SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Date of Report (Date of Earliest event reported):
May 28, 1998
FUN TYME CONCEPTS, INC.
(Exact name of registrant as specified in its charter)
Delaware O-27542 11-3157259
State of Commission File IRS Employer
Incorporation Number. Identification No.
290 Wild Avenue
Staten Island, NY 10314
Address of principal executive offices
Registrant's telephone number, including area code (718) 761-6100
None
(Former name or former address, if changed since last report)
<PAGE>
Item 1. Changes in Control of Registrant.
On May 28, 1998, the Registrant entered into a stock purchase agreement
(the "Acquisition") with Play Co. Capital Corp., a Delaware corporation, BBS
Holdings, LLC ("BBS Holdings"), a limited liability company organized under the
laws of the state of Delaware, the members of BBS Holdings, Anthony DiMatteo, an
individual residing at 110H Dinsmore Street, Staten Island, New York 10341
(ADiMatteo@) and LD Trust, a trust formed under the laws of the state of
Delaware, CAT L.L.C., a limited liability company and RICH L.L.C., a limited
liability company, whereby, BBS Holdings acquired an aggregate of 8,152,000
shares of Registrant's common stock, par value $.001 per share (the "Common
Stock"), of which Registrant issued 7,230,000 shares directly to BBS Holdings in
exchange for all of the outstanding shares of Play Co. Capital Corp. (APCC@).
Simultaneously therewith, CAT L.L.C and RICH L.L.C transferred an aggregate of
922,000 shares to BBS Holdings for a 20% ownership interest therein.
PCC owns a 50% interest in Prestige Fine Jewelry, L.L.C., a Delaware
limited liability company and owns the right under a purchase agreement to
purchase Cortina Mountain Ski Resort and all personal and real property included
therein.
Prior to the exchange of shares in the Acquisition, Daniel Catalfumo
and Richard Rosso each transferred 461,000 shares of the Registrant's Common
Stock to CAT L.L.C. and RICH L.L.C., respectively, companies owned by Daniel
Catalfumo and Richard Rosso, President and Vice President of the Registrant,
respectively.
Presently, inclusive of the shares issued in the acquisition, there are
9,991,465 shares of Registrant's Common Stock outstanding, of which BBS Holdings
owns 8,152,000 or approximately 81.5%, whereby, Registrant has become a
subsidiary of BBS Holdings and PCC has become a wholly owned subsidiary of the
Registrant.
In conjunction with the Acquisition, the Registrant's board of
directors was expanded from three members to four members, and a vacancy on the
board was filled. The executive Officers and Directors of the Company are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Herbert P. Marks 66 President and Director
Russell C. Murawski 49 Chief Financial Officer
Daniel Catalfumo 41 Chief Operating Officer and Director
Anthony DiMatteo 47 Executive Vice President of Sales
and Marketing and Director
Richard Rosso 41 Executive Vice President of Entertainment
and Secretary and Director
</TABLE>
All Directors hold office until the next annual meeting of stockholders or
until their successors are duly elected and qualified. The Executive Officers
are elected annually by the Board of Directors, serve at the discretion of the
Board of Directors, and hold office until their successors are duly elected and
qualified. Vacancies on the Board of Directors may be filled by the remaining
Directors.
Herbert P. Marks was elected as a Director and appointed as president and
Chief Executive Officer of the Company in May 1998. Since 1997, Mr. Marks has
run The Marks Group, L.L.C. a firm created by Mr. Marks to offer consulting
services to lending institutions and businesses. The services offered by The
Marks Group, L.L.C. include financial and management consulting, loan
restructuring and placement, cash control, asset liquidation, collateral
evaluations, asset monitoring support, on-site field examinations, and the
liquidation of assets securing loans. Mr. Marks shall devote 100% of his
business time to the affairs of the Company.
<PAGE>
Russell C. Murawski was appointed Chief Financial Officer and Treasurer in
May 1998. Since 1993, Mr. Murawski has been President of Princeton Business
Consultants, Inc., a capital, banking, and financial consulting company, which
he founded. Mr. Murawski shall devote 100% of his business time to the affairs
of the Company.
Daniel Catalfumo has been a Director of the Company since its inception in
1993. From the Company's inception until May 1998, he was also the Company's
Chief Executive Officer and President. In May 1998, upon the appointment of
Herbert P. Marks as President, Mr. Catalfumo was named Chief Operating Officer
and Executive Vice President. From 1982 to November 1994, Mr. Catalfumo was the
sole shareholder, Officer, and Director of Professional Tile Contracting Co., a
tile contracting company located in Brooklyn, New York.
Anthony DiMatteo was elected as a director of the Company and appointed
Executive Vice President of Sales and Marketing in May 1998. Since 1972, Mr.
DiMatteo served as Executive Vice President of Sales and Marketing for Four
Color Litho, Inc., a lithograph plating facility servicing the financial and
commercial printing community of New York and New Jersey. From 1992 to 1995, Mr.
DiMatteo served as a director of Leadville Milling & Mining Corp., a Colorado
based gold and silver mining company. Mr. DiMatteo voluntarily resigned his
directorship in 1995.
Richard Rosso has been the Secretary and a Director of the Company since
its inception in 1993. From the Company=s inception until May 1998, he was also
Treasurer. In May 1998 he was appointed Executive Vice President of
Entertainment and Administrative Coordinator. From 1983 to November 1994, Mr.
Rosso was the owner of Dynamic Dental Labs located in Brooklyn, New York. Mr.
Rosso operated Dynamic Dental Labs, which serviced over 1,000 area dentists for
over ten years.
<PAGE>
The following table sets forth certain information upon the consummation of
the Acquisition, with respect to the beneficial ownership of Common Stock held
by (i) each person known by the Registrant to be the owner of 5% or more of the
outstanding Common Stock; (ii) by each Director; and (iii) by all Officers and
Directors as a group. Except as otherwise indicated below, each named beneficial
owner has sole voting and investment power with respect to the shares of Common
Stock listed:
<TABLE>
<CAPTION>
Title Name and Address Amount and Nature Percentage of
of Class of Beneficial Owner of Beneficial Ownership (1) Class (2)
- -------- ------------------- --------------------------- ---------
<S> <C> <C> <C>
common BBS Holdings, LLC 8,152,000 81.6%
stock c/o Fun Tyme Concepts, Inc.
290 Wild Avenue
Staten Island, New York 10314
common Herbert P. Marks -- *
stock c/o Fun Tyme Concepts, Inc.
290 Wild Avenue
Staten Island, New York 10314
common Daniel Catalfumo (3) -- *
stock c/o Fun Tyme Concepts, Inc.
290 Wild Avenue
Staten Island, New York 10314
common Anthony DiMatteo (4) -- *
stock c/o Fun Tyme Concepts, Inc.
290 Wild Avenue
Staten Island, New York 10314
common Richard Rosso (5) -- *
stock c/o Fun Tyme Concepts, Inc.
290 Wild Avenue
Staten Island, New York 10314
common All Officers and Directors -- *
stock as a group (5 persons) (1)-(5)
- ----------------------------------------------------------------------------
</TABLE>
* Less than 1%
(1) Unless otherwise noted, all of the shares shown are held by individuals
or entities possessing sole voting and investment power with respect to such
shares. Shares not outstanding but deemed beneficially owned by virtue of the
right of a person to acquire them within 60 days, whether by the exercise of
options or warrants, are deemed outstanding in determining the number of shares
beneficially owned by such person or group.
(2) The "Percentage Beneficially Owned" is calculated by dividing the
"Number of Shares Beneficially Owned" by the sum of (i) the total outstanding
shares of Common Stock of the Registrant, and (ii) the number of shares of
Common Stock that such person has the right to acquire within 60 days, whether
by exercise of options or warrants. The "Percentage Beneficially Owned" does not
reflect shares beneficially owned by virtue of the right of any person, other
than the person named and affiliates of the person, to acquire them within 60
days, whether by exercise of options or warrants.
(3)Does not include (i) an aggregate of 151,365 shares of Common Stock
owned by members of Mr. Catalfumo's family, of which Mr. Catalfumo disclaims
beneficial ownership or (ii) the shares owned by BBS Holdings, of which a trust
formed by Mr. Catalfumo, in which his family members are the beneficiaries, owns
a 10% interest.
<PAGE>
(4)Does not include the shares owned by BBS Holdings, of which Mr. DiMatteo
is a 20% owner.
(5) Does not include (i) 6,278 shares of Common Stock owned by Mr. Rosso's
parents, of which Mr. Rosso disclaims beneficial ownership or (ii) the shares
owned by BBS Holdings, of which a trust formed by Mr. Rosso, in which his family
members are the beneficiaries, owns a 10% interest.
Item 2. Acquisition or Disposition of Assets
Registrant's Acquisition of Play Co. Capital Corp.
On May 28, 1998, the Registrant acquired 100% of PCC in the above mentioned
transaction. PCC owns (i) a 50% interest in Prestige Fine Jewelry, LLC
("Prestige"), and (ii) all rights, title and interest to a contract (the
"Contract") to purchase a lease and certain real and personal property
incorporated in the Cortina Mountain Ski Resort in Haines Falls, New York
("Cortina").
Prestige was formed as the exclusive marketing arm for a jewelry, primarily
gold manufacturing business named Prestige Chain, Inc. ("PCI"), which has its
manufacturing facilities in Long Island City, New York. Prestige entered into an
exclusive sales agreement with PCI, whereby, PCI does the manufacturing of the
jewelry and Prestige is the sales agent. PCI receives agreed upon prices per
piece manufactured and the purchase of the raw materials are funded by Prestige.
Prestige has entered in a sales agreement with J.K. Limited, Inc., for the sale
of jewelry, primarily gold to large chain store retailers.
In January 1998 PCC acquired the rights to a contract to acquire Cortina,
an existing but non-operating ski resort in upstate New York. The contract
includes the purchase of rights under a lease agreement, inclusive of the
ownership of certain real property. In addition, the purchase includes all
buildings, ski lifts and other personal property incorporated in the ski resort.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(a) Financial Statements of business being acquired. Shall be filed by
amendment.
(b) Pro Forma Financial Information. Shall be filed by amendment.
(c) Exhibits. The following exhibits are filed herewith pursuant to Item
601 of Regulation S-B of the Securities Act of 1933, as amended, except those
exhibits designated with an asterisk (*), which shall be filed by amendment.
<TABLE>
<CAPTION>
<S> <C>
10.5 Stock Purchase Agreement among Fun Tyme Concepts, Inc.; Play Co. Capital Corp.; BBS Holdings, LLC; the Members of
BBS Holdings, LLC; Cat LLC; and Rich LLC.
10.6 Operating Agreement of Prestige Fine Jewelry LLC.
10.7 * Exclusive Sales Agreement between Prestige Fine Jewelry LLC and Prestige Chain, Inc.
10.8 * Sales Agreement between Prestige Fine Jewelry LLC and J.K. Limited, Inc.
10.9 * Contract to purchase Cortina Mountain Ski Resort.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the Undersigned hereunto duly authorized on the 9th day of June, 1998.
FUN TYME CONCEPTS, INC.
By: /s/ Herbert P. Marks
Herbert P. Marks
President
By: /s/ Russell C. Murawski
Russell C. Murawski
Chief Financial Officer
<PAGE>
Exhibit 10.5
STOCK PURCHASE AGREEMENT
AMONG
FUN TYME CONCEPTS, INC.,
PLAY CO. CAPITAL CORP.,
BBS HOLDINGS, LLC,
THE MEMBERS OF BBS HOLDINGS, LLC,
CAT L.L.C. and RICH L.L.C.
May 28, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. Definitions ...................................................................................................3
2. Terms of Exchange .............................................................................................7
3. Representations and Warranties Concerning the
Transaction ....................................................................................................7
4. Representations and Warranties
Concerning the Target, its Subsidiary and Cortina ..............................................................9
5. Post-Closing Covenants .......................................................................................16
6. Remedies for Breaches of This Agreement ......................................................................17
7. Miscellaneous ................................................................................................20
</TABLE>
Exhibit A=Appraisal of Cortina Mountain Ski Resort
Exhibit B=Operating Agreement for BBS Holdings, LLC
Exhibit C=Amended Operating Agreement for Prestige
Exhibit D=Contract to purchase Cortina Mountain Ski Resort
Exhibit E=Sales Agreement between J.K. Ltd., Inc. and Prestige and Exclusive
Marketing Agreement with Prestige Chain, Inc.
Exhibit F=Assignment of rights in Cortina Mountain Ski Resort to Playco and
Assumption of Promissory Note to Cortina Mtn. Partnership
<PAGE>
STOCK PURCHASE AGREEMENT
AGREEMENT made as of the 28th day of May, 1998, by and among Fun Tyme
Concepts, Inc., a New York corporation with its principal executive offices
located at 290 Wild Avenue, Staten Island, New York 10314 ("Acquirer"), Play Co.
Capital Corp., a Delaware corporation, with offices located at 110H Dinsmor
Street, Staten Island, New York 10341 (ATarget@), BBS Holdings, LLC, a limited
liability company organized under the laws of the state of Delaware ("BBS
Holdings"), the members of BBS Holdings, Anthony Di Matteo, an individual
residing at 110H Dinsmor Street, Staten Island, New York 10341 (ADiMatteo@) and
LD Trust, a trust formed under the laws of the state of Delaware, located at c/o
J.H. Cohn LLP, 75 Eisenhower Parkway, Roseland, NJ 07068-1697 (the ATrust@)
(DiMatteo and Trust are collectively referred to as the "Sellers"), CAT L.L.C.,
a limited liability company, located at 290 Wild Avenue, Staten Island, New York
10314 (ACAT L.L.C.@) and RICH L.L.C., a limited liability company, located at
290 Wild Avenue, Staten Island, New York 10314 (ARICH L.L.C.@).
W I T N E S S E T H:
WHEREAS, Target is corporation which is wholly owned by BBS Holdings, a
limited liability company with its only members being Sellers; and
WHERAS, Target owns (i) a 50% interest in Prestige Fine Jewelry, LLC, a
company which is the exclusive marketing arm for a gold manufacturing business
(APrestige@) and (ii) all rights, title and interest to a contract (the
"Contract") to purchase a lease and certain real and personal property
incorporated therein with respect to the Cortina Mountain Ski Resort (ACortina@)
as annexed hereto as Exhibit D; and
WHEREAS, Daniel Catalfumo, sole member of CAT L.L.C. and Richard Rosso sole
member of RICH L.L.C. are officers, directors and principal stockholders of
Acquirer; and
WHEREAS, in accordance with its overall plan of reorganization under
Section 368(a)(1)(B) of the Internal Revenue Service Code, the parties to this
Agreement, individually, by their respective boards of directors and members, as
appropriate, have agreed that it is in the best interests of all parties for
Target to be acquired by Acquirer upon the terms and conditions set forth
herein, in a tax free exchange, whereby, Target shall be a wholly owned
subsidiary of Acquirer.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions.
"Acquirer" has the meaning set forth in the preface above.
"Acquirer's Shares" means an aggregate of 8,302,000 shares of Common
Stock of Acquirer, of which (i) 7,230,000 shares are to be issued by Acquirer in
accordance with this Agreement and (ii) 982,000 shares of Acquirer=s Common
Stock are owned in the aggregate by CAT L.L.C. and RICH L.L.C..
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, taxes, liens, losses, expenses, and
fees, including court costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the rules and
regulations promulgated under the Securities Exchange Act.
<PAGE>
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Closing" has the meaning set forth in '2(e) herein.
"Closing Date" has the meaning set forth in '2(e) herein.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the
businesses and affairs of the Target that is not already generally available to
the public.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Sec. 3(1).
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations- in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable investigation.
<PAGE>
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Multiemployer Plan" has the meaning set forth in ERISA Sec. 3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past customs and practice (including with respect to quantity
and frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406
and Code Sec. 4975.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security" has the meaning set forth in '2 of the Securities Act.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable (c) purchase
money liens and liens securing rental payments under capital lease arrangements,
and (d) other liens arising in the Ordinary Course of Business and not incurred
in connection with the borrowing of money.
"Sellers" means all the stockholders of Target as set forth in the
preface above.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Target" has the meaning set forth in the preface above.
"Target's Shares" means all the issued and outstanding shares of the
Common Stock, no par value per share, of the Target.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
2. Terms of the Exchange.
(a) Basic Transaction. The Acquirer hereby exchanges with BBS Holdings
7,230,000 of the Acquirer's Shares for the Target's Shares. In addition, CAT
L.L.C. and RICH L.L.C. hereby contribute an aggregate of 922,000 of the
Acquirer=s Shares to BBS Holdings. Each of CAT L.L.C. and RICH L.L.C., are
transferring there rights in BBS Holdings to CAT Trust and RAR Trust,
respectively, which trusts shall become members of BBS Holdings, in accordance
with '2(d) below.
<PAGE>
(b) Ownership of Prestige. In accordance with the operating agreement of
Prestige Sellers have obtained consents to the transfer=s herein described as
well as a fully executed operating agreement from the remaining member of
Prestige, as annexed hereto as Exhibits C, whereby, Target is a 50% owner in
Prestige.
(c) Contract to Purchase Cortina Properties; Appraisal. The Sellers have
obtained and perfected in the name of Target, including but not limited to
obtaining all necessary consents and performing all necessary filings, all
rights, title and interest to the Contract, which is annexed hereto as Exhibit D
and the assignment to the contract to Target is annexed hereto as Exhibit F. In
accordance with this Agreement Target has had an appraisal performed on Cortina,
a copy of which is annexed hereto as Exhibit A.
(d) Formation of Parent. Sellers have formed BBS Holdings LLC., a limited
liability company to be the parent company of the Acquirer, to own Acquirer=s
Shares. Simultaneously with the Closing all members of Parent shall execute an
operating agreement for the control and operation of the Parent, in the form
annexed hereto as Exhibit C.
(e) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") is taking place at the offices of Acquirer=s Counsel
on the date hereof (the "Closing Date"). The Closing shall be deemed to have
occurred at 11:59 p.m. on the Closing Date.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Sellers. Each of the Sellers
represents and warrants to the Acquirer that the statements contained in this
?3(a) are correct and complete as of the date of this Agreement with respect to
himself or itself.
(i) Authorization of Transaction. This Agreement constitutes the valid
and legally binding obligation of each Seller, enforceable against each
Seller in accordance with its terms and conditions. No Seller either
individually or collectively needs to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any other Seller
or Person, in order to consummate the transactions contemplated by this
Agreement, except that certain third party consents are required as
identified herein.
(ii) Noncontravention. Except for the consents referred to in the
Schedules herein, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which the Target or any
Seller is a party or by which he/she or it is bound or to which any of
his/her or its assets are subject.
(iii) Brokers' Fees. No Seller has any Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Acquirer could
become liable or obligated.
(iv) Investment. The Sellers understand that the Acquirer's Shares
have not been, and will not be, registered under the Securities Act, or
under any state securities laws, and are being offered and sold in reliance
upon exceptions from the federal and state securities laws, in accordance
with transactions not involving any public offering.
<PAGE>
(v) Target's Shares. Each Seller holds of record and owns beneficially
the number of Target Shares as provided for in the Target=s corporate book
and stock ledger, which have been duly authorized, validly issued, fully
paid and non-assessable, free and clear of any liens and encumbrances,
restrictions on transfer (other than any restrictions under the Securities
Act and state securities laws), Taxes, Security Interests, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. The Sellers, individually or as a group are not a party to any
option, warrant, purchase right, or other contract or commitment that could
require any or all the Sellers to sell, transfer, or otherwise dispose of
any capital stock of the Target (other than this Agreement). No Seller is a
party to any voting trust, proxy, or other agreement or understanding with
respect to the voting of any capital stock of the Target. The Target's
Shares, when exchanged for the Acquirer's Shares, will confer good title to
same upon the Acquirer.
(b) Representations and Warranties of the Acquirer. The Acquirer represents
and warrants to the Sellers that the statements contained in this '3(b) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this '3(b)).
(i) Organization of the Acquirer. The Acquirer is a corporation duly
organized, validly existing, and in good standing under the laws of the
State of New York.
(ii) Authorization of Transaction. The Acquirer has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Acquirer, enforceable against the Acquirer in accordance with its terms and
conditions. The Acquirer need not give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement.
(iii) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which the
Acquirer is a party or by which it is bound or to which any of its assets
is subject.
(iv) Acquirer's Shares. The Acquirer's Shares, when issued and
delivered to the Sellers at the Closing, will be duly authorized, validly
issued, fully paid and non-assessable, free and clear of all liens and
encumbrances and will confer good title to same upon the Sellers.
4. Representations and Warranties Concerning the Target, its Subsidiary and
Cortina.
Each Seller represents and warrants to the Acquirer that the statements
contained in this '4 are correct and complete as of the date of this Agreement.
Nothing in the annexed schedules shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however, unless the
schedule identifies the exception with particularity and describes the relevant
facts in detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document or other item itself). All representation and warranties made in this
Paragraph 4 referring to the ATarget@ shall include representations and
warranties on behalf of its subsidiary, Prestige and as to the rights to
Cortina, as these businesses are the sole operations of the Target.
<PAGE>
(a) Organization, Qualification, and Corporate Power. The Target and
its subsidiary are corporations or limited liability companies duly organized,
validly existing, and in good standing under the laws of their states of
formation and duly authorized to conduct business and in good standing under the
laws of each jurisdiction where such qualification is required, except where the
failure to so qualify does not materially adversely affect the business or
financial condition of the Target. The Target and its subsidiary have full
corporate power and authority and all licenses, permits, and authorizations
necessary to carry on the businesses in which they are engaged, and to own and
use the properties, including but not limited to all real and personal property,
owned and used by it. Target and subsidiary own all of their properties,
inclusive of but not limited to all real and personal properties. The Sellers
have delivered to the Acquirer correct and complete copies of the charter and
bylaws of the Target (as amended to date). The minute books containing the
records of meetings of the shareholders, the board of directors, and any
committees of the board of directors, the stock certificate books, and the stock
record books of the Target is correct and complete. The Target is not in default
under or in violation of any provision of its charter or bylaws.
(b) Capitalization. The entire authorized capital stock of the Target
shall consist of as of the Closing Date, 200 shares of Common Stock, no par
value per share (the "Common Stock"), of which 100 shares will be issued and
outstanding, of which DiMatteo owns 20 shares and the Trust owns 80 shares. All
of the issued and outstanding shares have been duly authorized, and will be
validly issued, fully paid, and non-assessable, and are held of record and
beneficially by the respective Sellers. There are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require the Target
to issue, sell, or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorized stock appreciation, phantom stock,
profit participation, or similar rights with respect to the Target. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of the Target. With respect to Prestige the
Target is the 50% owner of such limited liability company, there being no
outstanding or authorized, by either Prestige or Target, options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Target or allow another
party the right to issue, sell, or otherwise cause to become outstanding any of
ownership in Prestige.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Target of its subsidiary are subject
or any provision of the charter or bylaws of either the Target or its
subsidiares or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Target or its subsidiary is a party or by which they are bound or to which
any of their assets is subject (or result in the imposition of any Security
Interest upon any of its assets). Neither the Target nor any of its subsidiary
needs to give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for the
Parties to consummate the transactions contemplated by this Agreement.
(d) Title to Assets. The Target and its subsidiary have good and
marketable title to, or a valid leasehold interest in the properties and assets
used by it, free and clear of all Security Interests, except those set forth in
Schedule 4(d) and except for properties and assets disposed of in the Ordinary
Course of Business. The contract to purchase Cortina and the assignment to
Target, annexed hereto as Exhibits D and F, are valid and binding agreements,
enforceable in accordance with there terms.
<PAGE>
(e) Subsidiary. The Target=s only subsidiary is Prestige and does not
own or have the right or option to acquire any Security of any Person, except
the rights to Cortina.
(f) Intentionally Left Blank.
(g) Events Subsequent to the Most Recent Fiscal Year End. Since
formation with respect to Prestige and Target, there has not been any material
adverse change in the business, financial condition, operations, results of
operations, or future prospects. Without limiting the generality of the
foregoing, since that date:
(i) neither Target nor its subsidiary has sold, leased, transferred,
or assigned any of its assets, tangible or intangible, other than for a
fair consideration in the Ordinary Course of Business;
(ii) neither Target nor its subsidiary has entered into any agreement,
contract, lease, or license (or series of related agreements, contracts,
leases, and licenses) either involving more than $25,000 or outside the
Ordinary Course of Business;
(iii) no party has accelerated, terminated, modified, or canceled any
agreement, contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) with Prestige, or by which Prestige is
bound;
(iv) neither Target nor its subsidiary has imposed any Security
Interest upon any of its assets, tangible or intangible;
(v) neither Target nor its subsidiary has made any capital expenditure
(or series of related capital expenditures) either involving more than
$25,000 or outside the Ordinary Course of Business;
(vi) neither Target nor its subsidiary has made any capital investment
in, any loan to, or any acquisition of the securities or assets of, any
other Person (or series of related capital investments, loans, and
acquisitions);
(vii) neither Target nor its subsidiary has issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed any
indebtedness for borrowed money or capitalized lease obligation;
(viii) neither Target nor its subsidiary has delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary
Course of Business whereby there are no liabilities in default and no
accounts payable older than 30 days;
(ix) neither Target nor its subsidiary has canceled, compromised,
waived, or released any right or claim (or series of related rights and
claims);
(x) neither Target nor its subsidiary has granted any license or
sublicense of any rights under or with respect to any real or personal
property or terminated a right it has acquired;
(xi) except for the amendment to the operating agreement of Prestige,
referred to in Exhibits C, there has been no change made or authorized in
Prestige or Target;
(xii) except for the shares of Common Stock owned by the Sellers,
Target has not issued, sold, or otherwise disposed of any of its capital
stock, or granted any options, warrants, or other rights to purchase or
obtain (including upon conversion, exchange, or exercise) any of its
capital stock;
<PAGE>
(xiii) Target has declared, set aside, or paid any dividend or made
any distribution with respect to its capital stock (whether in cash or in
kind) or redeemed, purchased, or otherwise acquired any of its capital
stock;
(xiv) neither Target nor its subsidiary experienced any damage,
destruction, or loss (whether or not covered by insurance) to its property;
(xv) neither Target nor its subsidiary made any loan to, or entered
into any other transaction with, any of its directors, officers, and
employees;
(xvi) neither Target nor its subsidiary entered into any employment
contract or collective bargaining agreement, written or oral, and there are
no such agreements presently in effect;
(xvii) neither Target nor its subsidiary adopted, amended, modified,
or terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any other
Employee Benefit Plan);
(xviii) neither Target nor its subsidiary made or pledged to make any
charitable or other capital contribution;
(xix) there has not been any other occurrence, event, incident,
action, failure to act, or transaction outside the Ordinary Course of
Business involving Prestige or Target; and
(xx) neither Target nor its subsidiary committed to any of the
foregoing.
(h) Undisclosed Liabilities. Except as listed on Schedule 4(h) neither
nor any of its subsidiary have any Liability in excess of $10,000 and there is
no Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability, none of which results from, arises out of, relates to, is
in the nature of, or was caused by any breach of contract, breach of warranty,
tort, infringement, or violation of law.
(i) Legal Compliance. The Target and its subsidiary, and its and their
respective predecessors and Affiliates have complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply.
(j) Tax Matters.
The Target and its subsidiaries have filed all Tax Returns during the
past five years that it was required to file and all Taxes owed by the Target
(whether or not shown on any Tax Return) have been paid. The Target is not
currently the beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction where the
Target does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction. There are no Security Interests on any of the assets of the
Target that arose in connection with any failure (or alleged failure) to pay any
Tax.
(k) Real Property. Except with respect to Cortina, the Target does not
own or lease any real property and has not entered into any agreement to acquire
any real property, except and annexed as Exhibit F, which contains an accurate
legal description by categories of all real estate and easements and other
rights in real property, owned or leased by or to Target. All such leases of
real property are valid, binding and enforceable in accordance with their terms
neither Target nor, to Target's knowledge, any other party thereto is in default
thereunder.
<PAGE>
(b) Target has all of the property and property rights used or necessary in
the operation of the business as presently conducted. Target owns good and
marketable title to all of its real and personal property free and clear of all
security interests, mortgages, pledges, liens, conditional sales agreements,
leases, encumbrances, charges, or claims of third parties of any nature
whatsoever.
(c) All real estate leased to Target and all machinery, equipment,
leasehold improvements, furniture, furnishings, plant and office equipment and
other fixed assets of Target and Target=s use of the same, comply in all
material respects with all applicable ordinances and regulations and building,
zoning or other laws. All such assets are and will be, as of the Closing Date,
in good working order and condition and suitable for use in the operation of the
business of Target, subject to ordinary wear and tear.
(l) Intellectual Property.
Neither the Target nor Prestige own or have the right to use pursuant
to any license, sublicense, agreement, or permission any intellectual property
necessary for the operation of their businesses.
(m) Tangible Assets. The Target and its subsidiary owns or leases all
buildings, machinery, equipment, and other tangible assets necessary for the
conduct of their businesses as presently conducted and as presently proposed to
be conducted. Each such tangible asset is free from defects (patent and latent),
has been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used and presently is
proposed to be used.
(n) Inventory. The inventory of the Target and its subsidiary consists
of raw materials and supplies, manufactured and purchased parts, goods in
process, and finished goods, all of which are merchantable and fit for the
purpose for which they were procured or manufactured, and none of which are
slow-moving, obsolete, damaged, or defective.
(o) Contracts. The sole contracts of the Target are the contracts
referenced in '4(d) regarding Cortina and the Sales Agreement between J.K. Ltd.,
Inc. and Prestige and Exclusive Marketing Agreement between Prestige and
Prestige Chain, Inc. annexed hereto as Exhibit E, all of which are correct and
complete copies of each written agreement (as amended to date) With respect to
each such agreement: (A) the agreement is legal, valid, binding, enforceable,
and in full force and effect; (B) the agreement will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby; (C) no party
is in breach or default, and no event has occurred which with notice or lapse of
time would constitute a breach or default, or permit termination, modification,
or acceleration, under the agreement; and (D) no party has repudiated any
provision of the agreement.
(p) Notes and Accounts Receivable. All notes and accounts receivable of
the Target and its subsidiary are reflected properly on its books and records,
are valid receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts.
<PAGE>
(q) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Target, its subsidiary or any of the Sellers.
(r) Insurance. Each of the Target and its subsidiares have appropriate
insurance coverage applicable to their businesses and with respect thereto each
such insurance policy: (A) the policy is legal, valid, binding, enforceable, and
in full force and effect; (B) the policy will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (C) neither the Target
nor any other party to any policy is in breach or default (including with
respect to the payment of premiums or the giving of notices), and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default, or permit termination, modification, or acceleration, under the
policy; and (D) no party to the policy has repudiated any provision thereof.
(s) Litigation. Neither the Target nor its subsidiary (i) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge nor (ii)
is it a party or to the best Knowledge of any of the Sellers and the directors
and officers of the Target threatened to be made a party to or has any reason to
believe that there may be the commencement of any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator.
(t) Product Warranty. Each product manufactured, sold or delivered by
the Target or its subsidiairies has been in conformity with all applicable
contractual commitments and all express and implied warranties, and the Target
does not have any Liability (and there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against any of them giving rise to any Liability) for replacement or
repair thereof or other damages in connection therewith. No product
manufactured, sold or delivered by the Target is subject to any guaranty,
warranty or other indemnity beyond the applicable standard terms and conditions
of sale not in the ordinary course of business.
(u) Product Liability. Neither the Target nor any of its subsidiary has
any Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold or delivered by the Target.
(v) Employees. Except as annexed as Schedule 4(v) neither Target nor
any subsidiary is bound by any employment agreement or collective bargaining
agreement, nor has either experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes. Neither the Target or
any subsidiary, nor any of its or their officers or directors have committed any
unfair labor practice.
(w) Employee Benefits.
(i) Neither the Target nor any subsidiary contributes or
maintains and has never contributed or maintained any Employee Benefit Plan.
Neither the Target nor any subsidiary has contributed to, or ever has been
required to contribute to any Multiemployer Plan or has any Liability (including
withdrawal Liability) under any Multiemployer Plan.
(iii) Neither the Target nor any subsidiary has maintained or
contributed to or has ever been required to contribute to any Employee Welfare
Benefit Plan providing medical, health, or life insurance or other welfare-type
benefits for current or future retired or terminated employees, their spouses,
or their dependents (other than in accordance with Code Sec. 4980B).
(x) Guaranties. Neither the Target nor any subsidiary is a guarantor or
otherwise liable for any Liability or obligation (including indebtedness) of any
other Person, except for a promissory note in the principal amount of $165,000
in accordance with its acquisition of the rights to the Contract.
(y) Disclosure. The representations and warranties contained in this '4
do not contain any material untrue statement of a fact or omit to state any
material fact necessary in order to make the statements and information
contained in this '4 not misleading.
<PAGE>
5. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.
(a) General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under '6 below). The
Sellers acknowledge and agree that from and after the Closing the Acquirer will
be entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to the Target.
(b) Confidentiality. Each of the Sellers will treat and hold as such
all of the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the Acquirer or destroy, at the request and option of the Acquirer, all tangible
embodiments (and all copies) of the Confidential Information which are in
his/her possession. In the event that any of the Sellers is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, that Seller will notify the
Acquirer promptly of the request or requirement so that the Acquirer may seek an
appropriate protective order or waive compliance with the provisions of this
'5(b). If, in the absence of a protective order or the receipt of a waiver
hereunder, any of the Sellers is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable for
contempt, that Seller may disclose the Confidential Information to the tribunal;
provided, however, that the disclosing Seller shall use his/her best efforts to
obtain, at the request of the Acquirer, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as the Acquirer shall designate. The
foregoing provisions shall not apply to any Confidential Information which is
generally available to the public immediately prior to the time of disclosure.
6. Remedies for Breaches of this Agreement.
(a) Survival of Representations and Warranties. All of the representations
and warranties of the Parties contained in this Agreement shall survive the
Closing hereunder (even if the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect for a period subject to the applicable statutes of
limitations.
(b) Indemnification By Sellers. Subject to the limitations set forth in
'6(e) hereof as to the amount and manner of payment of indemnification
obligations hereunder, each of the Sellers does hereby indemnify and hold
Acquirer harmless from and against each Seller's pro rata share of any Adverse
Consequences sustained by the Acquirer as a result of any untrue
representations, breach of warranty or non-fulfillment of any covenant or
agreement by each such Seller contained herein or in any certificate, document
or instrument delivered to Acquirer hereunder, provided that Acquirer shall have
given written notice to each of the Sellers of any claim for indemnification
prior to the expiration of the applicable survival period set forth in '6(a)
hereof.
(c) Indemnification By Acquirer. The Acquirer does hereby indemnify and
hold each of the Sellers harmless from and against any Adverse Consequences
sustained by each Seller as a result of any untrue representation, breach of
warranty or non-fulfillment of any covenant or agreement by Acquirer contained
herein or in any certificate, document or instrument delivered to Sellers
hereunder, provided that Sellers shall have given written notice to Acquirer of
any claim for indemnification prior to the expiration of the applicable survival
period set forth in '6(a) hereof.
(d) Procedures for Indemnification. The procedures for Indemnification
shall be as follows:
<PAGE>
(i) The party claiming indemnification ("Claimant") shall
promptly give notice to the party or parties from whom indemnification
is claimed ("Indemnitor") of any claim, whether between the parties or
brought by a third party, specifying the factual basis for such claim
and the amount of claim. If the claim relates to an action, suit or
proceeding filed by a third party against Claimant, such notice shall
be given by Claimant to Indemnitor within five (5) business days after
written notice of such action, suit or proceeding was given to
Claimant.
(ii) Following receipt of notice from the Claimant of any
claim, the Indemnitor shall have thirty (30) days, except where such
claim requires a sooner response, in which to make such investigation
of the claims as the Indemnitor deems necessary or desirable. For the
purpose of such investigation, the Claimant agrees to make available to
the Indemnitor and/or Indemnitor's authorized representatives, the
information relied upon by the Claimant to substantiate the claim. If
the Claimant and the Indemnitor agree at or prior to the expiration of
said period (or any mutually agreed upon extension thereof) as to the
validity and amount of such claim, the Indemnitor or Indemnitors shall
pay to the Claimant their pro rata portion of such claim in the manner
and subject to the limitations set forth hereinafter in '6(e). If the
Claimant and the Indemnitor fail to agree as aforesaid, then the
Claimant may seek appropriate legal remedy.
(iii) With respect to any claim by a third party as to which
the Claimant is entitled to indemnification hereunder (other than those
relating to liabilities for Taxes, which are subject to subparagraph
(iv) hereof), the Indemnitor shall have the right at any time at its
own expense to assume and thereafter conduct and control the defense of
the third party claim with counsel of Indemnitor's choice. The Claimant
shall cooperate fully with the Indemnitor, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as a result of
request by the Indemnitor. If the Indemnitor elects to assume control
of the defense of any third party claim, the Claimant shall have the
right to participate in such defense at its own expense. If the
Indemnitor does not elect to assume control or otherwise participate in
the defense of any third party claim, the Indemnitor shall be bound by
the results obtained by the Claimant with respect to such claim.
Indemnitor has three (3) business days to either consent to such action
or defend against the claim. In the event that the Indemnitor fails to
consent or commence defending the claim within the time specified, then
the Claimant may enter into such consent or judgement without the
Indemnitors consent. Notwithstanding anything to the contrary set forth
in this '8(d)(iii) the Claimant shall not settle or consent to the
entry of any judgment with respect to the third party claim without the
prior written consent of the Indemnitor, which consent shall not be
unreasonably withheld. However, in the event that the consent requires
the payment of money damages only, and the payment is to be made by the
Indemnitor at the time of entering into the settlement, then Indemnitor
need not receive the consent of the Claimant.
(iv) In the case of any audit, examination or other proceeding
("Proceeding") with respect to Taxes for which Sellers have agreed to
indemnify Acquirer pursuant to this Agreement, Acquirer shall promptly
inform Sellers, and shall afford Sellers, at Seller's expense the
opportunity to control the conduct of such Proceeding. Acquirer shall
execute or cause to be executed powers of attorney or other documents
necessary to enable Sellers to take all actions desired by Sellers with
respect to such Proceeding to the extent such Proceeding may affect the
amount of Taxes for which Sellers are liable pursuant to this
Agreement. Sellers shall have the right to control any such Proceeding
and if necessary initiate any claim for refund, file any amended return
or take any other action which it deems appropriate with respect to
such Taxes. Sellers shall be entitled to retain any refund attributable
to any tax period prior to the Closing, except with respect to the Tax
Period. Notwithstanding anything to the contrary set forth in this
'6(d)(iv) the Claimant shall not settle or consent to the entry of any
judgment with respect to the third party claim without the prior
written consent of the Indemnitor, which consent shall not be
unreasonably withheld. However, in the event that the consent requires
the payment of money damages only, and the payment is to be made by the
Indemnitor at the time of entering into the settlement, then Indemnitor
need not receive the consent of the Claimant.
<PAGE>
(e) Limitations On Amount and Manner of Payment of Sellers' Indemnification
Obligations.
(i) Acquirer shall have no right of recovery against Sellers
pursuant to the indemnification provisions under this '6 until the aggregate
amount of all Adverse Consequences exceeds $25,000 and then to the extent of all
such adverse consequences.
(ii) The aggregate amount of the liability of all Sellers
hereunder for indemnification of Acquirer's Adverse Consequences shall be
recoverable solely from the shares of Acquirer received pursuant to the terms of
this Agreement and any proceeds received by Sellers from the redemption or sale
of the aforesaid.
7. Miscellaneous.
(a) Nature of Certain Obligations. The covenants of each of the Sellers
in '2(a) above concerning the sale of his/her Target's Shares to the Acquirer
and the representations and warranties of each of the Sellers in '3(a) above
concerning the transaction are several obligations. This means that the
particular Seller making the representation, warranty, or covenant will be
solely responsible to the extent provided in '6 above for any Adverse
Consequences the Acquirer may suffer as a result of any breach thereof.
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of the Acquirer and the Sellers; provided, however, that the Acquirer
may (i) assign any or all of its rights and interests hereunder to one or more
of its Affiliates and (ii) designate one or more of its Affiliates to perform
its obligations hereunder (in any or all of which cases the Acquirer nonetheless
shall remain responsible for the performance of all of its obligations
hereunder).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
herein. Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
<PAGE>
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of New York.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Acquirer and the Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Parties, the Target will bear his/her or its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby. The
Sellers agree that the Target has not borne and will not bear any of the
Sellers' costs and expenses (including any of their legal fees and expenses) in
connection with this Agreement or any of the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(n) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in the County of New York,
State of New York, in any action or proceeding arising out of or relating to
this Agreement and agrees that all claims in respect of the action or proceeding
may be heard and determined in any such court. Each Party also agrees not to
bring any action or proceeding arising out of or relating to this Agreement in
any other court. Each of the Parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any bond,
surety, or other security that might be required of any other Party with respect
thereto. Any Party may make service on any other Party by sending or delivering
a copy of the process (i) to the Party to be served at the address and in the
manner provided for the giving of notices in '8(g) above. Nothing in this '8(n),
however, shall affect the right of any Party to bring any action or proceeding
arising out of or relating to this Agreement in any other court or to serve
legal process in any other manner permitted by law or at equity. Each Party
agrees that a final judgment in any action or proceeding so brought shall be
conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or at equity.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
FUN TYME CONCEPTS, INC. BBS HOLDINGS, LLC
By:/s/Daniel Catalfumo By:/s/ Daniel Catalfumo
Name: Daniel Catalfumo Name: Daniel Catalfumo
Title:President Title:
SELLERS:
/s/Anthony DiMatteo /s/ Curt Bernhardt
Anthony DiMatteo LD Trust, by its Trustee, Curt Bernhardt
/s/Daniel Catalfumo /s/Richard Rosso
CAT L.L.C. RICH L.L.C.
PLAY CO. CAPITAL CORP.
By: /s/ Anthony DiMatteo
Anthony DiMatteo
President
<PAGE>
Exhibit 10.6
<PAGE>
PRESTIGE FINE JEWELRY,LLC
Operating Agreement
This Operating Agreement (this "Agreement") is entered into this 12th day
of February, 1998, by and among Play Co. Capital Corp. ("Playco"), with an
address at 110H Dinsmor Street, Staten Island, New York 10341 and ZEKI
KOCHISARLI with an address at 39-40 39th Street, Long Island City, New York
11101 ("Kochisarli").
Explanatory Statement
All prior operating agreements, if any, with respect to
Prestige Fine Jewelry are hereby amended to reflect a change in the ownership
structure to replace member Anthony DiMatteo, and transfer Mr. DiMatteo=s 50%
owner in the company with and to Play Co. Capital Corp. as of the date hereof,
in accordance with the assignment dated February 12, 1998; and
The Parties wish to continue to operate the limited liability
company in accordance with the terms and subject to the conditions set forth in
this Agreement, as amended.
NOW, THEREFORE, for good and valuable consideration, the
parties, intending legally to be bound, agree as follows:
Article I
Defined Terms
The Following capitalized terms shall have the meanings specified in this
Article I. Other terms are defined in the text of this Agreement; and,
throughout this Agreement, those terms shall have the meanings respectively
ascribed to them.
"Adjusted Capital Balance" means, as of any day, a Member=s total Capital
Contributions less all amounts actually distributed to the Member pursuant to
this Agreement. If any Interest is transferred in accordance with the terms of
this Agreement, the transferee shall succeed to the Adjusted Capital Balance of
the transferor to the extent the Adjusted Capital Balance related to the
Interest transferred.
"Agreement" means this Operating Agreement, as amended from time to time.
"Capital Account" means the account to be maintained by the Company for
each Member in accordance with the following provisions:
Member's Capital Account shall be credited with the Member's Capital
Contributions, the amount of any Company liabilities assumed by the Member (or
which are secured by Company property distributed to the Member), and the
Member's distributive share of Profit; and
Member's Capital Account shall be debited with the amount of money and the
fair market value of any Company property distributed to the Member, the amount
of any liabilities of the Member assumed by the Company (or which are secured by
property contributed by the Member to the Company), and the Member=s
distributive share of Loss.
If any Interest is transferred pursuant to the terms of this agreement, the
transferee shall succeed to the Capital Account of the transferor to the extent
the Capital Account is attributable to the transferred Interest.
"Capital Contribution" means the total amount of cash and the fair market
value of any other assets contributed to the Company by a Member, net of
liabilities assumed or to which the assets are subject.
<PAGE>
"Cash Flow" means all cash funds derived from operations of the Company,
without reduction for any non-cash charges, but less cash funds used to pay
current operating expenses and to pay or establish reasonable reserves for
future expenses, debt payments, capital improvements, and replacements as
determined by the Managers.
"Code" means the Internal Revenue Code of 1986, as amended, or any
corresponding provision of any succeeding law.
"Company" means the limited liability company formed in accordance with
this Agreement.
"Involuntary Withdrawal" means, with respect to any Member, the occurrence
of any of the following events;
the Member makes and assignment for the benefit of creditors;
the Member files a voluntary petition of bankruptcy;
the Member is adjudged bankrupt or insolvent or there is entered against
the Member an order for relief in any bankruptcy or insolvency proceeding;
the Member files a petition seeking for the Member any reorganization,
arrangement, composition, readjustment, liquidation, dissolution, or similar
relief under any statute, law, or regulation;
the Member seeks, consents to, or acquiesces in the appointment of a
trustee for, receiver for, or liquidation of the Member or of all or any
substantial part of the Member=s properties;
the Member files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against the Member in any
proceeding described in Subsections (i) through (v);
any proceeding against the Member seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
statute, law, or regulation, continues for one hundred twenty (120) days after
the commencement thereof, or the appointment of a trustee, receiver, or
liquidator for the Member or all or any substantial part of the Member=s
properties without the Member=s agreement or acquiescence, which appointment is
not vacated or stayed for one hundred twenty (120) days or, if the appointment
is stayed, for one hundred twenty (120) days after the expiration of the stay
during which period the appointment is not vacated; and
the Member=s death, incapacity, or adjudication by a court of competent
jurisdictions as incompetent to manage the Member=s person or property.
"Interest" means all of the rights of a Member in the Company, including a
Member=s: (i) Percentage of the Profit and Loss of the Company, (ii) right to
inspect the Company=s books and records; and (iii) right to vote on matter which
are reserved to the Members hereunder and under the Law.
"Law" means the Delaware Limited Liability Company Law, as amended from
time to time.
"Manager" shall mean a manager of the company, whose rights, powers and
duties are specified in Article V hereof.
"Member" means each Person signing this Agreement and any Person who
subsequently is admitted as a member of the Company.
"Percentage" means, as to a Member, the percentage set forth after the
Member=s name on Exhibit A, as amended from time to time.
"Person" means and includes an individual, corporation, partnership,
association, limited liability company, trust, estate, or other entity.
<PAGE>
"Profit" and "Loss" means, for each taxable year of the Company (or other
period for which Profit or Loss must be computed), the Company=s taxable income
or loss determined in accordance with Code Section 703(a).
"Regulation" means the income tax regulations, including any temporary
regulations, from time to time promulgated under the Code.
"Transfer" means, when used as a noun, any sale, hypothecation, pledge,
assignment, attachment, or other transfer, and, when used as a verb, means to
sell, hypothecate, pledge, assign, or otherwise transfer.
"Voluntary Withdrawal" means a Member=s disassociation with the Company by
means other than a Transfer or an Involuntary Withdrawal.
Article II
Formation and Name: Office; Purpose; Term
2.1 Organization. The parties hereby agree to cause to be formed a limited
liability company pursuant to the Law and the provisions of this Agreement.
2.2 Name of the Company. The name of the Company shall be PRESTIGE FINE
JEWELRY, LLC. The Company may do business under that name and under any other
name or names which the members select.
2.3 Purpose. The purposes of the Company shall be to:
Engage in the business of selling gold and other jewelry.
Own, acquire, manage, develop, operate, buy, sell, exchange,
finance, refinance, and otherwise deal with real estate, personal property, and
any type of business, as the Managers may from time to time deem to be in the
best interests of the Company;
Acquire, own, buy, sell, invest in, trade, manage, finance,
refinance, exchange, or otherwise dispose of debt and equity securities,
partnership interests, CDs, mutual funds, commodities, and any and all
investments whatsoever, that the Managers may from time to time deem to be in
the best interests of the Company; and
Engage in such other activities as are related or incidental
to the foregoing purposes.
2.4 Term. The term of the Company shall begin upon the filing of Articles
of Organization with the Delaware Department of State and shall continue for 40
years from the date hereof unless its existence is sooner terminated pursuant to
this Agreement.
2.5 Members. The name, present mailing address, taxpayer identification
number, and Percentage of each Member are set forth on Exhibit A.
Article III
Members; Capital; Capital Accounts
3.1 Initial Capital Contributions. Upon the execution of this Agreement,
the Members shell contribute to the Company cash in the amounts respectively set
forth on Exhibit A as initial contributions.
3.2 Additional Capital Contributions
3.2.1 If the Managers determine at any time or from time to time that the
Company requires additional Capital Contributions, then they shall cause the
Company to give notice to each Member of (i) the total amount of additional
Capital Contributions required, (ii) the reason the additional Capital
Contribution is required, (iii) each Member=s proportionate interest of the
total additional Capital Contribution (determined in accordance with this
Section), and (iv) the date each Member=s additional Capital Contribution is due
and payable, which date shall be no less than fifteen (15) days after the notice
has been given. A Member=s share of the total additional Capital Contribution
shall be equal to the product obtained by multiplying the Member=s Percentage
and the total additional Capital Contribution required.
<PAGE>
3.2.2 Except as provided in Section 3.2.1, no Member shall be required to
contribute any additional capital to the company, and no Member shall have any
personal liability for any obligation of the Company.
3.3 No Interest on Capital Contributions. Members shall not be paid
interest on their Capital Contributions.
3.4 Return of Capital Contributions. Except as otherwise provided in this
Agreement, no Member shall have the right to receive any return of any Capital
Contribution.
3.5 Form of Return of Capital. If a Member is entitled to receive a return
of a Capital Contribution, the Member shall not have the right to receive
anything but cash in return of the Member=s Capital Contribution.
3.6 Capital Accounts. A separate Capital Account shall be maintained for
each Member.
3.7 Loans. No Member may, without the consent of the Managers, make or
cause a loan to be made to the Company.
Article IV
Profit, Loss, and Distributions
4.1 Distributions of Cash Flow and Allocations of Profit or Loss.
4.1.1 For any taxable year of the Company, Profit or Loss shall be
allocated to the Members in proportion to their Percentages.
4.1.2 Cash Flow. Cash Flow for each taxable year of the company shall be
distributed to the members in proportion to their allocations of Profit as
described in Section 4.1.1, above, when determined to be appropriate by the
Managers.
4.2 Liquidation and Dissolution
4.2.1 If the Company is liquidated, the assets of the Company shall be
distributed to the members in accordance with their Capital Accounts.
4.2.2 No Member shall be obligated to restore a negative Capital Account
unless and to the extent that the failure to do so would result in the failure
of the allocation of Profit described in Section 4.1, above, to have
Asubstantial economic effect@ under the Code and Regulations.
4.3 General
4.3.1 Except as otherwise provided in this Agreement, the timing and amount
of all distributions shall be determined by decision of the Managers.
4.3.2 If any assets of the Company are distributed in kind to the Members,
those assets shall be valued on the basis of their fair market value, and any
Member entitled to any interest in those assets shall receive that interest as a
tenant-in-common with all other Members so entitled. Unless the Managers deem it
impractical or uneconomical, the fair market value of the assets shall be
determined by an independent appraiser who shall be selected by the Managers.
The Profit or Loss for each unsold asset shall be determined as if the asset had
been sold at its fair market value, and the Profit or Loss shall be allocated as
provided in Section 4.2 and shall be properly credited or charged to the Capital
Accounts of the Members prior to the distribution of the assets in liquidation.
4.3.3 All Profit and Loss shall be allocated, and all distributions shall
be made to the Persons shown on the records of the Company to have been Members
as of the last day of the taxable year for which the allocation or distribution
is to be made. Notwithstanding the foregoing, unless the Company=s taxable year
is separated into segments, if there is a Transfer or an Involuntary Withdrawal
during the taxable year, the Profit and Loss shall be allocated between the
original Member and the successor on the basis of the number of days each was a
Member during the taxable year; provided, however, the Company=s taxable year
shall be segregated into two or more segments in order to account for Profit,
Loss, or to any other extraordinary nonrecurring items of the Company.
<PAGE>
Article V
Management by Managers; Rights, Powers, and Duties
5.1 Management
5.1.1 Member Management. Except as expressly provided otherwise by Law or
this Operating Agreement, the powers of the Company shall be exercised by or
under the authority of, and the business and affairs of the Company shall be
managed by, one or more Managers.
5.1.2 General Powers. The Managers shall have full, exclusive, and complete
discretion , power, and authority, subject to the requirements of applicable
law, to manage, control, administer, and operate the business and affairs of the
Company for the purposes herein stated, and to make all decisions affecting such
business and affairs, including, without limitation, for Company purposes, the
power to:
5.1.1.1 Acquire by purchase, lease, or otherwise, any real or personal
property, tangible or intangible;
5.1.1.2 construct, operate, maintain, finance, and improve, and to own,
sell, convey, assign, mortgage, or lease any real estate and any personal
property;
5.1.1.3 sell, dispose, trade, or exchange Company assets in the ordinary
course of the Company=s business;
5.1.1.4 enter into agreements and contracts and to give receipts, releases,
and discharges;
5.1.1.5 purchase liability and other insurance to protect the Company=s
properties and business and to protect the Managers against liability for their
acts and omissions;
5.1.1.6 borrow money for and on behalf of the Company;
5.1.1.7 execute or modify leases with respect to any part or all of the
assets of the Company;
5.1.1.8 prepay, in whole or in part, refinance, amend, modify, or extend
any mortgages or deeds of trust which may affect any asset of the Company and in
connection therewith to execute for and on behalf of the Company any extensions,
renewals, or modifications of such mortgages or deeds of trust.
5.1.1.9 Execute any and all other instruments and documents which may be
necessary to carry out the intent and purpose of this Agreement, including, but
not limited to, documents whose operation and effect extend beyond the term of
the Company;
5.1.1.10 enter into any kind of activity necessary to, in connection with,
or incidental to, the accomplishment of the purposes of the company; and
5.1.1.11 invest and reinvest Company reserves.
5.1.2 All cash, checks and instruments for the payment of monies shall be
deposited in the Company=s bank account(s). Checks drawn upon such account(s)
may be signed by any one of the Managers.
5.1.3 Election Etc. of Managers
5.1.4.1 The Members hereby unanimously elect the following persons as the
initial Managers of the Company, to serve until the first annual meeting of the
Members and until their respective successors shall be duly elected and
qualified:
<PAGE>
NAME: Play Co. Capital Corp.
NAME: Zeki Kochisarli
5.1.5
5.1.5.1 The Members shall elect one or more Persons as Managers at each
annual meeting of the Company to serve until the next annual meeting of the
Company and until their respective successors are duly elected and qualified. In
addition, if any Person resigns or otherwise vacates the office of Manager, the
Members shall elect a replacement Manager to serve the remaining term of such
office, unless one or more other Persons then serve as Managers and the Members
determine not to fill such vacancy. A Person may be removed as a Manager by the
Members with or without cause at any time. A Manager may, but shall not be
required to, be elected from among the Members. Notwithstanding any of the
foregoing provisions, the rights of the Members to elect and remove Managers
shall be subject to the restrictions set forth in Section 5.1.6 hereof.
5.1.6 Voting Agreement. For so long as NAME and NAME (the AFounding
Members@) are Members and have not consented otherwise in writing, each Member
agrees at all times to vote his or her entire Membership Interest (whether in
the election or Managers or in any vote to remove a Manager) so as to cause the
Founding Members, or such Person(s) whom they designate, to be Managers of the
Company. If any Founding Member ceases to be a Member, and the other Founding
Member continues as a Member, each Member hereby agrees at all times to vote his
or her entire Membership Interest (whether in the election of Managers or in any
vote to remove a Manager) so as to cause the Founding Member who continues to be
a Member, and his or her designee, if any, to be a Manager of the Company. At
such time as all of the Founding Members have ceased to be Members, the
covenants contained in this Section shall terminate.
5.1.7 Action by Managers. Unless otherwise expressly provided by the Law or
the terms of this Operating Agreement, the unanimous vote, approval or consent
of the Managers, shall be necessary and sufficient for the Managers to take any
action on behalf of the Company that the Managers are authorized to take
pursuant to Law, the Articles or this Operating Agreement;
5.1.8 Execution of Documents and Other Actions. The Managers may delegate
to one or more of their number the authority to execute any documents or take
any other actions deemed necessary or desirable in furtherance of any action
that they have authorized on behalf of the Company as provided in Section 5.1.7
hereof.
5.1.9 Single Manager. If at any time there is only one Person serving as a
Manager, such Manager shall be entitled to exercise all powers of the Managers
set forth in this Section, and all references in this Section and otherwise in
this Operating Agreement to AManagers@ shall be deemed to refer to such single
Manager.
5.1.10 Reliance by Other Persons. Any Person dealing with the Company,
other than a Member, may rely on the authority of a particular Manager or
Managers in taking any action in the name of the company, if such Manager or
Managers provide to such Persona copy of the applicable provision of this
Operating Agreement and/or the resolution or written consent of the Managers or
Members granting such authority, certified in writing by such Manager or
Managers to be genuine and correct and not to have been revoked, superseded or
otherwise amended.
5.1.11 Manager=s Expenses and Fees. A Manager shall be entitled, but not
required, to receive a reasonable salary for services rendered on behalf of the
company or in his or her capacity as a Manager. The amount of such salary shall
be determined by the Managers and consented to by the Members, which consent
shall not be unreasonably withheld. The Company shall reimburse any Manager for
reasonable out-of-pocket expenses that were or are incurred by the Manager on
behalf of the company with respect to the start-up or operation of the Company,
the on-going conduct of the Company=s business, or the dissolution and winding
up of the Company.
<PAGE>
5.1.12 Indemnification. The Company shall indemnify each Manager to the
full extent permitted by the Law. The foregoing rights of indemnification shall
not be exclusive of any other rights to which the Managers may be entitled. The
Managers may, upon the approval of the Members, take such action as is necessary
to carry out these indemnification provisions and may adopt, approve and amend
from time to time such resolutions or contracts implementing such provisions or
such further indemnification arrangements as may be permitted by law.
5.1.13 Liability of Managers. So long as the Managers act in good faith
with respect to the conduct of the business and affairs of the Company, no
Manager shall be liable of accountable to the Company or to any of the Members,
in damages or otherwise, for any error or judgment, for any mistake of fact or
of law, or for any other act or thing that he or she may do or refrain from
doing in connection with the business and affairs of the Company, except for
willful misconduct or gross negligence.
Article VI
Member; Meeting; Rights, Duties and Powers
6.1 Management. The Members shall not be entitled to participate in the
day-to-day affairs and management of the Company, but instead, the Members=
right to vote or otherwise participate with respect to matters relating to the
Company shall be limited to those matters as to which the express terms of the
Law or this Operating Agreement vest in the Members the right to so vote or
otherwise participate.
6.2 Actions Requiring Approval of Members. Notwithstanding any other
provision of this Operating Agreement, the approval of the Members shall be
required in order for any of the following actions to be taken on behalf of the
Company:
Amending the Articles of this Operating Agreement in any
manner that materially alters the preferences, privileges or relative rights of
the Members.
Electing the Managers as provided in Article V hereof.
Taking any action which would make it impossible to carry on
the ordinary business of the Company.
Confessing a judgment against the Company in excess of $5,000.
Filing or consenting to filing a petition for or against the
Company under any federal or state bankruptcy, insolvency or reorganization act.
Loaning Company funds in excess of $25,000 or for a term in
excess of one year to any Member.
6.3 Meetings of and Voting by Members.
6.3.1 A meeting of the Members may be called at any time by Members holding
at least fifty percent (50%) of the Percentages then held by Members. Meetings
of Members shall be held at the Company=s principal place of business. Not less
than ten (10) nor more than sixty (60) days before each meeting, the Person
calling the meeting shall give written notice of the meeting to each Member
entitled to vote at the meeting. The notice shall state the place, date, hour,
and purpose of the meeting. Notwithstanding the foregoing provisions, each
Member who is entitled to notice waives notice if before or after the meeting
the Member signs a waiver of the notice which is filed with the records of
Members= meeting, or is present at the meeting in person or by proxy without
objecting to the lack of notice. Unless this Agreement provides otherwise, at a
meeting of Members, the presence in person or by proxy of all of the Members
shall constitute a quorum. A Member may vote either in person or by written
proxy signed by the Member or by the Member=s duly authorized attorney in fact.
6.3.2 Except as otherwise provided in this Agreement, the affirmative vote
of all of the Members shall be required to approve any matter to be decided by
the Members under this Agreement.
<PAGE>
6.3.3 In lieu of holding a meeting, the Members may vote or otherwise take
action by a written instrument indicating the unanimous consent of Members.
6.3.4 Annual Meeting. The annual meeting of the Members shall be held on
the ___ of each year at or at such other time as shall be determined by the
Managers for the purpose of the transaction of such business as may come
properly before the meeting.
6.3.5 Special Meetings. Special meetings of the Members, for any purpose or
purposes, unless otherwise prescribed by statute, may be called by the Mangers,
and shall be called by the Managers at the request of any two Members, or such
lesser number of Members as are Members of the Company.
6.3.6 Conduct of Meetings. All meetings of the Members shall be presided
over by a chairperson of the meeting, who shall be a Manager, or a Member
designed by the Managers. The chairperson of any meeting of the Members shall
determine the order of business and the procedure at the meeting, including
regulation of the manner of voting and the conduct of discussion, and shall
appoint a secretary of such meeting to take minutes thereof.
6.3.7 Participation by Telephone or Similar Communications. Members may
participate and hold a meeting by means of conference telephone or similar
communications equipment by means of which all Members participating can hear
and be heard, and such participation shall constitute attendance and presence in
person at such meeting.
Article VII
Transfer of Interests and Withdrawal of Members
7.1 Death of a Member. In the event of the death of a Member, the legal
representative of his or her estate shall be required to sell all of the
decedent=s Interests in the Company and said legal representative shall be
deemed to have offered said Interest as of the date of the decedent=s death, in
accordance with the following offers:
7.1.1 First Option: First to the Company, which agrees to give notice in
wiring of the portion of such Interest the Company will purchase within thirty
(30) days of the date of the decedent=s death.
7.1.2 Second Option: In the event the Company does not purchase all of such
Interest, then the remaining Member(s) shall either (1) elect to purchase all
the remaining Interest of the deceased Member in accordance with the terms
hereof, or (2) elect to liquidate the Company. Said election shall be pro-rata
to the remaining Members= respective Interests in the Company, but any portion
of any Interest not accepted for purchase by one Member may be accepted by the
remaining Member(s). Notice of the election of option (1) or (2), as the case
may be, shall be made, in writing, within ten (10) days after the expiration of
the first option, and failure to send notice of such election by the remaining
Member (s) shall be deemed to be an election by said remaining Member(s) to
liquidate the Company. The election by the remaining Member(s) to liquidate the
Company shall not, however, affect the obligation of the Company to pay over
forthwith the proceeds of insurance on the life of the deceased Member to the
deceased Member=s estate (or the designated beneficiary of the deceased Member)
in accordance with this Agreement. The Company shall pay to the estate of the
deceased Member, from the first proceeds of liquidation (after deducting or
paying all liabilities of the Company), a sum equal to the purchase price for
the deceased member= Interest (as hereinafter provided), less all insurance
proceeds received by such estate from life insurance policies owned by the
Company.
7.1.3 Purchase Price. The purchase price for a deceased Member=s Interest
shall be as determined in accordance with Section 7.4 hereof.
7.1.4 Closing. The closing of the purchase and sale of a deceased Member=s
Interest (the AClosing@) shall be held at the office of the attorney for the
Company on a data and time to be mutually agreed upon, but no later than ten
(10) days after i) the determination of the purchase price, or ii) the
appointment of a legal representative for the decedent=s estate, whichever is
later.
<PAGE>
7.1.5 Life Insurance
(i) In order to provide the Company with funds to purchase the
Interest of a deceased Member, the Company may obtain life insurance
policies on the lives of one or more of the Members as described in
Schedule 7.1.5 annexed hereto and made a part hereof. The Company shall be
the owner of the policies, shall pay the premiums thereon, and shall be the
beneficiary thereof. The policies shall be subject to the terms and
provisions of this Agreement and shall not be assigned or otherwise
disposed of during the term of the Agreement, except as hereinafter
provided. Notwithstanding the failure to describe such policies in the
annexed Schedule, all such policies shall be subject to this Agreement, and
the proceeds thereof shall be disbursed in accordance with the terms
hereof.
(ii) The Company shall promptly collect the proceeds of the policies
of life insurance on the life of a deceased Member and shall hold same as a
Trustee, separate and apart from its other assets, solely for the purpose
of purchasing the deceased Member=s Interest and, as such Trustee, shall
turn over the same to the legal representative of the estate of the
deceased Member immediately upon his or her appointment, as payment on
account for the deceased Member=s Interest. In the event the purchase price
for the deceased Member=s Interest, as hereinafter determined, does not
exceed the net proceeds of the insurance policies described in the
subsection (i), above, then and in such event, the legal representatives of
the deceased Member shall retain the amount received from the Company as
payment in the full for the deceased Member=s Interest. In the event the
purchase price exceeds the net proceeds of the insurance policies described
in subsection (i), above, actually collected by the Company, then and in
such event, the balance of the purchase price shall be paid as hereinafter
provided. It is the express intention of the parties hereto that the amount
of insurance proceeds collected by the Company on the deceased Member=s
life shall at all times constitute the minimum purchase price to be paid by
the Company for the Interest of the deceased Member.
7.1.6. Default. If either the Company or the surviving Member 9s) default
in payment after acceptance of the offer to sell described above, and said
default in payment continues for a period of ten 910) days after notice in
writing thereof form the legal representative of the deceased Member to the
Company and the surviving Member (s), then, and in such event, the Company shall
be liquidated and dissolved forthwith, all salaries of all Managers shall
immediately cease, the purchase price of the deceased Member=s Interest shall be
paid out of the first proceeds of liquidation after payment in full of the
liabilities of the Company, and the accepting party or parties shall remain
liable for any resulting deficiency and shall be required to pay the difference
between the purchase price and the net amount realized by the deceased Member=s
estate from the liquidation of the Company.
<PAGE>
7.2. Lifetime Sale of Interest.
7.2.1. Restriction on Sale. No Member shall sell, transfer, pledge,
hypothecate, assign or in any way dispose of all or any portion of (or interest
in ) his or her Interest except by sale to the Company or the other Member(s),
as hereinafter provided.
7.2.2. Offer. In the event a Member desires to dispose of his or her
Interest, he shall offer, in writing, all of his or her Interest to the Company
and the other Member (s) at the purchase price set forth herein. The company
shall have the first option to purchase as many of its Interest as it can
legally purchase. If the Company fails to indicate acceptance of the offer in
writing within ten (10) days from the receipt of the offer, then the remaining
Member(s) shall have the option to purchase the remaining balance of said
Interest, pro-rata to their Interests in the Company. The remaining Member (s),
if they desire to purchase the Interest as offered, shall indicate their
acceptance in writing to the selling Member within twenty (20) days after the
receipt of the original offer.
7.2.3. Purchase Price. The purchase price shall be as set forth in Section
7.5 of this Agreement.
7.2.4. Closing. The Closing of a purchase and sale under this Section 7.2
shall be held no later than sixty (60) sell was made, and shall take place at
the office of the attorney for the Company at a time to be mutually agreed upon
between the parties, to be held within said sixty (60) day period. At the
Closing, the seller shall have the option to purchase any and all life insurance
policies owned by the Company on his or her life, at a price equal to the then
cash surrender value of such policies or the sum of TEN ($10.00) DOLLARS,
whichever is greater.
7.2.5. Payment. Payment for a selling Member=s Interest under this Section
7.2 shall be made pursuant to and under the terms and conditions of Section 7.8
of this Agreement.
7.2.6. Failure to Purchase. In the event the Company and/or the remaining
Member(s) fail or refuse to purchase all of the selling Member=s Interest, as
hereinabove provided, and such failure or refusal continues for a period of
twenty (20) days after the original written notice of offer to sell, then and
dissolved forthwith, that all salaries of all Managers shall immediately cease,
and the net proceeds of liquidation shall be distributed to each Member,
pro-rata in accordance with his or her interest in the Company.
7.2.7. Default. If either the Company or the remaining Member (s) default
in payments after acceptance of the offer described in this Section 7.2, and
said default in payment continues for a period of ten (1) days after notice in
writing thereof from the Seller, then the Company shall be liquidated and
dissolved forthwith, the purchase price for the selling Member=s Interest shall
be paid out of the first proceeds of liquidation after deducting or paying all
liabilities of the Company, and the accepting party or parties shall remain
liable for any resulting deficiency and shall be required to pay the difference
between the purchase price and the amount realized by the selling Member after
liquidation of the Company.
7.3. The Members agree to meet not less often than every twelve 912) months
in order to fix an evaluation of the Interest of the Company, which evaluation
shall be entered on Schedule 7.3 annexed hereto and made a part hereof, dated
and initialed by all of the Members. Said meeting shall be held within sixty
(60) days after the Certified Public Accountant retained by the Company renders
a financial statement for the Company prepared in accordance with generally
accepted accounting principles covering its fiscal year then ended.
7.4. The purchase price of a deceased Member=s Interest shall be the
greater of the following:
<PAGE>
(i) The amount of the life insurance proceeds, if any, collected by
the Company on the life of the decedent pursuant to this Agreement; or
(ii) Decedent=s pro-rata Interest of the last evaluation in Schedule
7.3 aforementioned, if the death of the Member occurs within the twelve
(12) month period following the date such evaluation has been made; or
(iii) If no evaluation has been made within a twelve (12) month period
prior to the death of the Member, the book value of the Interest to be sold
as of the end of the month in which the death occurred.
7.5. the purchase price of a selling Member=s Interest shall be the selling
Member=s pro-rata Interest of the last evaluation in Schedule 7.3
aforementioned, or, if no evaluation has been made within the twelve-month
period prior to the effective date of the offer, the book value of the Interest
to be sold, as of the end of the month in which the offer to sell was made.
7.6. For purposes of this Agreement, the book value shall be as determined
by the Certified Public Accountant regularly retained by the Company, in
accordance with generally accepted accounting principles, consistently applied,
computed in accordance with the provisions of Section 7.7 of this Agreement, and
calculated as of the end of the month during which said death or offer occurred,
and presented in the form of a certified report to all parties within forty-five
(45) days after the end of the month in which death occurred or offer was made.
7.7. In determining book value of the Company, the following rules shall
apply:
7.7.1 Good-will, trade names, trademarks and other intangible assets shall
be deemed of no value unless acquired for a valuable consideration, in which
even their value shall be the cost of acquisition.
7.7.2. Merchandise inventory shall be taken in the presence of a
representative of the selling Member, and shall be valued at the lower of cost
or market.
7.7.3. Furniture, fixtures and other equipment shall be valued at the book
value thereof as of the date of calculation.
7.7.4. Cash in bank or on hand shall be taken at face value and all
negotiable securities owned the Company shall be taken at market value.
7.7.5. Accounts receivable shall be taken at their net value after allowing
for all customary discounts and reasonable reserves in the light of actual prior
experience and practice.
7.7.6. All other assets, if any, customarily mentioned in the books of
account of the Company shall be taken at their appraisal value.
7.7.7. There shall be deducted from the aggregate of the foregoing assets
of the Company all liabilities as of the date of calculation (except
subordinated loans due to a Member), including, but not limited to, any and all
accrued wages, vacation pay (whether or not accrued), commissions and bonuses to
salesmen, employees or others.
7.7.8. There shall also be deducted all taxes of every kind, nature and
description, whether imposed by Federal, State or Municipal authorities, which
then shall be due and payable or which thereafter may become payable by the
Company for any periods prior to the date of calculation.
7.7.9. Appropriate reserves shall be created to reflect bad debts and any
accrued or contingent tax or other liabilities as the accountant for the Company
may determine to be necessary.
7.7.10. The proceeds of any life or disability insurance policies collected
upon the death or disability of the Member whose Interest are being evaluated
shall not be deemed an asset of the Company and life insurance policies owned by
the Company on the lives of the Members shall be valued as an asset at no more
than their cash surrender value.
<PAGE>
7.7.11. In the event any of the parties to a sale of an Interest objects to
the determination of the book value found by the accountant, as herein provided,
the objecting party shall notify the other parties hereto of such objection
within ten (1) days after the receipt of the determination of book value. In the
event of an objection, the objecting party shall designate his or her own
accountant at this or her own cost and expense to determine book value in
accordance with the terms of this Agreement. If the accountant so designated by
the objecting party and the accountant for the Company do not agree upon the
book value with fifteen (15) days after objection, the dispute shall be referred
to arbitration in accordance with the terms and provisions of this Agreement,
and the actual book value, as found by the arbitrators, shall be final and
binding upon all parties hereto.
7.8. Deferred Payment. The purchase price for the Interest of a selling
Member, or the balance, if any, of the purchase price for the Interest of a
deceased Member, as the case may be, shall be paid in thirty-six (36) equal,
consecutive monthly installments, which installments shall bear interest at the
minimum rate required to avoid the imputation of interest under the Code, the
first such installment to be payable on the first day of the month next
following the date of the Closing. At the Closing, the legal representative of
the deceased Member or the selling Member, as the case may be, shall deliver an
executed standard form General Release in favor of the Company and the remaining
Member(s), to the Company.
7.9. Additional Items at Closing.
7.9.1. At the Closing, the legal representative of a deceased Member shall
be required to deliver an appropriate tax waiver and Certificate of Letters
Testamentary or Letters of Administration to the attorney for the purchasers.
7.9.2. At the Closing, all credit cards and corporate property of the
selling or deceased Member shall be delivered to the Company. The seller shall
agree to indemnify the company against any unknown and/or unauthorized charges
on such cards or property.
7.9.3. Any loans owed to the Company by the deceased or selling Member
shall be paid to the Company out of the first monies received in respect of the
purchase price for the Interest hereunder, and any loans owed to the deceased or
selling Member by the Company not evidenced by a promissory not shall repaid to
the deceased or selling Member in thirty-six (36) equal consecutive monthly
installments simultaneously with the payments for the Interest under Section
7.8.
7.10. During the period of which all or any part of the purchase price
remains unpaid, the Company shall not increase the remuneration, either directly
or indirectly, of the officers or directors, or take any action outside the
usual normal course of its regular customary business without first obtaining
the consent of the legal representative of the deceased Member or the selling
Member, as the case may be.
7.11. In the event of the permanent disability of a Member, as determined
by the Managers upon competent medical advice, for a period of six months
following the commencement of said disability, such Member shall be deemed to
have offered his or her Interest for sale under the same terms and conditions as
set forth in Section 7.1 of this Agreement as of the effective date of such
disability. During the period of said Member=s disability, actions of the
Managers shall not require the concurrence of said disabled Member.
Article VIII
Dissolution, Liquidation, and Termination of the Company
8.1. Events of Dissolution. The Company shall be dissolved upon the
happening of any of the following events:
<PAGE>
8.1.1. when the period fixed for its duration in Section 2.4 has expired;
8.1.2. upon the unanimous written agreement of the Members; or
8.1.3. the occurrence of an Involuntary Withdrawal, unless all remaining
Members, within ninety (90) days after the occurrence of the Involuntary
Withdrawal, elect to continue the business of the Company pursuant to the terms
of this Agreement.
8.2. Procedure for Winding Up and Dissolution. If the Company is dissolved,
the Members shall wind up its affairs. On winding up the Company, the assets of
the Company shall be distributed, first, to creditors of the Company, including
Members who are creditors, in satisfaction of the liabilities of the Company,
and then to the Members in accordance with this Agreement.
Article IX
Books, Records, Accounting, and Tax Elections
9.1 Books and Records.
9.1.1 The Managers shall keep or cause to be kept complete and accurate
books and records of the Company and supporting documentation of the
transactions with respect to the Company=s business. The records shall include,
but not be limited to:
a current alphabetized list of names and addresses of all of the
Members, as well as the contribution and the Percentage of profits and
losses of each Member or information from which such Interest can be
readily derived;
if the firm is managed by a Manager or Managers, a current
alphabetized list of the names and addresses of the Managers;
a copy of the articles of organization and all amendments thereto or
restatements thereof, together with executed copies of any powers of
attorney pursuant to which any certificate or amendment has been executed;
a copy of the operating agreement and any amendments thereto and any
amended and restated operating agreement; and
a copy of the limited liability company=s federal, state, and local
income tax or information return and reports, if any, for the three most
recent fiscal years.
9.1.2 The books and records shall be maintained in accordance with sound
accounting practices and shall be available at the Company=s principal office
for examination by any Member of the Member=s duly authorized representative at
any and all reasonable times during normal business hours.
9.1.3 Each Member shall reimburse the Company for all costs and expenses
incurred by the Company in connection with the Member=s inspection and copying
of the Company=s books and records.
9.2 Annual Account Period. The annual accounting period of the Company
shall be its taxable year. The Company=s taxable year shall be the calendar
year.
9.3 Tax Matters Member. Playco shall be the Company=s Tax Matters Member
(ATax Matters Member@). The Tax Matters Member shall have a all powers and
responsibilities provided in Code Section 6221, et seq. The Tax Matters Member
shall keep all Members informed of all notices from government taxing
authorities which may come to the attention of the Tax Matters Member. The
Company shall pay and be responsible for all reasonable third party costs and
expenses incurred by the Tax Matters Member in performing those duties. A Member
shall be responsible for any costs incurred by the Member with respect to any
tax audit or tax-related administrative or judicial proceeding against any
Member, even though it relates to the Company. The Tax Matters Member shall not
compromise any dispute with the Internal Revenue Service without the approval of
the Members.
<PAGE>
9.4 Tax Elections. The Managers shall have the authority to make all
Company elections permitted under the Code, including, without limitation,
elections of methods of depreciation and elections under Code Section 754.
9.5 Title to Company Property.
9.5.1 All real and personal property acquired by the Company shall be
acquired and held by the Company in its name.
9.5.2 The Managers may direct that legal title to all or any portion of the
Company=s property be acquired or held in a name other than the Company=s name.
Without limiting the foregoing, the Members may cause title to be acquired and
held in its name or in the names of trustees, nominees, or straw parties for the
Company. It is expressly understood and agreed that the manner of holding title
to the Company=s property (or any pert thereof) is solely for the convenience of
the Company and all of that property shall be treated as Company property.
Article X
General Provisions
10.1. Assurances. Each Member shall execute all certificates and other
documents and shall do all such filing, recording, publishing, and other acts as
the Members deem appropriate to comply with the requirements of law for the
formation and operation of the Company and to comply with any laws, rules, and
regulations relating to the acquisition, operation, or holding of the property
of the Company.
10.2. Notifications. Any notice, demand, consent, election, offer,
approval, request, or other communication (collectively a Anotice@) required or
permitted under this Agreement must be in writing and either delivered
personally or sent by certified or registered mail, postage prepaid, return
receipt requested or by facsimile transmission, provided receipt is actually
acknowledged by the member or member=s agent. Any notice to be given hereunder
by the Company shall be given by any Member. A notice must be addressed to a
Member at the Member=s last known address on the records of the Company. A
notice to the Company must be addressed to the Company=s principal office. A
Notice delivered personally will be deemed given only when acknowledged in
writing by the person to whom it is delivered. A notice that is sent by mail
will be deemed given three (3) business days after it is mailed. Any party may
designate, by notice to all of the others, substitute addresses or addressees
for notices; and, thereafter, notices are to be directed to those substitute
addresses or addressees. A notice sent by facsimile is deemed given when receipt
is acknowledged.
10.3. Specific Performance. The parties recognize that irreparable injury
will result from a breach of any provision of this Agreement and that money
damages will be inadequate to fully remedy the injury. Accordingly, in the event
of a breach or threatened breach of one or more of the provisions of this
Agreement, any party who may be injured (in addition to any other remedies which
may be available to that party) shall be entitled to one or more preliminary or
permanent orders (i) restraining and enjoining any act which would constitute a
breach or (ii) compelling the performance of any obligation which, if not
performed, would constitute a breach.
10.4 Complete Agreement. This Agreement constitutes the complete and
exclusive statement of the agreement among the Members with respect to the
subject matter thereof. It supersedes all prior written and oral statements,
including any prior representation, statement, condition, or warranty. Except as
expressly provided otherwise herein, this Agreement may not be amended without
the written consent of the Members holding 80% or more of the Percentages then
held by Members.
<PAGE>
(a) Any controversy arising out of or relating to this Agreement shall
be settled by arbitration in New York pursuant to the rules of the American
Arbitration Association, and judgment may be entered in any Court having
jurisdiction.
(b) The parties consent to the jurisdiction of the Supreme Court of
the State of New York, and of the United States District Court for the
Southern District of New York, for all purposes in connection with
arbitration, including the entry of judgment on any award; and consent that
any process, notice, motion or other application to either of said courts,
and any papers in connection with arbitration, may be served by registered
or certified mail, return receipt requested, by personal service, or in
such other manner as may be permissible under the rules of the applicable
court or arbitration tribunal, provided a reasonable time for appearance is
allowed.
( c) The arbitrators shall have no power to alter or modify any
express provision of this Agreement, or to render an award which has the
effect of altering or modifying any express provision hereof, provided,
however, that any application for reformation of this Agreement shall be
made to the arbitrators and not to any Court, and the arbitrators shall be
empowered to determine whether valid grounds for reformation exist.
(d) Any arbitration proceeding must be instituted within one year
after the claimed breach occurred, and a party=s failure to institute
arbitration proceedings within such period shall constitute an absolute bar
to the institution of any proceedings by said party and waiver of such
claimed breach. Notwithstanding any law or rule to the contrary, the
determination of whether said on-year period has expired shall be made by
the Court and shall not be within the jurisdiction of the arbitrators.
10.6. Article and Section Titles. The headings herein are inserted as a
matter of convenience only and do not define, limit, or describe the scope of
this Agreement of the intent of the provisions hereof.
10.7. Binding Provisions. This Agreement is binding upon, and inures to the
benefit of the parties hereto and their respective heirs, executors,
administrators, personal and legal representatives, successors, and permitted
assigns.
10.8. Exclusive Jurisdiction and Venue. Any suit involving any dispute or
matter arising under this Agreement may only be brought in a United States
District Court located in the State of New York or any New York State Court
having jurisdiction over the subject matter of the dispute or matter. All
Members hereby consent to the exercise of personal jurisdiction by any such
court with respect to any such proceeding.
10.9. Terms. Common nouns and pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular, and plural, as the identity of the Person
may in the context require.
10.10. Separability of Provisions. Each provision of this Agreement shall
be considered separable; and if, for any reason, any provision or provisions
herein are determined to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of or affect those portions of
this Agreement which are valid.
10.11. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original and all of
which, when taken together, constitute one and the same document. The signature
of any party to any counterpart shall be deemed a signature to, and may be
appended to, any other counterpart.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth hereinabove.
<TABLE>
<CAPTION>
<S> <C>
WITNESS OR ATTEST MEMBERS:
Play Co. Capital Corp.
/s/Harvey Guberman /s/ Anthony DiMatteo
By: Anthony DiMatteo, President
/s/ Harvey Guberman /s/Zeki Kochisarli
ZEKI KOCHISARLI
</TABLE>
