SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: March 21, 1997
(Date of earliest event reported)
HOLLY HOLDINGS, INC.
Exact name of registrant as specified in its charter
New Jersey 1-12668 22-3172149
State of other jurisdiction of Commission File No. I.R.S. Employer
incorporation or organization ID No.
200 Monument Road, Suite 10, Bala Cynwyd, Pennsylvania 19004
(Address of principal executive offices)
Registrant's telephone number, including area code: (610) 617-0400
Holly Products, Inc.
(Former name or former address if changed since last report)
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
Pursuant to a Stock Purchase and Exchange Agreement dated March 21, 1997
(the "Stock Purchase Agreement") among Holly Holdings, Inc. ("Registrant"),
Nightlife Printing & Promotion, Inc. ("Nightlife") and American Publishers
Company, Inc. ("American"), in exchange for 100% of the issued and outstanding
common stock of Nightlife and American, Registrant issued an aggregate of
3,000,000 shares of Registrant's common stock to the shareholders of Nightlife
and American (the "Exchange"). The number of shares delivered to the
shareholders of Nightlife and American was determined through negotiations in
an arms length transaction. The shareholders of Nightlife and American were
Thomas K. Weitzmann, Mark Rosner, Joel C. Schneider, Herbert H. Sommer and
Emerging Growth Distributors, Ltd. (collectively, the "Shareholders"). Mr.
Schneider and Mr. Sommer are partners of the law firm Sommer & Schneider, LLP
who are securities counsel to the Registrant.
The aggregate of 3,000,000 shares of common stock represents
approximately 38% of the outstanding common stock of the Registrant.
As a result of the Exchange the Registrant owns 100% of the issued and
outstanding common stock of Nightlife and American. Nightlife is engaged in
the color print-on-demand commercial offset printing business. American is a
wholesaler marketing education products to schools (public and private),
libraries, teachers and consumers throughout the continental United States.
The description contained herein of the Exchange is qualified in its
entirety by reference to the Stock Purchase Agreement, dated March 21, 1997
and the amendment thereto, dated March 24, 1997, by and among the Registrant,
and the Shareholders, the Press Release dated March 24, 1997, the Option
Agreement between Holly and Thomas K. Weitzmann dated March 21, 1997 and the
Option Agreement between Holly and Mark Rosner dated March 21, 1997, which are
attached as Exhibits 2.1, 2.6, 2.2, 2.3 and 99.1 respectively.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) Financial Statements
The financial information described below which is required by Item
7 of Form 8-K is not yet available. The Registrant anticipates that it will
file the required financial information as soon as possible, but no later than
60 days from the date this report must be filed.
Report of Moore Stephens P.C.
Balance Sheet of Nightlife at December 31, 1995 and December 31, 1996
Balance Sheet of American at February 28, 1997
Statement of Operations of Nightlife, years ended December 31, 1995
and December 31, 1996
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Statement of Operations of American, three months ended February 28,
1997
Statement of Cash Flows of Nightlife, years ended December 31, 1995
and December 31, 1996
Statement of Cash Flows of American, three months ended February 28,
1997
Notes to Financial Statements.
(b) Pro Forma Financial Information
Pro Forma Balance Sheet at March 31, 1997 (to be filed with Form
10-KSB).
Pro Forma Combined Statement of Operations for the fiscal year
ending March 31, 1997.
(c) Exhibits
The following Exhibits are filed with this Form 8-K
2.1 Stock Purchase and Exchange Agreement dated March 21, 1997
between Holly Holdings, Inc., Nightlife Printing & Promotion, Inc.
and American Publishers Company, Inc.
2.2 Option Agreement dated March 21, 1997 between Holly Holdings,
Inc. and Thomas K. Weitzmann.
2.3 Option Agreement dated March 21, 1997 between Holly Holdings,
Inc. and Mark Rosner.
2.4 Employment Agreement dated March 21, 1997 between Nightlife
Printing & Promotion, Inc. and Thomas K. Weitzmann.
2.5 Employment Agreement dated March 21, 1997 between Nightlife
Printing & Promotion, Inc. and Mark Rosner.
2.6 Amendment to Option Agreement and Employment Agreement
dated March 24, 1997 between Holly Holdings, Inc., Nightlife Printing
& Promotion, Inc., Thomas K. Weitzmann and Mark Rosner.
99.1 Holly Holdings, Inc. Press Release dated March 24, 1997.
Item 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
Pursuant to the Stock Purchase Agreement, on March 21, 1997, in exchange
for Emerging Growth Distributors, Ltd's ("EGD") 50 shares of common stock of
Nightlife and 50 shares of common stock of American, the Registrant issued
750,000 shares of its common stock to EGD. These shares were issued by the
Registrant in an offshore transaction pursuant to an exemption under
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Regulation S of the Securities Act. EGD is a "non-U.S. person" as defined in\
Regulation S. There were no commissions paid in connection with this
transaction.
On March 21, 1997, the Company closed an offering of $350,000 principal
amount convertible subordinated debentures (the "Debentures"). The Debentures
were offered through Baytree Associates, Inc. as placement agent. Each
Debenture bears interest at the rate of 3 3/4% per annum and matures three
years from the date of issuance. Each Debenture is convertible into shares of
the Registrant's common stock at the lesser of a thirty percent discount to the
average high closing bid price of the Registrant's common stock on the five
consecutive trading days ending two days before the date of conversion or
$1.00.
The offering was made only to "non-U.S. persons" as defined in Regulation
S and the aggregate commission, expenses and legal fees related to this offering
totaled $56,000.
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HOLLY HOLDINGS, INC.
By: __ /s/_William_Patrowicz________
William Patrowicz, President and
Director
Date: April 4, 1997
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STOCK PURCHASE AND EXCHANGE AGREEMENT
THIS STOCK PURCHASE AND EXCHANGE AGREEMENT (the "Agreement") is made and
entered into as of the 21st day of March, 1997, by and between HOLLY HOLDINGS,
INC., a New Jersey corporation (the "Company"), and the individuals whose
names appear on the signature page hereof (the "Shareholders").
RECITALS
A. Nightlife Printing & Promotion, Inc., a New York corporation
("Nightlife"), whose issued and outstanding common stock, (the "Nightlife
Stock") is owned, beneficially and of record, by the individuals whose names
appear on the signature page hereof (the "Nightlife Shareholders"), who
together own all of the issued and outstanding shares of the Nightlife Stock,
each owning the number of shares set forth opposite their respective names.
B. American Publishers Company, Inc., a New York corporation
("American"), whose issued and outstanding common stock (the "American Stock")
is owned, beneficially and of record by the individuals whose names appear on
the signature page hereof (the "American Shareholders"), who together own all
of the issued and outstanding shares of American Stock, each owning the number
of shares set forth beside their respective names.
C. The Company proposes to acquire all outstanding shares of
Nightlife Stock and American Stock in exchange for the issuance of an
aggregate of 3,000,000 shares of its common stock, no par value (the
"Company's Common Stock") at a closing provided for in Section 1.2 of this
Agreement.
D. The parties hereto intend that the issuance of the shares of the
Company's Common Stock in exchange for the Nightlife Stock and American Stock
shall qualify as a "tax-free" reorganization as contemplated by the provisions
of the Internal Revenue Code of 1986, as amended.
NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants, agreements, representations and warranties contained herein, the
parties hereto agree as follows:
1. ISSUANCE, SALE AND PURCHASE OF SHARES.
1.1 Purchase and Sale.
At the Closing to be held in accordance with the provisions of Section 2
below, the Company agrees to sell, and each of the Nightlife Shareholders and
American Shareholders (collectively the "Shareholders") agree, severally and
not jointly, to purchase from the Company the aggregate number of authorized
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and newly issued shares of the Company's Common Stock determined as provided
in Section 1.2 below. In consideration for the issuance and sale of the
Company's Common Stock to the Shareholders, and as payment in full of the
purchase price for the Company's Common Stock to be issued to, and purchased
at the Closing, each shall deliver to the Company certificates of common stock
or shares evidencing the entire ownership of Nightlife and American, together
with duly executed stock powers to effectuate the transfer of same.
1.2 Shares Issuable.
An aggregate of 3,000,000 shares of the Company's Common Stock shall be
purchased by and issued and sold to the Shareholders in the proportion set
forth on the signature page of this Agreement.
2. CLOSING.
Concurrently with the execution of this Agreement (the "Closing") the
parties shall deliver the following:
2.1 Deliveries by Company.
The Company shall deliver, or cause to be delivered to the Shareholders:
(a) Certificates for the shares of the Company's Common Stock being
purchased for their respective accounts, in form and substance reasonably
satisfactory to the Shareholders and their counsel;
(b) Resolutions (certified as of the date of the Closing as being in
full force and effect by an appropriate officer of the Company) duly
adopted by the Board of Directors of the Company approving this Agreement
and the other documents, agreements and instruments to be entered into by
the Company as provided herein, which shall be in form and substance
reasonably satisfactory to the Shareholders and their counsel;
(c) A duly executed option agreement in the form annexed hereto as
Exhibit A (the "Option Agreement");
(d) Duly executed employment agreements of Tom K. Weitzmann and Mark
Rosner (each a "Principal Shareholder") in the forms annexed hereto as
Exhibits B1 and B2, respectively (the "Employment Agreements");
(e) Duly executed registration rights agreements in favor of U.S.
Shareholders in the form annexed hereto as Exhibit C (the "Registration
Rights Agreement"); and
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2.2 Shareholders' Deliveries.
The Shareholders shall deliver to the Company:
(a) Certificates evidencing the ownership of each Shareholder, of all
shares of Nightlife Stock and American Stock owned by them, respectively,
duly endorsed for transfer to the Company; and
(b) Duly executed representation and restriction letters;
(c) Duly executed counter parts of the Agreements referred to in
paragraphs (c), (d), and (e) above (collectively the "Ancillary
Agreements").
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to each Shareholder, as
follows:
3.1 Organization and Corporate Power.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey, and is duly qualified and
in good standing to do business as a foreign corporation in each jurisdiction
in which such qualification is required and where the failure to be so
qualified would have a materially adverse effect upon the Company. The
Company has all requisite corporate power and authority to conduct its
business as now being conducted and to own and lease the properties which it
now owns and leases. The Company's Articles of Incorporation as amended to
date, certified by the Secretary of State of New Jersey, and the By-laws of
the Company as amended to date, certified by the President and the Secretary
of the Company, which have been delivered to the Shareholders prior to the
execution hereof, are true and complete copies thereof as in effect as of the
date hereof.
3.2 Authorization.
The Company has full power, legal capacity and authority to enter into
this Agreement, to execute all attendant documents and instruments necessary
to consummate the transaction herein contemplated, and to issue and sell the
Common Stock to each Shareholder, and to perform all of its obligations
hereunder. This Agreement and all other agreements, documents and instruments
to be executed in connection herewith have been effectively authorized by all
necessary action, corporate or otherwise, on the part of the Company, which
authorizations remain in full force and effect, have been duly executed and
delivered by the Company, and no other corporate proceedings on the part of
the Company are required to authorize this Agreement and the transactions
contemplated hereby, except as specifically set forth herein. This Agreement
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constitutes the legal, valid and binding obligation of the Company and is
enforceable with respect to the Company in accordance with its terms, except
as enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, priority or other laws of court decisions relating to or
affecting generally the enforcements of creditors' rights or affecting
generally the availability of equitable remedies. Neither the execution and
delivery of this Agreement, nor the consummation by the Company of any of the
transactions contemplated hereby, or compliance with any of the provisions
hereof, will (i) conflict with or result in a breach or, violation of, or
default under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, lease, credit agreement or other agreement,
document, instrument or obligation (including, without limitation, any of its
charter documents) to which the Company is a party or by which the Company or
any of its assets or properties may be bound, or (ii) violate any judgment,
order, injunction, decree, statute, rule or properties of the Company. No
authorization, consent or approval of any public body of authority or any
third party is necessary for the consummation by the Company of the
transactions contemplated by this Agreement.
3.3 Capitalization.
The authorized and outstanding capital stock of the Company as of January
30, 1997 is as set forth on Schedule 3.3. All of the outstanding shares of
the Company's Common Stock have been, and all of the Company's Common Stock to
be issued and sold to each Shareholder pursuant to this Agreement, when issued
and delivered as provided herein will be duly authorized, validly issued,
fully paid and non-assessable and free of preemptive or similar rights.
3.4 Financial Statements.
The Company's financial statements contained in its Form 10-KSB filing
for the fiscal year ended March 31, 1996, its Form 10-QSB filings for the
periods ended June 30, 1996, September 30, 1996 and December 31, 1996, each as
amended (collectively the "Company's Financial Statements") are complete in
material respects and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated. The Company's Financial Statements accurately set out and describe
the financial condition and operating results of the Company as of the dates,
and for the periods indicated therein, subject to normal year-end audit
adjustments. Except as set forth in the Company's Financial Statements and
the Form 8-K reports filed by the Company, the Company has no liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to December 31, 1996 and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in the
Company's Financial Statements. The Company maintains and will continue to
maintain a standard system of accounting established and administered in
accordance with generally accepted accounting principles.
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3.5 Subsidiaries.
The Company has no subsidiaries and no investments, directly or
indirectly, or other financial interest in any other corporation or business
organization, joint venture or partnership of any kind whatsoever except as
reflected in the Company's Financial Statements or in other filings made by
the Company with the Securities and Exchange Commission.
3.6 Absence of Undisclosed Liabilities.
Except as and to the extent reflected or reserved against in the most
recent balance sheet included in the Financial Statements, the Company has no
liability(s) or obligation(s) (whether accrued, to become due, contingent or
otherwise) which individually or in the aggregate could have a materially
adverse effect on the business, assets, properties, condition (financial or
otherwise) or prospects of the Company.
3.7 No Pending Material Litigation or Proceedings.
Except as set forth on Schedule 3.7, there are no actions, suits or
proceedings pending or, to the best of the Company's knowledge, threatened
against or affecting the Company (including actions, suits or proceedings
where liabilities may be adequately covered by insurance) at law or in equity
or before or by any federal, state, municipal or other governmental
department, commission, court, board, bureau, agency or instrumentality,
domestic or foreign, or affecting any of the officers or directors of the
Company in connection with the business, operations or affairs of the Company,
which might result in any adverse change in the business, properties or
assets, or in the condition (financial or otherwise) of the Company, or which
might prevent the sale of the transactions contemplated by this Agreement.
The Company is not subject to any voluntary or involuntary proceeding under
the United States Bankruptcy Code and has not made an assignment for the
benefit of creditors.
3.8 Brokerage.
The Company has no obligation to any person or entity for brokerage
commissions, finder's fees or similar compensation in connection with the
transactions contemplated by this Agreement.
3.9 Investment Representation.
The Company, through its current officers and directors, has the
knowledge and experience in business and financial matters to meaningfully
evaluate the merits and risks of the issuance of the Company's Common Stock in
exchange and consideration for the shares of Common Stock of Nightlife and
American as contemplated hereby. The Company understands and acknowledges
that the shares of Stock of American and Nightlife were originally issued to
the Shareholders, and will be sold and transferred to the Company, without
registration or qualification under the Securities Act of 1933, as amended, or
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any applicable state securities or "Blue Sky" law, in reliance upon specific
exemptions therefrom, and in furtherance thereof the Company represents that
the Nightlife and American Stock will be taken and received by the Company for
its own account for investment, with no present intention of a distribution or
disposition thereof to others. The Company further acknowledges and agrees
that the certificates representing the Nightlife and American Common Stock of
the Company shall bear a restrictive legend, in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE "ACT"), ARE
RESTRICTED SECURITIES, AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR IN A
TRANSACTION WHICH, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, IS
NOT REQUIRED TO BE REGISTERED UNDER THE ACT."
3.10 Disclosure.
Neither this Agreement, nor any certificate, exhibit, or other written
document or statement, furnished to the Shareholders by the Company in
connection with the transactions contemplated by this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to be stated in order to make the statements
contained herein or therein not misleading.
3.11 Tax Returns and Payments.
All tax returns and reports, including, without limitation, all foreign
returns and reports, of the Company required by law to be filed have been duly
filed, and all taxes, assessments, fees and other governmental charges
heretofore levied upon any properties, assets, income or franchises of the
Company which are due and payable have been paid, except as otherwise
reflected in the Financial Statements. No extension of time for the
assessment of deficiencies in any federal or state tax has been requested of
or granted by the Company.
3.12 Compliance with Law and Government Regulations.
The Company is in compliance with all applicable statutes, regulations,
decrees, orders, restrictions, guidelines and standards, whether mandatory or
voluntary, imposed by the United States of America, any state, county,
municipality or agency of any thereof, and any foreign country or government
to which the Company is subject. Without limiting the generality of the
foregoing, the Company has filed all reports and statements required to be
filed pursuant to the Securities Act of 1933 (the "1933 Act") and Securities
Exchange Act of 1934 (the "1934 Act") including all periodic reports required
under the Section 13 or 15 of the Exchange Act and Form SR reports under Rule
463 of the Securities Act of 1933. Each of such reports was complete, did not
contain any material misstatement of or omit to state any material fact.
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4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
The Shareholders hereby represent and warrant to the Company as follows:
4.1. Authorization.
All Shareholders have full power, legal capacity and authority to enter
into this Agreement, to execute all attendant documents and instruments
necessary to consummate the transactions herein contemplated, and to perform
all of the obligations to be performed by them hereunder. This Agreement and
all other agreements, documents and instruments to be executed by the
Shareholders in connection herewith have been duly executed and delivered and
constitute the legal, valid and binding obligation of the Shareholders
executing and delivering the same, and is enforceable with respect to them in
accordance with its terms, except as enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, priority or other laws or court
decisions relating to or affecting generally the enforcements of creditors'
rights or affecting the availability of equitable remedies. No authorization,
consent or approval of any public body or authority is necessary for the
consummation by the Shareholders of the transactions contemplated hereby.
4.2 Ownership of Nightlife and American Stock.
The Shareholders own the shares of Nightlife and American Stock to be
transferred to the Company free and clear of (i) any lien, charge, mortgage,
pledge, conditional sale agreement, or other encumbrance of any kind or nature
whatsoever, and (ii) any claim as to ownership thereof or any rights, powers
or interest therein by any third party, whether legal or beneficial, and
whether based on contract, proxy or other document or otherwise. All of the
shares of Nightlife and American Stock have been duly authorized and validly
issued and are fully paid and non-assessable.
The Principal Shareholders hereby represent and warrant to the Company as
follows:
4.3 Organization and Corporate Power.
Each of Nightlife and American are corporations duly organized, validly
existing and in good standing under the laws of the State of New York and are
duly qualified and in good standing to do business as a foreign corporation in
each jurisdiction in which such qualification is required and where the
failure to be so qualified would have a materially adverse effect upon their
respective business. Each of Nightlife and American have all requisite
corporate power and authority to conduct business as now being conducted and
to own and lease the properties which they now own and lease. The Certificate
of Incorporation of each of Nightlife and American, as amended to date, and
the By-laws of each of Nightlife as amended to date, certified by their
President and Secretary, which have been delivered to the Company prior to the
execution hereof, are true and complete copies thereof as in effect at the
date hereof.
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4.4 Financial Statements.
(a) Schedule 4.4 sets forth the internal, unaudited balance sheet of
Nightlife as of December 31, 1995 and 1996 and internal unaudited income
statements of Nightlife for each of the two years ended December 31, 1996 on a
historical basis giving effect to all operations and costs in existence at the
time (the "Financial Information"):
(b) The Financial Information was compiled from Nightlife's internal
management reports in the ordinary course of Nightlife's business and 1995
statements were compiled by Steinbach & Sekula in accordance with Statements
or Standards for Accounting and Review Services Issued by the American
Institute of Certified Public Accountants. The Financial Information is not
consistent in all circumstances with generally accepted accounting
principles. The amounts with respect to property, plant and equipment set
forth in the Financial Statements, fairly present, in all material respects,
such information as of the dates referred to therein, and the revenues and
gross margins set forth in the Financial Information fairly present, in all
material respects, such information for the periods referred to therein.
(c) Since December 31, 1996, Nightlife has kept its financial records in a
manner consistent with its practices at the time and during the periods
reflected in paragraph (b) above without change, in any material respect, of
policy or procedure, as to nature of item, amount or otherwise.
4.5 Capital Stock.
(a) Nightlife has an authorized capitalization consisting of 200 shares of
common stock, without par value, of which 200 shares are issued and
outstanding. All such outstanding shares have been duly authorized and
validly issued and are fully paid and non-assessable. There are no
outstanding options, warrants, rights, calls, commitments, conversion rights,
rights of exchange, plans or other agreements of any character providing for
the purchase, issuance or sale of any shares of the capital stock of
Nightlife, other than as contemplated by this Agreement.
(b) American has an authorized capitalization consisting of 200 shares of
common stock, without par value, of which 200 shares are issued and
outstanding. All such outstanding shares have been duly authorized and
validly issued and are fully paid and non-assessable. There are no
outstanding options, warrants, rights, calls, commitments, conversion rights,
rights of exchange, plans or other agreements of any character providing for
the purchase, issuance or sale of any shares of the capital stock of American,
other than as contemplated by this Agreement.
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4.6 Subsidiaries and Investments.
Neither Nightlife nor American has any subsidiaries or interest in any
corporation, partnership, join venture or other entity.
4.7 Leases.
Schedule 4.7 attached hereto, contains an accurate and complete list of
all leases to which either Nightlife or American is a party, accurate and
complete copies of which have been delivered to the Company (as lessee or
lessor). Each lease set forth on Schedule 4.7 (or required to be set forth on
Schedule 4.7) is in full force and effect; all rents and additional rents due
to date on each such lease have been paid; in each case, the lessee has been
in peaceable possession since the commencement of the original term of such
lease and is not in default thereunder and no waiver, indulgence or
postponement of the lessee's obligations thereunder has been granted by
the lessor; and there exists no event of default or event, occurrence,
condition or act (including the consummation of the transactions contemplated
hereby) which, with the giving of notice, the lapse of time or the happening
of any further event or condition, would become a default under such lease.
Neither Nightlife nor American has not violated any of the terms or conditions
under any such lease in any material respect, and, to the best knowledge,
information and belief of the Principal Shareholders, Nightlife and American,
all of the covenants to be performed by any other party under any such
lease have been fully performed. The property leased by the Nightlife and
American is in a state of good maintenance and repair and is adequate and
suitable for the purposes for which it is presently being used.
4.8 Material Contracts. Except as set forth on Schedule 4.8
attached hereto, neither Nightlife nor American has and is bound by:
(a) any agreement, contract or commitment relating to the employment of
any person by the Company, or any bonus, deferred compensation, pension,
profit sharing, stock option, employee stock purchase, retirement or other
employee benefit plan;
(b) any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other
distribution in respect of its capital stock;
(c) any loan or advance to, or investment in, any individual,
partnership, joint venture, corporation, trust, unincorporated
organization, government or other entity (each a "Person") or any agreement,
contract or commitment relating to the making of any such loan, advance or
investment;
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(d) any guarantee or other contingent liability in respect of any
indebtedness or obligation of any person (other than the endorsement of
negotiable instruments for collection in the ordinary course of business);
(e) any management service, consulting or any other similar type contract;
(f) any agreement, contract or commitment limiting the freedom of
Nightlife or American or any subsidiary to engage in any line of business or
to compete with any Person;
(g) any agreement, contract or commitment not entered into in the
ordinary course of business which involves $25,000 or more and is not
cancelable without penalty or premium within 30 days; or
(h) any agreement, contract or commitment which might reasonably be
expected to have a potential adverse impact on the business or operations
of Nightlife or American; or
(i) any agreement, contract or commitment not reflected in the Financial
Statement under which Nightlife or American is obligated to make cash payments
of, or deliver products or render services with a value greater than $10,000
individually or $25,000 in the aggregate, or receive cash payments of, or
receive products or services with a value greater than $10,000 individually
or $25,000 in the aggregate, and any other agreement, contract or
commitment which is material to the conduct of the business of Nightlife
or American.
Each contract or agreement set forth on Schedule 4.8 (or not required to be
set forth on Schedule 4.8) is in full force and effect and there exists no
default or event of default or event, occurrence, condition or act
(including the consummation of the transactions contemplated hereby)
which, with the giving of notice, the lapse of time or the happening of any
other event or condition, would become a default or event of default
thereunder. The Company has not violated any of the terms or conditions of
any contract or agreement set forth on Schedule 4.8 (or not required to be
set forth on Schedule 4.8) in any material respect, and, to the best
knowledge, information and belief of the Principal Shareholders and Nightlife
and American, all of the covenants to be performed by any other party thereto
have been fully performed. Except as set forth on Schedule 4.8, the
consummation of the transactions contemplated hereby does not constitute an
event of default (or an event, which with notice or the lapse of time or
both would constitute a default) under any such contract or agreement.
4.9 Books and Records.
Except as set forth in Schedule 4.9 attached hereto, neither Nightlife
nor American has any of its records, systems, controls, data or information
recorded, stored, maintained, operated or otherwise wholly or partly dependent
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upon or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) which (including all means
of access thereto and therefrom) are not under the exclusive ownership and
direct control of Nightlife or American, respectively.
4.10 Title to Properties; Encumbrances.
Except as set forth in Schedule 4.10 attached hereto each of Nightlife
and American has good, valid and marketable title to all of its material
properties and assets (real and personal, tangible and intangible), in each
case subject to no encumbrance, lien, charge or other restriction of any kind
or character, except for (i) liens consisting of zoning or planning
restrictions, easements, permits and other restrictions or limitations on the
use of real property or irregularities in title thereto which do not
materially detract from the value of, or impair the use of, such property by
Nightlife or American in the operation of its business, (ii) liens for current
taxes, assessments or governmental charges or levies on property not yet due
and delinquent and (iii) liens described on Schedule 4.10 attached hereto
(liens of the type described in clauses (i), (ii) and (iii) are hereinafter
sometimes referred to as "Permitted Liens").
4.11 Compliance with Law and Government Regulations.
To the best knowledge of the Principal Shareholders, after due inquiry,
Nightlife and American are in compliance with all applicable statutes,
regulations, decrees, orders, restrictions, guidelines and standards, whether
mandatory or voluntary, imposed by the United States of America or any agency
thereof.
4.12 Payroll Taxes.
Nightlife and American has withheld taxes from its employees'
compensation, if any, in the amounts required by applicable law and has filed
all required federal, state and local returns and reports with respect
thereto, and has paid all required applicable, employee income tax
withholding, social security and unemployment taxes for all periods (or
portions thereof, except with respect to shares issued that may be deemed to
be compensation) ending on or before the date hereof.
4.13 Tax Returns.
Each of Nightlife and American has timely filed all federal, state and
local tax returns and reports required to be filed by it. There have been no
federal state or local income tax audits of Nightlife or American, except as
set forth on Schedule 4.13. The Principal Shareholders do not know of any
pending matters, assessments, notices of deficiency or demand, for taxes or
proposed deficiencies against Nightlife or American for any federal, state or
local taxes.
<PAGE>
4.14 Absence of Undisclosed Liabilities.
Except as and to the extent reflected or reserved against in the
Financial Statements of Nightlife and American or on Schedule 4.14 or Schedule
4.16, and as to matters arising in the ordinary course of its business since
such date, Nightlife and American have no liability(s) or obligation(s)
(whether accrued, to come due, contingent or otherwise) which individually or
in the aggregate could have a materially adverse effect on the business,
assets, properties, condition (financial or otherwise) or prospects of either
Nightlife or American.
4.15 No Changes Since December Balance Sheet Date. Since the date
of the last balance sheet included in Nightlife's and American's Financial
Statements (the "Balance Sheet Date"), neither Nightlife nor American has:
(a) incurred any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except liabilities and obligations in the
ordinary course of business and consistent with past practice, resulting in
an increase for the liabilities shown on the such Balance Sheet of less than
$25,000 in the aggregate;
(b) permitted any of its assets to be subjected to any mortgage, pledge,
lien, security interest, encumbrance, restriction or charge of any kind (other
than Permitted Liens);
(c) sold, transferred or otherwise disposed of any assets except inventory
sold in the ordinary course of business and consistent with past practice;
(d) made any single capital expenditure or commitment therefor, in excess
of $10,000 or made aggregate capital expenditures and commitments therefor in
excess of $25,000;
(e) declared or paid any dividend or made any distribution on any shares
of its capital stock, or redeemed, purchased or otherwise acquired any shares
of its capital stock or any option, warrant or other right to purchase or
acquire any such shares;
(f) made any bonus or profit sharing distribution or payment of any kind;
(g) increased its indebtedness for borrowed money which was in the
ordinary course of business and consistent with past practice, or made any
loan to any person;
(h) written off as uncollectible any notes or accounts receivable,
except immaterial write-downs or write-offs in the ordinary course of business
and consistent with past practice which do not exceed $25,000 in the
aggregate charged to applicable reserves, and none of which individually or
in the aggregate is material to the Company;
<PAGE>
(i) granted any increase in the rate of wages, salaries, bonuses or other
remuneration or benefits of any executive employee or other employees or
consultants, and no such increase is customary on a periodic basis or required
by agreement or understanding except as set forth on Schedule 4.8;
(j) canceled or waived any claims or rights of substantial value;
(k) made any change in any method of accounting or auditing practice;
(l) otherwise conducted its business or entered into any transaction,
except in the usual and ordinary manner and in the ordinary course of business
and consistent with past practices;
(m) paid, loaned or advanced any amount to, or sold, transferred or leased
any properties or assets (real, personal or mixed, tangible or intangible to,
or entered into any agreement or arrangement of any kind with, any of its
officers, directors or shareholders or any affiliate or associate of its
officers, directors or shareholders, except compensation to officers at rates
not exceeding the rate of compensation in effect as of the Balance Sheet
Date;
(n) paid, discharged or satisfied any claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) other than the payment, discharge
or satisfaction in the ordinary course of business and consistent with past
practice of liabilities and obligations reflected and reserved against in the
Nightlife's and American's Financial Statements or incurred in the ordinary
course of business and consistent with past practice since the Balance Sheet
Date;
(o) suffered any material adverse changes in its working capital,
financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business operations or prospects; or
(p) agreed, whether or not in writing, to do any of the foregoing.
4.16 No Pending Material Litigation or Proceedings.
Except as disclosed in Schedule 4.16 or the Financial Statements of
Nightlife or American, there are no actions, suits or proceedings pending or,
to the best knowledge of the Shareholders, threatened against or affecting the
Shareholders, Nightlife ore American (including actions, suits or proceedings
where liabilities may be adequately covered by insurance) at law or in equity
or before any federal, state, municipal or other governmental department,
commission, court, board, bureau, agency or instrumentality, domestic or
<PAGE>
foreign, or affecting any of the officers or directors of Nightlife or
American in connection with the business, operations or affairs of Nightlife
or American which might result in any material adverse change in the business,
properties or assets, or in the condition (financial or otherwise) of
Nightlife or American, or the transfer to the Company of the Nightlife or
American Stock by the Shareholders or any of the obligations to be performed
by the Shareholders under this Agreement. Neither Nightlife or American nor
the Shareholders are subject to any voluntary or involuntary proceeding under
the United States Bankruptcy Code, nor have they made an assignment for the
benefit of creditors.
4.17 Brokerage.
Neither the Principal Shareholders, Nightlife nor American have entered
into an agreement with any individual or entity with respect to the payment of
a finder's fee in connection with the transactions contemplated by this
Agreement.
4.18 Disclosure.
Neither this Agreement, nor any certificate, exhibit, or other written
document or statement, furnished to the Company by the Shareholders in
connection with the transactions contemplated by this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to be stated in order to make the statements
contained herein or therein not misleading.
5. COVENANTS OF THE COMPANY.
The Company covenants and agrees as follows:
5.1 Capital Infusion.
The Company covenants and agrees to provide capital to Nightlife and
American for their ongoing operations as follows:
(a) an aggregate of $150,000 within ten (10) days of the execution of this
Agreement, which shall be considered contribution to the capital of the
recipient;
(b) an aggregate of $200,000 within sixty (60) days of the execution of
this Agreement, which shall be considered contribution to the capital of the
recipient;
(c) an aggregate of $400,000 within ninety (90) days of the execution of
this Agreement subject to receipt of a plan and budget from the officers of
Nightlife and American, reasonably acceptable to the Board of Directors of the
Company;
5.2 Representation on Board of Directors.
Within ten days after the Closing Date, the Company's Board of Directors
will enlarge the Board to consist of four members and will appoint Tom
Weitzmann a member of the Board to fill the vacancy created thereby.
Thereafter, for the term of his employment by Nightlife, the Company will use
its reasonable best efforts to nominate Mr. Weitzmann to continue as a Board
member and to include him in management's proxy statement.
<PAGE>
5.3 Indemnification of Personal Guarantees.
The Company agrees to indemnify Principal Shareholders and hold them
harmless from and against any liabilities in an amount not to exceed $500,000,
arising from personal guarantees of obligations of Nightlife and American
entered into prior to the date of this Agreement. This indemnification shall
be in addition to any other indemnification provided to the Principal
Shareholders hereunder. The Company also agrees to use its reasonable efforts
to relieve the Principal Shareholder of such guarantee obligations.
6. [INTENTIONALLY OMITTED]
7. INDEMNIFICATION.
7.1 Indemnification by Company.
The Company agrees to indemnify and hold Shareholders, it successors and
assigns, harmless from and against any liability resulting from breach of
representations or warranties of the Company under this Agreement. In no
event shall the aggregate liability of the Company hereunder exceed
$2,612,500.
7.2 Indemnification by Shareholders.
Shareholders agree to indemnify and hold Company, its successors and
assigns, harmless from and against any liability resulting from breach of any
representation made by them or warranty, respectively, of Shareholders under
this Agreement, notwithstanding anything to the contrary contained in this
Agreement, Shareholders shall not be obligated to indemnify Company until the
aggregate of all losses as to which indemnification would be required exceeds
One Hundred Thousand Dollars ($100,000), in which case Shareholders shall be
required to indemnify Company for such excess amounts. In no event shall the
aggregate liability of Shareholders hereunder exceed $2,612,500.
7.3 Time Period for Indemnification.
The right of indemnification as to breaches or representations and
warranties is only to the extent that written notice of the claim for
indemnification is given to the party from which indemnification is sought
prior to the expiration of a period ending fifteen months subsequent to the
Closing which shall be the period of limitation as to any such breach or
breaches, except as otherwise specifically provided to the contrary in this
Agreement.
<PAGE>
7.4 Further Limitation.
Notwithstanding anything contained herein to the contrary, neither party
shall have a right of indemnification hereunder by reason of any breach by
either party of any warranty or representation contained in this Agreement to
the extent that such party seeking indemnification has of the Closing Date,
actual knowledge of the fact or matter forming the basis for such breach (or
alleged breach) of such warranty or representation.
7.5 Exclusive Remedy.
This indemnification shall be the sole and exclusive remedy for any of
the parties hereof in connection with a breach of any representation or
warranty by any other party hereof.
8. ADDITIONAL AGREEMENTS OF THE PARTIES.
8.1 Taxes and Expenses.
The Company and the Shareholders shall each pay all of their own
respective taxes, attorneys' fees and other costs and expenses payable in
connection with or as a result of the transactions contemplated hereby and the
performance and compliance with all agreements and conditions contained in
this Agreement respectively to be performed or observed by each of them.
8.2 Expiration of Representations and Warranties.
The respective representations and warranties contained herein and in any
other document or instrument delivered by or on behalf of the Company, and the
Shareholders, shall survive the Closing for a period of fifteen months.
Nothing contained in this Section 8.2 shall in any way affect any obligations
or any party under this Agreement that are to be performed, in whole or in
part, at any time after the Closing, nor shall it prevent or preclude any
party from pursuing any and all available remedies at law or in equity for
actual fraud in the event that, prior to the Closing, any other party had
actual knowledge of any material breach of any of its representations and
warranties herein but failed to disclose to or actively concealed such
knowledge prior to the Closing from the other party(s) to whom the
representations and warranties were made.
8.3 Agreements of the Company.
During the term of the Option Agreement, the Company will not take any
action to sell or transfer the capital stock or assets of Nightlife or
American, other than in the ordinary course of their respective businesses.
<PAGE>
9. MISCELLANEOUS.
9.1 Other Documents.
Each of the parties hereto shall execute and deliver such other and
further documents and instruments, and take such other and further actions, as
may be reasonably requested of them of the implementation and consummation of
this Agreement and the transactions herein contemplated.
9.2 Parties in Interest.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and the heirs, personal representatives, successors and
assigns of all of them, but shall not confer, expressly or by implication, any
rights or remedies upon any other party.
9.3 Governing Law.
This Agreement is made and shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of Pennsylvania.
9.4 Notices.
All notices, requests, demands, offerings, acceptances, consents and
other communications required or permitted under this Agreement shall, unless
otherwise provided, be in writing and shall be deemed to have been duly given
if personally delivered and actually received or if mailed by first class
registered or certified mail, return receipt requested, or by first class
mail, addressed to the parties hereto at their respective addresses provided
below, or in each case to such other person or address as may be designated by
notice hereunder. Each notice, demand, request or other communication
transmitted in the manner described in this paragraph shall be deemed to have
been given and received as follows: (i) four business days after delivery to
the addressee by certified mail, return receipt requested, (ii) immediately
when delivered by hand to the party to whom such notice is to be given and its
address set forth on the first page herein, which address shall be sufficient
in order to effect the service of process against each such party or such
other address for the party is shall be specified by notice given pursuant
thereto or (iii) two business days after being sent by priority delivery next
day by Federal Express or other similar reputable overnight carrier.
(a) If to the Company to:
Holly Holdings, Inc.
200 Monument Road, Suite 10
Bala Cynwyd, PA 19004
Attn: William Patrowicz, President
<PAGE>
(b) If to Shareholder, at their addresses set forth on the signature page
hereof.
Any party hereto may change its address by written notice to the other
party given in accordance with this Section 9.4.
9.5 Entire Agreement.
This Agreement and the exhibits and schedules attached hereto contain the
entire agreement between the parties and supersede all prior agreements,
understandings and writings between the parties with respect to the subject
matter hereof and thereof. Each party hereto acknowledges that no
representations, inducements, promises, or agreements, oral or otherwise, have
been made by any party, which are not embodied herein or in an exhibit hereto,
and that no other agreement, statement or promise may be relied upon or shall
be valid or binding. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally. This Agreement may be
amended or any term hereof may be changed, waived, discharged, or terminated
by an agreement in writing signed by all parties hereto.
9.6 No Equitable Conversion.
Prior to the Closing, neither the execution of this Agreement nor the
performance of any provision contained herein shall cause any party hereto to
be or become liable in any respect for the operations of the business of any
other party, or the condition or property owned by any other party, for
compliance with any applicable laws, requirements, or regulations of, or
taxes, assessments, or other charges now or hereafter due to any governmental
authority, or for any other charges or expenses whatsoever pertaining to the
conduct of the business or the ownership, title, possession, use, or occupancy
of any other party.
9.7 Headings.
The captions and headings used herein are for convenience only and shall
not be construed as a part of this Agreement.
9.8 Attorneys' Fees.
In the event of any litigation between the parties hereto, the
non-prevailing party shall pay the reasonable expenses, including the
attorneys' fees, of the prevailing party in connection therewith.
9.9 Counterparts.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which taken together shall constitute but one
and the same document.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
HOLLY HOLDINGS, INC.
By:_______________________________
William Patrowicz, President
Number of Number of Number
Nightlife American Company
Shares Shares Shares
"Shareholders" Exchanged Exchanged Received
____________________ 50 50 750,000
Tom K. Weitzmann
1167 Pine Valley Road
Upper Brookville, NY 11771
____________________ 50 50 750,000
Mark Rosner
117 Bounty Lane
Jericho, NY 11753
____________________ 25 25 375,000
Herbert H. Sommer
600 Old Country Road
Garden City, NY 11530
____________________ 25 25 375,000
Joel C. Schneider
600 Old Country Road
Garden City, NY 11530
____________________ 50 50 750,000
Emerging Growth
Distributors, Ltd.
Arawak Chambers
P.O. Box 173
Road Town, Tortola,
British Virgin Islands
____________
3,000,000
<PAGE>
OPTION AGREEMENT
OPTION AGREEMENT dated as of the 21st day of March, 1997 by and between
Thomas K. Weitzmann (the "Optionee") and HOLLY HOLDINGS, INC., a New Jersey
corporation with offices at 200 Monument Road, Suite 10, Bala Cynwyd, PA
19004 ("Holly").
W I T N E S S E T H
WHEREAS, concurrently with the execution hereof, Holly is acquiring 200
shares of the common stock ("Nightlife Common Stock") of Nightlife Printing and
Promotion, Inc., a New York corporation ("Nightlife") from Optionee;
WHEREAS, concurrently with the execution hereof Holly is acquiring 200
shares of the common stock ("American Common Stock") of American Publishers
Company, Inc., a New York corporation ("American");
WHEREAS, Holly desires to grant to Optionee, and Optionee is willing to
accept, on the terms and conditions set forth herein, an option to purchase
fifty (50%) of the issued and outstanding shares of Nightlife Common Stock and
fifty (50%) of the issued and outstanding shares of American Common Stock;
NOW, THEREFORE, for and in consideration of the premises, representations
and warranties and the mutual covenants and agreements contained herein, and
for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Optionee and Holly (collectively, the "Parties"
and, sometimes individually, a "Party"), intending to be legally bound, hereby
agree as follows:
1. OPTION GRANTED.
(a)Subject to the terms and conditions set forth herein, for value
received, Holly hereby grants to the Optionee an option (the "Option") to
purchase from Holly, during the period set forth in Section 2 hereof, (i)
fifty (50%) of the issued and outstanding shares of the Nightlife Common Stock
(the "Nightlife Shares"); and (ii) fifty (50%) of the issued and outstanding
shares of American Common Stock (the "American Shares" and, together with the
Nightlife Shares, the "Shares").
(b)If following the date of this Agreement, the outstanding shares of
Common Stock of Nightlife or American are, without the receipt of consideration
by the issuer thereof, increased, decreased, changed into or exchanged for a
different number or kind of shares or securities of such issuer through
reorganization, reclassification, stock dividend, stock split, reverse stock
split or similar change in such issuer's capitalization, Holly shall deliver to
the Optionee upon the exercise of this Option in addition to or in lieu of
Nightlife or American Shares specified in this Section 1, voting common stock
of such issuer in equitably adjusted amounts. In the event of any such change
in Nightlife or American's capitalization, all reference to the Shares herein
shall refer to the number of Shares as so adjusted.
<PAGE>
2. EXERCISE PERIOD.
(a) Unless earlier terminated in accordance with Section 2(b) hereof, the
Option may be exercised, in whole and not in part, at any time during the
period (the "Exercise Period") commencing on the date of a "Commencement Event"
defined in paragraph 2(c) below and ending at 5:00 P.M. (New York, New York
time) forty five days following notice of such event.
(b) This Option shall terminate (the "Termination Date"):
(i) Upon Optionee having materially breached any agreement or covenant
made by the Optionee in this Option Agreement, or the Stock
Purchase and Exchange Agreement between the Parties dated March
21, 1997 ("Stock Purchase Agreement"), or the Company has
terminated the Employment Agreement between the Optionee and
Nightlife dated March 21, 1997 for "Cause"; or
(ii) at 5:00 p.m. (New York, New York time) on March 31, 1999.
(c) For the purposes of this Agreement, a "Commencement Event" shall mean:
(i) the voluntary or involuntary cessation or suspension of quotations
(or delisting or suspension of trading) of the shares of Holly's
Common Stock on NASDAQ, the American or New York Stock Exchanges
(the "Exchanges") except if such cessation is in connection with
either the listing of such shares on another of the Exchanges or a
temporary trading suspension for the distribution of news lasting
no more than two trading days;
(ii) the receipt by the Company of a notice from an Exchange which
indicates that its shares of common stock will no longer be listed
for any reason other than the failure to file reports under the
Securities and Exchange Act of 1934, as amended as long as such
failure does not continue for more than 60 days;
(iii) the material breach by Holly of any of its agreements, covenants
or obligations under the Registration Rights Agreement dated March
21, 1997 between Holly and the Optionee, this Option Agreement,
the Stock Purchase Agreement or the Employment Agreement (the
"Employment Agreement") dated March 21, 1997 between Nightlife and
the Optionee or the material breach by Nightlife of any of its
agreements, covenants or obligations under the Employment
Agreement;
<PAGE>
(iv) if Holly shall make an assignment for the benefit of creditors or
shall admit in writing its inability to pay its debts as they
become due;
(v) if Holly shall file a voluntary petition in bankruptcy, or shall
be adjudicated a bankrupt or insolvent, or shall file any petition
or answer seeking any reorganization arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under
the United States bankruptcy code or other applicable federal,
state or similar statute, law or regulation, or shall seek or
consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of Holly, or of all or any substantial part
of its properties (except the properties of Country World Casino,
Inc.); or
(vi) if within thirty (30) days after the commencement of any
proceedings against Holly seeking any reorganization, arrangement,
composition readjustment, liquidation, dissolution or similar
relief under the United States bankruptcy code or other
application federal, state or similar statute, law or regulation,
such proceeding shall not have been dismissed or if, within thirty
(30) days after the appointment, without the consent or
acquiescence of Holly, or of all or any substantial part of its
properties (except the properties of Country World Casinos, Inc.).
3. EXERCISE PRICE.
(a) The purchase price for the Shares pursuant to the Option (the
"Exercise Price") shall be 750,000 shares of Holly common stock ("Holly
Shares").
(b) If following the date of this Agreement the outstanding shares of
Common Stock of Holly are, without the receipt of consideration by the issuer
thereof, increased, decreased, changed into or exchanged for a different
number or kind of shares or securities of such issuer through reorganization,
reclassification, stock dividend, stock split, reverse stock split or similar
change in such issuer's capitalization, the Optionee shall deliver to Holly
upon the exercise of this Option in addition to or in lieu of Holly Shares
specified in this Section 1, voting common stock of such issuer in equitably
adjusted amounts. In the event of any such change in Holly's capitalization,
all reference to the Holly Shares herein shall refer to the number of Holly
Shares as so adjusted.
4. EXERCISE OF OPTION; PURCHASE OF SHARES.
(a) Unless earlier terminated and upon a Commencement Event, the Option
may be exercised at any time during the Exercise Period by the delivery to
Holly at its address set forth in this Agreement of (i) the completed
Subscription Form, a copy of which is attached hereto; (ii) the number of Holly
<PAGE>
Shares equal to the Exercise Price; and (iii) this original Option.
(b) Upon receipt thereof, and subject to the provisions of subsection
(c) hereof, Optionee shall be deemed to be the holder of record of the
Nightlife and American Shares, notwithstanding that the stock transfer books
of Nightlife and American shall then be closed or that certificates
representing the Shares shall not then be actually delivered to Optionee, and
Holly shall, as promptly as practicable, cause to be executed and delivered to
Optionee a certificate or certificates representing the Shares. Each stock
certificate so delivered shall be in such denomination as may be requested by
Optionee and shall be registered in the name of Optionee. Holly shall pay all
expenses, taxes and other charges payable in connection with the preparation,
execution and delivery of stock certificates pursuant to this section.
(c) Upon the effectiveness of the exercise of the Option pursuant to this
Agreement and as a condition subsequent to the obligation of Holly to sell and
deliver the Nightlife and American Shares pursuant to this Agreement, Nightlife
and American shall agree in writing to pay the net balance of intercompany
indebtedness ("Debt") due to Holly and its affiliates in thirty six (36)
monthly installments over a period of three (3) years with interest at the rate
of 4% per annum. The Debt will be evidenced by a Promissory Note which is
annexed hereto as Exhibit A and secured by the Shares pursuant to the Security
Agreement annexed hereto as Exhibit B. In the event there is a dispute as to
the amount net due to Holly and its affiliates, such dispute will be submitted
to a firm of independent certified public accountants acceptable to both
parties. The certificate of such auditors concerning the net balance shall be
binding on all parties.
5. REPLACEMENT OF OPTION. Upon receipt by Holly of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Option, and, in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon surrender and cancellation of this
Option, if mutilated, Holly will make and deliver a new Option of like tenor,
in lieu of this Option. This Option shall be promptly canceled by Holly upon
the surrender thereof in connection with any exchange or replacement. Optionee
shall pay all expenses, taxes and other charges payable in connection with the
preparation, execution and delivery of a replacement Option pursuant to this
Section 5.
6. REPRESENTATIONS OF HOLLY. Holly hereby represents and warrants to
Optionee as of the date hereof and as of the Closing Date:
(a) Holly is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey.
(b) Upon the consummation of the purchase and sale of the Nightlife and
American Shares pursuant to the Option, the Shares will be sold and
transferred to Optionee free and clear of all liens, claims and
encumbrances.
<PAGE>
(c) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by Holly. This Agreement constitutes the legal, valid and
binding obligation of Holly, enforceable in accordance with its terms,
except to the extent that enforceability may be limited by bankruptcy,
receivership, insolvency, moratorium or other laws or equitable principles
of general applicability relating to creditors' rights and availability of
certain equitable remedies, including specific performance.
7. COVENANTS OF HOLLY. Holly agrees and covenants that during the period
beginning from the date of this Option Agreement and ending on the Termination
Date:
(a) Holly shall take all necessary corporate action in its capacity as
shareholder of Nightlife Common Stock and American Common Stock to elect a
five member board of each such Company and elect a nominee of the
Optionee, who initially shall be the Optionee, as a director of each such
Company.
(b) Holly will not transfer or encumber its Nightlife Shares or American
Shares nor will it cause or permit either Nightlife or American (the
"Companies") to take any of the following actions without the prior
written consent of Optionee:
(i) amend the certificate of incorporation of either of the Companies;
(ii) amend the Bylaws of either of the Companies;
(iii) merge, consolidate or exchange shares with any other party.
(iv) sale, lease, or exchange of more than 5% in one transaction or 15%
in the aggregate of the property or assets of either of the
Companies either in the regular course of business or other than
in regular course of business;
(v) change any of the titles, duties, salary or other compensation of
Optionee except in accordance with the terms of their Employment
Agreement;
(vi) incur any corporate indebtedness, enter into any business
transaction or financial commitment (including, but not limited
to, any intercompany payments or advances) involving in excess of
$25,000 in a single transaction or $150,000 in the aggregate;
(vii) declare or pay any dividends and other distributions on the stock
of either of the Companies;
(viii) dissolve either of the Companies;
(ix) enter into or perform any business transactions between an
Executive Officer, Director, or any person performing the normal
duties and responsibilities normally assigned to Directors of
<PAGE>
Holly and either of the Companies or any contract or other
transaction between either of the Companies and a corporation,
partnership, or association in which one or more of the Executive
Officers, Directors, or any persons performing the managerial
duties and responsibilities normally assigned to directors, are
officers of Holly, directors, have a material financial interest,
direct or indirect;
(x) form any subsidiary of either of the Companies, or any joint
venture, partnership, business trust or limited liability company
in which either of the Companies is to have an interest;
(xi) designate or issue any shares or class stock of either of the
Companies;
(xii) grant of any option, right or warrant to purchase any securities
of either of the Companies or in any way encumber the Shares;
(xiii) materially change the business of either of the Companies;
(xiv) permit checks above $5,000 to be authorized without the signature
of either Tom Weitzmann or Mark Rosner; or
(xv) change of any of the titles, duties, salary or other compensation
of any employee of either of the Companies, or make any personnel
decisions relating to the hiring or firing of any employee of
either of the Companies.
8. MISCELLANEOUS.
(a) This Agreement shall inure to the benefit of, and shall be binding
upon, the successors and assigns of the Parties.
(b) Each Party agrees to execute such additional documents or instruments
as may be reasonably necessary or desirable in order to carry out the
provisions of this Agreement.
(c) Neither Party will directly or indirectly avoid or take any action
which would have the effect of avoiding the observance or performance of any of
the terms and conditions hereof and will at all times in good faith assist in
carrying out the provisions of this Agreement and in taking all such action
may be reasonably necessary in order to carry out the intent of this Agreement.
<PAGE>
(d) This Agreement may be signed in any number of counterparts, each of
which (when executed and delivered) shall be an original, but all of which
together shall constitute one and the same instrument. It shall not be
necessary when making proof of this Agreement to account for any counterparts
other than a sufficient number of counterparts which, when taken together,
contain signatures of all of the Parties.
(e) All notices, demands, requests or other communications required or
permitted to be given in connection with this Agreement shall be given in
writing, shall be transmitted to the appropriate Party by hand delivery, by
certified mail, return receipt requested, postage prepaid or by telegram,
telex or other electronic means and shall be addressed to the appropriate
Party at his or its address shown on the first page hereof. Any Party may
designate by written notice given to all other Parties a new address to which
any notice, demand, request or other communication hereunder shall thereafter
be given. Each notice, demand, request or other communication transmitted in
the manner described in this Section shall be deemed to have been given and
received as follows: (i) four business days after delivery to the addressee by
certified mail, return receipt requested, (ii) immediately when delivered by
hand to the party to whom such notice is to be given at its address set forth
on the first page herein, which address shall be sufficient in order to effect
the service of process against each such party, or such other address for the
party as shall be specified by notice given pursuant hereto, or (iii) two
business days after being sent by priority delivery, next day by Federal
Express or other similar reputable overnight carrier.
(f) This Agreement constitutes the entire contract among the Parties, and
supersedes all existing contracts between or among them, whether oral or
written, with respect to the subject matter hereof. No change, modification or
amendment of this Agreement shall be effective unless set forth in a writing
signed by all of the Parties.
(g) This Agreement shall be construed and enforced in accordance with the
laws of the State of Pennsylvania.
(h) No delay or omission to exercise any right, power or remedy accruing
to any Party shall impair any such right, power or remedy or shall be construed
to be a waiver of or an acquiescence to any breach hereof. Any waiver of any
provision hereof shall be effective only to the extent specifically set forth
in the applicable writing. All remedies afforded to any Party under this
Agreement, by law or otherwise shall be cumulative and not alternative.
(i) No Party may assign, transfer, pledge or otherwise encumber or dispose
of any of his or its rights or obligations under this Agreement, except as
otherwise provided herein.
(j) If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, unenforceable or illegal for any reason,
then, notwithstanding such invalidity, unenforceability or illegality, the
remaining provisions of this Agreement shall remain in full force and effect
in the same manner and to the same extent as if the invalid, unenforceable or
illegal provision had not been contained herein.
<PAGE>
(k) The Section headings contained herein are inserted for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
HOLLY HOLDINGS, INC.
By:___________________________
William Patrowicz
President
__________________________
Optionee
<PAGE>
SUBSCRIPTION FORM
TO BE EXECUTED BY OPTIONEE IF IT DESIRES TO EXERCISE THE WITHIN OPTION
The undersigned hereby exercises the right to purchase the Nightlife and
American Shares subject to the within Option according to the conditions
thereof and herewith makes payment of the Exercise Price of such Shares in
full.
___________________________
Optionee
Dated:___________________
<PAGE>
OPTION AGREEMENT
OPTION AGREEMENT dated as of the 21st day of March, 1997 by and between
Mark Rosner (the "Optionee") and HOLLY HOLDINGS, INC., a New Jersey
corporation with offices at 200 Monument Road, Suite 10, Bala Cynwyd, PA
19004 ("Holly").
W I T N E S S E T H
WHEREAS, concurrently with the execution hereof, Holly is acquiring 200
shares of the common stock ("Nightlife Common Stock") of Nightlife Printing and
Promotion, Inc., a New York corporation ("Nightlife") from Optionee;
WHEREAS, concurrently with the execution hereof Holly is acquiring 200
shares of the common stock ("American Common Stock") of American Publishers
Company, Inc., a New York corporation ("American");
WHEREAS, Holly desires to grant to Optionee, and Optionee is willing to
accept, on the terms and conditions set forth herein, an option to purchase
fifty (50%) of the issued and outstanding shares of Nightlife Common Stock and
fifty (50%) of the issued and outstanding shares of American Common Stock;
NOW, THEREFORE, for and in consideration of the premises, representations
and warranties and the mutual covenants and agreements contained herein, and
for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the Optionee and Holly (collectively, the "Parties"
and, sometimes individually, a "Party"), intending to be legally bound, hereby
agree as follows:
1. OPTION GRANTED.
(a)Subject to the terms and conditions set forth herein, for value
received, Holly hereby grants to the Optionee an option (the "Option") to
purchase from Holly, during the period set forth in Section 2 hereof, (i)
fifty (50%) of the issued and outstanding shares of the Nightlife Common Stock
(the "Nightlife Shares"); and (ii) fifty (50%) of the issued and outstanding
shares of American Common Stock (the "American Shares" and, together with the
Nightlife Shares, the "Shares").
(b)If following the date of this Agreement, the outstanding shares of
Common Stock of Nightlife or American are, without the receipt of consideration
by the issuer thereof, increased, decreased, changed into or exchanged for a
different number or kind of shares or securities of such issuer through
reorganization, reclassification, stock dividend, stock split, reverse stock
split or similar change in such issuer's capitalization, Holly shall deliver to
the Optionee upon the exercise of this Option in addition to or in lieu of
Nightlife or American Shares specified in this Section 1, voting common stock
of such issuer in equitably adjusted amounts. In the event of any such change
in Nightlife or American's capitalization, all reference to the Shares herein
shall refer to the number of Shares as so adjusted.
<PAGE>
2. EXERCISE PERIOD.
(a) Unless earlier terminated in accordance with Section 2(b) hereof, the
Option may be exercised, in whole and not in part, at any time during the
period (the "Exercise Period") commencing on the date of a "Commencement Event"
defined in paragraph 2(c) below and ending at 5:00 P.M. (New York, New York
time) forty five days following notice of such event.
(b) This Option shall terminate (the "Termination Date"):
(i) Upon Optionee having materially breached any agreement or covenant
made by the Optionee in this Option Agreement, or the Stock
Purchase and Exchange Agreement between the Parties dated March
21, 1997 ("Stock Purchase Agreement"), or the Company has
terminated the Employment Agreement between the Optionee and
Nightlife dated March 21, 1997 for "Cause"; or
(ii) at 5:00 p.m. (New York, New York time) on March 31, 1999.
(c) For the purposes of this Agreement, a "Commencement Event" shall mean:
(i) the voluntary or involuntary cessation or suspension of quotations
(or delisting or suspension of trading) of the shares of Holly's
Common Stock on NASDAQ, the American or New York Stock Exchanges
(the "Exchanges") except if such cessation is in connection with
either the listing of such shares on another of the Exchanges or a
temporary trading suspension for the distribution of news lasting
no more than two trading days;
(ii) the receipt by the Company of a notice from an Exchange which
indicates that its shares of common stock will no longer be listed
for any reason other than the failure to file reports under the
Securities and Exchange Act of 1934, as amended as long as such
failure does not continue for more than 60 days;
(iii) the material breach by Holly of any of its agreements, covenants
or obligations under the Registration Rights Agreement dated March
21, 1997 between Holly and the Optionee, this Option Agreement,
the Stock Purchase Agreement or the Employment Agreement (the
"Employment Agreement") dated March 21, 1997 between Nightlife and
the Optionee or the material breach by Nightlife of any of its
agreements, covenants or obligations under the Employment
Agreement;
<PAGE>
(iv) if Holly shall make an assignment for the benefit of creditors or
shall admit in writing its inability to pay its debts as they
become due;
(v) if Holly shall file a voluntary petition in bankruptcy, or shall
be adjudicated a bankrupt or insolvent, or shall file any petition
or answer seeking any reorganization arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under
the United States bankruptcy code or other applicable federal,
state or similar statute, law or regulation, or shall seek or
consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of Holly, or of all or any substantial part
of its properties (except the properties of Country World Casino,
Inc.); or
(vi) if within thirty (30) days after the commencement of any
proceedings against Holly seeking any reorganization, arrangement,
composition readjustment, liquidation, dissolution or similar
relief under the United States bankruptcy code or other
application federal, state or similar statute, law or regulation,
such proceeding shall not have been dismissed or if, within thirty
(30) days after the appointment, without the consent or
acquiescence of Holly, or of all or any substantial part of its
properties (except the properties of Country World Casinos, Inc.).
3. EXERCISE PRICE.
(a) The purchase price for the Shares pursuant to the Option (the
"Exercise Price") shall be 750,000 shares of Holly common stock ("Holly
Shares").
(b) If following the date of this Agreement the outstanding shares of
Common Stock of Holly are, without the receipt of consideration by the issuer
thereof, increased, decreased, changed into or exchanged for a different
number or kind of shares or securities of such issuer through reorganization,
reclassification, stock dividend, stock split, reverse stock split or similar
change in such issuer's capitalization, the Optionee shall deliver to Holly
upon the exercise of this Option in addition to or in lieu of Holly Shares
specified in this Section 1, voting common stock of such issuer in equitably
adjusted amounts. In the event of any such change in Holly's capitalization,
all reference to the Holly Shares herein shall refer to the number of Holly
Shares as so adjusted.
4. EXERCISE OF OPTION; PURCHASE OF SHARES.
(a) Unless earlier terminated and upon a Commencement Event, the Option
may be exercised at any time during the Exercise Period by the delivery to
Holly at its address set forth in this Agreement of (i) the completed
Subscription Form, a copy of which is attached hereto; (ii) the number of Holly
<PAGE>
Shares equal to the Exercise Price; and (iii) this original Option.
(b) Upon receipt thereof, and subject to the provisions of subsection
(c) hereof, Optionee shall be deemed to be the holder of record of the
Nightlife and American Shares, notwithstanding that the stock transfer books
of Nightlife and American shall then be closed or that certificates
representing the Shares shall not then be actually delivered to Optionee, and
Holly shall, as promptly as practicable, cause to be executed and delivered to
Optionee a certificate or certificates representing the Shares. Each stock
certificate so delivered shall be in such denomination as may be requested by
Optionee and shall be registered in the name of Optionee. Holly shall pay all
expenses, taxes and other charges payable in connection with the preparation,
execution and delivery of stock certificates pursuant to this section.
(c) Upon the effectiveness of the exercise of the Option pursuant to this
Agreement and as a condition subsequent to the obligation of Holly to sell and
deliver the Nightlife and American Shares pursuant to this Agreement, Nightlife
and American shall agree in writing to pay the net balance of intercompany
indebtedness ("Debt") due to Holly and its affiliates in thirty six (36)
monthly installments over a period of three (3) years with interest at the rate
of 4% per annum. The Debt will be evidenced by a Promissory Note which is
annexed hereto as Exhibit A and secured by the Shares pursuant to the Security
Agreement annexed hereto as Exhibit B. In the event there is a dispute as to
the amount net due to Holly and its affiliates, such dispute will be submitted
to a firm of independent certified public accountants acceptable to both
parties. The certificate of such auditors concerning the net balance shall be
binding on all parties.
5. REPLACEMENT OF OPTION. Upon receipt by Holly of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Option, and, in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and upon surrender and cancellation of this
Option, if mutilated, Holly will make and deliver a new Option of like tenor,
in lieu of this Option. This Option shall be promptly canceled by Holly upon
the surrender thereof in connection with any exchange or replacement. Optionee
shall pay all expenses, taxes and other charges payable in connection with the
preparation, execution and delivery of a replacement Option pursuant to this
Section 5.
6. REPRESENTATIONS OF HOLLY. Holly hereby represents and warrants to
Optionee as of the date hereof and as of the Closing Date:
(a) Holly is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey.
(b) Upon the consummation of the purchase and sale of the Nightlife and
American Shares pursuant to the Option, the Shares will be sold and
transferred to Optionee free and clear of all liens, claims and
encumbrances.
<PAGE>
(c) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by Holly. This Agreement constitutes the legal, valid and
binding obligation of Holly, enforceable in accordance with its terms,
except to the extent that enforceability may be limited by bankruptcy,
receivership, insolvency, moratorium or other laws or equitable principles
of general applicability relating to creditors' rights and availability of
certain equitable remedies, including specific performance.
7. COVENANTS OF HOLLY. Holly agrees and covenants that during the period
beginning from the date of this Option Agreement and ending on the Termination
Date:
(a) Holly shall take all necessary corporate action in its capacity as
shareholder of Nightlife Common Stock and American Common Stock to elect a
five member board of each such Company and elect a nominee of the
Optionee, who initially shall be the Optionee, as a director of each such
Company.
(b) Holly will not transfer or encumber its Nightlife Shares or American
Shares nor will it cause or permit either Nightlife or American (the
"Companies") to take any of the following actions without the prior
written consent of Optionee:
(i) amend the certificate of incorporation of either of the Companies;
(ii) amend the Bylaws of either of the Companies;
(iii) merge, consolidate or exchange shares with any other party.
(iv) sale, lease, or exchange of more than 5% in one transaction or 15%
in the aggregate of the property or assets of either of the
Companies either in the regular course of business or other than
in regular course of business;
(v) change any of the titles, duties, salary or other compensation of
Optionee except in accordance with the terms of their Employment
Agreement;
(vi) incur any corporate indebtedness, enter into any business
transaction or financial commitment (including, but not limited
to, any intercompany payments or advances) involving in excess of
$25,000 in a single transaction or $150,000 in the aggregate;
(vii) declare or pay any dividends and other distributions on the stock
of either of the Companies;
(viii) dissolve either of the Companies;
(ix) enter into or perform any business transactions between an
Executive Officer, Director, or any person performing the normal
duties and responsibilities normally assigned to Directors of
<PAGE>
Holly and either of the Companies or any contract or other
transaction between either of the Companies and a corporation,
partnership, or association in which one or more of the Executive
Officers, Directors, or any persons performing the managerial
duties and responsibilities normally assigned to directors, are
officers of Holly, directors, have a material financial interest,
direct or indirect;
(x) form any subsidiary of either of the Companies, or any joint
venture, partnership, business trust or limited liability company
in which either of the Companies is to have an interest;
(xi) designate or issue any shares or class stock of either of the
Companies;
(xii) grant of any option, right or warrant to purchase any securities
of either of the Companies or in any way encumber the Shares;
(xiii) materially change the business of either of the Companies;
(xiv) permit checks above $5,000 to be authorized without the signature
of either Tom Weitzmann or Mark Rosner; or
(xv) change of any of the titles, duties, salary or other compensation
of any employee of either of the Companies, or make any personnel
decisions relating to the hiring or firing of any employee of
either of the Companies.
8. MISCELLANEOUS.
(a) This Agreement shall inure to the benefit of, and shall be binding
upon, the successors and assigns of the Parties.
(b) Each Party agrees to execute such additional documents or instruments
as may be reasonably necessary or desirable in order to carry out the
provisions of this Agreement.
(c) Neither Party will directly or indirectly avoid or take any action
which would have the effect of avoiding the observance or performance of any of
the terms and conditions hereof and will at all times in good faith assist in
carrying out the provisions of this Agreement and in taking all such action
may be reasonably necessary in order to carry out the intent of this Agreement.
<PAGE>
(d) This Agreement may be signed in any number of counterparts, each of
which (when executed and delivered) shall be an original, but all of which
together shall constitute one and the same instrument. It shall not be
necessary when making proof of this Agreement to account for any counterparts
other than a sufficient number of counterparts which, when taken together,
contain signatures of all of the Parties.
(e) All notices, demands, requests or other communications required or
permitted to be given in connection with this Agreement shall be given in
writing, shall be transmitted to the appropriate Party by hand delivery, by
certified mail, return receipt requested, postage prepaid or by telegram,
telex or other electronic means and shall be addressed to the appropriate
Party at his or its address shown on the first page hereof. Any Party may
designate by written notice given to all other Parties a new address to which
any notice, demand, request or other communication hereunder shall thereafter
be given. Each notice, demand, request or other communication transmitted in
the manner described in this Section shall be deemed to have been given and
received as follows: (i) four business days after delivery to the addressee by
certified mail, return receipt requested, (ii) immediately when delivered by
hand to the party to whom such notice is to be given at its address set forth
on the first page herein, which address shall be sufficient in order to effect
the service of process against each such party, or such other address for the
party as shall be specified by notice given pursuant hereto, or (iii) two
business days after being sent by priority delivery, next day by Federal
Express or other similar reputable overnight carrier.
(f) This Agreement constitutes the entire contract among the Parties, and
supersedes all existing contracts between or among them, whether oral or
written, with respect to the subject matter hereof. No change, modification or
amendment of this Agreement shall be effective unless set forth in a writing
signed by all of the Parties.
(g) This Agreement shall be construed and enforced in accordance with the
laws of the State of Pennsylvania.
(h) No delay or omission to exercise any right, power or remedy accruing
to any Party shall impair any such right, power or remedy or shall be construed
to be a waiver of or an acquiescence to any breach hereof. Any waiver of any
provision hereof shall be effective only to the extent specifically set forth
in the applicable writing. All remedies afforded to any Party under this
Agreement, by law or otherwise shall be cumulative and not alternative.
(i) No Party may assign, transfer, pledge or otherwise encumber or dispose
of any of his or its rights or obligations under this Agreement, except as
otherwise provided herein.
(j) If any provision of this Agreement shall be declared by a court of
competent jurisdiction to be invalid, unenforceable or illegal for any reason,
then, notwithstanding such invalidity, unenforceability or illegality, the
remaining provisions of this Agreement shall remain in full force and effect
in the same manner and to the same extent as if the invalid, unenforceable or
illegal provision had not been contained herein.
<PAGE>
(k) The Section headings contained herein are inserted for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
HOLLY HOLDINGS, INC.
By:___________________________
William Patrowicz
President
__________________________
Optionee
<PAGE>
SUBSCRIPTION FORM
TO BE EXECUTED BY OPTIONEE IF IT DESIRES TO EXERCISE THE WITHIN OPTION
The undersigned hereby exercises the right to purchase the Nightlife and
American Shares subject to the within Option according to the conditions
thereof and herewith makes payment of the Exercise Price of such Shares in
full.
___________________________
Optionee
Dated:___________________
<PAGE>
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made and entered into this 21st day of March
1997 and between NIGHTLIFE PRINTING & PROMOTION, INC., a New York corporation
having its principal office at 2200 Marcus Avenue, Lake Success, New York
(herein after called "Employer" or "Company"), and THOMAS K. WEITZMAN
(hereinafter called "Employee").
R E C I T A L S :
A. Employer is in the printing business and related products and
services.
B. Employer desires to employ Employee and Employee desires to be
employed by Employer, upon the terms and conditions hereinafter set forth.
In consideration of the mutual covenants hereinafter set forth, it is
hereby agreed as follows:
1. EMPLOYMENT AND DUTIES.
Employer agrees to employ Employee as President and Employee agrees
to serve Employer in such capacity and to engage in those duties which might
reasonably be required of a President, including, but not limited to
responsibility for day to day operations of the Employer and such other
related businesses as Employer may subsequently develop or acquire, subject to
the direction of the Board of Directors and to manage the business affairs of
American Publishers Corporation.
2. TERM.
Employee's employment hereunder shall be for a period of ten (10) years
unless sooner terminated pursuant to Section 9 hereof (the "Term") commencing
March 24, 1997 (the "Commencement Date") and ending March 23, 2007. This
Agreement shall be automatically renewed for successive two (2) year periods,
unless either party shall notify the other in writing of its intention not to
renew this Agreement, which notice shall be given at least 120 days prior to
end of the then current term.
3. DEVOTION OF ATTENTION.
Throughout the Term of his employment, Employee shall devote his full
time to carry out the duties commensurate with Employee's position, to the
business affairs of the Employer.
<PAGE>
4. NON-DISCLOSURE.
4.1 Acknowledgment and Purposes. Employee acknowledges that during
the course of his employment with Employer prior to the Term of this
Agreement, Employee has learned, developed, and had access to and will, during
the Term of this Agreement, learn, develop and have access to, Confidential
Information relating to the business and affairs of Employer. As used in this
Agreement, Confidential Information shall mean trade secrets concerning
Employer's operations, future plans, projected and historical sales,
marketing, costs, production, growth and distribution, any customer lists,
customer information, information relating to governmental relations, or
information relating to the products or services, whether patentable or not,
concerning the business of Employer and/or its affiliates as conducted at any
time prior to the termination of this Agreement.
Employer and/or its affiliates is engaged in a highly competitive
business; its competitive position depends in great measure upon its ability
to develop or acquire and maintain the confidentiality of Confidential
Information; and it may have expended and is likely to continue to expend
considerable efforts and resources in the development or acquisition of
Confidential Information. Based upon the foregoing, Employee recognizes that
the unauthorized disclosure of Confidential Information in violation of the
terms hereof is likely to result in serious and irrevocable harm to Employer
and/or its affiliates.
4.2 Restrictions on the Use of Confidential Information. Employee
agrees and covenants as follows:
(a) All documents and other materials made or compiled by Employee prior
to or during the Term of this Agreement and any copies thereof, whether or not
containing Confidential Information are and shall be the property of Employer
and shall be delivered to Employer by Employee upon request by Employer.
Employee will treat as trade secrets all Confidential Information acquired by
him prior to or during the Term of this Agreement, and will not use any such
Confidential Information for his own benefit nor disclose it or any part of it
to any other person, firm or corporation (other than Employer) (i) without the
prior written consent of Employer; (ii) unless such disclosure is required by
law or in response to a legal order; (iii) unless such Confidential
Information has become generally available to the public other than through
the breach by Employee of the terms hereof; or (iv) unless such information is
rightfully received by Employee from a third party without restrictions on
disclosure or use.
5. COVENANT NOT TO COMPETE.
5.1 Acknowledgment and Purposes. Employer is and will be engaged in
the business (the "Business") of (i) selling printing services and printed
materials to customers, and (ii) the marketing and sale of other related
products and services in the New York Metropolitan Area. Employee
acknowledges that said business of Employer is local in scope and that
Employer competes with other organizations that could be located in the New
York Metropolitan Area.
<PAGE>
5.2 Covenants. Employee covenants and agrees that during the Term
of the Agreement and unless Employee is terminated without cause or this
Agreement expires and there is no renewal, until one year after termination
Employee will not directly or indirectly:
(a) Engage or invest in, own, manage, operate, control or participate in
the ownership, management, operation or control of, be employed, associated or
in any manner connected with or render services or advice to, any business the
services of which compete, in whole or in part, with the then current or
actively developing services or activities of Employer described in paragraph
5.1 above, within the geographical territories within the New York
Metropolitan Area; provided, that Employee may: (i) invest in less than five
percent (5%) of any class of securities of any enterprise (but without
otherwise participating in the activities of such enterprise) if such
securities are listed on any regional or national securities exchange or have
been registered under Section 12(g) or Section 15(d) of the Securities
Exchange Act of 1934, as amended.
(b) Whether for his own account or for the account of any other person,
directly or indirectly, solicit the business of any person known by him to be
a customer or former customer of Employer except if such customer has not done
business with Employer for a period of thirty (30) months from the
Commencement Date, without Employer's consent, which consent Employer may
withhold in its absolute discretion, whether or not Employee had personal
contact with such person during or by reason of his employment with the
Employer prior to or during the Term of this Agreement. Provided, however,
that such restriction on solicitation applies only in connection with
solicitation for the then current or actively developing services or
activities of Employer.
(c) Whether for his own account or the account of any other person,
directly or indirectly, without the Employer's consent, which consent Employer
may withhold in its absolute discretion, (i) solicit, employ or otherwise
engage as an employee, independent consultant or otherwise, any person who is
or was an employee of Employer at any time during the employment of Employee
by Employer prior to or during the Term of this Agreement, except if such
person was not employed by Employer for a period of thirty (30) months from
the Commencement Date, or in any manner induce or attempt to induce any
employee of Employer who was an employee within the thirty months immediately
preceding the Commencement Date or the date of termination without cause, to
terminate his or her employment with Employer, or (ii) interfere with the
relationship of Employer with any person, including any person who at any time
during the employment of Employee by Employer prior to or during the Term of
this Agreement was an employee, a customer, a vendor, a supplier or a
consultant of, or to, Employer.
<PAGE>
6. DISCLOSURE AND ASSIGNMENT.
Employee will disclose fully to Employer all inventions, formulae,
processes, improvements and ideas, whether or not patentable, made or
conceived by Employee in whole or in part, alone or with others, at any time
during the Term and which relate to the then current or actively developing
services or activities of Employer. Employee will also (i) assign to Employer
all such inventions, formulae, processes, improvements and ideas and all
Employee's rights thereto and (ii) sign all documents reasonably requested by
Employer to enable Employer to obtain patents thereon in the United States of
America and such foreign countries as Employer may designate, and otherwise
assist Employer, at the latter's expense, in obtaining such patents and in
protecting, maintaining and defending same.
7. COMPENSATION AND BENEFITS.
Employee shall receive the following compensation and benefits for
services rendered by him during the term of this Agreement:
7.1 Salary. Employer shall pay Employee a base salary ("Base
Salary") as follows: $208,000 per year commencing on the Effective Date.
Employee's Base Salary may be increased, but not decreased by the Board of
Directors. Once increased, such increased amount shall constitute the
Employee's Base Salary. Base Salary shall be payable in accordance with the
ordinary payroll practices of the Company, but in no event less than two
times per month.
7.2 Bonus.
(a) In addition to the aforementioned salary, a bonus shall be paid
to the Employee of (i) $7,500 per quarter if the Company's profits ("Profits"
which shall be defined as earnings before interest, depreciation, tax and
without giving effect to the payment of this bonus) exceed $250,000 for the
quarter; or (ii) $15,000 per quarter if the Company's Profits exceed $500,000
for the quarter; and (iii) $7,500 per year if the Company's Profits exceed
$250,000 for the year; or (iv) $15,000 per year if the Company's Profits
exceed $500,000 for the year. Such bonus shall be paid within fifteen days
after the completion of the quarter or year as the case may be.
(b) A bonus shall be paid to Employee of (i) $12,500 per quarter
of American's Profits exceed $200,000 for the quarter; or (ii) $25,000 per
quarter if American's Profits exceed $400,000 for the quarter; and (iii)
$12,500 per year if American's Profits exceed $200,000 for the year; or (iv)
$25,000 per year if American's Profits exceed $400,000 for the year. Such
bonus shall be paid within fifteen days after the completion of the quarter
or year as the case may be.
7.3 Vacation. During the term hereof, Employee shall be entitled
to such vacations during each calendar year as the Board of Directors shall
specify, but in no event shall Employee be entitled to less than four weeks
of paid vacation during each year of employment.
<PAGE>
7.4 Fringe Benefits. In addition to all the other compensation to
be provided to Employee pursuant to this paragraph 7, Employee shall be
entitled to receive or to participate in any fringe benefits which are or may
be provided by Employer to its officers and/or employees, including, but not
limited to, insurance, health, welfare and retirement plans, but in no event
less than as set forth in Schedule 7.4.
7.5 Business Expenses. Employee is authorized to incur reasonable
expenses in carrying out his duties and responsibilities under this Agreement,
including, without limitation, expenses for travel, cellular telephone
(including access charges and business calls) and similar items related to
such duties and responsibilities. Company will reimburse Employee for all
such expenses upon presentation by Employee of appropriately itemized accounts
of such expenditures.
7.6 Automobile. Employer shall lease an automobile of Employee's
choice on behalf of Employee and reimburse Employee for insurance and
maintenance. Employer's total monthly obligation for the lease, insurance and
maintenance is $1,500. Employer will provide Employee monthly with the
difference between the lease payment per month and $1,500.
8. INDEMNIFICATION
Employee shall be indemnified by the Company against any cost, loss,
damage, judgment, and/or expense, including attorneys' fees, actually
incurred by him in connection with the defense of any claim, action, suit,
investigation or proceeding or similar legal activity, regardless of whether
criminal, civil, administrative or investigative in nature ("Claim"), to which
he is made a party or is otherwise subject to, by reason of his being or
having been an officer of Company, to the full extent permitted by applicable
law and the Certificate of Incorporation of Company. Such right of
indemnification will not be deemed exclusive of any other rights to which
Employee may be entitled under Company's Certificate of Incorporation or
By-Laws, as in effect from time to time, any agreement or otherwise. In
addition, Holly Holdings, Inc. agrees to name the Employee on it Directors
and Officers Insurance Policy.
9. TERMINATION OF EMPLOYMENT.
9.1 Termination Without Cause, for Good Reason, or Voluntarily.
(a) Company may terminate Employee's employment at any time for any
reason. If (i) Employee's employment is terminated by the Company other than
(x) for Cause (as defined in Section 9.4 hereof) or (y) as a result of
Employee's death or Permanent Disability (as defined in Section 9.2 hereof);
or (ii) if Employee terminates his employment for Good Reason (as defined in
Section 9.1 (b) hereof) prior to the Termination Date, Employee shall receive
or commence receiving as soon as practicable in accordance with the terms of
this Agreement:
(i) such payments under applicable plans or programs, including but not
limited to those referred to in Section 7.4 hereof, to which he is entitled
pursuant to the terms of such plans or programs through the date of
termination;
<PAGE>
(ii) any earned but unpaid Bonus which amount shall be paid in a cash lump
sum within thirty (30) days of the date of termination;
(iii) a severance payment (the "Severance Payment"), which amount shall be
paid in a cash lump sum within thirty (30) days of the date of termination, in
the amount of the greater of (a) five times the Employee's Base salary plus
the amount of any bonus paid by the Company for the calendar year preceding
the calendar year in which termination occurs; or (b) the aggregate amount of
the Employee's Base Salary for the then remaining term of this Agreement;
(iv) immediate vesting of all unvested stock options and the extension of
the exercise period of such options to the later of the longest period
permitted by the Company's stock option plans or ten years following the
Termination Date;
(v) payment in respect of accrued but unused vacation days (the "Vacation
Payment") and compensation earned but not yet paid and a pro rata portion of
the Bonus for the amount of the year elapsed prior to termination, (the
"Compensation Payment") which amount shall be paid in a cash lump sum within
thirty (30) days of the date of termination; and
(vi) continued coverage, at the Company's expense for a period of 24
months from the date of termination under all employee health, dental,
disability and life insurance plans in which the Employee participates as of
the date of termination in accordance with the respective terms thereof, plus
COBRA coverage rights thereafter if available, of substantially the same
insurance coverage as Employer maintains for Employee during term of
employment.
(b) For purposes of this Agreement, "Good Reason" shall mean any of the
following:
(i) Any material breach by Company of any provision of this Agreement,
including any material reduction by Company of Employee's duties or
responsibilities (except in connection with the termination of Employee's
employment for Cause, as a result of Permanent Disability, as a result of
Employee's death or by Employee other than for Good Reason) or any material
breach by Company of any provision of the Option Agreement dated March 21,
1997 (the "Option Agreement"), the Stock Purchase and Exchange Agreement dated
March 21, 1997, or the Registration Rights Agreement dated March 21, 1997;
<PAGE>
(ii) A reduction by the Company in Employee's Base Salary without his
consent;
(iii) Moving the principal executive offices of Company to a location
outside of the New York metropolitan area; or
(iv) Upon a Change of Control of Company (as such term is hereinafter
defined).
9.2 Permanent Disability. If Employee becomes permanently
disabled (as defined in the Company's disability benefit plan applicable to
senior executive officers as in effect on the date thereof) ("Permanent
Disability"), Company or Employee may terminate Employee's employment on
written notice thereof, and Employee shall receive or commence receiving, as
soon as practicable:
(i) amounts payable pursuant to the terms of the disability insurance
policy or similar arrangement which Company maintains during the term hereof.
The Company covenants to obtain within sixty days of the date hereof and
maintain a disability policy reasonably acceptable to Employee with coverage
of Employee of no less than $75,000 per year for the Term of this Employment
Agreement. If the Company, despite its best efforts, is unable to obtain a
disability insurance policy or similar arrangement for Employees, then Company
will pay, in addition to (v) below, $75,000 per year in equal monthly
installments for two years;
(ii) the Vacation Payment and the Compensation Payment which shall be paid
to Employee as a cash lump sum within 30 days of such termination;
(iii) such payments under applicable plans or programs, including but not
limited to those referred to in Section 7.4 hereof, to which he is entitled
pursuant to the terms of such plans or programs through the date of
termination;
(iv) immediate vesting of all unvested stock options; and
(v) compensation equal to one year's Base Salary which shall be paid
within 30 days of such termination.
9.3 Death. In the event of Employee's death during the term of
his employment hereunder, Employee's estate or designated beneficiaries shall
receive or commence receiving, as soon as practicable in accordance with the
terms of this Agreement:
(i) compensation equal to one year's Base Salary which shall be paid
within 30 days of such termination;
<PAGE>
(ii) any death benefits provided under the employee benefit programs,
plans and practices referred to in Section 7.4 hereof, in accordance with
their respective terms;
(iii) the Vacation Payment and the Compensation Payment which shall be
paid to Employee as a cash lump sum within 30 days of such termination; and
(iv) such other payments under applicable plans or programs, including
but not limited to those referred to in Section 7.4 hereof, to which Employee's
estate or designated beneficiaries are entitled pursuant to the terms of such
plans or programs.
9.4 Voluntary Termination by Employee: Discharge for Cause. The
Company shall have the right to terminate the employment of Employee for Cause
(as hereinafter defined). In the event that Employee's employment is
terminated by Company for Cause, as hereinafter defined, or by Employee other
than for Good Reason or other than as a result of the Employee's Permanent
Disability or death, prior to the Termination Date, Employee shall be entitled
only to receive, as a cash lump sum within 30 days of such termination (i) the
Compensation Payment and the Vacation Payment; and (ii) earned but unpaid
Bonus attributable to a calendar year prior to the calendar year in which such
termination occurs. As used herein, the term "Cause" shall be limited to (i)
willful malfeasance, willful misconduct or gross negligence by Employee in
connection with his employment in a matter of material importance to the
conduct of the Company's affairs which has a material adverse affect on the
business of the Company, (ii) any material breach of this Agreement by
Employee which remains uncured after thirty days written notice specifying the
material breach or (iii) the conviction of Employee for commission of a felony
related to fraud, embezzlement and drug related activities and/or any other
white collar crimes in connection with the Business. For purposes of this
subsection, no act or failure to act on the Employee's part shall be
considered "willful" unless done, or omitted to be done, by the Employee not
in good faith and with the belief that his action or omission was not in the
best interest of the Company. Termination of Employee pursuant to this
Section 9.4 shall be made by delivery to Employee of a copy of a resolution
duly adopted by the affirmative vote of all of the members of the Board of
Directors called and held for such purpose (after 30 days prior written notice
to Employee and reasonable opportunity for Employee to be heard before the
Board of Directors prior to such vote), finding that in the good faith
business judgment of such Board of Directors, Employee was guilty of conduct
set forth in any of clauses (i) through (iii) above and specifying the
particulars thereof.
9.5. Late Payments. Any amounts due hereunder to Employee which
remain unpaid after their due date, shall bear interest from the due date
until paid at a rate of the prime rate (in effect on the date thereof for
Citibank, N.A.) plus 2%.
10. ASSIGNMENT.
This contract shall be binding upon and inure to the benefit of the heirs
and representatives of Employee and the assigns and successors of Company, but
<PAGE>
neither this Agreement nor any rights or obligations hereunder shall be
assignable or otherwise subject to hypothecation by Employee (except by will
or by operation of the laws of intestate succession) or by Company.
11. CHANGE IN CONTROL.
11.1 Definition. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if (i) there shall be consummated
(A) any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the
Company's Common Stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the
Company's Common Stock immediately prior to the merger have substantially the
same proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all the assets of the Company, or (ii) the stockholders of the
Company shall approve any plan or proposal for the liquidation or dissolution
of the Company, or (iii) any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")),
other than the Company or Holly or any employee benefit plan sponsored by the
Company or Holly, shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of securities of the Company representing
20% or more of the combined voting power of the Company's then outstanding
securities ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of directors, as a
result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, or (iv) at any time during a period of two
consecutive years, individuals who at the beginning of such period,
constituted the Board of Directors of the Company shall cease for any reason
to constitute at least a majority thereof, unless the election or the
nomination for election by the Company's stockholders of each new director
during such two-year period was approved by a vote of at least two-thirds of
the directors then still in office, who were directors at the beginning of
such two-year period.
11.2 Rights and Obligations. If a Change in Control of the
Company shall have occurred while the Employee is an employee of the Company,
the Employee shall be entitled to the compensation provided in Section 9.1 of
this Agreement upon the subsequent termination of the Employee's employment
with the Company by either the Company, or the Employee within two years of
the date upon which the Change in Control shall have occurred, unless such
termination is a result of (i) the Employee's death; (ii) the Employee's
Disability; (iii) the Employee's Retirement; or (iv) the Employee's
termination for Cause, except that the Severance Payment shall equal to the
greater of (x) the remainder due under this contract, if the change of control
had not happened, or (y) five (5) times Employee's Base Salary and shall be
payable in a cash lump sum no later than thirty (30) days after such
termination, and the continuation of benefits shall be for a period of five
years (collectively the "Termination Amount"). If Employee elects not to
terminate and, subsequent to such Change in Control, Employee's employment is
terminated by Company other than for Cause, or if Employee terminates this
Agreement for Good Reason, Employee shall be entitled to receive the
Termination Amount.
<PAGE>
12. BINDING EFFECT.
Subject to Paragraph 11 above, this Agreement shall be binding upon the
parties and their respective heirs, legal representatives, successors and
assigns.
13. REMEDIES.
Employee hereby acknowledges that in the event of a breach or threatened
breach by him of the provisions of this Agreement, Employer would suffer
irreparable harm for which there would be no adequate remedy at law.
Accordingly, Employee agrees that in such event, in addition to any other
remedies which Employer may have in law or in equity for money damages or
other relief, Employer shall be entitled to temporary and/or injunctive
relief, without the necessity of posting bond or proving damages, to enforce
the provisions hereof.
14. ENFORCEABILITY.
If any provision of this Agreement would be deemed to be invalid or
unenforceable for any reason, including, without limitation, the geographic or
business scope or the duration thereof, such provision shall be construed in
such a way as to make it valid and enforceable to the maximum extent
possible. Any invalidity or unenforceability of any provision of this
Agreement shall attach only to such provision and shall not effect or render
invalid or unenforceable any other provision of this Agreement or any other
agreement or instrument.
15. AGREEMENT TO PERFORM NECESSARY ACTS.
Each party agrees to perform any further acts and execute and deliver any
further documents which may be reasonably necessary to carry out the
provisions of this Agreement.
16. NOTICES.
All notices and other communications hereunder shall be in writing
(including a writing delivered by facsimile transmission) and, unless
otherwise provided herein, shall be deemed to have been given when delivered
to the party to whom such notice is to be given at its address set forth
below, which address shall be sufficient in order to effect the service of
process against each such party, or such other address for the party as shall
be specified by notice given pursuant hereto, four business days after
delivery by certified mail, return receipt requested, immediately upon hand
delivery, two business days after delivery by priority Federal Express or
other similarly reputable overnight carrier:
To Employer:
Nightlife Printing & Promotion, Inc.
2200 Marcus Avenue
Lake Success, NY 11042
<PAGE>
with a required copy to:
Holly Holdings, Inc.
200 Monument Road, Suite 10
Bala Cynwyd, PA 19004
To Employee:
Thomas K. Weitzman
1167 Pine Valley Road
Upper Brookville, NY 11771
17. ENTIRE AGREEMENT: MODIFICATION.
This Agreement constitutes the full and complete agreement and
understanding between the parties hereto and supersedes any and all similar
agreements heretofore executed. Any modification to the terms of this
Agreement must be in writing signed by both parties.
18. GOVERNING LAW.
This Agreement is made and shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of New York,
without reference to the conflicts of laws principles thereof. Any legal
action or proceeding with respect to this Agreement shall be brought only in
the courts of Nassau County, New York or of the United States of America for
the Eastern District of New York, and, by execution and delivery of this
Agreement, each of the Employee and Employer hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Each of the Employee and Employer hereby knowingly,
voluntarily, intentionally and irrevocably waive, in connection with any such
action or proceeding: (i) any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in such respective jurisdictions and (ii) to the maximum
extent not prohibited by law, any right it may have to a trial by jury in
respect of any litigation directly or indirectly arising out of, under or in
connection with this Agreement. Each of the Employer and the Employee
irrevocably consents to the service of process of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof in
the manner provided in Section 16.
19. HEADINGS.
The captions and headings used herein are for convenience only and shall
not be construed as a part of this Agreement.
<PAGE>
20. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which taken together shall constitute but one
and the same document.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands on the
day and year first above written.
Employer: NIGHTLIFE PRINTING & PROMOTION, INC.
By:________________________________
Employee: ___________________________________
Thomas K. Weitzman
As a material inducement for Employee entering into this Employment Agreement,
Holly Holdings, Inc. ("Holly") hereby agrees: (a) to pay Employee the sum of
$200,000 within ten days of the execution hereof; (b) is executing and
delivering to Employee the Option Agreement; and (c) Subsequent to the
termination of the Option Agreement, agrees not to cause or permit Night Life
Printing & Promotion, Inc. ("Night Life") or American Publishers Corp. to take
the actions set forth on Schedule A to this Agreement with prior written
consent of Employee, provided that in any given fiscal year, Night Life had a
Profit (as defined in Section 7.2 above) in the immediately preceding fiscal
year. Notwithstanding the forgoing, Holly shall not be liable to Employee for
any obligation of Employer arising under this Agreement. In addition, Holly
agrees to be subject to all of the provisions of Section 18 of this Agreement.
Holly Holdings, Inc.
By:____________________________________
William Patrowicz, President
<PAGE>
SCHEDULE 7.4
FRINGE BENEFITS
1. Contributory 401K Plan
- John Hancock
2. Health Insurance
- Oxford Health Plan
3. Term Life Insurance
- $500,000
<PAGE>
SCHEDULE A
(i) amend the certificate of incorporation of either of the
Companies;
(ii) amend the Bylaws of either of the Companies;
(iii) merge, consolidate or exchange shares with any other party.
(iv) sale, lease, or exchange of more than 5% in one transaction or
15% in the aggregate of the property or assets of either of the Companies
either in the regular course of business or other than in regular course of
business;
(v) change any of the titles, duties, salary or other compensation
of Optionee except in accordance with the terms of their Employment Agreement;
(vi) incur any corporate indebtedness, enter into any business
transaction or financial commitment (including, but not limited to, any
intercompany payments or advances) involving in excess of $25,000 in a single
transaction or $150,000 in the aggregate;
(vii) declare or pay any dividends and other distributions on the
stock of either of the Companies;
(viii) dissolve either of the Companies;
(ix) enter into or perform any business transactions between an
Executive Officer, Director, or any person performing the normal duties and
responsibilities normally assigned to Directors of Holly and either of the
Companies or any contract or other transaction between either of the Companies
and a corporation, partnership, or association in which one or more of the
Executive Officers, Directors, or any persons performing the managerial duties
and responsibilities normally assigned to directors, are officers of Holly,
directors, have a material financial interest, direct or indirect;
(x) form any subsidiary of either of the Companies, or any joint
venture, partnership, business trust or limited liability company in which
either of the Companies is to have an interest;
(xi) designate or issue any shares or class stock of either of the
Companies;
(xii) grant of any option, right or warrant to purchase any
securities of either of the Companies or in any way encumber the Shares;
(xiii) materially change the business of either of the Companies;
<PAGE>
(xiv) permit checks above $5,000 to be authorized without the
signature of either Tom Weitzmann or Mark Rosner; or
(xv) change of any of the titles, duties, salary or other
compensation of any employee of either of the Companies, or make any personnel
decisions relating to the hiring or firing of any employee of either of the
Companies.
<PAGE>
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made and entered into this 21st day of March
1997 and between NIGHTLIFE PRINTING & PROMOTION, INC., a New York corporation
having its principal office at 2200 Marcus Avenue, Lake Success, New York
(herein after called "Employer" or "Company"), and MARK ROSNER (hereinafter
called "Employee").
R E C I T A L S :
A. Employer is in the printing business and related products and
services.
B. Employer desires to employ Employee and Employee desires to be
employed by Employer, upon the terms and conditions hereinafter set forth.
In consideration of the mutual covenants hereinafter set forth, it is
hereby agreed as follows:
1. EMPLOYMENT AND DUTIES.
Employer agrees to employ Employee as Vice-President and Employee agrees
to serve Employer in such capacity and to engage in those duties which might
reasonably be required of a Vice-President, including, but not limited to
responsibility for day to day operations of the Employer and such other
related businesses as Employer may subsequently develop or acquire, subject to
the direction of the Board of Directors and to manage the business affairs of
American Publishers Corporation.
2. TERM.
Employee's employment hereunder shall be for a period of ten (10) years
unless sooner terminated pursuant to Section 9 hereof (the "Term") commencing
March 24, 1997 (the "Commencement Date") and ending March 23, 2007. This
Agreement shall be automatically renewed for successive two (2) year periods,
unless either party shall notify the other in writing of its intention not to
renew this Agreement, which notice shall be given at least 120 days prior to
end of the then current term.
3. DEVOTION OF ATTENTION.
Throughout the Term of his employment, Employee shall devote his full
time to carry out the duties commensurate with Employee's position, to the
business affairs of the Employer.
<PAGE>
4. NON-DISCLOSURE.
4.1 Acknowledgment and Purposes. Employee acknowledges that during
the course of his employment with Employer prior to the Term of this
Agreement, Employee has learned, developed, and had access to and will, during
the Term of this Agreement, learn, develop and have access to, Confidential
Information relating to the business and affairs of Employer. As used in this
Agreement, Confidential Information shall mean trade secrets concerning
Employer's operations, future plans, projected and historical sales,
marketing, costs, production, growth and distribution, any customer lists,
customer information, information relating to governmental relations, or
information relating to the products or services, whether patentable or not,
concerning the business of Employer and/or its affiliates as conducted at any
time prior to the termination of this Agreement.
Employer and/or its affiliates is engaged in a highly competitive
business; its competitive position depends in great measure upon its ability
to develop or acquire and maintain the confidentiality of Confidential
Information; and it may have expended and is likely to continue to expend
considerable efforts and resources in the development or acquisition of
Confidential Information. Based upon the foregoing, Employee recognizes that
the unauthorized disclosure of Confidential Information in violation of the
terms hereof is likely to result in serious and irrevocable harm to Employer
and/or its affiliates.
4.2 Restrictions on the Use of Confidential Information. Employee
agrees and covenants as follows:
(a) All documents and other materials made or compiled by Employee prior
to or during the Term of this Agreement and any copies thereof, whether or not
containing Confidential Information are and shall be the property of Employer
and shall be delivered to Employer by Employee upon request by Employer.
Employee will treat as trade secrets all Confidential Information acquired by
him prior to or during the Term of this Agreement, and will not use any such
Confidential Information for his own benefit nor disclose it or any part of it
to any other person, firm or corporation (other than Employer) (i) without the
prior written consent of Employer; (ii) unless such disclosure is required by
law or in response to a legal order; (iii) unless such Confidential
Information has become generally available to the public other than through
the breach by Employee of the terms hereof; or (iv) unless such information is
rightfully received by Employee from a third party without restrictions on
disclosure or use.
5. COVENANT NOT TO COMPETE.
5.1 Acknowledgment and Purposes. Employer is and will be engaged in
the business (the "Business") of (i) selling printing services and printed
materials to customers, and (ii) the marketing and sale of other related
products and services in the New York Metropolitan Area. Employee
acknowledges that said business of Employer is local in scope and that
Employer competes with other organizations that could be located in the New
York Metropolitan Area.
<PAGE>
5.2 Covenants. Employee covenants and agrees that during the Term
of the Agreement and unless Employee is terminated without cause or this
Agreement expires and there is no renewal, until one year after termination
Employee will not directly or indirectly:
(a) Engage or invest in, own, manage, operate, control or participate in
the ownership, management, operation or control of, be employed, associated or
in any manner connected with or render services or advice to, any business the
services of which compete, in whole or in part, with the then current or
actively developing services or activities of Employer described in paragraph
5.1 above, within the geographical territories within the New York
Metropolitan Area; provided, that Employee may: (i) invest in less than five
percent (5%) of any class of securities of any enterprise (but without
otherwise participating in the activities of such enterprise) if such
securities are listed on any regional or national securities exchange or have
been registered under Section 12(g) or Section 15(d) of the Securities
Exchange Act of 1934, as amended.
(b) Whether for his own account or for the account of any other person,
directly or indirectly, solicit the business of any person known by him to be
a customer or former customer of Employer except if such customer has not done
business with Employer for a period of thirty (30) months from the
Commencement Date, without Employer's consent, which consent Employer may
withhold in its absolute discretion, whether or not Employee had personal
contact with such person during or by reason of his employment with the
Employer prior to or during the Term of this Agreement. Provided, however,
that such restriction on solicitation applies only in connection with
solicitation for the then current or actively developing services or
activities of Employer.
(c) Whether for his own account or the account of any other person,
directly or indirectly, without the Employer's consent, which consent Employer
may withhold in its absolute discretion, (i) solicit, employ or otherwise
engage as an employee, independent consultant or otherwise, any person who is
or was an employee of Employer at any time during the employment of Employee
by Employer prior to or during the Term of this Agreement, except if such
person was not employed by Employer for a period of thirty (30) months from
the Commencement Date, or in any manner induce or attempt to induce any
employee of Employer who was an employee within the thirty months immediately
preceding the Commencement Date or the date of termination without cause, to
terminate his or her employment with Employer, or (ii) interfere with the
relationship of Employer with any person, including any person who at any time
during the employment of Employee by Employer prior to or during the Term of
this Agreement was an employee, a customer, a vendor, a supplier or a
consultant of, or to, Employer.
<PAGE>
6. DISCLOSURE AND ASSIGNMENT.
Employee will disclose fully to Employer all inventions, formulae,
processes, improvements and ideas, whether or not patentable, made or
conceived by Employee in whole or in part, alone or with others, at any time
during the Term and which relate to the then current or actively developing
services or activities of Employer. Employee will also (i) assign to Employer
all such inventions, formulae, processes, improvements and ideas and all
Employee's rights thereto and (ii) sign all documents reasonably requested by
Employer to enable Employer to obtain patents thereon in the United States of
America and such foreign countries as Employer may designate, and otherwise
assist Employer, at the latter's expense, in obtaining such patents and in
protecting, maintaining and defending same.
7. COMPENSATION AND BENEFITS.
Employee shall receive the following compensation and benefits for
services rendered by him during the term of this Agreement:
7.1 Salary. Employer shall pay Employee a base salary ("Base
Salary") as follows: $208,000 per year commencing on the Effective Date.
Employee's Base Salary may be increased, but not decreased by the Board of
Directors. Once increased, such increased amount shall constitute the
Employee's Base Salary. Base Salary shall be payable in accordance with the
ordinary payroll practices of the Company, but in no event less than two
times per month.
7.2 Bonus.
(a) In addition to the aforementioned salary, a bonus shall be paid
to the Employee of (i) $7,500 per quarter if the Company's profits ("Profits"
which shall be defined as earnings before interest, depreciation, tax and
without giving effect to the payment of this bonus) exceed $250,000 for the
quarter; or (ii) $15,000 per quarter if the Company's Profits exceed $500,000
for the quarter; and (iii) $7,500 per year if the Company's Profits exceed
$250,000 for the year; or (iv) $15,000 per year if the Company's Profits
exceed $500,000 for the year. Such bonus shall be paid within fifteen days
after the completion of the quarter or year as the case may be.
(b) A bonus shall be paid to Employee of (i) $12,500 per quarter
of American's Profits exceed $200,000 for the quarter; or (ii) $25,000 per
quarter if American's Profits exceed $400,000 for the quarter; and (iii)
$12,500 per year if American's Profits exceed $200,000 for the year; or (iv)
$25,000 per year if American's Profits exceed $400,000 for the year. Such
bonus shall be paid within fifteen days after the completion of the quarter
or year as the case may be.
7.3 Vacation. During the term hereof, Employee shall be entitled
to such vacations during each calendar year as the Board of Directors shall
specify, but in no event shall Employee be entitled to less than four weeks
of paid vacation during each year of employment.
<PAGE>
7.4 Fringe Benefits. In addition to all the other compensation to
be provided to Employee pursuant to this paragraph 7, Employee shall be
entitled to receive or to participate in any fringe benefits which are or may
be provided by Employer to its officers and/or employees, including, but not
limited to, insurance, health, welfare and retirement plans, but in no event
less than as set forth in Schedule 7.4.
7.5 Business Expenses. Employee is authorized to incur reasonable
expenses in carrying out his duties and responsibilities under this Agreement,
including, without limitation, expenses for travel, cellular telephone
(including access charges and business calls) and similar items related to
such duties and responsibilities. Company will reimburse Employee for all
such expenses upon presentation by Employee of appropriately itemized accounts
of such expenditures.
7.6 Automobile. Employer shall lease an automobile of Employee's
choice on behalf of Employee and reimburse Employee for insurance and
maintenance. Employer's total monthly obligation for the lease, insurance and
maintenance is $1,500. Employer will provide Employee monthly with the
difference between the lease payment per month and $1,500.
8. INDEMNIFICATION
Employee shall be indemnified by the Company against any cost, loss,
damage, judgment, and/or expense, including attorneys' fees, actually
incurred by him in connection with the defense of any claim, action, suit,
investigation or proceeding or similar legal activity, regardless of whether
criminal, civil, administrative or investigative in nature ("Claim"), to which
he is made a party or is otherwise subject to, by reason of his being or
having been an officer of Company, to the full extent permitted by applicable
law and the Certificate of Incorporation of Company. Such right of
indemnification will not be deemed exclusive of any other rights to which
Employee may be entitled under Company's Certificate of Incorporation or
By-Laws, as in effect from time to time, any agreement or otherwise. In
addition, Holly Holdings, Inc. agrees to name the Employee on it Directors
and Officers Insurance Policy.
9. TERMINATION OF EMPLOYMENT.
9.1 Termination Without Cause, for Good Reason, or Voluntarily.
(a) Company may terminate Employee's employment at any time for any
reason. If (i) Employee's employment is terminated by the Company other than
(x) for Cause (as defined in Section 9.4 hereof) or (y) as a result of
Employee's death or Permanent Disability (as defined in Section 9.2 hereof);
or (ii) if Employee terminates his employment for Good Reason (as defined in
Section 9.1 (b) hereof) prior to the Termination Date, Employee shall receive
or commence receiving as soon as practicable in accordance with the terms of
this Agreement:
(i) such payments under applicable plans or programs, including but not
limited to those referred to in Section 7.4 hereof, to which he is entitled
pursuant to the terms of such plans or programs through the date of
termination;
<PAGE>
(ii) any earned but unpaid Bonus which amount shall be paid in a cash lump
sum within thirty (30) days of the date of termination;
(iii) a severance payment (the "Severance Payment"), which amount shall be
paid in a cash lump sum within thirty (30) days of the date of termination, in
the amount of the greater of (a) five times the Employee's Base salary plus
the amount of any bonus paid by the Company for the calendar year preceding
the calendar year in which termination occurs; or (b) the aggregate amount of
the Employee's Base Salary for the then remaining term of this Agreement;
(iv) immediate vesting of all unvested stock options and the extension of
the exercise period of such options to the later of the longest period
permitted by the Company's stock option plans or ten years following the
Termination Date;
(v) payment in respect of accrued but unused vacation days (the "Vacation
Payment") and compensation earned but not yet paid and a pro rata portion of
the Bonus for the amount of the year elapsed prior to termination, (the
"Compensation Payment") which amount shall be paid in a cash lump sum within
thirty (30) days of the date of termination; and
(vi) continued coverage, at the Company's expense for a period of 24
months from the date of termination under all employee health, dental,
disability and life insurance plans in which the Employee participates as of
the date of termination in accordance with the respective terms thereof, plus
COBRA coverage rights thereafter if available, of substantially the same
insurance coverage as Employer maintains for Employee during term of
employment.
(b) For purposes of this Agreement, "Good Reason" shall mean any of the
following:
(i) Any material breach by Company of any provision of this Agreement,
including any material reduction by Company of Employee's duties or
responsibilities (except in connection with the termination of Employee's
employment for Cause, as a result of Permanent Disability, as a result of
Employee's death or by Employee other than for Good Reason) or any material
breach by Company of any provision of the Option Agreement dated March 21,
1997 (the "Option Agreement"), the Stock Purchase and Exchange Agreement dated
March 21, 1997, or the Registration Rights Agreement dated March 21, 1997;
<PAGE>
(ii) A reduction by the Company in Employee's Base Salary without his
consent;
(iii) Moving the principal executive offices of Company to a location
outside of the New York metropolitan area; or
(iv) Upon a Change of Control of Company (as such term is hereinafter
defined).
9.2 Permanent Disability. If Employee becomes permanently
disabled (as defined in the Company's disability benefit plan applicable to
senior executive officers as in effect on the date thereof) ("Permanent
Disability"), Company or Employee may terminate Employee's employment on
written notice thereof, and Employee shall receive or commence receiving, as
soon as practicable:
(i) amounts payable pursuant to the terms of the disability insurance
policy or similar arrangement which Company maintains during the term hereof.
The Company covenants to obtain within sixty days of the date hereof and
maintain a disability policy reasonably acceptable to Employee with coverage
of Employee of no less than $75,000 per year for the Term of this Employment
Agreement. If the Company, despite its best efforts, is unable to obtain a
disability insurance policy or similar arrangement for Employees, then Company
will pay, in addition to (v) below, $75,000 per year in equal monthly
installments for two years;
(ii) the Vacation Payment and the Compensation Payment which shall be paid
to Employee as a cash lump sum within 30 days of such termination;
(iii) such payments under applicable plans or programs, including but not
limited to those referred to in Section 7.4 hereof, to which he is entitled
pursuant to the terms of such plans or programs through the date of
termination;
(iv) immediate vesting of all unvested stock options; and
(v) compensation equal to one year's Base Salary which shall be paid
within 30 days of such termination.
9.3 Death. In the event of Employee's death during the term of
his employment hereunder, Employee's estate or designated beneficiaries shall
receive or commence receiving, as soon as practicable in accordance with the
terms of this Agreement:
(i) compensation equal to one year's Base Salary which shall be paid
within 30 days of such termination;
<PAGE>
(ii) any death benefits provided under the employee benefit programs,
plans and practices referred to in Section 7.4 hereof, in accordance with
their respective terms;
(iii) the Vacation Payment and the Compensation Payment which shall be
paid to Employee as a cash lump sum within 30 days of such termination; and
(iv) such other payments under applicable plans or programs, including
but not limited to those referred to in Section 7.4 hereof, to which Employee's
estate or designated beneficiaries are entitled pursuant to the terms of such
plans or programs.
9.4 Voluntary Termination by Employee: Discharge for Cause. The
Company shall have the right to terminate the employment of Employee for Cause
(as hereinafter defined). In the event that Employee's employment is
terminated by Company for Cause, as hereinafter defined, or by Employee other
than for Good Reason or other than as a result of the Employee's Permanent
Disability or death, prior to the Termination Date, Employee shall be entitled
only to receive, as a cash lump sum within 30 days of such termination (i) the
Compensation Payment and the Vacation Payment; and (ii) earned but unpaid
Bonus attributable to a calendar year prior to the calendar year in which such
termination occurs. As used herein, the term "Cause" shall be limited to (i)
willful malfeasance, willful misconduct or gross negligence by Employee in
connection with his employment in a matter of material importance to the
conduct of the Company's affairs which has a material adverse affect on the
business of the Company, (ii) any material breach of this Agreement by
Employee which remains uncured after thirty days written notice specifying the
material breach or (iii) the conviction of Employee for commission of a felony
related to fraud, embezzlement and drug related activities and/or any other
white collar crimes in connection with the Business. For purposes of this
subsection, no act or failure to act on the Employee's part shall be
considered "willful" unless done, or omitted to be done, by the Employee not
in good faith and with the belief that his action or omission was not in the
best interest of the Company. Termination of Employee pursuant to this
Section 9.4 shall be made by delivery to Employee of a copy of a resolution
duly adopted by the affirmative vote of all of the members of the Board of
Directors called and held for such purpose (after 30 days prior written notice
to Employee and reasonable opportunity for Employee to be heard before the
Board of Directors prior to such vote), finding that in the good faith
business judgment of such Board of Directors, Employee was guilty of conduct
set forth in any of clauses (i) through (iii) above and specifying the
particulars thereof.
9.5. Late Payments. Any amounts due hereunder to Employee which
remain unpaid after their due date, shall bear interest from the due date
until paid at a rate of the prime rate (in effect on the date thereof for
Citibank, N.A.) plus 2%.
10. ASSIGNMENT.
This contract shall be binding upon and inure to the benefit of the heirs
and representatives of Employee and the assigns and successors of Company, but
<PAGE>
neither this Agreement nor any rights or obligations hereunder shall be
assignable or otherwise subject to hypothecation by Employee (except by will
or by operation of the laws of intestate succession) or by Company.
11. CHANGE IN CONTROL.
11.1 Definition. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if (i) there shall be consummated
(A) any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the
Company's Common Stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of the
Company's Common Stock immediately prior to the merger have substantially the
same proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all the assets of the Company, or (ii) the stockholders of the
Company shall approve any plan or proposal for the liquidation or dissolution
of the Company, or (iii) any person (as such term is used in Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")),
other than the Company or Holly or any employee benefit plan sponsored by the
Company or Holly, shall become the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of securities of the Company representing
20% or more of the combined voting power of the Company's then outstanding
securities ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of directors, as a
result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, or (iv) at any time during a period of two
consecutive years, individuals who at the beginning of such period,
constituted the Board of Directors of the Company shall cease for any reason
to constitute at least a majority thereof, unless the election or the
nomination for election by the Company's stockholders of each new director
during such two-year period was approved by a vote of at least two-thirds of
the directors then still in office, who were directors at the beginning of
such two-year period.
11.2 Rights and Obligations. If a Change in Control of the
Company shall have occurred while the Employee is an employee of the Company,
the Employee shall be entitled to the compensation provided in Section 9.1 of
this Agreement upon the subsequent termination of the Employee's employment
with the Company by either the Company, or the Employee within two years of
the date upon which the Change in Control shall have occurred, unless such
termination is a result of (i) the Employee's death; (ii) the Employee's
Disability; (iii) the Employee's Retirement; or (iv) the Employee's
termination for Cause, except that the Severance Payment shall equal to the
greater of (x) the remainder due under this contract, if the change of control
had not happened, or (y) five (5) times Employee's Base Salary and shall be
payable in a cash lump sum no later than thirty (30) days after such
termination, and the continuation of benefits shall be for a period of five
years (collectively the "Termination Amount"). If Employee elects not to
terminate and, subsequent to such Change in Control, Employee's employment is
terminated by Company other than for Cause, or if Employee terminates this
Agreement for Good Reason, Employee shall be entitled to receive the
Termination Amount.
<PAGE>
12. BINDING EFFECT.
Subject to Paragraph 11 above, this Agreement shall be binding upon the
parties and their respective heirs, legal representatives, successors and
assigns.
13. REMEDIES.
Employee hereby acknowledges that in the event of a breach or threatened
breach by him of the provisions of this Agreement, Employer would suffer
irreparable harm for which there would be no adequate remedy at law.
Accordingly, Employee agrees that in such event, in addition to any other
remedies which Employer may have in law or in equity for money damages or
other relief, Employer shall be entitled to temporary and/or injunctive
relief, without the necessity of posting bond or proving damages, to enforce
the provisions hereof.
14. ENFORCEABILITY.
If any provision of this Agreement would be deemed to be invalid or
unenforceable for any reason, including, without limitation, the geographic or
business scope or the duration thereof, such provision shall be construed in
such a way as to make it valid and enforceable to the maximum extent
possible. Any invalidity or unenforceability of any provision of this
Agreement shall attach only to such provision and shall not effect or render
invalid or unenforceable any other provision of this Agreement or any other
agreement or instrument.
15. AGREEMENT TO PERFORM NECESSARY ACTS.
Each party agrees to perform any further acts and execute and deliver any
further documents which may be reasonably necessary to carry out the
provisions of this Agreement.
16. NOTICES.
All notices and other communications hereunder shall be in writing
(including a writing delivered by facsimile transmission) and, unless
otherwise provided herein, shall be deemed to have been given when delivered
to the party to whom such notice is to be given at its address set forth
below, which address shall be sufficient in order to effect the service of
process against each such party, or such other address for the party as shall
be specified by notice given pursuant hereto, four business days after
delivery by certified mail, return receipt requested, immediately upon hand
delivery, two business days after delivery by priority Federal Express or
other similarly reputable overnight carrier:
To Employer:
Nightlife Printing & Promotion, Inc.
2200 Marcus Avenue
Lake Success, NY 11042
<PAGE>
with a required copy to:
Holly Holdings, Inc.
200 Monument Road, Suite 10
Bala Cynwyd, PA 19004
To Employee:
Mark Rosner
117 Bounty Lane
Jericho, NY 11753
17. ENTIRE AGREEMENT: MODIFICATION.
This Agreement constitutes the full and complete agreement and
understanding between the parties hereto and supersedes any and all similar
agreements heretofore executed. Any modification to the terms of this
Agreement must be in writing signed by both parties.
18. GOVERNING LAW.
This Agreement is made and shall be governed in all respects, including
validity, interpretation and effect, by the laws of the State of New York,
without reference to the conflicts of laws principles thereof. Any legal
action or proceeding with respect to this Agreement shall be brought only in
the courts of Nassau County, New York or of the United States of America for
the Eastern District of New York, and, by execution and delivery of this
Agreement, each of the Employee and Employer hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Each of the Employee and Employer hereby knowingly,
voluntarily, intentionally and irrevocably waive, in connection with any such
action or proceeding: (i) any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in such respective jurisdictions and (ii) to the maximum
extent not prohibited by law, any right it may have to a trial by jury in
respect of any litigation directly or indirectly arising out of, under or in
connection with this Agreement. Each of the Employer and the Employee
irrevocably consents to the service of process of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof in
the manner provided in Section 16.
19. HEADINGS.
The captions and headings used herein are for convenience only and shall
not be construed as a part of this Agreement.
<PAGE>
20. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which taken together shall constitute but one
and the same document.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands on the
day and year first above written.
Employer: NIGHTLIFE PRINTING & PROMOTION, INC.
By:________________________________
Employee: ___________________________________
Mark Rosner
As a material inducement for Employee entering into this Employment Agreement,
Holly Holdings, Inc. ("Holly") hereby agrees: (a) to pay Employee the sum of
$200,000 within ten days of the execution hereof; (b) is executing and
delivering to Employee the Option Agreement; and (c) Subsequent to the
termination of the Option Agreement, agrees not to cause or permit Night Life
Printing & Promotion, Inc. ("Night Life") or American Publishers Corp. to take
the actions set forth on Schedule A to this Agreement with prior written
consent of Employee, provided that in any given fiscal year, Night Life had a
Profit (as defined in Section 7.2 above) in the immediately preceding fiscal
year. Notwithstanding the forgoing, Holly shall not be liable to Employee for
any obligation of Employer arising under this Agreement. In addition, Holly
agrees to be subject to all of the provisions of Section 18 of this Agreement.
Holly Holdings, Inc.
By:____________________________________
William Patrowicz, President
<PAGE>
SCHEDULE 7.4
FRINGE BENEFITS
1. Contributory 401K Plan
- John Hancock
2. Health Insurance
- Oxford Health Plan
3. Term Life Insurance
- $500,000
<PAGE>
SCHEDULE A
(i) amend the certificate of incorporation of either of the
Companies;
(ii) amend the Bylaws of either of the Companies;
(iii) merge, consolidate or exchange shares with any other party.
(iv) sale, lease, or exchange of more than 5% in one transaction or
15% in the aggregate of the property or assets of either of the Companies
either in the regular course of business or other than in regular course of
business;
(v) change any of the titles, duties, salary or other compensation
of Optionee except in accordance with the terms of their Employment Agreement;
(vi) incur any corporate indebtedness, enter into any business
transaction or financial commitment (including, but not limited to, any
intercompany payments or advances) involving in excess of $25,000 in a single
transaction or $150,000 in the aggregate;
(vii) declare or pay any dividends and other distributions on the
stock of either of the Companies;
(viii) dissolve either of the Companies;
(ix) enter into or perform any business transactions between an
Executive Officer, Director, or any person performing the normal duties and
responsibilities normally assigned to Directors of Holly and either of the
Companies or any contract or other transaction between either of the Companies
and a corporation, partnership, or association in which one or more of the
Executive Officers, Directors, or any persons performing the managerial duties
and responsibilities normally assigned to directors, are officers of Holly,
directors, have a material financial interest, direct or indirect;
(x) form any subsidiary of either of the Companies, or any joint
venture, partnership, business trust or limited liability company in which
either of the Companies is to have an interest;
(xi) designate or issue any shares or class stock of either of the
Companies;
(xii) grant of any option, right or warrant to purchase any
securities of either of the Companies or in any way encumber the Shares;
(xiii) materially change the business of either of the Companies;
<PAGE>
(xiv) permit checks above $5,000 to be authorized without the
signature of either Tom Weitzmann or Mark Rosner; or
(xv) change of any of the titles, duties, salary or other
compensation of any employee of either of the Companies, or make any personnel
decisions relating to the hiring or firing of any employee of either of the
Companies.
<PAGE>
HOLLY HOLDINGS, INC.
200 MONUMENT ROAD, SUITE 10
BALA CYNWYD, PA 19004
March 24, 1997
Mr. Tom Weitzmann
Mr. Mark Rosner
Nightlife Printing & Promotion, Inc.
2200 Marcus Avenue
Lake Success, NY 11042
Re: Stock Purchase & Exchange Agreement dated March 21, 1997 between
Holly Holdings, Inc. and the Stockholders of Nightlife Printing & Promotion,
Inc. ("Nightlife") and American Publishers Company, Inc. ("American") (the
"Agreement")
Gentlemen:
Reference is made to the above Agreement and the following agreements
executed in connection therewith:
(a) Option Agreements between Tom Weitzmann, Mark Rosner and Holly
Holdings, Inc., dated March 21, 1997 (the "Option Agreements")
(b) Employment Agreements between Nightlife, Tom Weitzmann and Mark
Rosner dated March 21, 1997 (the "Employment Agreements").
The parties wish to make certain corrections and amendments to the
Agreement, the Option Agreements and the Employment Agreements as follows:
1. Amending the Employment Agreements by deleting the word
"Company" appearing in the sixth line of subsection 9.1(b)(i) and substituting
therefore the words "Holly Holdings, Inc."
2. Amending the Option Agreements by:
<PAGE>
(a) substituting the following for subsection 2(b)(i):
"(i) Ten business days after Optionee receives notice that Optionee
materially breached any agreement or covenant made by the Optionee in this
Option Agreement, or the Stock Purchase and Exchange Agreement between the
Parties
dated March 21, 1997 ("Stock Purchase Agreement") and such breach
has not been cured, or the Company has terminated the Employment Agreement
between the Optionee and Nightlife dated March 21, 1997 for "Cause"; or"
(b) substituting the following for subsection (2)(c)(iii):
"(iii) the material breach by Holly of any of its agreements,
covenants or obligations under the Registration Rights Agreement dated March
21, 1997 between Holly and the Optionee, this Option Agreement, the Stock
Purchase Agreement or the Employment Agreement (the "Employment Agreement")
dated March 21, 1997 between Nightlife and the Optionee or the material breach
by Nightlife of any of its agreements, covenants or obligations under the
Employment Agreement ten business days after receiving notice thereof and
having failed to cure such breach";
(c) deleting subsection 7(c) and substituting therefor the
following:
"(c) Holly will affix the following legend to the certificates
representing the Nightlife and American Shares:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERM
OF AND RESTRICTIONS ON TRANSFER PURSUANT TO OPTION AGREEMENTS
BETWEEN HOLLY
HOLDINGS, INC., TOM WEITZMANN AND MARK ROSNER DATED MARCH 21, 1997,
A COPY OF
WHICH IS ON FILE AT THE COMPANY'S PRINCIPAL OFFICES.""
The parties further agree that the number of Holly shares necessary to
exercise the Options shall be reduced by the number of shares each Optionee
transfers to David Sieger or other employees of Nightlife or American as part
of a compensation or other plan (but not to a number less than 675,000 for
each Option).
<PAGE>
Except, as specifically set forth herein, all terms of the Agreement,
the Employment Agreements and the Option Agreements shall remain in full force
and effect without modification.
Holly Holdings, Inc.
By:________________________
William Patrowicz, President
Agreed this 21st
day of March, 1997
Nightlife Printing & Promotion, Inc.
By:_________________________
Tom Weitzmann
____________________________
Tom Weitzmann
____________________________
Mark Rosner
<PAGE>
FOR IMMEDIATE RELEASE
CONTACT: William Patrowicz
(610) 617-0400
HOLLY HOLDINGS, INC. ANNOUNCES THE ACQUISITION OF NIGHTLIFE
PRINTING &
PROMOTION, INC. AND AMERICAN PUBLISHERS COMPANY, INC.
BALA CYNWYD, PENNSYLVANIA--March 24, 1997--Holly Holdings, Inc. (NASDAQ:
HOPR, HOPRW, HOPRP; BSE: HOP, HOPP) today announced that it has acquired 100%
of the issued and outstanding stock of Nightlife Printing & Promotion, Inc.
("Nightlife") and American Publishers Company, Inc. ("American") for an
aggregate of 3,000,000 shares of Holly's Common Stock.
Nightlife is engaged in the color "print-on-demand" commercial offset
printing business. Nightlife sells printing material and other related
products and services, primarily for the entertainment and dining industry in
the New York Metropolitan area.
American is a wholesaler marketing Education Products to schools (Public
and Private), libraries, teachers and consumers throughout the continental
United States.
William Patrowicz, Holly's President stated: "This acquisition adds two
profitable companies to our corporate family and is the first step in the
planned acquisition of complimentary private companies. The acquisition of
Nightlife and American also brings their strong management teams into our
corporate family and pursuant to the agreement, adds Tom Weitzmann, President
and Co-Founder of Nightlife to the board of Holly."
Holly Holdings, Inc., headquartered in Bala Cynwyd, Pennsylvania has a
wholly owned subsidiary, Navtech Industries, Inc. of Shiprock, New Mexico and
a majority owned subsidiary, Country World Casinos, Inc. of Denver, Colorado.
Navtech is a manufacturer and tester of electronic components for casino
equipment, hotel equipment and signage. Country World Casinos, Inc. is a
development corporation whose plan is to construct a casino in Black Hawk,
Colorado, as well as a hotel complex.
<PAGE>
