December 10, 1999
Leisure Time Casinos & Resorts, Inc.
0000 Xxxxxxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
1. Subscription. Pursuant to this Subscription Agreement (the "Agreement"),
the undersigned, Prime Technological Services, Inc. (the "Subscriber"),
intending to be legally bound, irrevocably applies to purchase from Leisure Time
Casinos & Resorts, Inc., a corporation organized under the laws of the State of
Colorado (the "Company"), 523,759 shares of the Company's Convertible Series A
Preferred Stock, no par value ("Convertible Series A"), for a total purchase
price of a total of $5,237,586 consisting of (i) the cancellation of a
promissory note dated August 1, 1999, in the amount of $2,000,000 from the
Company to the Subscriber, (ii) a credit for the payment of interest of $63,500
due from the Company to the Subscriber, (iii) a credit for the payment of
$69,532 of interest that the Company might be obligated to pay to the Subscriber
that the Subscriber has paid to the Subscriber's suppliers, (iv) a credit for
the payment of $557,523 due as an account payable from the Company to the
Subscriber and (v) a deposit of $2,547,031 against future purchases of inventory
by the Company from the Subscriber at the prices set forth on Exhibit A.
The Convertible Series A issued hereunder shall have the rights and
preferences set forth on Exhibit B hereto. The Convertible Series A is being
offered to the Subscriber without registration under the Securities Act of 1933,
as amended (the "Securities Act"). For purposes of this Agreement, the shares of
common stock of the Company into which the Convertible Series A will be
converted shall be referred to as the "Conversion Shares."
2. Acceptance. The subscription shall be deemed accepted by the Company
upon execution of this Agreement by the Company.
3. Delivery of Certificate for Shares and Promissory Note. At the Closing,
the Company will deliver to the Subscriber a certificate or certificates
representing the Convertible Series A subscribed for hereby, registered in the
name of the Subscriber and the Subscriber will deliver to the Company the
promissory note dated August 1, 1999, marked "CANCELLED", and evidence of
Subscriber's forgiveness of the items set forth above and evidence of the credit
set forth above.
4. Closing. The closing will be held on December 10, 1999, at 2:00 p.m. in
the offices of Xxxxx XxXxxxxxxx, P.C. at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000.
5. Representations, Warranties and Covenants of Subscriber. In order to
induce the Company to sell the Convertible Series A to the Subscriber, the
Subscriber hereby represents, warrants and covenants to the Company as follows:
a) Requisite Power and Authority. Subscriber has all necessary power
and authority under all applicable provisions of law to execute and deliver this
Agreement and to carry out its provisions. All actions on Subscriber's part
required for the lawful execution and delivery of this Agreement have been or
will be effectively taken prior to the Closing. Upon execution and delivery,
this Agreement will be a valid and binding obligation of Subscriber, enforceable
in accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors' rights, and (b) general principles of equity
that restrict the availability of equitable remedies.
b) Investment Representations. Subscriber understands that neither
the Convertible Series A nor the Conversion Shares have been registered under
the Securities Act. Subscriber also understands that the Convertible Series A is
being offered and sold pursuant to an exemption from registration contained in
the Securities Act based in part upon Subscriber's representations contained in
the Agreement. Subscriber hereby represents and warrants as follows:
(i) Subscriber Bears Economic Risk. Subscriber has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Subscriber must bear the economic risk of
this investment indefinitely unless the Convertible Series A (or the Conversion
Shares) are registered pursuant to the Securities Act, or an exemption from
registration is available. Subscriber also understands that there is no
assurance that any exemption from registration under the Securities Act will be
available and that, even if available, such exemption may not allow Subscriber
to transfer all or any portion of the Convertible Series A or the Conversion
Shares under the circumstances, in the amounts or at the times Subscriber might
propose.
(ii) No Transfer Without Registration. The Subscriber will not
sell or otherwise transfer any or all of the Convertible Series A or Conversion
Shares without registration under the Securities Act or an exemption therefrom
such as permitted by Rule 144.
(iii)Legend. The Subscriber acknowledges and agrees that the
certificate or certificates representing the Convertible Series A and Conversion
Shares shall bear a legend restricting the transfer of the Convertible Series A
and Conversion Shares.
(iv) Acquisition for Own Account. Subscriber is acquiring the
Convertible Series A and the Conversion Shares for Subscriber's own account for
investment only, and not with a view towards their distribution.
(v) Subscriber Can Protect Its Interest. Subscriber represents
that by reason of its, or of its management's, business or financial experience,
Subscriber has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement. Further, Subscriber is aware of no
publication of any advertisement in connection with the transactions
contemplated in the Agreement.
(vi) Documents. The Subscriber understands that all documents,
records and books pertaining to this investment have been made available for
inspection by the Subscriber, the Subscriber's attorney and/or accountant
including, but not limited to, the Company's Prospectus dated September 15, 1999
and the Company's Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1999.
(vii)Rule 144. Subscriber acknowledges and agrees that the
Convertible Series A, and, if issued, the Conversion Shares, must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available. Subscriber has been advised or
is aware of the provisions of Rule 144 promulgated under the Securities Act as
in effect from time to time, which will permit the limited sales of the
Conversion Shares purchased in the private placement by the Company subject to
the satisfaction of certain conditions, including, among other things, the
availability of certain current public information about the Company, the
resales occurring following the required holding period under Rule 144 and the
number of Conversion Shares being sold during any three-month period not
exceeding specified limitations.
6. Representations and Warranties of the Company.
a) Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado. The Company has all requisite corporate power and
authority to own and operate its properties and assets to carry on its business
as presently conducted and to execute and deliver this Agreement, and by
Closing, the Company will have all requisite corporate power and authority, to
issue and sell the Convertible Series A and the Conversion Shares and to carry
out the provisions of this Agreement and the Articles of Amendment to the
Company's Articles of Incorporation that describe the Convertible Series A
("Articles of Amendment"). The Company is duly qualified and is authorized to do
business and is in good standing as a foreign corporation in all jurisdictions
in which the nature of its activities and of its properties (both owned and
leased) makes such qualification necessary, except for those jurisdictions in
which failure to do so would not have a material adverse effect on the Company
or its business.
b) Authorization; Binding Obligations. All corporate action on the
part of the Company, its officers, directors and shareholders necessary for the
authorization of this Agreement, the performance of all obligations of the
Company hereunder and thereunder at the Closing and the authorization, sale,
issuance and delivery of the Convertible Series A pursuant hereto and the
Conversion Shares pursuant to the Articles of Amendment has been taken or will
be taken prior to the Closing. The Agreement, when executed and delivered, will
be a valid and binding obligation of the Company enforceable in accordance with
its terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors' rights; and (b) general principles of equity that
restrict the availability of equitable remedies. The sale of the Convertible
Series A and the subsequent conversion of the Convertible Series A into
Conversion Shares are not and will not be subject to any preemptive rights or
rights of first refusal that have not been properly waived or complied with.
c) Title to Convertible Series A and Conversion Shares. Upon issuance
of the Convertible Series A by the Company to Subscriber at Closing, the
Convertible Series A will be fully paid and nonassessable and Subscriber will
have good and marketable title to the Convertible Series A (and upon conversion,
the Conversion Shares) free and clear of all mortgages, liens, pledges,
encumbrances, charges or other security interests.
d) Compliance with Other Instruments. Except as disclosed in the
Company's filings with the Securities and Exchange Commission (the
"Commission"), the Company is not in violation or default of any term of its
Articles of Incorporation or Bylaws, or of any provision of any mortgage,
indenture, contract, agreement, instrument or contract to which it is party or
by which it is bound or of any judgment, decree, order, writ or, to its
knowledge, any statute, rule or regulation applicable to the Company which would
materially and adversely affect the business, assets, liabilities, financial
condition, operations or prospects of the Company. The execution, delivery, and
performance of and compliance with this Agreement, and the issuance and sale of
the Convertible Series A pursuant hereto and the issuance of the Conversion
Shares upon conversion of the Convertible Series A as provided in the Articles
of Amendment, will not, with or without the passage of time or giving of notice,
result in any such material violation, or be in conflict with or constitute a
default under any such term, or result in the creation of any mortgage, pledge,
lien, encumbrance or charge upon any of the properties or assets of the Company
or the suspension, revocation, impairment, forfeiture or nonrenewal of any
permit license, authorization or approval applicable to the Company, its
business or operations or any of its assets or properties.
e) Litigation. Except as disclosed in the Company's filings with the
Commission, there is no action, suit, proceeding or investigation pending or to
the Company's knowledge currently threatened against the Company that questions
the validity of this Agreement, or the right of the Company to enter into this
Agreement, or to consummate the transactions contemplated hereby, or which might
result, either individually or in the aggregate, in any material adverse change
in the assets, condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company, nor is
the Company aware that there is any basis for the foregoing. The Company is not
a party or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality that has not been
satisfied. There is no action, suit, proceeding or investigation by the Company
currently pending or which the Company intends to initiate.
f) Compliance with Laws; Permits. Except as disclosed in the
Company's filings with the Commission, to its knowledge, the Company is not in
violation of any applicable statute, rule, regulation, order or restriction of
any domestic or foreign government or any instrumentality or agency thereof in
respect of the conduct of its business or the ownership of its properties which
violation would materially and adversely affect the business, assets,
liabilities, financial condition, operations or prospects of the Company. No
governmental orders, permissions, consents, approvals or authorizations are
required to be obtained and no registrations or declarations are required to be
filed in connection with the execution and delivery of this Agreement and the
issuance of the Convertible Series A or the Conversion Shares, except such as
has been duly and validly obtained or filed, or with respect to any filings that
must be made after the Closing, as will be filed in a timely manner. The Company
has all franchises, permits, licenses and any similar authority necessary for
the conduct of its business as now being conducted by it, the lack of which
could materially and adversely affect the business, properties, prospects or
financial condition of the Company and believes it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as
planned to be conducted.
g) Offering Valid. Assuming the accuracy of the representations and
warranties of the Subscriber contained in Section 5(b) hereof, the offer, sale
and issuance of the Convertible Series A and the Conversion Shares will be
exempt from the registration requirements of the Securities Act and will have
been registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws. Neither the Company nor any agent on its behalf has
solicited or will solicit any offers to sell or has offered to sell or will
offer to sell all or any part of the Convertible Series A to any person or
persons so as to bring the sale of such Convertible Series A by the Company
within the registration provisions of the Securities Act or any state securities
laws.
h) Full Disclosure. This Agreement, and all other documents delivered
by the Company to Purchaser or its attorneys or agents in connection herewith or
with the transactions contemplated hereby, do not contain any untrue statement
of a material fact nor, to the Company's knowledge, omit to state a material
fact necessary in order to make the statements contained herein or therein not
misleading.
7. Registration Rights.
a) Definitions. For purposes of this Section 7, the following terms
shall have the respective meanings set forth below:
i) "Commission" shall mean the Securities and Exchange Commission
or any other Federal agency at the time administering the Securities Act.
ii) The term "Common Stock" means the Company's $0.001 par value
common stock.
iii) The term "Holder or Holders of Registrable Stock" shall mean
any holder of Convertible Series A or Conversion Shares issued or issuable upon
conversion of the Convertible Series A issued pursuant to this Agreement,
including any transferee of any such holder.
iv) The term "Participating Holder" shall mean a holder of
Registrable Stock that requests the Company to register the holder's Registrable
Stock.
v) The terms "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document by the
Commission.
vi) The term "Registrable Stock" means the Conversion Shares
issued or issuable upon the conversion of the Convertible Series A issued
pursuant to this Agreement; provided, however, that shares of the Registrable
Stock shall cease to be Registrable Stock if they are sold or transferred
pursuant to a registered public offering or other transaction which does not
result in restrictions on resale being imposed on the transfer by virtue of
Federal or state securities laws; and provided further that Registrable Stock
shall cease to be Registrable Stock to the extent the holder could sell or
transfer such Registrable Stock held by the holder pursuant to Rule 144
promulgated under the Securities Act.
b) Demand Registration.
i) Upon the written request of one or more of the Holders after
December 10, 2002, which request shall state the intended method or disposition
by such Participating Holders and shall request that the Company effect the
registration of all or part of the Registrable Stock under the Securities Act,
the Company shall use its best efforts to prepare and file with the Commission a
registration statement and such other documents, including a prospectus, as may
be necessary to permit a public offering and sale of such Registrable Stock in
the United States in compliance with the provisions of the Securities Act, all
to the extent required to permit the disposition (in accordance with the
intended methods thereof as aforesaid) by the Participating Holders of the
Registrable Stock so to be registered. If such sale of Registrable Stock is to
be pursuant to an underwritten offering, the underwriter shall be selected by
the Holders and shall be reasonably acceptable to the Company. If the
underwriter selected determines that the number of shares of Registrable Stock
so to be included is required to be limited due to market conditions or
otherwise, the Holders of Registrable Stock proposing to sell their shares of
Registrable Stock in such underwritten registration shall share pro rata
(according to the number of shares of Registrable Stock requested to be
registered) in the number of shares of Registrable Stock being underwritten (as
determined by such underwriter) and registered for their account. The Company
shall only be required to effect one registration pursuant to this Section 7(b);
provided, however, that if at the time of the exercise of the rights of the
Participating Holders under this Section 7(b), the Company is not permitted by
law to register all of the Registrable Stock, the Company may be required to
effect one additional registration pursuant to this Section 7(b).
ii) The Company shall not be required to effect any registration under
this Section 7(b) within nine months after the completion of any public offering
of its securities pursuant to which the Holders of Registrable Stock were
afforded the right to register as many shares of their Registrable Stock as
requested nor within six months after the effective date of any other public
offering by the Company.
iii) The Company shall have the right to include in any registration
statement or post-effective amendment filed pursuant to this Section 7(b) other
securities of the Company then proposed to be distributed, except that, to the
extent consistent with the rights of other holders of the Company's securities,
if and to the extent that the underwriter or underwriters acting with respect of
such public offering reasonably determine that the inclusion of such other
securities may substantially prejudice or hinder the offering of Registrable
Stock, the number of such other securities shall be reduced or eliminated prior
to any reduction in the number of shares of Registrable Stock so to be
registered.
iv) If the registration under this Section 7(b) is effected on Form
S-3 (or any successor form thereto), and the effectiveness of such registration
statement can be maintained without significant additional expense to the
Company, then the Company agrees to maintain the effectiveness of such
registration statement for a period of two years after its initial effective
date. Otherwise, the Company shall not be required to maintain the effectiveness
of such registration statement for a period in excess of six months after its
initial effective date.
c) Incidental Registration.
i) If prior to December 10, 2002, the Company at any time and from
time to time proposes to file with the Commission a registration statement under
the Securities Act with respect to any proposed distribution of any of its
securities (other than a registration to be effected on Form S-4, S-8 or other
similar limited purpose form), whether for sale for its own account or for the
account of any other person holding registration rights with respect to the
securities of the Company, or both, then the Company each such time shall give
written notice of such proposed filing to the Holders of Registrable Stock at
least thirty (30) days before the anticipated filing date, and such notice shall
describe in detail the proposed registration and distribution (including those
jurisdictions where registration or qualification under the securities or blue
sky laws is intended) and shall offer the Holders of Registrable Stock the
opportunity to register such number of shares of Registrable Stock as the
Holders of Registrable Stock may request. Upon receipt by the Company by the
anticipated filing date of written requests from Participating Holders for the
Company to register their Registrable Stock, the Company shall permit, or in the
event of any underwritten offering, shall use its best efforts to cause the
managing underwriter or underwriters of such proposed underwritten offering to
permit, the Participating Holders to include such Registrable Stock in such
offering on the same terms and conditions as any similar securities of the
Company included therein; provided, however, that if in the written opinion of
the managing underwriter of such offering, the inclusion of the total amount or
kind of securities in such offering would adversely effect the marketing or the
success of the offering of the Company's securities proposed to be so registered
then the amount of Registrable Stock proposed to be registered (other than any
person's exercising demand registration rights) shall be eliminated or reduced
in proportion to their respective values to the extent necessary to reduce the
total amount of securities to be included in such offering on behalf of such
holders of securities to the amount recommended by such managing underwriter.
For purposes of this Section, "value" shall mean principal amount with respect
to debt securities and the proposed offering price per share with respect to
equity securities. Notwithstanding the foregoing, if, at any time after giving
written notice of its intention to register the Company's securities and prior
to the effectiveness of the registration statement filed in connection with such
registration, the Company determines for any reason either not to effect such
registration or to delay such registration, the Company may, at its election, by
delivery of written notice to the Participating Holders, (i) in the case of a
determination not to effect registration, relieve itself of its obligation to
register any Registrable Stock in connection with such registration, or (ii) in
the case of determination to delay the registration, delay the registration of
such Registrable Stock for the same period as the delay in the registration of
such other securities.
ii) The Company shall not be required to include any of the
Registrable Stock of a Participating Holder in any registration statement or
post-effective amendment prepared at its own instance unless the Participating
Holders shall convert all of the Convertible Series A to Common Stock
immediately after the date the Company's registration statement for the
Registrable Stock filed with the Commission is declared effective by the
Commission and unless the Participating Holders furnish such information and
sign such documents as may be required by the Commission or reasonably requested
by the Company in accordance with generally accepted practices, in connection
with such proposed distribution.
d) Covenants of the Company with Respect to Registration. In connection
with any registration under this Section 7, the Company shall, as expeditiously
as is reasonably possible:
i) Prepare and file with the Commission a registration statement with
respect to such Registrable Stock and, subject to the last sentence of Section
7(c)(i) hereof, use its best efforts to cause such registration statement to
become effective.
ii) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective
until, in the case of an underwritten public offering, each underwriter has
completed the distribution of all securities purchased by it, and, subject to
Section 7(b)(iv), in all other cases until the earlier of (i) the sale of all
included Registrable Stock covered thereby or (ii) 180 days from the effective
date of the registration statement, and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all included
Registrable Stock covered by such registration statement;
iii) Furnish to the Participating Holders such number of copies of a
prospectus, including, if applicable, a preliminary prospectus, in conformity
with the requirements of the Securities Act, and such other documents as the
selling shareholders may reasonably request in order to facilitate the
disposition of Registrable Stock owned by the Participating Holders.
iv) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions within the United States as shall be reasonably
requested by the Participating Holders, or, in the case of an underwritten
public offering the managing underwriter shall reasonably request, provided,
however, that the Company shall not be required in connection therewith or as a
condition hereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdiction.
v) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. The Participating Holders
shall also enter into and perform their obligations under such an agreement.
vi) Notify the Participating Holders, at any time when a prospectus
relating to Registrable Stock covered by such registration statement is required
to be delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, and at
the request of the Holder, as promptly as practicable prepare, file and furnish
to the Holder a reasonable number of copies of a supplement to or an amendment
of such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing.
vii) If the Company has delivered preliminary or final prospectuses to
the Holder and after having done so the prospectus is amended to comply with the
requirements of the Securities Act, the Company shall promptly notify the Holder
and, if requested, the Holder shall immediately cease making offers of included
Registrable Stock and return prospectuses to the Company. The Company shall
promptly provide the Holder with revised prospectuses and, following receipt of
the revised prospectuses, the Holder shall be free to resume making offers of
the included Registrable Stock.
e) Payment of Costs and Expenses of Registration. The Company shall pay all
costs, fees and expenses in connection with all registration statements filed
under this Section 7 including, without limitation, the Company's legal and
accounting fees and disbursements, printing expenses and blue sky fees and
expenses, but not including the fees and expenses of counsel and accountants and
advisors for the Participating Holders in connection with such registration.
Further, the Company shall not pay for underwriting discount and commissions and
underwriter's expense allowance allocable to the Registrable Stock being
registered or state transfer taxes.
f) Indemnification.
i) The Company shall indemnify each Participating Holder and any such
person controlling it within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended, against any
loss, claim, damage, expense or liability (including without limitation all
expenses reasonably incurred in investigating, preparing, or defending against
any claim whatsoever, such expenses to be reimbursed by the Company as they are
incurred) to which they may become subject under the Securities Act, the
Exchange Act or otherwise, arising out of or based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus or any amendments or supplements thereto in which
Registrable Stock is included or in any application, statement or other document
filed by the Company with the Commission or any securities exchange or in any
jurisdiction in connection with qualifying such Registrable Stock under the
securities laws thereof, or (ii) the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading, unless such statement or omission is made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Participating Holder expressly for use in any such registration statement
or other document.
ii) Each Participating Holder shall, as a condition to such
registration of Registrable Stock, agree to indemnify the Company and any person
controlling the Company within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, against any loss, claim, damage or expense
or liability (including without limitation all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever, such
expenses to be reimbursed by the Participating Holder as they are incurred) to
which they may become subject under the Securities Act, the Exchange Act or
otherwise, arising out of or based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in any registration statement or
prospectus or any amendments or supplements thereto in which Registrable Stock
is included or in any application, statement or other document filed by the
Company with the Commission or any securities exchange or in any jurisdiction in
connection with qualifying such Registrable Stock under the securities laws
thereof, or (ii) the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading,
provided, in each case that such statement or omission is made in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of such Participating Holder expressly for use in any such registration
statement or other document.
iii) Promptly upon receipt by a party claiming indemnification
hereunder of notice of the commencement of any action involving a claim referred
to above, such indemnified party will, if a claim in respect thereof is to be
made against a party which may be required to indemnify such party hereunder,
give written notice to the latter of the commencement of such action. In any
case, if any such action is brought against an indemnified party, the
indemnifying party shall be entitled to participate in and to assume the defense
of such action, to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party. Except as set forth herein, the
indemnified party and any party cooperating in the defense of such claim shall
not settle or compromise any such claim or admit liability without the express
written consent of the indemnifying party. The indemnified party shall have the
right to be represented by an advisory counsel and accountants, at its own
expense, and the indemnified party shall be kept fully informed of such action,
suit or proceeding at all stages thereof whether or not the indemnified party is
so represented.
Notwithstanding the foregoing, the indemnified party may immediately cause
to be paid or discharged any asserted claim the non-payment of which would have
an immediate substantial adverse impact on the indemnified party and any claim
which the indemnifying party has not disputed within thirty days of notice as
provided above.
iv) If the indemnification provided for in this Section 7(f) is
unavailable or insufficient to hold harmless an indemnified party under such
Section in respect of any losses, claims, damages or liabilities or action in
respect thereof or referred to therein, then each indemnifying party shall in
lieu of indemnifying such indemnified party as a result of such losses, claims,
damages, liabilities or actions contribute to the amount paid by the indemnified
party in such proportion as is appropriate to reflect the relative fault of the
Company, on the one hand, and the Participating Holders, on the other, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or actions as well as any other relevant equitable
considerations, including the failure to give the notice required under such
Section. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
relates to information supplied by the Company on the one hand, or the
Participating Holders on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Participating Holders agree that it
would not be just and equitable if contribution pursuant to this Section
7(f)(iv) were determined by pro rata allocation or by any other method of
allocation which did not take account of the equitable considerations referred
to above in this subsection. No person guilty of fraudulent misrepresentations
(within the meaning of Section 11(f) of the Securities Act), shall be entitled
to contribution from any person who is not guilty of such fraudulent
misrepresentations.
v) The obligations of the Company and the Participating Holders under
this Section 7(f) shall survive the completion of any offering of Registrable
Stock in a registration statement under this Section 7.
vi) The rights of indemnification contained in this Section 7 shall
not be deemed to be the exclusive remedy of the parties hereto and such rights
shall be in addition to any other rights or remedies which any party hereto may
have at law or equity.
g) Assignment of Registration Rights. The Subscriber's rights and
obligations set forth in this Section 7 shall automatically be deemed assigned
to any transferee or assignee of Registrable Stock, provided that immediately
following such transfer the further disposition of such Registrable Stock by the
transferee or assignee is restricted under the Securities Act; provided however,
that the termination of registration rights in respect of any shares of
Registrable Stock by reason of the operation of Section 7(a) shall be binding
upon any transferee of such Registrable Stock. Upon the request of any such
Holder, the Company will confirm in writing to any transferee of such Xxxxxx's
Registrable Stock the Company's agreements contained in this Section 7, but no
failure of the Company to confirm such obligations shall in any way impair such
transferee's rights under this Section 7.
h) Reporting Requirements Under the Securities Exchange Act of 1934, as
Amended (the "Exchange Act"). The Company agrees to keep its Common Stock
registered under Section 12 of the Exchange Act and to file timely (whether or
not it shall then be required to do so) such information, documents and reports
as the Commission may require or prescribe under Section 13 of the Exchange Act.
The Company forthwith upon request agrees to furnish to any Holder of
Convertible Series A and Conversion Shares (a) a copy of the most recent annual
or quarterly report of the Company and (b) such other reports and documents
filed by the Company with the Commission as such Holder may reasonably request
in availing itself of an exemption for the sale of Conversion Shares without
registration under the Securities Act.
i) Rule 144. With a view to making available the benefits of certain rules
and regulations of the Commission which may permit the sale of the Conversion
Shares to the public without registration, the Company agrees to use its best
efforts to make and keep public information available as those terms are
understood and defined in Rule 144 under the Securities Act and to use its best
efforts to file with the Commission in a timely manner all reports and other
documents required of the Company under the Exchange Act.
j) Forms. All references in this Agreement to particular forms of
registration statements are intended to include, and shall be deemed to include,
references to all successor forms which are intended to replace, or to apply to
similar transactions as, the forms herein referenced.
k) Termination. This Agreement shall terminate and be of no further force
and effect on the earlier of (i) the date ten (10) years from the date hereof;
or (ii) the date on which all of the Conversion Shares subject hereto shall no
longer be Registrable Stock.
8. Conditions to Closing.
a) Conditions to Subscriber's Obligations at the Closing. Purchaser's
obligations to purchase the Convertible Series A at the Closing are subject to
the satisfaction, at or prior to the Closing Date, of the following conditions:
i) Representations and Warranties True; Performance of Obligations.
The representations and warranties made by the Company in Section 6 hereof shall
be true and correct in all material respects as of the Closing Date with the
same force and effect as if they had been made as of the Closing Date, and the
Company shall have performed all obligations and conditions herein required to
be performed or observed by it on or prior to the Closing.
ii) Legal Investment. On the Closing Date, the sale and issuance of the
Convertible Series A and the proposed issuance of the Conversion Shares shall be
legally permitted by all laws and regulations to which the Purchaser and the
Company are subject.
iii) Filing of Articles of Amendment. The Articles of Amendment shall
have been filed with the Secretary of State of the State of Colorado.
iv) Reservation of Conversion Shares. The Conversion Shares issuable
upon conversion of the Convertible Series A shall have been duly authorized and
reserved for issuance upon such conversion.
v) Compliance Certificate. The Company shall have delivered to the
Subscriber a Compliance Certificate, executed by the President or a Vice
President of the Company, dated the Closing Date, to the effect that the
conditions specified in subsections (i), (iii), and (iv) of this Section 8 have
been satisfied.
vi) Consulting Agreement. A Consulting Agreement substantially in the
form attached hereto as Exhibit C shall have been executed and delivered by the
parties thereto.
vii) Promissory Note. A Promissory Note substantially in the form
attached hereto as Exhibit D shall have been executed and delivered by the
parties thereto.
viii)Cash Payment. The Company shall have delivered to Mogo Financial
Management Company the sum of One Hundred Seventy-Five Thousand Dollars
($175,000.00) in immediately available funds.
(ix) Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser and its counsel, and the
Purchaser and its counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
9. Conditions to Obligations of the Company. The Company's obligation to
issue and sell the Convertible Series A at the Closing is subject to the
satisfaction, on or prior to such Closing, of the following conditions:
a) Representations and Warranties True. The representations and warranties
made by the Subscriber in Section 5 hereof shall be true and correct in all
material respects at the date of the Closing, with the same force and effect as
if they had been made on and as of said date.
b) Filing of Articles of Amendment. The Articles of Amendment shall have
been filed with the Secretary of State of the State of Colorado.
c) Cash Payment. The Company shall have delivered to Mogo Financial
Management Company d/b/a Mogo Technical Consulting the sum of One Hundred
Seventy-Five Thousand Dollars ($175,000.00) in immediately available funds.
10. Confidentiality. The Subscriber shall hold and shall cause its
consultants and advisors to hold in strict confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of law,
all documents and information concerning the Company furnished to it (except to
the extent that such information can be shown to have been (a) previously known
by the party to which it was furnished, (b) in the public domain through no
fault of such party or (c) later lawfully acquired from other sources by the
party to which it was furnished), and Subscriber shall not release or disclose
such information to any other person or entity, except its auditors, attorneys,
financial advisors, bankers and other consultants and advisors in connection
with this Agreement. Subscriber shall be deemed to have satisfied its obligation
to hold confidential information concerning or supplied to it if it exercises
the same care as it takes to preserve confidentiality for its own similar
information.
11. Governing Law. This Agreement has been made in, and shall be construed
in accordance with, the laws of the State of Georgia applicable to contracts
made and to be fully performed therein.
12. Entire Agreement. This Agreement and the Exhibits and other documents
delivered pursuant hereto contain the entire understanding and agreement of the
parties with respect to the subject matter hereof and supersedes all
negotiations, representations, and other agreements made by and between such
parties with respect hereto.
13. Assignment. The Subscriber may assign its rights to acquire shares of
Convertible Series A hereunder with the written consent of the Company. Any such
assignment must be in compliance with the Securities Act.
14. Survival of Representations, Warranties and Covenants. The parties
agree that all representations, warranties and covenants contained in this
Agreement shall survive the closing of the transaction as set forth herein in
the Agreement.
15. Waivers and Amendments. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally or by course of
dealing, but only by a statement in writing signed by the party against which
enforcement of the change waiver, discharge or termination is sought, except to
the extent provided in this Section 15. Specifically, but without limiting the
generality of the foregoing, the failure of any party at any time or times to
require performance of any provision hereof by the Company shall in no manner
affect the right of such party at a later time to enforce the same. No waiver by
any party of the breach of any term or provision contained in this Agreement, in
any one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement
16. Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Subscriber and the
closing of the transactions contemplated hereby.
17. Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of the Convertible Series A and Conversion Shares from time to time.
18. Severability. In case any provision of the Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
19. Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company
and to the Subscriber at the addresses set forth below or at such other address
as the Company or Subscriber may designate by ten (10) days advance written
notice to the other.
20. Expenses. Each party shall pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and performance of this
Agreement.
21. Attorneys' Fees. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
22. Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
23. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
24. Broker's Fees. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party indirectly in connection with the transactions
contemplated herein. Each party hereto further agrees to indemnify each other
party for any claims, losses or expenses incurred by such other party as a
result of the representation in this Section 24 being untrue.
PRIME TECHNOLOGICAL SERVICES, INC.
By:/s/ X. Xxxx Xxxx
--------------------
Name:X. Xxxx Xxxx
Title:CEO
Taxpayer Identification Number:
_____________________________
Address:_____________________
_____________________________
_____________________________
Xxxxxx to and accepted this 10th day of December, 1999.
LEISURE TIME CASINOS & RESORTS, INC.
By:/s/ Xxxx X. Xxxxxxx
----------------------------
Xxxx X. Xxxxxxx, President
Address: 0000 Xxxxxxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
EXHIBIT A
# of Original
Item Description Units Price PO # Totals
----------- ------------- -------- ----------- ------- --------------
1 LTT-91000 T340+ Main 2233 $362.87 $ 810,288.71
2 LTT-91000 T340+ Main 4961 $350.08 $1,736,741.92
-------------
$2,547,030.63
=============
Items to be taken from line 1 first then line 2 after line one is completely
delivered.
