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EXHIBIT 10.29
AGREEMENT
1. Parties The parties to this Agreement are Xxxxx Orkney ("Orkney"), and G. I.
Joe's, Inc., an Oregon corporation ("Company").
2. Recitals
2.1. Orkney is the Chairman of the Board of Company and is the owner of
1,236,000 shares of the common stock (the "Stock") of the Company which
represents the majority of the issued and outstanding shares of the Company's
common stock.
2.2 Contemporaneous with the execution of this Agreement, Orkney and
Company have entered into a Stock Redemption Agreement in which Orkney has
agreed to sell and Company has agreed to redeem all of the Stock ("Stock
Redemption Agreement").
2.3 The obligations under this Agreement and the Stock Redemption Agreement
are intended to be mutually interdependent and the breach of any covenant or
condition of one agreement shall be deemed a breach of the other and the
satisfaction of all conditions to close the Stock Redemption Agreement shall be
required to close this Agreement and vice versa.
3. Closing. The closing of this Agreement shall be contemporaneous with the
closing of the Stock Option Agreement (the "Closing Date").
4. Representations and Warranties of Orkney. Orkney represents and warrants to
Company as follows:
4.1 Orkney has the unrestricted right to enter into this Agreement.
4.2 This Agreement has been reviewed by Orkney's independent legal counsel
and tax advisors.
4.3 Orkney has not engaged the services of any broker or finder with
respect to this Agreement or the transactions contemplated herein, other than
his engagement of Xxxxxx Xxxxxxxx, LLP on behalf of the Company and Orkney
agrees to indemnify Company for and hold it harmless from and against all claims
for brokers or finders fees or compensation in connection with this transaction
herein provided for by any person, firm or corporation (other than Xxxxxx
Xxxxxxxx, LLP) claiming such a right because engaged by Orkney.
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5. Representations and Warranties of Company. Company represents and warrants to
Orkney as follows:
5.1 Company is an Oregon corporation in good standing.
5.2 This Agreement has been duly approved by the Company's Board of
Directors and Company has full power and authority to execute and comply with
the terms and provisions of this Agreement.
5.3 No consent or approval is required to be obtained from any governmental
agency in connection with the execution and consummation of this Agreement by
Company. Consents and approval from other third parties are required to
consummate this transaction and shall be supplied by Company prior to or at
closing.
5.4 Company has not engaged the services of any broker or finder with
respect to this Agreement or the transactions contemplated herein, other than
Xxxxxx Xxxxxxxx, LLP, and Company agrees to indemnify Orkney for and hold him
harmless from and against all claims for brokers or finders fees or compensation
in connection with this transaction herein provided for by any person, firm or
corporation claiming such a right because engaged by Orkney.
5.5 Company shall pay the financial advisory fees payable to Xxxxxx
Xxxxxxxx, LLP in connection with this transaction and the Stock Redemption
transaction in accordance with the terms of the agreement between the Company
and Xxxxxx Xxxxxxxx, LLP.
5.6 Company shall offer to redeem all issued and outstanding stock of the
Company, except for that owned by Xxxx Xxxxxxx, on the same terms as set forth
in the Stock Redemption Agreement.
6. Employment Termination. Orkney's employment with the Company shall terminate
as of the Closing Date. As consideration for Orkney's many years of service to
the Company, Company agrees:
6.1 At closing, Company shall pay a bonus to Orkney in the amount of the
principal and interest owed by Orkney to the Company and will transfer to Orkney
as an additional bonus the 1983 Porsche vehicle which Orkney has been driving.
6.2 Company shall indemnify Orkney for claims related to his services for
or on behalf of the Company and related entities prior to closing in accordance
with the Bylaws and Articles of Incorporation of the Company in effect as of the
Closing Date.
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7. Indemnification.
7.1 Orkney shall indemnify and hold Company and its affiliates and their
respective agents, officers, directors and employees from and against any and
all claims, damages, costs and expenses, including without limitation, attorneys
fees relating to or arising out of any misrepresentation, breach or warranty or
non-fulfillment of any covenant or obligation on the part of Orkney under this
Agreement.
7.2 Company shall defend, indemnify and hold harmless Orkney and its
affiliates and their respective agents, officers, directors and employees from
and against, any and all claims, damages, costs and expenses, including without
limitation, attorneys fees relating to or arising out of any misrepresentation,
breach of warranty or non-fulfillment of any covenant or obligation on the part
of Company under this Agreement.
8. Consulting Agreement. Orkney and Company agree to execute and deliver to each
other at closing, duplicate copies of a Consulting Agreement in the form of
Exhibit "A".
9. Stock Warrants. As additional consideration for Orkney's obligations under
the Stock Purchase Agreement, Company shall execute and deliver at closing,
Warrants for the purchase of common stock of the Company or its parent company,
in the form of Exhibit "B" attached.
10. Tax Matters.
10.1 Orkney shall be responsible for all state and federal income taxes due
as a result of the consideration paid to Orkney under paragraph 6, fees paid
under the Consulting Agreement and any income resulting from the Warrant
Agreement.
10.2 Company shall pay Orkney an amount equal to all income taxes arising
from the earnings allocated to his Sub Chapter "S" stock in the Company as
provided in the Stock Redemption agreement.
11. Conditions to Closing. The obligation of the parties to close the
transactions and agreements referred to herein, shall be conditioned as follows:
11.1 The simultaneous closing of the Stock Redemption Agreement.
11.2 All representations and warranties made in this Agreement shall be
true in all material respects on and as of the Closing Date as though such
representations and warranties had been made or given on the Closing Date.
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11.3 Each party shall have performed all obligations and complied with all
covenants required to be performed or complied with prior to the Closing Date.
11.4 No investigation, suit, action or other proceeding shall be threatened
or pending before any court, governmental agency or other agency or authority
which in either parties reasonable opinion may have a material adverse effect on
the Company or the transaction provided for in this Agreement.
11.5 The Company shall have adopted a Plan (the "Plan") to redeem all
issued and outstanding stock of the Company (including any stock issued as a
result of the exercise of existing stock options) as described in the Disclosure
Statement, dated March 16, 1998, attached as Exhibit "C" (the "Disclosure
Statement").
11.6 The Company has redeemed all shares of stock tendered by shareholders
pursuant to the Plan and the Disclosure Statement.
11.7 The sale/purchase of certain real estate owned by the Company in
accordance with the terms of Exhibit "D" shall have closed not less than one day
prior to the Closing Date.
11.8 Company shall have delivered to Orkney documents releasing Orkney from
liability for all obligations of the Company, which Orkney has personally
guaranteed in a form reasonably acceptable to Orkney.
11.9 Company shall have received funding of a Subordinated Debenture Loan
from Peregrine Capital, Inc. ("Peregrine"), in an amount which when combined
with the proceeds from the sale of real estate described in 11.7 above will
provide sufficient funds to satisfy all of Company's obligations under the Plan.
11.10 Company shall have executed and delivered to Orkney the Stock Warrant
Agreement.
11.11 Orkney and Company have executed and delivered to each other the
Consulting Agreement.
11.12 Orkney has delivered to Company, Orkney's resignation as an officer
and director of the Company.
11.13 Xxxx Xxxxxxx ("Xxxxxxx") and Peregrine shall have delivered to Orkney
certificates in a form reasonably acceptable to Orkney verifying Peregrine and
Xxxxxxx have entered into binding agreements as follows:
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(a) Following a redemption of a majority of the Stock, Xxxxxxx, xxxx
contribute his shares of the Stock to a newly formed holding company
("Newco") in exchange for a 100% ownership interest in Newco.
(b) After Xxxxxxx has contributed his Stock to Newco Peregrine shall
contribute the Subordinated Debenture Loan and additional cash sufficient
to equal a combined total capital contribution to Newco of $9,500,000 to
Newco in exchange for a minority ownership interest in Newco.
(c) At some time thereafter Newco will make a capital contribution to
Company of $9,500,000. This transaction may create preemptive rights for
the remaining shareholders.
(d) Xxxxxxx and Peregrine will warrant to the Company and its
shareholders they have no plan or intent and will take no action to alter
the ownership structure of Newco which would cause the sale/purchase of
real estate as described above to be deemed for tax purposes to be a
"related party transaction", or to change the controlling interest in Newco
from Xxxxxxx to any third party.
(e) After Newco has acquired a majority of all of the outstanding
common stock of Company as described above, Newco will create a Key
Employees' Incentive Stock Option and Nonqualified Stock Option Plan to
substitute options to purchase Newco's stock for options issued to purchase
the Company's stock. This substitution of options is being proposed
pursuant to section 424 of the Internal Revenue Code of 1986 ("Code").
12. Miscellaneous
12.1 This Agreement may be amended or supplemented only by a written
agreement signed by all parties.
12.2 All matters with respect to this agreement shall be governed by the
laws of the State of Oregon.
12.3 This Agreement and any document or agreement entered into pursuant to
the terms of this Agreement (including without limitation, the Stock Redemption
Agreement) shall constitute the entire agreement between the parties and there
are no other restrictions, promises, representations, warranties, or obligations
other than those as expressly set forth referred to in such documents. This
Agreement and such documents supersede all prior agreements and understandings
between the parties.
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12.4 In the event of litigation related to or arising from this Agreement,
the prevailing party shall be entitled in addition to any other remedy or relief
to recover their reasonable attorneys fees at trial or on appeal.
12.5 All representations and warranties made in this Agreement by Company
and Orkney and all obligations to be performed after the Closing Date and shall
survive the closing of this Agreement.
12.6 The Exhibits attached to and referred to in this Agreement are
incorporated into and are a part of this Agreement.
12.7 The waiver, amendment or modification of any provision of this
Agreement or any right, power or remedy under this Agreement, whether by
agreement of the parties or by custom course of dealing or trade practice shall
not be effective unless in writing and signed by the party against whom
enforcement of such waiver, amendment or modification is sought. No failure or
delay by either party in exercising any right, power or remedy with respect to
any of the provisions of this Agreement, shall operate as a waiver of such
provision with respect to such occurrences.
12.8 This Agreement shall bind and benefit the parties, their successors
and assigns.
"ORKNEY" "COMPANY"
"G. I. JOE'S, INC."
XXXXX ORKNEY By: XXXX XXXXXXX
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XXXXX ORKNEY XXXX XXXXXXX, President
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EXHIBIT A
CONSULTING AGREEMENT
This Consulting Agreement, dated as of __________________, 1998, is entered
into by and between G. I. Joe's, Inc., an Oregon corporation ("Company") and
Xxxxx Orkney ("Orkney").
RECITALS
Orkney has for many years been an employee, officer, director and
shareholder of Company. Pursuant to a Stock Redemption Agreement between Orkney
and Company dated March ___, 1998, (the "Stock Redemption Agreement") , Company
has agreed to redeem all of Orkney's stock in Company. In addition, Orkney has
agreed to enter into a Consulting Agreement with Company.
NOW THEREFORE, the parties agree as follows:
1. Engagement. Company hereby engages Orkney to perform consulting
services on its behalf, and Orkney agrees to provide such services to Company on
the terms set forth in this Agreement. Orkney shall assist Company with the
development and operation of its business as and when requested by the President
of Company. In no event shall Orkney be required to perform more than 20 hours
of services for Company during any calendar month.
2. Term and Compensation. The period during which Orkney shall provide
consulting services for Company shall be for a period of two years commencing on
May 1, 1998, and ending on April 31, 2000, unless otherwise renewed or extended
upon the mutual agreement of the parties. Company shall pay Orkney for his
services at the rate of $100,000 for the first year, and $50,000 for the second
year of the term of this Agreement. Company will pay Orkney a pro rata portion
of his annual compensation on its regularly scheduled payroll dates.
3. Benefits. During the first year of the term of this Agreement,
Company shall pay Orkney an automobile allowance for gasoline, maintenance and
repairs in accordance with past practices, and Company will continue to provide
Orkney with his existing office space at no charge. During such period Company
will also continue to provide Orkney with health insurance, telephone, fax,
copier, gymnasium and other benefits which he was receiving at the time of his
termination as an employee of Company, all at Company's expense. Orkney shall be
entitled to continue to store personal items presently located in Company's
distribution center
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(approximately 30 pallets) at no charge for up to three years following the date
of this Agreement.
4. Personal Artwork. Orkney shall retain ownership of various art
pieces (such as photographs, paintings and sculptures) on display at Company's
corporate offices, and may remove such pieces at will.
5. Independent Contractor. The parties acknowledge that Company shall
not have the authority to control the manner in which Orkney performs services
pursuant to this Agreement, and that Orkney shall perform such services as an
independent contractor, and not as an employee or as part of a joint venture or
partnership.
6. Construction. This Agreement shall be construed and governed in
accordance with the laws of the State of Oregon, excluding rules applicable to
the conflict of laws.
7. Attorneys Fees. If any suit or action is brought to enforce or
interpret this Agreement, the prevailing party shall be entitled to recover its
reasonable attorney fees and costs incurred in such suit or action in any appeal
therefrom from the nonprevailing party, as fixed by the court or courts in which
such suit, action or appeal is heard.
8. Paragraph Captions. The paragraph captions are for the convenience
of the parties and shall not affect the meaning or interpretation of any
provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
G. I. JOE'S, INC.
By:
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Xxxxx Orkney Its:
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