interest as lessor
for the Enigma Location; and (iv) all right, title and interest in and to any
and all trademarks, trade names, trade dress, service marks, slogans, logos,
corporate or partnership names (and any existing or possible combination or
derivation of any or all of the same) and general intangibles.
Pursuant to the terms of the Enigma Agreement, as consideration for the
Enigma Assets, the Company paid to Enigma 350,000 shares of common stock of
the Company valued at $1.00 per share. The Enigma Agreement was the result of
negotiations between the Company and Enigma and was based on numerous factors
including the Company's estimate of the value of the Enigma Location and the
Personal Property. Eric Langan and Stephen E. Fischer, directors of the
Company, controlled Enigma.
The lessee of the Enigma Location is Atcomm Services, Inc. ("Atcomm"),
which operates an adult entertainment business. The Company, through its
wholly owned subsidiary Broadstreets Cabaret, Inc. ("Broadstreets"), entered
into an Asset Purchase Agreement with Atcomm which provided for the
acquisition by the Company of substantially all of the assets of Atcomm (the
"Atcomm Agreement"). The assets acquired by Broadstreets consisted of: (i)
all right, title, interest and claim to the permit to operate a sexually
oriented business at the Enigma Location; (ii) all inventory located at the
Enigma Location; (iii) Atcomm's lease interest as lessee for the Enigma
Location; and (iv) all right, title and interest in and to any and all
trademarks, trade names, trade dress, service marks, slogans, logos, corporate
or partnership names (and any existing or possible combination or derivation
of any or all of the same) and general intangibles. The Company intends to
continue to operate the adult nightclub at this location.
Pursuant to the terms of the Asset Purchase Agreement with Atcomm,
Broadstreets agreed to pay, as consideration, $225,000 to Atcomm, payable
pursuant to the terms of a four year unsecured promissory note of
Broadstreets, payable monthly, in arrears and bearing interest at the rate of
six percent (6%) per annum. The Atcomm Agreement was the result of
negotiations between the Company and Atcomm and was based on numerous factors
including the Company's estimate of the value of the sexually oriented
business permit owned by Atcomm, current revenues of Atcomm and the leasehold
rights held by Atcomm. Atcomm is owned by the son of Stephen E. Fischer, a
director of the Company. Mr. Fischer abstained on voting on this transaction.
<PAGE>
On December 31, 1997, the Company entered into an Exchange Agreement with
the members of Citation Land, L.L.C. (the "Citation Agreement") which provided
for the acquisition by the Company of all of the outstanding membership
interests in Citation Land, L.L.C. ("Citation"). Citation owns certain real
estate in Houston, Texas at which another company, XTC Cabaret, Inc. ("XTC")
operates an adult entertainment business (the "XTC Location"). As discussed
below, the Company has acquired all of the stock of XTC and intends to
continue operating an adult entertainment business at the XTC Location.
Citation also owns approximately 350 acres of ranch land in Brazoria County,
Texas, 50 acres of raw land in Wise County, Texas, and owns options to
purchase real estate in Austin, Texas and San Antonio, Texas, at which the
Company contemplates operating adult entertainment businesses. Mr. Langan
received 1,153,137 shares as a result of this transaction.
Pursuant to the terms of the Citation Agreement, the Company paid to the
Citation Stockholders an aggregate of 2,500,000 shares of common stock of the
Company which the Company valued at $1.00 per share. The Citation Agreement
was the result of negotiations between the Company and the members of Citation
and was based on numerous factors including the Company's estimate of the
value of the assets of Citation which the Company estimated, based upon the
existing lease, the estimated value of the real estate and the options, to be
approximately $2,500,000. Eric Langan, Chairman of the Board of the Company
controlled Citation. Mr. Langan abstained on voting on this transaction.
On December 31, 1997, the Company entered into a Stock Exchange Agreement
with the stockholders of XTC Cabaret, Inc. (the "XTC Agreement") which
provided for the acquisition by the Company of all of the outstanding stock of
XTC Cabaret, Inc. ("XTC"). XTC operates three adult entertainment businesses,
two in Houston and one in Austin. Citation is the landlord of one of XTC's
adult nightclubs in Houston, Texas and has an option to purchase the real
estate in Austin. The Company intends to continue operating XTC as an adult
entertainment business.
Pursuant to the terms of the XTC Agreement, the Company paid the XTC
Stockholders an aggregate of 525,000 shares of common stock of the Company
valued at $1.00 per share. The XTC Agreement was the result of negotiations
between the Company and the XTC Stockholders and was based on numerous factors
including the Company's estimate of the value of the assets of XTC which the
Company estimated, based upon current operations and future revenues from its
three existing adult nightclubs to be approximately $525,000. Eric Langan,
Chairman of the Board of the Company and Mitchell White, director of the
Company, are the sole stockholders of XTC. Messrs. Langan and White abstained
on voting on this transaction.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) and (b) Financial Statements and Information
As of the date of the filing of this Current Report on Form 8-K,
the financial statements and proforma financial information
required by Items 7(a) and 7(b) are not available. Such financial
statements will be filed no later than March 16, 1998.
<PAGE>
(c) Exhibits
10.1 Asset Purchase Agreement dated December 31, 1997, between the
Company and The Enigma Group, Inc.
10.2 Asset Purchase Agreement dated December 31, 1997 between
Broadstreets Cabaret, Inc. and Atcomm Services, Inc.
10.3 Stock Exchange Agreement dated December 31, 1997 between the
Company and the Stockholders of XTC Cabaret, Inc.
10.4 Exchange Agreement dated December 31, 1997 between the
Company and the Members of Citation Land, L.L.C.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TAURUS ENTERTAINMENT COMPANIES, INC.
Date: January 15, 1998 By: /s/ Eric Langan
____________________________________
Eric Langan, Chairman of the Board
<PAGE>
Exhibit 10.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made effective this 31st
day of December 1997, by and among TAURUS ENTERTAINMENT COMPANIES, INC. (the
"Buyer"), a Colorado Corporation with its principal place of business located
at 2016 Main Street, Suite 109, Houston, Texas 77002, and THE ENIGMA GROUP,
INC., a Texas corporation, whose address is 410 N. Sam Houston Parkway E.,
Houston, Texas 77060 (the "Seller").
R E C I T A L S:
WHEREAS, Seller is the owner of a certain tract of real estate commonly
known as 410 N. Sam Houston Parkway E., Houston, Texas 77060 and the
improvements, furniture & fixtures, and leases thereon; (collectively, the
"Assets"); and
WHEREAS, Seller desires to sell and transfer all of the Assets to Buyer;
and
WHEREAS, the Buyer desires to acquire the Assets upon and subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements set forth herein and in reliance upon the representations and
warranties contained herein, the parties hereto covenant and agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Assets of Seller to be Transferred to Buyer. On the Closing Date
(as defined in Article V hereof), and subject to the terms and conditions set
forth in this Agreement, Seller shall sell, convey, transfer and assign, or
cause to be sold, conveyed, transferred and assigned to Buyer, and Buyer shall
acquire the Assets of the Seller, as such assets exist on the date hereon and
as are listed on Exhibit A , including the following assets ("Purchased
Assets"):
(i) that certain real estate commonly known as 410 N. Sam Houston
Parkway E. Houston, Texas 77060 (the "Location"), furniture,
fixtures, equipment, goods, and other personal property of the
Seller as such exist on the date hereon and as such are located at
the Location (the "Personal Property"), including but not limited
to the Personal Property reflected on Exhibit A;
(ii) the lease interest for the Location;
<PAGE>
(iii) all right, title and interest in and to any and all trademarks,
trade names, trade dress, service marks, slogans, logos, corporate
or partnership names (and any existing or possible combination or
derivation of any or all of the same) and general intangibles,
including, without limitation, the goodwill and intellectual
property rights, associated with or used in connection with the
Location including all rights, title and interest in and to the
business name, trade name and trademark, if any, of Seller.;
(iv) all of Seller's copies of books, records, papers, files, memoranda
and other documents in Seller's possession relating to or compiled
in connection with the operation of the Location which are
requested by Buyer (the "Records").
1.2 Excluded Assets. For the purposes of this Agreement, the term
"Purchased Assets" shall not include and Seller shall not sell or assign to
Buyer, and Buyer shall not purchase or accept assignment from Seller of, any
right, title or interest owned by Seller of all cash equivalents, any deposits
previously advanced by Seller, investment securities, federal income tax
refunds, corporate seals, and books and records relating solely to corporate
governance.
1.3 No Assumption of Liabilities. Except for the Buyer's assumption
of the first mortgage lien on the Location, the Buyer shall have no obligation
and shall not assume or agree to pay, perform or discharge, nor shall the
Buyer be directly or indirectly responsible or obligated for, any debts,
obligations, contracts or liabilities of the Seller, wherever or however
incurred. All personal property and real estate taxes on the Purchased Assets
will be paid in full by the Seller for all years prior to the Closing Date
and, for the year of Closing, will be pro rated to the Closing Date.
1.4 Purchase Price. As consideration for the Purchased Assets, Buyer
shall pay to Seller the total aggregate amount of 350,000 shares of restricted
common stock of Buyer.
ARTICLE II
REPRESENTATIONS, WARRANTIES, AND COVENANTS
OF THE SELLER
The Seller represents and warrants to Buyer the following;
2.1 Organization and Capitalization of Seller. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas, with full power and authority and all necessary
governmental and regulatory licenses, permits and authorizations to carry on
the businesses in which it is engaged, to own the assets that it owns
currently and will own at the Closing, and to perform its obligations under
this Agreement. The authorized capital stock of the Seller consists of
20,000,000 shares of common stock, $0.01 par value, (the "Common Stock") of
which 2,769,000 shares are validly issued and outstanding. All of such issued
and outstanding shares of Common Stock of Seller are fully paid and non-
assessable.
<PAGE>
2.2 Authorization of Agreement. Seller has all requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery by Seller of this Agreement
and the performance by Seller of its obligations hereunder (a) have been duly
and validly authorized by all requisite corporate action and (b) will not
violate its charter or bylaws or any order, writ, injunction, decree, statute,
rule or regulations applicable to it or any of its properties or assets, or be
in conflict with, result in a breach of or constitute a default under any
note, bond, indenture, mortgage, lease, license, franchise agreement or other
agreement, instrument or obligation, or result in the creation or imposition
of any lien, charge or encumbrance of any kind or nature whatsoever upon any
of the properties or assets of Seller. This Agreement and each and every
agreement, document, exhibit and instrument to be executed, delivered and
performed by the Seller in connection herewith constitute or will, when
executed and delivered, constitute the valid and legally binding obligations
of the Seller enforceable against Seller except as enforceability may be
limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally.
2.3 Consents. Except as set forth on Exhibit 2.3, no consent of,
approval by, order or authorization of, or registration, declaration or filing
by Seller with, any court or any governmental or regulatory agency or
authority having jurisdiction over Seller or any of Seller's property or
assets or any other person is required on the part of Buyer in connection with
the consummation of the transactions contemplated by this Agreement, excluding
any registration, declaration or filing the failure to effect which would not
have a material adverse effect on the financial condition of Buyer or the
operation of its business after the Closing.
2.4 Title to Purchased Assets. Except for the first mortgage lien on
the Location, the Seller has and will transfer to Buyer at Closing good and
marketable title to all of the Purchased Assets which are being sold to Buyer
under this Agreement, free and clear of all liens, claims, charges,
encumbrances, restrictions or security interests. All of the Purchased Assets
which are to be acquired by Buyer are in the possession of Seller and are
generally in good operating condition and repair (ordinary wear and tear
excepted). Seller is not a party to any contract or obligation whereby there
has been granted to anyone an absolute or contingent right to purchase, obtain
or acquire any rights in the Purchased Assets or in any of the assets,
properties or operations of Seller or used in connection with the business of
Seller at the Location.
2.5 Contracts and Leases. Except as disclosed in Exhibit 2.5, Seller
(i) has no leases of personal property or real estate relating to the
Purchased Assets, whether as lessor or lessee; (ii) has no contractual or
other obligations relating to the Purchased Assets, whether written or oral;
and (iii) has not given any power of attorney to any person or organization
for any purpose relating to the Purchased Assets. Exhibit 2.5 sets forth a
complete list, including any amendment of each lease or contract which are
part of the Purchased Assets to be acquired by the Buyer. Seller has
furnished Buyer a copy of each contract, lease or other document relating to
the Purchased Assets to which they are subject or are a party or a
beneficiary, which is to be assumed
<PAGE>
or acquired by Buyer. To Seller's knowledge, such contracts, leases or other
documents are valid and in full force and effect according to their terms and
constitutes a legal, valid and binding obligation of the respective parties
thereto and is enforceable in accordance with their terms, and Seller has no
any knowledge of any default or breach under such contract, lease or other
document or of any pending or threatened claims under any such contract, lease
or other document. Neither the signing or execution of this Agreement, nor
the consummation of all or any of the transactions contemplated under this
Agreement, will constitute a breach or default under any such contract, lease
or other document.
2.6 Litigation. There is no suit, claim, arbitration, investigation,
action or proceeding entered against, now pending or, to the Seller's
knowledge, threatened against the Purchased Assets before any court,
arbitration, administrative or regulatory body or any governmental agency
which may result in any judgment, order, award, decree, liability or other
determination which will or could reasonably be expected to have any effect
upon the Purchased Assets. Seller is not subject to any judicial injunction or
mandate or any quasi-judicial or administrative order or restriction directed
to or against it or which would affect the Purchased Assets.
2.7 Taxes. Seller has accurately filed all federal, state, foreign
and local tax returns and reports required to be filed and timely paid all
taxes shown on such returns as owed for the periods of such returns, including
all withholding or other payroll related taxes shown on such returns. Seller
has made adequate provision for the payment of all taxes accruable for all
periods ending on or before the Closing Date to any taxing authority and are
not delinquent in the payment of any material tax or governmental charge of
any nature. No assessments or notices of deficiency or other communications
have been received by Seller with respect to any tax return which has not been
paid, discharged or fully reserved against and no amendments or applications
for refund have been filed or are planned with respect to any such return.
There are no agreements between Seller and any taxing authority, including,
without limitation, the Internal Revenue Service, waiving or extending any
statute of limitations with respect to any tax return.
2.8 Financial Information. Seller has provided Buyer with all
requested financial information about Seller.
2.9 Compliance with Laws. Seller is and at all times prior to the
date hereof has been, in compliance with all statutes, orders, rules, and
regulations applicable to it or to the ownership of its assets or the
operation of its business, except for failures to be in compliance that would
not have a material adverse effect on the business, properties, condition
(financial or otherwise) or prospects of Seller, and Seller has no basis to
expect to receive, and have not received, any order or notice of any such
violation or claim of violation of any such statute, order, rule, ordinance or
regulation.
2.10 Intellectual Property. The Seller is the owner of all right,
title and interest in and to all of the Intellectual Property used in
connection with the operation of the Location. Such Intellectual Property is
free and clear of any material liens, mortgages, judgments, or other
<PAGE>
encumbrances of any kind, and no rights or licenses of any kind respecting the
Intellectual Property have been granted to any third party. There are no
outstanding, or, to the best knowledge of the Seller, threatened claims of
infringement against Seller respecting the use of any of the Intellectual
Property in connection with the operations or business of the Seller.
2.11 Insurance Policies. Seller maintains insurance in such amounts,
and insures against such losses and risks, as Seller reasonably deems
appropriate for its property and business operations and which are consistent
with industry practice. All such insurance policies are in full force and
effect, and all premiums due thereon have been paid. Valid policies for such
insurance will be outstanding and duly in force at all times prior to the
Closing. Copies of all policies relating to such insurance carried by the
Seller have been delivered or will be made available to Buyer.
2.12 Labor Matters. Seller is not a party or otherwise subject to any
collective bargaining agreement with any labor union or association. There
are no discussions, negotiations, demands or proposals that are pending or
have been conducted or made with or by any labor union or association, and
there are not pending or threatened against Seller any labor disputes, strikes
or work stoppages. To the best of Seller's knowledge, Seller is in compliance
with all federal and state laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and, to its
knowledge, is not engaged in any unfair labor practices. Seller is not a
party to any written or oral contract, agreement or understanding for the
employment of any officer, director or employee of the Seller.
2.13 Environmental Matters. Seller is not now, nor has in the past,
used or is using the Purchased Assets for the handling, treatment, storage or
disposal of any Hazardous Substance (as hereinafter defined). No release,
discharge, spillage or disposal of any Hazardous Substance and no soil or
water contamination by any Hazardous Substance has occurred or is occurring in
or on the Purchased Assets. There are no claims, actions, suits, proceedings
or investigations related to the presence, release, discharge, spillage or
disposal of any Hazardous Substance or contamination of soil or water by any
Hazardous Substance pending or threatened with respect to the Purchased Assets
or otherwise against the Seller in any court or before any state, federal or
other governmental agency or private arbitration tribunal. The Seller is not
aware of any of the Purchased Assets which contains any asbestos or any
asbestos-containing materials. For the purposes of this Agreement, "Hazardous
Substance" shall mean any hazardous or toxic substance or waste as those terms
are defined by any applicable federal or state law or regulation including,
without limitation, the Comprehensive Environmental Recovery Compensation and
Liability Act, 42 U.S.C. 9601 and the Resource Conservation and Recovery Act,
42 U.S.C. 6901 and petroleum, petroleum products and oil.
2.14 No Default. Seller is not in default under any term or condition
of any instrument evidencing, creating or securing any indebtedness of Seller,
and there has been no default in any material obligation to be performed by
Seller under any other contract, lease, agreement, commitment or undertaking
to which it is a party or by which it or its assets or properties are
<PAGE>
bound, nor has Seller waived any material right under any such contract,
lease, agreement, commitment or undertaking.
2.15 Disclosure. No representation or warranty of Seller contained in
this Agreement (including the exhibits hereto) contains any untrue statement
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading.
2.16 No Brokerage Commission. No broker or finder has acted for the
Seller in connection with this Agreement or the transactions contemplated
hereby, and no person is entitled to any brokerage or finder's fee or
compensation in respect thereof based in any way on agreements, arrangements
or understandings made by or on behalf of the Seller.
2.17 The representations and warranties of the Seller shall survive the
Closing.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE BUYER
Buyer hereby represents and warrants to Seller the following:
3.1 Organization and Capitalization of Buyer. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Colorado with full power and authority and all necessary governmental
and regulatory licenses, permits and authorizations to carry on the businesses
in which it is engaged, to own the assets that it owns currently and will own
at the Closing, and to perform its obligations under this Agreement. The
authorized capital stock of the Buyer consists of 20,000,000 of common stock,
without $0.001 par value, (the "Common Stock") of which 201,025 shares are
validly issued and outstanding. All of such issued and outstanding shares of
Common Stock of Buyer are fully paid and non-assessable.
3.2 Authorization of Agreement. Buyer has all requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery by Buyer of this Agreement
and the performance by Buyer of its obligations hereunder (a) have been duly
and validly authorized by all requisite corporate action and (b) will not
violate its charter or bylaws or any order, writ, injunction, decree, statute,
rule or regulations applicable to it or any of its properties or assets, or be
in conflict with, result in a breach of or constitute a default under any
note, bond, indenture, mortgage, lease, license, franchise agreement or other
agreement, instrument or obligation, or result in the creation or imposition
of any lien, charge or encumbrance of any kind or nature whatsoever upon any
of the properties or assets of Buyer. This Agreement and each and every
agreement, document, exhibit and instrument to be executed, delivered and
performed by the Buyer in connection herewith constitute or will, when
executed and delivered, constitute the valid and legally binding
<PAGE>
obligations of the Buyer enforceable against Buyer except as enforceability
may be limited by applicable equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws from time to time in
effect affecting the enforcement of creditors' rights generally.
3.3 Disclosure. No representation or warranty of Buyer contained in
this Agreement (including the exhibits hereto) contains any untrue statement
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading.
3.4 Litigation. No litigation is pending, or, to Buyer's knowledge,
threatened, against Buyer, or its assets or properties which seeks to restrain
or enjoin the execution and delivery of this Agreement or any of the documents
referred to herein or the consummation of any of the transactions contemplated
hereby or thereby. There are no judgments or outstanding orders, injunctions,
decrees, stipulations or awards against Buyer or any of its assets or
properties.
3.5 Brokerage Commission. No broker or finder has acted for the Buyer
in connection with this Agreement or the transactions contemplated hereby, and
no person is entitled to any brokerage or finder's fee or compensation in
respect thereof based in any way on agreements, arrangements or understandings
made by or on behalf of the Buyer.
3.6 The representations and warranties of the Buyer shall survive for
a period of one year from the date of Closing.
ARTICLE IV
CONDITIONS TO CLOSING
4.1 Conditions to the Obligations of Seller . The obligations of
Seller to consummate the transactions contemplated hereby shall be subject to
the satisfaction, on or before the Closing Date, of each and every one of the
following conditions, unless waived, in whole or in part, by Seller for
purposes of consummating such transaction.
(a) The representations and warranties of Buyer set forth in
this Agreement shall be true and correct in all material respects on the
Closing Date;
(b) Buyer shall have performed and complied with all agreements,
obligations, covenants and conditions required by this Agreement to be
performed or complied with on or prior to the Closing;
(c) Seller shall have received as of the Closing Date
resolutions of the Board of Directors of the Buyer certified by its
Secretary or an Assistant Secretary, which authorize the execution,
delivery and performance of this Agreement and the documents referred to
herein to which it is or is to be a party; and
<PAGE>
(d) No action, suit or proceeding by or before any court or any
governmental or regulatory authority shall have been commenced and no
investigation by any governmental or regulatory authority shall have
been commenced seeking to restrain, prevent or challenge the
transactions contemplated hereby or seeking judgments against Buyer.
4.2 Conditions to the Obligations of Buyer. The obligations of the
Buyer to effect the transactions contemplated hereby shall be subject to the
satisfaction, on or before the Closing Date, of each and every one of the
following conditions, unless waived, in whole or in part, by Buyer for
purposes of consummating such transaction.
(a) The representations and warranties of Seller set forth
herein shall be true and correct in all material respects on the Closing
Date with the same force and effect as if they had been made on the
Closing Date;
(b) Seller shall have performed and complied with all
agreements, obligations, covenants and conditions required by this
Agreement to be performed or complied with by Seller on or prior to the
Closing;
(c) Seller shall have received a Special Warranty Deed conveying
good and marketable title to the Location, free and clear of all liens,
claims, charges or encumbrances, subject only to a first mortgage lien
on the Location;
(d) A Bill of Sale, conveying to Buyer from Seller good and
marketable title to all of the Purchased Assets which are being sold to
Buyer, free and clear of all liens, claims, charges, encumbrances,
restrictions or security interests (except for the first mortgage lien
on the location);
(e) Buyer shall have received as of the Closing Date resolutions
of the Board of Directors of the Seller certified by its Secretary or an
Assistant Secretary, which authorize the execution, delivery and
performance of this Agreement and the documents referred to herein to
which it is or is to be a party; and
(f) No action, suit or proceeding by or before any court or any
governmental or regulatory authority shall have been commenced and no
investigation by any governmental or regulatory authority shall have
been commenced seeking to restrain, prevent or challenge the
transactions contemplated hereby or seeking judgments against Seller;
<PAGE>
ARTICLE V
THE CLOSING
5.1 Time and Place of Closing. The Closing of the transactions
provided for in this Agreement ("Closing") shall be held at the offices of
Axelrod, Smith & Kirshbaum, 5300 Memorial Drive, Suite 700, Houston, Texas
77007, commencing at 10:00 a.m. Central Daylight Time on December 31, 1997.
The day on which the Closing occurs is referred to herein as the "Closing
Date."
5.2 Closing Documents of Seller. At the Closing, Seller shall deliver
or cause to be delivered to Buyer the following:
(a) all instruments of assignment and bills of sale and deed of
trust necessary to transfer to Buyer good and marketable title to the
Purchased Assets free and clear of all liens, charges or encumbrances;
(b) Special Warranty Deed;
(c) resolutions of the Board of Directors of the Seller, all as
required by Section 4.2(e); and
(d) any consents of third parties.
5.3 Closing Documents of Buyer. At the Closing, Buyer shall deliver
or cause to be delivered to Seller, the following:
(a) 350,000 shares of restricted common stock of the Buyer;
(b) resolutions of the Board of Directors of the Buyer, all as
required by Section 4.1(c); and
(c) any consents of third parties.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification from the Seller. The Seller agrees to and shall
indemnify, defend (with legal counsel reasonably acceptable to Buyer), and
hold Buyer, its officers, directors, shareholders, employees, agents,
affiliates, and assigns harmless at all times after the date of Closing,
from and against and in respect of, any liability, claim, deficiency, loss,
damage or injury, and all reasonable costs and expenses (including reasonable
attorneys' fees and costs of any suit related thereto) suffered or incurred by
Buyer arising from (a) any misrepresentation by, or breach of any covenant or
warranty of Seller contained in this Agreement, or any Exhibit, certificate,
or other agreement or instrument furnished or to be furnished by Seller
hereunder, or any claim by a third party for any action which occurred prior
to the date of this Agreement (regardless of whether the claimant is
ultimately successful) which if true would be such a misrepresentation or
<PAGE>
breach or (b) any suit, action, proceeding, claim or investigation, pending or
threatened, against or affecting Seller which arises from, which arose from,
or which is based upon any matter or state of facts existing prior to the
Closing Date.
6.2 Indemnification from the Buyer. The Buyer agrees to and shall
indemnify, defend (with legal counsel reasonably acceptable to Seller) and
hold Seller, its officers, directors, shareholders, employees, agents and
assigns harmless at all times after the date of Closing from and against, and
in respect of any liability, claim, deficiency, loss, damage, or injury, and
all reasonable costs and expenses (including reasonably attorneys' fees and
costs of any suit related thereto) suffered or incurred by Seller arising from
(a) any misrepresentation by, or breach of any covenant or warranty of, the
Buyer contained in this Agreement, or any Exhibit, certificate, or other
agreement or instrument furnished or to be furnished by Buyer hereunder, or
any claim by a third party for any action which occurred prior to the date of
this Agreement (regardless of whether the claimant is ultimately successful),
which if true would be such a misrepresentation or breach or (b) any suit,
action, proceeding, claim or investigation, pending or threatened, against or
affecting Buyer which arises from, which arose from, or which is based upon
any matter or state of facts existing subsequent to the Closing Date.
6.3 Defense of Claims. If any lawsuit or enforcement action is filed
against any party entitled to the benefit of indemnity hereunder, written
notice thereof shall be given to the indemnifying party as promptly as
practicable (and in any event not less than fifteen (15) days prior to any
hearing date or other date by which action must be taken); provided that the
failure of any indemnified party to give timely notice shall not affect rights
to indemnification hereunder except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. After such notice, if the
indemnifying party shall acknowledge in writing to such indemnified party that
this Agreement applies with respect to such lawsuit or action, then the
indemnifying party shall be entitled, if it so elects, to take control of the
defense and investigation of such lawsuit or action and to employ and engage
attorneys of its own choice to handle and defend the same, at the indemnifying
party's cost, risk and expense; and such indemnified party shall cooperate in
all reasonable respects, at its cost, risk and expense, with the indemnifying
party and such attorneys in the investigation, trial and defense of such
lawsuit or action and any appeal arising therefrom; provided, however, that
the indemnified party may, at its own cost, participate in such investigation,
trial and defense of such lawsuit or action and any appeal arising therefrom.
The indemnifying party shall not, without the prior written consent of the
indemnified parties, effect any settlement of any proceeding in respect of
which any indemnified parties is a party and indemnity has been sought
hereunder unless such settlement of a claim, investigation, suit, or other
proceeding only involves a remedy for the payment of money by the indemnifying
party and includes an unconditional release of such indemnified parties from
all liability on claims that are the subject matter of such proceeding.
6.4 Default of Indemnification Obligation. If an entity having an
indemnification, defense and hold harmless obligation, as above provided,
shall fail to assume such obligation, then the party or entities or both, as
the case may be, to whom such indemnification, defense and hold
<PAGE>
harmless obligation is due shall have the right, but not the obligation, to
assume and maintain such defense (including reasonable counsel fees and costs
of any suit related thereto) and to make any settlement or pay any judgment or
verdict as the individual or entities deem necessary or appropriate in such
individual's or entities' absolute sole discretion and to charge the cost of
any such settlement, payment, expense and costs, including reasonable
attorneys' fees, to the entity or individual that had the obligation to
provide such indemnification, defense and hold harmless obligation and same
shall constitute an additional obligation of the entity or of the individual
or both, as the case may be.
ARTICLE VIII
MISCELLANEOUS
7.1 Notices. All communications required or permitted under this
Agreement shall be in writing and any communication or delivery hereunder
shall be deemed to have been duly made if actually delivered or sent by
electronic fax or if mailed by registered or certified mail, postage prepaid,
addressed to the party being notified as set forth below. All such notices
and communications shall be deemed to have been received on the date of
delivery or on the third business day after the mailing thereof. Any party
may, by written notice so delivered to the other, change the address to which
delivery shall thereafter be made. Notices to the parties hereto shall be
made at the addresses set forth below:
(a) If to Seller:
The Enigma Group, Inc.
Attn: Mr. Stephen E. Fischer
410 N. Sam Houston Parkway East
Houston, Texas 77060
Fax: 713-999-3644
(b) If to Buyer, to:
Taurus Entertainment Companies, Inc.
Attn: Eric Langan
2016 Main Street, Suite 109
Houston, Texas 77002
Fax: 650-0440
With a copy to:
Mr. Robert D. Axelrod
Axelrod, Smith & Kirshbaum
5300 Memorial Drive, Suite 700
Houston, Texas 77007
Fax: (713) 552-0202
<PAGE>
7.2 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
(except that Buyer may assign its rights to an entity which is wholly owned by
Buyer or is under common control of Buyer) without the prior written consent
of the other parties. This Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective heirs,
personal representatives, successors and assigns.
7.3 Counterparts. This Agreement may be executed in any number of
counterparts, which taken together shall constitute one and the same
instrument and each of which shall be considered an original for all purposes.
7.4 Section Headings. The section headings contained in this
Agreement are for convenient reference only and shall not in any way affect
the meaning or interpretation of this Agreement.
7.5 Entire Agreement; Amendment. This Agreement, the documents to be
executed hereunder and the exhibits attached hereto constitute the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties pertaining to the subject matter
hereof, and there are no warranties, representations or other agreements among
the parties in connection with the subject matter hereof except as
specifically set forth herein or in documents delivered pursuant hereto. No
supplement, amendment, alteration, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the parties hereto.
All of the exhibits referred to in this Agreement are hereby incorporated into
this Agreement by reference and constitute a part of this Agreement.
7.6 Public Announcements. The parties hereto agree that prior to
making any public announcement or statement with respect to the transactions
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other parties hereto and
exercise their best efforts to (i) agree upon the text of a joint public
announcement or statement to be made by all of such parties or (ii) obtain
approval of the other parties hereto to the text of a public announcement or
statement to be made solely by the party desiring to make such public
announcement; provided, however, that if any party hereto is required by law
to make such public announcement or statement, then such announcement or
statement may be made without the approval of the other parties.
7.7 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provisions of this Agreement, which shall remain in full force
and effect.
7.8 Waiver. No waiver by any party of any default or non-performance
shall be deemed a waiver of any subsequent default or non-performance, and no
waiver of any kind shall be effective unless set forth in writing and signed
by the party against whom such waiver is to be charged.
<PAGE>
7.9 Further Assurances. Each party covenants that at any time, and
from time to time, after the Closing Date, it will execute such additional
instruments and take such actions as may be reasonably requested by the other
parties to confirm or perfect or otherwise to carry out the intent and
purposes of this Agreement.
7.10 Expenses. All expenses incurred by the parties hereto in
connection with or related to the authorization, preparation and execution of
this Agreement and the Closing of the transactions contemplated hereby, shall
be borne solely and entirely by the party which has incurred the same.
7.11 Gender. All personal pronouns used in this Agreement shall
include the other genders, whether used in the masculine, feminine or neuter
gender, and the singular shall include the plural, and vice versa, whenever
appropriate.
7.12 Jurisdiction. This Agreement was entered into in Harris County,
State of Texas, and the laws of the State of Texas shall govern and be
applicable to this Agreement and any interpretation or construction thereto.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed effective as of the day and year first above written.
Seller:
THE ENIGMA GROUP, INC.
By: /s/ Stephen E. Fischer
_______________________________
Stephen E., Fischer, President
Buyer:
TAURUS ENTERTAINMENT COMPANIES, INC.
By: /s/ Eric Langan
______________________________
Eric Langan, President
<PAGE>
Exhibit 10.2
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made this 31st day of
December 1997, by and among BROADSTREETS CABARET, INC. (the "Buyer"), a Texas
Corporation with its principal place of business located at 2016 Main Street,
Suite 109, Houston, Texas 77002, and ATCOMM SERVICES, INC., a Texas
corporation, whose address is 410 N. Sam Houston Parkway E., Houston, Texas
77060 (the "Seller").
R E C I T A L S:
WHEREAS, Seller is the owner of certain assets, including a permit to
operate a sexually oriented business and a lease for the property where an
adult entertainment nightclub is located, as well as certain inventory,
including beer, wine and liquor (collectively, the "Assets"); and
WHEREAS, Seller desires to sell and transfer all of the Assets to Buyer;
and
WHEREAS, the Buyer desires to acquire the Assets upon and subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements set forth herein and in reliance upon the representations and
warranties contained herein, the parties hereto covenant and agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Assets of Seller to be Transferred to Buyer. On the Closing Date
(as defined in Article V hereof), and subject to the terms and conditions set
forth in this Agreement, Seller shall sell, convey, transfer and assign, or
cause to be sold, conveyed, transferred and assigned to Buyer, and Buyer shall
acquire the Assets of the Seller, as such assets exist on the date hereon and
as are listed on Exhibit A , including the following assets ("Purchased
Assets"):
(i) all right, title, interest and claim to the permit to operate a
sexually oriented business in the City of Houston, Texas at a
location commonly known as 410 N. Sam Houston Parkway East,
Houston, Texas 77060 (the "Location"), any furniture, fixtures,
equipment, goods, and other personal property of the Seller as
such may exist on the date hereof and as such are located at the
Location;
<PAGE>
(ii) all inventory at the Location, including, but not limited to,
beer, wine, liquor, paper goods, glassware, flatware, tableware,
utensils, supplies, consumables and durables;
(iii) the leasehold interest, as Lessee for the Location;
(iv) all right, title, interest and claim in connection with a certain
class action lawsuit between Atcomm Services, Inc. and others
versus the City of Houston, Texas and others;
(v) all right, title and interest in and to any and all trademarks,
trade names, trade dress, service marks, slogans, logos, corporate
or partnership names (and any existing or possible combination or
derivation of any or all of the same) and general intangibles,
including, without limitation, the goodwill and intellectual
property rights, associated with or used in connection with the
Location including all rights, title and interest in and to the
business name, trade name and trademark, if any, of Seller.;
(vi) all of Seller's copies of books, records, papers, files, memoranda
and other documents in Seller's possession relating to or compiled
in connection with the operation of the Location which are
requested by Buyer (the "Records").
1.2 Excluded Assets. For the purposes of this Agreement, the term
"Purchased Assets" shall not include and Seller shall not sell or assign to
Buyer, and Buyer shall not purchase or accept assignment from Seller of, any
right, title or interest owned by Seller of all cash equivalents, any deposits
previously advanced by Seller, investment securities, federal income tax
refunds, corporate seals, and books and records relating solely to corporate
governance.
1.3 No Assumption of Liabilities. The Buyer shall have no obligation
and shall not assume or agree to pay, perform or discharge, nor shall the
Buyer be directly or indirectly responsible or obligated for, any debts,
obligations, contracts or liabilities of the Seller, wherever or however
incurred. All personal property and real estate taxes in connection with the
Lease, if any, on the Purchased Assets will be paid in full by the Seller for
all years prior to the Closing Date and, for the year of Closing, will be pro
rated to the Closing Date.
1.4 Purchase Price. As consideration for the Purchased Assets, Buyer
shall pay to Seller $225,000.00, payable pursuant to the terms of that
certain unsecured Promissory Note of the Buyer which shall bear interest at
the rate of six percent (6%) per annum, payable in the form attached hereto as
Exhibit B.
<PAGE>
ARTICLE II
REPRESENTATIONS, WARRANTIES, AND COVENANTS
OF THE SELLER
The Seller represents and warrants to Buyer the following;
2.1 Organization and Capitalization of Seller. Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Texas, with full power and authority and all necessary
governmental and regulatory licenses, permits and authorizations to carry on
the businesses in which it is engaged, to own the assets that it owns
currently and will own at the Closing, and to perform its obligations under
this Agreement.
2.2 Authorization of Agreement. Seller has all requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery by Seller of this Agreement
and the performance by Seller of its obligations hereunder (a) have been duly
and validly authorized by all requisite corporate action and (b) will not
violate its charter or bylaws or any order, writ, injunction, decree, statute,
rule or regulations applicable to it or any of its properties or assets, or be
in conflict with, result in a breach of or constitute a default under any
note, bond, indenture, mortgage, lease, license, franchise agreement or other
agreement, instrument or obligation, or result in the creation or imposition
of any lien, charge or encumbrance of any kind or nature whatsoever upon any
of the properties or assets of Seller. This Agreement and each and every
agreement, document, exhibit and instrument to be executed, delivered and
performed by the Seller in connection herewith constitute or will, when
executed and delivered, constitute the valid and legally binding obligations
of the Seller enforceable against Seller except as enforceability may be
limited by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally.
2.3 Consents. No consent of, approval by, order or authorization of,
or registration, declaration or filing by Seller with, any court or any
governmental or regulatory agency or authority having jurisdiction over Seller
or any of Seller's property or assets or any other person is required on the
part of Buyer in connection with the consummation of the transactions
contemplated by this Agreement, excluding any registration, declaration or
filing the failure to effect which would not have a material adverse effect on
the financial condition of Buyer or the operation of its business after the
Closing.
2.4 Title to Purchased Assets. The Seller has and will transfer to
Buyer at Closing good and marketable title to all of the Purchased Assets
which are being sold to Buyer under this Agreement, free and clear of all
liens, claims, charges, encumbrances, restrictions or security interests. All
of the Purchased Assets which are to be acquired by Buyer are in the
possession of Seller and are generally in good operating condition and repair
(ordinary wear and tear excepted). Seller is not a party to any contract or
obligation whereby there has been granted to anyone an absolute or contingent
right to purchase, obtain or acquire any rights in the Purchased Assets or in
<PAGE>
any of the assets, properties or operations of Seller or used in connection
with the business of Seller at its leased Location.
2.5 Contracts and Leases. Except as disclosed in Exhibit 2.5, Seller
(i) has no leases of personal property or real estate relating to the
Purchased Assets, whether as lessor or lessee; (ii) has no contractual or
other obligations relating to the Purchased Assets, whether written or oral;
and (iii) has not given any power of attorney to any person or organization
for any purpose relating to the Purchased Assets. Exhibit 2.5 sets forth a
complete list, including any amendment of each lease or contract which are
part of the Purchased Assets to be acquired by the Buyer. Seller has
furnished Buyer a copy of each contract, lease or other document relating to
the Purchased Assets to which they are subject or are a party or a
beneficiary, which is to be assumed or acquired by Buyer. To Seller's
knowledge, such contracts, leases or other documents are valid and in full
force and effect according to their terms and constitutes a legal, valid and
binding obligation of the respective parties thereto and is enforceable in
accordance with their terms, and Seller has no any knowledge of any default or
breach under such contract, lease or other document or of any pending or
threatened claims under any such contract, lease or other document. Neither
the signing or execution of this Agreement, nor the consummation of all or any
of the transactions contemplated under this Agreement, will constitute a
breach or default under any such contract, lease or other document.
2.6 Litigation. Except as set forth on Exhibit 2.6, there is no suit,
claim, arbitration, investigation, action or proceeding entered against, now
pending or, to the Seller's knowledge, threatened against the Purchased Assets
before any court, arbitration, administrative or regulatory body or any
governmental agency which may result in any judgment, order, award, decree,
liability or other determination which will or could reasonably be expected to
have any effect upon the Purchased Assets. Seller is not subject to any
judicial injunction or mandate or any quasi-judicial or administrative order
or restriction directed to or against it or which would affect the Purchased
Assets.
2.7 Taxes. Except as set forth on Exhibit 2.7, Seller has accurately
filed all federal, state, foreign and local tax returns and reports required
to be filed and timely paid all taxes shown on such returns as owed for the
periods of such returns, including all withholding or other payroll related
taxes shown on such returns. Seller has made adequate provision for the
payment of all taxes accruable for all periods ending on or before the Closing
Date to any taxing authority and are not delinquent in the payment of any
material tax or governmental charge of any nature. No assessments or notices
of deficiency or other communications have been received by Seller with
respect to any tax return which has not been paid, discharged or fully
reserved against and no amendments or applications for refund have been filed
or are planned with respect to any such return. There are no agreements
between Seller and any taxing authority, including, without limitation, the
Internal Revenue Service, waiving or extending any statute of limitations with
respect to any tax return.
<PAGE>
2.8 Financial Information. Seller has provided Buyer with all
requested financial information about Seller.
2.9 Compliance with Laws. Seller is and at all times prior to the
date hereof has been, in compliance with all statutes, orders, rules, and
regulations applicable to it or to the ownership of its assets or the
operation of its business, except for failures to be in compliance that would
not have a material adverse effect on the business, properties, condition
(financial or otherwise) or prospects of Seller, and Seller has no basis to
expect to receive, and have not received, any order or notice of any such
violation or claim of violation of any such statute, order, rule, ordinance or
regulation.
2.10 Intellectual Property. The Seller is the owner of all right,
title and interest in and to all of the Intellectual Property used by Seller.
Such Intellectual Property is free and clear of any material liens,
mortgages, judgments, or other encumbrances of any kind, and no rights or
licenses of any kind respecting the Intellectual Property have been granted to
any third party. There are no outstanding, or, to the best knowledge of the
Seller, threatened claims of infringement against Seller respecting the use of
any of the Intellectual Property in connection with the operations or business
of the Seller.
2.11 Insurance Policies. Seller maintains insurance in such amounts,
and insures against such losses and risks, as Seller reasonably deems
appropriate for its property and business operations and which are consistent
with industry practice. All such insurance policies are in full force and
effect, and all premiums due thereon have been paid. Valid policies for such
insurance will be outstanding and duly in force at all times prior to the
Closing. Copies of all policies relating to such insurance carried by the
Seller have been delivered or will be made available to Buyer.
2.12 Labor Matters. Seller is not a party or otherwise subject to any
collective bargaining agreement with any labor union or association. There
are no discussions, negotiations, demands or proposals that are pending or
have been conducted or made with or by any labor union or association, and
there are not pending or threatened against Seller any labor disputes, strikes
or work stoppages. To the best of Seller's knowledge, Seller is in compliance
with all federal and state laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and, to its
knowledge, is not engaged in any unfair labor practices. Seller is not a
party to any written or oral contract, agreement or understanding for the
employment of any officer, director or employee of the Seller.
2.13 Environmental Matters. Seller is not now, nor has in the past,
used or is using the Purchased Assets for the handling, treatment, storage or
disposal of any Hazardous Substance (as hereinafter defined). No release,
discharge, spillage or disposal of any Hazardous Substance and no soil or
water contamination by any Hazardous Substance has occurred or is occurring in
or on the Purchased Assets. There are no claims, actions, suits, proceedings
or investigations related to the presence, release, discharge, spillage or
disposal of any Hazardous Substance or
<PAGE>
contamination of soil or water by any Hazardous Substance pending or
threatened with respect to the Purchased Assets or otherwise against the
Seller in any court or before any state, federal or other governmental agency
or private arbitration tribunal. The Seller is not aware of any of the
Purchased Assets which contains any asbestos or any asbestos-containing
materials. For the purposes of this Agreement, "Hazardous Substance" shall
mean any hazardous or toxic substance or waste as those terms are defined by
any applicable federal or state law or regulation including, without
limitation, the Comprehensive Environmental Recovery Compensation and
Liability Act, 42 U.S.C. 9601 and the Resource Conservation and Recovery Act,
42 U.S.C. 6901 and petroleum, petroleum products and oil.
2.14 No Default. Seller is not in default under any term or condition
of any instrument evidencing, creating or securing any indebtedness of Seller,
and there has been no default in any material obligation to be performed by
Seller under any other contract, lease, agreement, commitment or undertaking
to which it is a party or by which it or its assets or properties are bound,
nor has Seller waived any material right under any such contract, lease,
agreement, commitment or undertaking.
2.15 Disclosure. No representation or warranty of Seller contained in
this Agreement (including the exhibits hereto) contains any untrue statement
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading.
2.16 No Brokerage Commission. No broker or finder has acted for the
Seller in connection with this Agreement or the transactions contemplated
hereby, and no person is entitled to any brokerage or finder's fee or
compensation in respect thereof based in any way on agreements, arrangements
or understandings made by or on behalf of the Seller.
2.17 The representations and warranties of the Seller shall survive the
Closing.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE BUYER
Buyer hereby represents and warrants to Seller the following:
3.1 Organization and Capitalization of Buyer. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Texas with full power and authority and all necessary governmental
and regulatory licenses, permits and authorizations to carry on the businesses
in which it is engaged, to own the assets that it owns currently and will own
at the Closing, and to perform its obligations under this Agreement.
<PAGE>
3.2 Authorization of Agreement. Buyer has all requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery by Buyer of this Agreement
and the performance by Buyer of its obligations hereunder (a) have been duly
and validly authorized by all requisite corporate action and (b) will not
violate its charter or bylaws or any order, writ, injunction, decree, statute,
rule or regulations applicable to it or any of its properties or assets, or be
in conflict with, result in a breach of or constitute a default under any
note, bond, indenture, mortgage, lease, license, franchise agreement or other
agreement, instrument or obligation, or result in the creation or imposition
of any lien, charge or encumbrance of any kind or nature whatsoever upon any
of the properties or assets of Buyer. This Agreement and each and every
agreement, document, exhibit and instrument to be executed, delivered and
performed by the Buyer in connection herewith constitute or will, when
executed and delivered, constitute the valid and legally binding obligations
of the Buyer enforceable against Buyer except as enforceability may be limited
by applicable equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally.
3.3 Disclosure. No representation or warranty of Buyer contained in
this Agreement (including the exhibits hereto) contains any untrue statement
or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they
were made, not misleading.
3.4 Litigation. No litigation is pending, or, to Buyer's knowledge,
threatened, against Buyer, or its assets or properties which seeks to restrain
or enjoin the execution and delivery of this Agreement or any of the documents
referred to herein or the consummation of any of the transactions contemplated
hereby or thereby. There are no judgments or outstanding orders, injunctions,
decrees, stipulations or awards against Buyer or any of its assets or
properties.
3.5 Brokerage Commission. No broker or finder has acted for the Buyer
in connection with this Agreement or the transactions contemplated hereby, and
no person is entitled to any brokerage or finder's fee or compensation in
respect thereof based in any way on agreements, arrangements or understandings
made by or on behalf of the Buyer.
3.6 The representations and warranties of the Buyer shall survive for
a period of one year from the date of Closing.
ARTICLE IV
CONDITIONS TO CLOSING
4.1 Conditions to the Obligations of Seller . The obligations of
Seller to consummate the transactions contemplated hereby shall be subject to
the satisfaction, on or before the Closing Date, of each and every one of the
following conditions, unless waived, in whole or in part, by Seller for
purposes of consummating such transaction.
<PAGE>
(a) The representations and warranties of Buyer set forth in
this Agreement shall be true and correct in all material respects on the
Closing Date;
(b) Buyer shall have performed and complied with all agreements,
obligations, covenants and conditions required by this Agreement to be
performed or complied with on or prior to the Closing;
(c) Seller shall have received as of the Closing Date
resolutions of the Board of Directors of the Buyer certified by its
Secretary or an Assistant Secretary, which authorize the execution,
delivery and performance of this Agreement and the documents referred to
herein to which it is or is to be a party; and
(d) No action, suit or proceeding by or before any court or any
governmental or regulatory authority shall have been commenced and no
investigation by any governmental or regulatory authority shall have
been commenced seeking to restrain, prevent or challenge the
transactions contemplated hereby or seeking judgments against Buyer.
4.2 Conditions to the Obligations of Buyer. The obligations of the
Buyer to effect the transactions contemplated hereby shall be subject to the
satisfaction, on or before the Closing Date, of each and every one of the
following conditions, unless waived, in whole or in part, by Buyer for
purposes of consummating such transaction.
(a) The representations and warranties of Seller set forth
herein shall be true and correct in all material respects on the Closing
Date with the same force and effect as if they had been made on the
Closing Date;
(b) Seller shall have performed and complied with all
agreements, obligations, covenants and conditions required by this
Agreement to be performed or complied with by Seller on or prior to the
Closing;
(c) A Bill of Sale, conveying to Buyer from Seller good and
marketable title to all of the Purchased Assets which are being sold to
Buyer, free and clear of all liens, claims, charges, encumbrances,
restrictions or security interests;
(d) Buyer shall have received as of the Closing Date resolutions
of the Board of Directors of the Seller certified by its Secretary or an
Assistant Secretary, which authorize the execution, delivery and
performance of this Agreement and the documents referred to herein to
which it is or is to be a party; and
(e) No action, suit or proceeding by or before any court or any
governmental or regulatory authority shall have been commenced and no
investigation by any governmental or regulatory authority shall have
been commenced seeking to restrain,
<PAGE>
prevent or challenge the transactions contemplated hereby or seeking
judgments against Seller;
ARTICLE V
THE CLOSING
5.1 Time and Place of Closing. The Closing of the transactions
provided for in this Agreement ("Closing") shall be held at the offices of
Axelrod, Smith & Kirshbaum, 5300 Memorial Drive, Suite 700, Houston, Texas
77007, commencing at 10:00 a.m. Central Daylight Time on December 31, 1997.
The day on which the Closing occurs is referred to herein as the "Closing
Date."
5.2 Closing Documents of Seller. At the Closing, Seller shall deliver
or cause to be delivered to Buyer the following:
(a) all instruments of assignment and bills of sale necessary to
transfer to Buyer good and marketable title to the Purchased Assets
free and clear of all liens, charges or encumbrances;
(b) resolutions of the Board of Directors of the Seller, all as
required by Section 4.2(e); and
(c) any consents of third parties.
5.3 Closing Documents of Buyer. At the Closing, Buyer shall deliver
or cause to be delivered to Seller, the following:
(a) $225,000 Promissory Note of Buyer in the form of Exhibit B;
(b) resolutions of the Board of Directors of the Buyer, all as
required by Section 4.1(c); and
(c) any consents of third parties.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification from the Seller. The Seller agrees to and shall
indemnify, defend (with legal counsel reasonably acceptable to Buyer), and
hold Buyer, its officers, directors, shareholders, employees, agents,
affiliates, and assigns harmless at all times after the date of Closing,
from and against and in respect of, any liability, claim, deficiency, loss,
damage or injury, and all reasonable costs and expenses (including reasonable
attorneys' fees and costs of any suit
<PAGE>
related thereto) suffered or incurred by Buyer arising from (a) any
misrepresentation by, or breach of any covenant or warranty of Seller
contained in this Agreement, or any Exhibit, certificate, or other agreement
or instrument furnished or to be furnished by Seller hereunder, or any claim
by a third party for any action which occurred prior to the date of this
Agreement (regardless of whether the claimant is ultimately successful) which
if true would be such a misrepresentation or breach or (b) any suit, action,
proceeding, claim or investigation, pending or threatened, against or
affecting Seller which arises from, which arose from, or which is based upon
any matter or state of facts existing prior to the Closing Date.
6.2 Indemnification from the Buyer. The Buyer agrees to and shall
indemnify, defend (with legal counsel reasonably acceptable to Seller) and
hold Seller, its officers, directors, shareholders, employees, agents and
assigns harmless at all times after the date of Closing from and against, and
in respect of any liability, claim, deficiency, loss, damage, or injury, and
all reasonable costs and expenses (including reasonably attorneys' fees and
costs of any suit related thereto) suffered or incurred by Seller arising from
(a) any misrepresentation by, or breach of any covenant or warranty of, the
Buyer contained in this Agreement, or any Exhibit, certificate, or other
agreement or instrument furnished or to be furnished by Buyer hereunder, or
any claim by a third party for any action which occurred prior to the date of
this Agreement (regardless of whether the claimant is ultimately successful),
which if true would be such a misrepresentation or breach or (b) any suit,
action, proceeding, claim or investigation, pending or threatened, against or
affecting Buyer which arises from, which arose from, or which is based upon
any matter or state of facts existing subsequent to the Closing Date.
6.3 Defense of Claims. If any lawsuit or enforcement action is filed
against any party entitled to the benefit of indemnity hereunder, written
notice thereof shall be given to the indemnifying party as promptly as
practicable (and in any event not less than fifteen (15) days prior to any
hearing date or other date by which action must be taken); provided that the
failure of any indemnified party to give timely notice shall not affect rights
to indemnification hereunder except to the extent that the indemnifying party
demonstrates actual damage caused by such failure. After such notice, if the
indemnifying party shall acknowledge in writing to such indemnified party that
this Agreement applies with respect to such lawsuit or action, then the
indemnifying party shall be entitled, if it so elects, to take control of the
defense and investigation of such lawsuit or action and to employ and engage
attorneys of its own choice to handle and defend the same, at the indemnifying
party's cost, risk and expense; and such indemnified party shall cooperate in
all reasonable respects, at its cost, risk and expense, with the indemnifying
party and such attorneys in the investigation, trial and defense of such
lawsuit or action and any appeal arising therefrom; provided, however, that
the indemnified party may, at its own cost, participate in such investigation,
trial and defense of such lawsuit or action and any appeal arising therefrom.
The indemnifying party shall not, without the prior written consent of the
indemnified parties, effect any settlement of any proceeding in respect of
which any indemnified parties is a party and indemnity has been sought
hereunder unless such settlement of a claim, investigation, suit, or other
proceeding only involves a remedy for the payment of money by the indemnifying
party and
<PAGE>
includes an unconditional release of such indemnified parties from all
liability on claims that are the subject matter of such proceeding.
6.4 Default of Indemnification Obligation. If an entity having an
indemnification, defense and hold harmless obligation, as above provided,
shall fail to assume such obligation, then the party or entities or both, as
the case may be, to whom such indemnification, defense and hold harmless
obligation is due shall have the right, but not the obligation, to assume and
maintain such defense (including reasonable counsel fees and costs of any suit
related thereto) and to make any settlement or pay any judgment or verdict as
the individual or entities deem necessary or appropriate in such individual's
or entities' absolute sole discretion and to charge the cost of any such
settlement, payment, expense and costs, including reasonable attorneys' fees,
to the entity or individual that had the obligation to provide such
indemnification, defense and hold harmless obligation and same shall
constitute an additional obligation of the entity or of the individual or
both, as the case may be.
ARTICLE VIII
MISCELLANEOUS
7.1 Notices. All communications required or permitted under this
Agreement shall be in writing and any communication or delivery hereunder
shall be deemed to have been duly made if actually delivered or sent by
electronic fax or if mailed by registered or certified mail, postage prepaid,
addressed to the party being notified as set forth below. All such notices
and communications shall be deemed to have been received on the date of
delivery or on the third business day after the mailing thereof. Any party
may, by written notice so delivered to the other, change the address to which
delivery shall thereafter be made. Notices to the parties hereto shall be
made at the addresses set forth below:
(a) If to Seller:
Atcomm Services, Inc.
Attn: Mr. Brad Fischer
410 N. Sam Houston Parkway East
Houston, Texas 77060
Fax: 713-999-3644
(b) If to Buyer, to:
Broadstreets Cabaret, Inc.
Attn: Eric Langan
2016 Main Street, Suite 109
Houston, Texas 77002
Fax: 713-650-0440
<PAGE>
With a copy to:
Mr. Robert D. Axelrod
Axelrod, Smith & Kirshbaum
5300 Memorial Drive, Suite 700
Houston, Texas 77007
Fax: 713-552-0202
7.2 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
(except that Buyer may assign its rights to an entity which is wholly owned by
Buyer or is under common control of Buyer) without the prior written consent
of the other parties. This Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective heirs,
personal representatives, successors and assigns.
7.3 Counterparts. This Agreement may be executed in any number of
counterparts, which taken together shall constitute one and the same
instrument and each of which shall be considered an original for all purposes.
7.4 Section Headings. The section headings contained in this
Agreement are for convenient reference only and shall not in any way affect
the meaning or interpretation of this Agreement.
7.5 Entire Agreement; Amendment. This Agreement, the documents to be
executed hereunder and the exhibits attached hereto constitute the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties pertaining to the subject matter
hereof, and there are no warranties, representations or other agreements among
the parties in connection with the subject matter hereof except as
specifically set forth herein or in documents delivered pursuant hereto. No
supplement, amendment, alteration, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the parties hereto.
All of the exhibits referred to in this Agreement are hereby incorporated into
this Agreement by reference and constitute a part of this Agreement.
7.6 Public Announcements. The parties hereto agree that prior to
making any public announcement or statement with respect to the transactions
contemplated by this Agreement, the party desiring to make such public
announcement or statement shall consult with the other parties hereto and
exercise their best efforts to (i) agree upon the text of a joint public
announcement or statement to be made by all of such parties or (ii) obtain
approval of the other parties hereto to the text of a public announcement or
<PAGE>
statement to be made solely by the party desiring to make such public
announcement; provided, however, that if any party hereto is required by law
to make such public announcement or statement, then such announcement or
statement may be made without the approval of the other parties.
7.7 Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
7.8 Waiver. No waiver by any party of any default or non-performance
shall be deemed a waiver of any subsequent default or non-performance, and no
waiver of any kind shall be effective unless set forth in writing and signed
by the party against whom such waiver is to be charged.
7.9 Further Assurances. Each party covenants that at any time, and
from time to time, after the Closing Date, it will execute such additional
instruments and take such actions as may be reasonably requested by the other
parties to confirm or perfect or otherwise to carry out the intent and
purposes of this Agreement.
<PAGE>
7.10 Expenses. All expenses incurred by the parties hereto in
connection with or related to the authorization, preparation and execution of
this Agreement and the Closing of the transactions contemplated hereby, shall
be borne solely and entirely by the party which has incurred the same.
7.11 Gender. All personal pronouns used in this Agreement shall
include the other genders, whether used in the masculine, feminine or neuter
gender, and the singular shall include the plural, and vice versa, whenever
appropriate.
7.12 Jurisdiction. This Agreement was entered into in Harris County,
State of Texas, and the laws of the State of Texas shall govern and be
applicable to this Agreement and any interpretation or construction thereto.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed effective as of the day and year first above written.
Seller:
ATCOMM SERVICES, INC.
/s/ Brad Fischer
By:__________________________________
Brad Fischer, President
Buyer:
BROADSTREETS CABARET, INC.
/s/ Eric Langan
By: _________________________________
Eric Langan, President
<PAGE>
Exhibit 10.3
STOCK EXCHANGE AGREEMENT
This Stock Exchange Agreement (the "Agreement") effective as of December
31, 1997, is made and entered into by Taurus Entertainment Companies, Inc., a
Colorado corporation ("Taurus" or the "Corporation"), and the stockholders of
XTC Cabaret, Inc. ("XTC") listed on Exhibit A, who are all of the
stockholders of XTC Cabaret, Inc. (the "Stockholders").
WHEREAS, Taurus desires to acquire 100% of the outstanding stock of XTC
in exchange for 525,000 shares of Taurus; and
WHEREAS, the Stockholders collectively own 100% of the outstanding stock
of XTC; and
WHEREAS, the Stockholders desire to exchange their stock in XTC in
exchange for a total amount of 525,000 shares of Taurus; and
WHEREAS, Taurus and the Stockholders agree that it is in the best
interest of Taurus and the Stockholders to enter into a stock exchange on the
terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements and the respective representations and warranties herein
contained, and on the terms and subject to the conditions herein set forth,
the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
EXCHANGE OF SHARES
Section 1.1 XTC Cabaret, Inc. Common Stock. At the Closing (as
hereinafter defined) the Stockholders shall transfer, convey and deliver to
Taurus 1,000 shares of XTC Cabaret, Inc. Common Stock, which is 100% of the
outstanding common stock of XTC, and shall deliver to
<PAGE>
Taurus stock certificates representing such stock, duly endorsed to Taurus or
accompanied by duly executed stock powers in form and substance satisfactory
to Taurus. The transaction by which such transfer shall take place is
hereinafter referred to as the "Exchange."
Section 1.2 Taurus Entertainment Companies, Inc. Common Stock. At the
Closing, in exchange for the XTC Common Stock transferred to Taurus by the
Stockholders, Taurus shall deliver to the Stockholders a total of 525,000
shares of Taurus Entertainment Companies, Inc. Common Stock, and shall deliver
to the Stockholders stock certificates representing such stock, all with
restricted legend, in such amounts as set forth in Exhibit A.
ARTICLE II
THE CLOSING
Section 2.1 Date and Time. The Closing of the transaction contemplated
hereby (the "Closing") shall take place at 1:00 p.m. on December 31, 1997 (the
"Closing Date") at the offices of Axelrod, Smith & Kirshbaum, 5300 Memorial
Drive, Suite 700, Houston, Texas 77007, or at such other time and place as
agreed upon among the parties hereto
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE STOCKHOLDERS
The Stockholders hereby each represent and warrant to Taurus as follows:
Section 3.1 Ownership of the XTC Common Stock. Stockholders are the
record and beneficial owners of and have good and marketable title to 100% of
the outstanding XTC Common Stock, each in the amounts as set forth in Exhibit
A, free and clear of any adverse claims, liens, charges, encumbrances,
security interests, rights of first refusal, proxies, voting agreements or
trusts, options, shareholders' agreements, or restrictions (except those
imposed by applicable securities laws). Stockholders have the complete and
unrestricted right, power, and
<PAGE>
authority to transfer the XTC Common Stock to Taurus. Upon consummation of
this Agreement, Taurus will hold all record and beneficial rights, titles, and
interests in and to the XTC Common Stock and have good and marketable title to
the XTC Common Stock, free and clear of any adverse claims, liens, charges,
encumbrances, security interests, rights of first refusal, proxies, voting
agreements or trusts, options, shareholders' agreements, or restrictions
(except those imposed by applicable securities laws).
Section 3.2 Authorization. Each of the Stockholders is a person of full
age of majority, with full power, capacity, and authority to enter into this
Agreement and perform the obligations contemplated hereby by and for himself
and his spouse. All action on the part of the Stockholders necessary for the
authorization, execution, delivery and performance of this Agreement by the
Stockholders has been taken and will be taken prior to the Closing. This
Agreement, when duly executed and delivered in accordance with its terms, will
constitute legal, valid, and binding obligations of the Stockholders
enforceable against the Stockholders in accordance with its terms, except as
may be limited by bankruptcy, insolvency, and other similar laws affecting
creditors' rights generally or by general equitable principles.
Section 3.3 No Breaches or Defaults. The execution, delivery, and
performance of this Agreement by the Stockholders does not: (i) conflict
with, violate, or constitute a breach of or a default under, (ii) result in
the creation or imposition of any lien, claim, or encumbrance of any kind upon
any of the XTC Common Stock pursuant to the terms of, or (iii) require any
authorization, consent, approval, exemption, or other action by or note to or
filing with any third party or Governmental Authority under any provision of:
(a) any applicable Legal Requirement, or (b) any credit or loan agreement,
promissory note, or any other agreement or instrument to which the
Stockholders are a party or by which the XTC Common Stock may be bound or
<PAGE>
affected. For purposes of this Agreement, "Governmental Authority" means any
foreign governmental authority, the United States of America, any state of the
United States, and any political subdivision of any of the foregoing, and any
agency, department, commission, board, bureau, court, or similar entity,
having jurisdiction over the parties hereto or their respective assets or
properties. For purposes of this Agreement, "Legal Requirement" means any
law, statute, ordinance, writ, injunction, decree, requirement, order,
judgment, rule, or regulation (or interpretation of any of the foregoing) of,
and the terms of any license or permit issued by, any Governmental Authority.
Section 3.4 Pending Claims. There is no claim, suit, action or
proceeding, whether judicial, administrative or otherwise, pending or, to the
best of the Stockholders' knowledge, threatened with respect to the transfer
to Taurus of the XTC Common Stock owned by the Stockholders or the performance
of this Agreement by the Stockholders.
Section 3.5 Litigation. No litigation is pending, or, to Stockholders'
knowledge, threatened, against Stockholders, or their assets or properties
which seeks to restrain or enjoin the execution and delivery of this Agreement
or any of the documents referred to herein or the consummation of any of the
transactions contemplated hereby or thereby. There are no judgments or
outstanding orders, injunctions, decrees, stipulations or awards against the
Stockholders or any of their assets or properties.
Section 3.6 Brokerage Commission. No broker or finder has acted
for the Stockholders in connection with this Agreement or the transactions
contemplated hereby, and no person is entitled to any brokerage or finder's
fee or compensation in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of the Stockholders.
<PAGE>
Section 3.7 Consents. No permit, consent, approval or authorization of,
or designation, declaration or filing with, any Governmental Authority or any
other person or entity is required on the part of the Stockholders in
connection with the execution and delivery by the Stockholders of this
Agreement or the consummation and performance of the transactions contemplated
hereby.
Section 3.8 Disclosure. No representation or warranty of the
Stockholders contained in this Agreement (including the exhibits hereto)
contains any untrue statement or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF TAURUS
Taurus hereby represents and warrants to the Stockholders as follows:
Section 4.1 Organization and Corporate Status. Taurus is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Colorado, with full power and authority and all necessary
governmental and regulatory licenses, permits and authorizations to carry on
the businesses in which it is engaged, to own the properties that it owns
currently and will own at the Closing, and to perform its obligations under
this Agreement.
Section 4.2 Authorization. Taurus is a corporation with full
power, capacity, and authority to enter into this Agreement and perform the
obligations contemplated hereby by and for itself. All action on the part of
Taurus necessary for the authorization, execution, delivery and performance of
this Agreement by Taurus has been taken or will be taken prior to the Closing.
This Agreement, when duly executed and delivered in accordance with its
terms, will constitute legal, valid, and binding obligations of Taurus
enforceable against Taurus in accordance with its
<PAGE>
terms, except as may be limited by bankruptcy, insolvency, and other similar
laws affecting creditors' rights generally or by general equitable principles.
Section 4.3 No Breaches or Defaults. The execution, delivery, and
performance of this Agreement by Taurus does not: (i) conflict with, violate,
or constitute a breach of or a default under, (ii) result in the creation or
imposition of any lien, claim, or encumbrance of any kind upon the Taurus
Common Stock, or (iii) require any authorization, consent, approval,
exemption, or other action by or note to or filing with any third party or
Governmental Authority under any provision of: (a) any applicable Legal
Requirement, or (b) any credit or loan agreement, promissory note, or any
other agreement or instrument to which Taurus is a party or by which the
Taurus Common Stock may be bound or affected. For purposes of this Agreement,
"Governmental Authority" means any foreign governmental authority, the United
States of America, any state of the United States, and any political
subdivision of any of the foregoing, and any agency, department, commission,
board, bureau, court, or similar entity, having jurisdiction over the parties
hereto or their respective assets or properties. For purposes of this
Agreement, "Legal Requirement" means any law, statute, ordinance, writ,
injunction, decree, requirement, order, judgment, rule, or regulation (or
interpretation of any of the foregoing) of, and the terms of any license or
permit issued by, any Governmental Authority.
Section 4.4 Pending Claims. There is no claim, suit, action or
proceeding, whether judicial, administrative or otherwise, pending or, to the
best of Taurus knowledge, threatened with respect to the transfer to the
Stockholders of the Taurus Common Stock or the performance of this Agreement
by Taurus.
Section 4.5 Consents. No permit, consent, approval or authorization of,
or designation, declaration or filing with, any Governmental Authority or any
other person or entity <PAGE>
is required on the part of Taurus in connection with the execution and
delivery by Taurus of this Agreement or the consummation and performance of
the transactions contemplated hereby.
Section 4.6 Financial Statements. Taurus has delivered to the
Stockholders audited balance sheets of Taurus dated as of September 30, 1997
and related statements of income for the period covered, together with related
notes and schedules thereto. Such financial statements fairly present the
financial condition of Taurus as of the date thereof and for the period
therein referred to.
Section 4.7 Litigation. No litigation is pending, or, to Taurus'
knowledge, threatened, against Taurus, or its assets or properties which seeks
to restrain or enjoin the execution and delivery of this Agreement or any of
the documents referred to herein or the consummation of any of the
transactions contemplated hereby or thereby. There are no judgments or
outstanding orders, injunctions, decrees, stipulations or awards against
Taurus or any of its assets or properties.
Section 4.8 Brokerage Commission. No broker or finder has acted for
Taurus in connection with this Agreement or the transactions contemplated
hereby, and no person is entitled to any brokerage or finder's fee or
compensation in respect thereof based in any way on agreements, arrangements
or understandings made by or on behalf of the Taurus.
Section 4.9 Disclosure. No representation or warranty of Taurus
contained in this Agreement (including the exhibits hereto) contains any
untrue statement or omits to state a material fact necessary in order to make
the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
<PAGE>
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 Conditions to the Obligations of Taurus. The obligations of
Taurus to effect the transactions contemplated hereby are subject to the
following conditions, any of which may be waived by it:
(a) The representations and warranties of the Stockholders set forth
herein shall be true and correct on the Closing Date with the same
force and effect as if they had been made on the Closing Date.
Section 5.2 Conditions to the Obligations of the Stockholders. The
obligations of the Stockholders to effect the transactions contemplated hereby
are subject to the following conditions, any of which may be waived by them:
(a) The directors of Taurus shall have voted or consented to approve
the exchange transaction contemplated herein in accordance with
the corporate laws of the State of Colorado;
(b) The representations and warranties of Taurus set forth herein
shall be true and correct on the Closing Date with the same force
and effect as if they had been made on the Closing Date; and
ARTICLE VI
NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 6.1 Nature of Statements. All statements contained herein, or
in any certificate or other written instrument delivered by or on behalf of
Taurus or the Stockholders pursuant to this Agreement shall be deemed
representations and warranties by Taurus or the Stockholders, as the case may
be. No investigation by any party hereto nor failure by any party hereto, to
make any investigation, shall constitute a waiver of any representation,
warranty, covenant, or agreement of any party hereto, nor relieve such other
party of any obligation with respect to the accuracy or fulfillment thereof.
<PAGE>
Section 6.2 Survival of Representations and Warranties. Regardless of
any investigation at any time made by or on behalf of any party hereto or of
any information any party may have in respect hereof, all covenants,
agreements, representations, and warranties made hereunder or pursuant hereto
or in connection with the transactions contemplated hereby shall survive the
Closing and continue in effect thereafter for the maximum period allowed by
law.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices. All communications required or permitted under
this Agreement shall be in writing and any communications or delivery
hereunder shall be deemed to have been duly made if actually delivered or if
mailed by registered or certified mail, postage prepaid, addressed to the
party being notified as set forth below. Any party may, by written notice so
delivered to the other, change the address to which delivery shall thereafter
be made. Notices to the parties hereto shall be made at the addresses set
forth below:
(a) If to Taurus, to:
Taurus Entertainment Companies, Inc.
2016 Main Street, Suite 109
Houston, Texas 77002
Attn: Mr. Eric Langan, President
(b) If to the Stockholders to:
XTC Stockholders
at their address reflected on Exhibit A
Section 7.2 Entire Agreement. This Agreement and any documents executed
and delivered pursuant hereto constitute the entire agreement of the parties
relating to the subject matter hereof, supersede all prior oral or written
agreements, understandings, or arrangements with respect thereto, and may not
be amended, supplemented, or terminated except by written instrument executed
by the parties.
<PAGE>
Section 7.3 Waiver. Any waiver of any provision of this Agreement
shall be effective only if in writing, and no waiver of any provision of this
Agreement shall constitute a waiver of any other provision of this Agreement,
nor shall such waiver constitute a waiver of any subsequent breach of such
provision.
Section 7.4 Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns and may not be assigned unless agreed to in writing by all parties
hereto.
Section 7.5 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original but all of
which shall be deemed one instrument.
Section 7.6 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not effect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
Section 7.7 Governing Law. This Agreement shall be construed and
enforceable under and in accordance and governed by the laws of the State of
Texas.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day and year first above written.
TAURUS ENTERTAINMENT COMPANIES, INC.
/s/ Eric Langan
By: ______________________________
Eric Langan, President
ERIC LANGAN, Stockholder
/s/ Eric Langan
___________________________________
MITCHELL WHITE, Stockholder
/s/ Mitchell White
___________________________________
<PAGE>
EXHIBIT A
Shares of Shares of
Stockholder XTC to Exchange Taurus to Receive
Eric Langan 475 249,375
2016 Main Street, Suite 109
Houston, Texas 77002
Mitchell White 525 275,625
2016 Main Street, Suite 109
Houston, Texas 77002 _______ _________
Total 1000 525,000
Being 100% of the
outstanding shares of
XTC Cabaret, Inc.
<PAGE>
Exhibit 10.4
EXCHANGE AGREEMENT
This Exchange Agreement (the "Agreement") effective as of December 31,
1997, is made and entered into by Taurus Entertainment Companies, Inc., a
Colorado corporation ("Taurus" or the "Corporation"), and the members (the
"Members ") of Citation Land, L.L.C., a Texas limited liability company
("Citation Land"), listed on Exhibit A, who are all of the Members of Citation
Land.
WHEREAS, Taurus desires to acquire 100% of the Membership Interest (the
"Membership Interest") of Citation Land in exchange for 2,500,000 shares of
Taurus (the "Taurus Shares"); and
WHEREAS, the Members collectively own 100% of the Membership Interest in
Citation Land as evidenced by certificates of membership interest (the
"Membership Certificates"); and
WHEREAS, the Members desire to exchange their Membership Interests in
Citation Land in exchange for an aggregate amount of 2,500,000 shares of
Taurus; and
WHEREAS, Taurus and the Members agree that it is in the best interest of
Taurus and the Members to enter into the Agreement on the terms and conditions
set forth below.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements and the respective representations and warranties herein
contained, and on the terms and subject to the conditions herein set forth,
the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
EXCHANGE
Section 1.1 Citation Land Membership Interest. At the Closing (as
hereinafter defined) the Members shall transfer, convey and deliver to Taurus
1,084 shares of Citation Land
<PAGE>
Membership Interest, which is 100% of the outstanding Membership Interest of
Citation Land, and shall deliver to Taurus Membership Certificates
representing such Membership Interests, duly endorsed to Taurus or accompanied
by duly executed membership interest powers in form and substance satisfactory
to Taurus. The transaction by which such transfer shall take place is
hereinafter referred to as the "Exchange."
Section 1.2 Taurus Entertainment Companies, Inc. Membership Interest.
At the Closing, in exchange for the Citation Land Membership Interest
transferred to Taurus by the Members, Taurus shall deliver to the Members a
total of 2,500,000 shares of Taurus Entertainment Companies, Inc., and shall
deliver to the Members stock certificates representing such stock, all with
restricted legend, in such amounts as set forth in Exhibit A.
ARTICLE II
THE CLOSING
Section 2.1 Date and Time. The Closing of the transaction contemplated
hereby (the "Closing") shall take place at 1:00 p.m. on December 31, 1997 (the
"Closing Date") at the offices of Axelrod, Smith & Kirshbaum, 5300 Memorial
Drive, Suite 700, Houston, Texas 77007, or at such other time and place as
agreed upon among the parties hereto
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MEMBERS
The Members hereby each represent and warrant to Taurus as follows:
Section 3.1 Ownership of the Citation Land Membership Interest. Members
are the record and beneficial owners of and have good and marketable title to
100% of the outstanding Citation Land Membership Interest, each in the amounts
as set forth in Exhibit A, free and clear of any adverse claims, liens,
charges, encumbrances, security interests, rights of first refusal, proxies,
<PAGE>
voting agreements or trusts, options, shareholders' agreements, or
restrictions (except those imposed by applicable securities laws). Members
have the complete and unrestricted right, power, and authority to transfer the
Citation Land Membership Interest to Taurus. Upon consummation of this
Agreement, Taurus will hold all record and beneficial rights, titles, and
interests in and to the Citation Land Membership Interest and have good and
marketable title to the Citation Land Membership Interest, free and clear of
any adverse claims, liens, charges, encumbrances, security interests, rights
of first refusal, proxies, voting agreements or trusts, options, shareholders'
agreements, or restrictions (except those imposed by applicable securities
laws).
Section 3.2 Authorization. Each of the Members is a person of full age
of majority, with full power, capacity, and authority to enter into this
Agreement and perform the obligations contemplated hereby by and for himself
and his spouse. All action on the part of the Members necessary for the
authorization, execution, delivery and performance of this Agreement by the
Members has been taken and will be taken prior to the Closing. This
Agreement, when duly executed and delivered in accordance with its terms, will
constitute legal, valid, and binding obligations of the Members enforceable
against the Members in accordance with its terms, except as may be limited by
bankruptcy, insolvency, and other similar laws affecting creditors' rights
generally or by general equitable principles.
Section 3.3 No Breaches or Defaults. The execution, delivery, and
performance of this Agreement by the Members does not: (i) conflict with,
violate, or constitute a breach of or a default under, (ii) result in the
creation or imposition of any lien, claim, or encumbrance of any kind upon any
of the Citation Land Membership Interest pursuant to the terms of, or (iii)
require any authorization, consent, approval, exemption, or other action by or
note to or filing with any
<PAGE>
third party or Governmental Authority under any provision of: (a) any
applicable Legal Requirement, or (b) any credit or loan agreement, promissory
note, or any other agreement or instrument to which the Members are a party or
by which the Citation Land Membership Interest may be bound or affected. For
purposes of this Agreement, "Governmental Authority" means any foreign
governmental authority, the United States of America, any state of the United
States, and any political subdivision of any of the foregoing, and any agency,
department, commission, board, bureau, court, or similar entity, having
jurisdiction over the parties hereto or their respective assets or properties.
For purposes of this Agreement, "Legal Requirement" means any law, statute,
ordinance, writ, injunction, decree, requirement, order, judgment, rule, or
regulation (or interpretation of any of the foregoing) of, and the terms of
any license or permit issued by, any Governmental Authority.
Section 3.4 Pending Claims. There is no claim, suit, action or
proceeding, whether judicial, administrative or otherwise, pending or, to the
best of the Members' knowledge, threatened with respect to the transfer to
Taurus of the Citation Membership Interest owned by the Members or the
performance of this Agreement by the Members.
Section 3.5 Litigation. No litigation is pending, or, to Members'
knowledge, threatened, against Members, or their assets or properties which
seeks to restrain or enjoin the execution and delivery of this Agreement or
any of the documents referred to herein or the consummation of any of the
transactions contemplated hereby or thereby. There are no judgments or
outstanding orders, injunctions, decrees, stipulations or awards against the
Members or any of their assets or properties.
Section 3.6 Brokerage Commission. No broker or finder has acted
for the Members in connection with this Agreement or the transactions
contemplated hereby, and no person is entitled <PAGE>
to any brokerage or finder's fee or compensation in respect thereof based in
any way on agreements, arrangements or understandings made by or on behalf of
the Members.
Section 3.7 Consents. No permit, consent, approval or authorization of,
or designation, declaration or filing with, any Governmental Authority or any
other person or entity is required on the part of the Members in connection
with the execution and delivery by the Members of this Agreement or the
consummation and performance of the transactions contemplated hereby.
Section 3.8 Disclosure. No representation or warranty of the Members
contained in this Agreement (including the exhibits hereto) contains any
untrue statement or omits to state a material fact necessary in order to make
the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF TAURUS
Taurus hereby represents and warrants to the Members as follows:
Section 4.1 Organization and Corporate Status. Taurus is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Colorado, with full power and authority and all necessary
governmental and regulatory licenses, permits and authorizations to carry on
the businesses in which it is engaged, to own the properties that it owns
currently and will own at the Closing, and to perform its obligations under
this Agreement.
Section 4.2 Authorization. Taurus is a corporation with full
power, capacity, and authority to enter into this Agreement and perform the
obligations contemplated hereby by and for itself. All action on the part of
Taurus necessary for the authorization, execution, delivery and performance of
this Agreement by Taurus has been taken or will be taken prior to the Closing.
<PAGE>
This Agreement, when duly executed and delivered in accordance with its
terms, will constitute legal, valid, and binding obligations of Taurus
enforceable against Taurus in accordance with its terms, except as may be
limited by bankruptcy, insolvency, and other similar laws affecting creditors'
rights generally or by general equitable principles.
Section 4.3 No Breaches or Defaults. The execution, delivery, and
performance of this Agreement by Taurus does not: (i) conflict with, violate,
or constitute a breach of or a default under, (ii) result in the creation or
imposition of any lien, claim, or encumbrance of any kind upon the Taurus
Shares, or (iii) require any authorization, consent, approval, exemption, or
other action by or note to or filing with any third party or Governmental
Authority under any provision of: (a) any applicable Legal Requirement, or
(b) any credit or loan agreement, promissory note, or any other agreement or
instrument to which Taurus is a party or by which the Taurus Shares may be
bound or affected. For purposes of this Agreement, "Governmental Authority"
means any foreign governmental authority, the United States of America, any
state of the United States, and any political subdivision of any of the
foregoing, and any agency, department, commission, board, bureau, court, or
similar entity, having jurisdiction over the parties hereto or their
respective assets or properties. For purposes of this Agreement, "Legal
Requirement" means any law, statute, ordinance, writ, injunction, decree,
requirement, order, judgment, rule, or regulation (or interpretation of any of
the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority.
Section 4.4 Pending Claims. There is no claim, suit, action or
proceeding, whether judicial, administrative or otherwise, pending or, to the
best of Taurus knowledge, threatened with respect to the transfer to the
Members of the Taurus Shares or the performance of this Agreement by Taurus.
<PAGE>
Section 4.5 Consents. No permit, consent, approval or authorization of,
or designation, declaration or filing with, any Governmental Authority or any
other person or entity is required on the part of Taurus in connection with
the execution and delivery by Taurus of this Agreement or the consummation and
performance of the transactions contemplated hereby.
Section 4.6 Financial Statements. Taurus has delivered to the Members
audited balance sheets of Taurus dated as of September 30, 1997 and related
statements of income for the period covered, together with related notes and
schedules thereto. Such financial statements fairly present the financial
condition of Taurus as of the date thereof and for the period therein referred
to.
Section 4.7 Litigation. No litigation is pending, or, to Taurus'
knowledge, threatened, against Taurus, or its assets or properties which seeks
to restrain or enjoin the execution and delivery of this Agreement or any of
the documents referred to herein or the consummation of any of the
transactions contemplated hereby or thereby. There are no judgments or
outstanding orders, injunctions, decrees, stipulations or awards against
Taurus or any of its assets or properties.
Section 4.8 Brokerage Commission. No broker or finder has acted for
Taurus in connection with this Agreement or the transactions contemplated
hereby, and no person is entitled to any brokerage or finder's fee or
compensation in respect thereof based in any way on agreements, arrangements
or understandings made by or on behalf of the Taurus.
Section 4.9 Disclosure. No representation or warranty of Taurus
contained in this Agreement (including the exhibits hereto) contains any
untrue statement or omits to state a material fact necessary in order to make
the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
<PAGE>
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 Conditions to the Obligations of Taurus. The obligations of
Taurus to effect the transactions contemplated hereby are subject to the
following conditions, any of which may be waived by it:
(a) The representations and warranties of the Members set forth herein
shall be true and correct on the Closing Date with the same force
and effect as if they had been made on the Closing Date.
Section 5.2 Conditions to the Obligations of the Members. The
obligations of the Members to effect the transactions contemplated hereby are
subject to the following conditions, any of which may be waived by them:
(a) The directors of Taurus shall have voted or consented to approve
the exchange transaction contemplated herein in accordance with
the corporate laws of the State of Colorado;
(b) The representations and warranties of Taurus set forth herein
shall be true and correct on the Closing Date with the same force
and effect as if they had been made on the Closing Date; and
ARTICLE VI
NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 6.1 Nature of Statements. All statements contained herein, or
in any certificate or other written instrument delivered by or on behalf of
Taurus or the Members pursuant to this Agreement shall be deemed
representations and warranties by Taurus or the Members, as the case may be.
No investigation by any party hereto nor failure by any party hereto, to make
any investigation, shall constitute a waiver of any representation, warranty,
covenant, or agreement of any party hereto, nor relieve such other party of
any obligation with respect to the accuracy or fulfillment thereof.
<PAGE>
Section 6.2 Survival of Representations and Warranties. Regardless of
any investigation at any time made by or on behalf of any party hereto or of
any information any party may have in respect hereof, all covenants,
agreements, representations, and warranties made hereunder or pursuant hereto
or in connection with the transactions contemplated hereby shall survive the
Closing and continue in effect thereafter for the maximum period allowed by
law.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices. All communications required or permitted under
this Agreement shall be in writing and any communications or delivery
hereunder shall be deemed to have been duly made if actually delivered or if
mailed by registered or certified mail, postage prepaid, addressed to the
party being notified as set forth below. Any party may, by written notice so
delivered to the other, change the address to which delivery shall thereafter
be made. Notices to the parties hereto shall be made at the addresses set
forth below:
(a) If to Taurus, to:
Taurus Entertainment Companies, Inc.
2016 Main Street, Suite 109
Houston, Texas 77002
Attn: Mr. Eric Langan, President
(b) If to the Members to:
Citation Land Members
at their address reflected on Exhibit A
Section 7.2 Entire Agreement. This Agreement and any documents executed
and delivered pursuant hereto constitute the entire agreement of the parties
relating to the subject matter hereof, supersede all prior oral or written
agreements, understandings, or arrangements with respect thereto, and may not
be amended, supplemented, or terminated except by written instrument executed
by the parties.
<PAGE>
Section 7.3 Waiver. Any waiver of any provision of this Agreement
shall be effective only if in writing, and no waiver of any provision of this
Agreement shall constitute a waiver of any other provision of this Agreement,
nor shall such waiver constitute a waiver of any subsequent breach of such
provision.
Section 7.4 Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns and may not be assigned unless agreed to in writing by all parties
hereto.
Section 7.5 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original but all of
which shall be deemed one instrument.
Section 7.6 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not effect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
Section 7.7 Governing Law. This Agreement shall be construed and
enforceable under and in accordance and governed by the laws of the State of
Texas.
IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the day and year first above written.
TAURUS ENTERTAINMENT COMPANIES, INC.
/s/ Eric Langan
By: ______________________________
Eric Langan, President
ERIC LANGAN, Member
/s/ Eric Langan
_____________________________
RALPH McELROY, Member
/s/ Ralph McElroy
_____________________________
<PAGE>
EXHIBIT A
Units of Membership
Interest of Citation Shares of
Members Land, L.L.C. to Exchange Taurus to Receive
Eric Langan 500 1,153,137
2016 Main Street, Suite 109
Houston, Texas 77002
Ralph McElroy 584 1,346,863
2016 Main Street, Suite 109
Houston, Texas 77002 _______ _________
Total 1,084 2,500,000
Being 100% of the
outstanding Membership
Interest of Citation Land, L.L.C.
