Exhibit 10.6
STOCK PURCHASE AGREEMENT
THE PLAYERS NETWORK
AND
KO VENTURES, LLC
MARCH 21, 2003
1. Sale and Purchase of Shares
2. Seven Closings; Deliveries; Conditions
3. Certain Definitions
4. Representations, Warranties and Covenants of Company
5. Representation, Warranties and Covenants of Purchaser
6. Governance; Board Membership; Corporate Mission
7. Registration Covenants
8. Indemnification of Purchaser Against REB Gaming, Inc. and Others
9. Miscellaneous
EXHIBITS
2.2 Stock Option Agreement
SCHEDULES
4.5 Company material agreements
4.6 Company litigation
4.9 Company material changes
5.10 Purchaser material agreements
5.12 Purchaser financial statements
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of March 21, 2003,
between The Players Network ("Company"), a Nevada corporation, and KO Ventures,
LLC ("Purchaser"), a California limited liability company.
Company and Purchaser entered into that certain Binding Term
Sheet on January 7, 2003, pursuant to which the parties entered into a binding
commitment to sell and purchase, respectively, in five installments 13,636,363
shares (the "SHARES") of Company Common Stock, par value $.001 per share (the
"COMMON STOCK") and an option (the "OPTION") to purchase 10,000,000 additional
shares of Common Stock. The parties sold and purchased, respectively, 303,303
Shares, comprising the first of such installments, for $100,000 on January 7,
0000 (xxx "Xxxxx Xxxxxxx"). The Binding Term Sheet contemplates that the parties
enter into this Agreement by January 31, 2003, and the parties extended that
date until March 21, 2003. The board of directors of Company, after considering
the potential benefits to Company and its shareholders, and in particular the
synergies, capital resources, continuity and enhancement of shareholder value
that may result from the contemplated transaction, have determined that it is in
the best interests of Company and its shareholders to proceed as set forth
below.
IN CONSIDERATION of the mutual covenants contained in this
Agreement and the Binding Term Sheet, Company and Purchaser agree as follows.
1. SALE AND PURCHASE OF THE SHARES. Company has authorized the
sale of 13,636,363 Shares of Common Stock on the terms and subject to the
conditions set forth in this Agreement. At the Second through Seventh Closings
(as defined in Section 2.1), Company shall sell to Purchaser, and Purchaser
shall buy from Company for cash, upon the terms and conditions contained in this
Agreement, the number of Shares specified below at a purchase price of
Thirty-Three Cents ($.33) per Share (the "Purchase Price per Share"), subject to
adjustment in certain cases as provided in Section 2.1 (a) below.
2. SEVEN CLOSINGS; DELIVERIES; CONDITIONS.
2.1 SECOND THROUGH SEVENTH CLOSINGS. Company shall sell and
Purchaser shall buy for the Purchase Price per Share on six occasions (each, a
"CLOSING" on the date indicated and collectively, the "Closings") the balance of
the Shares not previously sold and purchased at the First Closing on the
following dates (each, a "CLOSING DATE") in the amounts indicated:
SHARES CLOSING DATE AGGREGATE PURCHASE PRICE
------ ------------ ------------------------
Second Closing 606,060 March 21, 2003 $ 199,999.99
Third Closing 1,515,152 March 31, 2003 $ 500,000.16*
Fourth Closing 1,060,606 April 18, 2003 $ 349,999.98*
Fifth Closing 1,060,607 May 2, 2003 $ 350,000.32
Sixth Closing 4,545,455 May 30, 2003 $ 1,500,000.10
Seventh Closing 4,545,455 August 31, 2003 $ 1,500,000.10
* Subject to adjustment
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Each Closing shall take place at the offices of Company at 11:00 a.m. local
time.
(a) In the event all conditions precedent to Purchaser's duty to buy
and pay for Shares at the Third and/or Fourth Closings are satisfied, but
Purchaser fails to buy and pay for the Shares as required above on either or
both of the respective Closing Dates for such two Closings, Purchaser shall not
be in default hereunder for a period of three weeks following the Third Closing
Date or two weeks following the Fourth Closing Date, respectively, provided that
Purchaser shall remain obligated to purchase the Subject Shares during said
three-week period or said two-week period at a price increased by $.025 per
share (two and one-half cents per share) for each week or portion thereof beyond
the relevant Closing Date on which Purchaser failed to buy and pay for Shares as
required hereunder (up a maximum purchase price of $.405 per share for Shares
purchasable at the Third Closing and $.38 for Shares purchasable at the Fourth
Closing). In the event Purchaser fails to buy and pay for the subject Shares
following either such three-week period or two-week period, or fails to purchase
the Shares purchasable at the Fifth Closing (as to which no extension period
applies), then Purchaser shall have no further duty or right to buy and pay for
the subject Shares that were required to be purchased and sold at the Third,
Fourth or Fifth Closing, respectively, and the Company shall have no duty or
right to sell them to Purchaser, and the liquidated damages provisions of
Section 2.1(b) below shall apply to the purchase(s) that Purchaser failed to
make by the expiration of the relevant three-week period, two-week period or at
the Fifth Closing and the Company shall have the right to seek and obtain
additional debt or equity capital without Purchaser's consent.
(b) In the event all conditions precedent to Purchaser's duty to buy
and pay for Shares at the Sixth and Seventh Closings are satisfied, but
Purchaser fails to buy and pay for the Shares as required above on either of
both of the respective Closing Dates for such two Closings, Purchaser shall not
be in default hereunder for a period of 30 calendar days following any such
Closing Date. During each such 30-day period (each, a "Cure Period"), and until
Purchaser has performed as required hereunder, Purchaser shall remain obligated
to buy and pay for the subject Shares. The parties acknowledge that in the event
Purchaser has a duty to buy and pay for the Shares but fails to do so during a
Cure Period, the damages to Company will be significant but difficult to
determine; and therefore, as liquidated damages and not as a penalty, Purchaser
shall promptly upon each such failure following a Cure Period pay to Company an
amount equal to 10% of the Purchase Price due and payable but unpaid at each
such Closing but Purchaser shall have no duty or right to buy, and Company shall
have no duty or right to sell, the Shares not bought by Purchaser at the subject
Closing. In the event Purchaser fails to pay any such liquidated damages within
three business days following written demand therefor, Company shall have the
right (but not the duty) on Purchaser's behalf to contribute to capital and
cancel that number of Shares previously purchased that at the closing bid price
on the day of delivery of such demand comprise said 10% liquidated damage
remedy. Purchaser grants to Company a power of attorney coupled with an interest
to effect such contribution and cancellation, as well as a stop transfer
notation in Company's records with respect to the affected stock certificate.
Purchaser shall return for cancellation and reissuance minus the cancelled
shares as appropriate one or more stock certificates to evidence said remedy.
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2.2 DELIVERY OF THE SHARES AND OPTION. Subject to the
satisfaction of the conditions set forth below, at each of the Closings, Company
shall deliver to Purchaser one or more stock certificates, registered in the
name of Purchaser, representing the number of Shares to be purchased by such
Purchaser at each of such Closings and bearing an appropriate legend stating
that the Shares have not been registered under the Securities Act (as defined
herein) and cannot be sold unless registered under the Securities Act, or an
exemption from registration is available. Such deliveries shall be made against
payment of the aggregate purchase price therefor (the "Purchase Price") by wire
transfers to the account designated in writing by Company, of immediately
available funds at or within two business days prior to each Closing. At the
Seventh Closing (August 31, 2003), and provided that Purchaser has purchased the
required Shares at the Second through Sixth Closings, Company shall deliver the
Option in the form of EXHIBIT 2.2 to Purchaser.
2.3 CLOSING CONDITIONS.
(a) Company's respective obligations to complete the
sale of the Shares and deliver the stock certificates representing the Shares to
Purchaser at each Closing shall be subject to the following conditions, any one
or more of which may be waived by Company:
(1) receipt by Company of same-day funds in the full
amount of the Purchase Price for the Shares being purchased hereunder;
(2) no statute, rule, regulation, executive order,
decree, ruling or order shall have been enacted, entered, promulgated, enforced
or issued by any court or governmental authority of competent jurisdiction which
prohibits, restrains, enjoins or restricts the consummation of the transactions
described herein;
(3) the accuracy in all material respects of the
representations and warranties made by Purchaser hereunder and the fulfillment
in all material respects of those obligations of Purchaser to be fulfilled prior
to each Closing;
(4) all covenants of Purchaser to be performed or
complied with by Purchaser shall have been performed or complied with in all
material respects; and
(5) at or prior to the Third Closing Company shall
have entered into an employment agreement with Xxxx Xxxxxxx in form and
substance satisfactory to both parties.
(b) Purchaser's obligations to complete the purchase of the
Shares and deliver the Purchase Price therefor to Company at each Closing shall
be subject to the following conditions, any one or more of which may be waived
by Purchaser:
(1) receipt by Purchaser of stock certificates
representing the Shares being purchased hereunder;
(2) no statute, rule, regulation, executive order,
decree, ruling or order shall have been enacted, entered, promulgated, enforced
or issued by any court or governmental authority of competent jurisdiction which
prohibits, restrains, enjoins or restricts the consummation of the transactions
described herein;
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(3) the accuracy in all material respects of the
representations and warranties made by Company hereunder and the fulfillment in
all material respects of those obligations of Purchaser to be fulfilled prior to
each Closing;
(4) all covenants of Company to be performed or
complied with by Purchaser shall have been performed or complied with in all
material respects;
(5) at or prior to the Third Closing Company shall
have entered into an employment agreement with Xxxx Xxxxxxx in form and
substance satisfactory to both parties; and
(6) at or prior to the Third Closing Xxxxxx Xxxxx
shall have been appointed Chief Executive Officer of Company.
3. CERTAIN DEFINITIONS. Unless the context otherwise requires,
the terms defined in this Section 3 shall have the meaning herein specified for
purposes of this Agreement.
"AGREEMENT" means this agreement, including the exhibits and
appendices hereto.
"COMMISSION" means the Securities and Exchange Commission.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934,
as amended from time to time.
"MATERIAL ADVERSE CHANGE" means a material adverse change in
the condition (financial or otherwise), properties, business, or results of
operations taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
the condition (financial or otherwise), properties, business, or results of
operations taken as a whole.
"REGISTRATION STATEMENT" means a registration statement on
Form S-3 filed with the Commission covering the re-sale of the Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended
from time to time.
"10-KSB" means the Annual Report on Form 10-KSB filed by
Company with the Commission for the year ended December 31, 2001.
"10-QSB" means the Quarterly Report on Form 10-QSB filed by
Company with the Commission for the quarterly period ended September 30, 2002.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY.
Company hereby represents and warrants to Purchaser as follows.
4.1 ORGANIZATION AND GOOD STANDING. Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada. Company has no subsidiaries.
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4.2 AUTHORIZED AND OUTSTANDING CAPITAL STOCK. An aggregate of
25,000,000 shares of Common Stock, par value $.001 per share, are authorized
under Company's Articles of Incorporation. No other class or series of stock is
so authorized. As of January 20, 2003, Company had outstanding 13,484,195 shares
of Common Stock, par value $.001 per share (including shares issued to Purchaser
at the First Closing and shares recently issued to Xxxxx Xxxx), and options or
warrants outstanding for the issuance of an additional 1,772,000 shares of
Common Stock.
4.3 SHARES. The Shares have been duly authorized and, when
issued, delivered and paid for in the manner set forth in this Agreement, will
be duly authorized, validly issued, fully paid and nonassessable. No preemptive
rights or other rights to subscribe for or purchase exist with respect to the
issuance and sale of the Shares by Company pursuant to this Agreement. No
further approval or authority of the stockholders or the Board of Directors of
Company will be required for the issuance and sale of the Shares to be sold by
Company as contemplated herein.
4.4 CORPORATE ACTS AND PROCEEDINGS. Company has full legal
right, corporate power and authority to enter into this Agreement and perform
the transactions contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by Company. The execution, delivery and
performance of this Agreement by Company and the consummation of the
transactions herein contemplated will not violate any provision of the
organizational documents of Company and will not result in the creation of any
lien, charge, security interest or encumbrance upon any assets of Company
pursuant to the terms or provisions of, or will not conflict with, result in the
breach or violation of, or constitute, either by itself or upon notice or the
passage of time or both, a default under any agreement, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which
Company is a party or by which Company or its properties may be bound or
affected and in each case which would have a Material Adverse Effect or, to
Company's knowledge, under any statute or any authorization, judgment, decree,
order, rule or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to Company or its properties. No
consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution
and delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, except for compliance with the Blue Sky laws and
federal securities laws applicable to the offering of the Shares. Upon Company's
execution and delivery, and assuming the valid execution thereof by Purchaser
and payment of the Purchase Price, this Agreement will constitute the valid and
binding obligations of Company, enforceable in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as the indemnification agreements of Company in Section 8 hereof may
be legally unenforceable.
4.5 CONTRACTS. The contracts described in SCHEDULE 4.5 as
being in effect on the date hereof that are material to Company, are in full
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force and effect on the date hereof; and neither Company, nor, to Company's
knowledge, any other party is in breach of or default under any of such
contracts which would have a Material Adverse Effect.
4.6 NO ACTIONS. Other than as described in SCHEDULE 4.6, there
are no legal or governmental actions, suits or proceedings pending or, to
Company's knowledge, overtly threatened to which Company is or may be a party or
of which property owned or leased by Company is or may be the subject, or
related to environmental or discrimination matters, which actions, suits or
proceedings, individually or in the aggregate, might prevent or might reasonably
be expected to materially and adversely affect the transactions contemplated by
this Agreement or result in a Material Adverse Change; and no labor disturbance
by the employees of Company exists or, to Company's knowledge, is imminent which
might reasonably be expected to have a Material Adverse Effect. Company is not a
party to or subject to the provisions of any material injunction, judgment,
decree or order of any court, regulatory body administrative agency or other
governmental body. Company is not a party to any collective bargaining
agreement.
4.7 PROPERTIES. Company has good and marketable title to all
personal property reflected as owned by Company in the financial statements
included in the 10-KSB and 10-QSB. Such property is not subject to any lien,
mortgage, pledge, charge or encumbrance of any kind except (i) those, if any,
reflected in such financial statements (including the notes thereto), or (ii)
those which are not material in amount and do not adversely affect the use of
such property by Company. Any property or building held under lease by Company
is held under valid, existing and enforceable leases, free and clear of all
liens, encumbrances, claims, and defects except such as would not have a
Material Adverse Effect. Company owns or leases all such properties as are
necessary to its operations as now conducted.
4.8 PROPRIETARY RIGHTS. Company has not registered any
trademarks or copyrights used in Company's business as currently conducted
(collectively, the "INTELLECTUAL PROPERTY"); and (ii) to Company's knowledge
(for each of the following subsections (a) through (e)): (a) there are no third
parties who have any ownership rights to any Intellectual Property that would
preclude Company from conducting its business as currently conducted; (b) there
are currently no sales of any products that would constitute an infringement by
a third party of any Intellectual Property owned, licensed or optioned by
Company; (c) there is no pending or threatened action, suit, proceeding or claim
by others challenging the rights of Company in or to any Intellectual Property
owned, licensed or optioned by Company, other than claims which would not be
reasonably expected to have a Material Adverse Effect; (d) there is no pending
or threatened action, suit, proceeding or claim by others challenging the
validity or scope of any Intellectual Property owned, licensed or optioned by
Company, other than claims which would not be reasonably expected to have a
Material Adverse Effect; and (e) there is no pending or threatened action, suit,
proceeding or claim by others that Company infringes or otherwise violates any
patent, trademark, copyright, trade secret or other proprietary right of others,
other than claims which would not be reasonably expected to have a Material
Adverse Effect.
4.9 NO MATERIAL ADVERSE CHANGE. Since the date of the
financial statements included in the 10-QSB, and except as disclosed in SCHEDULE
4.9, (i) other than the letter agreement with REB Gaming, Inc., dated July 22,
2002, Company has not incurred any material liabilities or obligations,
indirect, or contingent, or entered into any material verbal or written
agreement or other transaction which is not in the ordinary course of business
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or which could reasonably be expected to result in a material reduction in the
future earnings of Company; (ii) Company has not sustained any material loss or
interference with its businesses or properties from fire, flood, windstorm,
accident or other calamity not covered by insurance; (iii) Company has not paid
or declared any dividends or other distributions with respect to its capital
stock and Company is not in default in the payment of principal or interest on
any outstanding debt obligations; (iv) except as disclosed in SCHEDULE 4.9,
there has not been any change in the capital stock of Company other than the
sale of the Shares hereunder and at the First Closing [and shares or options
issued pursuant to employee equity incentive plans or purchase plans approved by
Company's Board of Directors], or indebtedness material to Company (other than
in the ordinary course of business); and (v) there has not been a Material
Adverse Change. Company has terminated said letter agreement with REB Gaming,
Inc. and has no duties thereunder.
4.10 FINANCIAL STATEMENT. Xxxxxx & Xxxxxx, PLLC (a) have
expressed their opinion with respect to the financial statements included in
Company's 10-KSB for the fiscal year ended December 31, 2001, (b) have not given
Company any indication that they will not include such opinion in the 10-KSB for
the fiscal year ended December 31, 2002 and (c) have confirmed to Company that
they are independent accountants as required by the Securities Act and the rules
and regulations promulgated thereunder.
4.11 NO DEFAULTS. Except as to defaults, violations and
breaches which individually or in the aggregate would not be material to
Company, taken as a whole, Company is not in violation or default of any
provision of its articles of incorporation or bylaws, or other organizational
documents, or in breach of, or default with respect to, any provision of any
material agreement filed as an exhibit to Company's filings with the Commission,
any judgment, decree, order, mortgage, deed of trust, lease, franchise, license,
indenture, or permit to which it is a party or by which it or any of its
properties are bound; and there does not exist any state of fact which, with
notice or lapse of time or both, would constitute an event of breach or default
on the part of Company as defined in such documents, except such breaches or
defaults which individually or in the aggregate would not be material to
Company, taken as a whole.
4.12 COMPLIANCE. Company has not been advised, and neither has
any reason to believe, that it is conducting its business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local, state
and federal environmental laws and regulations; except where failure to be so in
compliance therewith would not have a Material Adverse Effect.
4.13 TAXES. Company has filed all necessary federal, state and
foreign income and franchise tax returns which are required to be filed, or has
received extensions thereof, and has paid or accrued all taxes shown as due
thereon, and Company has no knowledge of a tax deficiency which has been or
might be asserted or threatened against it which could have a Material Adverse
Effect. On each Closing Date all stock transfer or other taxes (other than
income taxes) which are required to be paid in connection with the sale and
transfer of the Shares to be sold to Purchaser hereunder will be, or will have
been, fully paid or provided for by Company and all laws imposing such taxes
will be or will have been fully complied with.
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4.14 BOOKS, RECORDS AND ACCOUNTS. The books, records and
accounts of Company and its Subsidiaries accurately and fairly reflect, in
reasonable detail, the transactions in, and dispositions of, the assets of, and
the results of operations of, Company. Company and each of its Subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
4.15 NO OFFERING MATERIALS. Although Company has provided
substantial amounts of written and unwritten information to Purchaser, Company
has not distributed and will not distribute prior to the Closing Date any
offering material in connection with the offering and sale of the Shares.
4.16 INSURANCE. Company maintains insurance of the type and in
the amount that Company reasonably believes is adequate for its business,
including, but not limited to, insurance covering all real and personal property
owned or leased by Company against theft, damage, destruction, acts of vandalism
and all other risks customarily insured against by similarly situated companies,
all of which insurance is in full force and effect.
4.17 INVESTMENT COMPANY. Company is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for an investment company, within the meaning of the Investment Company Act of
1940, as amended.
4.18 CONTRIBUTIONS. At no time since its incorporation has
Company, directly or indirectly, (i) used any corporate or other funds for
gifts, entertainment or other unlawful contributions to any candidate for public
office, or failed to disclose fully any contribution in violation of law, or
(ii) made any payment to any federal or state governmental officer or official,
or other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
4.19 ADDITIONAL INFORMATION. Company represents and warrants
that the information contained in the 10-KSB and 10-QSB, which the Company has
furnished to Purchaser, is and will be true and correct in all material respects
as of the respective dates that they were filed with the Commission, and does
not and contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading,
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
5.1 INVESTMENT INTENT AND EXPERIENCE. Purchaser represents and
warrants to, and covenants with, Company that: (i) Purchaser is knowledgeable,
sophisticated and experienced in making, and is qualified to make, decisions
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with respect to investments in shares representing an investment decision like
that involved in the purchase of the Shares, including investments in securities
issued by Company, and has requested, received, reviewed and considered all
information it deems relevant in making an informed decision to purchase the
Shares; (ii) Purchaser is acquiring the Shares in the ordinary course of its
business and for its own account for investment (as defined for purposes of the
Securities Act and the regulations thereunder) only and with no present
intention of distributing any of such Shares or any arrangement or understanding
with any other persons regarding the distribution of such Shares within the
meaning of Section 2(11) of the Securities Act; (iii) Purchaser will not,
directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) any of the Shares except in compliance with the Act and the Rules and
Regulations; (iv) Purchaser has, in connection with its decision to purchase the
number of Shares, relied as to information from Company solely upon the
documents provided to Purchaser in the course of its due diligence investigation
of Company and the representations and warranties of Company contained herein;
and (v) Purchaser has assets of at least $5 million and is an accredited
investor within the meaning of Regulation D promulgated under the Securities
Act.
5.2 RESTRICTIONS ON TRANSFER. Purchaser hereby covenants with
Company not to make any sale of the Shares without satisfying the prospectus
delivery requirement under the Securities Act, and Purchaser acknowledges and
agrees that such Shares are not transferable on the books of Company unless the
certificate submitted to the transfer agent evidencing the Shares is accompanied
by a separate officer's certificate: (i) in any reasonable form, (ii) executed
by an officer of, or other authorized person designated by, Purchaser, and (iii)
to the effect that (A) the Shares have been sold in accordance with the
Registration Statement, all federal laws and requirements, including without
limitation the Securities Act and the rules and regulations promulgated
thereunder and any applicable state securities or blue sky laws and (B) the
requirement of delivering a current prospectus has been satisfied. Purchaser
acknowledges that there may occasionally be times when Company determines the
use of the prospectus forming a part of the Registration Statement should be
suspended until such time as an amendment or supplement to the Registration
Statement or the Prospectus has been filed by Company and any such amendment to
the Registration Statement is declared effective by the Commission, or until
such time as Company has filed an appropriate report with the Commission
pursuant to the Exchange Act. Purchaser hereby covenants that it will not sell
any Shares pursuant to said prospectus during the period commencing at the time
at which Company gives Purchaser written notice of the suspension of the use of
said prospectus and ending at the time Company gives Purchaser written notice
that Purchaser may thereafter effect sales pursuant to said prospectus and
Purchaser hereby covenants that it will thereafter solely utilize said amended
or supplemented prospectus for the sale of Shares. Purchaser further covenants
to notify Company promptly of the sale of any or all of its Shares.
5.3 AUTHORIZATION. Purchaser further represents and warrants
to, and covenants with, Company that (i) Purchaser has full right, power,
authority and capacity to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
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the execution, delivery and performance of this Agreement, and (ii) upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of Purchaser enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
the indemnification agreements of Purchaser in Section 9 hereof may be legally
unenforceable.
5.4 RESTRICTION ON SALES, SHORT SALES AND HEDGING
TRANSACTIONS. Purchaser represents and agrees that during the period of five
business days immediately prior to the execution of this Agreement by Purchaser,
Purchaser did not, and from such date through the effectiveness of the
Registration Statement, Purchaser will not, directly or indirectly, execute or
effect or cause to be executed or effected any short sale, option or equity swap
transactions in or with respect to the Common Stock or any other derivative
security transaction the purpose or effect of which is to hedge or transfer to a
third party all or any part of the risk of loss associated with the ownership of
the Shares by Purchaser.
5.5 NO LEGAL, TAX OR INVESTMENT ADVICE. Purchaser understands
that nothing in this Agreement, the Company Counsel Opinion Letter or any other
materials presented to Purchaser in connection with the purchase and sale of the
Shares constitutes legal, tax or investment advice. Purchaser has consulted such
legal, tax and investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of the Shares.
5.6 FURTHER AGREEMENTS OF PURCHASER.
(a) Purchaser understands that the Shares are being offered
and sold to it in reliance upon specific exemptions from the registration
requirements of the Securities Act, the rules and regulations promulgated
thereunder, and state securities laws and that Company is relying upon the truth
and accuracy of, and Purchaser's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of Purchaser to acquire the Shares.
(b) Purchaser understands that its investment in the Shares
involves a significant degree of risk and that the market price of the Common
Stock has been volatile and that no representation is being made as to the
future value of the Common Stock. Purchaser has the knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Shares and has the ability to bear the economic
risks of an investment in the Shares.
(c) Purchaser understands that no United States federal or
state agency or any other government or governmental agency has passed upon or
made any recommendation or endorsement of the Shares.
(d) Purchaser understands that, until such time as the
Registration Statement has been declared effective or the Shares may be sold
pursuant to Rule 144 under the Securities Act without any restriction as to the
10
number of securities as of a particular date that can then be immediately sold,
the Shares will bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the certificates
for the Shares):
The securities represented by this certificate have
not been registered under the Securities Act of 1933,
as amended. The securities may not be sold,
transferred or assigned in the absence of an
effective registration statement for the securities
under said Act, or an opinion of counsel, in form,
substance and scope reasonably acceptable to Company,
that registration is not required under said Act or
unless sold pursuant to Rule 144 under said Act.
(e) Purchaser's principal executive offices are in California.
(f) Purchaser hereby covenants with Company not to make any
sale of the Shares under the Registration Statement without effectively causing
the prospectus delivery requirement under the Securities Act to be satisfied,
and Purchaser acknowledges and agrees that such Shares are not transferable on
the books of Company unless the certificate submitted to the transfer agent
evidencing the Shares is accompanied by a separate Purchaser's Certificate: (i)
in the form of Appendix II hereto, (ii) executed by an officer of, or other
authorized person designated by, Purchaser, and (iii) to the effect that (A) the
Shares have been sold in accordance with the Registration Statement, the
Securities Act and any applicable state securities or blue sky laws and (B) the
requirement of delivering a current prospectus has been satisfied. Purchaser
acknowledges that there may occasionally be times when Company must suspend the
use of the prospectus forming a part of the Registration Statement until such
time as an amendment to the Registration Statement has been filed by Company and
declared effective by the Commission, or until such time as Company has filed an
appropriate report with the Commission pursuant to the Exchange Act. Purchaser
hereby covenants that it will not sell any Shares pursuant to said prospectus
during the period commencing at the time at which Company gives Purchaser
written notice of the suspension of the use of said prospectus and ending at the
time Company gives Purchaser written notice that Purchaser may thereafter effect
sales pursuant to said prospectus. Purchaser further covenants to notify Company
promptly of the sale of any or all of its Shares and Purchaser hereby covenants
that it will thereafter solely utilize said amended or supplemented prospectus
for the sale of Shares.
(g) Notwithstanding anything to the contrary contained herein,
at any time after the effectiveness of the Registration Statement, Company may
refuse to permit Purchaser to resell any Share pursuant to the Registration
Statement for a period not to exceed ninety (90) days (the "Blackout Period");
PROVIDED HOWEVER, that to exercise this right, Company must deliver a
certificate in writing to Purchaser to the effect that a delay in such sale is
necessary because a sale pursuant to such Registration Statement in its
then-current form would not be in the best interests of Company and its
stockholders due to disclosure obligations of Company. Notwithstanding the
foregoing, Company shall not be entitled to exercise its right to block such
sales more than three (3) times during the effectiveness of the Registration
Statement or more than one (1) time in any four-month period. Each Purchaser
hereby covenants and agrees that it will not sell any Securities pursuant to the
Registration Statement during such Blackout Periods.
11
5.7 ORGANIZATION AND GOOD STANDING. Purchaser is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of California. Purchaser has no subsidiaries.
5.8 OUTSTANDING MEMBERSHIP UNITS. As of January 20, 2003,
Purchaser had outstanding 1,000,000 units of membership interest held by four
persons and no options or warrants outstanding for the issuance of additional
membership units.
5.9 COMPANY ACTS AND PROCEEDINGS. Purchaser has full legal
right, power and authority to enter into this Agreement and perform the
transactions contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by Purchaser. The execution, delivery and
performance of this Agreement by Purchaser and the consummation of the
transactions herein contemplated will not violate any provision of the
organizational documents of Purchaser and will not result in the creation of any
lien, charge, security interest or encumbrance upon any assets of Purchaser
pursuant to the terms or provisions of, or will not conflict with, result in the
breach or violation of, or constitute, either by itself or upon notice or the
passage of time or both, a default under any agreement, mortgage, deed of trust,
lease, franchise, license, indenture, permit or other instrument to which
Purchaser is a party or by which Purchaser or its properties may be bound or
affected and in each case which would have a Material Adverse Effect or, to
Purchaser's knowledge, under any statute or any authorization, judgment, decree,
order, rule or regulation of any court or any regulatory body, administrative
agency or other governmental body applicable to Purchaser or its properties. No
consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution
and delivery of this Agreement or the consummation of the transactions
contemplated by this Agreement, except for compliance with the Blue Sky laws and
federal securities laws applicable to the offering of the Shares. Upon
Purchaser's execution and delivery, and assuming the valid execution thereof by
Company and payment of the Purchase Price, this Agreement will constitute the
valid and binding obligations of Purchaser, enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except as the indemnification agreements of Purchaser in Section 8 hereof
may be legally unenforceable.
5.10 CONTRACTS. The contracts described in SCHEDULE 5.10 as
being in effect on the date hereof that are material to Purchaser, are in full
force and effect on the date hereof; and neither Purchaser, nor, to Purchaser's
knowledge, any other party is in breach of or default under any of such
contracts which would have a Material Adverse Effect.
5.11 NO ACTIONS. There are no legal or governmental actions,
suits or proceedings pending or, to Purchaser's knowledge, overtly threatened to
which Purchaser is or may be a party or of which property owned or leased by
Purchaser is or may be the subject, or related to environmental or
discrimination matters, which actions, suits or proceedings, individually or in
the aggregate, might prevent or might reasonably be expected to materially and
12
adversely affect the transactions contemplated by this Agreement or result in a
Material Adverse Change; and no labor disturbance by the employees of Purchaser
exists or, to Purchaser's knowledge, is imminent which might reasonably be
expected to have a Material Adverse Effect. Purchaser is not a party to or
subject to the provisions of any material injunction, judgment, decree or order
of any court, regulatory body administrative agency or other governmental body.
Purchaser is not a party to any collective bargaining agreement.
5.12 PROPERTIES. Purchaser has good and marketable title to
all personal property reflected as owned by Purchaser in Purchaser's financial
statements attached hereto as SCHEDULE 5.12. Such property is not subject to any
lien, mortgage, pledge, charge or encumbrance of any kind except (i) those, if
any, reflected in such financial statements (including the notes thereto), or
(ii) those which are not material in amount and do not adversely affect the use
of such property by Purchaser. Any property or building held under lease by
Purchaser is held under valid, existing and enforceable leases, free and clear
of all liens, encumbrances, claims, and defects except such as would not have a
Material Adverse Effect. Purchaser owns or leases all such properties as are
necessary to its operations as now conducted.
5.13 NO MATERIAL ADVERSE CHANGE. Since the date of the
financial statements included in SCHEDULE 5.12, (i) Purchaser has not incurred
any material liabilities or obligations, indirect, or contingent, or entered
into any material verbal or written agreement or other transaction which is not
in the ordinary course of business or which could reasonably be expected to
result in a material reduction in the future earnings of Purchaser; (ii)
Purchaser has not sustained any material loss or interference with its
businesses or properties from fire, flood, windstorm, accident or other calamity
not covered by insurance; (iii) Purchaser has not paid or declared any dividends
or other distributions with respect to its capital stock and Purchaser is not in
default in the payment of principal or interest on any outstanding debt
obligations; (iv) there has not been any change in the capital structure of
Purchaser or indebtedness material to Purchaser (other than in the ordinary
course of business); and (v) there has not been a Material Adverse Change.
5.14 NO DEFAULTS. Except as to defaults, violations and
breaches which individually or in the aggregate would not be material to
Purchaser, taken as a whole, Purchaser is not in violation or default of any
provision of its articles of organization or other organizational documents, or
in breach of, or default with respect to, any provision of any material
agreement, any judgment, decree, order, mortgage, deed of trust, lease,
franchise, license, indenture, or permit to which it is a party or by which it
or any of its properties are bound; and there does not exist any state of fact
which, with notice or lapse of time or both, would constitute an event of breach
or default on the part of Purchaser as defined in such documents, except such
breaches or defaults which individually or in the aggregate would not be
material to Purchaser, taken as a whole.
5.15 COMPLIANCE. Purchaser has not been advised, and neither
has any reason to believe, that it is conducting its business in compliance with
all applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local, state
and federal environmental laws and regulations; except where failure to be so in
compliance therewith would not have a Material Adverse Effect.
13
5.16 TAXES. Purchaser has filed all necessary federal, state
and foreign income and franchise tax returns which are required to be filed, or
has received extensions thereof, and has paid or accrued all taxes shown as due
thereon, and Purchaser has no knowledge of a tax deficiency which has been or
might be asserted or threatened against it which could have a Material Adverse
Effect. On each Closing Date all stock transfer or other taxes (other than
income taxes) which are required to be paid in connection with the sale and
transfer of the Shares to be sold to Purchaser hereunder will be, or will have
been, fully paid or provided for by Purchaser and all laws imposing such taxes
will be or will have been fully complied with.
5.17 BOOKS, RECORDS AND ACCOUNTS. The books, records and
accounts of Purchaser accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, Purchaser. Purchaser maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
5.18 INSURANCE. Purchaser maintains insurance of the type and
in the amount that Purchaser reasonably believes is adequate for its business,
including, but not limited to, insurance covering all real and personal property
owned or leased by Purchaser against theft, damage, destruction, acts of
vandalism and all other risks customarily insured against by similarly situated
companies, all of which insurance is in full force and effect.
5.19 CONTRIBUTIONS. At no time since its organization has
Purchaser, directly or indirectly, (i) used any corporate or other funds for
gifts, entertainment or other unlawful contributions to any candidate for public
office, or failed to disclose fully any contribution in violation of law, or
(ii) made any payment to any federal or state governmental officer or official,
or other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
5.20 ADDITIONAL INFORMATION. Purchaser represents and warrants
that the information which Purchaser has furnished to Company regarding
Purchaser and its principals, is and will be true and correct in all material
respects as of the date of their delivery to Company, and does not and contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading,
6. GOVERNANCE: BOARD MEMBERSHIP; CORPORATE MISSION.
6.1 APPOINTMENT OF THREE PURCHASER NOMINEES TO BOARD; ACTIONS
IN ORDINARY COURSE. Concurrent with completion of the purchase and sale required
at the Third Closing, or as soon thereafter as Purchaser identifies a nominee,
Company shall cause a vacancy to exist on its board of directors and shall cause
14
such vacancy to be filled by Purchaser's nominee. Concurrent with completion of
the purchase and sale required at the Fifth Closing, or as soon thereafter as
Purchaser identifies a nominee, Company shall cause a vacancy to exist on its
board of directors and shall cause such vacancy to be filled by Purchaser's
nominee. Concurrent with completion of the purchase and sale required at the
Sixth Closing, or as soon thereafter as Purchaser identifies a nominee, Company
shall cause a vacancy to exist on its board of directors and shall cause such
vacancy to be filled by Purchaser's nominee, leaving five duly elected or
appointed members of the board of directors in office, three of whom being
Purchaser's nominees. Company shall cause its board of directors to consist of
five members (three of whom members are nominated by Purchaser in accordance
with this Agreement) until August 31, 2003, or the earlier completion of the
Seventh Closing.
(a) It is expressly agreed that without the prior written
consent of Purchaser Company (i) will not undertake
any action out of the ordinary course of business,
including but not limited to granting bonuses or
substantial increases in compensation for employees,
financings, reorganizations or divestitures and (ii)
will not terminate Xxxxxx Xxxxx as Chief Executive
Officer of Company, during the period from execution
of this Agreement and the completion of the Sixth
Closing, scheduled for May 30, 2003. The obligation
expressed in this paragraph is conditioned upon
Purchaser not being in default under the terms
hereof.
(b) The following are not deemed out of the ordinary
course for purposes of the preceding paragraph (a):
raises of up to 22% for three of Company's staff
members and granting to each a one-time 12-month
employment contract providing for 6-month severance
in the event of termination without cause; compliance
with federal securities laws; and entering into the
employment agreement referred to in Section 2.3(a)(4)
and (b)(4) above.
6.2 CORPORATE MISSION FOCUS. The parties intend to use their
respective best efforts to enhance and expand the business, good will and brand
name recognition of Company as a gaming industry specialty company in several
broadcast and publication media. The parties intend that Company not engage in
other industries or lines of business and to that end shall cause Company's
Bylaws to be amended concurrent with the Second Closing to provide that Company
shall not engage in any such other industries or lines of business without the
vote of 80% of the directors then in office or 80% of the shareholders.
7. REGISTRATION COVENANTS.
7.1 DEMAND REGISTRATION PROCEDURES AND EXPENSES.
(a) Company shall:
(1) no earlier than six months following the
Seventh Closing, and on one occasion upon
approval of Company's Board of Directors
following a recommendation of a nationally
or regionally recognized investment bank
that is prepared to act as an underwriter
for the subject Shares, prepare and file
15
with the Commission a Registration Statement
relating to the sale of the (a) Shares by
Purchaser and (b) all other Restricted
Shares (as defined in Rule 144 promulgated
by the Commission under the Securities Act)
of Company Common Stock held by Company
directors, officers and 10% or greater
stockholders (collectively, "REGISTRABLE
SECURITIES") through the automated quotation
system of the Over the Counter Bulletin
Board, the NASDAQ National Market or the
facilities of any national securities
exchange on which Company's Common Stock is
then traded or in privately-negotiated
transactions; PROVIDED that the aggregate
number of shares so registered shall be no
greater than the number recommended by such
investment bank; and PROVIDED FURTHER, that
if any limitation of the number of shares of
Registrable Securities to be registered by
the Holders is required pursuant to this
Section 7.1, the number of shares to be
included shall be determined on a pro rata
basis (based upon the respective holdings of
Registrable Securities by such the persons
making demand under this Section 7.1).
(2) use its reasonable efforts subject to
receipt of necessary information from
Purchaser, to cause the Commission to notify
Company of the Commission's willingness to
declare the Registration Statement effective
within 60 days after the Registration
Statement is filed by Company;
(3) prepare and file with the Commission such
amendments and supplements to the
Registration Statement and the prospectus
used in connection therewith as may be
necessary to keep the Registration Statement
effective until the earlier of (i)
twenty-four (24) months after the effective
date of the Registration Statement or (ii)
the date on which the Shares may be resold
by Purchaser without registration by reason
of Rule 144(k) under the Securities Act or
any other rule of similar effect;
(4) furnish to Purchaser with respect to the
Shares registered under the Registration
Statement (and to each underwriter, if any,
of such Shares) such reasonable number of
copies of prospectuses in order to
facilitate the public sale or other
disposition of all or any of the Shares by
Purchaser; PROVIDED, HOWEVER, that the
obligation of Company to deliver copies of
prospectuses to Purchaser shall be subject
to the receipt by Company of reasonable
assurances from Purchaser that Purchaser
will comply with the applicable provisions
of the Securities Act and of such other
securities or blue sky laws as may be
applicable in connection with any use of
such prospectuses;
16
(5) file documents required of Company for
normal blue sky clearance in states
specified in writing by Purchaser; PROVIDED,
HOWEVER, that Company shall not be required
to qualify to do business or consent to
service of process in any jurisdiction in
which it is not now so qualified or has not
so consented; and
(6) bear all expenses in connection with the
procedures in paragraphs (1) through (5) of
this Section 7.1 and the registration of the
Shares pursuant to the Registration
Statement, other than fees and expenses, if
any, of counsel or other advisers to
Purchaser or the Other Purchaser or
underwriting discounts, brokerage fees and
commissions incurred by Purchaser or such
directors, officers and 10% or greater
stockholders, if any.
(b) Company shall file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the Commission thereunder (or, if Company is not required to file
such reports, it will, upon the request of any Purchaser, make publicly
available other information), and it will take such further action as any
Purchaser may reasonably request, all to the extent required from time to time
to enable such Purchaser to sell the Shares without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule 144
under the Securities Act, as such Rule may be amended from time to time, or (ii)
any similar rule or regulation hereafter adopted by the Commission. Upon the
request of any Purchaser, Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
7.2 TRANSFER OF SHARES AFTER REGISTRATION. Purchaser shall not
effect any disposition of the Shares or its right to purchase the Shares that
would constitute a sale within the meaning of the Securities Act, except as
contemplated in the Registration Statement referred to in Section 7.1, and that
it shall promptly notify Company of any changes in the information set forth in
the Registration Statement regarding Purchaser or its plan of distribution.
7.3 TERMINATION OF CONDITIONS AND OBLIGATIONS. The
restrictions imposed by Section 5 or this Section 7 upon the transferability of
the Shares shall cease and terminate as to any particular number of the Shares
upon the passage of twenty-four months from the effective date of the
Registration Statement covering such Shares or at such time as an opinion of
counsel satisfactory in form and substance to Company shall have been rendered
to the effect that such conditions are not necessary in order to comply with the
Securities Act.
7.4 INFORMATION AVAILABLE. So long as the Registration
Statement is effective covering the resale of Shares owned by Purchaser, Company
will furnish to Purchaser:
(1) upon request, as soon as practicable after
available (but in the case of Company's
Annual Report to Stockholders, within 120
days after the end of each fiscal year of
Company), one copy of (i) its Annual Report
to Stockholders (which Annual Report shall
contain financial statements audited in
accordance with generally accepted
17
accounting principles by a national firm of
certified public accountants), (ii) if not
included in substance in the Annual Report
to Stockholders, its Annual Report on Form
10-KSB, (iii) if not included in substance
in its Quarterly Reports to Shareholders,
its quarterly reports on Form 10-QSB, and
(iv) a full copy of the particular
Registration Statement covering the Shares
(the foregoing, in each case, excluding
exhibits);
(2) upon the reasonable request of Purchaser, a
reasonable number of copies of the
prospectuses to supply to any other party
requiring such prospectuses;
and Company, upon the reasonable request of Purchaser, will meet with Purchaser
or a representative thereof at Company's headquarters to discuss information
relevant for disclosure in the Registration Statement covering the Shares
subject to appropriate confidentiality limitations.
7.5 PIGGYBACK REGISTRATIONS. If at any time or times after the
date hereof Company shall seek to register any shares of its Common Stock under
the Securities Act for sale to the public for its own account or on the account
of others (except with respect to registration statements on Form X-0, X-0 or
another form not generally available for registering the Registrable Securities
for sale to the public), Company shall promptly give written notice thereof to
all holders of Registrable Securities (the "HOLDERS"). If within 20 days after
their receipt of such notice one or more Holders request the inclusion of some
or all of the Registrable Securities owned by them in such registration, Company
will use its best efforts to effect the registration under the Securities Act of
such Registrable Securities. In the case of the registration of shares of
capital stock by the Company in connection with any underwritten public
offering, if the underwriter(s) determines that marketing factors require a
limitation on the number of Registrable Securities to be offered, subject to the
following sentence, the Company shall not be required to register Registrable
Securities of the Holders in excess of the amount, if any, of shares of the
capital stock which the principal underwriter of such underwritten offering
shall reasonably and in good faith agree to include in such offering in addition
to any amount to be registered for the account of the Company. If any limitation
of the number of shares of Registrable Securities to be registered by the
Holders is required pursuant to this Section 7.5, the number of shares to be
excluded shall be determined in the following sequence: (i) first, securities
held by any persons not having any contractual, incidental "piggyback"
registration rights, (ii) second securities held by any Persons (other than the
Holders) having contractual, incidental "piggyback" rights pursuant to an
agreement which is not this Agreement, and (iii) third, Registrable Securities
sought to be included by the Holders as determined on a pro rata basis (based
upon the respective holdings of Registrable Securities by such Holders).
7.6 THIRD PARTY BENEFICIARIES OF REGISTRATION RIGHTS. The
parties jointly and severally agree that Company directors, officers and 10% or
greater stockholders are and at all relevant times shall be third party
beneficiaries of the covenants of this Section 7 as and to the extent they are
provided for herein.
18
8. INDEMNIFICATION OF PURCHASER AGAINST REB GAMING, INC. AND
OTHERS. Company shall indemnify and hold harmless Purchaser, including the
provision of legal defense, against any and all claims or causes of action
brought by REB Gaming, Inc., Northfield, Inc., Stuart Broadcasting or any of
their affiliates or successors based upon termination of the letter agreement
described in Section 4.9 above and failure to consummate the transaction
contemplated by such letter agreement, whether based on theories of interference
with prospective business advantage or otherwise.
9. MISCELLANEOUS
9.1 NO BROKER'S OR FINDER'S FEE. Each party represents and
warrants to the other that there are no brokers, finders, financial advisors or
similar persons entitled to compensation in connection with the sale of the
Shares to Purchaser. Each party shall indemnify and hold harmless the other
party from and against any such compensation claimed as a result of any
agreement or understanding entered into or allegedly entered into by each party,
respectively.
9.2 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as addressed as follows:
(1) if to Company, to:
The Players Network
0000 Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: President
with a copy to:
Xxxx X. Xxxxxxxxx
XxXxxxxxx, Will & Xxxxx
0000 Xxxxxxx Xxxx Xxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
or to such other person at such other
place as Company shall designate
to Purchaser in writing; and
(2) if to Purchaser, to
KO Ventures, LLC
0000 Xxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
19
Attn: Xxxxxx Xxxxx
with a copy to:
Xxxxxxx Xxxxx, Esq.
Xxxxx & Xxxxxxx
Xxx Xxxxxxxx Xxxxx, Xxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
or to such other person at such other place
as Company shall designate to Purchaser in
writing.
9.3 CHANGES. This Agreement may not be modified or amended
except pursuant to an instrument in writing signed by an authorized
representative of Company and Purchaser.
9.4 HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
9.5 SEVERABILITY. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
9.6 GOVERNING LAW; ATTORNEYS' FEES. This Agreement shall be
governed by and construed in accordance with the laws of the State of Nevada
without regard to the conflict of laws and the federal law of the United States
of America. In the event any action is brought to enforce the covenants of this
Agreement, the losing party shall pay the prevailing party its attorneys' fees
and other direct costs incurred to enforce this Agreement or seek damages for
its breach.
9.7 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument, and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other parties.
9.8 ASSIGNMENT. Purchaser may assign its rights hereunder to
any entity controlled by Purchaser, provided that such assignee(s) makes all
representations and covenants incumbent upon Purchaser hereunder.
9.9 COOPERATION. In addition to and without limiting the
foregoing covenants the parties shall use their best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with each other in doing all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement.
20
9.10 PROFESSIONAL FEES. Each party hereto shall be responsible
for the fees and expenses of legal counsel and other professional advisors in
connection with the preparation of this Agreement and the performance of the
parties required at each Closing.
9.11 CONFIDENTIALITY; PRESS RELEASES, PUBLIC REPORTS AND
ANNOUNCEMENTS. The parties have entered into and shall continue to abide by the
terms of a confidentiality agreement entered into as of January 7, 2003. Except
as is required by applicable law or court order, through completion of the
Seventh Closing, or September 30, 2003, whichever occurs first, Company shall
consult with Purchaser and offer it a reasonable opportunity to review, comment
upon and edit any proposed press release or other public announcement with
respect to the transactions that are the subject matter of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
THE PLAYERS NETWORK
By:____________________________
Its:
KO VENTURES, LLC
By:_____________________________
Its:
21
SCHEDULE 4.5
TO
STOCK PURCHASE AGREEMENT BETWEEN THE PLAYERS NETWORK AND KO VENTURES, LLC
COMPANY MATERIAL CONTRACTS
------------------------------- ------------------------ --------------- ---------------- -----------------------
START EXPIRATION DATE COMMENTS
NAME OF AGREEMENT OTHER PARTY DATE (IF ANY)
------------------------------- ------------------------ --------------- ---------------- -----------------------
Affiliate Services Agreement Four Queens Hotel & 1/1/98 Ongoing In-room & online
Casino service
------------------------------- ------------------------ --------------- ---------------- -----------------------
Master Services Agreement & Station Casinos, Inc. 5/4/01 5/3/03 In-room & online
Addendum service
------------------------------- ------------------------ --------------- ---------------- -----------------------
Master Services Agreement Xxxxx Xxxxxx Hotel 3/4/02 3/3/04 In-room & online
Casino service
------------------------------- ------------------------ --------------- ---------------- -----------------------
Standard Grove Family Limited 9/1/01 8/31/04 Polaris facility
Industrial/Commercial Partnership rental agrmt.
Multi-Tenant Lease
------------------------------- ------------------------ --------------- ---------------- -----------------------
Fixed Sum Promissory Note XxXxxxxxx, Will & Xxxxx 6/1/01 6/1/05 (or Beginning balance
(Corporate) sooner) $88,152.85
------------------------------- ------------------------ --------------- ---------------- -----------------------
Agreement Stella Productions 1/22/02 1/21/04 Studio rental revenue
share
------------------------------- ------------------------ --------------- ---------------- -----------------------
Marketing / Sales / Uproar 11/19/02 Ongoing Outside non-gaming
Operations Agreement hotel in-room sales
(commission deal only)
------------------------------- ------------------------ --------------- ---------------- -----------------------
Not named Xxxx Xxxxxxx Not dated Ongoing until Deferment of salary
settled (approx. $32,000 as
of 12/31/03
------------------------------- ------------------------ --------------- ---------------- -----------------------
Sponsorship Advertising E-Net Marketing TBD 12 months from Commercial
Agreement start date advertising on PN
television
------------------------------- ------------------------ --------------- ---------------- -----------------------
22
SCHEDULE 4.6
TO
STOCK PURCHASE AGREEMENT BETWEEN THE PLAYERS NETWORK AND KO VENTURES, LLC
COMPANY LITIGATION
In August 2000, Company retained Nevada legal counsel with respect to NetBooth's
failure to meet its responsibilities under a (verbal) joint venture agreement to
create and market interactive kiosks. A Complaint was filed in the District
Court of Xxxxx County, NV. No further actions have been taken by Company since
2000.
23
SCHEDULE 4.9
TO
STOCK PURCHASE AGREEMENT BETWEEN THE PLAYERS NETWORK AND KO VENTURES, LLC
COMPANY CHANGES SINCE SEPTEMBER 30, 2002
1. Company entered into a Binding Term Sheet with KO Ventures, LLC, dated
January 7, 2003.
2. Company issued 600,000 shares of Common Stock, par value $.001 per share to
Xxxxx Xxxx for services rendered.
24
SCHEDULE 5.10
TO
STOCK PURCHASE AGREEMENT BETWEEN THE PLAYERS NETWORK AND KO VENTURES, LLC
PURCHASER MATERIAL CONTRACTS
KO Ventures, LLC Limited Liability Operating Agreement among Messrs. Kole,
Orgel, Brukman and Fish, dated ________, 2002.
25
SCHEDULE 5.12
TO
STOCK PURCHASE AGREEMENT BETWEEN THE PLAYERS NETWORK AND KO VENTURES, LLC
PURCHASER FINANCIAL STATEMENTS
KO VENTURES, LLC - BALANCE SHEET
05-MAR-03
ASSETS
CURRENT ASSETS
CHECKING/SAVINGS
Citibank Checking 794,641.25
TOTAL CHECKING/SAVINGS 794,641.25
ACCOUNTS RECEIVABLE
Accounts Receivable 20,000.00
TOTAL ACCOUNTS RECEIVABLE 20,000.00
OTHER CURRENT ASSETS
Deposits 105,800.00
Stock Held for Investment 684,177.06
Partner Loans 125,000.00
Tri-Valley Convertible Loan 425,000.00
TOTAL OTHER CURRENT ASSETS 1,339,977.06
TOTAL CURRENT ASSETS 2,154,618.31
OTHER ASSETS
Yosemite Plaza 8,100,000.00
Malibu Land 6,500,000.00
TOTAL OTHER ASSETS 14,600,000.00
TOTAL ASSETS 16,754,618.31
=============
LIABILITIES & EQUITY
LIABILITIES
CURRENT LIABILITIES
OTHER CURRENT LIABILITIES
Short Term Loan 28,089.92
Short Term Liabilities 40,000.00
TOTAL OTHER CURRENT LIABILITIES 68,089.92
TOTAL CURRENT LIABILITIES 68,089.92
LONG TERM LIABILITIES
Real Estate Loans 9,528,000.00
TOTAL LONG TERM LIABILITIES 9,528,000.00
TOTAL LIABILITIES 9,596,089.92
=============
EQUITY
Appreciation of Assets 1,500,000.00
Partner Equity Accounts 7,700,000.00
Retained Earnings 217,884.19
Net Income 1,823,587.42
TOTAL EQUITY 7,158,528.39
TOTAL LIABILITIES & EQUITY 16,754,618.31
=============
