EXHIBIT 10
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is made the 16th day of May 2002, by and among
Xxxx Xxxxxx ("Purchaser"), LVDGT Rainbow, Inc. ("Rainbow"), and Sports
Entertainment Enterprises, Inc., a Colorado corporation (referred to as
"SPEN").
WHEREAS, Purchaser desires to acquire all of the issued and outstanding
shares of common stock of Rainbow; and
WHEREAS, Rainbow is a wholly-owned subsidiary of SPEN; and
WHEREAS, SPEN desires to sell all of its Shares of common stock of
Rainbow to Purchaser; and
WHEREAS, Purchaser, Rainbow and SPEN desire to make certain
representations, warranties, covenants and agreements in connection with the
Purchase.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
representations contained herein, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE 1
THE PURCHASE
1.1 Sale and Delivery of Common Stock. Subject to all the terms and
conditions of this Agreement, SPEN shall transfer, convey and deliver to
Purchaser at the Closing (as defined in paragraph 1.2 hereof) good, valuable
and marketable title to the shares of Rainbow, free and clear of all liens,
claims and encumbrances in exchange for the consideration described in this
Article 1. The consideration described in this Article 1 hereof shall be
delivered to SPEN in accordance with the provisions of Section 1.3 below.
1.2 Effective Date and Closing. The closing of the transaction
contemplated herein (the "Closing") shall occur at a mutually agreeable time
and place, on the earliest practicable date following the day on which all of
the obligations and conditions precedent contained herein are complied with.
The Closing date shall be July 1, 2002, or as soon thereafter as reasonably
practicable after the approval of SPEN's shareholders referred to in Section
6.5 (the "Closing Date").
1.3 Purchase Price. Subject to all of the terms and conditions set
forth in the Agreement and in reliance on the representations, warranties and
covenants hereinafter set forth, the purchase price shall be $347,000 to be
paid on behalf of Purchaser by reducing the amounts owed by SPEN to Rainbow by
that amount.
1.4 Debt Forgiveness. As additional consideration on behalf of
Purchaser, as of the closing date Rainbow will forgive all remaining amounts
owed to it by SPEN.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to SPEN:
Investigation of Financial Condition. Purchaser has had the opportunity
to meet with SPEN and Rainbow's accountants and attorneys to discuss the
financial condition of Rainbow. Rainbow has made available to Purchaser all
books and records of Rainbow. Purchaser has made such investigation of the
financial condition of Rainbow it deems necessary. Rainbow have provided all
documents requested by Purchaser and answered all questions and inquiries made
by Purchaser. Purchaser has relied on its own legal, tax and financial
advisors. Purchaser is not relying on any oral statements made by any person.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF RAINBOW
Except as disclosed in Schedule 3 which is attached hereto and
incorporated herein by reference, Rainbow represents and warrants to Purchaser
that:
3.1 Organization. Rainbow is a corporation duly organized, valid
existing, and in good standing under the laws of Nevada, has all necessary
corporate powers to own properties and to carry on business, and it is not now
conducting any business, except to the extent to which the effecting of the
transaction contemplated by this Agreement constitutes doing business.
3.2 Capitalization. The authorized capital stock of Rainbow consists
of 2,500 shares of Common Stock of which 100 shares of Common Stock are
currently issued and outstanding. All of the issued and outstanding shares of
Common Stock are duly authorized, validly issued, fully paid and
nonassessable. There are no outstanding subscriptions, options, rights,
warrants, convertible securities, or other agreements or commitments
obligating Rainbow to issue or to transfer from treasury any additional shares
of its capital stock of any class.
3.3 Subsidiaries. Rainbow does not presently have any subsidiaries
or own any interest in any other enterprise (whether or not such enterprise is
a corporation).
3.4 Directors and Officers. Schedule 3 contains the names and titles
of all directors and officers of Rainbow as of the date of this Agreement.
3.5 Authority. Rainbow has full corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated by
this Agreement. The Board of Directors of Rainbow has taken all action
required to authorize the execution and delivery of this Agreement by or on
behalf of Rainbow, the performance of the obligations of Rainbow under this
Agreement and the consummation by Rainbow of the transactions contemplated
under this Agreement. No other corporate proceedings on the part of Rainbow
are necessary to authorize the execution and delivery of this Agreement by
Rainbow in the performance of its obligations under this Agreement. This
Agreement is, and when executed and delivered by Rainbow, will be a valid and
binding agreement of Rainbow, enforceable against Rainbow in accordance with
its terms, except as such enforceability may be limited by general principles
of equity, bankruptcy, insolvency, moratorium and similar laws relating to
creditors rights generally.
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3.6 Ability to Carry Out Obligations. Neither the execution and
delivery of this Agreement, the performance by Rainbow of its obligations
under this Agreement, nor the consummation of the transactions contemplated
under this Agreement will violate any provision of Rainbow's articles of
incorporation or bylaws, or to the best of Rainbow's knowledge: (a) with or
without the giving of notice or the passage of time, or both, violate, or be
in conflict with, or constitute a default under, or cause or permit the
termination or the acceleration of the maturity of, any debt, contract,
agreement or obligation of Rainbow, or require the payment of any prepayment
or other penalties; (b) require notice to, or the consent of, any party to any
agreement or commitment, lease or license, to which Rainbow is bound; (c)
result in the creation or imposition of any security interest, lien or other
encumbrance upon any property or assets of Rainbow; or (d) violate any
statute or law or any judgment, decree, order, regulation or rule of any court
or governmental authority to which Rainbow is bound or subject.
3.7 Full Disclosure. None of the representations and warranties made
by Rainbow herein, or in any exhibit, certificate or memorandum furnished or
to be furnished by Rainbow, or on its behalf, contains or will contain any
untrue statement of material fact, or omit any material fact the omission of
which would be misleading.
3.8 Consents and Approvals. No consent, approval or authorization
of, or declaration, filing or registration with, any governmental or
regulatory authority is required to be made or obtained by Rainbow in
connection with: (a) the execution and delivery by Rainbow of its obligations
under this Agreement; (b) the performance by Rainbow of its obligations under
this Agreement; or (c) the consummation by Rainbow of the transactions
contemplated by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SPEN
As an inducement to Purchaser to enter into this Agreement, SPEN
represents and warrants to Purchaser that to the best of his actual knowledge
without further investigation:
4.1 Organization. SPEN is a corporation duly organized, valid
existing, and in good standing under the laws of Colorado, has all necessary
corporate powers to own properties and to carry on its business as now owned
and operated by it in Colorado; however, SPEN is not qualified to do business
in any other states.
4.2 Ability to Carry Out Obligations. Subject to the conditions set
forth in Article 6 hereof, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated under this
Agreement will: (a) violate any provision of SPEN's articles of incorporation
or bylaws; (b) with or without the giving of notice or the passage of time,
or both, violate, or be in conflict with, or constitute a default under, or
cause or permit the termination or the acceleration of the maturity of, any
debt, contract, agreement or obligation of SPEN, or require the payment of any
prepayment or other penalties; (c) require notice to, or the consent of, any
party to any agreement or commitment, lease or license, to which SPEN is bound
except for its obligations under an Investment and Voting Agreement with ASI
Group, LLC; (d) result in the creation or imposition of any security interest,
lien or other encumbrance upon any property or assets of SPEN; or (e) violate
any statute or law or any judgment, decree, order, regulation or rule of any
court or governmental authority to which SPEN is bound or subject.
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4.3 Full Disclosure. None of the representations and warranties made
by SPEN herein, or in any exhibit, certificate or memorandum furnished or to
be furnished by SPEN contains or will contain any untrue statement of material
fact, or omit any material fact the omission of which would be misleading.
4.4 Share Ownership. SPEN holds all of the outstanding common shares
of Rainbow Common Stock. Such ownership is of record and beneficially by
SPEN, and such shares are not subject to any claim, lien, encumbrance or
pledge. SPEN has authority to sell such shares pursuant to this Agreement.
ARTICLE 5
COVENANTS
5.1 Investigative Rights. From the date of this Agreement until the
Closing Date, each party shall provide to the other party, and such other
party's counsels, accountants, auditors, and other authorized representatives,
full access during normal business hours and upon reasonable advance written
notice to all of each party's properties, books, contracts, commitments, and
records for the purpose of examining the same. Each party shall furnish the
other party with all information concerning each party's affairs as the other
party may reasonably request. If the transaction contemplated hereby is not
completed, all documents received by each party and/or its attorneys and
accountants, auditors or other authorized representatives shall be returned to
the other party who provided same upon request. The parties hereto, their
directors, employees, agents and representatives shall not disclose any of the
information described above unless such information is already disclosed to
the public, without the prior written consent of the party to which the
confidential information pertains. Each party shall take such steps as are
necessary to prevent disclosure of such information to unauthorized third
parties.
5.2 Conduct of Business. Prior to the Closing, Rainbow shall conduct
its business in the normal course, and shall not sell, pledge, or assign any
assets, without the prior written approval of the other party, except in the
regular course of business or as contemplated in previously disclosed
contractual obligations. Rainbow shall not amend its Articles of
Incorporation or Bylaws, declare dividends, redeem or sell stock or other
securities, incur additional or newly-funded liabilities, acquire or dispose
of fixed assets, change employment terms, enter into any material or long-term
contract, guarantee obligations of any third party, settle or discharge any
balance sheet receivable for less than its stated amount, pay more on any
liability than its stated amount, or enter into any other transaction other
than in the regular course of business except as otherwise contemplated
herein.
ARTICLE 6
CONDITIONS PRECEDENT TO
SPEN'S PERFORMANCE
6.1 Conditions. The obligations of SPEN hereunder shall be subject
to the satisfaction, at or before the Closing, of all the conditions set forth
in this Article 6. SPEN may waive any or all of these conditions, except the
conditions set forth in Sections 6.5 and 6.7 below, in whole or in part
without prior notice; provided, however, that no such waiver of a condition
shall constitute a waiver by SPEN of any other condition of or any of SPEN's
other rights or remedies, at law or in equity, if Purchaser shall be in
default of any of his representations, warranties, or covenants under this
Agreement.
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6.2 Accuracy of Representations. Except as otherwise permitted by
this Agreement, all representations and warranties by Purchaser in this
Agreement or in any written statement that shall be delivered to SPEN by
Purchaser under this Agreement shall be true and accurate on and as of the
Closing Date as though made at that time.
6.3 Performance. Purchaser shall have performed, satisfied, and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it, on or before the Closing
Date.
6.4 Absence of Litigation. No action, suit, or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against any party hereto on or before the Closing
Date.
6.5 Shareholder Approval. The shareholders of SPEN shall have
approved the sale of the shares of Rainbow to Purchaser pursuant to the
requirements of the Colorado Business Corporation Act.
6.6 Dissenting Shareholders. The holders of no more than 5% of the
outstanding shares of SPEN shall have dissented from the sale of the shares of
Rainbow and demanded payment for their shares of SPEN pursuant to the Colorado
Business Corporation Act.
6.7 Consent of ASI. ASI Group, LLC, shall have given its consent to
the sale of the shares.
ARTICLE 7
CONDITIONS PRECEDENT TO PURCHASER'S PERFORMANCE
7.1 Conditions. Purchaser's obligations hereunder shall be subject
to the satisfaction, at or before the Closing, of all the conditions set forth
in this Article 7. Purchaser may waive any or all of these conditions in
whole or in part without prior notice; provided, however, that no such waiver
of a condition shall constitute a waiver by Purchaser of any other condition
of or any of Purchaser's rights or remedies, at law or in equity, if SPEN
shall be in default of any of his representations, warranties, or covenants
under this Agreement.
7.2 Accuracy of Representations. Except as otherwise permitted by
this Agreement, all representations and warranties by SPEN in this Agreement
or in any written statement that shall be delivered to Purchaser by SPEN under
this Agreement shall be substantially true and accurate on and as of the
Closing Date as though made at that time.
7.3 Absence of Litigation. No action, suit or proceeding before any
court or any governmental body or authority, pertaining to the transaction
contemplated by this Agreement or to its consummation, shall have been
instituted or threatened against any party hereto on or before the Closing
Date.
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ARTICLE 8
CLOSING
8.1 Closing. The Closing of this transaction shall be held at the
offices of SPEN at 0000 Xxxxx Xxx Xxxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxx 00000, or
such other place as shall be mutually agreed upon, on such date as shall be
mutually agreed upon by the parties. At the Closing:
8.2 SPEN shall deliver the certificate representing the shares of
Rainbow being sold pursuant to this Agreement, and such certificate will be
duly endorsed.
8.3 Rainbow shall deliver a statement releasing SPEN of $347,000 of
indebtedness to Rainbow.
8.4 Rainbow shall deliver a statement releasing SPEN of all remaining
indebtedness to Rainbow.
ARTICLE 9
MISCELLANEOUS
9.1 Captions and Headings. The Article and paragraph headings
throughout this Agreement are for convenience and reference only, and shall in
no way be deemed to define, limit, or add to the meaning of any provision of
this Agreement.
9.2 No Oral Change. This Agreement and any provision hereof, may not
be waived, changed, modified, or discharged orally, but it can be changed by
an agreement in writing signed by the party against whom enforcement of any
waiver, change, modification, or discharge is sought.
9.3 Non-Waiver. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Agreement shall be
deemed to have been made unless expressly in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party to
insist in any one or more cases upon the performance of any of the provisions,
covenants, or conditions of this Agreement or to exercise any option herein
contained shall not be construed as a waiver or relinquishment for the future
of any such provisions, covenants, or conditions, (ii) the acceptance of
performance of anything required by this Agreement to be performed with
knowledge of the breach or failure of a covenant, condition, or provision
hereof shall not be deemed a waiver of such breach or failure, and (iii) no
waiver by any party of one breach by another party shall be construed as a
waiver with respect to any other or subsequent breach.
9.4 Time of Essence. Time is of the essence of this Agreement and of
each and every provision hereof.
9.5 Entire Agreement. This Agreement contains the entire Agreement
and understanding between the parties hereto, and supersedes all prior
agreements and understandings.
9.6 Choice of Law. This Agreement and its application shall be
governed by the laws of the State of Nevada, except to the extent its conflict
of laws provisions would apply the laws of another jurisdiction.
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9.7 Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party
to whom notice is to be given, or on the third day after mailing if mailed to
the party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed as follows:
Purchaser:
Xxxx Xxxxxx
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
SPEN and Rainbow:
Sport Entertainment Enterprises, Inc.
0000 Xxxxx Xxx Xxxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxx 00000
with a copy to:
Xxx X. Xxxxxx
Xxxx Xxxxx Xxxxxxxx & Xxxxxx, P.C.
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
9.8 Binding Effect. This Agreement shall inure to and be binding
upon the heirs, executors, personal representatives, successors and assigns of
each of the parties to this Agreement.
9.9 Mutual Cooperation. The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such other
and further documents and take such other and further actions as may be
necessary or convenient to effect the transaction described herein.
9.10 Brokers. The parties hereto represent and agree that no broker
has brought about the aforementioned transaction. Each of the parties hereto
shall indemnify and hold the other harmless against any and all claims,
losses, liabilities or expenses which may be asserted against it as a result
of its dealings, arrangements or agreements with any broker or person, except
as described in this paragraph.
9.11 Announcements. Paradise and SPEN will consult and cooperate
with each other as to the timing and content of any announcements of the
transactions contemplated hereby to the general public or to employees,
customers or suppliers.
9.12 Exhibits. As of the execution hereof, the parties hereto have
provided each other with the Exhibits provided for herein above, including any
items referenced therein or required to be attached thereto. Any material
changes to the Exhibits shall be immediately disclosed to the other party.
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AGREED TO AND ACCEPTED as of the date first above written.
PURCHASER: SPORTS ENTERTAINMENT
ENTERPRISES, INC.
By:/s/ Xxxx Xxxxxx By:/s/ Xxxx Xxxxxx
Xxxx Xxxxxx Xxxx Xxxxxx, President
LVDGT RAINBOW, INC.
By:/s/ Xxxx Xxxxxx
Xxxx Xxxxxx, President
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SCHEDULE 3
LVDGT RAINBOW, INC.
("Rainbow")
Officers and Directors:
Xxxx Xxxxxx - President, Secretary, Treasurer and Sole Director
