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
contendre, 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
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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
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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
------------------------------
(Vice) President
Red River: Red River Concepts, Inc.
By:/s/ Xxxxx X. Xxxxxxxxx
------------------------------
(Vice) President
Jebco Jebco, L.L.C.
/s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Manager
Xxxxxx:
/s/ Xxxx X. Xxxxxx
---------------------------------
Xxxx X. Xxxxxx
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