Exhibit 10.8
CONTRIBUTION AGREEMENT
This Contribution Agreement (this "Agreement"), dated as of
February 25, 1997, is made by and between On Stage Entertainment, Inc., a Nevada
corporation (the "Company"), and Xxxx X. Xxxxxx, an individual ("Stuart").
RECITALS
WHEREAS, Stuart is the founder of the Company and owns
substantially all of the issued and outstanding common stock of the Company.
WHEREAS, Stuart is the founder and sole stockholder of Las
Vegas/Hawaii Entertainment, Inc., a Nevada corporation ("LVHE").
WHEREAS, LVHE owns a 40% membership interest (the "R.B.L.S.
Interest") in R.B.L.S., Ltd., a Nevada limited liability company ("R.B.L.S."),
as successor in interest to Legends in Concert, Hawaii Limited Partnership,
which was terminated on November 22, 1995.
WHEREAS, the members of R.B.L.S. are parties to an Operating
Agreement, dated August 3, 1994 (the "Operating Agreement").
WHEREAS, R.B.L.S., as limited partner, and Silver State
Property Management, Inc., a Nevada corporation, as general partner, formed
R.B.L.S. Partnership (the "R.B.L.S. Partnership"), which operates a Legends In
Concert production in Hawaii.
WHEREAS, pursuant to an Agreement dated on or about August 1,
1994, Stuart performs consulting services for R.B.L.S. and/or R.B.L.S.
Partnership in connection with the Legends In Concert production in Hawaii (the
"Consulting Services"), and receives therefor a weekly management consulting fee
from R.B.L.S. and/or R.B.L.S. Partnership in the amount of $3,000 per week (the
"Consulting Fee"), plus $1,000 in expense reimbursement per trip to Hawaii.
WHEREAS, Stuart desires that the Company complete a bridge
financing with Whale Securities Co., L.P. as placement agent (the "Placement
Agent") followed by an initial public offering to be underwritten by the
Placement Agent.
WHEREAS, Stuart has entered into an Employment Agreement dated
February 1, 1997 with the Company, as required by the Placement Agent in
connection with the bridge financing and the proposed initial public offering.
WHEREAS, the Board of Directors of the Company has determined
that Stuart's services to LVHE, R.B.L.S. and R.B.L.S. Partnership will not place
him in a conflict of interest with his Employment Agreement on the condition
that all monies received by Stuart for doing so are paid over to the Company.
WHEREAS, the Placement Agent has required in connection with
the bridge financing and the proposed initial public offering that Stuart make
certain capital contributions to the Company in connection with the Board of
Directors determination.
NOW, THEREFORE, in consideration of the foregoing and the
agreements set forth below, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
ARTICLE I
CAPITAL CONTRIBUTIONS
1.1 Contribution of LVHE Stock. Stuart and the Company hereby
agree that Stuart shall make a capital contribution to the Company of all the
shares of Common Stock of LVHE beneficially owned by Stuart (the "LVHE Shares"),
which represents all of the issued and outstanding stock of LVHE, promptly, upon
the request of the Company, after it is permissible to do so under the Operating
Agreement without breaching any restriction or right of first refusal under the
Operating Agreement, for which purpose Xxxxxx xxx rely on an opinion of counsel
that the contribution to the Company may be completed without breaching any
restriction or right of first refusal under the Operating Agreement (the date of
such contribution of the LVHE Shares shall be "Contribution Date").
1.2 Contribution of LVHE Income. Stuart hereby contributes,
grants, conveys, assigns, transfers and delivers to the Company as a capital
contribution all of Stuart's right, title and interest in and to any and all
economic benefit derived by Stuart from LVHE and Stuart's ownership of the LVHE
Shares. Stuart and the Company agree that the term "economic benefit" shall mean
cash or other consideration or benefit actually received by Stuart, and,
therefore, shall not include any amount for distributions made by R.B.L.S. to
LVHE that are withheld or used for reimbursement by R.B.L.S, including amounts
withheld to fund the defense of the Disputed Lawsuits (as defined in Section
5.1(b)).
1.3 Contribution of Consulting Fee. Stuart hereby contributes,
grants, conveys, assigns, transfers and delivers to the Company as a capital
contribution all of Stuart's right, title and interest in the Consulting Fee.
(a) Performance of Consulting Services. Stuart agrees to
continue to perform the Consulting Services for R.B.L.S. and/or R.B.L.S.
Partnership as an employee of the Company under the provisions of Stuart's
Employment Agreement.
(b) Expense Reimbursement. The Company will reimburse or make
advances to Stuart for his reasonable costs and expenses in performing the
Consulting Services. Stuart will remit to the Company any amounts he receives
from R.B.L.S. and/or R.B.L.S. Partnership for the reimbursement of costs and
expenses that were paid or reimbursed by the Company.
ARTICLE II
VOTING AND ESCROW
2.1 Agreement to Vote. During the term of this Agreement,
Stuart shall vote all of the LVHE Shares in the manner directed by the Company.
2.2 Irrevocable Proxy. In furtherance of the purposes of this
Agreement, Shareholder shall deliver to the Company an irrevocable proxy in the
form of Exhibit A to this Agreement (the "Irrevocable Proxy") upon the execution
of this Agreement. The Irrevocable Proxy shall appoint the Company as Stuart's
true and lawful attorney and proxy, with full power of substitution, for and in
Stuart's name to vote and otherwise act with respect to all LVHE Shares at all
annual, special, and other meetings of stockholders of LVHE (or by written
consent in lieu thereof) and at any other time those shares are required to be,
or may be, voted or acted upon.
2.3 Escrow of LVHE Shares. Stuart hereby appoints the Company
as escrow agent, and the Company agrees to act as escrow agent, to hold the LVHE
Shares in escrow on behalf of Stuart until the Contribution Date, at which time
the LVHE Shares will be released from escrow.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Stuart represents and warrants to the Company as follows:
3.1 Organization of LVHE. LVHE is a corporation validly
existing and in good standing under the laws of the State of Nevada, with full
corporate power and authority to conduct its business as it is now being
conducted, to own or use the properties and assets that it purports to own or
use, and to perform all its obligations under the Operating Agreement.
3.2 Capitalization of LVHE. The authorized equity securities
of LVHE consist of 1,000 shares of common stock, no par value, of which 50
shares are issued and outstanding and constitute the LVHE Shares. Stuart is and
will be on the Contribution Date the record and beneficial owner and holder of
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the LVHE Shares, free and clear of all liens, encumbrances or other impairments
to title. The LVHE Shares have been duly authorized, validly issued and are
fully paid and nonassessable. There are no contracts, agreements, obligations,
promises or understandings of any kind relating to the LVHE Shares or to the
issuance, sale or transfer of any securities of LVHE other than the Operating
Agreement.
3.3 R.B.L.S. Interest. LVHE is and will be on the Contribution
Date the record and beneficial owner and holder, free and clear of all liens,
encumbrances or other impairments to title, of the R.B.L.S. Interest. The
R.B.L.S. Interest represents 40% of the membership interests of R.B.L.S. and
membership interests are the only issued and outstanding security of R.B.L.S.
3.4 Assets and Liabilities. LVHE has no assets, liabilities,
contracts, agreements, obligations, promises or understandings of any kind other
than the R.B.L.S. Interest and under the Operating Agreement.
ARTICLE IV
COVENANTS
4.1 Access and Investigation. Between the date of this
Agreement and the Contribution Date, Stuart will and will cause LVHE to afford
the Company and its representatives full and free access to LVHE's personnel,
assets, contracts, books and records and other documents and data.
4.2 Operation of LVHE. Between the date of this Agreement and
the Contribution Date, Stuart will and will cause LVHE to (a) conduct the
business of LVHE only in the ordinary course of business of owning the R.B.L.S.
Interest; (b) use best efforts to preserve intact the current business
organization; (c) confer with the Company concerning operational matters of a
material nature; and (d) otherwise report periodically to the Company concerning
the status of the business and finances of LVHE.
4.3 Negative Covenants. Between the date of this Agreement and
the Contribution Date, Stuart will not and will cause LVHE not to (a) take any
action inconsistent with Section 4.2 above; (b) incur any liabilities or
indebtedness; (c) acquire any assets; (d) sell, transfer, convey, assign,
contribute, or otherwise transfer the LVHE Shares or any asset of LVHE,
including the R.B.L.S. Interest; or (e) pledge, encumber or otherwise grant any
right or interest in the LVHE Shares or any assets of LVHE, including the
R.B.L.S. Interest.
4.4 Notification. Between the date of this Agreement and the
Contribution Date, Stuart will and will cause LVHE to promptly notify the
Company in writing if Stuart or LVHE becomes aware of any fact or condition that
causes or constitutes a breach of Stuart's representations and warranties as of
the date of this Agreement, or if Stuart or LVHE becomes aware of the occurrence
after the date of this Agreement of any fact or condition that would cause or or
constitute a breach of any representation or warranty or any covenant or
condition of this Agreement.
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ARTICLE V
INDEMNIFICATION
5.1 Indemnification.
(a) From and after the date of this Agreement Stuart shall
defend, indemnify and hold harmless the Company and its subsidiaries and each of
their officers, directors or employees from, against and in respect of any and
all damages, losses, deficiencies, liabilities, costs and expenses (including
reasonable expenses of investigation and litigation and reasonable attorneys',
accountants' and other professionals' fees and costs incurred in the
investigation or defense thereof or the enforcement of rights hereunder),
including consequential damages (collectively, "Damages"), resulting from or
arising out of, directly or indirectly: (i) any breach of the representations
and warranties of Stuart in this Agreement; (ii) any non-fulfillment of any
agreement or covenant by Stuart in this Agreement.
(b) From and after the date of this Agreement, Stuart shall
defend, indemnify and hold harmless the Company and its subsidiaries and each of
their officers, directors or employees from, against and in respect of any and
all Damages, resulting from or arising out of, directly or indirectly: any act,
omission, obligation, or liability prior to the Contribution Date of LVHE,
R.B.L.S. or the R.B.L.S. Partnership, or the other members of R.B.L.S. and their
respective companies. The indemnification under this subsection (b) shall
include the following lawsuits, and any additional lawsuits arising as a result
of these lawsuits (the "Disputed Lawsuits"): Xxxxx Xxxx, Xxx Xxxxxx, Xxxxxx
Xxxxx, et. al. vs. Las Vegas/Hawaii Entertainment, Inc. d.b.a. Legends in
Concert, et. al. Civil No. 00-0000-00; Las Vegas/Hawaii Entertainment, Inc., et.
al. vs. Xxx Xxxx, Xxxxxx Xxx, Lene Mualeave, Chandoor Mehra, xx.xx., Civil No.
00-0000-00; and Xxx Xxxx, Mualeave Lene and Xxxxxx Xxx, vs. Las Vegas/Hawaii
Entertainment, Inc., Xxxx Xxxxxx, Xxxx Xxxxxx and Xxxxxx Xxxxxxxxx, in the
Federal District Court Civil No. 95-00924.
(c) Liabilities arising out of, resulting from or relating to
any matters described in this Section 5.1 are hereinafter referred to as
"Liabilities."
5.2 Insurance Coverage. In the case of any Liability to be
indemnified by Stuart hereunder which is covered by a policy of insurance, the
Company shall cooperate with the insurers in the exercise of their rights to
investigate, defend, or compromise the Company as may be required to retain the
benefits of such insurance with respect to such Liability. Neither any failure
to cooperate that does not cause any material damage to Stuart, nor any
cooperation shall have any effect whatsoever on the obligations of Stuart to
indemnify the Company.
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5.3 Control of Litigation. The Company shall promptly notify
Stuart of the commencement of any action, suit, or proceeding with respect to a
Liability or the assertion of any Liability, in each case as to which
indemnification is sought; provided, that the failure to provide such notice
shall not release Stuart from any of its obligations to indemnify hereunder to
the extent that such failure does not materially prejudice the rights of Stuart
in his ability to defend such Liability. Stuart shall, at his own expense,
assume or cause to be assumed the defense of any such Liability within thirty
(30) days after the Company shall have notified Stuart thereof. The Company,
upon reasonable notice by Stuart or the person assuming the defense shall
consult from time to time with respect to such Liability and provide Stuart or
the person assuming the defense with any documents or other items or access to
any witness which Stuart or the person assuming the defense deems in its
reasonable judgment to be necessary in connection with the defense of such
Liability, and Stuart shall pay or reimburse or cause to be paid or reimbursed,
any reasonable out-of-pocket costs therefor. The Company may participate in the
defense of any such Liability and employ separate counsel, at its own expense,
unless such Investor Indemnitee shall have reasonably determined that counsel
selected by Stuart or such person has a conflict of interest because of the
availability of different or additional defenses to the Company in which case
Stuart shall pay or cause to be paid the costs and expenses of counsel employed
by the Company. Stuart and his insurers may, in their sole discretion, defend,
settle, or compromise any such action, suit or proceeding; provided, that Stuart
and its insurers shall be liable in respect of all Liabilities relating thereto
(whether by payment of any judgment, settlement, amount or indemnity hereunder)
and no settlement or compromise shall be entered into unless the Company is
fully released or discharged from all such Liabilities. Participation by the
Company in any such action, suit, or claim shall not constitute a waiver of the
indemnification provided in this Article V. Nothing contained in this Article V
shall be deemed to require the Company to contest any Liability or to assume
responsibility for or control of any judicial proceeding with respect thereto.
5.4 Settlements. The Company shall not enter into a settlement
or other compromise with respect to any Liability without the prior written
consent of Stuart, which consent shall not be unreasonably withheld, unless the
Company waives its right to be indemnified with respect to such Liability under
this Article V.
5.5 Subrogation, Etc. To the extent that an Liability to be
indemnified by Stuart under this Article V is in fact paid by Stuart or any
other person, Stuart or such person shall be subrogated to the extent of such
payment to the rights and remedies of the Company with respect to the
transaction, event, or matter giving rise to such Liability. Should the Company
receive any refund, in whole or in part, with respect to any Liability paid by
Stuart or such person hereunder, it shall promptly pay over the amount refunded,
together with any interest received with respect to such amount, to Stuart or
such person.
5.6 Netting of Recoveries. In determining the amount of any
indemnification or other recovery available to the Company under this Article V,
with respect to any specific claim, such amount shall be reduced by any other
amount the Company has recovered with respect to such claim.
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ARTICLE VI
SECURITY AND PLEDGE AGREEMENTS
6.1 Security and Pledge Agreement for Contribution of LVHE
Shares . Stuart hereby agrees to secure his promises hereunder to contribute the
LVHE Shares to the Company under Section 1.1 by entering into a Security and
Pledge Agreement as of the date hereof.
6.2 Security and Pledge Agreement for Indemnity. Stuart hereby
agrees to secure Stuart's obligation to provide indemnification under Article V
by entering into a Security and Pledge Agreement as of the date hereof.
ARTICLE VII
MISCELLANEOUS
7.1 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior written and oral and all contemporaneous oral agreements and
understandings with respect to the subject matter hereof and thereof.
7.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada without regard to
applicable conflicts of law principles.
7.3 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
7.4 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid
return receipt requested) to the respective parties as follows:
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if to the Company
On Stage Entertainment, Inc.
0000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxxxxxx Xxxxx, Esq.
General Counsel and Secretary
if to Stuart:
Xxxx X. Xxxxxx
0000 Xxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxx 00000
or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by telecopy shall be deemed effective
on the first business day at the place of which such notice or communication is
received following the day on which such notice or communication was sent. Any
notice or communication sent by registered or certified mail shall be deemed
effective on the fifth business day at the place from which such notice or
communication was mailed following the day in which such notice or communication
was mailed.
7.5 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
7.6 Binding Effect; Assignment. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective legal
representatives and successors. This Agreement may not be assigned by any party
hereto.
7.7 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
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IN WITNESS WHEREOF, each of the parties has caused this
Contribution Agreement to be executed on its behalf by its officers thereunto
duly authorized on the day and year first above written.
ON STAGE ENTERTAINMENT, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------
Name: Xxxxx X. Xxxxx
Title: SVP & CFO
/s/ Xxxx X. Xxxxxx
----------------------------
Xxxx X. Xxxxxx
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EXHIBIT A
TO CONTRIBUTION AGREEMENT
IRREVOCABLE PROXY
STATE OF NEVADA )
) SS.
COUNTY OF XXXXX )
This Irrevocable Proxy is given by Xxxx X. Xxxxxx ("Shareholder"), the
sole stockholder of Las Vegas/Hawaii Entertainment, Inc., a Nevada corporation
("LVHE") to On Stage Entertainment, Inc. (the "Proxyholder") pursuant to a
Contribution Agreement of this same date between Stuart and Proxyholder (the
"Contribution Agreement").
1. Irrevocable Proxy.
x. Xxxxxx irrevocably appoints the Proxyholder as Stuart's
true and lawful attorney and proxy, with full power of substitution, for and in
Stuart's name to vote and otherwise act with respect to all of the shares of
stock of LVHE (the "LVHE Shares") at all annual, special, and other meetings of
stockholders of LVHE (or by written consent in lieu thereof) and at any other
time the LVHE Shares are required to be, or may be, voted or acted upon.
b. The appointment and proxy granted to the Proxyholder by
Section 1(a) of this Proxy is irrevocable and coupled with an interest and,
except as otherwise provided in Section 2 of this Proxy, shall not terminate by
operation of law, whether by reason of the death, bankruptcy, or adjudication of
incompetency of Proxyholder or otherwise, or by the occurrence of any other
event.
c. This Proxy relates to all voting rights (whether limited,
fixed, or contingent) with respect to the LVHE Shares and does not relate to any
other right incident to the ownership of the LVHE Shares (including, without
limitation, the right to receive dividends and any other distributions on the
LVHE Shares).
2. Term. This Proxy shall terminate only upon the termination of the
Contribution Agreement.
3. Legend on Stock. Each certificate evidencing the LVHE Shares shall
bear a conspicuous statement in substantially the following form:
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The shares evidenced by this certificate are subject to a
voting agreement and an irrevocable proxy (copies of which are
available for inspection at the principal office of the
company). The recipient of any interest in such shares shall
be deemed to have agreed to and shall become bound by all of
the provisions of said voting agreement and irrevocable proxy.
4. Benefit and Burden. This Proxy shall be binding upon the Stuart, and
shall inure to the benefit of Proxyholder, and his or her respective personal
representatives, executors, administrators, legal representatives, devisees,
distributees and heirs.
5. Modifications. This Proxy may be modified, waived, discharged, or
terminated only by an instrument in writing executed by Stuart and Proxyholder.
6. Waiver. The failure of Stuart or Proxyholder, or both, to comply, or
insist upon compliance, with any provision of this Proxy at any time shall not
be deemed (a) to affect the validity or enforceability of this Proxy, (b) to be
a waiver of any other provisions of this Proxy at that time, or (c) to be a
waiver of that provision or any other provisions of this Proxy at any other
time.
7. Governing Law. This Proxy shall be governed by and construed under
the laws of the State of Nevada, without reference to the conflict of laws
principles of such State.
8. Liability of Proxyholder. Proxyholder shall not be liable by reason
of any act or omission to act by Proxyholder in connection with any of the
rights specified in Section 1(a) of this Proxy, except for actual fraud, gross
negligence, or criminal conduct.
9. Proxy Binding upon Transferees. If, at any time or from time to
time, any shares of capital stock of LVHE now or hereafter held by the Stuart
are transferred to any party, the transferee shall take those shares pursuant to
all provisions, conditions, and covenants of this Proxy, and, as a condition
precedent to the transfer of those shares, the transferee shall become signatory
to this Proxy or to a new irrevocable proxy in the same form and agree (for and
on behalf of transferee, transferee's legal and personal representatives, and
subsequent transferees and assigns of such shares) in writing to be bound by all
provisions of this Proxy.
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IN WITNESS WHEREOF, Stuart has executed this Irrevocable Proxy on the
date indicated below Stuart's signature.
WITNESS: XXXX X. XXXXXX:
/s/ Xxxxx X. Xxxxx /s/ Xxxx X. Xxxxxx
------------------------- ------------------------------
Name: Xxxx X. Xxxxxx
Date: February 25, 1997
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