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Exhibit 2.1
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is dated the 4th day of May, 2000, and entered into
by and among Cohen Capital Technologies, L.L.C., a Missouri limited liability
company ("COHEN CAPITAL"), Kirk C. Reivich, an individual ("REIVICH"), October
Capital, L.L.C. ("OCTOBER CAPITAL") (collectively, together with Cohen Capital
and Revich, "SELLERS"), SOLOSEARCH.COM, INC. ("CORPORATION"), PAN International
Gaming, Inc., a Nevada corporation ("BUYER"), Jerry Cornwell, an individual and
Clifford M. Johnston, an individual (collectively, together with Mr. Cornwell,
the "PRINCIPALS").
Sellers desire to sell, and Buyer desires to purchase all the
issued and outstanding shares of capital stock (the "CAPITAL STOCK") of
Corporation and Buyer is willing to acquire such interest of Sellers, for the
consideration and on the terms and conditions hereinafter set forth (the
"TRANSACTION").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein set forth, Sellers, Buyer and the Principals, intending to be
legally bound, represent, warrant and agree as follows:
SECTION 1. DEFINITIONS.
The following terms used in this Agreement shall have the meanings
indicated below unless the context otherwise indicates:
"AFFILIATE" means with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such Person.
"BUSINESS" means the existing and prospective business,
operations, facilities and other assets, financial condition, results of
operations, finances, markets, products, competitive position, raw materials
and other supplies, customers and customer relations and personnel of a
company.
"BUYER" shall have the meaning given in the heading to this
Agreement.
"BUYER'S CAPITAL STOCK" shall have the meaning set forth in
SECTION 2.2.
"CAPITAL STOCK" shall have the meaning given in the recitals
hereto.
"CLOSING" and "CLOSING DATE" shall have the meanings set forth in
SECTION 3.
"CLOSING VALUE" Shall have the meaning set forth in SECTION 2.
"ENVIRONMENTAL LAWS" means any provision of past, present or
future international, national, federal, state, local or any other governmental
law, directive, statute, ordinance, regulation, code, standard or other legal
requirement, or common law (including, but
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not limited to, common law that may impose strict liability) or any judgment,
order, writ, notice, decree, permit, license, authorization, approval, consent,
injunction, or agreement with any governmental authority, relating to any
environmental, health or safety matters or conditions, Hazardous Materials,
pollution, protection, preservation or restoration of the environment,
including, without limitation, any sewer discharge permits or ordinances.
"GAAP" means generally accepted accounting principles,
consistently applied.
"HAZARDOUS MATERIALS" shall have the meaning given in SECTION 5.11
of this Agreement.
"MATERIAL ADVERSE EFFECT" shall mean the result of any change,
event, occurrence or state of facts which is, or which would reasonably be
expected to lead to, an adverse change in the business, assets, condition
(financial or otherwise), financial position or results of a company which is
material to the Business or such company taken as a whole, other than any
change, event, occurrence or statement of facts (i) arising out of general
economic or market conditions, (ii) arising out of the public announcement of
the Transaction, or (iii) arising out of facts set forth on the disclosure
schedules attached to this Agreement.
"PERSON" means any individual, partnership, limited liability
company, corporation, cooperative, trust, estate or other entity.
"PROPORTIONATE INTEREST" of a Seller means the ratio equal to the
number of shares of Capital Stock owned by a seller to the total number of
shares of the Corporation that are issued and outstanding (as set forth in
SECTION 2).
"PURCHASE PRICE" shall have the meaning set forth in SECTION 2 of
this Agreement.
"SELLERS" shall have the meaning given in the heading to this
Agreement.
"TAX" shall mean any and all federal, state, local and foreign
income, profits, franchise, sales, use, occupation, property, excise,
employment and other taxes (including interest, penalties and withholdings of
tax) of any kind and any liability arising under the escheat or unclaimed
property laws of any state or other governmental authority.
"TRANSACTION" shall have the meaning given in the recital to this
Agreement.
SECTION 2. SALE AND PURCHASE OF SHARES.
2.1. SALE AND PURCHASE OF SHARES. On the Closing Date, upon the
terms and conditions herein set forth. Buyer agrees to purchase from Sellers
and Sellers agree to sell, transfer, convey and deliver an aggregate of
3,000,000 shares of the Capital Stock of the Corporation (the "SHARES"). At
Closing Sellers shall designate to Buyer Sellers' Proportionate Interests.
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2.2 PURCHASE PRICE; PAYMENT OF CONSIDERATION. The purchase
price (the "Purchase Price") for the Shares shall be as follows:
(a) Each Seller shall receive such Seller's
Proportionate Interest of 4,850,000 shares of Buyer's Common Stock
("Buyer's Capital Stock")(and the stock certificates evidencing
such stock shall be delivered at Closing); plus
(b) Each Seller shall receive its Proportionate Interest
of $300,000, which amount shall be payable in cash at Closing by
wire transfer of immediately available funds to an account
designated by Sellers at least two (2) business days prior to the
Closing Date.
2.3 CLOSING VALUE; DETERMINATION OF BUYER'S CAPITAL STOCK. For
purposes hereof the term "Closing Value" shall mean the average closing bid
price of one (1) share of Buyer's Capital Stock as reported on the National
Association of Securities Dealers ("NASD's") OTC Bulletin Board during the five
(5) consecutive trading day periods ending on the trading day prior to the
Closing Date. If the Closing Value is less than Two Dollars ($2.00) per share,
then the holders of a majority of the Shares may, at their discretion, elect by
written Notice to Buyer (prior to Closing) (x) continue with the Transaction or
(y) elect to terminate this Agreement (if the Sellers do not provide notice of
their election, they will be deemed to have elected (x) above).
SECTION 3. CLOSING DATE.
The transfer and exchange provided for in this Agreement (the
"CLOSING") shall take place at the offices of Bryan Cave LLP at One Kansas
City Place, 1200 Main Street, Kansas City, Missouri 64105, at 10 a.m., on May
19, 2000, or on such other date or at such other place as the parties may
mutually agree (such date is herein called the "CLOSING DATE"). The cash
portion of the Purchase Price will be deposited in escrow with Buyer's lawyers
on May 13, 2000 (with interest being paid to the Sellers).
SECTION 4. SELLERS' REPRESENTATIONS AND WARRANTIES.
Each Seller hereby severally makes the following representations
and warranties to Buyer and each of which is true and correct on the date
hereof and will be true and correct on the Closing Date, each of which shall be
unaffected by any investigation heretofore or hereafter made by Buyer and each
of which shall survive the Closing and the Transaction:
4.1 SELLERS. Such Seller is the owner, beneficially and of
record, of shares of Capital Stock and Sellers together own all of the issued
and outstanding stock of the Corporation. Such Seller has complete and
unrestricted power to enter into this Agreement and all other agreements to be
executed and delivered by such Seller hereunder, and to perform its obligations
hereunder and thereunder. This Agreement has been, and all other agreements to
be executed and delivered by such Seller hereunder will be prior to the
Closing, duly authorized, executed and delivered by such Seller and constitutes
legal, valid and binding obligations of such Seller and enforceable against
such Seller in accordance with its terms. The execution and delivery of
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this Agreement and all other agreements to be executed and delivered by such
Seller hereunder and the consummation of the transactions contemplated hereby
and thereby by such Seller will not violate any provision of, or constitute a
default under, any law, regulation, order or judgment or any contract or other
agreement to which such Seller is a party or by which it is bound or conflict
with such Seller's organizational documents (if applicable) or result in the
creation or imposition of any lien, claim, charge or encumbrance of any nature
whatsoever upon the Capital Stock. Neither the execution and delivery by such
Seller of this Agreement, nor the consummation of the transactions contemplated
by this Agreement, requires the consent or approval of, or the giving of notice
by such Seller to, or the registration by such Seller with, or the taking of any
other action by such Seller in respect of, any federal, state, or local
governmental authority or any third party. Such Seller has not made any contract
or agreement or granted any option to sell or otherwise transfer the Assets or
the Capital Stock. The Capital Stock of the Corporation is owned by such Seller,
and will be transferred to Buyer, free and clear of all liens, claims,
encumbrances and charges and subject to no restrictions as to transferability.
SECTION 5. COHEN CAPITAL'S REPRESENTATIONS AND WARRANTIES.
Cohen Capital hereby makes the following representations and
warranties to Buyer and each of which is true and correct on the date hereof and
will be true and correct on the Closing Date, each of which shall by unaffected
by any investigation heretofore or hereafter made by Buyer and each of which
shall survive the Closing and the transactions contemplated hereby:
5.1 CORPORATE.
(a) The Corporation is a non-reporting corporation duly
organized, validly existing and in good standing under the laws of the
State of Missouri and has all requisite corporate power and authority to
own its property and operate its business as and where it is now being
conducted.
(b) Except as set forth on Cohen Capital's Disclosure
Schedule, the Corporation has no subsidiaries and owns no interest in any
corporation, partnership, proprietorship or any other business entity.
(c) The entire authorized Capital Stock of the
Corporation consists of Three Million (3,000,000) shares of common stock,
having a par value of $.001 each, all of which shares are validly issued,
fully paid and nonassessable. Except for options to Reivich, there are no
outstanding or authorized options, warrants, agreements, subscriptions,
calls, demands or rights of any character relating to the Capital Stock,
whether or not issued, including, without limitation, securities
convertible into or evidencing the right to purchase any Capital Stock or
other securities of the Corporation.
5.2 FINANCIAL STATEMENTS. The unaudited balance sheet of
Corporation as of December 31, 1999 (the "UNAUDITED BALANCE SHEET DATE") and the
statements of income for the fiscal year then ended present fairly the financial
condition of the Corporation as of the date thereof and the results of its
operations for the period(s) then ended provided that said financial
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statements lack footnotes. Except as set forth in Exhibit A hereto (the "COHEN
CAPITAL'S DISCLOSURE SCHEDULE"), the Corporation has no liabilities or
obligations of any nature, whether absolute or contingent, accrued or otherwise,
which are not shown or provided for on the unaudited balance sheet of the
Corporation as of December 31, 1999, except for liabilities incurred in the
ordinary course of business.
5.3 ABSENCE OF CERTAIN EVENTS. Since the Unaudited Balance Sheet
Date, except as set forth on Part 5.3 of Cohen Capital's Disclosure Schedule,
the business of the Corporation has been operated only in the ordinary and
normal course of business and there has not been any material adverse change in
the financial condition, assets, liabilities, results of operations, business,
prospects or condition, financial or otherwise, of the Corporation and there has
been no occurrence, circumstance or combination thereof which might be expected
to result in any such material adverse change before or after the Closing Date.
5.4 TITLE TO AND CONDITION OF PROPERTIES.
(a) Except as set forth on Part 5.4 of Cohen Capital's
Disclosure Schedule, the Corporation has good and marketable title to all
of its real, personal and mixed properties (the "ASSETS") free and clear
of all mortgages, liens, pledges, charges, claims, leases, restrictions or
encumbrances of any nature whatsoever, and subject to no restrictions with
respect to transferability.
(b) The accounts receivable of the Corporation as shown
on its books and records have arisen in the ordinary cause of business,
represent valid obligations owed to the Corporation and are recorded as
accounts receivable on the books of the Corporation in accordance with
generally accepted accounting principles ("GAAP").
5.5 CONTRACTS AND COMMITMENTS.
(a) Except as set forth on Part 5.5 of Cohen Capital's
Disclosure Schedule, the Corporation has no existing contracts with
directors, officers, employees, managers, accountants, agents, lawyers or
shareholders that are not cancelable by the Corporation on notice of not
longer than thirty (30) days and without liability, penalty or premium.
(b) The Corporation has not given a power of attorney,
which is currently in effect, to any person, firm or corporation for any
purpose whatsoever.
(c) The Corporation has no collective bargaining or
employment agreements, nor any agreements that contain any severance or
termination pay liabilities or obligations, nor any bonus, vacation,
deferred compensation, stock purchase, stock option, profit-sharing,
pension, retirement or other employee benefit plans.
(d) The Corporation has not made any other contract or
agreement or granted any option to sell or otherwise transfer the Assets
or the Capital Stock.
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(e) Part 5.5 of Cohen Capital's Disclosure Schedule
contains a list of all contracts, leases, licenses, commitments and other
agreements relating to the Assets and the operation of the business of the
Corporation. To the knowledge of Cohen Capital, each of such contracts,
leases, licenses, commitments and agreements is in full force and effect
and constitute the legal, valid and binding obligations of all of the
parties thereto. The Corporation is not in default and has not received or
given any notice of default, and to Cohen Capital's knowledge no other
party thereto is in default, under any such contract, lease, license,
commitment or other agreement or under any other obligation relating to
the Assets or the business of the Corporation.
5.6 NO LITIGATION OR ADVERSE EVENTS. There are no outstanding
orders, judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body involving the Corporation. No suit, action or
legal, administrative, arbitration or other proceeding or reasonable basis
therefor, or, to the best of the Cohen Capital's knowledge, no investigation by
any governmental agency, pertaining to the Corporation or the Assets or any
change in the zoning or building ordinances affecting the properties or
leasehold interests of the Corporation, is pending or, to the best of Cohen
Capital's knowledge, has been threatened against the Corporation which could
adversely affect the financial condition or prospects of the Corporation or the
conduct of the business thereof or any of the Assets or materially adversely
affect the ability of Sellers to consummate the transactions contemplated by
this Agreement.
5.7 INTANGIBLE PROPERTIES.
(a) To the knowledge of Cohen Capital, the Corporation
has not infringed any patent or patent application, copyright or copyright
application, trademark or trademark application or trade name or other
proprietary or intellectual property right of any other person or received
any notice of a claim of such infringement.
(b) Part 5.7 of Cohen Capital's Disclosure Schedule
contains a true and accurate list of all patents, copyrights, trademarks,
trade names and service marks, both foreign and domestic, owned, possessed
or used by the Corporation.
(c) The Corporation has the rights to use all data and
information (including without limitation confidential information, trade
secrets and know-how) necessary to permit the conduct from and after the
Closing Date of the business of the Corporation, as such business is and
has been normally conducted.
5.8 NO VIOLATION.
(a) The execution and delivery of this Agreement and all
other agreements, instruments and documents contemplated hereby and the
consummation of the transactions contemplated hereby and thereby will not
conflict with or violate or constitute a breach or default under the
Articles of Incorporation or Bylaws of the Corporation or any provision of
any mortgage, trust indenture, lien, lease, agreement, instrument, order,
judgment, degree or other restriction of any kind or character to which
the Corporation is subject or result in the creation or imposition or any
lien, claim, charge
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or encumbrance of any nature whatsoever upon the Assets, the Capital Stock or
the Corporation.
(b) The Corporation has not violated, and is not currently in
violation of and the consummation of the transactions contemplated hereby will
not cause any violation or breach of, any zoning or building laws, statutes,
ordinances or regulations or any health, safety or environmental laws, statutes,
ordinances or regulations or any other laws, statutes, ordinances or regulations
relating to the Corporation or the Assets or their use.
(c) All licenses, permits, franchise and other governmental or
quasi-governmental authorizations and approvals required or necessary for the
Corporation to carry on its business have been obtained and are in full force
and effect.
5.9. TAX RETURNS AND TAX AUDITS.
(a) All tax and information returns required to be filed by the
Corporation on or prior to the Closing Date with respect to Taxes have been or
will be timely filed with the appropriate government agencies and in all
jurisdictions in which such returns are required to be filed and such returns
and filings are substantially true, complete and correct.
(b) All amounts shown on each of such returns have been paid or
will be paid when due.
(c) Any Taxes which at the Balance Sheet Date were not yet due
and owing were adequately reflected on the Balance Sheet as a reserve for Taxes.
There were no grounds for the assertion or assessment of any Taxes against the
Corporation at the Balance Sheet Date other than those reflected or reserved
against on the Balance Sheet.
(d) The business of the Corporation is not, nor will it be,
encumbered by any liens arising out of any unpaid Taxes and there are no
grounds for the assertion or assessment of any liens against such business in
respect of any Taxes (other than liens for Taxes if payment thereof is not yet
required).
(e) There is no action or proceeding or unresolved claim for
assessment or collection, pending or threatened, by, or present or expected
dispute with, any government authority for assessment or collection from the
Corporation of any Taxes of any nature.
(f) There is no extension or waiver of the period for assertion
of any Taxes against the Corporation affecting its business.
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5.10. BOOKS AND RECORDS.
(a) The books and records of accounts of the Corporation (i)
are true, complete and correct, (ii) have been maintained in accordance with
good business practices on a basis consistent with prior years, (iii) state in
reasonable detail and accurately reflect the transactions and dispositions of
the Assets of the Corporation, and (iv) accurately and fairly reflect the basis
for the financial statements referred to in SECTION 5.2 above.
(b) The minute book of the Corporation is complete and
correctly reflects in all material respects all corporate actions taken by the
board of directors of the Corporation and all committees thereof and by its
shareholders.
5.11. ENVIRONMENTAL MATTERS.
(a) The following terms shall have the meanings set forth
below:
(i) "CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended.
(ii) "CERCLIS" means the Comprehensive Environmental
Response Compensation Liability Information System List.
(iii) "HAZARDOUS MATERIALS" means (i) any "hazardous
substance" as defined by CERCLA; (ii) any "hazardous waste" or
"petroleum," as defined by the Resource Conservation and Recovery Act, as
amended; (iii) any petroleum product; (iv) any pollutant or contaminant
or hazardous, dangerous or toxic chemical, material or substance within
the meaning of any other Environmental Law, as amended or hereafter
amended; or (v) any radioactive material, including any source, special
nuclear or by-product material as defined at 42 U.S.C. Section 2011, et
seq., as amended or hereafter amended.
(iv) "RELEASE" means a "release," as such term is defined
in CERCLA.
(b) Except as disclosed on Part 5.11 of Cohen Capital's
Disclosure Schedule, the Corporation:
(i) has complied during the past ten (10) years with all
applicable legal requirements of any nature, including all applicable
federal, state or local statutes, laws, ordinances, codes, rules and
regulations (including consent decrees and administrative orders)
concerning public health and safety or the protection of the environment,
including, without limitation, requirements concerning discharges to the
air, soil, surface water or ground water and concerning the generation,
storage, treatment, disposal or remediation of any waste (collectively,
"ENVIRONMENTAL LAWS"), and for dealing with, and the
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regulation, storage, treatment and disposal of, Hazardous Materials,
where failure to so comply would have a Material Adverse Effect;
(ii) has no owned property and, to the knowledge
of Cohen Capital, no leased properties, that contains Hazardous
Materials, polychlorinated biphenyls, asbestos, radon exceeding the
action level established by the Environmental Protection Agency, urea
formaldehyde foam insulation, or Hazardous Materials storage tanks, or
which is otherwise not in compliance with any Environmental Law, where
such would have a Material Adverse Effect;
(iii) has not received any notice from any
governmental authority or third party of any liability or condition that
could give rise to a liability or an obligation to take remedial action
or file reports under Environmental Law where such liability or
obligation would have a Material Adverse Effect, and has no knowledge of
any condition that could give rise thereto, and has never taken such
action or filed such reports; and
(iv) has obtained, and has maintained in full
force and effect and is in compliance with all necessary registrations,
licenses, permits and approvals required by any Environmental Law, the
failure of which to obtain or maintain would, individually or in the
aggregate, have a Material Adverse Effect;
(c) The Corporation has not directly transported or
directly arranged for the transportation of any Hazardous Material to any
location which is listed or proposed for listing on the National
Priorities List pursuant to CERCLA, on the CERCLIS or on any similar
federal or state list or which is the subject of any federal, state or
local enforcement actions or other investigations which may lead to
claims against the Corporation for any remedial work, damage to natural
resources or personal injury, including claims under CERCLA, which claims
would have a Material Adverse Effect.
5.12. COMPLIANCE: LICENSE AND PERMITS. Except as set forth on
Part 5.12 of Cohen Capital's Disclosure Schedule, Cohen Capital has complied and
is in compliance in all material respects with all federal, state, local and
foreign laws, ordinances, rules, regulations and orders applicable to the
Corporation. There are no conditions relating to the Corporation, or relating to
any of the Corporation's Assets or any appurtenances thereto or improvements
thereon, that could reasonably be expected to lead to any material liability
against Buyer for violation of any health or safety laws. The Corporation holds
all federal, state, local and foreign governmental licenses, approvals and
permits that are necessary to conduct its respective businesses as presently
being conducted. Such licenses, approvals and permits are in full force and
effect, no violations are or have been recorded in respect of any thereof, no
proceeding is pending or, to the knowledge of Cohen Capital, threatened, to
revoke or limit any thereof, and the consummation of the Transaction and the
other transactions contemplated by this Agreement will not result in the
non-renewal, revocation or termination of any such license, approval or permit.
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5.13. FULL DISCLOSURE. To the knowledge of Cohen Capital, neither
any representation or warranty contained in this SECTION 5 nor any statement
contained in the Schedules and Exhibits hereto contains any untrue statement of
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which it was made, not misleading.
5.14. OWNERSHIP OF PROPERTY. Except as set forth as set forth in
Part 5.14 of Cohen Capital's Disclosure Schedule, neither Sellers, nor any
company controlled by any of them, own any property or assets which are used by
the Corporation or are necessary in the conduct of the Corporation's business.
5.15. PERMITS. The Corporation holds are material permits,
licensees, registrations and authorizations necessary to own and operate its
assets and conduct its business.
SECTION 6. REPRESENTATIONS AND WARRANTIES BY THE PRINCIPALS.
The Principals hereby jointly and severally make the following
representations and warranties to the Sellers and each of which is true and
correct on the date hereof and will be true and correct on the Closing Date,
each of which shall be unaffected by any investigation heretofore or hereafter
made by the Sellers and each of which shall survive the Closing and the
transactions contemplated hereby:
6.1. BUYER'S SEC COMPLIANCE.
(a) Except as described in Exhibit B hereto (the
"PRINCIPALS' DISCLOSURE SCHEDULE"), since January 1, 1995, Buyer has filed on a
timely basis all reports, registration statements and filings that it was
required to file with the Securities and Exchange Commission (the "SEC") under
the 1933 Act and the 1934 Exchange Act.
(b) To the best of Principals' knowledge, neither Buyer's
Report on Form 10-K for the years ended December 31, 1994-1999, nor any other
document filed by Buyer with the SEC (including 10-Q's) contained a misstatement
of a material fact or failed to state a material fact required to be stated
therein or necessary to make the statements made therein not misleading as of
the date such filing was made; provided, however, the Principals are making no
representation regarding the accuracy or adequacy of any information regarding
Corporation or Searchound.com, Ltd. ("Searchound") in any filings with the SEC.
(c) All filings required to be made by Buyer pursuant to
Federal and State securities laws are current.
6.2. DUE AUTHORIZATION AND VALIDITY OF AGREEMENT. The execution,
delivery and performance of this Agreement and the other transactions
contemplated hereby, are within Buyer's powers and have been duly and validly
authorized by all necessary action by or on behalf of Buyer. Buyer has the
requisite authority (or legal capacity, as the case may be) to enter into this
Agreement and the other transactions contemplated hereby. This Agreement has
been,
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and upon the Closing Date will have been, duly executed and delivered by Buyer,
and constitutes the valid and binding obligation of Buyer enforceable against
Buyer in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium and other similar laws affecting creditors'
rights generally and by general principles of equity, whether considered in a
proceeding a law or in equity.
6.3. CAPITALIZATION. Part 6.3 of the Principles' Disclosure Schedule
sets forth the authorized equity securities of Buyer, the total issued and
outstanding shares which constitute Buyer's Capital Stock and to the best of
Principals' knowledge, a list (including name and number of shares owned) of all
persons owning 1% or more of the securities of Buyer. Except as disclosed in
Buyer's S-8 filed April 26, 2000 or on Buyer's 10-K for 1999, there are no
shares of Buyer's Capital Stock or other equity securities or other securities
of Buyer which are issuable upon the exercise of warrants, conversion rights or
options.
6.4. FINANCIAL STATEMENTS. The audited consolidated financial statements
of Buyer, for the years ended December 31, 1999, 1998 and 1997 and the unaudited
consolidated financial statements of Buyer for the three-month period ending
March 31, 2000 (the "BALANCE SHEET DATE"), copies of which constitute Part 6.4
of the Principals' Disclosure Schedule, were prepared in accordance with GAAP
throughout the periods and with past periods, and fairly present, in all
material respects, the consolidated financial position of Buyer as at the dates
of such balance sheets, and the consolidated results of the operations and cash
flows of Buyer for the periods ended on such dates. Except as set forth in Part
6.4 of the Principals' Disclosure Schedule, since the Balance Sheet Date, Buyer
does not have (and as a result of the Transaction, will not incur) any
liabilities or obligations of any nature (whether absolute, accrued, contingent,
unasserted or otherwise, and whether due or to become due), except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice.
6.5. NO LITIGATION OR ADVERSE EVENTS. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body involving Buyer. No suit, action or legal,
administrative, arbitration or other proceeding or reasonable basis therefor,
or, to the best of the Principals' knowledge, no investigation by any
governmental agency, pertaining to Buyer or the Assets or any change in the
zoning or building ordinances affecting the properties or leasehold interests of
Buyer, is pending or, to the best of the Principals' knowledge, has been
threatened against Buyer which could adversely affect the financial condition or
prospects of Buyer or the conduct of the business thereof or any of the Assets
or materially adversely affect the ability of Buyer to consummate the
transactions contemplated by this Agreement.
6.6. ENVIRONMENTAL MATTERS.
(a) Except as disclosed on Part 6.6 to the Principals' Disclosure
Schedule, Buyer and all of Buyer's predecessors (together the "RESPONSIBLE
PARTIES"):
(i) have complied with all applicable legal requirements of any
nature, including all applicable federal, state or local statutes, laws,
ordinances, codes, rules and regulations (including consent decrees and
administrative orders)
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concerning public health and safety or the protection of the
environment, including, without limitation, requirements concerning
discharges to the air, soil, surface water or ground water and
concerning the generation, storage, treatment, disposal or remediation
of any waste (collectively, "ENVIRONMENTAL LAWS"), and for dealing with,
and the regulation, storage, treatment and disposal of, Hazardous
Materials;
(ii) have no owned property and, to the knowledge of
Principals, no leased properties, that contains Hazardous Materials,
polychlorinated biphenyls, asbestos, radon exceeding the action level
established by the Environmental Protection Agency, urea formaldehyde
foam insulation, or Hazardous Materials storage tanks, or which is
otherwise not in compliance with any Environmental Law, where such would
have a Material Adverse Effect;
(iii) have not received any notice from any governmental
authority or third party of any liability or condition that could give
rise to a liability or an obligation to take remedial action or file
reports under Environmental Law, and has no knowledge of any condition
that could give rise thereto, and has never taken such action or filed
such reports;
(iv) have obtained, and has maintained in full force and
effect and is in compliance with all necessary registrations, licenses,
permits and approvals required by any Environmental Law; and
(v) have no liability of any kind or nature (including,
without limitation) removal or clean-up obligations) arising under,
pursuant to or in connection with any Environmental Laws.
(b) Buyer has not directly transported or directly arranged for the
transportation of any Hazardous Material to any location which is listed or
proposed for listing on the National Priorities List pursuant to CERCLA, on
the CERCLIS or on any similar federal or state list or which is the subject
of any federal, state or local enforcement actions or other investigations
which may lead to claims against Buyer for any remedial work, damage to
natural resources or personal injury, including claims under CERCLA, which
claims would have a Material Adverse Effect.
6.7. COMPLIANCE; LICENSE AND PERMITS. Buyer has complied and is in
compliance with all federal, state, local and foreign laws, ordinances, rules,
regulations and orders applicable to Buyer or its respective businesses
relating to gambling and gaming.
6.8. FULL DISCLOSURE. There is no fact known to the Principals which is
reasonably likely to materially adversely affect Buyer's business or financial
condition or any of its properties or assets which has not been set forth in
this Agreement, including the Exhibits and Schedules, or the other documents
furnished to the Sellers on or prior to the date hereof in connection with the
transactions contemplated hereby.
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6.9. HSR. No filings pursuant to the Hart-Scott-Rodino Act are
required as a result of the transaction contemplated hereby.
SECTION 7. REPRESENTATIONS AND WARRANTIES BY BUYER.
Buyer hereby makes the following representations and warranties to
the Sellers and each of which is true and correct on the date hereof and will be
true and correct on the Closing Date, each of which shall be unaffected by any
investigation heretofore or hereafter made by the Sellers and each of which
shall survive the Closing and the transactions contemplated hereby:
7.1. BUYER'S SEC COMPLIANCE.
(a) Except as described in the Principals' Disclosure
Schedule, since January 1, 1995, Buyer has filed on a timely basis all
reports, registration statements and filings that it was required to file
with the Securities and Exchange Commission (the "SEC") under the 1933
Act and the 1934 Exchange Act.
(b) Neither Buyer's Report on Form 10-K for the years
ended December 31, 1994-1999, nor any other document filed by Buyer with
the SEC (including 10-Q's), contained a misstatement of a material fact
or failed to state a material fact required to be stated therein or
necessary to make the statements made therein not misleading as of the
date such filing was made.
(c) All filings required to be made by Buyer pursuant to
Federal and State securities laws are current.
7.2. CORPORATE STATUS. Part 7.2 of the Principals' Disclosure
Schedule contains a complete and accurate list of Buyer's jurisdiction of
incorporation, other jurisdictions in which it is authorized to do business, and
its capitalization (including the identity of each shareholder and the number of
shares held by each person). Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state of Nevada, has the
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted, and is duly qualified to do
business and is in good standing in such jurisdictions, which constitute all the
jurisdictions in which such qualification is necessary because of the property
owned, leased or operated by it or because of the nature of its business as now
being conducted, except for any failure so to qualify or be in good standing
which, individually, would not have a Material Adverse Effect on Buyer. True and
complete copies of the Certificate of Incorporation and Bylaws of Buyer, as
amended to the date of this Agreement, have been delivered to Sellers and the
minute books and stock records of Buyer have been made available to Sellers.
7.3. DUE AUTHORIZATION AND VALIDITY OF AGREEMENT. The execution,
delivery and performance of this Agreement and the other transactions
contemplated hereby, are within Buyer's powers and have been duly and validly
authorized by all necessary action by or on behalf of Buyer. Buyer has the
requisite authority (or legal capacity, as the case may be) to enter
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into this Agreement and the other transactions contemplated hereby. This
Agreement has been, and upon the Closing Date will have been, duly executed and
delivered by Buyer, and constitutes the valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws affecting creditors' rights generally and by general principles of
equity, whether considered in a proceeding at law or in equity.
7.4. CAPITALIZATION.
(a) Part 6.3 of the Principles' Disclosure Schedule sets
forth the authorized equity securities of Buyer, the total issued and
outstanding shares which constitute Buyer's Capital Stock and a list of
all persons owning 1% or more of the securities of Buyer. Those persons
listed on such schedule are and will be on the Closing Date the lawful
record and beneficial owners and holders of Buyer's Capital Stock. There
are no shares of Buyer's Capital Stock or other equity securities or
other securities of Buyer which are issuable upon the exercise of
warrants, conversion rights or options. All of the outstanding equity
securities of Buyer have been, and the shares of Buyer's Capital Stock to
be issued to Sellers pursuant to this Agreement will be, duly authorized
and validly issued, are, or will be at Closing, fully paid and
nonassessable and are subject to no preemptive rights. There are no
contracts, warrants, options, rights, agreements or other claims,
arrangements or commitments of any kind or character, whether written or
oral, relating to the issuance, registration, sale or transfer of any
equity securities or other securities of Buyer.
(b) Except as set forth in Part 7.4 of the Principals'
Disclosure Schedule, no equity securities or other securities of Buyer
are issued, reserved for issuance or outstanding. Except as set forth in
Part 7.4 of the Principals' Disclosure Schedule, there are no bonds,
debentures, notes or other indebtedness or securities of Buyer having the
right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which shareholders of Buyer
may vote. Except as set forth in Part 6.4 of the Principals' Disclosure
Schedule, there are no securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to
which Buyer is a party or is bound obligating it to issue, deliver or
sell, or cause to be issued, delivered or sold, equity securities or
other securities or obligating it to issue, grant, extend or enter into
any such security, option, warrant, call right, commitment, agreement,
arrangement or undertaking. Except as set forth in Part 6.4 of the
Principals' Disclosure Schedule, there are no outstanding rights,
commitments, agreements, arrangements or undertakings of any kind
obligating Buyer to repurchase, redeem or otherwise acquire any equity
securities or other securities of Buyer or any securities of the type
described in the two immediately preceding sentences. Except as set forth
on Part 6.4 of the Principals' Disclosure Schedule, no former holder of a
security of Buyer is, or will become, entitled to any payments with
respect to such security.
7.5. AFFILIATES, SUBSIDIARIES AND JOINT VENTURES; OTHER EQUITY
INTERESTS. Except as disclosed on Part 7.5 of the Principals' Disclosure
Schedule, there is no corporation or
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other entity in which Buyer owns, directly or indirectly, a controlling
interest or a majority of the outstanding shares or other equity interest
issued by such corporation or entity (each a "SUBSIDIARY"), nor does Buyer own
any other capital stock, security, partnership interest or other interest of
any kind, either direct or indirect, in any other Person (where "PERSON" means
an individual, corporation, partnership, joint venture, association, limited
liability company, trust, unincorporated organization or other entity). All
Affiliates of Buyer are set forth on Part 7.5 of the Principals' Disclosure
Schedule.
7.6. [INTENTIONALLY DELETED]
7.7. CONTRACTS, LEASES, AGREEMENTS AND OTHER COMMITMENTS.
(a) Except as set forth on Part 7.7 to the Principals'
Disclosure Schedule, Buyer has no existing contracts with directors,
officers, employees, managers, accountants, agents, lawyers or
shareholders that are not cancelable by Buyer on notice of not longer
than thirty (30) days and without liability, penalty or premium.
(b) Buyer has not given a power of attorney, which is
currently in effect, to any person, firm or corporation for any purpose
whatsoever.
(c) Buyer has no collective bargaining or employment
agreements, nor any agreements that contain any severance or termination
pay liabilities or obligations, nor any bonus, vacation, deferred
compensation, stock purchase, stock option, profit-sharing, pension,
retirement or other employee benefit plans.
(d) Buyer has not made any other contract or agreement
or granted any option to sell or otherwise transfer the Assets or the
Capital Stock.
(e) Part 7.7 to the Principals' Disclosure Schedule
contains a list of all contracts, leases, licenses, commitments and other
agreements relating to the Assets and the operation of the business of
Buyer. To the knowledge of the Principals, each of such contracts,
leases, licenses, commitments and agreements is in full force and effect
and constitutes the legal, valid and binding obligations of all of the
parties thereto. Buyer is not in default and has not received or given
any notice of default, and to Principals' knowledge no other party
thereto is in default, under any such contract, lease, license,
commitment or other agreement or under any other obligation relating to
the Assets or the business of Buyer.
(f) The name and location of each financial institution
in which Buyer has an account or borrowing authority, and the names of
the persons authorized to draw or borrow therefrom are listed on Part 7.7
to the Principals' Disclosure Schedule.
7.8. NO LITIGATION OR ADVERSE EVENTS. There are no outstanding
orders, judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body involving Buyer. No suit, action or legal,
administrative, arbitration or other proceeding or reasonable basis therefor,
or, to the best of the Principals' knowledge, no investigation by any
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governmental agency, pertaining to Buyer or the Assets or any change in the
zoning or building ordinances affecting the properties or leasehold interests of
Buyer, is pending or, to the best of the Principals' knowledge, has been
threatened against Buyer which could adversely affect the financial condition or
prospects of Buyer or the conduct of the business thereof or any of the Assets
or materially adversely affect the ability of the Buyer to consummate the
transactions contemplated by this Agreement.
7.9. CONFLICTING INTERESTS. Except as disclosed on Part 7.9 to the
Principals' Disclosure Schedule, no director, officer, or, to the knowledge of
the Principals, employee of Buyer, and no relative or Affiliate of any of the
foregoing (a) has any interest in any material supplier or customer of Buyer or
in any other Person with which Buyer conducts material business (including as a
borrower from or lender to such Person) or is an officer, director, employee of
or consultant to any such Person; (b) is indebted to Buyer or is a lender to
Buyer; (c) owns, directly or indirectly, in whole or in part, any tangible or
intangible property that Buyer uses in the conduct of its business; (d) has any
cause of action or other claim whatsoever (other than claims in the ordinary
course of employment for accrued benefits) against Buyer; (e) is a party to any
transaction or agreement with Buyer (apart from such person's status as an
employee or shareholder of such); or (f) has any business or other interest in
conflict with the interests of Buyer that would have a Material Adverse Effect.
7.10. TAXES.
(a) All tax and information returns required to be filed by Buyer
on or prior to the Closing Date with respect to Taxes have been or will
be timely filed with the appropriate government agencies and in all
jurisdictions in which such returns are required to be filed and such
returns and filings are substantially true, complete and correct.
(b) All amounts shown on each of such returns have been paid or
will be paid when due.
(c) Any Taxes which at the Balance Sheet Date were not yet due
and owing were adequately reflected on the Balance Sheet as a reserve
for Taxes. There were no grounds for the assertion or assessment of any
Taxes against Buyer at the Balance Sheet Date other than those reflected
or reserved against on the Balance Sheet.
(d) The business of Buyer is not, nor will it be, encumbered
by any liens arising out of any unpaid Taxes and there are no grounds
for the assertion or assessment of any liens against such business in
respect of any Taxes (other than liens for the Taxes if payment thereof
is not yet required).
(e) The Transaction will not give rise to (i) the creation of any
liens against the assets of Buyer in respect of any Taxes or (ii) the
assertion of any additional Taxes against Buyer.
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(f) There is no action or proceeding or unresolved claim for
assessment or collection, pending or threatened, by, or present or
expected dispute with, any government authority for assessment or
collection from Buyer of any Taxes of any nature.
(g) There is no extension or waiver of the period for assertion
of any Taxes against Buyer affecting its business.
7.11. ACTIONS SINCE BALANCE SHEET DATE. Except as disclosed on Part 7.11
to the Principals' Disclosure Schedule, since the Balance Sheet Date, Buyer:
(a) has not taken any action outside of the ordinary and usual
course of business or inconsistent with past practice;
(b) has not borrowed any money or become contingently liable for
any obligation or liability of others;
(c) has paid all of its debts and obligations as they became due;
(d) has not incurred any debt, liability or obligation of any
nature to any party except for obligations arising from the purchase of
goods or the rendition of services in the ordinary course of business
consistent with past practice;
(e) has not waived any right or canceled any material debt or
claim, which debt or claim, individually or in the aggregate, exceeds
Twenty-Five Thousand Dollars ($25,000);
(f) has not used its best efforts to preserve its business
organization intact, to keep available the services of its employees,
and to preserve its relationships with its customers, suppliers and
others with whom it deals;
(g) has not sustained a termination of its relationship with any
customer, supplier or other person with whom it deals where such
relationship is material to Buyer, and no such termination is
anticipated;
(h) has not paid, discharged, satisfied or settled any material
claim of obligation, except in the ordinary course of business and
consistent with past practice;
(i) has not declared, set aside or paid any dividend or other
distribution with respect to any of its equity securities (including
Buyer's Capital Stock) or other securities or, directly or indirectly,
redeemed, purchased or otherwise acquired any such securities;
(j) has not issued, sold or entered into any contract for the
issuance or sale, of any of its equity securities or other securities
(including securities convertible into or exercisable for its equity
securities);
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(k) has not sold, assigned, pledged, encumbered, transferred or
otherwise disposed of any material asset(excluding in all events sales
of assets no longer useful in the operation of the business and sales of
inventory to customers in the ordinary course of business consistent
with past practice), or sold, assigned, pledged, encumbered, transferred
or otherwise disposed of any Intellectual Property;
(l) has not created any claim on its property, except for claims
created in the ordinary course of business consistent with past practice
or which individually or in the aggregate would not have a Material
Adverse Effect;
(m) has not written down the value of any asset or written-off as
uncollectible any accounts or notes receivable or any portion thereof,
other than write-downs or write-offs which do not exceed Ten Thousand
Dollars ($10,000), in the aggregate, as of the date of this Agreement
and at the Closing Date;
(n) has not made any material capital expenditure or commitment
or addition to its property, plant or equipment other than in the
ordinary course of business and consistent with its capital expenditure
plan;
(o) except in each case for regular annual increases, has not
made any material or general increase in the compensation of its
employees (including any increase pursuant to any written benefit or
compensation plan, policy or arrangement of commitment), or any increase
in such compensation or bonus payable to any officer, stockholder,
director, consultant or agent having an annual salary or remuneration in
excess of Forty Thousand Dollars ($40,000);
(p) has not suffered any damage, destruction or loss not covered
by insurance affecting any asset or property resulting in liability or
loss in excess of Ten Thousand Dollars ($10,000);
(q) has not made any change in its independent public accountants
or any material change in its accounting methods or accounting practices
or any material change in depreciation or amortization policies or
rates;
(r) has not suffered any Material Adverse Effect;
(s) has not effected any reduction in the period in which any
receivables are payable, or otherwise accelerated any receivables or any
collection efforts with respect to receivables not in the ordinary
course and inconsistent with past practice;
(t) not agreed, whether in writing or otherwise, to take any of
the actions specified in the foregoing items (a) through (s).
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7.12. ENVIRONMENTAL MATTERS.
(a) Except as disclosed on Part 6.6 to the Principals'
Disclosure Schedule, Buyer and all of Buyer's predecessors (together the
"RESPONSIBLE PARTIES"):
(i) have complied with all applicable legal
requirements of any nature, including all applicable federal,
state or local statutes, laws, ordinances, codes, rules and
regulations (including consent decrees and administrative orders)
concerning public health and safety or the protection of the
environment, including, without limitation, requirements
concerning discharges to the air, soil, surface water or ground
water and concerning the generation, storage, treatment, disposal
or remediation of any waste (collectively, "ENVIRONMENTAL LAWS"),
and for dealing with, and the regulation, storage, treatment and
disposal of, Hazardous Materials;
(ii) have no owned property and, to the knowledge
of Principals, no leased properties, that contains Hazardous
Materials, polychlorinated biphenyls, asbestos, radon exceeding
the action level established by the Environmental Protection
Agency, urea formaldehyde foam insulation, or Hazardous Materials
storage tanks, or which is otherwise not in compliance with any
Environmental Law, where such would have a Material Adverse
Effect;
(iii) have not received any notice from any
governmental authority or third party of any liability or
condition that could give rise to a liability or an obligation to
take remedial action or file reports under Environmental Law, and
has no knowledge of any condition that could give rise thereto,
and has never taken such action or filed such reports;
(iv) have obtained, and has maintained in full
force and effect and is in compliance with all necessary
registrations, licenses, permits and approvals required by any
Environmental Law; and
(v) have no liability of any kind or nature
(including, without limitation) removal or clean-up obligations)
arising under, pursuant to or in connection with any Environmental
Laws.
(b) Buyer has not directly transported or directly
arranged for the transportation of any Hazardous Material to any location
which is listed or proposed for listing on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar federal or state
list or which is the subject of any federal, state or local enforcement
actions or other investigations which may lead to claims against Buyer
for any remedial work, damage to natural resources or personal injury,
including claims under CERCLA, which claims would have a Material Adverse
Effect.
7.13. EMPLOYMENT MATTERS. As of the date hereof, Buyer has
approximately 7 employees and 2 consultants. Buyer has not had at any time
during the last two (2) years, nor to
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the knowledge of the Principals is there threatened, any walkout, strike,
picketing, work stoppage, work slowdown or any other similar occurrence relating
to union activity which materially and adversely affects, or may materially and
adversely affect, the assets, properties, business, operations or condition
(financial or otherwise) of Buyer, or of any attempt to organize or represent
the labor force of Buyer. Buyer has complied in all material respects with all
applicable laws, rules and regulations relating to the employment of labor,
including those relating to wages, hours, collective bargaining and the payment
and withholding of taxes, and Buyer has withheld all amounts required by law or
agreement to be withheld from the wages or salaries of its employees and Buyer
is not liable for any arrears of wages or other taxes or penalties for failure
to comply with any of the foregoing. There are no material controversies pending
or threatened between Buyer and any of its employees or former employees. No
union or other collective bargaining unit has been certified or recognized by
Buyer as representing any of its respective employees.
7.14. BOOKS AND RECORDS.
(a) The books and records of accounts of Buyer (i) are
true, complete and correct, (ii) have been maintained in accordance with
good business practices on a basis consistent with prior years, (iii)
state in reasonable detail and accurately reflect the transactions and
dispositions of the Assets of Buyer, and (iv) accurately and fairly
reflect the basis for the financial statements referred to in SECTION 6.4
above.
(b) The minute book of Buyer is complete and correctly
reflects in all material respects all corporate actions taken by the
board of directors of Buyer and all committees thereof and by its
shareholders.
7.15. CONFLICTS; CONSENTS. The execution, delivery and
performance by Buyer of this Agreement and the other transactions contemplated
hereby do not (a) conflict with or result in a breach of the Articles of
Incorporation, Bylaws or other constitutive documents of Buyer, (b) conflict
with, breach or result (with or without notice, the passage of time or both) in
a default (or give rise to any right of termination, cancellation or
acceleration) under any of the provisions of any note, bond, lease, mortgage,
indenture, or any license, franchise, permit, agreement or other instrument or
obligation to which Buyer is a party, or by which Buyer or its properties or
assets are bound, except for such conflicts, breaches or defaults as to which
requisite waivers or consents have been obtained before the Closing (which
required waivers or consents are listed in Part 7.15 of the Principals'
Disclosure Schedule, (c) violate any law, statute, rule or regulation or
judgment, order, writ, injunction or decree applicable to Buyer or any of
Buyer's properties or assets or (d) result in the creation or imposition of any
claim upon any property or assets used or held by Buyer. No consent or approval
by, or notification of or registration or filing with, any Person (including,
without limitation, the filing under the Hart-Scott-Rodino Act of 1976, as
amended) will be required in connection with the execution, delivery and
performance by Buyer of this Agreement or the transactions contemplated hereby.
7.16. COMPLIANCE; LICENSE AND PERMITS. Except as set forth in
Part 7.16 of the Principals' Disclosure Schedule, Buyer has complied and is in
compliance with all federal, state,
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local and foreign laws, ordinances, rules, regulations and orders applicable to
Buyer or its respective businesses. There are no conditions relating to Buyer,
or relating to any of Buyer's Assets or any appurtenances thereto or
improvements thereon, that could reasonably be expected to lead to any material
liability against any of the Sellers for violation of any health or safety laws.
Buyer holds all federal, state, local and foreign governmental licenses,
approvals and permits that are necessary to conduct its respective businesses as
presently being conducted. Such licenses, approvals and permits are in full
force and effect, no violations are or have been recorded in respect of any
thereof, no proceeding is pending or, to the knowledge of Principals,
threatened, to revoke or limit any thereof, and the consummation of the
Transaction and the other transactions contemplated by this Agreement will not
result in the non-renewal, revocation or termination of any such license,
approval or permit.
7.17. FULL DISCLOSURE. Neither any representation or warranty
contained in this SECTION 6 nor any statement contained in the Schedules and
Exhibits hereto contains any untrue statement of material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which it was made, not misleading. There is no fact known to Buyer or to
the Principals which could materially adversely affect Buyer's business,
prospects, financial condition or affairs or any of its properties or assets
which has not been set forth in this Agreement, including the Exhibits and
Schedules, or the other documents furnished to the Sellers on or prior to the
date hereof in connection with the transactions contemplated hereby.
7.18. HSR. No filings pursuant to the Hart-Scott-Rodino Act are
required as a result of the transaction contemplated hereby
Section 8. ACTIONS BY THE PARTIES PENDING CLOSING.
From and after the date hereof and until the Closing Date the
Parties jointly and severally warrant and agree that:
8.1. FULL ACCESS. Sellers and Buyer and their authorized
representatives shall have full access during normal business hours to all
properties, books, records, contracts and documents of the Corporation and Buyer
and each party shall furnish or cause to be furnished to the other party or its
authorized representatives all information with respect to the affairs and
business of the Corporation and Buyer as the parties hereto may reasonably
request.
8.2. CARRY ON IN REGULAR COURSE. Except as set forth on
Schedule 8.2 hereto, the Corporation and Buyer shall carry on their business
diligently and substantially in the manner as heretofore conducted and the
Corporation and Buyer shall not make or institute any unusual or novel methods
of purchase, sale, management, accounting or operation, except with the prior
written consent of the other party. The Corporation and Buyer shall not enter
into any contract or commitment to purchase or sell any equipment or machinery,
capital assets or other assets (other than inventory) or engage in any
transaction (including incurring any indebtedness) not in the usual and ordinary
course of business without the prior written consent of the other party.
8.3. GENERAL INCREASES LIMITED. Without the prior written
consent of the other party, neither the Corporation nor Buyer shall increase or
decrease the rates of pay of its
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employees or increase or decrease the fixed compensation payable or to become
payable to any officer, director, employee or agent of the Corporation or Buyer
or change or make any contract or commitment to increase or decrease the
benefits or other compensation of any such officers, directors, employees or
agents; and neither the Corporation nor Buyer shall pay or make a commitment to
pay any bonus or commission to any officer, director, employee or agent thereof.
8.4. PRESERVATION OF ORGANIZATION. Sellers and Principals shall
use their best efforts to preserve the Corporation's and Buyer's respective
business organization intact, to keep available their present employees and to
preserve their present relationships with their suppliers, distributors and
customers and others having business relations with them. Neither the
Corporation nor Buyer will amend its Articles of Incorporation or Bylaws or make
any changes in authorized or issued Capital Stock without the prior written
approval of the other party.
8.5. USE OF PROPERTY. All tangible property of the Corporation
and Buyer will be used, operated, maintained and repaired in a careful and
efficient manner.
8.6. NO DEFAULT. Neither the Corporation nor Buyer shall act or
omit to do any act, or permit any act or omission to act, which will cause a
breach of any contract, commitment or obligation.
8.7 DIVIDENDS. Neither the Corporation nor Buyer will declare
or pay any dividend or make any distribution, directly or indirectly, in respect
of their respective Capital Stock or other securities, nor will they directly or
indirectly redeem, purchase, sell or otherwise acquire or dispose of their own
stock. Notwithstanding the foregoing, prior to Closing, the Corporation may
distribute to its shareholders all amounts paid by Revich to purchase the
Capital Stock owned by him.
SECTION 9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.
Each and every obligation of the Buyer to be performed on the
Closing Date shall be subject to the satisfaction prior to or on the Closing
Date of the following conditions, unless waived in writing by Buyer:
9.1. REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties made by Sellers and Cohen Capital in this Agreement shall be true
and correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of the Closing
Date, and Buyer shall receive a certificate from Sellers and Cohen Capital to
that effect.
9.2. COMPLIANCE WITH AGREEMENT. Sellers and the Corporation
shall have performed and complied with all of their obligations under this
Agreement which are to be performed or complied with by them prior to or on the
Closing Date, and Buyer shall receive a certificate from Sellers to that effect.
9.3. CORPORATE DOCUMENTS AND RESOLUTIONS. Cohen Capital and
October Capital shall have delivered or caused to be delivered to Buyer (a) a
certificate of incumbency,
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(b) certified copies of the Organization and Operating Agreement, and
resolutions of their Members or Managers (as appropriate) authorizing the
execution, delivery and performance of this Agreement and authorizing the acts
of its officers and employees in carrying out the terms and provisions hereof,
and (c) certificates and telegrams from the proper state officials evidencing
the good standing of Cohen Capital and October Capital in their states of
organization.
9.4. REVIEW OF ASSETS AND RECORDS. Buyer shall have the option
to review or cause its representatives to review the Corporation's records and
assets, and in the event Buyer exercises such option, Buyer shall be satisfied
that such review indicates that the financial statements of the Corporation
which have been delivered to Buyer accurately reflect the past results and the
current financial condition of the Corporation's business to be acquired hereby.
9.5. ACQUISITION OF SEARCHOUND.COM 2000, LTD. The Buyer shall
have closed its acquisition of all of the issued and outstanding shares of
common stock in Searchound.com 2000, Ltd.
SECTION 10. CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS.
Each and every obligation of Sellers and the Corporation to be
performed on the Closing Date shall be subject to the satisfaction prior to or
on the Closing Date of the following conditions, unless waived in writing by the
Sellers:
10.1. REPRESENTATIONS AND WARRANTIES TRUE. Buyer's and
Principals' representations and warranties contained in this Agreement shall be
true and correct on and as of the Closing Date with the same effect as though
such representations and warranties had been made or given on and as of the
Closing Date, and Sellers shall receive a certificate from the Principals to
that effect.
10.2. COMPLIANCE WITH AGREEMENT. Buyer and Principals shall have
performed and complied with all its obligations under this Agreement which are
to be performed or complied with by it prior to or on the Closing Date, and
Sellers shall receive a certificate from the Principals to that effect.
10.3. CORPORATE DOCUMENTS AND RESOLUTIONS. Buyer shall have
delivered or caused to be delivered to Sellers (a) a certificate of incumbency,
(b) certified copies of the Articles of Incorporation and Bylaws, and
resolutions of its Board of Directors authorizing the execution, delivery and
performance of this Agreement and authorizing the acts of its officers and
employees in carrying out the terms and provisions hereof, and (c) certificates
and telegrams from the proper state officials evidencing the good standing of
Buyer.
10.4. REVIEW OF ASSETS AND RECORDS. The Sellers shall have the
option to review or cause its representatives to review Buyer's records and
assets, and, in the event the Sellers exercise such option, the Sellers shall be
satisfied that such review indicates that the financial statements of Buyer
which have been delivered to the Sellers accurately reflect the past results and
the current financial condition of Buyer's business to be acquired hereby.
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<PAGE> 24
10.5. OPINION OF COUNSEL FOR BUYER. Sellers shall have received
from David Levenson, counsel for Buyer, a written opinion, dated as of the
Closing Date, addressed to Sellers and satisfactory to counsel for Sellers in
form and substance.
10.6. ACQUISITION OF SEARCHOUND.COM 2000, LTD. The Buyer shall
close its acquisition of all of the issued and outstanding shares of common
stock in Searchound.com 2000, Ltd. on substantially the terms and conditions
represented by Buyer to Sellers and the Corporation.
10.7. FINANCIAL CONDITION. As of the Closing, Buyer shall have no
accounts payable and shall have at least $1,000,000 in cash.
10.8. RELEASES. Buyer shall have received (in form and substance
satisfactory to Sellers) complete releases in connection with (i) the $225,000
stipulation payable to Steve Roake and the sale of the 407,945 option shares for
$428,342.25 in connection therewith and (ii) the Convertible Notes in the amount
of approximately $395,250 (which shall be converted into 475,917 shares of
common stock of Buyer).
10.9. TAXES PAYABLE. All taxes payable for all periods ending
prior to the Closing shall be paid in full.
10.10. CANCELLED SHARES. Other than 59,571 shares, the remainder
of the 3,200,000 shares of common stock of Buyer issued in connection with the
Whitfield Holdings transaction shall be transferred to treasury shares and such
transfer shall be confirmed in writing by the transfer agent.
10.11. SEC. Buyer shall not have received any notice from the SEC
regarding the accuracy or adequacy of any filings or reports made by Buyer prior
to the Closing.
10.12. BOARD APPROVAL. Corporation's Board of Directors shall have
approved the transaction contemplated hereby.
10.13. TAX RETURNS. Buyer shall have filed all tax returns for all
periods ending prior to the Closing Date.
SECTION 11. INDEMNIFICATION.
11.1. INDEMNIFICATION. Sellers severally, but not jointly, Cohen
Capital, Buyer and the Principals (as the case may be) ("INDEMNIFYING PARTY")
agree to defend, indemnify and hold harmless the other party ("Indemnitee") and
its officers, directors, employees, agents, representatives, successors and
assigns from, against and in respect of any and all loss, liability and expense
resulting from:
(a) Any and all loss, damage or deficiency resulting
from any misrepresentation or breach of warranty or nonfulfillment of any
obligation by Indemnifying Party under this Agreement or from any
misrepresentation in or omission
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<PAGE> 25
from any certificate or other instrument furnished or to be furnished by
Indemnifying Party pursuant to this Agreement (the parties acknowledge
and agree that the Principals shall have no liability with respect to the
adequacy or accuracy of any information distributed to Buyer's
shareholders regarding Corporation or Searchound unless either Principal
has actual knowledge that any of such information is inaccurate); and
(b) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses (including, without
limitation, legal expenses and environmental assessments) incident to any
of the foregoing provisions.
11.2 PRE-CLOSING LIABILITIES. In addition to the foregoing provision,
the Principals jointly and severally agree to defend, indemnify and hold
harmless the Sellers from, against and in respect of any and all loss,
liability and expense resulting from all liabilities and obligations of any
kind or nature relating to or arising out of (i) the operations of the Buyer's
business on or prior to the Closing Date and (ii) all acts, actions, omissions,
events, facts or transactions of Buyer, the Principals or their agents or
representatives prior to or on the Closing Date, in each case which are not
specifically disclosed on the financial statements contained in Buyer's 10-K
for the period ended December 31, 1999 or on the Principals' Disclosure
Schedule, and (iii) the failure of Buyer to file tax returns for periods ending
prior to the Closing Date. (The parties acknowledge and agree that the
Principals shall have no liability with respect to the adequacy or accuracy of
any information distributed to Buyer's shareholders regarding Corporation or
Searchound except as provided in 11.1(a)above.)
11.3 CLAIMS. If any Indemnitee receives notice of any claim or the
commencement of any action or proceeding with respect to which the Indemnifying
Party is obligated to provide indemnification pursuant to SECTION 11.1, the
Indemnitee shall promptly give the Indemnifying Party notice thereof. Such
notice shall be a condition precedent to any liability of the Indemnifying
Party under the provisions for indemnification contained in this Agreement and
shall describe the claim in reasonable detail and shall indicate the amount
(estimated if necessary) of the loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party may elect to compromise or defend, at such
Indemnifying Party's own expense and by such Indemnifying Party's own counsel,
any such matter involving the asserted liability of the Indemnitee; provided,
however, that to the satisfaction of the Indemnitee, the Indemnifying Party
shall indemnify and secure the Indemnitee against such contested claims and for
the expenses of contesting and defending the claims. If the Indemnifying Party
elects to compromise or defend such asserted liability, it shall within thirty
(30) days (or sooner, if the nature of the asserted liability so requires)
notify the Indemnitee of its intent to do so, and the Indemnity shall
cooperate, at the expense of the Indemnifying Party, in the compromise of, or
defend against, any such asserted liability. If the Indemnifying Party elects
not to compromise or defend against the asserted liability, or fails to notify
the Indemnitee of its election as herein provided, the Indemnitee may, if
acting in accordance with its good faith business judgment, pay, compromise or
defend such asserted liability, and such settlement shall be binding on the
Indemnifying Party for purposes of this SECTION 11. Notwithstanding the
foregoing, neither the Indemnifying Party nor the Indemnitee may settle or
compromise any claim over the objection of the other; provided, however, that
consent to settlement or compromise shall not be unreasonably
25
<PAGE> 26
withheld. In any event, the Indemnitee and the Indemnifying Party may each
participate, at its own expense, in the defense of such asserted liability. If
the Indemnifying Party chooses to defend any claim, the Indemnitee shall make
available to the Indemnifying Party any books, records or other documents
within its control that are necessary or appropriate for such defense.
11.4. COSTS. If any legal action or other proceeding is brought for the
enforcement or interpretation of any of the rights or provisions of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement,
the successful or prevailing party shall be entitled to recover reasonable
attorneys' fees and all other costs and expenses incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
Notwithstanding anything else herein to the contrary, the Seller's liability
under this SECTION 11 shall not exceed the amount received as the Purchase
Price. In the event that Sellers indemnify the Principals hereunder, Sellers
may satisfy such claim by returning Buyer's Capital Stock.
11.5. LIMITATIONS ON AMOUNT. Notwithstanding anything else to the
contrary herein, the Sellers shall have no liability (for indemnification or
otherwise) with respect to the matters described in this SECTION 11 until the
total of all damages with respect to such matters exceeds $25,000; provided,
however, that once the damages exceed said amount then Sellers will be liable
for all such damages; provided further however, that the aggregate liability
hereunder for all Sellers shall not exceed the lesser of $5,000,000 or the
value of the Buyer's Capital Stock received by Sellers calculated at the time
indemnity claims are made (with the amount of any prior indemnity claims that
have been paid being subtracted from said value). Further, the Principals shall
have no liability (for indemnification or otherwise) with respect to the
matters described in this Section 10 until the total of all damages with
respect to such matters exceed $25,000; provided, however, that once the total
damages exceeds said amount, then the Principals will be liable for all
damages.
SECTION 12. ADDITIONAL COVENANTS.
12.1 FURTHER ASSURANCE. The parties hereto shall execute and deliver or
cause to be executed and delivered such further instruments and take such other
action as the other parties may reasonably require to remedy any
misrepresentation or any breach of warranty made by such party herein and to
more effectively carry out the transfer of the Capital Stock and the
consummation of the matters contemplated by this Agreement.
12.2 CONFIDENTIAL INFORMATION. The parties hereto agree not to
communicate, divulge or use for the benefit of any person, firm, partnership or
corporation any of the trade secrets, business methods, business records and
files, customer lists, promotional materials, product specifications, drawings
and prototypes, price lists, instruction manuals, reports, or any other
confidential or proprietary information of any type or description of the other
parties hereto, without such other parties' written consent.
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<PAGE> 27
SECTION 13. TERMINATION AND ABANDONMENT.
This Agreement may be terminated and abandoned on or prior to the Closing
Date as follows: (a) by mutual consent of all parties hereto, (b) by Sellers if
the conditions precedent contained in SECTION 10 hereof have not been fulfilled
or waived in writing on or prior to the Closing Date or if the Closing Value
does not meet the values specified in SECTION 2, (c) by Buyer if the conditions
precedent contained in SECTION 9 hereof have not been fulfilled or waived in
writing on or prior to the Closing Date, or (d) by Buyer or Sellers if the
Closing has not occurred by June 30, 2000. In the event of termination by any
party as provided above, written notice shall promptly be given to the other
party and each party shall pay its or his own expenses incident to the
preparation for the consummation of this Agreement and the transactions
contemplated hereby; provided, however, a termination under the provisions of
this SECTION 13 shall not prejudice any claim for damages that any party may
have hereunder or in law or in equity.
SECTION 14. MISCELLANEOUS.
14.1. ASSIGNMENT. This Agreement shall not be assigned by any party
without the prior written consent of each of the other parties and any
attempted assignment without such written consent shall be null and void and
without legal effect.
14.2. GOVERNING LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the law of the State of Missouri applicable
to agreements made and to be performed entirely within such state, including
all matters of enforcement, validity and performance.
14.3. AMENDMENT AND MODIFICATION. Buyer and Sellers may amend, modify
and supplement this Agreement in such manner as may be mutually agreed by them
in writing.
14.4. NOTICES. All notices, requests, demands and other communications
hereunder shall be deemed to duly given if delivered by hand, if sent by
facsimile (with receipt electronically confirmed and hard copy sent by mail) or
if mailed by certified mail with postage prepaid as follows:
If to Sellers:
SoloSearch.com, Inc.
1700 Wyandotte
Kansas City, Missouri 64104
Attn: Brad Cohen
If to Buyer or the Principals:
PAN International Gaming, Inc.
74-133 El Paso, Suite 9
Palm Desert, California 92260
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Attn: Clifford Johnston
or to such other address as any party may provide to the other in writing.
14.5 ENTIRE AGREEMENT. This instrument embodies the entire agreement
between the parties hereto with respect to the transactions contemplated herein,
and there have been and are no agreements, representations or warranties between
the parties other than those set forth or provided for herein.
14.6 SUCCESSORS AND COUNTERPARTS. This Agreement shall be binding upon
and shall inure to the benefit of each of the parties hereto and to their
respective successors and assigns and may be executed in two or more
counterparts each of which shall be deemed an original but all of which together
shall constitute but one and the same instrument.
14.7 HEADINGS. The headings used in this Agreement are for convenience
only and shall not constitute a part of this Agreement.
14.8 EXHIBITS AND SCHEDULES. All of the exhibits and schedules attached
hereto are incorporated herein and made a part of this Agreement by reference
thereto.
14.9 NEGOTIATED TRANSACTION. The provisions of this Agreement were
negotiated by the parties hereto and said Agreement shall be deemed to have been
drafted by all the parties hereto.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
BUYER:
PAN INTERNATIONAL GAMING, INC.
By: /s/ JERRY CORNWELL
----------------------------------
Printed Name: JERRY CORNWELL
------------------------
Title: PRESIDENT & CEO
-------------------------------
PRINCIPALS:
/s/ JERRY CORNWELL
-------------------------------------
Jerry Cornwell
/s/ CLIFFORD M. JOHNSTON
-------------------------------------
Clifford M. Johnston
SELLERS:
COHEN CAPITAL TECHNOLOGIES, L.L.C.
By: /s/ BRAD COHEN
----------------------------------
Printed Name: Brad Cohen
------------------------
Title: President
-------------------------------
/s/ KURK C. REVICH
-------------------------------------
Kurk C. Revich
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<PAGE> 30
SOLOSEARCH.COM, INC.
By: /s/ BRAD COHEN
-------------------------------
Printed Name: BRAD COHEN
---------------------
Title: PRESIDENT
----------------------------
OCTOBER CAPITAL, L.L.C.
By: /s/ LANCE LEMAY
-------------------------------
Printed Name: LANCE LEMAY
---------------------
Title: MANAGER
----------------------------
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COHEN CAPITAL'S DISCLOSURE SCHEDULE
5.1 Corporate.
FrameCast $140,000 Convertible Debenture Note
GlobalNet Financial 3,333 shares of Stock
5.4--Cohen Capital has a lien on all of Corporation's assets
5.5 Contracts and Commitments.
1. Global Net Contract
2. FrameCast Contract
3. Bhaskar Contract
4. Kirk Reivich Contracts - Employment and Option
5. Neutral Technology, LLC Contract
6. Month to Month Lease for 1700 Wyandotte (Corporate Offices)
7. Note and Security Agreement with Cohen Capital Technologies, LLC
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<PAGE> 32
PRINCIPAL'S DISCLOSURE STATEMENT
RE: STOCK PURCHASE AGREEMENT
6.1(a) and 7.1(a)
Buyer did not file the following reports on a timely basis, but did file
them on February 3, 1998 all at one time.
12-31-94 10-KSB/A
03-31-95 10-QSB
06-30-95 10-QSB
09-30-95 10-QSB
12-31-95 10-KSB
03-31-96 10-QSB
06-30-96 10-QSB
09-30-96 10-QSB
12-31-96 10-KSB
03-31-97 10-QSB
06-30-97 10-QSB
09-30-97 10-QSB
12-31-97 10-KSB
7.2
Buyer was incorporated in Nevada on October 28, 1998.
Buyer is not authorized to do business in any other jurisdiction.
As of April 13, 2000 buyer had 4,508,413 common shares outstanding.
Transfer agent shows 4,515,121, which we have not yet reconciled.
6.2 and 7.3
None.
6.3 and 7.4(a)
Buyer has 40,000,000 common shares authorized and 10,000,000 preferred
shares authorized. As of April 13, 2000 buyer had 4,508,413 common shares
issued and outstanding. Transfer agent shows 4,515,121, which we have not
yet reconciled.
Other than what shows on the transfer agent list, we do not have a list
of 1% shareholders because of stock held in street name.
Page 1 of 4
<PAGE> 33
6.4
To the best of our knowledge, all financial statements were prepared in
accordance with GAAP.
7.4(b)
Buyer has no equity securities reserved for issuance other than:
13,500,000 stockholders of SearchHound.com, Ltd.
4,850,000 stockholders of SoloSearch.com, Inc.
500,000 S-8 registration statement
475,917 settlement of convertible notes debt
1,700,000 506 Reg D private placement at $1.00 per share or $1.50 or
higher
7.5
Affiliates of Buyer include:
Jerry Cornwell
Clifford M. Johnston
Judy Morton Johnston
TCKTS, L.L.C. dba Bristol Media, Ltd. (Jerry Cornwell, Clifford M.
Johnston and Judy Morton Johnston)
Valhalla Financial Group, L.L.C. (Jerry Cornwell, Clifford M. Johnston and
Judy Morton Johnston)
XXX Enterprises Corp. (Jerry Cornwell)
4 Point Lake, L.L.C. (Clifford M. Johnston and Judy Morton Johnston)
7.6
Deleted.
7.7 (a) Buyer has eight contracts outstanding: 6 employment contracts and 2
consulting contracts, all funded with the company's S-8
registration statement filed with the SEC on April 26, 2000.
(b) None.
(c) None.
(d) None.
Page 2 of 4
<PAGE> 34
(e) Convertible note settlement agreements (7);
Stipulated judgement payable - Stephen M. Roake;
One account payable - William L. Butcher, CPA;
One judgment payable - Short Cressman (1995).
(f) Checking account with Wells Fargo Bank, Heights Branch, 7009 212th
Street SW, Edmonds, Washington 98026 under the name of PAN
Environmental Corporation, account number 0224 717140. The sole
signer on the account is Judy Morton Johnston, Assistant
Secretary/Assistant Treasurer of the corporation.
6.5 and 7.8
Judgment for $33,000 to Short, Cressman Attorneys will be settled prior
to 5-13-2000.
Convertible notes (7) will be settled for stock prior to 5-13-2000.
PAN's lawsuit against Tim Shiah seeking $10,000,000 in damages and
Shiah's counterclaim seeking $500,000 in damages both will be dismissed
with prejudice prior to 5-13-200.
Stipulated judgment for $225,000 to Stephen Roake will be paid prior to
5-13-2000.
7.9
Buyer has had an agreement with TCKTS, L.L.C. dba Bristol Media, Ltd
(owned by Jerry Cornwell, Clifford M. Johnston and Judy Morton Johnston)
to supply I/R services from 1-1-98 to 1-1-2000. The agreement has not
been extended.
7.10(a)
No tax returns have been filed. However, will attempt to prepare and file
prior to 5-13-2000. In any event, the NOL carryforward will disappear due
to the change in ownership.
7.11
(a) Payroll taxes for 1993 of $7,078.25 and for 1994 of $371.71
will be paid prior to 5-13-2000.
(b) Convertible note amounts of $395,250 settled for 475,917 common
shares to be completed prior to 5-13-2000.
(c) Attorneys' fees owed to McGuire Woods of $44,395.03, plus ongoing
attorneys' fees for David Levenson incident to these transactions
will be paid out of $200,000 506 Reg D re: Max Herndl.
(d) None.
Page 3 of 4
<PAGE> 35
(e) Convertible note amounts of $395,250 settled for 475,917 common
shares to be completed prior to 5-13-2000.
(f) None.
(m) The escrow shares reserved for debt settlement shown on balance
sheet have been used to settle out cash loans by TCKTS, L.L.C.,
the Short Cressman 1995 judgment, the 1993 and 1994 payroll taxes,
and audit fees to William L. Butcher.
(o) S-8 registration statement for 6 employment contracts and 2
consulting contracts to be paid with issuance of 500,000 shares.
6.6 and 7.12
To the best of our knowledge, the three subsidiaries (Northwest
Specialties, Advantage Systems, and MRR Industries) that PAN owned from
mid-1993 to December 31, 1994 all complied with all environmental
matters. We divested all subsidiaries on January 2, 1995. These
subsidiaries did almost no business during this period due to lack of
financing.
6.7
To the best of our knowledge, since we were not in the gambling business
but only a software and hardware provider, we complied with all rules,
regulations and laws related to gambling and gaming.
Page 4 of 4
