FUNDING AGREEMENT
THIS FUNDING AGREEMENT is entered into as of the 15th day of
January, 1996, by and among XXXXXXX X. XXXXX, an individual ("Xxxxx"), SHARPS
INTERNATIONAL LIMITED PARTNERSHIP, a Nevada limited partnership ("Sharps"),
XXXXX X. XXXXX, an individual ("Sines"), XXXXXX X. XXXXX, an individual
("Forte"), SINES XXXXX PARTNERSHIP, a Nevada general partnership consisting
of Sines and Forte (the "Partnership") and, solely for purposes of Sections 4
and 5 below, XXXXXX X. XXXXX.
R E C I T A L S:
Huson, Sines, and Forte each own a significant percentage of the
outstanding partnership interests ("Units") in Sharps;
The Partnership licenses certain inventions, ideas, patents,
trademarks and other intellectual property to Sharps;
Xxxxx wishes to purchase from Xxxxx and Forte some of their limited
partnership Units and acquire from them an option to purchase additional
limited partnership Units, and Xxxxx and Xxxxx wish to sell such Units and
provide such an option to Xxxxx;
Sharps has requested a loan from Xxxxx, and Xxxxx is willing to make
such a loan on certain terms and conditions, including certain modifications
of the Partnership's licensing arrangements with Sharps, and the Partnership
is willing to commit to such modifications.
The parties wish to clarify prior agreements and understandings and
make certain additional agreements concerning the reorganization of Sharps'
business.
In consideration of the mutual promises and covenants contained
herein, the parties hereto agree as follows:
A G R E E M E N T:
SECTION 1. PURCHASE OF PARTNERSHIP UNITS AND RELATED MATTERS
a. Purchase of Partnership Units. Subject to the terms and conditions
set forth herein, Xxxxx and Forte (collectively the "Sellers") hereby sell to
Xxxxx and Xxxxx hereby purchases from the Sellers a total of 42 limited
partnership Xxxxx, 00 from Xxxxx and 21 from Forte (the "Transferred Units").
The transfer of the Transferred Units shall be duly reflected on Sharps'
books and records as provided in the Sharps International Limited Partnership
Agreement ("Sharps Partnership Agreement").
b. Purchase Price. Subject to the adjustments listed in Section 1.4,
Xxxxx will pay to the Sellers an aggregate amount equal to Two Hundred Sixty
Five Thousand and No/100 Dollars ($265,000.00) (the "Purchase Price") for the
Units.
c. Payment of Purchase Price. The Purchase Price will be paid to the
Sellers as follows:
i. Upon execution of this Agreement, Xxxxx shall deliver a check to
Sellers in the amount of ONE HUNDRED THOUSAND AND NO/100 DOLLARS
($100,000.00)
payable to Sellers; and
ii. Upon execution of this Agreement, Xxxxx and his wife shall execute
and deliver to Sellers a promissory note in the form attached hereto as
Exhibit A (the "Purchase Price Promissory Note").
d. Adjustments to Purchase Price. Upon complete repayment of the Loan
to Sharps (as defined and described in Section 2), and if one of the two
contingencies listed below is met by July 15, 1996, the Purchase Price shall
be increased to THREE HUNDRED NINETY SEVEN THOUSAND FIVE HUNDRED DOLLARS
($397,500.00).
The contingencies are:
e. (a) (i) The "Random Ejection Card Shuffler" product shall be
licensed by Sharps to Shufflemaster, Inc. substantially pursuant to the terms
of the draft agreement attached hereto as Exhibit B, or (ii) Sharps' products
shall be licensed or sold to a third party pursuant to an agreement which
provides for a payment to Sharps concurrently with the execution of such
agreement of at least $1,000,000 in cash or cash equivalents, which payment
shall not be subject to any contractual right of offset, cancellation,
rescission, return or other condition, and (b) a minimum of ONE MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($1,500,000.00) in cash or cash
equivalents shall be received by Sharps from investors who have purchased
Units in Sharps after the date of this Agreement at a minimum amount of
$9,456 per Unit. If, pursuant to Section 5, the Reorganization described
therein has then been completed, clause (b) of the preceding sentence shall
be deemed to require that any shares of Casinovations stock be purchased for
a minimum per-share price of $1.50; OR
ii. A total of TWO MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($2,500,000.00) in cash or cash equivalents shall be received by Sharps from
investors who have purchased Units in Sharps after the date of this Agreement
at a minimum amount of $9,456 per Unit (or $1.50 per-share of Casinovations
stock).
f. Payment of Adjusted Purchase Price. In the event the Purchase Price
is adjusted as set forth in Section 1.4 of this Agreement, the additional ONE
HUNDRED THIRTY TWO THOUSAND FIVE HUNDRED DOLLARS AND NO/100 ($132,500.00)
shall be paid by Xxxxx in cash upon repayment of the Loan.
SECTION 2. LOAN
a. Loan by Xxxxx to Sharps. Upon execution of this Agreement, Xxxxx
shall loan to Sharps Three Hundred Thousand and No/100 Dollars ($300,000)
(the "Loan"), and Sharps shall execute and deliver to Xxxxx a promissory note
in the form attached hereto as Exhibit C (the "Loan Promissory Note"). The
Loan shall be secured by a pledge of certain limited partnership Units
("Pledged Units") of Sharps owned by Xxxxx and Xxxxx in accordance with the
terms of a Partnership Pledge and Security Agreement attached hereto as
Exhibit D (the "Partnership Pledge Agreement"). Upon execution of this
Agreement, Xxxxx and Forte shall execute and deliver to Xxxxx the Partnership
Pledge Agreement and shall cause their spouses to execute and deliver spousal
consents in the forms attached hereto as Exhibits E-1 and E-2. If Xxxxx
acquires ownership of any or all of the Pledged Units, Xxxxx and Xxxxx shall
have an option to re-purchase 50% of the acquired Units pursuant to the terms
of the Partnership Pledge Agreement.
b. Assignment of Loan Promissory Note. Notwithstanding any other
provision of this Agreement, if Xxxxx should at any time acquire all or a
portion of the Pledged Units, then Xxxxx shall immediately assign and endorse
the Loan and Note to Xxxxx and Forte who shall have unconditional right,
title and interest in the Note and Loan in the principal amount of $300,000,
without recourse to Xxxxx. The foregoing shall be in addition to any rights
of subrogation which Xxxxx and Forte may have under applicable law.
SECTION 3. OPTION TO PURCHASE ADDITIONAL UNITS
a. Option to Purchase Additional Units. Subject to the terms and
conditions contained in Sections 3.2. and 3.3. below, Xxxxx shall have an
option (the "Option") to purchase from Sellers up to an additional 43 Units
("Option Units"), 21.5 limited partnership Units from Xxxxx and 21.5 limited
partnership Units from Forte, at the price of $405,000 for all such Option
Units or $9,456 per Unit (the "Option Price"). The Option shall be
exercised, if at all, within 90 days from the date the Loan is repaid in
full.
b. Default on Loan. In the event the Loan is not repaid in full on or
before the maturity date specified in the Loan Promissory Note, the Option
described in Section 3.1 shall be extinguished and Xxxxx shall have no rights
with respect to it.
c. Adjustment to Option Price. In the event that the Loan is repaid in
full on or before the maturity date specified in the Loan Promissory Note but
neither of the contingencies listed in Section 1.4.1. or 1.4.2 is satisfied
as of the date the Loan is repaid, the Option Price shall be reduced from
$9,456 per Option Unit to $6,304 per Option Unit.
d. Exercise of Option. To exercise the Option, Xxxxx shall give
written notice to Sellers of his election to exercise the Option. The notice
shall specify the number of Option Units which Xxxxx elects to purchase. The
sale and purchase of the Option Units which Xxxxx has elected to purchase
shall be closed at a mutually agreed time and place within 30 days after
Xxxxx'x notice of exercise. At the closing of such purchase, Xxxxx shall pay
50% of the Option Price and the purchase of the Option Units shall be duly
reflected on Sharps' books and records in accordance with the Sharps
Partnership Agreement. At the closing Xxxxx shall also execute and deliver
to Sellers a promissory note in substantially the form attached as Exhibit F
for the balance of the Option Price, except that the principal amount and
related terms of the Note shall be appropriately adjusted in the actual note
to reflect any change in the Option Price pursuant to Section 3.3 or to
reflect a purchase of less than all of the Option Units.
e. Conversion to Casinovations Shares. If the Reorganization has then
been effected, the Option shall apply to 270,000 shares of Casinovations
stock at $1.50 per share, subject to reduction to $1.00 per share on the
terms described above.
SECTION 4. INTELLECTUAL PROPERTY RIGHTS
a. Intellectual Property Rights. Sharps and the Partnership have
previously entered into an Exclusive License Agreement dated June 6, 1994
(the "Licensing Agreement") pursuant to which the Partnership granted to
Sharps a license with respect to certain inventions. The Partnership, Sines,
Forte, and Xxxxxx X. Xxxxx hereby transfer, convey and assign to Sharps all
of the right, title and interest in and to the Licensed Inventions, Licensed
Technology, Licensed Patent Rights, Copyrights, Licensed Copyright Works,
Licensed Technology Rights, Licensed Products, Licensed Trademarks, and
Licensed Trademark Rights as those terms are defined and used in the
Licensing Agreement (the "Total Inventions"), excluding from such transfer
the "Safety Peek Dealing Shoe" and the Slow "Roll-Reel Vision" slot machine
concept (the "Retained Inventions"). The Total Inventions, excluding the
Retained Inventions and the Literary Rights, defined below, are referred to
herein as the "Transferred Inventions". The transfers herein shall not be
deemed to restrict the ability of Xxxxx, Xxxxx or Xxxxxx X. Xxxxx to write or
develop articles, books, movie scripts, motion pictures, sound recordings or
other literary works about the Total Inventions or the story behind the
development thereof, including any copyrights therein (collectively, the
"Literary Rights"); provided, however, exercise of such rights shall not
involve disclosure of confidential information of Sharps which may have
commercial value to the business of Sharps or its successors.
x. Xxxxx, Xxxxxx X. Xxxxx, Xxxxx and the Partnership will take any and
all steps necessary to enable Sharps to record the assignment of the
Transferred Inventions. Xxxxx, Xxxxxx X. Xxxxx, Xxxxx and the Partnership
will sign all documents necessary to confirm that the Transferred Inventions
is owned by Sharps, and will take all steps necessary to otherwise effect
transfer of Xxxxx, Xxxxxx X. Xxxxx'x, Xxxxx' and the Partnership's rights in
the Transferred Inventions to Sharps.
x. Xxxxx, Xxxxxx X. Xxxxx, Xxxxx and the Partnership will, at the
request of Sharps, assist in preparing United States and foreign trademark
and or patent applications covering the Transferred Inventions. Xxxxx,
Xxxxxx X. Xxxxx, Xxxxx and the Partnership will sign and deliver to Sharps
all such applications. Sharps will bear all expenses to be incurred in
connection with all trademark and patent applications.
d. Royalties for Initial Products. The Licensing Agreement is hereby
terminated as to the Transferred Inventions but shall remain in full force
and effect in all other respects. In lieu of the royalties, license fees and
other consideration provided for in the License Agreement, the Partnership
shall receive from Sharps (a) a quarterly royalty fee of 3% of the "Net
Revenues" (as defined below) earned by Sharps with respect to the Initial
Products, and (b) an option to purchase from Sharps 6 of its limited
partnership Units at a price of $6,304.00 per Unit or 40,000 shares of
Casinovations at a price of $1.00 per share upon completion of the
Reorganization described in Section 5 below (the "Inventions Option"). The
term "Initial Products" means the following products: the "Random Ejection
Shuffler" (including future improvements thereto and variations thereof), the
"Safety Peek Cards" and the table-game version of "Fantasy 21" (but not any
computer, home version or other variation thereof). The term "Net Revenues"
means gross cash revenues received by Sharps for the relevant quarter
attributable to sales of the Initial Products, minus Sharps' cost of such
goods sold for such quarter. Unless otherwise agreed, the determination of
the cost of goods sold shall be made in accordance with generally accepted
accounting principles, consistently applied. The royalty fee provided for
herein shall be paid in accordance with and subject to the terms of a Royalty
Agreement which Sharps and the Partnership shall enter into by April 1, 1996.
The other terms and conditions of the Royalty Agreement shall be as provided
in the Licensing Agreement (including the duration of the royalty obligations
and provisions for termination), but if not provided for therein, shall be
mutually acceptable to Sharps, the Partnership and Xxxxx.
e. To exercise the Inventions Option, the Partnership shall give
written notice to Sharps of its election to exercise the Inventions Option.
The notice shall specify the number of Inventions Option Units which the
Partnership elects to purchase. The sale and purchase of the Inventions
Option Units which the Partnership has elected to purchase shall be closed at
a mutually agreed time and place within 30 days after the Partnership's
notice of exercise. At the closing of such purchase, the Partnership shall
pay Sharps the applicable purchase price for the Units, and the purchase of
the Inventions Option Units shall be duly reflected on Sharps' books and
records in accordance with the Sharps Partnership Agreement.
f. The Inventions Option may be exercised by the Partnership only
during the one year period beginning on the second anniversary of the date of
this Agreement.
g. Consideration. The parties agree that the transfer of the
Transferred Inventions, of the License Agreement, the agreement to enter into
a Royalty Agreement with respect to the Initial Products and the Inventions
Options reflect a negotiated resolution by the parties.
h. Personal Services Agreements.
i. On or before the closing of the Reorganization (defined below), but
in any event by April 1, 1996, Xxxxx and Xxxxxx X. Xxxxx, individually, (as
applicable, the Individual"), shall each enter into employment or consulting
agreements with Sharps or Casinovations, as applicable, as the "Company" (the
"Personal Services Agreements").
ii. (a) Each of the Personal Services Agreements shall obligate the
Company to pay compensation to the Individual at a rate of $10,000 per month,
subject to pro rata reductions for any amount of work time spent by the
Individual on business not related to the Company. Each Personal Services
Agreement shall be for a term of two years subject to automatic renewals for
consecutive two-year terms thereafter unless and until either the Company or
the Individual gives written notice of non-renewal at least sixty (60) days
prior to expiration of the then current term, and subject to earlier
termination as provided in the remainder of this Section 4.4.2.
(b) The Company may terminate a Personal Services Agreement for
Adequate Cause (defined in Section 4.4.3 below) immediately upon the Company
giving written notice to the Individual. If terminated for Adequate Cause,
the Company's compensation obligations shall terminate upon the last day of
the employment or consulting relationship as specified in the termination
notice.
(c) The Company may also terminate a Personal Services Agreement
without Adequate Cause, but in such event (other than a Mandatory
Disassociation, defined below), the Company shall be obligated to pay the
terminated Individual compensation for a period equal to the longer of six
(6) months or the balance of the then current term, at a monthly rate equal
to the average monthly compensation paid by the Company to the terminated
Individual during the six (6) month period immediately preceding the month in
which termination occurs. Notwithstanding the preceding sentence, in the
case of a Mandatory Disassociation (defined below), the terminated Individual
shall be entitled to compensation at the rate determined in accordance with
the preceding sentence for a period of six (6) months following the
termination. As used herein, the term "Mandatory Disassociation" means a
termination of the Individual by the Company as a result of any circumstance
in which, in the reasonable opinion of counsel to the Company and after
giving effect to Section 4.4.7 below, the continuation of the Personal
Services Agreement would render the Company unable to obtain any material
gaming or other license, franchise, permit or approval required for the
Company to sell, lease, license and distribute its products and otherwise
engage in its business activities.
(d) In addition to the Company's rights of termination, the Individual may
terminate his Personal Services Agreement voluntarily upon giving at least
sixty (60 days prior written notice.
i. As used herein, the term "Adequate Cause" means and includes any of
the following:
(a) the Individual's failure or refusal to carry out the reasonable
directions of the Board of Directors of Casinovations following the
Reorganization described in Section 5, provided that the directions are
reasonably consistent with the normal duties performed by the Individual,
which failure or refusal continues for thirty (30) days after the
Individual's receipt of written notice thereof;
(b) The Individual's willful failure or refusal to comply in any material
respect with the reasonable policies and procedures of the Company as in
effect from time to time, which failure or refusal continues for thirty (30)
days after the Individual's receipt of written notice thereof;
(c) The Individual's breach of the Personal Services Agreement, including
but not limited to, his failure, inability or refusal in any material respect
to perform his or her duties in accordance with the Personal Services
Agreement, which breach remains uncured for thirty (30) days after the
Individual's receipt of written notice of the breach; or
(d) Any deceptive, fraudulent, dishonest or illegal act (or failure to act)
or breach of fiduciary duty by the Individual with respect to Sharps or
Casinovations.
j. Each Personal Services Agreement shall include provisions
transferring to the Company, without additional compensation, royalty or
other consideration, full ownership of any inventions, ideas or other
intellectual property (other than the Literary Rights) heretofore developed
by the Individual or hereafter developed by the Individual while employed or
retained by the Company that (a) relate to the present or future business of
the Company or (b) are developed on the Company's premises or using the
facilities, property or the assets of the Company Each of the Personal
Services Agreements shall contain confidentiality provisions, provisions
preventing the Individual from competing, directly or indirectly, with the
business of the Company during the employment or consulting term and for a
period of two (2) years thereafter and provisions preventing the use of the
Company's trade secrets and other proprietary information at any time except
in furtherance of the interests of the Company.
The Personal Services Agreement for Xxxxxx X. Xxxxx shall permit him
to continue to engage in his gaming industry consulting business as presently
conducted (which does not include product development or improvement), and
shall allow Xxxxxx X. Xxxxx to maintain ownership of intellectual property
developed in such consulting business except for any ideas or inventions for
products, other patentable matter and information developed under clause (b)
in Section 4.4.4, all of which shall be the property of the Company pursuant
to Section 4.4.4.
k. The other terms and provisions of the Personal Services Agreements
shall be reasonably acceptable to the Company and Xxxxx or Xxxxxx X. Xxxxx,
as applicable.
l. Notwithstanding Sections 4.4.1 through 4.4.6, the parties agree to
structure (or subsequently restructure as appropriate) the terms of the
Personal Services Agreement in such a manner as to enable the Company to
obtain all gaming and other licenses, franchises, permits and approvals
required for the Company to sell, lease, license and distribute its products
and otherwise engage in its business activities.
m. Transfer of Retained Inventions. Each of Sines, Forte, Xxxxxx X.
Forte, Huson, the Partnership and Sharps agree and consent that, as part of
the Reorganization, (a) the Partnership shall acquire from Xxxxx, Xxxxx and
Xxxxxx X. Xxxxx any residual interest or rights any of such individuals may
have in the Retained Inventions, (b) the Partnership will transfer all right,
title and interest in the Retained Inventions to Casinovations in an Internal
Revenue Code Section 351 transaction, and (c) Casinovations will issue the
Partnership 1,261,000 Casinovations Shares (defined below).
SECTION 5. AGREEMENT TO REORGANIZE
a. Capitalization of Casinovations. As soon as reasonably practicable
following the date of this Agreement, but in no event later than March 15,
1996, all parties hereto agree to vote their Units and/or take all other
actions necessary or appropriate consistent with their respective obligations
set forth below to attempt in good faith to cause a reorganization of Sharps
involving substantially the following elements (the "Reorganization"):
x. Xxxxxxx have formed Casinovations, Inc., a Washington corporation
("Casinovations").
x. Xxxxxxx represent that at the time of the Reorganization
Casinovations' articles of incorporation and bylaws will (a) authorize
Casinovations to issue only up to 10,000,000 shares of common stock, $1.00
par value (the "Shares") and no other class of securities, (b) provide for
pre-emptive rights to the extent permitted under Washington law, including
RCW 23B.02.010 and 23B.06.300.
d. The Reorganization shall involve the issuance by Casinovations of a
maximum of 5,390,000 Shares, allocated as follows and issued or reserved for
issuance as described below:
(i) 2,513,000 Shares shall be issued to all of the existing holders of
Units in Sharps in exchange for all such Units, on a pro rata basis so that
the relative ownership interests among such holders following such
transaction is the same as immediately prior to such transaction.
(ii) 1,261,900 Shares shall be issued to the Partnership in return for its
contribution of the Retained Inventions pursuant to Section 4.5.
(iii) Up to 1,020,000 Shares shall be offered by Casinovations for sale in a
private placement of securities at a price per Share of not less than $1.50.
(iv) 555,000 Shares shall be issued or reserved for issuance to the persons
listed on exhibit H to this Agreement.
(v) 40,000 Shares shall be reserved for issuance to the Partnership in
connection with the option under Section 4.2.
Casinovations shall, directly or indirectly, succeed to and assume
all of the assets and liabilities of Sharps.
The transactions described in Sections 5.1.1, 5.1.2, 5.1.3 and
5.1.4 shall have no material adverse tax consequences to Sharps,
Casinovations and the existing holders of Units in Sharps.
Casinovations will enter into the Personal Services Agreements
described in Section 4.3 if Sharps has not already done so.
All the parties hereto agree that if all outstanding Units of Sharps
are not transferred in exchange for Shares in Casinovations as provided in
Section 5.1.3 by March 15, 1996, they shall vote their respective Units in
favor of the transfer of, and otherwise attempt to cause Sharps to transfer,
all of Sharps' assets and liabilities to Casinovations by April 10, 1996 in
exchange for 2,513,100 Shares issued to Sharps.
All parties hereto agree to vote to eliminate (a) Article X, Section
10.1(c)(2) of the Sharps Partnership Agreement, (b) and the requirement in
Article X, Section 10.2(a) of the Sharps Partnership Agreement that the
general partner receive an opinion of counsel for Sharps stating that the
transfer or encumbrance of Units by the general partner will not cause the
termination of Sharps for federal income tax purposes, and (c) any other
related sections of the Sharps Partnership Agreement and to bring such
changes to a vote of all Sharps' partners as soon as possible following the
execution of this Agreement.
Effect of Reorganization on Contemplated Transactions. The parties
agree, upon closing of the Reorganization, that:
Casinovations shall assume all liabilities of Sharps under this
Agreement and the documents executed in connection herewith.
Xxxxx shall permit the Pledged Units to be converted to Shares
(at 6304 Shares per Unit) upon his receipt of the certificates evidencing the
shares and an executed Stock Pledge Agreement from Sellers on terms and
conditions substantially identical to the Partnership Pledge Agreement
The rights and obligations of Sellers and Xxxxx with respect to
the Transferred Units, the Pledged Units, the Option Units and the Eligible
Re-Purchase Units (as defined and described in the Partnership Pledge
Agreement) shall attach to the Shares which are attributable thereto, and all
numerical adjustments shall be made as necessary to reflect the
Reorganization.
SECTION 6.REPRESENTATIONS AND WARRANTIES OF SHARPS, THE SELLERS AND
THE PARTNERSHIP
As a material inducement to Buyer to enter into this Agreement and purchase
the Units and make the Loan, Sharps, the Sellers and the Partnership
(collectively, the "Warranting Parties"), jointly and severally, represent
and warrant that:
Organization and Corporate Power. To the best of each Warranting
Party's knowledge, Sharps is a limited partnership validly existing, and in
good standing under the laws of the State of Nevada. To the best of each
Warranting Party's knowledge, Sharps has all requisite power and authority
and all licenses, permits, and authorizations necessary to own and operate
its properties, and to carry on its business as now conducted.
Notwithstanding the foregoing, the parties acknowledge that Sharps presently
has no gaming licenses.
Capital Securities and Related Matters. Sharps' Units are distributed as set
forth on Exhibit G, attached hereto, and copies of all outstanding options
are attached hereto as Exhibit H and no other partnership Units of Sharps are
issued and outstanding. Other than as set forth in this Agreement, Sharps
does not have outstanding and has not agreed, orally or in writing, to issue
any Units convertible or exchangeable for any of its Units, nor does it have
outstanding nor has it agreed, orally or in writing, to issue any options or
rights to purchase or otherwise acquire any Units of Sharps. Sharps is not
subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of its Units. All of the outstanding Units
of Sharps are validly issued, fully paid, and nonassessable. The Sellers
have, and upon purchase thereof by Buyer pursuant to the terms of this
Agreement Buyer will have, good and marketable title to the Transferred
Units, the Pledged Units and the Option Units, free and clear of all security
interests, liens, encumbrances, or other restrictions or claims, subject only
to restrictions as to marketability imposed by securities laws and the Sharps
Partnership Agreement.
Authorization; No Breach. The execution, delivery, and performance
of this Agreement and all other agreements contemplated hereby to which
Sharps, the Sellers or the Partnership are parties have been duly authorized
by Sharps, or the Sellers, or the Partnership, as the case may be. To best
of each Warranting Party's knowledge, this Agreement and each other agreement
contemplated hereby, when executed and delivered by the parties thereto, will
constitute the legal, valid, and binding obligation of Sharps, the Sellers,
or the Partnership, or all of them as the case may be, enforceable against
such parties in accordance with its terms except as the enforceability
thereof may be limited by the Partnership Agreement, the application of
bankruptcy, insolvency, moratorium, or similar laws affecting the rights of
creditors generally or judicial limits on the right of specific performance.
Except as provided in this Agreement, the execution and delivery by Sharps,
the Sellers and the Partnership of this Agreement and all other agreements
contemplated hereby to which Sharps or the Sellers or the Partnership is a
party, the offering and sale of the Units hereunder and the fulfillment of
and compliance with the respective terms hereof and thereof by Sharps, the
Sellers and the Partnership do not and will not (1) conflict with or result
in a breach of the terms, conditions or provisions of, (2) constitute a
default under, (3) result in the creation of any lien, security interest,
charge, or encumbrance upon the capital securities or assets of the Sellers
or Sharps pursuant to, (4) give any third party the right to accelerate any
obligation under, (5) to the best of each Warranting Party's knowledge,
result in a violation of, or (6) to the best of each Warranting Party's
knowledge, require any authorization, consent, approval, exemption, or other
action by or notice to any court or administrative or governmental body
pursuant to the charter or bylaws of Sharps or any law, statute, rule, or
regulation to which the Sellers, Sharps or the Partnership is subject, or any
agreement, instrument, order, judgment, or decree to which the Sellers,
Sharps or the Partnership is subject, including but not limited to the Sharps
Partnership Agreement. Xxxxx acknowledges that he has been informed that his
acquisition of the Option Units and/or Pledged Units may result in a
"termination" of Sharps for federal income tax purposes, which may cause him
to suffer adverse tax consequences and may be contrary to the Sharps
Partnership Agreement.
Litigation. There are no actions, suits, proceedings, orders,
investigations, or claims pending or threatened against Sharps, the Sellers
or the Partnership, or any of their respective properties, at law or in
equity, or before or by any governmental department, commission, board,
bureau, agency, or instrumentality; Sharps, the Sellers and the Partnership
are not currently participating in any arbitration proceedings under
collective bargaining agreements or otherwise, or any governmental
investigations or inquiries; and there is no basis for any of the foregoing.
Tax Matters. To the best of each Warranting Party's knowledge, (a)
Sharps has filed all federal, state, local, and foreign tax returns and
reports heretofore required to be filed by it and has paid all taxes shown as
due thereon (including interest and penalties), (b) no taxing authority has
asserted any deficiency in the payment of any tax or informed Sharps that it
intends to assert any such deficiency or to make any audit or other
investigation of Sharps for the purpose of determining whether such a
deficiency should be asserted against Sharps and (c) Sharps has paid any and
all withholding, payroll or employment taxes required to be paid by, or
assessed against, Sharps.
Compliance with Laws. To the best of each Warranting Party's
knowledge, Sharps is, in the conduct of its business, in compliance with all
laws, statutes, ordinances, regulations, orders, judgments, or decrees
applicable to it, the enforcement of which, if Sharps were not in compliance
therewith, would have a materially adverse effect on the business of Sharps
taken as a whole. Neither the Sellers nor Sharps has received any notice of
any asserted present or past failure by Sharps to comply with such laws,
statutes, ordinances, regulations, orders, judgments, or decrees.
SECTION 7. MISCELLANEOUS PROVISIONS
Amendment and Modification. Subject to applicable law, this
Agreement may be amended, modified, or supplemented only by a written
agreement signed by Buyer, the Sellers and the Partnership.
Waiver of Compliance; Consents
Any failure of any party to comply with any obligation, covenant,
agreement, or condition herein may be waived by the party entitled to the
performance of such obligation, covenant, or agreement or who has the benefit
of such condition, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement, or condition will not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
Whenever this Agreement requires or permits consent by or on behalf
of any party hereto, such consent will be given in a manner consistent with
the requirements for a waiver of compliance as set forth above.
Notices. All notices, requests, demands, and other communications
required or permitted hereunder will be in writing and will be deemed to have
been duly given when delivered by hand or two days after being mailed by
certified or registered mail, return receipt requested, with postage prepaid:
If to Xxxxx:
Xxxxxxx X. Xxxxx
The Xxxxxx Xxxxx Company
000 X.X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
With a copy to:
Ater Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx
222 S.W. Columbia, Suite 1800
Xxxxxxxx, Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
or to such other person or address as Buyer furnishes to the Sellers pursuant
to the above.
If to Sharps,
Xxxxx X. Xxxxx, or the
Partnership: c/o Xxxxx Xxxxx
0000 Xxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
with a copy to:
Xxxxxx X. Xxxxxx
Attorney At Law
000 Xxxxx 0xx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
If to Xxxxxx X. Xxxxx
or Xxxxxx X. Xxxxx:
Xxxxxx and Xxxxxx Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxx 00000
or to such other address as any of such parties furnishes to Buyer pursuant
to the above.
Assignment. This Agreement can be assigned by a party hereto upon
such party's giving prior written notice to the other parties hereto. No
assignment will release the assignor from its obligations hereunder. Subject
to the foregoing, this Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns, heirs, executors, and personal
representatives. Nothing in this Agreement, express or implied, is intended
to confer on any person other than the parties hereto, or their respective
successors, any rights, remedies, obligations, or liabilities under or by
reason of this Agreement.
Governing Law. All matters with respect to this Agreement,
including but not limited to matters of validity, construction, effect, and
performance, will be governed by the laws of the State of Oregon applicable
to contracts made and to be performed therein between residents thereof,
regardless of the laws that might be applicable under principles of conflicts
of law.
Counterparts. This Agreement may be executed in two or more fully
or partially executed counterparts, each of which will be deemed an original
binding the signer thereof against the other signing parties, but all
counterparts together will constitute one and the same instrument.
Entire Agreement. This Agreement and the agreements to be entered
into pursuant to the provisions hereof (the terms of which are incorporated
herein by this reference) embody the entire agreement and understanding of
the parties hereto as to the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants, or
undertakings other than those expressly set forth or referred to in such
documents. This Agreement and such documents supersede all prior agreements
and understandings among the parties with respect to the subject matter
hereof.
Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction will, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement, or affecting the validity or enforceability of any of the terms or
provisions of this Agreement.
Attorney Fees. If any action is brought by any party to this
Agreement to enforce or interpret its terms or provisions, the prevailing
party will be entitled to reasonable attorney fees and costs incurred in
connection with such action prior to and at trial and on any appeal
therefrom.
Payment of Fees and Expenses. Each party to this Agreement will be
responsible for, and will pay, all of its own fees and expenses, including
those of its counsel and accountants, incurred in the negotiation,
preparation, and consummation of the Agreement and the Purchase.
Further Assurances. Upon the reasonable request of a party, the
other parties will take all action and will execute all documents and
instruments necessary or desirable to consummate and give effect to this
Agreement.
Legal Representation. Each party to this Agreement has been advised
to obtain independent legal counsel prior to executing this Agreement and has
had a full and fair opportunity to do so and either obtained such
representation or voluntarily declined to do so. Each party acknowledges
that Xxxxxxx X. Xxxxxxxx, P.C. is the attorney only for Xxxxx X. Xxxxx
individually and that Ater Xxxxx Xxxxxx Xxxxxx & Xxxxxxxx are the attorneys
only for Xxxxxxx X. Xxxxx.
Effective Date. Regardless of when it is signed by any or all of
the parties, this Agreement and the agreements to be executed concurrently
herewith shall be effective as of January 15, 1996.
Securities Laws. The Units which are the subject to the
transactions contemplated by this Agreement have been issued pursuant to the
Sharps Partnership Agreement and have not been registered with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, or
under the securities acts of Washington, Oregon, Nevada, or under any other
state securities laws. The sale or other disposition of the Units is
restricted, as stated in the Sharps Partnership Agreement. By acquiring any
Unit represented by the Sharps Partnership Agreement, the acquiring party
represents that such party has acquired the Units for investment and that
such party will not sell or otherwise dispose of the Units without
registration or other compliance with the aforesaid acts and the rules and
regulations thereunder. Each of the parties acknowledges that such party has
read the Sharps Partnership Agreement and agrees to remain bound by its terms
and conditions.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
SHARPS INTERNATIONAL LIMITED PARTNERSHIP, a Nevada limited partnership
By:
Title:
XXXXX X. XXXXX
XXXXXX X. XXXXX
XXXXX XXXXX PARTNERSHIP, a Nevada general partnership
Xxxxx X. Xxxxx, Partner
By:
Xxxxxx X. Xxxxx, Partner
XXXXXXX X. XXXXX
XXXXXX X. XXXXX, solely for purposes of Sections 4 and 5
