EXHIBIT 2.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT ("AGREEMENT") dated as of June
22, 2004, between SYNERGY 2000, INC., a Delaware corporation (the "COMPANY"),
and XXXXX HAWRELECHKO (collectively, the "PURCHASER").
W I T N E S S E T H:
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WHEREAS, the Company desires to sell and issue to the
Purchaser, and the Purchaser wishes to purchase from the Company, shares of the
Company's Common Stock, $.001 par value per share ("Common Shares"), having the
rights, designations and preferences set forth in the Restated Certificate of
Incorporation (the "Certificate"), in the form of Exhibit A attached hereto, in
consideration for the sale, transfer, assignment and delivery of certain of
Purchaser's assets, subject, in each case, to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF COMMON SHARES
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Section 1.1 SALE OF ASSETS BY PURCHASER. Subject to the terms,
covenants and conditions of this Agreement, at the Closing (as defined in
Section 1.3 below), Purchaser will sell, transfer, assign and deliver to Company
certain assets relating to the contemplated gaming resort development project to
be located in Tunica County, Mississippi, including without limitation, a
thirty-three percent (33%) limited liability company interest in Myriad World
Resorts of Tunica, LLC, a Mississippi limited liability company ("Tunica LLC").
The assets, including the interest in Tunica LLC, sometimes hereinafter shall be
referred to, collectively, as the "Assets". For purposes of this Agreement, the
Assets shall include all property and other rights listed as Purchaser's Assets
on Schedule 1.1 to this Agreement, and all other supplies, materials, work in
process, finished goods, inventory, equipment, machinery, furniture, fixtures,
claims and rights under leases, contracts, notes, evidences of indebtedness,
receivables, purchase and sales orders, copyrights, service marks, trademarks,
trade names, trade secrets, patents, patent applications, know-how, licenses,
royalty rights, deposits, and rights and claims to refunds and adjustments of
any kind, listed on Schedule 1.1 hereto.
Section 1.2. PURCHASE OF ASSETS BY COMPANY. In reliance on the
representations and warranties of Purchaser under this Agreement, and on terms
and subject to the conditions of this Agreement, at the Closing (as defined in
Section 1.3 below), Company will purchase the Assets. In consideration thereof,
Company will issue and deliver to Purchaser twenty-two million (22,000,000)
shares of Company Common Stock, valued at Two and 25/100 U.S. Dollars (USD$2.25)
per share of Company Common Stock (the "Purchase Price"), and constituting
approximately fifty-eight percent (58%) of Company's issued and outstanding
capital stock immediately subsequent to the Closing, calculated on a fully
diluted basis. The Purchase Price of the Assets shall be allocated as determined
mutually by the parties and the parties agree that the allocations shall be
binding on each of them for purposes of computing and preparing all state and
federal tax returns. Notwithstanding any other provisions of this Agreement to
the contrary, Company is not assuming any liability resulting from, connected
with, or related to any agreement between Purchaser and Myriad Golf Resort,
Inc., an Alberta, Canada corporation ("Myriad"), or any of Myriad's
stockholders.
Section 1.3 THE CLOSING.
(a) TIMING. Subject to the fulfillment or waiver of the
conditions set forth in Article V hereof, the purchase and sale of the Common
Shares shall take place at a closing (the "Closing"), on or about fifteen (15)
days following the date hereof or such other date as the Purchaser and the
Company may agree upon (the "Closing Date").
(b) FORM OF PAYMENT. The Purchaser shall convey the Assets
upon delivery by the Company to the Purchaser's counsel of the applicable Common
Shares, and upon satisfaction of the other conditions to the Closing. In
addition, each party shall deliver all documents, instruments and writings
required to be delivered by such party pursuant to this Agreement at or prior to
the Closing.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
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Section 2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby makes the following representations and warranties to the Purchaser as of
the date hereof and on the Closing Date:
(a) ORGANIZATION AND QUALIFICATION; MATERIAL ADVERSE EFFECT.
The Company is a corporation duly incorporated and existing in good standing
under the laws of the State of Delaware and has the requisite corporate power to
own its properties and to carry on its business as now being conducted. The
Company does not have any material subsidiaries other than the subsidiaries
listed on Schedule 2.1(a) attached hereto ("Subsidiaries"). Except where
specifically indicated to the contrary, all references in this Agreement to
subsidiaries shall be deemed to refer to all direct and indirect subsidiaries of
the Company. "Material Adverse Effect" means any adverse effect on the business,
operations, properties, prospects or financial condition of the Company and its
subsidiaries, if any, and which is (either alone or together with all other
adverse effects) material to the Company and its Subsidiaries, if any, taken as
a whole, and any material adverse effect on the transactions contemplated under
this Agreement, the Certificate, or any other agreement or document contemplated
hereby or thereby.
(b) AUTHORIZATION; ENFORCEMENT. (i) The Company has all
requisite corporate power and authority to enter into and perform this Agreement
and the Certificate (collectively, the "Transaction Documents") and to issue the
Common Shares in accordance with the terms hereof, (ii) the execution and
delivery of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including the issuance of the
Common Shares and the resolutions contained in the Certificate, have been duly
authorized by all necessary corporate action, and no further consent or
authorization of the Company or its Board of Directors (or any committee or
subcommittee thereof) or stockholders is required, (iii) this Agreement and the
Certificate constitute valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, except (A) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of creditors' rights and remedies or by
other equitable principles of general application, and (B) to the extent the
indemnification provisions contained in this Agreement may be limited by
applicable federal or state securities laws, and (iv) the Common Shares have
been duly authorized and, upon issuance thereof and payment therefor in
accordance with the terms of this Agreement and the Common Shares will be
validly issued, fully paid and non-assessable, free and clear of any and all
liens, claims and encumbrances.
(c) CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Company consists of (i) 25,000,000 shares of Common Stock,
of which as of the date hereof, 16,107,333 shares are issued and outstanding,
and 1,500,000 shares are issuable and reserved for issuance pursuant to the
Company's stock option plan, of which 150,000 are issued and outstanding; and
(ii) no shares of preferred stock. Upon the filing of the Company's Certificate,
concurrent with the Closing hereunder, the authorized capital stock of the
Company shall consist of (i) 300,000,000 shares of Common Stock, and (ii)
5,000,000 shares of preferred stock. All of such outstanding shares have been,
and upon issuance authorized but not outstanding shares will be, validly issued,
fully paid and nonassessable. As of the date hereof, except as disclosed in
SCHEDULE 2.1(c), (i) no shares of the Company's capital stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company, (ii) there are no outstanding debt
securities, (iii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, (iv) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the Securities Act of 1933, as amended ("Securities Act"
or "1933 Act"), (v) there are no outstanding securities of the Company or any of
its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries, (vi) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Common Shares as described in this Agreement,
and (vii) the Company does not have any stock appreciation rights or "phantom
stock" plans or agreements or any similar plan or agreement. The Company has
furnished to the Purchaser true and correct copies of the Company's Certificate
of Incorporation, as amended and as in effect on the date hereof (the
"Certificate of Incorporation"), and the Company's By-laws, as amended and as in
effect on the date hereof (the "By-laws"), and the terms of all securities
convertible or exchangeable into or exercisable for Common Stock and the
material rights of the holders thereof in respect thereto.
(d) ISSUANCE OF SHARES. Upon issuance in accordance with this
Agreement and the Certificate, the Common Shares will be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof.
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(e) NO CONFLICTS. Except as disclosed in SCHEDULE 2.1(e), the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby, and the issuance of the Common Shares will not (i) result in a
violation of the Certificate of Incorporation, any certificate of designations,
preferences and rights of any outstanding series of preferred stock of the
Company or the By-laws; (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its Subsidiaries is a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including United States federal and
state securities laws and regulations and the rules and regulations of the NASD
and the Over-The-Counter Electronic Bulletin Board ("Principal Market") and any
other principal securities exchange or trading market on which the Common Stock
is traded or listed) applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected. Except as disclosed in SCHEDULE 2.1(e), neither the Company nor its
Subsidiaries is in violation of any term of, or in default under, (x) its
Certificate of Incorporation, any certificate of designations, preferences and
rights of any outstanding series of preferred stock or by-laws or their
organizational charter or by-laws, respectively, (y) any material contract,
agreement, mortgage, indebtedness, indenture, instrument, or (z) any judgment,
decree or order or any statute, rule or regulation applicable to the Company or
its Subsidiaries, the non-compliance with which (in the case of clause (z) only)
would be material to the Company or its subsidiaries or interfere with the
performance of its obligations under the Transaction Documents. Except as
specifically contemplated by this Agreement and as required under the 1933 Act,
the Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency or any
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under, or contemplated by, the Transaction
Documents, or issue the Common Shares, in accordance with the terms hereof or
thereof. Except as disclosed in SCHEDULE 2.1(e), all consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company complies with and is not in violation of the
listing requirements of the Principal Market as in effect on the date hereof and
on the Closing Date and is not aware of any facts which would reasonably lead to
delisting or suspension of the Common Stock by the Principal Market in the
foreseeable future.
(f) SEC DOCUMENTS; FINANCIAL STATEMENTS. Since March 31, 2004,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Securities Exchange Act of 1934 Act, as amended ("1934 Act"
or "Exchange Act") (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the
"SEC Documents"). The Company has delivered to the Purchaser or its
representatives true and complete copies of any SEC Documents that were filed by
the Company with the SEC but not filed electronically via XXXXX. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other written
information provided by or on behalf of the Company to the Purchaser which is
not included in the SEC Documents, including, without limitation, information
referred to in Section 2.2(b) of this Agreement, contains any untrue statement
of a material fact or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstance under which they
are or were made, not misleading.
(g) ABSENCE OF CERTAIN CHANGES. Except as disclosed in
SCHEDULE 2.1(g) or the SEC Documents filed at least seven (7) days prior to the
date hereof, since March 31, 2004 there has been no adverse change or adverse
development in the business, properties, assets, operations, financial
condition, prospects, liabilities or results of operations of the Company or its
Subsidiaries which has had or, to the knowledge of the Company or its
Subsidiaries, is reasonably likely to have a Material Adverse Effect. The
Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any bankruptcy law nor does the Company or
its Subsidiaries have any knowledge or reason to believe that its creditors
intend to initiate involuntary bankruptcy proceedings. SCHEDULE 2.1(g) lists all
material events, transactions and agreements which have occurred or been entered
into affecting the Company since March 31, 2004.
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(h) ABSENCE OF LITIGATION. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company, the Common Stock or any of the Company's Subsidiaries or
any of the Company's or the Company's Subsidiaries' officers or directors in
their capacities as such, (i) except as set forth in SCHEDULE 2.1(h) and (ii)
except which individually and in the aggregate, respectively, would be
reasonably likely to result in liability to the Company in excess of $50,000.
(i) ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF SHARES.
The Company acknowledges and agrees that the Purchaser is acting solely in the
capacity of arm's length purchaser with respect to the Transaction Documents and
the transactions contemplated hereby and thereby. The Company further
acknowledges that the Purchaser is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated hereby and thereby, and
any advice given by the Purchaser or any of its respective representatives or
agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to the Purchaser's purchase
of the Common Shares. The Company further represents to the Purchaser that the
Company's decision to enter into the Transaction Documents has been based solely
on the independent evaluation by the Company and its representatives.
(j) NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR
CIRCUMSTANCES. No event, liability, development or circumstance has occurred or
exists with respect to the Company or its Subsidiaries or their respective
business, properties, prospects, operations or financial condition, that would
be required to be disclosed by the Company on or prior to the date hereof under
applicable securities laws on a registration statement filed with the SEC
relating to an issuance and sale by the Company of its Common Stock and which
has not been publicly disclosed.
(k) NO INSIDE INFORMATION. Neither the Company nor any of its
Subsidiaries or any of their officers, directors, employees or agents have
provided the Purchaser with any material, nonpublic information which was not
publicly disclosed prior to the date hereof, and the Company shall not provide
any Purchaser with any non-public information.
(l) NO INTEGRATED OFFERING. Neither the Company, nor any of
its affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of Common
Shares to the Purchaser to be integrated with prior offerings by the Company for
purposes of the 1933 Act or any applicable shareholder approval provisions,
including, without limitation, under the rules and regulations of the Principal
Market or other Approved Market (defined below) or the NASD, nor will the
Company or any of its Subsidiaries take any action or steps that would cause the
offering of the Common Shares to be integrated with other offerings.
(m) EMPLOYEE RELATIONS. Neither the Company nor any of its
Subsidiaries is involved in any labor dispute nor, to the knowledge of the
Company or any of its Subsidiaries, is any such dispute threatened, the effect
of which would be reasonably likely to result in a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is a party to a collective
bargaining agreement. The Company and its Subsidiaries believe that relations
between the Company and its Subsidiaries and their respective employees are
good. No executive officer (as defined in Rule 501(f) of the 0000 Xxx) whose
departure would be adverse to the Company has notified the Company that such
officer intends to leave the Company or otherwise terminate such officer's
employment with the Company.
(n) INTELLECTUAL PROPERTY RIGHTS. The Company and its
Subsidiaries own or possess adequate rights or licenses to use all trademarks,
trade names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on SCHEDULE 2.1(n), none of the
Company's trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other intellectual
property rights have expired or terminated, or are expected to expire or
terminate within two (2) years from the date of this Agreement. The Company and
its Subsidiaries do not have any knowledge of any infringement by the Company or
its Subsidiaries of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service xxxx
registrations, trade secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical information by
others and, except as set forth on SCHEDULE 2.1(n), there is no claim, action or
proceeding being made or brought against, or to the Company's knowledge, being
threatened against, the Company or its Subsidiaries regarding trademarks, trade
name rights, patents, patent rights, inventions, copyrights, licenses, service
names, service marks, service xxxx registrations, trade secrets or other
infringement. The Company and its Subsidiaries have taken reasonable security
measures to protect the value of all of their intellectual properties.
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(o) ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i)
are in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses, and (iii) are in compliance with all terms and
conditions of any such permit, license or approval where such noncompliance or
failure to receive permits, licenses or approvals referred to in clauses (i),
(ii) or (iii) above could have, individually or in the aggregate, a Material
Adverse Effect.
(p) TITLE. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in SCHEDULE 2.1(p) or such
as do not materially and adversely affect the value of such property and do not
interfere with the use made and proposed to be made of such property by the
Company or any of its Subsidiaries. Any real property and facilities held under
lease by the Company or any of its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.
(q) INSURANCE. The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as reasonably prudent and customary in the
businesses in which the Company and its Subsidiaries are engaged. Neither the
Company nor any such Subsidiary has been refused any insurance coverage sought
or applied for and neither the Company nor any such Subsidiary has any reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not materially
and adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its Subsidiaries taken as a whole.
(r) REGULATORY PERMITS. The Company and its Subsidiaries
possess all material certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities, necessary to
conduct their respective businesses, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
(s) INTERNAL ACCOUNTING CONTROLS. The Company and each of its
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance 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
conformity 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.
(t) TAX STATUS. The Company and each of its Subsidiaries has
made or filed all United States federal and state income and all material other
tax returns, reports and declarations required by any jurisdiction to which it
is subject and has paid all material taxes and other governmental assessments
and charges shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith, and has set aside on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. To the Company's knowledge, there are no unpaid taxes claimed to be due
by the taxing authority of any jurisdiction, and the Company is not aware of any
basis for any such claim.
(u) CERTAIN TRANSACTIONS. Except as set forth on SCHEDULE
2.1(u) and in the SEC Documents filed on XXXXX at least seven (7) days prior to
the date hereof and except for arm's length transactions pursuant to which the
Company makes payments in the ordinary course of business upon terms no less
favorable than the Company could obtain from third parties and other than the
grant of stock options disclosed on SCHEDULE 2.1(c), none of the officers,
directors or employees of the Company is presently a party to any transaction
with the Company or any of its Subsidiaries (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any corporation, partnership, trust or other entity in which any
officer, director or any such employee has a substantial interest or is an
officer, director, trustee or partner.
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(v) DILUTIVE EFFECT. The Company further acknowledges that,
subject to such limitations as are expressly set forth in the Transaction
Documents, its obligation to issue Common Shares purchased pursuant to this
Agreement, is absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other shareholders of the
Company.
(w) RIGHTS PLAN. Neither the Company nor any of its
Subsidiaries has adopted a shareholder rights plan or similar arrangement
relating to accumulations of beneficial ownership of Common Stock or a change in
control of the Company. The Company confirms that no provision of such plan
will, under any present or future circumstances, delay, prevent or interfere
with the performance of any of the Company's obligations under the Transaction
Documents and such plan will not be "triggered" by such performance.
(x) OBLIGATIONS ABSOLUTE. Each of the Company and the
Purchaser agrees that, subject only to the conditions, qualifications and
exceptions (if any) specifically set forth in the Transaction Documents, its
obligations under the Transaction Documents are unconditional and absolute.
Except to the extent (if any) specifically set forth in the Transaction
Documents, each party's obligations thereunder are not subject to any right of
set off, counterclaim, delay or reduction.
(y) BROKERS. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by the Company or any Purchaser relating to this Agreement or
the transactions contemplated hereby, except for those to certain entities or
individuals which are set forth on Schedule 2.1(z) hereof, all of which fees
will be paid by the Company.
Section 2.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser hereby makes the following representations and warranties to the
Company as of the date hereof and on the Closing Date:
(a) ACCREDITED PURCHASER STATUS; SOPHISTICATED PURCHASER. The
Purchaser is an "accredited Purchaser" as that term is defined in Rule 501(a) of
Regulation D under the 1933 Act. The Purchaser has such knowledge and experience
in financial and business matters that he is capable of evaluating the merits
and risks of investment in the Common Shares.
(b) INFORMATION. The Purchaser and his advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company that have been requested and materials relating to the
offer and sale of the Common Shares which have been requested by the Purchaser.
Neither such inquiries nor any other due diligence investigations conducted by
the Purchaser or his advisors, if any, or his representatives shall modify,
amend or affect the Purchaser's right to rely on the Company's representations
and warranties contained in Section 2.1 above. The Purchaser understands that
his investment in the Common Shares involves a high degree of risk. The
Purchaser has sought such accounting, legal and tax advice as he has considered
necessary to make an informed investment decision with respect to its
acquisition of the Common Shares.
(c) NO GOVERNMENTAL REVIEW. The Purchaser understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Common
Shares or the fairness or suitability of the investment in the Common Shares,
nor have such authorities passed upon or endorsed the merits of the offering of
the Common Shares.
(d) LEGENDS. The Company shall issue the certificates for the
Common Shares to the Purchaser without any legend except as described in Article
VI below. The Purchaser covenants that, in connection with any transfer of
Common Shares by the Purchaser, he will comply with the applicable prospectus
delivery requirements of the 1933 Act, provided that copies of a current
prospectus relating to such effective registration statement are or have been
supplied to the Purchaser.
(e) AUTHORIZATION; ENFORCEMENT. This Agreement has been duly
and validly authorized, executed and delivered on behalf of the Purchaser and is
a valid and binding agreement of the Purchaser enforceable against the Purchaser
in accordance with their terms, except (A) as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of creditors'
rights and remedies or by other equitable principles of general application, and
(B) to the extent the indemnification provisions contained in this Agreement may
be limited by applicable federal or state securities laws. The Purchaser has the
requisite power and authority to enter into and perform his obligations under
this Agreement. The execution and delivery of this Agreement by the Purchaser
and the consummation by it of the transactions contemplated hereby and thereby,
including the sale, transfer, assignment and delivery of interests in Tunica
LLC, have been duly authorized by all necessary action, and no further consent
or authorization by Tunica LLC or its members is required.
(f) RESIDENCY. The Purchaser is a resident of Edmonton,
Alberta, Canada.
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(g) NO CONFLICTS. The execution, delivery and performance of
this Agreement by the Purchaser and the consummation by the Purchaser of the
transactions contemplated hereby will not result in a violation of the limited
liability company agreement or other governing documents of Tunica LLC. Except
as specifically contemplated by this Agreement, the Purchaser and Tunica LLC is
not required to obtain any consent, authorization or order of, or make any
filing or registration with, any court, governmental agency or any regulatory or
self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under, or contemplated by, this Agreement in accordance with the
terms hereof.
(h) INVESTMENT REPRESENTATION. The Purchaser is purchasing the
Common Shares for its own account and not with a view to distribution in
violation of any securities laws. The Purchaser has been advised and understands
that the Common Shares have not been registered under the 1933 Act or under the
"blue sky" laws of any jurisdiction and may be resold only if registered
pursuant to the provisions of the 1933 Act or if an exemption from registration
is available, except under circumstances where neither such registration nor
such an exemption is required by law. The Purchaser has been advised and
understands that the Company in issuing the Common Shares is relying upon, among
other things, the representations and warranties of the Purchaser contained in
this Section 2.2 in concluding that such issuance is a "private offering" and is
exempt from the registration provisions of the 1933 Act.
(i) RULE 144. The Purchaser has been advised or is aware of
the provisions of Rule 144 promulgated under the 1933 Act.
(j) BROKERS. The Purchaser has taken no action which would
give rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by the Company or the Purchaser relating to this Agreement or
the transactions contemplated hereby.
(k) RELIANCE BY THE COMPANY. The Purchaser understands that
the Common Shares are being offered and sold in reliance on a transactional
exemption from the registration requirements of Federal and state securities
laws and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
the Purchaser set forth herein in order to determine the applicability of such
exemptions and the suitability of the Purchaser to acquire the Common Shares.
(l) ORGANIZATION AND QUALIFICATION; MATERIAL ADVERSE EFFECT.
Tunica LLC is a limited liability company duly organized and existing in good
standing under the laws of the State of Mississippi and has the requisite power
to own its properties and to carry on its business as now being conducted.
"Material Adverse Effect" means any adverse effect on the business, operations,
properties, prospects or financial condition of Tunica LLC and its members, and
which is (either alone or together with all other adverse effects) material to
Tunica LLC, taken as a whole, and any material adverse effect on the
transactions contemplated under this Agreement, the Certificate, or any other
agreement or document contemplated hereby or thereby.
(m) CAPITALIZATION AND MANAGEMENT OF TUNICA LLC. As of the
Closing, Tunica LLC shall consist of one hundred limited liability company
interests owned and/or controlled as follows:
66 LLC Interests held by Xxxxx Hawrelechko;
33 LLC Interests held by Company; and
1 LLC Interest held by Myriad Golf Resort, Inc.
As of the Closing, upon the sale, transfer, assignment and
delivery of the Assets in accordance with this Agreement, all of the outstanding
LLC interests in Tunica LLC will be validly issued, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issuance thereof. As of the date hereof, except as disclosed in SCHEDULE 2.2(m),
(i) no limited liability interests in Tunica LLC are subject to preemptive
rights or any other similar rights or any liens or encumbrances suffered or
permitted by Purchaser, (ii) there are no outstanding debt securities, (iii)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, any limited liability interests in Tunica LLC, or contracts,
commitments, understandings or arrangements by which Tunica LLC is or may become
bound to issue additional securities or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any limited liability interests in Tunica
LLC, (iv) there are no outstanding securities of Tunica LLC which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which Tunica LLC is or may become bound to
redeem any security, and (v) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the sale,
transfer, assignment and delivery of the LLC Interests in Tunica LLC to Company
as described in this Agreement. The Purchaser has furnished to the Company true
and correct copies of the Tunica LLC Limited Liability Company Operating
Agreement, as amended and as in effect on the date hereof. The Purchaser is the
manager of Tunica LLC and is solely responsible for management and control of
Tunica LLC.
7
(n) FINANCIAL STATEMENTS. The Purchaser has delivered to the
Company or its representatives true and complete copies of the financial
statements of Tunica LLC, which financial statements have been prepared in
accordance with generally accepted accounting principles, consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of Tunica LLC as of the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). No other written information
provided by or on behalf of Tunica LLC to the Company contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under
which they are or were made, not misleading.
(o) ABSENCE OF CERTAIN CHANGES. Except as disclosed in
SCHEDULE 2.2(o), since March 31, 2004 there has been no adverse change or
adverse development in the business, properties, assets, operations, financial
condition, prospects, liabilities or results of operations of Tunica LLC which
has had or, to the knowledge of the Purchaser, is reasonably likely to have a
Material Adverse Effect. Tunica LLC has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does Tunica LLC have any knowledge or reason to believe that
its creditors intend to initiate involuntary bankruptcy proceedings. SCHEDULE
2.2(o) lists all material events, transactions and agreements which have
occurred or been entered into affecting Tunica LLC since March 31, 2004.
(p) ABSENCE OF LITIGATION. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of Purchaser, threatened against or affecting Tunica LLC, or the
Assets.
(q) NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR
CIRCUMSTANCES. No event, liability, development or circumstance has occurred or
exists with respect to Tunica LLC or its respective business, properties,
prospects, operations or financial condition, that would be required to be
disclosed by the Purchaser on or prior to the date hereof under applicable
securities laws, and which has not been publicly disclosed.
(r) INTELLECTUAL PROPERTY RIGHTS. The Purchaser and Tunica
LLC own or possess adequate rights or licenses to use all trademarks, trade
names, service marks, service xxxx registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on SCHEDULE 2.2(r), none of
Tunica LLC's trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, government authorizations, trade secrets or other intellectual
property rights have expired or terminated, or are expected to expire or
terminate within two (2) years from the date of this Agreement. The Purchaser
and Tunica LLC do not have any knowledge of any infringement by the Purchaser
and Tunica LLC of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service xxxx
registrations, trade secret or other similar rights of others, or of any such
development of similar or identical trade secrets or technical information by
others and, except as set forth on SCHEDULE 2.2(r), there is no claim, action or
proceeding being made or brought against, or to the Purchaser's knowledge, being
threatened against, the Purchaser or Tunica LLC regarding trademarks, trade name
rights, patents, patent rights, inventions, copyrights, licenses, service names,
service marks, service xxxx registrations, trade secrets or other infringement.
The Purchaser and Tunica LLC have taken reasonable security measures to protect
the value of all of their intellectual properties.
(s) ENVIRONMENTAL LAWS. Tunica LLC (i) is in compliance with
any and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) has received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct its
businesses, and (iii) is in compliance with all terms and conditions of any such
permit, license or approval where such noncompliance or failure to receive
permits, licenses or approvals referred to in clauses (i), (ii) or (iii) above
could have, individually or in the aggregate, a Material Adverse Effect.
8
(t) TITLE. The Purchaser and Tunica LLC have good and
marketable title in fee simple and/or leasehold title to all real property and
good and marketable title to all personal property owned by them which is
material to the business of Tunica LLC, in each case free and clear of all
liens, encumbrances and defects except such as are described in SCHEDULE 2.2(t)
or such as do not materially and adversely affect the value of such property and
do not interfere with the use made and proposed to be made of such property by
Tunica LLC. Any real property and facilities held under lease by Tunica LLC is
held under valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the use made and proposed to be made of
such property and buildings by Tunica LLC.
(u) REGULATORY PERMITS. Tunica LLC has received (i) Site
Approval and (ii) Development Plan Approval by the Mississippi Gaming Commission
with respect to the contemplated gaming resort development project in Tunica
County, Mississippi, and possesses all material certificates, authorizations and
permits issued by the appropriate federal, state or foreign regulatory
authorities, necessary to conduct its businesses, and neither the Purchaser nor
Tunica LLC has received any notice of proceedings relating to the revocation or
modification of any such approvals, certificate, authorization or permit.
(v) TAX STATUS. Tunica LLC has made or filed all United States
federal and state income and all material other tax returns, reports and
declarations required by any jurisdiction to which it is subject and has paid
all material taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith, and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. To the Purchaser's
knowledge, there are no unpaid taxes claimed to be due by the taxing authority
of any jurisdiction, and the Purchaser is not aware of any basis for any such
claim.
(w) OBLIGATIONS ABSOLUTE. Each of the Purchaser and Tunica LLC
agrees that, subject only to the conditions, qualifications and exceptions (if
any) specifically set forth in this Agreement, its obligations hereunder are
unconditional and absolute. Except to the extent (if any) specifically set forth
in this Agreement, each party's obligations are not subject to any right of set
off, counterclaim, delay or reduction.
ARTICLE III
COVENANTS
---------
Section 3.1 REGISTRATION AND LISTING. The Company will use its best
efforts to cause the Common Stock to continue at all times to be registered
under Sections 12(b) or (g) of the Exchange Act, will comply in all material
respects with its reporting and filing obligations under Exchange Act, and will
not take any action or file any document (whether or not permitted by the
Exchange Act or the rules thereunder) to terminate or suspend such reporting and
filing obligations. The Company shall continue the listing or trading of the
Common Stock on the Principal Market and comply in all material respects with
the Company's reporting, filing and other obligations under the bylaws or rules
of the Principal Market on which the Common Stock is listed. For purposes of
this paragraph (and elsewhere in this Agreement where applicable), the term
"Company" shall include any successor to the Company.
Section 3.2 REPLACEMENT CERTIFICATES. The certificate(s) representing
the Common Shares held by the Purchaser (or then holder) may be exchanged by the
Purchaser (or such holder) at any time and from time to time for certificates
with different denominations representing an equal aggregate number of Common
Shares, as requested by the Purchaser (or such holder) upon surrendering the
same. The Purchaser will be solely responsible for any service charge made for
such registration or transfer or exchange.
Section 3.3 SECURITIES COMPLIANCE. The Company shall notify the SEC and
the Principal Market, in accordance with their requirements, of the transactions
contemplated by this Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Common Shares.
Section 3.4 NOTICES. The Company agrees to provide all holders of
Common Shares with copies of all notices and information, including without
limitation notices and proxy statements in connection with any meetings, that
are provided to the holders of shares of Common Stock, contemporaneously with
the delivery of such notices or information to such Common Stock holders.
Section 3.5 BEST EFFORTS. The parties shall use their best efforts to
satisfy timely each of the conditions described in Article V of this Agreement.
9
Section 3.6 PRIVATE OFFERING EXEMPTION. The Company agrees to file an
appropriate private offering exemption with respect to the Common Shares issued
to Purchaser hereby, and to provide a copy thereof to the Purchaser promptly
after such filing. The Company shall, on or before the Closing Date, take such
action as the Company shall have reasonably determined is necessary to qualify
the Common Shares for sale to the Purchaser under applicable securities or "blue
sky" laws of the states of the United States (or to obtain an exemption from
such qualification), and shall provide evidence of any such action so taken to
the Purchaser on or prior to the Closing Date; PROVIDED, HOWEVER, that the
Company shall not be required in connection therewith to register or qualify as
a foreign corporation in any jurisdiction where it is not now so qualified or to
take any action that would subject it to service of process in suits or
taxation, in each case, in any jurisdiction where it is not now so subject.
Section 3.7 PRESS RELEASE. Immediately upon Closing, the Company shall
issue a press release, in accordance with Principal Market rules and the
Securities Act, with respect to the transactions contemplated hereby, in the
form of a press release attached as Exhibit 3.7 hereto. No press release shall
name the Purchaser except as shall be required by law or permitted by Purchaser.
If the Company fails to issue a press release upon Closing, the Purchaser may
issue a press release covering the Closing and complying with any legal
requirement applicable to the Purchaser.
Section 3.8 TRANSACTIONS WITH AFFILIATES. The Company agrees that any
transaction or arrangement between it or any of its Subsidiaries and any
affiliate or employee of the Company shall be effected on an arms' length basis
in accordance with customary commercial practice and, except with respect to
grants of options and stock to service providers, including employees, shall be
approved by a majority of the Company's outside directors.
Section 3.9 NO SHORTING. As a material inducement for the Company to
enter into this Agreement, the Purchaser represents that it has not as of the
date hereof, and covenants on behalf of itself and its affiliates that neither
Purchaser nor any affiliate of Purchaser will at any time in which the Purchaser
or any affiliate of Purchaser beneficially owns any of the Common Shares, engage
in any short sales of, or hedging or arbitrage transactions with respect to, the
Common Shares, or buy "put" options or similar instruments with respect to the
Common Shares.
Section 3.10 NON-CIRCUMVENTION AGREEMENT BY PURCHASER IN FAVOR OF
COMPANY RELATING TO FUTURE VENTURES. Purchaser covenants and agrees that
Purchaser shall not circumvent, bypass or otherwise exclude the Company from
participating as a security holder, creditor or otherwise in any future
transactions engaged in, directly or indirectly, through one or more
intermediaries, by Purchaser, involving the development of resort opportunities,
or the investment of any other consideration in any such future ventures.
ARTICLE IV
TRANSFER AGENT INSTRUCTIONS
---------------------------
The Company shall issue irrevocable instructions to its
transfer agent, and any subsequent transfer agent, to issue certificates,
registered in the name of the Purchaser or its respective nominee(s), for the
Common Shares (the "Irrevocable Transfer Agent Instructions"). The Company
warrants that no instruction relating to the Common Shares other than the
Irrevocable Transfer Agent Instructions referred to in this Article IV will be
given by the Company to its transfer agent and that the Common Shares shall be
freely transferable on the books and records of the Company as contemplated by
Article VI below when the legend referred to therein may be removed. Nothing in
this Article IV shall affect in any way the Purchaser's obligations and
agreements to comply with all applicable prospectus delivery requirements, if
any, upon resale of the Common Shares. The Company acknowledges that a breach by
it of its obligations hereunder will cause irreparable harm to the Purchaser by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section will be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions of this Section,
that the Purchaser shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and
without any bond or other security being required.
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ARTICLE V
CONDITIONS TO CLOSINGS
----------------------
Section 5.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
SELL THE COMMON SHARES. The obligation hereunder of the Company to issue and/or
sell the Common Shares to the Purchaser at the Closing is subject to the
satisfaction, at or before the Closing, of each of the applicable conditions set
forth below. These conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.
(a) ACCURACY OF THE PURCHASER'S REPRESENTATIONS AND
WARRANTIES. The representations and warranties of the Purchaser will be true and
correct in all material respects as of the date hereof and as of the Closing
Date, as though made at that time.
(b) PERFORMANCE BY THE PURCHASER. The Purchaser shall have
performed all agreements and satisfied all conditions required to be performed
or satisfied by the Purchaser at or prior to the Closing, including payment of
the purchase price hereto.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Certificate.
Section 5.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
PURCHASE THE COMMON SHARES. The obligation hereunder of the Purchaser to acquire
and pay for the Common Shares at the Closing is subject to the satisfaction, at
or before the Closing, of each of the applicable conditions set forth below.
These conditions are for the Purchaser's benefit and may be waived by the
Purchaser at any time in its sole discretion.
(a) AUTHORIZATIONS; ACCURACY OF THE COMPANY'S REPRESENTATIONS
AND WARRANTIES. The Transaction Documents shall have been approved by the
Company's board of directors and by its stockholders (or by written consents in
lieu thereof). The representations and warranties of the Company shall be true
and correct in all material respects as of the date hereof and as of the Closing
Date as though made at that time (except for representations and warranties as
of an earlier date, which shall be true and correct in all material respects as
of such date).
(b) PERFORMANCE BY THE COMPANY. The Company shall have
performed all agreements and satisfied all conditions required to be performed
or satisfied by the Company at or prior to the Closing, including, without
limitation, delivery of the certificates representing the Common Shares issued
to Purchaser.
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Certificate. Neither the NASD nor the
Principal Market shall have objected or indicated that it may object to the
consummation of any of the transactions contemplated by this Agreement.
(d) OFFICER'S CERTIFICATE. The Company shall have delivered to
the Purchaser a certificate in form and substance satisfactory to the Purchaser
and the Purchaser's counsel, executed by an officer of the Company, certifying
as to satisfaction of closing conditions, incumbency of signing officers, and
the true, correct and complete nature of the Certificate of Incorporation,
By-Laws, good standing and authorizing resolutions of the Company.
(e) CERTIFICATE. The Certificate shall have been accepted for
filing by the Secretary of State of the State of Delaware and a stamped copy
thereof shall have been provided to the Purchaser's counsel.
(f) RESIGNATIONS AND APPOINTMENT OF OFFICERS AND Directors.
Concurrent with the Closing hereunder, the officers and directors of the Company
shall be:
OFFICERS:
Xxxxx Hawrelechko, President, Secretary, Treasurer
and Chief Financial Officer
DIRECTORS:
Xxxxx Hawrelechko
Xx. Xxxxxx X. Xxxx
Xxxx Xxxxx
11
(g) EXCHANGE ACT FILING. The Company shall have filed such
information statement pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 thereunder as required by the Exchange Act and the rules and regulations
promulgated thereunder, and all applicable waiting periods (and any extensions
thereof) under the securities laws shall have expired or otherwise been
terminated and the parties shall have received all other required
authorizations, consents and approvals.
(h) MISCELLANEOUS. The Company shall have delivered to the
Purchaser such other documents relating to the transactions contemplated by this
Agreement as the Purchaser or its counsel may reasonably request.
Section 5.3 CLOSING DELIVERIES.
(a) On the Closing Date, the Company shall deliver to the
Purchaser:
(i) Certificates representing the Common Shares;
(ii) A stamped copy of the filed Certificate
issued by the Delaware Secretary of State; and
(iii) The certificate referred to in Section
5.2(e) above.
(b) On the Closing Date, the Purchaser shall deliver to the
Company:
(i) Securities evidencing the assignment,
conveyance, transfer and delivery of a thirty-three percent (33%) interest in
Tunica LLC.
ARTICLE VI
LEGEND AND STOCK
----------------
Upon payment therefor as provided in this Agreement, the
Company will issue one or more certificates representing the Common Shares in
the name of the Purchaser and in such denominations to be specified by the
Purchaser prior to Closing. Each of the certificates representing the Common
Shares prior to such Common Shares being registered under the 1933 Act for
resale or available for resale under Rule 144 under the 1933 Act, shall be
stamped or otherwise imprinted with a legend substantially in the following
form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED FOR OFFER OR SALE
UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS.
THEY MAY NOT BE SOLD OR OFFERED FOR SALE EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAW OR AN APPLICABLE EXEMPTION
FROM SUCH REGISTRATION REQUIREMENTS."
The Company agrees to reissue certificates for the Common
Shares without the legend set forth above at such time as (i) the holder thereof
is permitted to dispose of such Common Shares pursuant to Rule 144 under the
Act, or (ii) such Common Shares are sold to a purchaser or purchasers who (in
the opinion of counsel to the seller or such purchaser(s), in form and substance
reasonably satisfactory to the Company and its counsel) are able to dispose of
such securities publicly without registration under the Act.
Upon any registration statement including said Common Shares
becoming effective, the Company agrees to promptly, but no later than three (3)
business days thereafter, issue new certificates representing such Common Shares
without such legend and any Common Shares issued after the Registration
Statement has become effective shall be free and clear of any legends, transfer
restrictions and stop orders; provided in each case that the Purchaser covenants
to comply with the prospectus delivery requirements under the Securities Act.
Notwithstanding the removal of such legend, the Purchaser agrees to sell the
Common Shares represented by the new certificates in accordance with the
applicable prospectus delivery requirements (if copies of a current prospectus
are provided to the Purchaser by the Company) or in accordance with an exemption
from the registration requirements of the 1933 Act.
Nothing herein shall limit the right of any holder to pledge
these securities pursuant to a bona fide margin account or lending arrangement
entered into in compliance with law, including applicable securities laws.
12
ARTICLE VII
TERMINATION
-----------
Section 7.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time prior to the Closing by the mutual written consent of the
Company and the Purchaser.
Section 7.2 OTHER TERMINATION. This Agreement may be terminated by
action of the Board of Directors of the Company or by the Purchaser at any time
if the Closing shall not have been consummated by the fifteenth (15th) business
day following the date of this Agreement; PROVIDED, HOWEVER, that the party (or
parties) prepared to close shall retain its (or their) right to xxx for any
breach by the other party (or parties).
ARTICLE VIII
INDEMNIFICATION
---------------
Section 8.1 COMPANY INDEMNITY. In consideration of the Purchaser's
execution and delivery of this Agreement and acquiring the Common Shares
hereunder and in addition to all of the Company's other obligations under the
Transaction Documents, the Company shall defend, protect, indemnify and hold
harmless the Purchaser and all of its partners, officers, directors, employees,
members and direct or indirect Purchasers and any of the foregoing person's
agents or other representatives (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement)
(collectively, the "Indemnitees") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including all reasonable attorneys' fees and disbursements of one
law firm (and local counsel where necessary) (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in the Transaction Documents or any other
certificate or document contemplated hereby or thereby, (c) any cause of action,
suit or claim brought or made against such Indemnitee by a third party and
arising out of or resulting from the execution, delivery, performance or breach
by the Company or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, and (d) the
enforcement of this Section. Notwithstanding the foregoing, Indemnified
Liabilities shall not include any liability of any Indemnitee arising solely out
of such Indemnitee's willful misconduct or fraudulent action(s). To the extent
that the foregoing undertaking by the Company may be unenforceable for any
reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
Section 8.2 PURCHASER INDEMNITY. In consideration of the Company's
execution and delivery of this Agreement and issuing the Common Shares hereunder
and in addition to all of the Purchaser's other obligations under the
Transaction Documents, the Purchaser shall defend, protect, indemnify and hold
harmless the Company and all of its officers, directors and employees
(collectively, the "Indemnitees") from and against any and all actions, causes
of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including all reasonable attorneys' fees and disbursements of one
law firm (and local counsel where necessary) (the "Indemnified Liabilities"),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the
Purchaser in the Transaction Documents or any other certificate or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Purchaser contained in the Transaction Documents or any other
certificate or document contemplated hereby or thereby, (c) any cause of action,
suit or claim brought or made against such Indemnitee by a third party and
arising out of or resulting from the execution, delivery, performance or breach
by the Purchaser or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, and (d) the
enforcement of this Section. Notwithstanding the foregoing, Indemnified
Liabilities shall not include any liability of any Indemnitee arising solely out
of such Indemnitee's willful misconduct or fraudulent action(s). To the extent
that the foregoing undertaking by the Purchaser may be unenforceable for any
reason, the Purchaser shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
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ARTICLE IX
GOVERNING LAW, MISCELLANEOUS
----------------------------
Section 9.1 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY
OF WILMINGTON, STATE OF DELAWARE, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR
DISCUSSED HEREIN, AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT
IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND
CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS FOR SUCH NOTICES TO IT UNDER
THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL LIMIT IN
ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. IF ANY
PROVISION OF THIS AGREEMENT SHALL BE INVALID OR UNENFORCEABLE IN ANY
JURISDICTION, SUCH INVALIDITY OR UNENFORCEABILITY SHALL NOT AFFECT THE VALIDITY
OR ENFORCEABILITY OF THE REMAINDER OF THIS AGREEMENT IN THAT JURISDICTION OR THE
VALIDITY OR ENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT IN ANY OTHER
JURISDICTION. EACH PARTY HERETO IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY.
Section 9.2 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.
Section 9.3 HEADINGS. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.
Section 9.4 SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
Section 9.5 ENTIRE AGREEMENT; AMENDMENTS; WAIVERS.
(a) This Agreement supersedes all other prior oral or written
agreements between the Purchaser, the Company, their affiliates and persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement and the instruments referenced herein (including the other Transaction
Documents) contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be amended other than by an instrument in writing signed by
the Company and the Purchaser, and no provision hereof may be waived other than
by an instrument in writing signed by the party against whom enforcement is
sought.
(b) The Purchaser may at any time elect, by notice to the
Company, to waive (whether permanently or temporarily, and subject to such
conditions, if any, as the Purchaser may specify in such notice) any of its
rights under any of the Transaction Documents to acquire shares of Common Stock
from the Company, in which event such waiver shall be binding against the
Purchaser in accordance with its terms.
Section 9.6 NOTICES. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing, must be delivered by (i) courier, mail or hand
delivery OR (ii) facsimile, and will be deemed to have been delivered upon
receipt. The addresses and facsimile numbers for such communications shall be:
If to the Company:
Synergy 2000, Inc.
0000 Xxx Xxxx Xxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: President
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If to the Transfer Agent:
Securities Transfer Corporation
0000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxx Xxxxxxx
If to the Purchaser:
Xxxxx Hawrelechko
c/o Myriad Golf Resort, Inc.
Xxxxx 0000
00000-000 Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxxxxx X0X 0X0
CANADA
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Fraser Xxxxxx Casgrain LLP
0000 Xxxxxxxx Xxxxx
00000-000 Xxxxxx
Xxxxxxxx, Xxxxxxx X0X 0X0
XXXXXX
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxxxxxx, Q.C.
Each party shall provide five (5) days prior written notice to the
other party of any change in address, telephone number or facsimile number.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a nationally recognized overnight delivery service, shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (A),
(B) or (C) above, respectively.
Section 9.7 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns, including any Permitted
Assignee (as defined below). The Company shall not assign this Agreement or any
rights or obligations hereunder without the prior written consent of the
Purchaser, including by merger or consolidation; provided that the Company may
assign this Agreement by operation of law in connection with any merger, the
sole purpose of which is to effect a change of the Company's state of
incorporation and/or an increase of the number of the members of the Board of
Directors of the Company. The Purchaser may assign some or all of its rights
hereunder to any person or entity to which such Purchaser transfers the Common
Shares without the consent of the Company (a "Permitted Assignee"); PROVIDED,
HOWEVER, that any such assignment shall not release the Purchaser from its
obligations hereunder unless such obligations are assumed by such assignee and
the Company has consented to such assignment and assumption (which may not be
unreasonably withheld).
Section 9.8 NO THIRD PARTY BENEFICIARIES. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 9.9 SURVIVAL. The representations, warranties and agreements of
the Company and the Purchaser contained in the Agreement shall survive the
Closing.
Section 9.10 PUBLICITY. Subject to Section 3.7, the Company and the
Purchaser shall have the right to approve before issuance any press releases or
any other public statements with respect to the transactions contemplated
hereby.
Section 9.11 FURTHER ASSURANCES. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
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Section 9.12 REMEDIES. The Purchaser and each Permitted Assignee shall
have all rights and remedies set forth in this Agreement and all rights and
remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which such holders have under any
law. Any person having any rights under any provision of this Agreement shall be
entitled to enforce such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. The Purchaser and
each Permitted Assignee without prejudice may withdraw, revoke or suspend its
pursuit of any remedy at any time prior to its complete recovery as a result of
such remedy.
Section 9.13 DAYS. Unless the context refers to "business days" or
"trading days", all references herein to "days" shall mean calendar days.
Section 9.14 EXPENSES. Each of the parties will bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
Section 9.15 CONSTRUCTION. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
Section 9.16 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
Section 9.17 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES ITS
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR SUBJECT MATTER HEREOF. THE SCOPE OF THIS WAIVER IS INTENDED
TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
AND THAT RELATE TO SUBJECT MATTER OF THIS TRANSACTION.
* * * * *
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed as of the date and year first above
written.
COMPANY: PURCHASER:
SYNERGY 2000, INC..
By: /s/ XXX XXXXXX, XX. /s/ XXXXX HAWRELECHKO
----------------------- ---------------------
Name: Xxx Xxxxxx, Xx. XXXXX HAWRELECHKO,
Title: President Individually and as the Manager of
Myriad World Resorts of Tunica, LLC
By: /s/ XXXXXXXX X. XXXXX
-----------------------
Name: Xxxxxxxx X. Xxxxx
Title: Executive Vice President
[SCHEDULES AND EXHIBITS ARE INTENTIONALLY OMITTED]
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