CESSATION AGREEMENT
This Agreement made this February 4, 1997, by and between Xxxx X. Xxxxxx, a
Colorado resident ("Xxxxxx"), Red River Concepts, Inc., a Delaware corporation
("Red River"), Western Country Clubs, Inc., a Colorado corporation ("WCCI"),
and Jebco, L.L.C., an Oklahoma limited liability company ("Jebco").
RECITALS
X. Xxxxxx and WCCI wish to provide for the cessation of
Xxxxxx'x service as a director of WCCI and for the settlement of obligations
arising from their former relationships.
B. The parties desire to amend (i) that Stock Purchase
Agreement dated September 1996, as amended November 1996, between and among them
and (ii) those instruments provided for in the Stock Purchase Agreement.
C. Jebco desires to purchase and Xxxxxx desires to sell
certain shares of the common stock of WCCI held by Xxxxxx and to divest other
shares.
The parties agree as follows:
TERMS AND CONDITIONS
1. Resignation. Xxxxxx hereby resigns as a director of WCCI effective as of the
date of this Agreement, and further resigns from any and all offices that he
may have in any subsidiary or affiliated entity.
2. Indemnification.
(a) WCCI shall indemnify and hold harmless Xxxxxx from and against any
and all losses, claims, demands, costs, damages, liabilities, joint and
several, expenses of any nature (including attorneys' fees and
disbursements), judgments, fines, settlements, penalties and other
expenses actually and reasonably incurred by the Xxxxxx in connection
with any and all claims, demands, actions, suits, or proceedings,
civil, criminal, administrative or investigative, in which the Xxxxxx
may be involved, or threatened to be involved, as a party or otherwise,
by reason of the fact that Xxxxxx is or was a director or officer of
WCCI or is or was an employee or agent of WCCI, arising out of or
incidental to the business of WCCI, provided: (i) Xxxxxx'x conduct did
not constitute willful misconduct or recklessness, (ii) the action is
not based on breach of his duty of loyalty, (iii) Xxxxxx acted in good
faith and in a manner he reasonably believed to be in or not opposed
to, the best interests of WCCI and within the scope of Xxxxxx'x
authority and (iv) with respect to a criminal action or proceeding,
Xxxxxx had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere, or its
equivalent, shall not, in and of itself, create a presumption or
otherwise constitute evidence that Xxxxxx acted in a manner contrary to
that specified above.
(b) Xxxxxx shall notify WCCI within 45 days of the assertion of any
purported third-party claim or discovery of any fact upon which Xxxxxx
intends to base a claim for indemnification; provided, however, that
the failure of Xxxxxx to so notify WCCI shall not relieve WCCI from any
liability under this Agreement to Xxxxxx with respect to such claim
unless such WCCI is prejudiced or damaged by the failure to receive
timely notice. In the event of any purported third-party claim, WCCI,
at its option, may assume (with legal counsel reasonably acceptable to
Xxxxxx) the defense of any claim, demand, lawsuit or other proceeding
brought against Xxxxxx, which claim, demand, lawsuit or other
proceeding may give rise to the indemnity obligation of WCCI under this
Section, and may assert any defense of WCCI or Xxxxxx; provided,
however, that Xxxxxx shall have the right at his own expense to
participate jointly with WCCI in the defense of any purported
third-party claim, demand, lawsuit or other proceeding in connection
with which Xxxxxx claims indemnification. Notwithstanding the right of
Xxxxxx so to participate, WCCI shall have the sole right to settle or
otherwise dispose of such purported third-party claim, demand, lawsuit
or other proceeding on such terms as WCCI, in its sole discretion,
shall deem appropriate with respect to any issue involved in such
claim, demand, lawsuit or other proceeding as to which (i) WCCI shall
have acknowledged the obligation to indemnify Xxxxxx or (ii) Xxxxxx
shall have declined so to participate,
(c) Notwithstanding anything herein to the contrary, WCCI shall have no
obligation to indemnify Xxxxxx, and such obligation of WCCI to
indemnify Xxxxxx shall expire and terminate, unless such WCCI shall
have received written notice of such claim for indemnity prior to the
close of business on the expiration of two years after the date of this
Agreement.
(d) The indemnification obligations of WCCI set forth in this Agreement
shall be limited to indemnification for actual damages suffered and
shall not include incidental, consequential, special or indirect
damages, and any indemnification payments may be set off against
amounts owed to WCCI by Xxxxxx.
(e) In addition to the rights of indemnification provided above, WCCI
shall indemnify and hold harmless Xxxxxx from liability on (i) amounts
due Dunlaney National Bank, Xxxxxxxx, Illinois, relating to the Indy
Club; (ii) amounts due Colonial Bank, Denver, Colorado, relating to the
Tucson Club; (iii) all guaranties of debt reflected on WCCI's September
30, 1996 balance sheet; and (iv) purchase money amounts due on the
Tucson condominium provided that Xxxxxx duly convey proper title, free
and clear of all other liens and encumbrances, on or before February
28, 1997. Xxxxxx shall indemnify and hold harmless WCCI from liability
on the Indy condominium and WCCI releases any and all claim to title
thereto. WCCI will use its best efforts to remove Xxxxxx as signatory
on any of the above instruments and to restore any personal collateral
pledge thereto.
3. Share Divestiture. On May 15, 1997, Xxxxxx shall sell and transfer to Jebco
90,000 shares of the common stock of WCCI (the "Shares") in exchange for a
promissory note in the amount of $75,000 due in two semi-annual installments
with interest at 8% per year. Xxxxxx shall immediately duly endorse the
certificate or certificates evidencing the Shares to Jebco, and tender a copy of
the duly endorsed certificate to Jebco. Xxxxxx shall further divest the
remainder of his shares of the common stock of WCCI to persons or entities
unaffiliated with WCCI on or before May 15, 1997.
4. Letter Agreement With Xxxxxx X. Xxxxxxx. Simultaneously with the date of this
Agreement, Xxxxxx shall enter into a binding and enforceable letter agreement
with Xxxxxx Xxxxxxx in the form attached as Exhibit B. The letter agreement
shall provide for the transfer by Xxxxxx of up to 13,000 shares of WCCI common
stock and for Xxxxxxx'x release of claims against Xxxxxx and WCCI.
5. Amendment of Stock Purchase Agreement and Promissory Note Terms. Xxxxxx and
Red River agree that the interest due date on the $800,000 promissory note given
under the above-referenced Stock Purchase Agreement shall be changed to become
payable on the earlier of June 1, 1997, or the effective date of a Form SB-2
registration statement filed by WCCI and covering shares of WCCI convertible
preferred stock. Xxxxxx and Red River also agree to extend the Second Closing to
April 15, 1997. These changes shall not alter any guaranties given in connection
with the promissory note.
6. Entire Agreement. This Agreement, including the Exhibits and other writings
referred to herein or delivered pursuant hereto, constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings, both written and oral,
with respect to the subject matter.
7. Amendments and Waiver. This Agreement may be amended, superseded, canceled,
renewed or extended, and the terms hereof may be waived, only by a written
instrument signed by the parties or, in the case of a waiver, by the party
waiving compliance. No delay on the part of either party in exercising any
right, power or privilege hereunder shall operate as a waiver, nor shall any
waiver on the part of either party of any such right, power or privilege, or any
single or partial exercise of any such right, power or privilege, preclude any
further exercise or the exercise of any other such right, power or privilege.
8. Governing Law. The parties agree that Oklahoma law shall govern the terms of
this Agreement.
9. Binding Effect; Assignment; No Third Party Benefit.
(a) This Agreement and all its provisions shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns; provided, however, that neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned
by the parties (by operation of law or otherwise) without the prior
written consent of the other parties.
(b) Nothing in this Agreement, express or implied, is intended to or
shall confer upon any person other than the parties any rights,
benefits or remedies of any nature whatsoever under or by reason of
this Agreement.
10. Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
The parties so agree as of the date first above written.
WCCI: Western Country Clubs, Inc.
By:/s/ Xxxxx X. Xxxxxxxxx
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(Vice) President
Red River: Red River Concepts, Inc.
By:/s/ Xxxxx X. Xxxxxxxxx
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(Vice) President
Jebco: Jebco, L.L.C.
/s/Xxxxx X. Xxxxxxxxx
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Manager
Xxxxxx: /s/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx
