EXHIBIT 10.3
MEMBER'S INTEREST PURCHASE AND SALE AGREEMENT
BETWEEN
XXXXX AND TURKEY XXXXXXXX
HUSBAND AND WIFE
AND
XXXXX AND XXXXXXXXX XXXXXXXX
HUSBAND AND WIFE
AND
LAST CHANCE, INC.
A NEVADA CORPORATION
MEMBER'S INTEREST PURCHASE AND SALE AGREEMENT
This Member's Interest Purchase and Sale Agreement ("Agreement") is made
this 27th day of December, 2001, by and between Xxxxx and Turkey Xxxxxxxx,
husband and wife and Xxxxx and Xxxxxxxxx Xxxxxxxx, husband and wife (jointly and
severally referred to as "Sellers"), and Last Chance, Inc., a Nevada corporation
(Last Chance).
RECITALS:
A. The capitalized terms used in this Agreement and not otherwise
defined shall have the meanings ascribed to such terms in Section 1;
B. This Agreement is one of the Integrated Agreements by and
between Last Chance and Prospector Gaming Enterprises, Inc. and its Affiliates
for the acquisition by Last Chance of all of the Integral Properties and Assets
of the Gold Ranch Casino and RV Resort;
C. The Sellers constitute all of the Members of, and possess all of
the Member's Interests in, California Prospectors, Ltd., a Nevada limited
liability company, (California Prospectors), which operates the California
Lottery Station on the California Lottery Property;
D. Subject to appropriate government approvals, Last Chance desires
to buy and Sellers desire to sell, all of the Sellers' Member's Interests in
California Prospectors on the terms and for the considerations set forth in this
Agreement; and
E. Target Investments, L.L.C., a Nevada limited liability company
(Target), owns the California Lottery Station and the California Lottery
Property and leases them to California Prospectors under and pursuant to the
terms of that certain Lease Agreement dated January 1, 1999. At the Closing,
California Prospectors and Target shall execute the California Lottery Station
Lease which shall, for all purposes, replace the lease of January 1, 1999, and
Target shall execute the Option To Purchase the Gold Ranch Casino Property
granting to Last Chance: (i) an option to purchase the California Lottery
Station and the California Lottery Property, and (ii) a right of first refusal
with respect thereto, contemporaneously with and as a condition precedent to the
execution of this Agreement.
NOW WHEREFORE, in consideration of the foregoing Recitals, the mutual
considerations, covenants and agreements provided below, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Sellers and Last Chance agree as follows:
1. DEFINITIONS.
1.1 "Affiliate" means as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any member of
the immediate family (including parents, spouse, children, grandchildren,
brothers and sisters, of such individual and any trust the principal beneficiary
of which is such individual or one or more members of such individual's
immediate family and any Person who is controlled by any such member or trust.
As used in this definition, "control" (including its correlative meanings,
"controlled by" and "under common control with") means possession, directly or
indirectly, of power to direct or cause the direction of the management or
policies, whether through the ownership of securities, limited liability
California Prospectors or partnership or other ownership interests, by contract
or otherwise.
1.2 "Asset Purchase Agreement" means the Asset Purchase Agreement by
and between Prospector Gaming Enterprises, Inc., a Nevada corporation and Last
Chance, Inc., a Nevada corporation, executed contemporaneously herewith and as
to which this Agreement is an integral part.
1.3 "California Lottery Property" means the real property owned by
Target Investments, LLC and described in Exhibit 1 to the Asset Purchase
Agreement (APN 000-000-00 and APN 023-100-06) upon and from which California
Prospectors operates the California Lottery Station.
1.4 "California Lottery Station" means all of the improvements
located on the California Lottery Property, including, without limitation, the
facility from which California Prospectors operates as a duly licensed
California State Lottery Retailer.
1.5 "California Lottery Station Lease" means the agreement between
California Prospectors and Target Investments, L.L.C. for the lease of the
California Lottery Property and the California Lottery Station with an option to
purchase and a right of first refusal.
1.6 "Closing," means the completion of the transaction contemplated
by the Integrated Agreements on the Closing Date.
1.7 "Closing Date" means the last day of the month in which all
conditions precedent to the Closing have occurred as provided in the Asset
Purchase Agreement.
1.8 "California Prospectors" means California Prospectors, Ltd., a
Nevada limited liability California Prospectors.
1.9 "EBITDA" shall mean the sum of net income (or loss) of
California Prospectors (after eliminating all extraordinary or nonrecurring
items of income or loss), plus to the extent deducted in computing such net
income (or loss), without duplication, (i) all interest and other similar
expense in respect of indebtedness for borrowed money
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and similar expense in respect of capitalized leases, plus (ii) all expenses for
income taxes (whether paid, accrued or deferred), plus (iii) all depreciation
and amortization of any assets or other non cash charges (including any
depreciation, amortization or write-off of intangible assets, transaction costs
or goodwill), plus (iv) all member draws, whether or not paid in cash, plus (v)
owner's compensation payments, plus (vi) all rent paid to Target under the
Existing Lease, less (vii) interest and other similar income in respect of money
loaned by California Prospectors and deposits of California Prospectors. In
determining EBITDA of California Prospectors for any period, to the extent that
as a result of conduct outside the ordinary course of business (i) any items of
income of California Prospectors have been shifted out of such period, or (ii)
any items of expense have been shifted into such period, such items of income or
expense shall be reclassified into the appropriate period. The schedule used to
compute the foregoing EBITDA is attached as Exhibit 1.
1.10 "Existing Lease" means the lease of the California Lottery
Station and California Lottery Property by and between Target and California
Prospectors dated January 1, 1999.
1.11 "Governmental Authority" shall mean any federal, state,
regional, county or municipal governmental agency, board, commission, officer or
official having or exercising or purporting to have or exercise jurisdiction
over California Prospectors, the Members or the Member's Interests.
1.12 "Integral Properties and Assets" means all of the assets, real
and personal, tangible and intangible, which constitute integral parts of the
businesses operated by Prospector Gaming Enterprises, Inc., and its Affiliates,
as the Gold Ranch Casino & RV Resort, as more particularly described in the
Asset Purchase Agreement.
1.13 "Integrated Agreements" means this Agreement and each of the
agreements and documents described as a component of that term as defined in the
Asset Purchase Agreement, which constitute integral parts of the single
transaction by which Last Chance, Inc., will acquire the businesses and assets
(real, personal, tangible and intangible) operated by Prospector Gaming
Enterprises, Inc. and its Affiliates as the Gold Ranch Casino & RV Resort.
1.14 "Intellectual Property" means all tradenames, servicemarks,
patents, copyrights, licenses, trade secrets, proprietary information,
intellectual property and other intangible property owned by any one of the
Sellers and used by the California Prospectors or necessary to the business
operations of California Prospectors, as set forth in Exhibit 2.
1.15 "Manager" means the person designated in or selected pursuant to
the articles of organization or operating agreement of California Prospectors to
manage the company.
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1.16 "Members" means each of the owners of an interest in California
Prospectors, Ltd., a limited liability company.
1.17 "Member's Interest" means either Seller's entire share of the
economic interests in the California Prospectors, including profits, losses and
distributions of assets.
1.18 "Nevada Gaming Authorities" means collective reference to the
State Gaming Control Board and the Nevada Gaming Commission, or any agency of
any state, county, city or other political subdivision, which has jurisdiction
over the activities of California Prospectors involving gaming or lottery.
1.19 "Person" means an individual, firm, corporation, trust,
association, partnership, joint venture, tribunal or other entity.
1.20 "Working Capital" means California Prospector's current assets
less California Prospector's current liabilities (excluding the current portion
of long-term debt of California Prospector outstanding at the consummation of
the purchase and assumed by Last Chance), all as determined in accordance with
generally accepted accounting principals applied on a consistent basis,
excluding, however, any current assets not purchased by the Last Chance, or
current liabilities not assumed by the Last Chance. The Working Capital may be
expressed as a positive or a negative number.
2. PURCHASE AND SALE. Sellers agree to sell and Last Chance agrees to buy
the Member's Interest of Sellers in California Prospectors, and the Intellectual
Property, on the terms and conditions set forth in this Agreement. The Sellers
shall list the Intellectual Property on Exhibit 3 hereto and provide assignments
thereof in the form of Exhibit 4.
3. PURCHASE PRICE. The Purchase Price shall be an amount equal to the
product of 6.25 multiplied by California Prospectors' EBITDA for the trailing
twelve calendar months prior to the Closing Date, less (i) the amount of debt
assumed or refinanced by Last Chance, (ii) any amount required to be withheld
pursuant to NRS 360.525 and NRS 612.695, plus (iii) California Prospector's
Working Capital.
4. PAYMENT. On the Closing Date, Last Chance shall pay the Purchase Price
in cash or cash equivalent to the Sellers.
5. SELLER'S DELIVERIES AT CLOSING. On the Closing Date, Sellers shall each
deliver to Last Chance, at Sellers' expense, certificates representing all their
respective Member's Interest, duly endorsed in blank, together with any other
documents of transfer and title reasonably requested by Last Chance. If there
have been no certificates issued for the Member's Interests, then each of the
Sellers shall issue a "Transfer Certificate" in the form of Exhibit 5, endorsed
in blank. Sellers shall also deliver to Last Chance at Closing, at Seller's
expense, all other documents required of Seller for closing of the sale and
purchase hereunder as well as all California Prospectors books and records,
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Member's Interest ledgers, seals and minute books and other records of
California Prospectors. Sellers shall pay any taxes, transfer fees or other
charges, which arise out of the transfer of the Member's Interests to Last
Chance.
6. SUBSEQUENT PERFORMANCE.
6.1 Consulting. At their sole cost and expense, Sellers' shall
provide management advisory and consulting services to Last Chance through Xxx
Xxxxxxxx (Consultant), concerning any and all aspects of California Prospector's
business, for a period of fourteen (14) consecutive calendar days commencing on
the business day next following the Closing Date. Thereafter, Consultant shall
remain available, without charge, for reasonable telephone consultation and
assistance to Last Chance concerning California Prospectors' business for the
following additional 14 consecutive calendar days.
6.2 Covenant Not to Compete. Sellers covenant and agree for the
benefit of Last Chance and its successors and assigns that, for the duration of
the Lease Term of the California Lottery Station Lease and for a period of one
year thereafter, Sellers will not engage or participate, directly or indirectly,
as principal, agent, employee, employer, consultant or in any other individual
or representative capacity whatever, in the conduct or management of, or own
(legally or beneficially), or have the right or option to acquire, any direct or
indirect interest in any business holding or making application for a license
issued by or contract with the California State Lottery Commission, as that term
is defined in Cal. Gov't Code Section 8880.11, as "Lottery Game Retailer" as
that term is defined in Cal. Government Code Section 8880.13, in Sierra County
California or any other California County bordering Washoe County, Nevada.
Sellers specifically acknowledge and agree that the foregoing covenants are
reasonable in content and scope and are given for adequate consideration. Last
Chance shall have the option to reduce the scope and extent of the foregoing
covenants, by written notice to the Sellers, either before or after any
adjudication of the legality of said covenants, whereupon said covenants, as so
reduced, shall be binding and enforceable against the Sellers.
7. CLOSING. The purchase and sale of the Member's Interests under this
Agreement shall be effective as of the Closing, or such other date as may be
agreed to in writing by Last Chance and Sellers.
8. REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers represent and warrant
now and as of the Closing as follows:
8.1 Organization. California Prospectors is a Nevada limited
liability company duly organized, validly existing, and in good standing under
the laws of the State of Nevada. California Prospectors has all corporate power
necessary to carry on its business as now being conducted and as proposed to be
conducted. California Prospectors is duly qualified to transact business and is
in good standing in each jurisdiction in which the failure so to qualify would
have a material adverse effect on its business, licenses, contracts, grants or
properties.
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8.2 Capital and Membership Structure.
A. Members: Sellers are the sole Members of California
Prospectors.
B. Member's Interests. The Sellers own all of the Member's
Interests in California Prospectors as follows: (i) Xxxxx and Turkey Xxxxxxxx,
husband and wife, own an undivided one-half interest in California Prospectors,
and (ii) Xxxxxx and Xxxxxxxxx Xxxxxxxx, husband and wife, own an undivided
one-half interest in California Prospectors. There are no other Member's
Interests as defined in NRS 86.091, or other rights or interests in California
Prospectors owned or held by any Person other than Sellers. Each Member's
Interest is validly issued (including without limitation full compliance with
all federal and state securities laws), fully paid, and nonassessable. No other
interest or share or other securities of any kind whatsoever are issued or
outstanding, including, without limitation, bonds, debentures, or any other debt
security; options, rights, or warrants to purchase or subscribe for, or any
commitment or obligation of any kind to issue, any Member's Interest or
securities of California Prospectors; or securities convertible into any class
of securities issued by or for Member's Interest in California Prospectors.
There are no declared or accrued and unpaid dividends or other distributions.
The Sellers have not assigned any interest in nor encumbered their respective
Member's Interest and there are no outstanding preferential rights to acquire
any interest in either Member's Interest granted by Seller or either of them.
C. Investments in Subsidiaries and Affiliates. California
Prospectors has no subsidiaries or any investment of any kind in any company,
partnership, trust, association or other firm or enterprise.
D. Articles and Operating Agreement. Attached as Exhibit 6
is a true and correct copy of the Articles of Organization of California
Prospectors, together with all amendments thereto, and a true and correct copy
of the Operating Agreement of California Prospectors, together with all
amendments thereto, all certified by the Manager of California Prospectors. The
execution and delivery of this Agreement does not, and the consummation of the
transaction contemplated hereby will not, conflict with the terms and provisions
of the Articles of Organization, as amended, or the Operating Agreement of
California Prospectors, as amended.
E. Financial Statements. Attached as Exhibit 7 are copies
of the financial statements of California Prospectors (Financial Statements) for
California Prospectors' fiscal years ending December 1, 2000 and December 1,
1999 and for the period from January 1, 2001 to the last day of the month
preceding the Closing Date. Such Financial Statements are true and complete;
have been prepared in accordance with sound accounting practice and generally
accepted accounting principles consistently applied; present fairly, accurately
and completely the financial position of California Prospectors as of the dates
specified and the results of its operations for the periods stated; reflect all
assets and all liabilities of California Prospectors; and have not
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been rendered untrue, incomplete, or unfair as representations of the financial
condition of California Prospectors by events subsequent to the respective dates
thereof.
F. Absence of Undisclosed Liabilities. California
Prospectors has no liabilities or obligations of any nature whatsoever, whether
accrued, absolute, contingent, or otherwise (including, without limitation, tax
liability, express or implied contract or tort liability involving persons or
property of any kind) except as reflected in the Financial Statements, and no
facts or circumstances exist, which could give rise to any such liabilities or
obligations. Sellers hereby assume all liability for, and Last Chance's
acquisition of the Member's Interest shall not be subject to, any liabilities or
obligations not specifically set forth in the Financial Statements. This
Agreement contains no statements which, at the time and in light of the
circumstances under which they are made, omit to state, or are false or
misleading with respect to, any material fact.
G. Managers, Officers, Employees, etc. No written or oral
contracts of employment and no written or oral representations or warranties of
continued employment have been made to any of the managers, officers, employees,
agents or independent contractors of California Prospectors. At or before the
Closing, Sellers shall deliver to Last Chance resignations effective at Closing
of all the managers, officers and employees of California Prospectors.
X. Xxxxx. Attached as Exhibit 8 is a list of all banks and
other institutions, persons, associations or entities with which California
Prospectors has an account, loan, line of credit, investment, instrument of
deposit, safe deposit box or other banking or investment relationship,
specifying account numbers, balances, agreement terms and such other information
as Last Chance may reasonably request. Exhibit 8 includes the bank and account
number of California Prospectors' EFT account which it is required to maintain
by the terms of California Prospectors' Standard Contract For California Lottery
Game Retailers together with copies of all authorizations and instructions
granted to enable the California State Lottery Commission to initiate electronic
fund transfers to or from California Prospectors' EFT account.
I. Agreements. Attached as Exhibit 9 are a list and copies
of the executed originals of all written agreements, contracts, commitments or
undertakings, including all contracts by and between California Prospectors and
the California State Lottery Commission and the Existing Lease with Target
Investments, L.L.C., a list and detailed descriptions of all oral agreements,
contracts, commitments or undertakings, and a list and copies of the executed
originals or detailed descriptions of all written or oral amendments to the
foregoing, to which California Prospectors is a party or its business or assets
or the Member's Interests are subject or bound (all collectively the
"Agreements"). Exhibit 9 also includes all judgments, orders, writs, injunctions
or decrees to which any of the Sellers, the Member's Interests, California
Prospectors, or its business or assets are subject or bound (which shall also be
deemed Agreements).
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J. Insurance. Attached as Exhibit 10 are a list and copies
of all liability, casualty, health and accident, keyman, workers' compensation,
and other insurance policies owned by the California Prospectors or of which
California Prospectors is a beneficiary ("Insurance Policies").
K. Registrations. Attached as Exhibit 11 are a list and
copies of the originals and all amendments of all foreign and domestic
registrations, licenses, filings, permits, approvals, authorizations,
exemptions, certifications and pending applications for any of the same
(including, without limitation, all licenses issued by the California State
Lottery Commission, trademarks, service marks, trade names, fictitious names
(including all rights to the name "California Prospectors" which is exclusively
the property of California Prospectors), copyrights and all other forms of
intellectual property rights and the Authorizations described in Paragraph 6(S)
below) and all other intangible property rights of any kind, used in or
necessary to the business of California Prospectors as heretofore conducted,
owned by or licensed to California Prospectors or in which California
Prospectors has any other interest of any kind (the "Registrations"). All such
Registrations are in full force and effect and were obtained in full compliance
with all applicable requirements and regulations. Except as otherwise set forth
on Exhibit 11, California Prospectors owns the entire right, title, and interest
in and to such Registrations free of all security interests, financing
statements, mortgages, pledges, liens, conditional sales agreements, leases,
licenses, encumbrances, charges, claims, restrictions, qualifications,
limitations or rights of any kind, and no third party is using, infringing or
otherwise violating or exercising any rights under any Registration.
L. Contractual Relations. California Prospectors and all
other parties thereto have complied fully with all the provisions of all
Agreements, Insurance Policies and Registrations; and neither California
Prospectors nor any such other party is in default, breach or violation, nor is
there any fact or circumstance that with a lapse of time, notice or both would
result in such a default, breach or violation, under any of the foregoing. All
Agreements, Insurance Policies and Registrations are set forth in the Exhibits,
conform with the terms of the copies thereof or, where oral, the written
summaries thereof contained in the Exhibits, are in full force and effect (and
no notices of cancellation or termination have been given or received) and are
valid, binding and enforceable in accordance with their terms. No term or
provision of such Agreements, Insurance Policies or Registrations violates any
applicable domestic law. California Prospectors has not paid any obligations not
yet due under any of its Agreements, Insurance Policies or Registrations except
as set forth in the Exhibits. California Prospectors is not subject to a
covenant not to compete or any other restriction related to the business or
assets of California Prospectors.
M. Assets Listing; Condition. Attached as Exhibit 12 is a
list (including a description, the location and the nature of California
Prospectors' interest) of all real and personal property of California
Prospectors, and all real and personal property used by California Prospectors,
in connection with the business of California Prospectors (the "assets"). The
list is arranged into at least the following classifications: tangible
personalty (such as equipment and inventory), realty, and intangible property
(such as
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Registrations, Agreements and Insurance Policies). The list may refer to and
incorporate other Exhibits to this Agreement. All assets are in good operating
condition and repair, not obsolete and are usable in the ordinary course of
California Prospector's business; all inventory is usable and saleable in the
ordinary course of the California Prospector's business. All accounts receivable
arose from valid sales and are collectible in the ordinary course of business at
the full amount as set forth in the Financial Statements, Exhibit 7. Possession
of all assets not in the possession of California Prospectors can be obtained
upon request and without the payment of any fee or charge of any kind.
N. Title to Assets. California Prospectors has good and
marketable title to, or valid and binding leasehold interests under leases and
other Agreements described in Exhibit 9, all of its assets. None of the assets
is subject to any security interest, financing statement, mortgage, pledge,
lien, conditional sale agreement, lease, license, encumbrance, charge, or claim
of any kind or to any restriction, qualification, limitation or right of any
kind adversely affecting use, marketability or title, except as specifically
described in detail in the Exhibits. All intangible assets are subject to proper
Registrations entitling California Prospectors to the maximum protection
available and such Registrations are current and in full compliance, force and
effect, except as specifically described in the Exhibits.
O. Consents. Attached as Exhibit 13 is a list of all
consents (the "Necessary Consents") from any person, association, entity, or
governmental authority, necessary to render the transaction contemplated hereby
lawful, effective in accordance with the terms of this Agreement, and in
compliance with any requirements by which any of the Sellers, the Member's
Interest, California Prospectors, its business or assets, are bound, and an
executed copy of all Necessary Consents.
P. Operational Continuity. From June 30, 2001, through the
Closing Date:
(i) The business of California Prospectors has been
and will be conducted in the usual and ordinary course as theretofore conducted
in accordance with sound and prudent business practice;
(ii) California Prospectors has not and will not,
without Last Chance's prior written approval: (1) take any action, or permit any
event or condition to occur which would materially affect the value of the
Member's Interests and/or California Prospectors, its business or assets, (2)
enter into any material agreement, contract, commitment or undertaking, (3)
alter any existing Agreements, (4) increase or decrease materially its level of
inventory, (5) disposed of or alter any material asset or any material amount of
its assets, or (6) institute any material litigation, claim or other proceeding
before any court or governmental authority;
(iii) All books and records (both corporate and
financial) of California Prospectors have been and will be maintained completely
and accurately
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without any change in accounting methods or practices except as specifically
approved by Last Chance; and
(iv) Each of the Sellers shall use its best efforts
to cause California Prospectors to maintain, and California Prospectors has and
shall have maintained, the good will of, and good business relations with, the
California State Lottery Commission, California Prospectors' employees, agents,
contractors, suppliers, customers and others having business relationships with
it, so as to keep such fully available to California Prospectors after the
Closing Date.
Q. Absence of Certain Changes. From June 30, 2001 through
the Closing, there has not been, nor will there be, any material change (whether
or not covered by insurance) in, and no condition or event does or will exist
which does or may have any adverse effect on, California Prospectors, its
business or assets or in the value of the Member's Interests.
R. Taxes and Tax Returns. California Prospectors has timely
filed all required foreign and domestic federal, state, and local income,
payroll, franchise, transaction, privilege, sales, and other tax returns and
reports of every kind whatsoever with the appropriate governmental authorities
for all periods up to the Closing Date. All such returns and reports are
complete, true, and accurate. All taxes, fees, charges, duties and assessments
of every kind whatsoever imposed upon California Prospectors or with respect to
its business or assets, whether assessed or not and whether incurred in respect
of or measured by the income of California Prospectors, for any period before
the Closing Date or arising out of transactions entered into or any state of
facts existing before the Closing Date have been fully paid. Attached as Exhibit
14 are copies of California Prospectors' tax returns for all years still subject
to audit by foreign or domestic authorities and all communications relating to
the same.
S. Proper Authority and Applicable Laws. California
Prospectors has had since its formation, does have currently, and will have at
the Closing, all requisite limited liability and other power and all necessary
registrations, licenses, filings, permits, exemptions, certificates, approvals,
and other authorizations required by any Governmental Authority, or any person,
association or entity to carry on and conduct its business in the manner in
which its business has been and is being conducted, and to own, lease, use, and
operate its assets at the places and in the manner in which its assets have been
and are being owned, leased, used, and operated (Authorizations), the term
Registrations to also include all Authorizations for purposes of this
Agreement). No registration, license, permit, exemptions, certificate, approval
or authorization or applications therefor of any kind for any purpose has been
denied in the five (5) years preceding the Closing Date. All such Authorizations
are in full force and effect. All meetings of the Manager and Members of
California Prospectors necessary to conduct its business have been duly convened
and held, and all requisite Manager and Members approval has been obtained for
all purported acts by California Prospectors. All assets of California
Prospectors are used and maintained in conformity with all applicable foreign
and domestic laws and public policies. No aspect of the business of
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California Prospectors as heretofore conducted or act or omission of California
Prospectors or its agents violates any applicable foreign or domestic law or
public policy. No aspect of the business of California Prospectors as heretofore
conducted (including without limitation use of trade names, trademarks and
written materials) has infringed or does now infringe any tradename, trademark,
service xxxx, copyright or other right of any third party. This Agreement and
the transactions contemplated hereby have been duly authorized by all necessary
action by California Prospectors and its Members, and Sellers will provide Last
Chance with certified resolutions to such effect at or before the Closing Date.
T. Litigation. No litigation, proceeding, investigation or
claim of any kind whatsoever is pending or threatened, by, against or relating
to the Sellers, the Member's Interests, California Prospectors, its business or
assets. No claim or liability can, on the basis of California Prospectors',
Sellers' or their employees' or agents' actions, or of facts or conditions
existing prior to the Closing Date, be asserted against California Prospectors,
its business or assets or the Sellers as the owners of the Member's Interests or
the Member's Interest by any individual, entity, association or governmental
authority, except as described in detail in Exhibit 15, all of which shall
remain the responsibility of Sellers.
U. Benefit, Pension and Profit-Sharing Plans. California
Prospectors has no employee benefit plans or policies of any kind whatsoever,
including without limitation, group health or life insurance, sick leave,
pension, holiday, vacation or profit-sharing policies or plans except as listed
on Exhibit 16.
V. Freedom from Restrictions. The execution and delivery of
this Agreement, the consummation of the transaction contemplated hereby, and the
fulfillment of the terms hereof by Sellers and California Prospectors (i) do not
violate or conflict with, and will not result in a breach or default, or in any
occurrence that, with a lapse of time or action by a third party or both, could
result in a breach or default with respect to any Agreements or any contract,
agreement, commitment, or undertaking, either written or oral, by which any of
the Sellers are a party or are bound; (ii) will not violate any applicable
foreign or domestic law or public policy; (iii) will not result in an
acceleration or increase of any amounts due from California Prospectors; and
(iv) will not result in an alteration to the detriment of California Prospectors
of the terms or conditions of any Agreements, Insurance Policy or Registration.
No contract, agreement, commitment, or undertaking, either oral or written, or
judgment, order, writ, injunction or decree exists that in any other manner
restricts, limits, or affects the execution, delivery or performance of this
Agreement, the transferability of the Member's Interest, or the business or
assets of California Prospectors.
W. Title to Member's Interests; Power to Transfer. Each
Seller will have and deliver to Last Chance at the Closing good and marketable
title to his or her respective Member's Interest free and clear of all security
interests, financing statements, pledges, liens, conditional sales agreements,
encumbrances, charges, proxies, agreements among Members, claims, restrictions,
qualifications, limitations or
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rights of any kind and will have at the Closing the right, power and authority
to transfer his or her Member's Interest without breach or default with respect
to any contract, agreement, commitment, or undertaking by which Sellers or the
Member's Interests are bound.
X. Environmental Matters. Attached hereto as Exhibit 17 is
a complete and accurate written disclosure with respect to all environmental
matters under federal, state or local law relating to the business operations of
California Prospectors or its assets, or arising from California Prospector's
use or occupancy of property, directly or indirectly, including without
limitation any matters relating to air, ground, and water pollution or
regulation, soil monitoring, occupational health or safety or the storage,
treatment, disposal, release, discharge or emission of any solid waste,
pollutant or contaminant of any kind, including without limitation any hazardous
substance as that term is defined in 42 U.S.C. Section 9601 or any hazardous
waste as that term is defined in 42 U.S.C. Section 6903 or any regulated
substance as that term is defined in 42 U.S.C. Section 6991, or as any of such
terms is defined under Nevada law (collectively, "Hazardous Substances"),
together with a list of all permits, licenses, authorizations, agreements,
injunctions, decrees and orders relating thereto, and copies of any and all
written communications with federal, state and local environmental regulatory
agencies and the Occupational Safety and Health Administration. The business
operations of California Prospectors and its assets have been, and are being,
used and operated in compliance with all applicable local, state and federal
laws, ordinances, rules, regulations, permits, licenses, authorizations,
agreements, injunctions, decrees and orders relating to air, ground and water
pollution or regulation; soil monitoring; occupational health or safety; or the
storage, treatment, disposal, release, discharge or emission of any Hazardous
Substances. No Hazardous Substances have been disposed of on any property that
is or has been owned or occupied by California Prospectors at any time, and no
Hazardous Substances have been transported by or on behalf of California
Prospectors or in connection with its business operations, for disposal except
as disclosed on Exhibit 17 hereto. Except as expressly provided in such Exhibit,
California Prospectors and/or its business activities or assets are not,
directly or indirectly, subject to any obligations, liabilities (contingent or
otherwise), claims, judgments, orders, settlements, resolutions of disputes,
writs, injunctions, or decrees relating to any product or service sold or
available for sale by California Prospectors, or arising from its use or
occupancy of property, directly or indirectly, or to the treatment, storage,
disposal, release, discharge or emission of any economic poisons, hazardous
wastes, toxic substances and/or any similar such pollutants or contaminants, or
to the occupational exposure of California Prospectors' employees or agents.
There are no threatened or pending litigation, proceedings, investigations,
citations, or notices of violation resulting from the business activities of
California Prospectors, or arising from its use or occupancy of property,
relating to the treatment, storage, disposal, release, discharge or emission of
any economic poisons, hazardous wastes, toxic substances and/or any similar such
pollutants or contaminants. Such Exhibit contains a complete list of all
agreements, contracts, commitments and undertakings involving California
Prospectors and its business or assets relating to the treatment, storage,
disposal, release, discharge or emission of any economic poisons,
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hazardous wastes, toxic substances and/or any similar such pollutants or
contaminants. There are no facts or circumstances which may give rise to any
litigation, claims, proceedings, investigations, citations, or notices of
violations resulting from the business activities of California Prospectors, or
from or relating to properties owned or occupied by California Prospectors
directly or indirectly, relating to the treatment, storage, disposal, release,
discharge or emission of any economic poisons, hazardous wastes, toxic
substances and/or any similar such pollutants or contaminants.
Y. California Lottery. Except as provided in Exhibit 18,
California Prospectors is and at all times has been in compliance with, and has
and continues to operate its business as a California State Lottery Retailer in
compliance with, the terms and conditions of the Standard Contract For
California Lottery Game Retailers by and between California Prospectors and the
California State Lottery Commissions, the California State Lottery Act, the
California State Lottery Regulations and the California State Lottery policies,
instructions and directives, as amended, issued or re-issued, from time to time,
and any license granted to California Prospectors by the California State
Lottery Commission. California Prospectors has paid and shall pay through the
Closing all sums due to the California State Lottery Commission for the sale of
lottery products, or otherwise.
9. VOLUME OF EXHIBITS AND SCHEDULES. All Exhibits and Schedules to this
Agreement are incorporated herein by reference and will be bound by Sellers in a
separate volume (the "Volume of Exhibits and Schedules") together with an index
thereof and a certificate (the "Certificate of Completion") executed by the
Sellers representing and warranting that the Volume of Exhibits and Schedules
contains true and complete Exhibits and Schedules as called for in this
Agreement. Sellers shall have until four (4) days prior to the Closing Date, to
complete the preparation of the Volume of Exhibits and Schedules and deliver it
to Last Chance. Sellers may deliver the Volume of Exhibits and Schedules in
installments of less than all the Exhibits and Schedules, but Sellers covenant
and agree that all Exhibits and Schedules shall be delivered and certified to
Last Chance no later than four (4) days prior to the Closing Date. All Exhibits
and Schedules, whether delivered upon execution hereof or hereafter delivered,
shall be dated effective as of the date of this Agreement and this Agreement
shall be fully effective and enforceable as of such date notwithstanding
delivery of such Exhibits and Schedules subsequent to such date or the breach by
Sellers of their covenant set forth above to deliver and certify such Exhibits
and Schedules; provided, that performance of such covenant shall remain a
condition of Last Chance's obligations hereunder as provided below. If Sellers
elect to deliver the Volume of Exhibits and Schedules in installments, Sellers
shall bind and index all the Exhibits within fifteen (15) days following the
Closing Date, and an additional Certificate of Completion shall be executed with
respect to the final bound version.
10. REPRESENTATIONS AND WARRANTIES OF LAST CHANCE. Last Chance represents
and warrants now and as of the Closing Date to Sellers as follows:
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10.1 Organization. Last Chance is a corporation duly organized,
validly existing and in good standing under the laws of Nevada. Last Chance has
all corporate power necessary to carry on its business as now being conducted
and as proposed to be conducted. Last Chance is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure so to
qualify would have a material adverse effect on its business, licenses,
contracts, grants or properties.
10.2 Authorization. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated hereby and the
fulfillment of the terms hereof by Last Chance will not, violate or conflict
with any provision of Last Chance's Articles of Incorporation or Bylaws, or any
provision of any contract, agreement, commitment or undertaking to which Last
Chance is bound. At the Closing Date, Last Chance shall deliver to Sellers a
certified copy of the resolutions of the Board of Directors of Last Chance
authorizing the consummation of the transaction contemplated by this Agreement.
Upon delivery to Sellers of such certified resolutions, the consummation of the
transaction contemplated by this Agreement will have been duly authorized by the
Board of Directors of Last Chance.
10.3 Investment Intent. Last Chance is purchasing the Member's
Interests for its own account for investment and not with a view to or for sale
in connection with any distribution of the Member's Interest of California
Prospectors; and Last Chance will neither sell nor transfer any of the Member's
Interest in violation of any applicable law, rule or regulation, federal or
state. Last Chance understands that any resale of the Member's Interests must be
made in compliance with the registration requirements of the Securities Act of
1933, as amended, or pursuant to an exemption therefrom. Last Chance understands
and consents that the certificates, if any, representing the Member's Interests
shall be endorsed with a legend, substantially as follows:
(i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO CALIFORNIA PROSPECTORS THAT SUCH REGISTRATION IS NOT
REQUIRED";
(ii) Any legend required by the Blue Sky laws of any state to the extent
such laws are applicable to the Member's Interest represented by the
certificate so legended;
(iii) Any legend required by the California State Lottery Commission;
and
(iv) Any other legend required by the Nevada Gaming Authorities,
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10.4 Accredited Investor; Investigation. Last Chance is an
"Accredited Investor", as such term is defined in Regulation D, Rule 501,
promulgated under the Securities Act of 1933, as amended. Last Chance has such
knowledge and experience in financial and business matters to enable Last Chance
to evaluate the merits and risks of an investment in the Member's Interests and
to make an informed investment decision with respect thereto. Last Chance has
discussed the California Prospector's business, management and financial affairs
with the California Prospectors management and has had the opportunity to review
the California Prospector's facilities. Last Chance has received current and
historical information concerning California Prospectors and its finances and
operations. California Prospectors acknowledges that all documents, records and
books requested by Last Chance pertaining to this investment have been made
available for inspection by, and have been inspected by, it and its attorney,
accountant and other advisors. Last Chance and its advisors have had full
opportunity to ask questions of and receive answers from the authorized
representatives of California Prospectors, including the Sellers, concerning the
offering of the Member's Interest.
11. BROKERS AND FINDERS. Each party hereto represents and warrants to the
other parties that it has not employed any broker or finder in connection with
the transactions contemplated by this Agreement. Notwithstanding the preceding
sentence, Sellers and Last Chance may retain the services of financial advisors
and attorneys, the fees of such persons to be borne by the party hiring such
advisors and attorneys. No expenses shall be borne by California Prospectors in
connection with this transaction.
12. SURVIVAL OF WARRANTIES. All representations, warranties, covenants, and
agreements contained herein, and all lists, descriptions, financial statements,
certificates, Exhibits, Schedules and other documents delivered under this
Agreement or in connection with the transactions contemplated hereby, are true
now, will be true at the Closing Date, and are binding and will survive the
Closing regardless of the waiver or satisfaction of any condition precedent to
the Closing or of any investigation or express or implied approval or acceptance
by or on behalf of any party hereto.
13. INDEMNITY.
13.1 Sellers. Sellers hereby jointly agree to indemnify and protect
Last Chance (and its officers, directors, shareholders and Affiliates), and to
defend and hold them harmless from and against, all claims, damages, losses,
costs, and expenses (including reasonable attorney fees, court costs and other
expenses incident to any proceeding, investigation or any claim, including
without limitation in any suit by Last Chance against Sellers) attributable,
directly or indirectly, to the operation of the business of California
Prospectors from inception to the Closing, the breach by Sellers of any
obligation hereunder or the inaccuracy of any representation or warranty made by
Sellers herein or in any instrument delivered pursuant hereto, or in connection
with the transactions contemplated hereby, including, but not limited to, the
Exhibits. A claim for indemnification shall be made only by Last Chance
notifying Sellers of the existence of the claim for which indemnification is
sought. Last Chance shall thereafter be entitled,
15
at its option, to control, or participate in, any prosecution or defense
relating to such claim for indemnity (including without limitation decisions to
settle or appeal) through attorneys and agents of its choosing, all at the
expense of the Sellers (except in any suit by Last Chance against any Seller).
The results of any such prosecution or defense shall be binding upon Last Chance
and Sellers for purposes of resolving any claim for indemnity. Any claims for
indemnity, or portions thereof shall be the joint and several responsibility of
Sellers and paid to Last Chance on demand. Sellers shall not be entitled to
indemnity or contribution from, or subrogation to or recovery against,
California Prospectors with respect to any liability of the Sellers, which may
arise under this Agreement or the transactions contemplated hereby.
13.2 Purchaser. Last Chance hereby unconditionally agrees to
indemnify Sellers and defend and hold them harmless from and against all claims,
damages, losses, costs, and expenses (including reasonable attorney fees, court
costs and other expenses incident to any proceeding, investigation or any claim,
including without limitation in any suit by Sellers against Last Chance)
attributable directly or indirectly to the operation of the business of
California Prospectors after the Closing or the breach by Last Chance of any
obligation hereunder or the inaccuracy of any representation or warranty made by
Last Chance herein or in any instrument delivered pursuant hereto or in
connection with the transactions contemplated hereby. A claim for
indemnification shall be made only by Sellers notifying Last Chance of the
existence of the claim for which indemnification is sought. Seller shall
thereafter be entitled, at its option, to control, or participate in any
prosecution or defense relating to such claim for indemnity (including without
limitation decisions to settle or appeal) through attorneys and agents of its
choosing, all at the expense of Last Chance (except in a suit by Sellers against
Last Chance). The results of any such prosecution or defense shall be binding
upon Last Chances and Sellers for purposes of resolving all claims for
indemnity.
14. CONDITIONS.
14.1 Conditions Precedent to the Obligation of Last Chance. The
obligation of Last Chance to purchase the Member's Interests at the Closing is
subject to the satisfaction in all material respects, on or before the Closing
Date, of the following conditions:
A. Representations True. The representations and warranties
of Sellers herein shall have been true and correct in all material respects as
of the date hereof; and shall further be true and correct in all material
respects as of the Closing with the same force and effect as if made as of the
Closing.
B. Covenants Performed. On or before the Closing Date,
Sellers shall have performed all obligations and complied with all covenants
required to be performed by them under this Agreement prior to the Closing.
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C. Opinion of Counsel. On the Closing Date, Sellers shall
deliver to Last Chance an opinion from Lemons, Grundy & Xxxxxxxxx, Chartered, a
Nevada professional corporation in the form attached hereto as Schedule 14.1(C).
D. Certificate. At the Closing Date, Sellers shall deliver
to Last Chance a certificate signed by each, certifying that the conditions
stated in Section 14.1(A) and (B) have been fulfilled as of the Closing Date.
E. Integrated Closing. The Closing shall have occurred
under the Asset Purchase Agreement and all of the Integrated Agreements.
F. California Lottery Station, Approvals. The California
State Lottery Commission shall have determined that Last Chance is suitable to
acquire all of the ownership interests in and to California Prospectors and
shall have issued all licenses or approvals, or entered into such contracts with
California Prospectors Ltd., as are necessary to the continued operation of the
California Lottery Station by California Prospectors as of the Closing Date. The
Nevada Gaming Authorities shall have determined that the operation of the
California Lottery Station by an Affiliate of Last Chance does not constitute an
unsuitable method of operation by Last Chance as a Nevada gaming licensee.
Approvals from all other Governmental Authorities having jurisdiction over the
California Lottery Station shall have been obtained, including, but not limited
to, the State of Nevada, State of California, Washoe County, Nevada, Sierra
County, California or any other governmental board, commission or agency that
must provide Last Chance approval to operate California Prospectors or approval
to California Prospectors to operate the California Lottery Station. In the
event that Last Chance is unable to secure the required approvals, this
Agreement shall terminate with no damages claimed by any party against the
other.
G. No certificate of occupancy or license necessary to the
operation of the California Lottery Station shall have been revoked or suspended
by the responsible Governmental Authority.
14.2 Conditions of the Obligations of Sellers. The obligation of
Sellers to sell the Member's Interests at the Closing Date is subject to the
satisfaction in all material respects, on or before the Closing Date, of the
following conditions:
A. Representations True. The representations and warranties
of Last Chance herein shall be true and correct in all material respects as of
the Closing with the same force and effect as if made as of the Closing.
B. Covenants Performed. On or before the Closing Date, Last
Chance shall have performed all obligations and complied with all covenants
required to be performed by it under this Agreement prior to the Closing.
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C. Certificate. At the Closing, Last Chance shall deliver
to Sellers a certificate, signed by Last Chance, certifying that the conditions
stated in Section 13.2(A) and (B) have been fulfilled as of the Closing Date.
15. PUBLICITY. Prior to the Closing, neither Last Chance nor Sellers nor
California Prospectors will (and each will direct its representatives not to)
make, directly or indirectly, any public comment, statement, or communication
with respect to, or otherwise disclose or permit the disclosure of the existence
of discussions regarding the transaction contemplated by this Agreement or any
of the conditions, or other aspects of the transaction; provided, however, that
The Sands Regent and Last Chance may discuss with and provide information
regarding the transaction, (i) as required by applicable Securities Laws, (ii)
to the media and to stock analysts, investment bankers and other financial
analysts, so long as such discussions and the information provided by the
disclosing party is within the scope of any press release approved by The Sands
Regent, Last Chance and Sellers (and such information does not address issues or
provide information which was not addressed or provided in such press release),
and (iii) to Last Chance's and California Prospector's respective lenders,
attorneys, accountants, advisors and other representatives (provided Last Chance
or California Prospectors, as the case may be, concurrently informs all of such
persons and entities of the confidential nature of such information). Further,
Last Chance shall have the right to contact and provide information regarding
the transaction to the Nevada Gaming Authorities, the California Lottery
authorities and any other governmental or regulatory authority. If either Last
Chance or Sellers or California Prospectors are required by law to make any
disclosures which would otherwise be disallowed by this Section 15, the party
intending to make such disclosure must first provide to the other party for
review and approval (which shall not be unreasonably withheld or delayed) the
content of the proposed disclosure, the reasons that such disclosure is required
by law, and the time and place that the disclosure will be made.
The obligations set forth in this Section 15 shall survive the
termination of this Agreement.
16. ADDITIONAL ACTS OR DOCUMENTATION. Sellers, California Prospectors and
Last Chance agree to make, execute, and deliver such additional documents and
instruments and take such actions as may be necessary or appropriate to carry
out the full intent and purpose of this Agreement.
17. NOTICES. Any notices that may be required under this Agreement shall be
in writing, shall be effective on the earlier of the date when received or the
third day following mailing, and shall be given by personal service, or by
certified or registered mail, return receipt requested, to the addresses set
forth below, or to such other addresses as may be specified in writing to all
parties hereto.
If to Sellers: Xxxxx Xxxxxxxx and Turkey Stremmel
0000 X. Xxxxxxxx
Xxxx, Xxxxxx 00000
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Xxxxx and Xxxxxxxxx Xxxxxxxx
0000 Xxxxxxxx XXXX #000
Xxxx, Xxxxxx 00000
With a copy to: Xxxxx X. Xxxxxx, Esq.
Lemons, Grundy & Xxxxxxxxx
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
If to Last Chance: Xxxxx X. Xxxx, Treasurer
The Sands Regent, Inc.
000 Xxxxxxxxx Xxx.
Xxxx, Xxxxxx 00000
With Copy to: Xxxx X. Bible, Esq.
Bible, Hoy & Trachok
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxx, Xxxxxx 00000
18. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, and their respective successors in
interest, but in no event shall any party be relieved of its obligations
hereunder without the express written consent of each other party except as
expressly provided herein.
19. SEVERABILITY. To the fullest extent possible each provision of this
Agreement shall be interpreted in such fashion as to be effective and valid
under applicable law. If any provision of this Agreement is declared void or
unenforceable with respect to particular circumstances, such provision shall
remain in full force and effect in all other circumstances. If any provision of
this Agreement is declared void or unenforceable, such provision shall be deemed
severed from this Agreement, which shall otherwise remain in full force and
effect.
20. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all such counterparts shall be deemed to constitute one and the
same instrument, and each of the executed counterparts shall be deemed an
original hereof.
21. GOVERNING LAW. This Agreement shall be deemed to be made under, and
shall be construed in accordance with and shall be governed by, the internal
laws of the State of Nevada. Suit to enforce any provision of this Agreement or
to obtain any remedy with respect hereto may be brought in State or Federal
Court in Washoe County, Nevada, and each party hereto expressly and irrevocably
consents to the jurisdiction of said court.
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22. GENDER AND NUMBER. Wherever from the context it appears appropriate,
each item stated in the singular shall include the plural and vice versa, and
the masculine, feminine, or neuter form shall include the masculine, feminine,
and neuter forms.
23. MODIFICATIONS AND WAIVERS. No change, modification, or waiver of any
provision of this Agreement shall be valid or binding unless it is in writing
dated after the date hereof and signed by the parties intended to be bound. No
waiver of any breach, term, or condition of this Agreement by either party shall
constitute a subsequent waiver of the same or any other breach, term, or
condition or a continuing waiver after demand for strict compliance.
24. CONTRIBUTIONS AND RELEASE BY SELLERS. Sellers hereby agree that on the
Closing Date they will be deemed to have contributed all loans or other amounts
owed to any of them by California Prospectors or any subsidiary to its capital
and will be deemed to have released all rights or claims of any nature they may
have against California Prospectors or any subsidiary.
25. CORPORATE LIABILITY. Prior to the Closing Date (but not following),
California Prospectors shall be considered to have made and shall be jointly and
severally liable for all of the covenants, representations and warranties of
Sellers herein.
26. ATTORNEYS' FEES. In the event a party must retain an attorney to enforce
this Agreement or in the event of litigation which arises as a result of any
controversy, dispute, breach or construction of this Agreement, the prevailing
party shall be entitled to recover, from the other party, all costs, expenses
and reasonable attorney's fees incurred in connection with the enforcement
efforts or litigation. For purposes of this Agreement, the term "attorneys'
fees" or "attorneys' fees and costs" shall mean the fees and expenses of counsel
to the parties hereto, which may include printing, duplicating and other
expenses, air freight charges, and fees billed for law clerks, paralegals and
other persons not admitted to the bar but performing services under the
supervision of an attorney.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Sellers Last Chance
Last Chance, Inc.,
a Nevada Corporation
/s/ Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
By: /s/ Xxxxxx Xxxxx
Its: Pres/CEO
/s/ Turkey Xxxxxxxx
Turkey Xxxxxxxx
/s/ Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
/s/ Xxxxxxxxx Xxxxxxxx
Xxxxxxxxx Xxxxxxxx
California Prospectors
California Prospectors, Ltd.,
a Nevada limited liability California Prospectors
By: /s/ Xxxxx Xxxxxxxx
Its: Partner
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