EXECUTION COPY - FINAL
ASSET PURCHASE AGREEMENT
by and among
COUNTRY TONITE BRANSON, LLC
(a Nevada limited liability company),
ON STAGE ENTERTAINMENT, INC.
(a Nevada corporation),
BOUNCEBACK ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
(a Minnesota corporation),
COUNTRY TONITE ENTERPRISES, INC.
(a Nevada corporation),
and
CRC OF BRANSON, INC.
(a Missouri corporation)
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made as of the 25th day of January 2001,
by and among Country Tonite Branson, LLC, a Nevada limited liability company
("CTB"), On Stage Entertainment, Inc., a Nevada corporation ("On Stage"), Bounce
Back ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Minnesota corporation ("BBT"), Country Tonite
Enterprises, Inc., a Nevada corporation ("CTE"), and CRC of Branson, Inc., a
Missouri corporation ("CRC of Branson", and together with CTE, the "Selling
Entities", and each individually, a "Selling Entity").
Certain other terms are used herein as defined below in Section 1 or
elsewhere in this Agreement.
Background
The Selling Entities desire to transfer to CTB the Purchased Assets (as
defined herein) in exchange for the assumption by CTB of the Assumed Liabilities
(as defined herein) and the payment by CTB of the Purchase Price (as defined
herein) in accordance with the terms and conditions set forth in this Agreement.
CTB desires to acquire the Purchased Assets and assume the Assumed Liabilities.
NOW, THEREFORE, in consideration of and reliance on the respective
representations, warranties and covenants contained herein and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Definitions. For convenience, certain terms used in more than one part
of this Agreement are listed in alphabetical order and defined or referred to
below (such terms as well as any other terms defined elsewhere in this Agreement
shall be equally applicable to both the singular and plural forms of the terms
defined).
"$650,000 Secured Short Term Note" means a promissory note from CTB to the
benefit of the Selling Entities in the principal amount of $650,000, which shall
accrue interest at the rate of ten percent (10%) per annum from the Closing Date
(payable in arrears), is secured by the Purchased Assets and which shall mature
on or before March 15, 2001, a true and correct form of which is attached hereto
as "Exhibit B-1" and is secured by the Security Agreement.
"$2,800,000 Secured Promissory Note" means a promissory note from CTB to
the benefit of the Selling Entities in the principal amount of $2,800,000, which
shall accrue interest at the rate of ten percent (10%) per annum from the
Closing Date (payable monthly, in arrears), is secured by the Purchased Assets
and which shall mature on or before July 31, 2001, a true and correct form of
which is attached hereto as "Exhibit B-2" and is secured by the Security
Agreement.
"Affiliates" means, with respect to a particular party, Persons
controlling, controlled by or under common control with that party, as well as
the officers, directors and majority-owned Persons of that party and of its
other Affiliates. For purposes of the foregoing, ownership, directly or
indirectly, of twenty percent (20%) or more of the voting stock or other equity
interest of a person shall be deemed to constitute control.
"Agreement" means this Agreement, including the Schedules and Exhibits
attached hereto.
"Assets" means all of the assets, properties and rights of every kind and
description, real and personal, tangible and intangible (including goodwill),
wherever situated and whether or not reflected in the most recent Financial
Statements, that are owned or possessed by a Selling Entity and relate primarily
to the Business.
"Assumed Liabilities" is defined in Section 2.3.
"Audited Financial Statements" is defined in Section 4.4.
"Balance Sheet" is defined in Section 4.4.
"Balance Sheet Date" is defined in Section 4.4.
"BBT Indemnified Party" is defined in Section 10.2.
"Benefit Plans" means all employee benefit plans of any Selling Entity
relating to the Business (including plans within the meaning of Section 3(3) of
ERISA) and any related or separate Contracts, plans, trusts, programs, policies,
arrangements, practices, customs and understandings, in each case whether formal
or informal, that provide benefits to any present or former employee of the
Business, or present or former beneficiary, dependent or assignee of any such
employee or former employee, including all incentive, bonus, deferred
compensation, vacation, holiday, medical, disability, share purchase or other
similar plans, policies, programs, practices or arrangements.
"BDO ▇▇▇▇▇▇▇" means BDO ▇▇▇▇▇▇▇, LLP, an independent certified public
accounting firm.
"Business" means collectively the business of the Selling Entities
conducted under the "Country Tonite" name, including the leasing and operation
of the Country Tonight Theater in Branson, Missouri, but specifically excluding
the ownership and operation of the Country Tonight production show based in
Pigeon Forge, Tennessee.
"Charter Documents" means an entity's certificate or articles of
incorporation, certificate defining the rights and preferences of securities,
articles of organization, general or limited partnership agreement, certificate
of limited partnership, joint venture agreement or similar document governing
the entity.
"Closing" is defined in Section 3.1.
"Closing Date" means the date of the Closing.
"CTB Indemnfied Party" is defined in Section 10.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agreements" means the $2,800,000 Secured Promissory Note, the
$650,000 Secured Short Term Note and the Security Agreement as the parties
hereto shall enter into prior to the closing.
"Commission" means the United States Securities and Exchange Commission.
"Commitments" is defined in Section 8.7.
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"Confidential Information" means any confidential information or trade
secrets of the Business, including information and knowledge pertaining to
products and services offered, innovations, designs, ideas, plans, trade
secrets, proprietary information, know-how and other technical information,
advertising, marketing plans and systems, distribution and sales methods and
systems, sales and profit figures, customer and client lists, and relationships
with dealers, distributors, wholesalers, customers, clients, suppliers and
others who have business dealings with the Business.
"Contract" means any written or oral contract, agreement, lease, plan,
instrument or other document or commitment, arrangement, undertaking, practice
or authorization that is binding on any Person or its property under applicable
law.
"Copyrights" means registered copyrights, copyright applications and
unregistered copyrights.
"Court Order" means any judgment, decree, injunction, order or ruling of
any Federal, state, local or foreign court or governmental or regulatory body or
arbitrator or authority that is binding on any Person or its property under
applicable law.
"Customers" is defined in Section 4.22.
"Default" means (a) a breach, default or violation, (b) the occurrence of
an event that with or without the passage of time or the giving of notice, or
both, would constitute a breach, default or violation or cause an Encumbrance to
arise or (c) with respect to any Contract, the occurrence of an event that with
or without the passage of time or the giving of notice, or both, would give rise
to a right of termination, renegotiation or acceleration or a right to receive
damages or a payment of penalties.
"Encumbrances" means any lien, mortgage, security interest, pledge,
restriction on transferability or voting, defect of title or other claim, charge
or encumbrance of any nature whatsoever on any property or property interest.
"Environmental Condition" is defined in Section 4.14(b).
"Environmental Law" is defined in Section 4.14(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Account" means the $100,000 deposit money CTB has previously
deposited with Escrow Agent, along with the $250,000 deposit money CTB will
deposit by January 26, 2001 pursuant to Section 2.6(a)(ii) below, into Escrow
Agents' interest bearing client trust account number ▇-▇▇▇-▇▇▇ at Commerce Bank
of Cherry Hill, New Jersey, for the benefit of account number ▇▇-▇▇▇▇▇▇▇.
"Escrow Agent" means ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, LLP.
"Escrow Agreement" means that Escrow Agreement dated November 21, 2000 by
and between BBT, On Stage and Escrow Agent.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Assets" is defined in Section 2.2.
"Excluded Liabilities" is defined in Section 2.4.
"Financial Statements" is defined in Section 4.4.
"GAAP" means generally accepted accounting principles in the United States
of America.
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"Hazardous Substances" means (i) any "hazardous substances" as defined by
the federal Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. ▇▇.▇▇. 9601 et seq., (ii) any "extremely hazardous substance,"
"hazardous chemical" or "toxic chemical" as those terms are defined by the
federal Emergency Planning and Community Right-to-Know Act, 42 U.S.C. ▇▇.▇▇.
11001 et seq., (iii) any "hazardous waste" as defined under the federal Solid
Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42
U.S.C. ▇▇.▇▇. 6901 et seq., (iv) any "pollutant" as defined under the federal
Water Pollution Control Act, 33 U.S.C. ▇▇.▇▇. 1251 et seq., as any of such laws
in clauses (i) through (iv) may be amended from time to time, and (v) any
regulated substance or waste under any Laws or Court Orders that currently exist
or that may be enacted, promulgated or issued in the future by any Federal,
state or local governmental authorities concerning protection of the
environment.
"Indemnified Party" is defined in Section 10.5.
"Indemnifying Party" is defined in Section 10.5
"Intellectual Property" means any Copyrights, Patents, Trademarks, trade
names, technology rights and licenses, trade secrets, franchises, know-how and
formulae, inventions, designs, processes, drawings, specifications, patterns and
other intellectual property owned by or licensed to a Selling Entity relating to
the Business.
"Inventory" means any inventory, including raw materials, supplies, work in
process and finished goods.
"Knowledge" means the actual knowledge of a director, officer or other
employee, provided that such persons shall have made due and diligent inquiry of
those individuals whom such director, officer or other employee reasonably
believe would have actual knowledge of the matters represented.
"Law" means any statute, law, ordinance, regulation, order or rule of any
federal, state, local, foreign or other governmental agency or body or of any
other type of regulatory body, including those covering environmental, energy,
safety, health, transportation, bribery, record keeping, zoning,
anti-discrimination, antitrust, wage and hour, and price and wage control
matters.
"Liability" means any direct or indirect liability, indebtedness,
obligation, expense, claim, loss, damage, deficiency, guaranty or endorsement of
or by any Person, absolute or contingent, accrued or unaccrued, due or to become
due, liquidated or unliquidated.
"License Agreement" means that certain license agreement dated as of April
26, 2000 by and between CTE and Country Tonite Theatre in Pigeon Forge,
Tennessee.
"Litigation" means any lawsuit, claim, action, dispute, investigation,
arbitration, inquiry, administrative or other proceeding or prosecution.
"Material Adverse Effect" means a material adverse effect on the Business
or the Purchased Assets, in each case taken as a whole, or the financial
condition or the results of operations of the Business, and when used with
respect to representations, warranties or conditions, means the individual
effect of the situation to which it relates and also the aggregate effect of all
similar situations unless the context indicates otherwise.
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"Non-Assignable Contract" is defined in Section 2.5.
"Ordinary Course" or "ordinary course of business" means the ordinary
course of business that is consistent in nature and, where relevant, amount with
past practices.
"Patents" means all patents and patent applications.
"Permit" means any federal, state or local governmental permit, license,
registration, certificate of occupancy, approval and other authorization.
"Person" means any natural person, corporation, partnership,
proprietorship, association, trust or other legal entity.
"Personal Property Leases" is defined in Section 4.8.
"Prorations" is defined in Section 2.6.
"Purchase Price" is defined in Section 2.6.
"Purchased Assets" is defined in Section 2.1.
"Real Estate Leases" is defined in Section 4.6.
"Real Property" is defined in Section 4.6.
"Restricted Business " is defined in Section 6.4(a).
"Required Consents" is defined in Section 4.3.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement" means the security agreement substantially in the form
of Exhibit "D", attached hereto and made a part hereof.
"Software" means any computer software of any nature whatsoever, including
all systems software, all applications software, whether for general business
usage (e.g., accounting, finance, word processing, graphics, spreadsheet
analysis, etc.) or specific, unique-to-the-Business usage (e.g., telephone call
processing, etc.) and all computer operating, security or programming software,
that is owned by or licensed to a Selling Entity and relates primarily to the
Business, or has been developed or designed for, or is in the process of being
developed or designed primarily for the Business, and any and all documentation
and object and source codes related thereto.
"Taxes" is defined in Section 4.12.
"Termination Fee" is defined in Section 11.2(b).
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"Trademarks" means registered trademarks, registered trade name and service
marks, trademark, trade name and service ▇▇▇▇ applications, unregistered
trademarks, trade name and service marks and brand names, service marks and
logos.
"Transaction Documents" means this Agreement and the Collateral Agreements.
"Transactions" means the purchase and sale of the Purchased Assets and the
consummation of the other transactions contemplated by the Transaction
Documents.
"Transferred Employees " is defined in Section 6.10.
2. Purchase and Sale of the Business and Assets.
2.1 The Purchased Assets. Subject to the terms and conditions of this
Agreement, at the Closing, the Selling Entities shall grant, sell, assign,
transfer, convey and deliver to CTB, free and clear of all Encumbrances
whatsoever, other than the permitted Encumbrances set forth on Schedule 2.1 (the
"Permitted Encumbrances"), and CTB shall purchase from the Selling Entities, the
Business as a going concern, and all right, title and interest of the Selling
Entities in and to all of the Assets used in or with respect to the conduct of
the Business other than the Excluded Assets (collectively, the "Purchased
Assets") as the same shall exist on the Closing Date including the following:
(a) Real Property Leased. Each Selling Entity's interest, as a lessee, in
the real property leased by such Selling Entity as is described on Schedule
2.1(a), and any easements, deposits or other rights pertaining thereto;
(b) Equipment and Other Tangible Personal Property. All equipment,
leasehold improvements, automobiles, supplies, office furniture and office
equipment, computers and telecommunications equipment and other items of
personal property that are owned by a Selling Entity relating to the Business,
including those described on Schedule 2.1(b);
(c) Contracts of the Business. All of the interest of each Selling Entity
in all Contracts, the License Agreement (save for any financial benefits),
leases of equipment and other personal property, sale orders, purchase orders,
commitments, instruments and all other agreements relating, in all cases, to the
Business, including those listed on Schedule 2.1(c);
(d) Customer Records, Sales and Marketing Materials. All customer records,
including principal contacts, address and telephone number, purchasing history,
payment information and any other information with respect to the customers of
the Business, sales data, catalogs, brochures, suppliers' names, mailing lists,
art work, photographs and advertising material relating to the Business, whether
in electronic form or otherwise;
(e) Permits. All rights under Permits relating to the Business, including
those listed on Schedule 2.1(e), to the extent such Permits are transferable to
CTB;
(f) Intellectual Property. All Intellectual Property, including the
Intellectual Property described in Schedule 2.1(f) and exclusive rights to the
name "Country Tonite Enterprises, Inc." to the trademark "Country Tonite" and to
the title song "Country Tonite" (subject to the rights of the co-owner thereof)
and all goodwill associated therewith, along with all rights, title and interest
in all video and song recordings of the Country Tonite Show from inception to
the extent of the interest of the Selling Entities therein, except in all cases
as granted in the License Agreement;
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(g) Property, Personnel and Accounting Records. All other records of the
Selling Entities relating to the Business, including property records and
records relating to employees (provided that the Selling Entities shall be
entitled to retain copies of the foregoing), all location manuals, employee
policy manuals, safety manuals, forms of independent contractor; employee,
marketing and ticket voucher agreements and all other types of manuals or
contracts related to the presentation of the "Country Tonite Show", in
electronic format if possible;
(h) Inventory. All Inventory relating to the Business;
(i) Prepaid Expenses. All rights relating to any prepaid expenses of or
arising in connection with the Business, including those described on Schedule
2.1(i);
(j) Software. All Software, including the Software described in Schedule
2.1(j)(i), and all documentation related thereto; provided, however, that all
third party licensed Software included in the Purchased Assets shall be
transferred to CTB subject to the terms and conditions of the third party
licenses listed in Schedule 2.1(j)(ii) under which the particular Selling Entity
acquired such licensed Software; and
(k) Other Intangible Assets. All other assets (including all causes of
action, rights of action, contract rights and warranty and product liability
claims against third parties) relating to the Purchased Assets or the Business,
including those described on Schedule 2.1(k).
2.2 Excluded Assets. The corporate seal, Charter Documents, bylaws, minute
book and other corporate records of each Selling Entity, those assets of each
Selling Entity described in Schedule 2.2, insurance Contracts, cash, accounts
receivable and all financial benefit derived under the License Agreement for the
Country Tonight production show based in Pigeon Forge, Tennessee (collectively,
the "Excluded Assets") shall not be included in the Purchased Assets in any
event.
2.3 Assumed Liabilities. At the Closing, and subject to ▇▇▇▇▇▇▇ ▇.▇, ▇▇▇
shall assume the following obligations (the "Assumed Liabilities"):
(a) all obligations that come into existence after the Closing (and do not
relate to the period prior to or at the Closing) under all Contracts and Permits
listed on Schedules 2.1(c) and (e) that are conveyed to CTB as Purchased Assets
pursuant to the terms and conditions hereof; and
(b) all advance deposits and pre-paid ticket sales (and ticket or amusement
taxes pertaining thereto) of the Business as of the Closing Date, but only to
the extent of the amount of the advance deposits and pre-paid ticket sales
applied as a reduction in the Purchase Price at Closing pursuant to Section
2.6(c).
(c) all obligations of CTE under the License Agreement (even though the
revenues derived from the License Agreement will be retained by CTE as an
Excluded Asset hereunder).
2.4 Excluded Liabilities. Except as expressly set forth in ▇▇▇▇▇▇▇ ▇.▇, ▇▇▇
shall not, by virtue of its purchase of the Purchased Assets or otherwise in
connection with the Transactions, assume or become responsible for any
Liabilities (the "Excluded Liabilities") of any Selling Entity of any nature
whatsoever arising on or before the Closing Date, including, but not limited to
(a) Liabilities relating to or arising out of any Selling Entity, the Purchased
Assets, the Business (including any event, condition, occurrence, action,
inaction or transaction relating to any of the foregoing) or the actions of any
Selling Entity's officers, employees, representatives or agents prior to or at
the Closing, (b) Liabilities for any Taxes (other than what is provided in
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Section 2.3(b)), (c) Liabilities relating to any claims for health care or other
welfare benefits, (d) Liabilities relating to any violation of any Law, (e) tort
Liabilities, (f) Liabilities from claims arising under any Contract or Permit
not (i) assumed by CTB pursuant hereto or (ii) included in any arrangement set
forth in Section 2.5; (g) Liabilities for claims arising under any Contract or
Permit to the extent such claim is based on events, conditions, acts or
omissions of any Person which occurred prior to or at the Closing; (h)
contingent Liabilities unknown to the Selling Entities at the Closing; and (i)
Liabilities for any accounts payable existing as of the Closing Date or
indebtedness for money borrowed.
2.5 Consent of Third Parties. Nothing in this Agreement shall be construed
as an attempt by any Selling Entity to assign to CTB any Contract or Permit
included in the Purchased Assets that is by its terms or by Law nonassignable
without the consent of any other party or parties, unless such consent or
approval shall have been given, or as to which all the remedies for the
enforcement thereof available to the Selling Entities would not by Law pass to
CTB as an incident of the assignments provided for by this Agreement (a
"Non-Assignable Contract"). To the extent that any such consent or approval in
respect of, or a novation of, a Non-Assignable Contract shall not have been
obtained on or before the Closing Date, the appropriate Selling Entity shall
continue to use reasonable efforts to obtain any such consent, approval or
novation after the Closing Date until such time as it shall have been obtained,
and shall cooperate with CTB in any economically feasible arrangement to provide
that CTB shall receive the benefits of the relevant Selling Entity under such
Non-Assignable Contract, provided that CTB shall undertake to pay or satisfy the
corresponding Liabilities under the terms of such Non-Assignable Contract to the
extent that it would have been responsible therefore if such consent, approval
or novation had been obtained.
2.6 Purchase Price. In addition to assuming the Assumed Liabilities, the
aggregate price to be paid by CTB to the Selling Entities (the "Purchase Price")
for the purchase of the Purchased Assets shall be equal to the following (which
calculation shall be made as of the Closing Date and set forth in a certificate
of CTB and BBT delivered at the Closing):
(a) $3,800,000, which shall be paid by CTB to the Selling Entities as
follows:
(i) $100,000, which has been paid out of the Escrow Account in
accordance with the instructions of the Escrow Agreement;
(ii) $250,000, which is to be deposited in the Escrow Account on or
before January 26, 2001 and which will be paid out of Escrow;
(iii) $650,000 Secured Short Term Note; and
(iv) $2,800,000 Secured Promissory Note.
(b) plus all prepaid expenses to the extent useable by CTB after
the Closing Date as set forth on Schedule 2.1(i);
(c) minus, the amount of all advance deposits and pre-paid
ticket and/or voucher sales (and ticket or amusement taxes
pertaining thereto) of the Business included in the Assumed
Liabilities;
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(d) minus the following, to the extent such amounts relate to
the Purchased Assets or the Business are unpaid as of the
date of Closing and have not been paid by the Selling
Entities prior to or at the Closing, all of which will
become Assumed Liabilities to the extent they are credited
against the Purchase Price:
(i) the prorated amount for the period prior to the Closing
Date of all real estate taxes and assessments, both
general and special, water charges and sewer rents,
whether or not then due or payable, and all other
normally proratable items (collectively, the
"Prorations"), based upon the latest assessments or
actual invoices available (should any such proration be
inaccurate based upon the actual tax ▇▇▇▇ or assessment
when received, any party hereto may demand and shall be
entitled to receive on demand, a payment from the other
correcting such inaccuracy);
(ii) any fees, taxes, impact fees, assessments, delinquent
or otherwise, attributable to a period prior to the
Closing Date;
(iii)any other land use charges attributable to any period
prior to the Closing Date;
(iv) one-half of all necessary State of Missouri, county and
municipal transfer, document stamp and/or recording
taxes, if any, incident to the transaction contemplated
in this Agreement normally attributable to the grantor;
and
(v) one-half of the cost of any escrow fee and charges of
any escrow agent, regardless of whether or not such
escrow agent is also counsel for any party hereto, the
issuer of the Commitments or the agent of such issuer.
2.7 Allocation of the Purchase Price. The Purchase Price allocation shall
be prepared by CTB. CTB and the Selling Entities (in consultation with each
party's financial advisors) shall agree in writing to the allocation prior to
the Closing. The Selling Entities and CTB shall prepare their respective
federal, state and local tax returns employing such agreed allocation and shall
not take a position in any tax proceeding or otherwise that is inconsistent with
such allocation. The Selling Entities and CTB shall give prompt notice to each
other of the commencement of any tax audit or the assertion of any proposed
deficiency or adjustment by any taxing authority or agency which challenges such
allocation.
3. Closing.
3.1 Location; Date. The closing of the Transactions (the "Closing") shall
take place by mail delivery or electronic transmission on the later of January
31, 2001 or the third business day after the date on which the conditions set
forth in Sections 8 and 9 to be satisfied prior to the Closing have been
satisfied (or waived by the party entitled to the benefit thereof), or at such
other date as CTB, BBT and the Selling Entities may agree.
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3.2 Closing Deliveries. In connection with the completion of the
Transactions contemplated in Section 2, at the Closing;
(a) CTB shall deliver or cause to be delivered to the Selling Entities:
(i) $250,000 in cash from the Escrow Account;
(ii) the $650,000 Secured Short Term Note;
(iii) the $2,800,000 Secured Promissory Note;
(iv) the Security Agreement (and any necessary financing
statements); and
(v) such assumption agreements and other agreements,
documents and instruments as may be contemplated by
this Agreement and such other items as may be
reasonably requested by BBT or the Selling Entities to
consummate the transactions contemplated by this
Agreement, each in form and substance reasonably
satisfactory to BBT and the Selling Entities.
(b) BBT and the Selling Entities shall deliver or cause to be
delivered to CTB:
(i) such bills of sale and assignment, deeds and assumption
agreements as may be required to transfer each Selling
Entity's right, title and interest in and to the
Purchased Assets in form and substance reasonably
satisfactory to CTB; and
(ii) such other agreements, documents and instruments as may
be contemplated by this Agreement and such other items
as may be reasonably requested by CTB to consummate the
transactions contemplated by this Agreement, each in
form and substance reasonably satisfactory to CTB.
(c) CTB shall deliver to BBT and the Selling Entities, and BBT and the
Selling Entities shall deliver to CTB, the certificates, instruments and
agreements referred to in Section 9 and Section 8, respectively.
4. Representations and Warranties of BBT and the Selling Entities. BBT and
the Selling Entities, jointly and severally, hereby represent and warrant to CTB
as follows:
4.1 Corporate Status. BBT and each Selling Entity is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and each is qualified to do business as
a foreign corporation and is in good standing in each jurisdiction where it is
required to be so qualified, except where the failure to be so qualified would
not have a Material Adverse Effect.
4.2 Authorization. BBT and each Selling Entity has the requisite power and
authority to own its property and carry on the Business as currently conducted,
and to execute and deliver the Transaction Documents to which it is a party and
to perform the Transactions to be performed by it. Such execution, delivery and
performance by BBT and each Selling Entity has been duly authorized by all
necessary corporate action. Each Transaction Document executed and delivered by
BBT and the Selling Entities as of the date hereof has been duly executed and
delivered by each and constitutes a valid and binding obligation of each Selling
Entity, enforceable against each in accordance with its terms. Each Transaction
Document to be executed and delivered by BBT or a Selling Entity after the date
hereof will have been duly executed and delivered by the relevant party and will
constitute a valid and binding obligation of such party, enforceable against it
in accordance with its terms.
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4.3 Consents and Approvals. Except for the consents specified in Schedule
4.3 (the "Required Consents"), neither the execution nor delivery by BBT or each
Selling Entity of any Transaction Document to which it is a party, nor the
performance of the Transactions to be performed by it thereunder, will require
any filing, consent or approval, constitute a Default or cause any payment
obligation to arise under (a) any Law or Court Order to which BBT or any Selling
Entity is subject, (b) the Charter Documents or bylaws of BBT or any Selling
Entity or (c) any Contract, Permit or other document to which BBT or each
Selling Entity is a party or by which the Business or Purchased Assets may be
subject.
4.4 Financial Statements. Schedule 4.4 includes correct and complete copies
of financial statements of the Business, consisting of the balance sheets of the
Business as of September 30, 1998, 1999 and 2000 and the related statements of
income of the Business for the years then ended, all of which have been
subjected to the same audit procedures as applied to the BBT audited financial
consolidated financial statements audited by BDO ▇▇▇▇▇▇▇ (for 1998 and 1999) and
▇▇▇▇ ▇▇▇▇▇, CPA (for 2000), and are accompanied by the January 3, 2001 ▇▇▇▇
▇▇▇▇▇ Independent Auditor's Report and January 4, 2001 memorandum from ▇▇▇▇▇▇
▇▇▇▇▇▇▇ (collectively, the "Audited Financial Statements") and unaudited
financial statements of the Business consisting of the balance sheet of the
Business as of December 31, 2000 and the related statement of income of the
Business for the three-month period then ended prepared by BBT (collectively,
the "Interim Financial Statements" and together with the Audited Financial
Statements, the "Financial Statements"). The Financial Statements are in all
material respects consistent with the books and records of the Business and the
books and records underlying such Financial Statements include all material
transactions required by GAAP, applied on a consistent basis. The Financial
Statements have been prepared in accordance with GAAP consistently applied and
present fairly the financial position and assets and liabilities of the Business
as of the dates thereof and the results of its operations for the periods then
ended, subject to, in the case of the Interim Financial Statements, normal
year-end adjustments which are not material in amount or significance in any
individual case or in the aggregate, and the absence of footnotes, statements of
cash flows and other presentation items that may be required under GAAP. The
balance sheet as of September 30, 2000 that is included in the Financial
Statements is referred to herein as the "Balance Sheet" and the date thereof is
referred to as the "Balance Sheet Date." The balance sheet as of December 31,
2000 that is included in the Financial Statements is referred to herein as the
"Interim Balance Sheet" and the date thereof is referred to as the "Interim
Balance Sheet Date."
4.5 Title to Assets and Related Matters. The Selling Entities collectively
own and will transfer to CTB at the Closing good, marketable and indefeasible
title to, or with respect to leased assets included in the Purchased Assets, a
valid leasehold interest in, subject to the terms and conditions of such leases,
all of the Purchased Assets, free and clear of all Encumbrances other than
Permitted Encumbrances. The use of the Purchased Assets is not subject to any
Encumbrances (other than Permitted Encumbrances), and such use does not
materially encroach on the property or rights of any other Person. All Purchased
Assets are in the possession or under the control of one or more of the Selling
Entities and consist of all of the Assets necessary to operate the Business as
currently, and since September 30, 2000, operated and which generated the
revenues reflected in the Financial Statements except for Assets disposed of
since such date in the ordinary course of business. Except as set forth on
Schedule 4.5, all of the tangible personal property included in the Purchased
Assets (a) is in good working condition and repair, subject to normal wear and
11
tear, (b) is usable in the ordinary course of business and (c) conforms in all
material respects with all applicable Laws relating to its construction, use and
operation. Except for those items subject to the Personal Property Leases, no
Person other than the Selling Entities owns any vehicles, equipment or other
tangible assets located on the Real Property that are used by the Selling
Entities in the Business (other than immaterial items of personal property owned
by the employees of the Selling Entities) or that are necessary for the
operation of the Business as currently, and since September 30, 2000, operated
except for Assets disposed of since such date in the ordinary course of
business. BBT does not own or lease any Assets used in the operation of the
Business or necessary to operate the Business substantially in accordance with
past practice.
4.6 Real Property. Schedule 4.6 sets forth the complete legal description
of all real estate (including a description of how such real estate is zoned)
used in the operation of the Business as well as any other real estate that is
in the possession of or leased by each Selling Entity and the improvements
(including buildings and other structures) located on such real estate
(collectively, the "Real Property"), identifies which Real Property is owned and
which is leased, and lists any leases under which any such Real Property is
possessed by each Selling Entity or leased by each Selling Entity to others (the
"Real Estate Leases"). All of the buildings and structures included in the Real
Property are structurally sound, and all of the heating, ventilating, air
conditioning, plumbing, sprinkler, fire alarm, electrical and drainage systems,
elevators and roofs, and all other fixtures, equipment and systems at or serving
such Real Property are in good condition, repair and working order (subject to
normal wear and tear) and constitute all of the systems, elevators, roofs,
fixtures and equipment utilized by the Selling Entities in the operation of the
Business as currently, and since September 30, 2000, operated, and there is no
condition that will result in the termination of the present access from the
Real Property to such utility services and other facilities. Neither BBT nor any
Selling Entity has received any written (or to the Knowledge of BBT or any
Selling Entity oral) notices, and neither BBT nor any Selling Entity has reason
to believe, that any governmental body having jurisdiction over any Real
Property intends to exercise the power of expropriation or eminent domain or a
similar power with respect to all or any part of the Real Property. Neither BBT
nor any Selling Entity has received any written (or to the Knowledge of BBT or
any Selling Entity oral) notices, from any governmental body, and neither BBT
nor any Selling Entity has reason to believe, that any of the Real Property or
any improvements erected or situated thereon, or the uses conducted thereon or
therein, violate any Laws of any governmental body having jurisdiction over such
Real Property. Neither BBT nor any Selling Entity has received any written (or
to the Knowledge of BBT or any Selling Entity oral) notice from the holder of
any mortgage, from any insurance company which has issued a policy with respect
to any of the Real Property or from any board of fire underwriters (or other
body exercising similar functions) claiming any defects or deficiencies in any
of the Real Property or suggesting or requesting the performance of any repairs,
alterations or other work to any of the Real Property.
4.7 Certain Personal Property. The Selling Entities have delivered to CTB a
complete fixed asset schedule, describing and specifying the location of all
items of tangible personal property that are included in the Balance Sheet.
Except as listed on Schedule 4.7, since the Balance Sheet Date, no Selling
Entity has (a) acquired any items of tangible personal property that has, in any
case, a carrying value in excess of $10,000, or an aggregate carrying value in
excess of $25,000 or (b) disposed of (other than in the ordinary course of
business) any items of tangible personal property (other than Inventory) that
have, in any case, an initial carrying value in excess of $10,000, or an initial
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aggregate carrying value in excess of $25,000.
4.8 Personal Property Leases. Schedule 4.8 lists all assets and property
(other than Real Property) that have been used in the operation of the Business
and that are possessed by a Selling Entity under an existing lease, including
all trucks, automobiles, machinery, equipment, office equipment, furniture and
computers, except for any lease under which the aggregate annual payments are
less than $1,000 (each, an "Immaterial Lease"). Schedule 4.8 also lists the
leases under which such assets and property listed on Schedule 4.8 are
possessed. All of such leases (excluding "Immaterial Leases") are referred to
herein as the "Personal Property Leases."
4.9 Inventory. All Inventory of each Selling Entity consists of items
useable or saleable in the ordinary course and is valued on each Selling
Entity's books and records at the lower of cost or fair market value. The
inventory records for the Selling Entities that have been delivered to CTB or
made available for inspection by CTB are materially accurate with respect to the
data contained therein.
4.10 Price Guarantees. Schedule 4.10 sets forth any outstanding warranties
or price guarantees made by each Selling Entity.
4.11 Liabilities. Except as specified on Schedule 4.11, no Selling Entity
has any Liabilities with respect to the Business, and none of the Purchased
Assets are subject to any Liabilities, except (a) as specifically disclosed on
the Interim Balance Sheet, (b) Liabilities incurred in the ordinary course since
the Interim Balance Sheet Date, and (c) Liabilities under the License Agreement,
any Contracts specifically disclosed (or not required to be disclosed because of
the term or amount involved) that were not required under GAAP to have been
specifically disclosed or reserved for in the Financial Statements.
4.12 Taxes. With respect to each Selling Entity and each member of any
affiliated group of a Selling Entity, within the meaning of Section 1504 of the
Code, of which a Selling Entity is or has been a member (the Selling Entities
and each such other company referred to in this Section 4.12 as the "Company")
(a) except as described in Schedule 4.12, all reports, returns, statements
(including estimated reports, returns, or statements), and other similar filings
required to be filed on or before the Closing Date by the Company (the "Tax
Returns") with respect to any Taxes (as defined below) have been timely filed
with the appropriate governmental agencies in all jurisdictions in which such
Tax Returns are required to be filed, and all such Tax Returns correctly reflect
the liability of the Company for Taxes for the periods, properties, or events
covered thereby; (b) except as described in Schedule 4.12, all Taxes payable
with respect to the Tax Returns referred to in the preceding clause, and all
Taxes accruable or otherwise attributable to events occurring prior to the
Closing Date, whether disputed or not, whether or not shown on any Tax Return,
and whether or not currently due or payable, will have been paid in full prior
to the Closing Date, or an adequate accrual in accordance with GAAP has been
provided with respect thereto on the Interim Balance Sheet; (c) except as
described in Schedule 4.12, the Company has no knowledge of any unassessed Tax
deficiencies or of any audits or investigations pending or threatened against
13
the Company with respect to any Taxes; (d) except as described in Schedule 4.12,
no Tax Returns of the Company have been examined by the Internal Revenue
Service, and any assessments with respect to such returns have been fully paid;
(e) except as described in Schedule 4.12, there is in effect no extension for
the filing of any Tax Return and the Company has not extended or waived the
application of any statute of limitations of any jurisdiction regarding the
assessment or collection of any Tax; (f) since January 1, 1996, no claim has
been made by any Tax authority in a jurisdiction in which the Company does not
file Tax Returns that it is or may be subject to taxation by that jurisdiction;
(g) there are no liens for Taxes upon any asset of the Company except for liens
for current Taxes not yet due; (h) the Company has timely made all deposits
required by law to be made with respect to employees' withholding and other
payroll, employment, or other withholding taxes, including the portions of such
taxes imposed upon the Company.
For purposes of this Agreement, "Taxes" means any taxes, duties,
assessments, fees, levies, or similar governmental charges, together with any
interest, penalties, and additions to tax, imposed by any taxing authority,
wherever located (i.e., whether federal, state, local, municipal, or foreign),
including all net income, gross income, gross receipts, net receipts, sales,
use, transfer, franchise, privilege, profits, social security, disability,
withholding, payroll, unemployment, employment, excise, severance, property,
windfall profits, value added, ad valorem, occupation, or any other similar
governmental charge or imposition.
4.13 Subsidiaries. Except as disclosed on Schedule 4.13, no Selling Entity
owns in relation to the Business, directly or indirectly, any interest or
investment (whether equity or debt) in any corporation, partnership, business,
trust, joint venture or other legal entity.
4.14 Legal Proceedings and Compliance with Law.
(a) Except as disclosed on Schedule 4.14(a), there is no Litigation that is
pending or, to the Knowledge of BBT or a Selling Entity, threatened against or
related to BBT or a Selling Entity with respect to the Business or the Purchased
Assets. There has been no Default under any Law applicable to the Purchased
Assets or the Business, including any Law relating to protection or quality of
the environment, except for any Defaults that have been cured, and neither BBT
nor any Selling Entity has received any notices from any governmental entity
regarding any alleged Default or investigation under any written order,
instruction or direction pursuant to any Law except those that have been cured.
Since January 1, 1996, there has been no Default with respect to any Court Order
applicable to BBT or a Selling Entity.
(b) Without limiting the generality of Section 4.14(a), except as described
on Schedule 4.14(b), to the Knowledge of BBT or the Selling Entities there has
not been any Environmental Condition (i) at any premises at which the Business
is currently conducted, (ii) at any property owned, leased or operated at any
time by BBT or a Selling Entity (or any predecessor of BBT or a Selling Entity)
or any Person controlling or controlled by any Affiliate of BBT or a Selling
Entity, or (iii) at any property at which wastes have been deposited or disposed
by or at the behest or direction of BBT or a Selling Entity (or any predecessor
of BBT or a Selling Entity) or any Person controlled by any Affiliate of BBT or
a Selling Entity, nor has BBT or any Selling Entity received written notice of
any such Environmental Condition or any investigation, to determine whether any
such Environmental Condition exists. "Environmental Condition" means any
condition or circumstance, including the presence of Hazardous Substances,
whether created by BBT or a Selling Entity (or any predecessor of BBT or a
Selling Entity) or any third party, at or relating to any such property or
premises that would (x) require abatement or correction under an Environmental
Law, (y) give rise to any civil or criminal liability under an Environmental Law
or (z) create a public or private nuisance. "Environmental Law" means all Laws
and Court Orders relating to protection or quality of the environment as well as
any principles of common law under which a Person may be held liable for the
release or discharge of any materials into the environment.
14
(c) Neither BBT nor any Selling Entity has Knowledge of any other written
reports, studies or assessments, whether in the possession or control of BBT or
a Selling Entity, that relate to any Environmental Condition.
(d) Except in those cases where the failure would not have a Material
Adverse Effect, (i) each Selling Entity has obtained and is in substantial
compliance with all Permits, all of which are listed on Schedule 4.14(d) along
with their respective expiration dates, that are required for the ownership of
the Purchased Assets or operation of the Business as reflected in the Financial
Statements, (ii) all of the Permits are currently valid and in full force and
(iii) each Selling Entity has filed such timely and complete renewal
applications as may be required with respect to its respective Permits. Neither
BBT nor a Selling Entity has Knowledge of any threatened revocation,
cancellation or withdrawal of a Permit.
4.15 Contracts. Schedule 4.15 lists each Contract of the following types to
which each BBT and each Selling Entity is a party or by which it is bound
relating to the Business or the Purchased Assets:
(a) Contracts with any present or former five percent (5%) stockholder,
director, officer, employee or consultant or with any Affiliate of a Selling
Entity;
(b) Contracts for the purchase of, or payment for, supplies or products, or
for the performance of services, from or by a third party, in excess of $10,000
with respect to any one supplier or other party;
(c) Contracts to sell or supply products, Inventory or other property to,
or to perform services for, a third party, that involve an amount in excess of
$10,000 with respect to any one customer or other party;
(d) Contracts to sell any product or provide any service to a governmental
or regulatory body;
(e) Contracts limiting or restraining any Selling Entity from engaging or
competing in any lines or business with any Person;
(f) Contracts with any customer providing for a volume refund,
retrospective price adjustment or price guarantee;
(g) Contracts to lease to, or to operate for, any other party any Asset
that involves an amount in excess of $5,000 in any individual case (other than
Real Estate Leases and Personal Property Leases identified on a Schedule);
(h) Any notes, debenture, bonds, conditional sale agreements, equipment
trust sale and lease-back and leasing agreements, letter of credit agreements,
reimbursement agreements, loan agreements or other Contracts for the borrowing
or lending of money (including loans to or from officers, directors,
shareholders or Affiliates of any Selling Entity), or agreements or arrangements
for a line of credit or for a guarantee of, or other undertaking in connection
with, the indebtedness of any other Person;
15
(i) Contracts creating or recognizing any Encumbrances with respect to any
Purchased Assets;
(j) Contracts with distributors, manufacturers' sales representatives or
other sales agents;
(k) Contracts that relate in whole or in part to any Software, technical
assistance or other know-how or other Intellectual Property right;
(l) Contracts for any capital expenditure or leasehold improvement in
excess of $5,000; and
(m) Any other Contracts (other than those that may be terminated on not
more than 30 days' notice without Liability and those described in any of (a)
through (l) above) not made in the ordinary course of business or which are
material to the Business or the Purchased Assets.
4.16 No Selling Entity is in Default under any Contract. To the Knowledge
of BBT and the Selling Entities, neither BBT nor any Selling Entity is in
Default under any Contract relating to the Business or has received any
communication from, or given any communication to, any other party indicating
that BBT or a Selling Entity or such other party, as the case may be, is in
Default under any such Contract. To the Knowledge of BBT and the Selling
Entities, none of the other parties to any such Contract to which BBT or a
Selling Entity is a party is in Default thereunder.
4.17 Insurance. Schedule 4.17 lists all policies or binders of insurance
held by or on behalf of each Selling Entity or relating to the Business or any
of the Purchased Assets, specifying with respect to each policy the insurer, the
type of insurance, the amount of the coverage, the insured, the expiration date,
the policy number and any pending claims thereunder.
4.18 Intellectual Property.
(a) Schedule 4.18 sets forth a correct and complete list and description of
all Intellectual Property and all Software owned by or licensed to any Selling
Entity and used, in whole or in part, directly or indirectly in, and material to
the Business, and indicates whether such Intellectual Property and Software is
owned or licensed by such Selling Entity.
(b) Except as disclosed on Schedule 4.18: (i) the Selling Entities own or
possess adequate licenses or other valid rights to use (without the making of
any payment to others or the obligation to grant rights to others in exchange)
all of such Intellectual Property and Software; (ii) the Intellectual Property
and Software included in the Purchased Assets constitute all such rights and
property necessary to conduct the Business in accordance with past practice and
the rights to which are being transferred to CTB together with the other
Purchased Assets; (iii) no Selling Entity is in Default under any Contract with
respect to any of such Intellectual Property or Software; (iv) the validity of
such Intellectual Property and the rights of any Selling Entity therein and to
the Software has not been questioned in any Litigation to which a Selling Entity
is or was a party or in any other written notice to a Selling Entity, nor, to
the Knowledge of each Selling Entity, is any such Litigation threatened; and (v)
to the Knowledge of BBT and each Selling Entity, the conduct of the Business
does not materially conflict with patent rights, licenses, trademark rights,
trade name rights, copyrights or other intellectual property rights of others.
(c) Except as disclosed on Schedule 4.18, to the Knowledge of BBT and each
Selling Entity, no material use of any Intellectual Property or Software
included within the Purchased Assets has heretofore been, or is now being, made
by any Person other than a Selling Entity or others under the License Agreement,
except for Software licensed to a Selling Entity under a third party license
agreement listed on Schedule 4.18. Except as disclosed on Schedule 4.18, to the
Knowledge of BBT and each Selling Entity, there is no current, and there has not
since January 1, 1996, been any infringement of any such Intellectual Property
or Software owned or licensed by a Selling Entity or used in the Business.
Except for interests being transferred pursuant to this Agreement and pursuant
to the License Agreement, no present or former director, officer, employee or
consultant of a Selling Entity or any Affiliate of a Selling Entity has any
interest, direct or indirect, in any of the Intellectual Property or Software.
(d) To the Knowledge of BBT and each Selling Entity, (i) no Confidential
Information of a Selling Entity has been used, divulged or appropriated for the
benefit of any Person other than the Selling Entities or otherwise to the
detriment of any Selling Entity and (ii) no employee or consultant of a Selling
Entity is, or is currently expected to be, in Default under any term of any
employment Contract, agreement or arrangement relating to the Intellectual
Property, or any confidentiality agreement or any other Contract or any
restrictive covenant relating to the Intellectual Property, or to the
development or exploitation thereof.
16
4.19 Employee Relations.
(a) Except as described on Schedule 4.19, no Selling Entity is in relation
to the Business (i) a party to or otherwise bound by any collective bargaining
or other type of union agreement, (ii) a party to, involved in or, to the
Knowledge of BBT or any Selling Entity, threatened by, any labor dispute or
unfair labor practice charge, or (iii) currently negotiating any collective
bargaining agreement, and no Selling Entity has experienced any work stoppage
during the last three years in the operation of the Business as a result of a
labor dispute. Schedule 4.19 sets forth the names and current annual salary
rates or current hourly wages of all present employees of the Business.
(b) Each Selling Entity in the operation of the Business is in material
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and is not
engaged in any unfair labor practice. There are no outstanding written claims
against any Selling Entity (whether under Law, contract, policy, or otherwise)
asserted by or on behalf of any present or former employee or job applicant of
the Business on account of or for (i) overtime pay, other than overtime pay for
work done in the current payroll period, (ii) wages or salary for any period
other than the current payroll period, (iii) any amount of vacation pay or pay
in lieu of vacation time off, other than vacation time off or pay in lieu
thereof earned in or in respect of the current fiscal year, (iv) any amount of
severance pay or similar benefits, (v) unemployment insurance benefits, (vi)
workers' compensation or disability benefits, (vii) any violation of any
statute, ordinance, order, rule or regulation relating to plant closings,
employment terminations or layoffs, including employee retraining, (viii) any
violation of any statute, ordinance, order, rule or regulations relating to
employee "whistleblower" or "right-to-know" rights and protection, (ix) any
violation of any statute, ordinance, order, rule or regulations relating to the
employment obligations of federal contractors or subcontractors or (x) any
violation of any Law relating to minimum wages or maximum hours of work, and to
the Knowledge of BBT and each Selling Entity no such claims have been asserted.
Since January 1, 1996, no Person (including any governmental body) has asserted
or threatened any claims against any Selling Entity relating to the Business
under or arising out of any Law relating to discrimination or occupational
safety in employment or employment practices.
4.20 ERISA.
(a) Schedule 4.20(a) contains a complete list of all Benefit Plans
sponsored or maintained by the Selling Entities, or under which the Selling
Entities may be obligated. The Selling Entities do not have any current or
contingent liability with respect to any Benefit Plan other than those listed on
Schedule 4.20(a). For purposes of this Section 4.20 and Section 6.10, the term
"Selling Entity" shall include any partnership or corporation that is a member
of any controlled group of partnerships or corporations (as defined in Section
414(b) of the Code) that includes the Selling Entities, any trade or business
(whether or not incorporated) that is under common control (as defined in
Section 414(c) of the Code) with any Selling Entity, any organization (whether
or not incorporated) that is a member of an affiliated service group (as defined
in Section 414(m) of the Code) that includes each Selling Entity and any other
entity required to be aggregated with any Selling Entity pursuant to the
regulations issued under Section 414(o) of the Code. Each Benefit Plan providing
benefits that are funded through a policy of insurance is indicated by the word
"insured" placed by the listing of the Benefit Plan on Schedule 4.20(a).
(b) The Selling Entities have delivered to CTB, to the extent applicable,
(i) accurate and complete copies of all Benefit Plan documents and all other
documents relating thereto, including all summary plan descriptions, summary
annual reports and insurance contracts, (ii) accurate and complete detailed
17
summaries of all unwritten Benefit Plans, (iii) accurate and complete copies of
the most recent financial statements and actuarial reports with respect to all
Benefit Plans for which financial statements or actuarial reports are required
or have been prepared and (iv) accurate and complete copies of all annual
reports for all Benefit Plans (for which annual reports are required) prepared
within the last three years.
(c) All Benefit Plans conform (and for the past six years have conformed)
to, and are being administered and operated (and for the past six years have
been administered and operated) in material compliance with, the requirements of
ERISA, the Code and all applicable Laws. All returns, reports and disclosure
statements required to be made under ERISA and the Code with respect to all
Benefit Plans have been timely filed or delivered or an extension for the
delayed filing has been obtained from the Internal Revenue Service or the U.S.
Department of Labor. To the Knowledge of BBT or the Selling Entities, there has
not been any "prohibited transaction," as such term is defined in Section 4975
of the Code or Section 406 of ERISA involving any of the Benefit Plans, that
could subject the Selling Entities to any penalty or tax imposed under the Code
or ERISA.
(d) Any Benefit Plan that is intended to be qualified under Section 401(a)
of the Code and exempt from tax under Section 501(a) of the Code has been
determined by the Internal Revenue Service to be so qualified or an application
for determination has been timely filed (and is still pending) with the Internal
Revenue Service, and such determination remains in effect and has not been
revoked. Copies of the most recent Internal Revenue Service determination
letters, if any, applicable to the Benefit Plans have been delivered to CTB.
Nothing has occurred since the date of any such determination (if received) that
would adversely affect such qualification or exemption.
(e) No Selling Entity sponsors or contributes to, and has not at any time
sponsored or contributed to, a defined benefit plan subject to Title IV of
ERISA, and no Selling Entity has incurred any liability under Title IV of ERISA.
No Selling Entity has a current or contingent obligation to contribute to any
multiemployer plan (as defined in Section 3(37) of ERISA), nor has any Selling
Entity ever had any obligation to contribute to a multiemployer plan.
(f) There are no pending or, to the Knowledge of BBT and each Selling
Entity, threatened claims by or on behalf of any Benefit Plans, or by or on
behalf of any participants or beneficiaries of any Benefit Plans or other
persons, alleging any breach of fiduciary duty on the part of any Selling Entity
or any of its officers, directors or employees under ERISA or any applicable
Law, or claiming benefit payments other than those made in the ordinary
operation of such plans, nor is there, to the Knowledge of BBT and each Selling
Entity, any basis for any such claim. To the Knowledge of BBT and each Selling
Entity, the Benefit Plans are not the subject of any investigation, audit or
action by the Internal Revenue Service, the U.S. Department of Labor or the
Pension Benefit Guaranty Corporation ("PBGC"). Except as disclosed on Schedule
4.20(f), no Selling Entity has made a plan or commitment, whether or not legally
binding, to create any additional Benefit Plan or to modify or change any
existing Benefit Plan.
(g) Each Selling Entity has made all required contributions under its
Benefit Plan on a timely basis, or such contributions are properly accrued on
the Financial Statements.
18
(h) There have been no accumulated funding deficiencies (as defined in
Section 412 of the Code or Section 302 of ERISA) with respect to any Benefit
Plan and no request for a waiver from the Internal Revenue Service with respect
to any minimum funding requirement under Section 412 of the Code. No Selling
Entity has incurred any liability for any excise, income or other taxes or
penalties with respect to any Benefit Plan, and no event has occurred and no
circumstance exists or has existed that could give rise to any such liability.
(i) The execution of and performance of the transactions contemplated by
this Agreement will not (either alone or upon the occurrence of any additional
or subsequent events) result in any payment, severance compensation,
acceleration, vesting or increase in benefits with respect to any employee or
former employee of a Selling Entity, and no compensation or benefits to be
provided to such employees or former employees under any Benefit Plan or other
agreement in effect as of the Closing will be considered an "excess parachute
payment" under Section 280G of the Code.
(j) With respect to any Benefit Plan that is an employee welfare benefit
plan (within the meaning of Section 3(1) of ERISA) (a "Welfare Plan"), (i) each
Welfare Plan for which contributions are claimed as deductions under any
provision of the Code is in compliance with all applicable requirements
pertaining to such deduction, (ii) with respect to any welfare benefit fund
(within the meaning of Section 419 of the Code) related to a Welfare Plan, there
is no disqualified benefit (within the meaning of Section 4976(b) of the Code)
that would result in the imposition of a tax under Section 4976(a) of the Code,
(iii) any Benefit Plan that is a group health plan (within the meaning of
Section 4980B(g)(2) of the Code) complies, and in each and every case has
complied, with all of the requirements of Section 4980B of the Code, ERISA,
Title XXII of the Public Health Service Act, the applicable provisions of the
Social Security Act and other applicable laws, (iv) all Welfare Plans may be
amended or terminated by a Selling Entity at any time on or after the Closing,
and (v) no Welfare Plan provides health or other benefits after an employee's or
former employee's retirement or other termination of employment except as
required by Section 4980B of the Code.
(k) All persons classified by a Selling Entity as independent contractors
satisfy and have satisfied the requirements of applicable law to be so
classified, each Selling Entity has fully and accurately reported their
compensation on IRS Forms 1099 when required to do so, and no Selling Entity has
any obligations to provide benefits with respect to such persons under Benefit
Plans or otherwise.
4.21 Absence of Certain Changes. Except as contemplated by this Agreement,
since the Interim Balance Sheet Date, except as mutually agreed, the Business
has been conducted in the ordinary course and there has not been with respect to
any Selling Entity:
(a) any material adverse change in the Business or its Assets or
liabilities;
(b) any increase in the compensation payable or to become payable to any
employee or agent of the Business, except for increases for non-officer
employees made in the ordinary course of business, nor any other change in any
employment or consulting arrangement of the Business;
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(c) any sale, assignment or transfer of any material Assets of the
Business, or any additions to or transactions involving any material Assets of
the Business, other than those made in the ordinary course of business;
(d) any change in the accounting policies followed with respect to the
Business or the method of applying such principles;
(e) any capital expenditure commitment of the Business involving in any
individual case, or series of related cases, more than (i) $10,000 or (ii) an
amount that would cause the sum of all such capital expenditure commitments to
exceed $25,000; or
(f) any other transaction involving a development affecting the Business or
the Purchased Assets outside the ordinary course of business consistent with
past practice.
4.22 Customers. Each Selling Entity has used its reasonable business
efforts to maintain and does currently maintain, good working relationships with
all of its tour operators and ticketing receptives (collectively, "Customers").
Schedule 4.22 contains a list of the names of each of the five Customers that,
for the year ended September 30, 2000 were the largest dollar volume Customers
of each Selling Entity. Except as specified on Schedule 4.22, none of such
Customers has given any Selling Entity written (or to the Knowledge of BBT or
any Selling Entity oral) notice terminating, canceling or threatening to
terminate or cancel any Contract or relationship with a Selling Entity.
4.23 Finder's Fees. No Person has been retained by BBT or the Selling
Entities that is or will be entitled to any commission or finder's or similar
fee in connection with the Transactions.
4.24 Additional Information. Schedule 4.24 accurately sets forth all names
under which each Selling Entity has conducted any business or which it has
otherwise used at any time during the past five years.
4.25 Transactions with Affiliates. Except as set forth on Schedule 4.25, no
Affiliate of any Selling Entity owns or has a controlling ownership interest in
any corporation or other entity (other than another Selling Entity) that is a
party to any Contract with respect to the Purchased Assets or the Business.
4.26 Full Disclosure. There are and will be no materially misleading
statements in any of the representations and warranties made by BBT and each
Selling Entity in this Agreement (including the Schedules and Exhibits attached
hereto) or any other Transaction Document or in any of the documents,
certificates and instruments delivered or to be delivered by BBT and each
Selling Entity pursuant to this Agreement and neither BBT nor a Selling Entity
has omitted to state any fact necessary to make statements made herein or
therein not materially misleading. There is no fact known to BBT or any Selling
Entity that has specific application to the Business (other than general
economic or industry conditions) and that materially adversely affects or, as
far as BBT or the Selling Entities reasonably foresee, materially threatens, the
Assets, business, prospects, financial condition, or results of operations of
the Business that has not been set forth in this Agreement or the Schedules
hereto.
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5. Representations and Warranties of CTB and On Stage. CTB and On Stage
hereby represent and warrant to BBT and the Selling Entities as follows:
5.1 Corporate Status. CTB is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Nevada. On
Stage is a corporation, validly existing and in good standing under the laws of
the state of Nevada. Both CTB and On Stage have the requisite power and
authority to execute and deliver the Transaction Documents to which each is a
party and to perform the Transactions to be performed by each of them
thereunder, and such execution, delivery and performance by each of them have
been duly authorized by all necessary corporate action.
5.2 Authorization. CTB and On Stage have the requisite power and authority
to execute and deliver the Transaction Documents to which each is a party and to
perform the Transactions to be performed by each of them. Such execution,
delivery and performance by CTB and On Stage have been duly authorized by all
necessary action. Each Transaction Document executed and delivered by CTB and/or
On Stage, as the case may be, as of the date hereof has been duly executed and
delivered by CTB and/or On Stage and constitutes a valid and binding obligation
of CTB and/or On Stage, enforceable against CTB and/or On Stage in accordance
with its terms. Each Transaction Document to be executed and delivered by CTB
and/or On Stage after the date hereof will have been duly executed and delivered
by CTB and/or On Stage and will constitute a valid and binding obligation of CTB
and/or On Stage, enforceable against it each of them in accordance with its
terms.
5.3 Consents and Approvals. Neither the execution and delivery by CTB or On
Stage of the Transaction Documents to which each is a party, nor the performance
of the Transactions to be performed by each of them thereunder, will require any
filing, consent or approval or constitute a Default under (a) any Law or Court
Order to which it is subject, (b) its Charter Documents or bylaws or (c) any
Contract, Permit or other document to which each is a party or by which each of
its properties or other assets may be subject.
5.4 Finder's Fees. No Person retained by CTB and/or On Stage is or will be
entitled to any commission or finder's or similar fee in connection with the
Transactions.
6. Certain Agreements.
6.1 Access. Between the date of this Agreement and the Closing Date, BBT
and the Selling Entities shall (a) give CTB and any Person who is considering
providing financing to CTB to finance any portion of the Purchase Price, and
their respective authorized representatives and legal counsel, reasonable access
to all properties, books, Contracts, Assets and records of the Selling Entities
relating to the Business or the Purchased Assets, (b) permit CTB to make
inspections thereof, and (c) cause its officers and its advisors to furnish CTB
with such financial and operating data and other information with respect to the
Business of the Selling Entities and to discuss with CTB and its authorized
representatives and legal counsel the affairs of the Selling Entities relating
to the Business or the Purchased Assets, all as CTB may from time to time
reasonably request.
6.2 Update Schedules. Between the date hereof and the Closing Date, the
Selling Entities shall promptly disclose to CTB, in writing, any information set
forth in the Schedules that is no longer complete, true or applicable and any
information of the nature of that set forth in the Schedules that arises after
the date hereof and that would have been required to be included in the
Schedules if such information had been obtained on the date of delivery thereof.
6.3 Financial Information. Until the Closing, upon request the Selling
Entities shall provide CTB within twenty (20) days after the end of the month
with monthly unaudited balance sheet(s) of the Business and the related
statements of income and cash flows of the Business, prepared in accordance with
GAAP and on the same basis as the Interim Financial Statements referred to in
Section 4.4, and certified as such by the chief financial officer of the Selling
Entities.
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6.4 Restrictive Covenants.
(a) BBT and the Selling Entities hereby covenant that for the period ending
four years after the Closing Date, it will not, directly or indirectly, own,
manage, operate, join, control, finance or participate in the ownership,
management, operation, control or financing of, or be connected as a partner,
principal, agent, representative, consultant or otherwise with or use or permit
the name, Country Tonite, to be used in connection with, any business or
enterprise engaged directly or indirectly in competition with the business
conducted by CTB and its Affiliates, including any business involving a live
stage production or the Business, but excluding the Country Tonite production in
Pigeon Forge, Tennessee (together, the "Restricted Business"); within any
portion of the United States, Canada or Western Europe . The foregoing
restriction shall not be construed to prohibit the ownership by any Selling
Entity of a passive investment of not more than five percent (5%) of any class
of securities of any corporation which is engaged in any of the foregoing
businesses and which is listed on a recognized securities exchange.
(b) Neither BBT nor a Selling Entity shall, during the period ending two
years after the Closing Date, either directly or indirectly, (i) with respect to
the activities prohibited by Section 6.4(a), call on or solicit any Person who
or which within the past two years has been a Customer with respect to the
Restricted Business or (ii) solicit the employment of any Person who is employed
by CTB or any Affiliate of CTB during such period on a full or part-time basis
(except after any such Person's employment has been terminated by CTB or any
such Affiliate).
(c) BBT and the Selling Entities acknowledge that Confidential Information
is a valuable and unique asset and agree that BBT and the Selling Entities shall
not disclose any Confidential Information after the Closing Date to any Person
for any reason whatsoever, unless such information (i) is in the public domain
through no wrongful act of any such Person, (ii) has been rightfully received
from a third party without restriction and without breach of this Agreement or
(iii) is required by law to be disclosed.
(d) BBT and the Selling Entities acknowledge that the restrictions
contained in this Section 6.4 are reasonable and necessary to protect the
legitimate interests of CTB and that any violation will result in irreparable
injury to CTB. CTB shall be entitled to preliminary and permanent injunctive
relief, without the necessity of proving actual damages or posting any bond, as
well as an equitable accounting of all earnings, profits and other benefits
arising from any violation of this Section 6.4, which rights shall be cumulative
and in addition to any other rights or remedies at law or in equity to which CTB
may be entitled. In the event that any of the provisions of this Section 6.4
should ever be adjudicated to exceed the time, geographic, product or service,
or other limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.
(e) CTB, BBT and the Selling Entities intend to and do hereby confer
jurisdiction to enforce the covenants set forth in this Section 6.4 upon the
courts of any jurisdiction within the geographical scope of such covenants. In
addition to Section 14 and not in limitation thereof, if the courts of any one
or more of such jurisdictions hold such covenants unenforceable in whole or in
part, it is the intention of CTB, BBT and the Selling Entities that such
determination not bar or in any way adversely affect the right of CTB and its
Affiliates to equitable relief and remedies hereunder in courts of any other
jurisdiction as to breaches or violations of this Section 6.4, such covenants
being, for this purpose, severable into diverse and independent covenants.
22
6.5 Required Consents, Regulatory and other Approvals. Subject to the
fiduciary duties of the Board of Directors of BBT, as determined by such
directors in good faith after consultation with and based upon the advice of
outside legal counsel, BBT and the Selling Entities shall (a) take all
commercially reasonable steps necessary or desirable, and proceed diligently and
in good faith and use all commercially reasonable efforts, as promptly as
practicable to obtain the Required Consents, approvals or actions of, to make
all filings with and to give all notices to governmental or regulatory
authorities or any other Person required of BBT and the Selling Entities to
consummate the transactions contemplated hereby and by the Transaction
Documents, (b) provide such other information and communications to such
governmental or regulatory authorities or other Persons as CTB or such
governmental or regulatory authorities or other Persons may reasonably request
in connection therewith and (c) cooperate with CTB as promptly as practicable in
obtaining the Required Consents, approvals or actions of, making all filings
with and giving all notices to governmental or regulatory authorities or other
Persons required of CTB to consummate the transactions contemplated hereby and
by the Transaction Documents. BBT and the Selling Entities will provide prompt
notification to CTB when any Required Consent, approval, action, filing or
notice referred to in clause (a) above is obtained, taken, made or given, as
applicable, and will advise CTB of any communications (and, unless precluded by
Law, provide copies of any such communications that are in writing) with any
governmental or regulatory authority or other Person regarding any of the
transactions contemplated by this Agreement or any of the Transaction Documents.
6.6 Publicity. Neither BBT, the Selling Entities, CTB, nor any affiliates
which they respectively control, shall issue or cause the publication of any
press release or other public statement or announcement with respect to this
Agreement or the Transactions contemplated hereby without the prior consultation
of the other parties hereto, except as may be required by law or by obligations
pursuant to applicable laws, rules, regulations and any listing agreements.
6.7 Satisfaction of Liabilities. The Selling Entities shall, in the
ordinary course of business, fully satisfy or cause to be satisfied all third
party Liabilities and obligations of the Selling Entities relating to the
Business which are not Assumed Liabilities.
6.8 Employee Benefit Matters. CTB shall have no responsibility, liability
or other obligations with respect to any Benefit Plans of the Selling Entities,
and the Selling Entities shall be fully responsible therefore.
6.9 Business Financial Statements.
(a) Selling Entities have provided CTB with the Financial Statements
referred to in Section 4.4 above and the Financial Information referred to in
Section 6.3 above.
(b) After the Closing, the Selling Entities shall provide to CTB and its
accountants and other representatives reasonable access to accounting and other
books and records of the Selling Entities and its personnel to permit the
preparation of financial statements of the Business required to be filed by On
Stage under the Exchange Act.
6.10 Employment and Employment Benefits.
(a) CTB may, but is not obligated to, offer full-time employment to all
employees of the Selling Entities who are employed in the Business on a
full-time basis as of the Closing and (except as required by law) who are not
then absent due to serious bodily injury, long-term sickness or disability,
layoff or leave of absence. Such employment shall be at will and shall be
accomplished by assigning to CTB and CTB assuming at or prior to Closing the
23
employment contract of each such employee. Such employees who accept such
offered employment are herein collectively referred to as the "Transferred
Employees." CTB may, but is not obligated to, afford to all Transferred
Employees credit for all of their years of employment with Selling Entities in
the determination of vesting and other rights under CTB's benefits programs,
including vacation time based on employment through the Closing Date, as
applicable. Selling Entities shall be responsible for, and hold CTB harmless
against, any severance payments or other obligations (including without
limitation any liability for wrongful discharge) that may be due by reason of
termination of employment of any employees of Selling Entities who are not
Transferred Employees, whether or not such termination occurred before or after
the Closing. CTB shall be responsible for, and hold Selling Entities harmless
against, any severance payments that may be due by reason of termination of
employment of Transferred Employees by CTB at any time after the Closing.
Selling Entities shall compensate each Transferred Employee on or before the
Closing Date for all accrued but unpaid payroll, unused vacation time,
discretionary time off and attendance or other bonuses.
(b) With respect to CTB's benefit programs, CTB may, but shall not be
obligated to, agree to waive for all Transferred Employees and their eligible
dependants (a) any eligibility waiting periods; and (b) any pre-existing
conditions and actively at work exclusions except that CTB may require any
Transferred Employee or eligible dependent who, as of the Closing Date, is then
in the process of satisfying any similar exclusions or waiting periods under
Selling Entities' benefits programs to fully satisfy the balance of the
applicable time period for such exclusions or waiting period under CTB's benefit
programs.
(c) Nothing contained in the Agreement shall confer any rights or remedies
upon any employees or consultants of Selling Entities as a third party
beneficiary. CTB and Selling Entities expressly disclaim any and all liability
to any such third party arising out of this Agreement.
7. Conduct of the Business Prior to the Closing.
7.1 Operation in Ordinary Course. Between the date of this Agreement and
the Closing Date, BBT and the Selling Entities shall conduct the Business in all
material respects in the ordinary course and use commercially reasonable efforts
to maintain the goodwill of all current business relationships.
7.2 Business Organization. Between the date of this Agreement and the
Closing Date, each Selling Entity shall use commercially reasonable efforts to
preserve substantially intact its respective business organization and keep
available the services of each of its present officers and employees.
24
7.3 Corporate Organization. Between the date of this Agreement and the
Closing Date, no Selling Entity shall amend its Charter Document or bylaws in a
manner that adversely effects any of the Transactions, if applicable, and shall
not:
(a) be party to any merger, consolidation or other business combination; or
(b) sell, lease, license or otherwise dispose of any of its Purchased
Assets (including rights with respect to the Intellectual Property), except in
the ordinary course of business.
7.4 Business Restrictions. Between the date of this Agreement and the
Closing Date, except as mutually agreed, neither BBT nor a Selling Entity shall
in relation to the Business, without the prior written consent of CTB:
(a) acquire or dispose of any of the Purchased Assets, other than Inventory
in the ordinary course of business consistent with past practices;
(b) except in the ordinary course of business, increase in any manner the
compensation of any director or officer or increase in any manner the
compensation of any class of employees;
(c) create or materially modify any bonus, deferred compensation, pension,
profit sharing, retirement, insurance, stock purchase, stock option, or other
fringe benefit plan, arrangement or practice or any other employee benefit plan;
(d) enter into, amend, modify, terminate (partially or completely), grant
any waiver under or give any consent with respect to any Contract;
(e) violate, breach or default under, in any material respect, or take or
fail to take any action that (with or without notice or lapse of time or both)
would constitute a material violation or breach of, or default under any term or
provision of any Contract or any Permit;
(f) engage in any transaction with respect to the Business with any
officer, director, Affiliate or associate of any Selling Entity or any associate
of any such officer, director or Affiliate;
(g) enter into any agreement that materially restricts it from carrying on
the Business;
(h) cancel any material debts of others or waive any material claims or
rights relating to the Business;
(i) act so as to, or omit from taking any action that would, cause any of
the representations and warranties in Section 4 to be inaccurate in any material
respect; or
(j) enter into any Contract to do or engage in any of the foregoing.
8. Conditions Precedent to Obligations of CTB.
All obligations of CTB to consummate the Transactions are subject to the
satisfaction (or waiver by CTB) prior thereto of each of the following
conditions:
25
8.1 Representations and Warranties. The representations and warranties of
the Selling Entities set forth in this Agreement shall be true and correct in
all material respects on the date hereof and (except to the extent such
representations and warranties speak as of an earlier date) shall also be true
and correct in all material respects (or, in the case of representations and
warranties qualified by materiality, shall also be true and correct in all
respects) on and as of the Closing Date with the same force and effect as if
made on and as of the Closing Date.
8.2 Agreements, Conditions and Covenants. The Selling Entities shall have
performed or complied with all agreements, conditions and covenants required by
this Agreement to be performed or complied with them on or before the Closing
Date.
8.3 Officers' Certificate. CTB shall have received a certificate of an
officer of each Selling Entity to the effect set forth in Section 8.2
8.4 Required Consents and Approvals. All Required Consents, approvals and
actions of, filings with and notices to, any governmental or regulatory
authority necessary to permit CTB, BBT and the Selling Entities to perform their
obligations under this Agreement and to consummate the Transactions (and to
permit CTB to operate the Business after the Closing) (a) shall have been duly
obtained, made or given, (b) shall be in form and substance reasonably
satisfactory to CTB, (c) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and (d) shall be in full force
and effect, and all terminations or expirations of waiting periods imposed by
any governmental or regulatory authority necessary for the consummation of the
transactions contemplated by this Agreement and the Transaction Documents shall
have occurred.
8.5 Third Party Consents. Except as set forth in Section 2.5, all consents
(or in lieu thereof waivers) to the performance by CTB, BBT and the Selling
Entities of their obligations under this Agreement or to the consummation of the
Transactions as are required under any Contract to which CTB or the Selling
Entities are a party or by which any of their respective Purchased Assets are
bound (a) shall have been obtained, (b) shall be in form and substance
reasonably satisfactory to CTB, (c) shall not be subject to the satisfaction of
any condition that has not been satisfied or waived and (d) shall be in full
force and effect, except where the failure to obtain any such consent (or in
lieu thereof waiver) could not reasonably be expected, individually or in the
aggregate with other such failures, to materially adversely affect CTB, the
Purchased Assets, the Assumed Liabilities or the Business or otherwise result in
a material diminution of the benefits of the Transactions to CTB.
8.6 Legality. No Law or Court Order shall be pending or threatened that
prevents or that seeks to restrain the consummation, or challenges the validity
or legality, of this Agreement or the Transactions or that would materially
limit or adversely affect CTB's acquisition of the Purchased Assets.
8.7 Title Insurance . The Selling Entities shall have obtained and
delivered to CTB the following title insurance commitments (the cost and expense
of which shall be paid one-half by BBT and one-half by CTB) issued by a title
insurance company acceptable to CTB and its lender, if any, each in their
respective sole and absolute discretion, as to the Real Property leased by any
one or more of the Selling Entities, (i) a commitment for issuance of an ALTA
Form B Leasehold Owner's Policy of Title Insurance with extended coverage
26
showing all endorsements thereto which CTB may request, along with legible
copies of all documents shown as exceptions thereto and (ii) a commitment for
issuance of a 1970 ALTA Form B Leasehold Mortgagee's Policy of Title Insurance
with extended coverage showing all endorsements thereto which CTB's lender may
request, along with legible copies of all documents shown as exceptions thereto
(all of the foregoing title commitments may hereinafter be referred to
collectively as the "Commitments"). In order to satisfy the provisions of this
Section 8.7, each of the Commitments must (x) be satisfactory, in form and
substance, to CTB in its reasonable discretion and CTB's lender, in such
lender's sole and absolute discretion, (y) contain no exceptions to title or the
survey, except for those exceptions approved by CTB (subject to the last
sentence of this Section 8.7) and CTB's lender, at any time prior to Closing,
and (z) have the appropriate policies of title insurance issued pursuant to and
in strict accordance with each of the Commitments at, or within five business
days of their receipt of all documents recorded in connection with the Closing,
provided that if the title insurance policies are to be issued within five
business days of receipt of all documents recorded in connection with the
Closing, CTB and its lender shall each receive at Closing, for each Commitment,
a "▇▇▇▇-up" of the Commitment evidencing the form of the title insurance policy
to be issued pursuant to said Commitment and written evidence that gap coverage
will be provided. Anything set forth in this Agreement to the contrary
notwithstanding, CTB shall have the right to terminate this Agreement (upon
which Section 11.2(a) shall apply) by delivering notice of such termination to
the Selling Entities prior to the Closing if CTB in its reasonable discretion
determines that any one or more of the title exceptions or other matters shown
on any of the Commitments or the surveys are not acceptable to CTB. BBT and the
Selling Entities hereby covenant that they shall cure all title exceptions and
other matters shown on any of the Commitments other than the items identified as
"Special Exceptions" on the title report included as part of Schedule 4.6 hereto
which may be cured by payment of a sum of money not to exceed $300,000 by
execution of a document requiring the signature of no party other than one or
more of BBT or the Selling Entities or any of their respective mortgagees,
including any affidavits which may reasonably be required by the title insurer
(including a standard title insurance company form of owner's affidavit to
induce the deletion from the Commitments of any exception for parties in
possession and for mechanics' or materialmen's liens).
8.8 Real Property Leases. With respect to each of the Real Property Leases
the Selling Entities shall have delivered to CTB an estoppel certificate and
consent to assignment from the lessor thereunder in form and substance
reasonably satisfactory to CTB.
8.9 Opinion of Counsel. CTB shall have received the opinion of ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to the Selling Entities, in a form
reasonably acceptable to CTB
8.10 Board Approval. The execution of this Agreement and the Transactions
contemplated thereby must be approved by the Board of Directors of On Stage.
8.11 Collateral Agreements. The Selling Entities shall have executed and
delivered each of the Collateral Agreements to which either is a party.
27
9. Conditions Precedent to Obligations of BBT and the Selling Entities.
All obligations of the Selling Entities to consummate the Transactions are
subject to the satisfaction (or waiver by the Selling Entities) prior thereto of
each of the following conditions:
9.1 Representations and Warranties. The representations and warranties of
CTB set forth in this Agreement shall be true and correct in all material
respects on the date hereof and (except to the extent such representations and
warranties speak as of an earlier date) shall also be true and correct in all
material respects (or, in the case of representations and warranties qualified
by materiality, shall also be true and correct in all respects) on and as of the
Closing Date with the same force and effect as if made on and as of the Closing
Date.
9.2 Agreements, Conditions and Covenants. CTB shall have performed or
complied with all agreements, conditions and covenants required by this
Agreement to be performed or complied with by it on or before the Closing Date.
9.3 Officer's Certificate. The Selling Entities shall have received a
certificate of an officer of CTB to the effects set forth in Sections 9.1 and
9.2
9.4 Legality. No Law or Court Order shall be pending or threatened that
prevents or that seeks to restrain the consummation, or challenges the validity
or legality of the Transactions.
9.5 Opinion of Counsel. The Selling Entities shall have received the
opinion of Grobl & Associates, Ltd., counsel to CTB, in a form reasonably
acceptable to the Selling Entities.
9.6 Collateral Agreements. CTB shall have executed and delivered such of
the Collateral Agreements to which it is a party or signatory.
10. Indemnification.
10.1 Indemnification by the Selling Entities. BBT and the Selling Entities,
jointly and severally, shall indemnify and hold harmless CTB and its Affiliates
(and each of its and their officers, directors, employees, agents, successors
and assigns) (each, a "CTB Indemnified Party") from, against and in respect of
any and all Liabilities, claims, demands, judgments, settlement payments,
losses, costs, damages, deficiencies, diminution in value and expenses
whatsoever (including reasonable attorneys', consultants' and other professional
fees and disbursements of every kind, nature and description incurred by such
CTB Indemnified Party in connection therewith) (collectively, "Damages") that
such CTB Indemnified Party may sustain, suffer or incur that result from, arise
out of or relate to:
(a) any Excluded Liability;
(b) (i) any breach of any representation or warranty of BBT or any Selling
Entity contained in this Agreement, including the representations and warranties
of BBT or the Selling Entities contained in Section 4, or (ii) any breach of or
any material inaccuracy in any representation or warranty in or omission from
any certificate, schedule, exhibit, statement, document or instrument furnished
to CTB by a Selling Entity (or any of its representatives or agents) pursuant
hereto or in connection with the negotiation, execution or performance hereof;
28
(c) any breach of any covenant or agreement of BBT or any Selling Entity
contained in this Agreement;
(d) any claim by any officer, former officer, employee, former employee,
shareholder or former shareholder of any Selling Entity relating to the period
prior to or at the Closing;
(e) any claim of infringement of any intellectual property right resulting
from CTB's operation of the Business as presently operated by the Selling
Entities;
(f) any Environmental Condition existing on or prior to the Closing;
(g) any Liability or obligation of a Selling Entity involving Taxes, except
for any Taxes expressly assumed herein, due and payable by, or imposed with
respect to BBT or a Selling Entity for any taxable periods ending on or prior to
the Closing Date (whether or not such taxes have been due and payable); or
(h) the enforcement of this Section 10.1.
10.2 Indemnification by CTB. CTB shall indemnify and hold harmless each of
BBT and the Selling Entities and their Affiliates (and each of their officers,
directors, employees, agents, successors and assigns) (each, a "BBT Indemnified
Party") from, against and in respect of any and all Damages that such BBT
Indemnified Party may sustain, suffer or incur that result from, arise out of or
relate to:
(a) any Assumed Liability;
(b) any breach by CTB of Section 6.10; or
(c) the operation of the Business after the Closing (to the extent such
Damage is not subject to Section 10.1); and
(d) the enforcement of this Section 10.2.
10.3 Limitations on Liability. Except as otherwise provided in Section 10.6
and except that this limitation shall not apply to any indemnification claim
arising under or with respect to either of Sections 4.5 and 4.23, BBT and the
Selling Entities shall not be liable to any CTB Indemnified Party under Section
10.1(b) for any misrepresentation or breach of warranty until the aggregate
amount for which they would otherwise (but for this provision) be liable to any
or all CTB Indemnified Parties for all such misrepresentations and breaches of
warranty exceeds $100,000 (after which BBT and the Selling Entities shall be
fully responsible only for any such excess). In addition, except as otherwise
provided in Section 10.6, BBT and the Selling Entities indemnification
29
obligations under Section 10.1 shall not exceed $3,800,000.
10.4 Survival. Except as otherwise provided in Section 10.5, the
representations and warranties given or made by any party in this Agreement or
in any certificate or other writing furnished in connection herewith, and all
rights to assert an indemnification claim under Section 10.1(b), shall survive
the Closing for a period of two years after the Closing Date and shall
thereafter terminate and be of no further force or effect, except that (a) all
representations and warranties relating to Taxes and Tax Returns shall survive
the Closing for the period of the applicable statutes of limitation plus any
extensions or waivers thereof, (b) all representations and warranties set forth
in Sections 4.2, 4.3, 4.5, 4.6, 4.14, 4.20 and 4.23 shall survive the Closing
without limitation and (c) any representation or warranty as to which a claim
(including without limitation a contingent claim) shall have been asserted
during the survival period shall continue in effect with respect to such claim
until such claim shall have been finally resolved or settled. Each party shall
be entitled to rely upon the representations and warranties of the other party
or parties set forth herein, notwithstanding any investigation or audit
conducted before or after the Closing Date or the decision of any party to
complete the Closing.
10.5 Indemnification Procedure. All claims for indemnification under
Sections 10.1 and 10.2 shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which a party obligated to
indemnify (the "Indemnifying Party") would be liable to a party entitled to
indemnification hereunder (the "Indemnified Party") is asserted against an
Indemnified Party by a third party, the Indemnified Party shall with reasonable
promptness notify the Indemnifying Party of such claim or demand (the "Claim
Notice"), specifying the nature of such claim or demand and the amount or the
estimated amount thereof to the extent then feasible (which estimate shall not
be conclusive of the final amount of such claim or demand). The Indemnifying
Party shall have 30 days from the receipt of the Claim Notice (the "Notice
Period") to notify the Indemnified Party (i) whether or not the Indemnifying
Party disputes the Indemnifying Party's liability to the Indemnified Party
hereunder with respect to such claim or demand and (ii) whether or not the
Indemnifying Party desires, at the sole cost and expense of the Indemnifying
Party, to defend against such claim or demand, provided that the Indemnified
Party is hereby authorized (but not obligated) prior to and during the Notice
Period to file any motion, answer or other pleading and to take any other action
which the Indemnified Party shall deem necessary or appropriate to protect the
Indemnified Party's interests. In the event that the Indemnifying Party notifies
the Indemnified Party within the Notice Period that the Indemnifying Party does
not dispute the Indemnifying Party's obligation to indemnify hereunder and
desires to defend the Indemnified Party against such claim or demand and except
as hereinafter provided, the Indemnifying Party shall have the right to defend
(with counsel reasonably satisfactory to the Indemnified Party) by appropriate
proceedings, which proceedings shall be promptly settled or prosecuted by the
Indemnifying Party to a final conclusion; provided that, unless the Indemnified
Party otherwise agrees in writing, the Indemnifying Party may not settle any
matter (in whole or in part) unless such settlement includes a complete and
unconditional release of the Indemnified Party. If the Indemnified Party desires
to participate in, but not control, any such defense or settlement the
Indemnified Party may do so at its sole cost and expense. If the Indemnifying
Party elects not to defend the Indemnified Party against such claim or demand,
whether by not giving the Indemnified Party timely notice as provided above or
otherwise, then the Indemnified Party, without waiving any rights against the
Indemnifying Party, may settle or defend against any such claim in the
Indemnified Party's sole discretion and, if it is ultimately determined that the
Indemnifying Party is responsible therefore under this Section 10, then the
30
Indemnified Party shall be entitled to recover from the Indemnifying Party the
amount of any settlement or judgment and all indemnifiable costs and expenses of
the Indemnified Party with respect thereto, including interest from the date
such costs and expenses were incurred.
(b) If at any time, in the reasonable opinion of the Indemnified Party,
notice of which shall be given in writing to the Indemnifying Party, any claim
or demand referred to in the first sentence of Section 10.5(a) seeks material
prospective relief which could have a materially adverse effect on the
businesses, operations, assets, properties, prospects or condition (financial or
otherwise) of any Indemnified Party, the Indemnified Party shall have the right
to control or assume (as the case may be) the defense of any such claim or
demand and the amount of any judgment or settlement and the reasonable costs and
expenses of defense shall be included as part of the indemnification obligations
of the Indemnifying Party hereunder. If the Indemnified Party should elect to
exercise such right, the Indemnifying Party shall have the right to participate
in, but not control, the defense of such claim or demand at the sole cost and
expense of the Indemnifying Party.
(c) In the event the Indemnified Party should have a claim against the
Indemnifying Party hereunder which does not involve a claim or demand being
asserted against or sought to be collected by a third party, the Indemnified
Party shall with reasonable promptness send a Claim Notice with respect to such
claim to the Indemnifying Party. If the Indemnifying Party does not notify the
Indemnified Party within the Notice Period that the Indemnifying Party disputes
such claim, the amount of such claim shall be conclusively deemed a liability of
the Indemnifying Party hereunder.
(d) Nothing herein shall be deemed to prevent the Indemnified Party from
making (and an Indemnified Party may make) a claim hereunder for potential or
contingent claims or demands provided the Claim Notice sets forth the specific
basis for any such potential or contingent claim or demand to the extent then
feasible and the Indemnified Party has reasonable grounds to believe that such a
claim or demand may be made. The Indemnified Party's failure to give reasonably
prompt notice to the Indemnifying Party of any actual, threatened or possible
claim or demand which may give rise to a right of indemnification hereunder
shall not relieve the Indemnifying Party of any liability which the Indemnifying
Party may have to the Indemnified Party unless the failure to give such notice
materially and adversely prejudiced the Indemnifying Party.
10.6 Exception to Limitations. Nothing herein shall be deemed to limit or
restrict in any manner any rights or remedies that any party has, or might have,
at law, in equity or otherwise, against any other party hereto, based on any
willful misrepresentation, willful breach of warranty or willful failure to
fulfill any agreement or covenant.
10.7 Payment of Indemnification Obligations. In the event that any
Indemnifying Party is required to make any payment under this Section 10, such
party shall promptly pay the Indemnified Party the amount of such indemnity
obligation. If there should be a dispute as to such amount, such Indemnifying
Party shall nevertheless pay when due such portion, if any, of the obligation as
shall not be subject to dispute. The difference, if any, between the amount of
the obligation ultimately determined as properly payable under this Section 10
and the portion, if any, theretofore paid shall bear interest for the period
from the date the amount was demanded by the Indemnified Party until payment in
full, payable on demand, at the rate of 10% per annum. Notwithstanding anything
herein to the contrary, all indemnification payments to a CTB Indemnified Party
shall be satisfied first by set-off against the $2,800,000 Secured Promissory
Note pursuant to Section 10.8 until such time as the principal thereof has been
fully so reduced or paid.
10.8 Right to Set Off. CTB shall have the right to pay to any other
Indemnified Party any amount owing by an Indemnifying Party to such Indemnified
Party under Section 10.1 and to set off the amount of such payment or payments
against the payment obligations of CTB under the $2,800,000 Secured Promissory
Note, provided that any such set off shall be paid into a mutually acceptable
escrow until a final determination of the underlying claim is made pursuant to
this Article 10.
31
11. Termination.
11.1 Grounds for Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written consent of CTB and BBT; or
(b) by BBT or by CTB, if the Closing has not occurred prior to January 31,
2001; provided, however, that such right to terminate this Agreement shall not
be available to any party (with BBT and the Selling Entities collectively deemed
as one party) that has breached any of its covenants, representations or
warranties in this Agreement in any material respect (which breach has not been
cured) or has refused to sign any of the Closing Documents, without cause; or
(c) by BBT or CTB, if there shall be any Law that makes consummation of the
Transactions illegal or otherwise prohibited or if any Court Order enjoining BBT
and the Selling Entities or CTB from consummating the Transactions is entered
and such Court Order shall become final and nonappealable; or
(d) by CTB, if BBT or a Selling Entity shall have breached any of its
covenants hereunder in any material respect or if the representations and
warranties BBT or a of the Selling Entity contained in this Agreement or in any
certificate or other writing delivered by BBT or a Selling Entity pursuant
hereto shall not be true and correct in any material respect, except for such
changes as are contemplated by this Agreement, and, in either event, if such
breach is subject to cure, BBT or the Selling Entities have not cured such
breach within ten business days of CTB's notice of an intent to terminate; or
(e) by BBT, if CTB shall have breached any of its covenants hereunder or if
the representations and warranties of CTB contained in this Agreement or in any
certificate or other writing delivered by CTB pursuant hereto shall not be true
and correct, except for such changes as are contemplated by this Agreement, and,
in either event, if such breach is subject to cure, CTB has not cured such
breach within ten business days of notice of an intent to terminate; or
(f) by CTB after the occurrence of an event which could reasonably be
expected to result in a Material Adverse Effect; or
(g) by CTB if the Board of Directors of BBT or any committee of the Board
of Directors of BBT (i) shall withdraw or modify in any adverse manner its
approval or recommendation of this Agreement, (ii) within ten days after CTB's
request, shall fail to reaffirm such approval or recommendation, (iii) shall
approve or recommend any acquisition of a material portion of its assets or the
Business or any tender offer for shares of its capital stock, in each case,
other than by CTB or an affiliate thereof, (iv) a tender offer or exchange offer
for any of the outstanding shares of BBT common stock shall have been commenced
or a registration statement with respect thereto shall have been filed and the
Board of Directors of BBT shall have recommended that the shareholders of BBT
tender their shares in such tender or exchange offer or publicly announced its
intention to take no position with respect to such tender or exchange offer, or
(v) shall resolve to take any of the actions specified in this Section 11.1(g);
or
(h) by BBT, prior to the approval of this Agreement, upon five days' prior
notice to CTB, if, as a result of discussions or negotiations with a party other
than CTB or any of its affiliates (a "Third Party"), and (without any
solicitation, initiation, encouragement, discussion or negotiation, directly or
indirectly, by or with any Selling Entity or their representative after the date
hereof) that Third Party makes an unsolicited bona fide written Acquisition
Proposal (hereinafter defined) that BBT's Board of Directors reasonably and in
good faith believe is superior to the transaction contemplated by this Agreement
and has demonstrated that the funds necessary for the Acquisition Proposal are
32
reasonably likely to be available (as determined in good faith in each case by
BBT's Board of Directors after consultation with its financial advisors) and
which Acquisition Proposal accomplishes at least the same long-term strategic
benefits afforded to the Selling Entities and BBT's shareholders by this
Agreement and the Transactions (such an Acquisition Proposal, a "Superior
Proposal"); provided, however, that BBT has fully complied with its obligations
under Section 6.3 and with all the applicable requirements of Section 11.2(b),
including the payment of the Termination Fee and CTB Expenses (each as
hereinafter defined); or
(i) by BBT if CTB fails to deposit $250,000 into the Escrow Account on or
before January 26, 2001; or
(j) by BBT if CTB fails to pay $150,000 under the $650,000 Secured Short
Term Note not later than February 15, 2001 or the balance due thereunder not
later than March 15, 2001.
11.2 Effect of Termination.
(a) In the event of termination of this Agreement as provided in Section
11.1, this Agreement shall forthwith become void and there shall be no liability
on the part of any of the parties, except (i) as set forth in Sections 6.6,
11.2(b), 11.2(c), 12, 18 and 19, and (ii) nothing herein shall relieve any party
from liability for any willful breach hereof.
(b) If (i) this Agreement is terminated by CTB pursuant to Section 11.1(g)
or by BBT pursuant to Section 11.1(h), (ii) either (1) at the time of such
termination there shall have been an Acquisition Proposal (whether or not such
offer shall have been rejected or shall have been withdrawn prior to the time of
such termination), or (2) within one year after termination of the Agreement
pursuant to this Section 11.2(b) a Selling Entity shall have entered into an
agreement with respect to, or consummated, an Acquisition Proposal, BBT shall
pay to CTB an amount equal to (i) a cash termination fee of $690,000 (the
"Termination Fee"), and (ii) all expenses incurred by CTB in connection with the
negotiation, execution and performance of the transactions contemplated hereby
(including all fees and expenses payable to CTB's financial advisors and
counsel) not to exceed $250,000 ("CTB Expenses") within one business day after
such termination or, in the case of (ii)(2), entering into an agreement with
respect to, or consummating an Acquisition Proposal. As used herein,
"Acquisition Proposal" means a proposal or offer for, or other business
combination involving, a substantial portion of the assets of the Business
whether directly or indirectly through a tender or exchange offer, merger,
consolidation or other business combination involving BBT or any other Selling
Entity or any proposal to acquire in any manner a substantial equity interest
in, or a substantial portion of the assets of, BBT or any other Selling Entity.
(c) In the event CTB fails to deposit $250,000 into escrow pursuant to
Section 11.1(i) above, CTB shall promptly pay such amount to BBT unless the
Escrow Agent would have returned such amount to CTB or On Stage pursuant to the
provisions of the Escrow Agreement such amount has been paid into escrow by CTB
pursuant to Section 11.1(i).
12. Payment of Expenses; Bulk Sales Act; Sales and Transfer Taxes. Except
as set forth in Section 6.10(a), each party hereto shall pay its own expenses
for lawyers, accountants, consultants, investment bankers, brokers, finders and
other advisers with respect to the Transactions. Further, the parties hereby
waive compliance with the bulk sales act or comparable statutory provisions of
each applicable jurisdiction. The Selling Entities jointly and severally shall
indemnify CTB and its officers, directors, employees, agents and Affiliates in
respect of, and hold each of them harmless from and against, any and all Damages
suffered, occurred or sustained by any of them or to which any of them becomes
subject, resulting from, arising out of or relating to the failure of the
Selling Entities to comply with the terms of any such bulk sales or comparable
provisions applicable to the Transactions. It is further agreed that the Selling
33
Entities shall pay all federal, state and local sales, documentary and other
transfer taxes, if any, due as a result of the purchase, sale or transfer of the
Purchased Assets in accordance herewith, whether or not imposed by law on the
Selling Entities, and the Selling Entities jointly and severally shall
indemnify, reimburse and hold harmless CTB in respect of any liability for
payment of or failure to pay any such taxes or the filing of or failure to file
any reports required in connection therewith.
13. Contents of Agreement. This Agreement, together with the other
Transaction Documents, sets forth the entire understanding of the parties hereto
with respect to the Transactions and supersedes all prior agreements other than
that the Escrow Agreement or understandings among the parties regarding those
matters, including that certain Letter of Intent dated November 21, 2000 between
BBT and On Stage, as amended.
14. Amendment; Parties in Interest; Assignment; Etc. This Agreement may be
amended, modified or supplemented only by a written instrument duly executed by
CTB and BBT. If any provision of this Agreement shall for any reason be held to
be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision hereof, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the respective heirs, legal
representatives, successors and assigns of the parties hereto. Any term or
provision of this Agreement may be waived at any time by the party entitled to
the benefit thereof by a written instrument duly executed by such party. The
parties hereto shall execute and deliver any and all documents and take any and
all other actions that may be deemed reasonably necessary by their respective
counsel to complete the Transactions.
15. Interpretation. Unless the context of this Agreement clearly requires
otherwise, (a) references to the plural include the singular, the singular the
plural, and the part the whole, (b) "or" has the inclusive meaning frequently
identified with the phrase "and/or," (c) "including" has the inclusive meaning
frequently identified with the phrase "but not limited to" and (d) all
currencies refer to United States dollars. The section and other headings
contained in this Agreement are for reference purposes only and shall not
control or affect the construction of this Agreement or the interpretation
thereof in any respect. Section, subsection, schedule and exhibit references are
to this Agreement unless otherwise specified. Each accounting term used herein
that is not specifically defined herein shall have the meaning given to it under
GAAP.
16. Remedies. The remedies provided by Section 10 shall constitute the
exclusive remedies for the matters covered thereby. With respect to any matters
not covered by such Section, any party hereto shall be entitled to such rights
and remedies as such party may have at law or in equity or otherwise for any
breach of this Agreement, including the right to seek specific performance,
rescission or restitution, none of which rights or remedies shall be affected or
diminished by the remedies provided hereunder.
17. Notices. All notices that are required or permitted hereunder shall be
in writing and shall be sufficient if personally delivered or sent by mail,
facsimile message or Federal Express or other delivery service. Any notices
shall be deemed given upon the earlier of the date when received at, or the
third day after the date when sent by registered or certified mail or the day
after the date when sent by Federal Express to, the address or fax number set
forth below, unless such address or fax number is changed by notice to the other
party hereto:
34
If to CTB:
Country Tonite Branson, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and CEO
If to On Stage:
On Stage Entertainment, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and CEO
with a required copy to:
Silver State Legal
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
General Counsel and Corporate Secretary
If to the Selling Entities:
Bounce Back ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attn: President
With a required copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esquire
18. Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the state of Nevada, without regard to its
provisions concerning conflict of laws.
19. Consent to Jurisdiction; Service of Process; Etc.
(a) Each party hereto irrevocably and unconditionally (i) agrees that any
suit, action or other legal proceeding (collectively, "Suit") arising out of
this Agreement may be brought and adjudicated in the United States District
Court for the Eighth Judicial District of the State of Nevada, County of ▇▇▇▇▇,
if such court does not have jurisdiction or will not accept jurisdiction, in any
court of competent civil jurisdiction in ▇▇▇▇▇ County, Nevada, (ii) consents and
submits to the non-exclusive jurisdiction of any such court for the purposes of
any such Suit and (iii) waives and agrees not to assert by way of motion, as a
defense or otherwise in any such Suit, any claim that it is not subject to the
jurisdiction of the above courts, that such Suit is brought in an inconvenient
forum or that the venue of such Suit is improper.
35
(b) Each party hereto also irrevocably consents to the service of any
process, pleadings, notices or other papers in a manner permitted by the notice
provisions of Section 17 or by any other method provided or permitted under
applicable law. Each party hereto agrees that final judgment in any Suit (with
all right of appeal having either expired or been waived or exhausted) shall be
conclusive and that CTB shall be entitled to enforce such judgment in any other
jurisdiction of the world by suit on the judgment, a certified or exemplified
copy of which shall be conclusive evidence of the fact and amount of
indebtedness arising from such judgment.
20. Further Assurances. At any time and from time to time after the
Closing, the parties agree to cooperate with each other, to execute and deliver
such other documents, instruments to transfer or assignment, files, books and
records and do all such further acts and things as may be reasonably required to
carry out the intent of the parties hereunder.
21. Exhibits; Schedules. The Exhibits and the Schedules hereto are intended
to be and hereby are specifically made a part of this Agreement.
22. No Benefit to Others. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto (and, with respect to Section 10 and related provisions of this
Agreement, the other Indemnified Parties) and the heirs, administrators,
personal representatives, successors, assigns, and they shall not be construed
as conferring any rights on any other persons.
23. Counterparts. This Agreement may be executed in counterparts, each of
which shall be binding as of the date first written above, and all of which
shall constitute one and the same instrument. Each such copy shall be deemed to
be an original, and it shall not be necessary in making proof this Agreement to
produce or account for more than one such counterpart.
24. On Stage Guaranty. On Stage hereby unconditionally guaranties all of
the representations, warranties and obligations of CTB arising under this
Agreement, including but not limited to the payment obligations of: (i) the
$250,000 to be placed into the Escrow Account on or before January 26, 2001;
(ii) the $650,000 Secured Short Term Note; and (iii) the $2,800,000 Secured
Promissory Note.
36
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto on the day and year first written above.
COUNTRY TONITE BRANSON, LLC
By:__________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
BOUNCE BACK ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: ______________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CEO
COUNTRY TONITE ENTERPRISES, INC.
By: ______________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Pres.
CRC OF BRANSON, INC.
By: ______________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Pres.
ON STAGE ENTERTAINMENT, INC.
By: ____________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO
EXHIBIT A
SECURED SHORT TERM NOTE
$650,000 as of January 31, 2001
Country Tonite Branson, LLC, a Nevada limited liability company ("Maker"),
for value received, hereby promises to pay to the order of BounceBack
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Minnesota corporation ("Payee"), at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as the holder
hereof may from time to time designate in writing to the Maker, subject to the
terms hereof, the principal sum of Six Hundred Fifty Thousand and 00/100 Dollars
($650,000), in legal tender of the United States of America, together with
interest on the outstanding principal balance at a rate of ten (10%) percent per
annum. ___ Principal in the amount of $150,000 together with any and all unpaid
interest accrued thereon shall be due and payable not later than February 15,
2001 and the balance of the principal due hereunder, together with any and all
unpaid interest accrued thereon shall be due and payable no later than March 15,
2001, without notice, presentment or demand.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of a certain Asset Purchase Agreement, dated as of
the date hereof (the "Asset Purchase Agreement"), by and among Maker, On Stage
Entertainment, Inc., a Nevada corporation, Payee, Country Tonite Enterprises,
Inc., a Nevada corporation, and CRC of Branson, Inc., a Missouri corporation.
The unpaid principal of this Note and interest accrued thereon may be
prepaid, in whole or in part, without premium or penalty. All payments
hereunder, including, without limitation, any partial prepayment, shall be
applied first to all costs and expenses due Payee pursuant to the terms of this
Note, then to late charges and accrued and unpaid interest and the balance, if
any, to principal outstanding hereunder. Interest as aforesaid shall be
calculated daily on the basis of a three hundred sixty (360) day year for the
actual number of days elapsed.
If any payment of principal or interest hereunder is not made within five
days of the date the same shall become due, Maker shall also pay Payee a late
charge equal to five percent of each such past due payment.
As security for the due and punctual payment of all indebtedness hereunder,
Maker and Payee have entered into a certain Security Agreement of even date
herewith (the "Security Agreement") pursuant to which Maker has granted to Payee
a security interest in the Business (as defined in the Asset Purchase
Agreement), including without limitation the Purchased Assets (as defined in the
Asset Purchase Agreement).
The occurrence and continuance of any one of the following events shall be
deemed to be a default under this Note, thereby entitling Payee, with or without
notice to Maker to declare the entire unpaid balance of principal immediately
due and payable, and thereafter to exercise any and all remedies provided under
this Note or the Security Agreement, or otherwise available to Payee in law or
in equity:
(a) failure of Maker to make any payment of principal or interest due under
this Note or in the $2,800,000 Secured Promissory Note when due; or
(b) breach of Maker in the performance or observance of any of its material
covenants, agreements or obligations, other than an obligation of payment,
contained herein, under the Asset Purchase Agreement or the Security Agreement,
and the continuance of such breach without cure within any applicable cured
period; or
(c) should Maker become insolvent or unable to pay its debts as they
mature, suspend business, be adjudicated bankrupt, or insolvent, or suffer or
permit the appointment of a receiver or trustee of or for its business or
property; or
(d) the sale, disposition or other transfer of any kind by Maker, in one or
more transactions, of all or substantially all of the business or assets of
Maker; or
(e) the merger, reorganization, dissolution or liquidation of Maker, or the
taking of any corporate action by Maker for the purpose of facilitating the
same.
Presentment, notice of non-payment, notice of dishonor and protest are
waived by Maker.
This Note shall be governed by and construed in accordance with the
internal laws of the State of Nevada without giving any effect to any choice of
law or conflict of law provisions or rule (whether of the State of Nevada or of
any jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Nevada.
2
IN WITNESS WHEREOF and intending to be legally bound, the Maker has caused
this Note to be signed by its duly authorized officers.
Country Tonite Branson, LLC
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and CEO
On Stage Entertainment, Inc., a Nevada corporation, does hereby guarantee
the payment and performance by Maker of the within Note.
On Stage Entertainment, Inc.
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and CEO
Attest:________________________
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
EXIBIT B
SECURED PROMISSORY NOTE
$2,800,000.00 as of January 31, 2001
Country Tonite Branson, LLC, a Nevada limited liability company ("Maker"),
for value received, hereby promises to pay to the order of BounceBack
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Minnesota corporation ("Payee"), at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other place as the holder
hereof may from time to time designate in writing to the Maker, subject to the
terms hereof, the principal sum of Two Million Eight Hundred Thousand and 00/100
Dollars ($2,800,000.00), in legal tender of the United States of America,
together with interest on the outstanding principal balance at a rate of ten
(10%) percent per annum. Interest only payments on the outstanding principal
amount shall be made on a monthly basis, beginning on March 1, 2001 and on the
first day of each month thereafter. Principal together with any and all unpaid
interest accrued thereon shall be due and payable not later than July 31, 2001,
without notice, presentment or demand.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of a certain Asset Purchase Agreement, dated as of
the date hereof (the "Asset Purchase Agreement"), by and among Maker, On Stage
Entertainment, Inc., a Nevada corporation, Payee, Country Tonite Enterprises,
Inc., a Nevada corporation, and CRC of Branson, Inc., a Missouri corporation.
The unpaid principal of this Note and interest accrued thereon may be
prepaid, in whole or in part, without premium or penalty. All payments
hereunder, including, without limitation, any partial prepayment, shall be
applied first to all costs and expenses due Payee pursuant to the terms of this
Note, then to late charges and accrued and unpaid interest and the balance, if
any, to principal outstanding hereunder. Interest as aforesaid shall be
calculated daily on the basis of a three hundred sixty (360) day year for the
actual number of days elapsed.
If any payment of principal or interest hereunder is not made within five
days of the date the same shall become due, Maker shall also pay Payee a late
charge equal to five percent of each such past due payment.
As security for the due and punctual payment of all indebtedness hereunder,
Maker and Payee have entered into a certain Security Agreement of even date
herewith (the "Security Agreement") pursuant to which Maker has granted to Payee
a security interest in the Business (as defined in the Asset Purchase
Agreement), including without limitation the Purchased Assets (as defined in the
Asset Purchase Agreement).
The occurrence and continuance of any one of the following events shall be
deemed to be a default under this Note, thereby entitling Payee, with or without
notice to Maker to declare the entire unpaid balance of principal immediately
due and payable, and thereafter to exercise any and all remedies provided under
this Note or the Security Agreement, or otherwise available to Payee in law or
in equity:
(a) failure of Maker to make any payment of principal or interest due under
this Note or the $650,000 Secured Short Term Note when due; or
(b) breach of Maker in the performance or observance of any of its material
covenants, agreements or obligations, other than an obligation of payment,
contained herein, under the Asset Purchase Agreement or the Security Agreement,
and the continuance of such breach without cure within any applicable cured
period; or
(c) should Maker become insolvent or unable to pay its debts as they
mature, suspend business, be adjudicated bankrupt, or insolvent, or suffer or
permit the appointment of a receiver or trustee of or for its business or
property; or
(d) the sale, disposition or other transfer of any kind by Maker, in one or
more transactions, of all or substantially all of the business or assets of
Maker; or
(e) the merger, reorganization, dissolution or liquidation of Maker, or the
taking of any corporate action by Maker for the purpose of facilitating the
same.
Presentment, notice of non-payment, notice of dishonor and protest are
waived by Maker.
This Note shall be governed by and construed in accordance with the
internal laws of the State of Nevada without giving any effect to any choice of
law or conflict of law provisions or rule (whether of the State of Nevada or of
any jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Nevada.
2
IN WITNESS WHEREOF and intending to be legally bound, the Maker has caused
this Note to be signed by its duly authorized officers.
Country Tonite Branson, LLC
By:_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and CEO
On Stage Entertainment, Inc., a Nevada corporation, does hereby guarantee
the payment and performance by Maker of the within Note.
On Stage Entertainment, Inc.
By:_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President and CEO
Attest:________________________
_______________, Secretary
EXHIBIT C
COUNTRY TONITE ENTERPRISES, INC.'S
PERSONAL SERVICE CONTRACT
FEATURE
NAME:
SIGNING DATE: __________________
TYPE: FEATURE - BRANSON
AMOUNT: $
SOC.SEC.:
ADDRESS:
PHONE: (___)
This Agreement is entered into this day by and between ___________
("Performer") and COUNTRY TONITE ENTERPRISES, INC., ("COMPANY").
WHEREAS, the Company is producing a variety country revue known as COUNTRY
TONITE ("Show") at the Country Tonite Theatre in Branson, MO, scheduled to be
from one hour to two and one-half hours in length and performed TWELVE (12)
times a week, or as determined by Company;
WHEREAS, Performer is a professional entertainer and desires to perform in
the Company's Show scheduled to begin on or about March 5, 2001 and ends on or
about December 15, 2001, or as may be reasonably determined by Company, as
further defined in Section 2. Term;
WHEREAS, both Performer and Company desire to have Performer serve as a
FEATURE for the Show; the precise services of Performer may be defined,
extended, or curtailed from time to time at the discretion of the Company.
NOW, THEREFORE, IT IS AGREED AS FOLLOWS:
Section 1. Services: Company hereby agrees to employ Performer as a Feature
in its Show and Performer hereby agrees to serve as a Feature for the Show.
Additionally, Performer shall:
A. Performer's services may required up to fourteen (14) shows in a seven day
work week, except as outlined in Section 1(Q). Company may elect to change
Performer's day off and/or require Performer to perform the show, or any
portion of it, at other locations.
B. Rehearse, as deemed necessary by Company, to improve the quality of the
Show, train replacements, re-block the show, etc., at reasonable times as
designated by Company;
C. Feature will attend all scheduled workshops and rehearsals as requested by
Company;
D. Make an appearance at a reasonable number of promotional appearances per
week if considered necessary by Company. Any performance less than a full
show will be considered a promotional appearance. Performer will promote
Show and attend photo and television sessions promoting Show for the
purposes of advertising;
E. Render services in connections with promotional films and trailers produced
in connection with the advertising and exploitation of the Show;
F. Not make any public appearance whatsoever in any capacity, without the
specific written approval of Company;
G. Do all things reasonably required by Company so that the Show shall be made
in an efficient and economic manner;
H. Not use, license or record any music for or in connection with the Show
without the specific written consent of the Company;
I. Not make any firm commitment for services, rights, facilities or materials
in connection with the Show without the specific written consent of the
Company;
J. Except as otherwise specifically set forth herein, no additional
compensation shall be payable for the services referred to in this section.
K. Performer agrees to work within structured Show for length of time in each
performance to be determined by Company;
L. Performer agrees to attend and be prompt for all meetings, rehearsals, and
Show times;
M. Performer agrees to remain in attendance at all Company events and Shows
until dismissed by supervisor;
N. Performer agrees to comply with all rules of Company handbook and agrees to
be present in the venue in which the show appears and accommodate all
requests of Company;
O. Performer agrees to conduct himself at all times in a professional manner,
both with co-workers and the public.
P. Performer agrees to a post-offer medical examination, dependent on job
description and physical functions required.
Q. Once each calendar year, the Company has the absolute right to require
Performer to perform in a Charitable Performance, in additional to
Performer's regular weekly performance schedule, as is reasonably requested
by the Company, for purposes of charity benefits, charitable fund raising,
or social or community activities. Said Charitable Performance will be
schedule on a normally "dark" night. Performer will not be compensated for
said Charitable Performance.
2
Section 2. Term: This Agreement shall be in effect beginning March 5, 2001
and ends on or about December 15, 2001. Unless terminated earlier or extended by
either party under the terms of this Agreement, the Company has the absolute
right to extend this Agreement for up to an additional ten (10) weeks for any
reason, upon 90 days notice to Performer and Performer must give notice of
acceptance of extension within 30 days of receipt of notice, or for the length
of any suspension of this Agreement under Section 9 a, b and c, upon reasonable
advance notice to Performer. During such extended periods, all of the terms and
conditions of this Agreement shall be applicable unless otherwise agreed to in
writing. Performer hereby agrees to make himself/herself available as a Feature
at any time during the period of employment with the Company or as may be
reasonable extended by the Company.
Section 3. Compensation: The term of compensation begins on March 5, 2001
and ends on December 15, 2001. The Company hereby agrees to pay Performer for
such services a sum equal to _____________________________ Dollars ($_____.00
per week), payable every other week as to conform with the payment policies and
procedures of the Company. Performer will be paid at the weekly rate of
$_____.00 for twelve (12) shows per week or a compensation rate of $_______ / 12
shows = $_____/show. If Performer performs fewer shows than are required by
Company, compensation will be prorated to reflect the actual number of shows in
which Performer performs. If Performer works less than 12 shows per week, rate
of pay will be calculated as the number of shows x $_____________ per Show. If
Performer works more than 12 shows in a week, he/she will be paid additional
compensation calculated weekly (number of shows x $______per Show).
In addition to the above compensation arrangement, Performer agrees to a
pre-production rehearsal period of two (2) weeks or fourteen (14) days on a
schedule to be determined by Company for one-half (1/2) of the weekly rate of
the amount agreed upon ($______). If performer attends fewer rehearsals than
required by Company, Performer's pay shall be reduced pro-rata to reflect the
actual number of rehearsals in which Performer participates.
Section 4. Photographs and Depictions:
A. Performer grants to the Company and to the venue in which the Show is
performed the unrestricted right to use Performer's name and any and all
photographs, video tapes, films or other depictions of Performer or
Performer's likeness, whether taken or created by the Company or provided
to the Company by Performer or his or her agents, for promotional purposes
for this or other shows or for purposes of promoting Performer's business,
whether during the term of this Agreement or at any time after this
Agreement has terminated.
B. Performer represents that he or she possesses all rights necessary for
granting of this right and agrees that by granting this right such
photographs, video tapes, films or other depictions of Performer or
Performer's likeness shall become the property of the Company and may be
used or published by the Company as stated above.
3
C. Performer releases the Company and all officers, employees, clients and
assigns of the Company and client(s) from all claims or demands Performer
may have in connection with the use of these materials as described above,
including all claims or demands arising out of the right of privacy or
similar rights or the law of libel in any state or jurisdiction. Performer
waives any right that he or she may have to inspect or approve any finished
product, including but not limited to, video, press release, publicity
statement or advertising copy that uses or includes these materials.
Section 5. No Ownership: Performer has no ownership interest in the Show
and Performer's interest is limited to the right to payments as described
herein. Company has the sole right, in its sole discretion, to sell or otherwise
dispose of any and all rights in the Show to any person.
Section 6. Agent Agreements: Performer hereby agrees that during the term
of this Agreement, should he/she choose to enter into a contract or agreement
with an Agent or any other party who performs, or represents that it performs,
services similar to those performed by an Agent, then Performer is solely
responsible for and liable to said Agent for any payments or liabilities to said
Agent and shall indemnify and hold Company harmless for any claims that may
arise from Performer having entered into any agreements or contracts with any
said Agents. Furthermore, Performer understands that the Company shall only
become involved in said Agents' contracts or agreements at a time when it is
directed by a Court of competent jurisdiction to withhold monies from
Performer's compensation.
Section 7. Publicity: Performer hereby grants to Company the right to issue
and authorize publicity concerning Performer and to use Performer's name, voice
and likeness and biographical data in connection with the distribution,
exhibition, advertising and exploitation of the Show in perpetuity. Without
limiting the generality of the foregoing, Company may use Performer's name,
voice and likeness in connection with publications, by products, merchandise,
commodities and services of every kind, provided reference is made to the Show
or to the literary property upon which the Show is based on any part thereof or
to Performer's employment hereunder, and provided Performer is not represented
as using or endorsing any such item, except as may be contractually excluded.
Section 8. Grant of Rights: All results and proceeds of Performer's
services hereunder, (including, but not limited to): a) all acts, poses, plays
and appearances of Performer, b) all literary, dramatic and musical material
written, supplied or improvised by Performer whether or not in writing, c) all
designs and inventions of Performer hereunder, and d) all photographs, drawings,
plans, specifications and sound recordings, whether or not audio or visual, on
any and all devices and/or mediums, whether in existence or not containing all
or any part of any of the foregoing) shall constitute works prepared by
Performer as an employee of the Company within the scope of Performer's
employment. The parties agree that all of the foregoing are and shall be
considered "works made for hire" for Company and that Company is and shall be
considered the author thereof for all purposes and the owner throughout the
world of all rights comprised in the copyright thereof and any and all patents,
trademarks and other rights thereto. Performer will, upon request, execute,
acknowledge and deliver to Company such additional documents as Company may deem
necessary to evidence and effectuate such rights as the Company's rights and
hereby grants to the Company the right as Performer's attorney-in-fact to
execute, acknowledge, deliver and record in the U.S. Copyright Office or
elsewhere any and all such documents. Except that any works developed solely on
Performer's "free time", while not in the employ of Company will not be deemed
"works made for hire" and will be the property of Performer.
4
Section 9. Conditions of Employment:
A. During said employment, Performer agrees that should conditions arise
beyond the control of Company causing Company to cancel any performances,
the weekly amount payable to Performer shall be proportionately reduced
based on the total number of performances previously scheduled for that
week. Additionally, any payments due Performer shall be pro-rated for any
days Performer does not appear.
B. Notwithstanding any other provision of this Agreement, Performer agrees
that if the Company's contract with the venue in which the Performer is
performing is canceled for any reason, or in the event of riot, strike,
epidemic, Acts of God or any other disturbance or event that impairs the
Company's ability to operate effectively, at any time during the term of
this Agreement, then Company may terminated or suspend this Agreement
without additional notice, until such time as normal operations resume, if
ever.
C. If this Agreement is suspended for a reason described in Paragraph 9(B), no
compensation shall be due to Performer for such period. Performer shall
have the right to render services to third parties during such period,
subject to the Company's right to require Performer to cease such services
and resume performance of this Agreement upon 48 hours prior notice. The
company shall have the right to extend the term of this Agreement for a
period equal to the period of such suspension.
D. During said employment, Performer agrees that in keeping with its
commitment to provide a drug-free work place, Company reserves the right to
require unannounced drug tests from any employee or associate at any time
at its own expense.
E. During said employment, Performer agrees that no alcoholic beverages or
drugs may be brought to or consumed at any Show or rehearsal hall and that
he/she shall not appear for either a Show or rehearsal under the influence
of alcohol or drugs.
F. During said employment, Performer agrees that a refusal to present
himself/herself for any drug or alcohol test when requested by Company or
its management representative AND/OR positive results of any drug or
alcohol test administered at Company's request gives the Company sole
option of immediately declaring the balance of this Agreement null and void
and the Performer shall not receive further compensation other than the
compensation due and owing to the date of his/her refusal to test or a
confirmation of his/her failure to pass the drug or alcohol test.
G. During said employment, Performer agrees that if he/she becomes unable to
appear on seven (7) consecutive working days for any reason, Company may,
at its sole option, consider this Agreement terminated, and no compensation
shall be due Performer beginning with the first day of Performer's absence;
however, the conditions created herein shall not serve to deny Performer
benefits that may be due him/her from any insurance or ▇▇▇▇▇▇▇'▇
compensation claims that are connected with Performer's absences.
5
Section 10. Ability to Perform: Performer represents that he or she is
physically and mentally able to perform all job related functions essential to
rendering services as a performer under this Agreement without threat to his or
her health or safety or that of others. Performer will not hold Company, or any
officer, agent or employee of Company personally liable for any injuries
incurred while on the job or for aggravations to preexisting conditions. All
performers will execute proper daily physical and/or vocal warm-ups prior to any
rehearsal or performance.
Section 11. Termination: Performer and Company agree that Company may
terminate Performer's employment at any time without cause and with Fourteen
(14) days written notice of said termination.
A. Performer may terminate employment for any reason after March 5, 2001 with
twelve (12) weeks written notice. It is understood that March 5, 2001 is
the first date on which Performer may submit twelve (12) weeks notice.
Performer agrees to make a bona fide, good faith effort to train a suitable
replacement, as selected by Company, during the twelve (12) week period. If
employment is terminated under this provision, Performer agrees to pay the
Company for any loss or damage suffered by Company as a result, including
but no limited to, recruitment costs, rehearsal pay, transportation,
housing and costume costs incurred as a result of the termination. Company
will provide receipt documentation of costs upon request of Performer.
B. If Company terminates Performer's employment without cause Performer shall
receive Fourteen (14) days notice or if the notice for termination comes
near the end of a Show's contract with a venue in which Performer is
playing, Performer shall receive as much notice as may be reasonably given
by the Company. Performer shall receive fourteen (14) days severance pay or
number of notice days, whichever is shorter. The Company, in its sole
discretion, shall have the right to determine if Performer shall perform
during the notice period.
C. Notwithstanding any other provision in this Agreement, if any absence,
behavior, appearance or performance by Performer is, in Company's sole
determination, disadvantageous or harmful in any way to the production,
Company may elect to terminate this Agreement and may do so effective
immediately upon notice to Performer without any further compensation to
Performer.
D. Termination for Cause: The Company shall have the sole discretion in
determining whether or not to terminate a Performer for cause which
includes but is not limited to the following:
1. Upon material violation by the Performer of any provisions of this
Agreement or the rules, policies, and/or procedures enacted by
Company.
2. Upon repeated failure by the Performer to meet utilization,
performance, and/or productivity standards established by the Company.
3. Upon conduct by the Performer, which is considered by the Company to
be unethical, unprofessional, fraudulent, unlawful, or adverse to the
interest, reputation, or business of the Company.
4. Upon the Performer's conviction of a felony or crime of moral
turpitude.
5. Upon repeated failure by the Performer to conform and comply with the
Company's professional requirements.
6
6. Upon the use of alcohol or any substance, legal or illegal, which
materially impairs the ability of the employee to effectively perform
his/her duties and obligations under this Agreement.
Section 12. Tardiness/Absence:
A. Because promptness is essential to Company's production, Performer shall
report to work one hour prior to the show time or as may be designated by
Company manager, sign in with supervisor, be dressed and ready to perform
15 minutes prior to show time, and report backstage 30 minutes prior to the
second show of the same day.
B. Unless injured or ill, Performer may be absent from a show only under
severe circumstances such as death of an immediate family member.
If Performer is absent for whatever reason, Perform will be responsible for
all replacement costs, including but not limited to transportation, housing,
rehearsal pay, and difference in salary and costume alterations necessary to
replace Performer or to perform a show without a Performer according to the
number of shows missed.
Section 13. Exclusivity: During the term of this Agreement and any
extension of it, Performer shall not appear as an entertainer at any other venue
without notifying the Company in writing and obtaining the Company's written
permission in advance.
Section 14. Employment Eligibility: Before the first day of rehearsal,
Performer must provide to the Company a complete Employer Verification Form I-9
and W-4 form along with all documents Performer deems necessary to demonstrate
that Perform is eligible for employment. Performer's failure to satisfy these
conditions may render this Agreement void.
Section 15. Warranties and Indemnity:
A. Performer warrants that he or she is not a minor and has full capacity to
enter into this Agreement. Performer further warrants that he or she has
read and understands all the terms of this Agreement and has had the
opportunity to consult counsel of his or her choosing before signing this
Agreement and has not committed himself or herself to any other employment
that would conflict with Performer fulfilling his or her obligations under
this Agreement.
B. Performer agrees to indemnify the Company against all judgments, liability,
damages, penalties, losses and expense (including reasonable attorneys
fees) that may be suffered or assumed by or obtained against the Company by
reason of any breach or failure of any warranty made by performer.
Section 16. Miscellaneous:
A. Performer understands that the Company will have complete control of all
creative aspects of Performer's performance.
7
B. Performer agrees that Company shall have complete control over all aspects
of Performer's personal grooming and appearance, including, but not limited
to hair style and length, and if male, facial hair, and all aspects of
Performer's stage attire. However, Company shall not demand drastic changes
from Performer's appearance as it was at the time of hiring, e.g. shaving
one's head or dying one's hair.
C. Performer hereby agrees that Company has the right to request weight
reduction or weight increase if Performer becomes visibly overweight or
underweight.
Section 17. Working Equipment:
A. Performer will be responsible for helping to maintain costumes and
accessories in a like-new, first-class condition during the entire term of
this Agreement by reporting costume repairs in writing as needed to the
wardrobe maintenance person at the close of each performing day, by
replacing costumes and props in their proper storage places after each
performance.
B. Performer is responsible for the repair or replacement cost of costumes and
accessories that are lost or are damaged beyond reasonable wear and tear.
C. Performer is responsible for wearing costumes exactly as finalized by the
Company for the duration of the show and must comply with the rules and
regulations for costume care, maintenance and cleaning.
D. Performer cannot change the script, lyrics, choreography or staging without
the approval of the Company. Failure to adhere to this policy may result in
immediate dismissal.
Section 18. Authorization for Payroll Deductions: Performer authorizes the
Company to withhold from Performer's compensation any amount owed by Performer
to the Company under the terms of this Agreement or any amounts paid by the
Company on behalf of Performer that the Company is not obligated to pay under
this Agreement, including but not limited to payroll advances, housing or
utility expenses on the road, personal transportation or shipping costs, fines,
termination expenses and collection costs for personal debts.
Section 19. Payroll: the Company's payroll department will be unable to
issue any payroll checks if all required forms (I-9 and W-4) are not filled out
completely.
8
Section 20. Confidentiality: Performer agrees not to disclose any
confidential information Performer may obtain while employed by the Company.
"Confidential information" means information disclosed or made available by the
Company, its employees or agents concerning the Company's business, operations
or financial condition, including but not limited to financial statements, tax
returns, cost and expense data, contracts, client, employee and marketing data
and other information not generally available to the public.
Section 21. Governing Law: This Agreement shall be governed by the Laws of
the State of Mississippi.
Section 22. Prior Agreements: This document is the entire, final and
complete Agreement of the parties pertaining to the Show and the services of
Performer and supersedes and replaces all prior and existing written and oral
agreements between the parties or their representatives relating to the Show and
the services of Performer. This Agreement cannot be changed except by written
agreement executed by all parties to this Agreement
Section 23. Binding Effect: This contract shall be binding upon the
parties.
Section 24. Employee's Address and Telephone:
A. Unless otherwise required by this Agreement, all notices that Employer or
Employee are required or may desire to give under this Agreement must be
given in writing and may be personally delivered to Performer or mailed,
certified mail/return receipt requested to Performer at the address listed
at the first of this Agreement or to the Company at BounceBack
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, c/o ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇.
B. Performer must keep Company's corporate office advised as to where Employee
may be reached by telephone and address before, during and after this
Agreement, without unreasonable delay. Performer's current telephone number
is listed at the first of this Agreement.
Section 25. Assignment: This Agreement is not assignable by Performer. This
Agreement shall inure to the benefit of the Company's successors, assignees,
licensees and grantees and associated, affiliated and subsidiary companies. The
Company and any subsequent assignee may freely assign this Agreement, in whole
or in part, to any party.
Section 26. Waiver: A waiver by either party of any term or condition of
this Agreement shall not be deemed or construed to be a waiver of such term or
condition for the future or any subsequent breach thereof.
Section 27. Validity: If any provision of this Agreement shall be deemed to
be illegal or unenforceable for any reason, such determination shall in no way
affect the validity or enforceability of any of the provisions of this
Agreement.
Section 28. Arbitration: If at any time during the term of this Agreement,
any dispute, difference, or disagreement shall arise upon or in respect of the
Agreement, and the meaning and construction hereof, every such dispute,
difference, and disagreement shall be referred to a single arbitrator agreed
upon by the parties, or if no single arbitrator can be agreed upon, an
arbitrator shall be selected in accordance with the rules of the American
Arbitration Association and such dispute, difference, or disagreement shall be
settled by arbitration in accordance with the then prevailing commercial rules
of the American Arbitration Association, and judgment upon the award rendered by
the arbitrator may be entered into any Court having jurisdiction thereof.
9
Section 29. Attorney's fees: In the event an arbitration, suit or action is
brought by any party under this Agreement to enforce any of its terms, or any
appeal therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorney's fees to be fixed by the arbitrator, trial court, and/or
Appellate Court.
Executed this ____ day of _____________, 2001.
COUNTRY TONITE ENTERPRISES, INC.
--------------------------- ----------------------------
________________, PERFORMER ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, DIRECTOR
(print)
EXHIBIT D
SECURITY AGREEMENT
(Purchased Assets)
THIS SECURITY AGREEMENT (the "Security Agreement") is made as of
____________, 2001 by Country Tonite Branson, LLC, a Nevada limited liability
company ("CTB"), whose address is ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, to BounceBack ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Minnesota corporation ("BBT"),
with its principal place of business at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
BACKGROUND
A. Pursuant to the terms and provisions of that certain Asset Purchase
Agreement by and among CTB, BBT, Country Tonite Enterprises, Inc., a Nevada
corporation ("CTE"), and CRC of Branson, Inc., a Missouri corporation ("CRC of
Branson"), dated as of the date hereof (the "Asset Purchase Agreement"), CTB
desires to purchase certain of the assets of CTE and CRC of Branson (the
"Purchased Assets") and CTE and CRC of Branson desire to sell, transfer and
convey certain the Purchased Assets to CTB.
B. BBT is the 100% owner of CTE and CRC of Branson.
C. Pursuant to the terms and conditions of the Asset Purchase Agreement,
CTB has delivered a $650,000 Secured Promissory Note (the "Short Term Note") and
a $2,800,000 Promissory Note (the "Note" and together with the Short Term Note,
the "Notes") payable to the order of BBT, as a part of the consideration for CTE
and CRC of Branson's sale of the Purchased Assets to CTB; and
D. Pursuant to the terms of the Asset Purchase Agreement, CTB is willing to
execute this Security Agreement to secure CTB's obligations to BBT under the
Notes; and
E. CTB and BBT intend that this instrument shall constitute a security
agreement within the meaning of the Uniform Commercial Code, as from time to
time in effect in the States of Missouri and Nevada (the "UCC").
NOW, THEREFORE, in consideration of the foregoing premises, and for other
good and valuable consideration, the receipt and sufficiency of all which is
acknowledged by CTB, the parties hereto agree as follows:
Section 1. Security Interest. As collateral security for the prompt and
unconditional payment of the principal and interest on the Notes (the "Debt"),
CTB hereby grants, assigns, pledges, transfers and sets over to BBT and grants
to BBT a first priority lien upon and security interest in and to the Purchased
Assets (including all of the CTB's right, title and interest in and to any and
all renewals, replacements, substitutions, additions, products and proceeds of
the Purchased Assets, including, without limitation, accounts receivable
generated by the sale of inventory which is part of the Purchased Assets). Items
referenced in this Section l are collectively hereinafter referred to as the
"Collateral".
Section 2. CTB's Title; Liens and Encumbrances; CTB's Representations.
2.1 CTB represents and warrants that CTB is, or, to the extent that this
Security Agreement states that the Collateral is to be acquired after the date
hereof, will be, the owner of the Collateral, having good and marketable title
thereto, free from any and all liens, security interests, encumbrances or
claims. CTB will not create or assume or permit to exist any such prior lien,
security interest, encumbrance or claim on or against the Collateral and CTB
will promptly notify BBT of any such claim, lien, security interest or other
encumbrance made or asserted against the Collateral and will defend the
Collateral against any such claim, lien, security interest or other encumbrance.
2.2 This Security Agreement constitutes the legal, valid and binding
obligation of CTB enforceable against CTB in accordance with its terms, except
to the extent the enforceability thereof may be limited (1) by bankruptcy,
reorganization or similar laws limiting the enforceability of creditors' rights
generally or (2) by the availability of discretionary equitable remedies. No
consent or approval of any person, including, without limitation, stockholders,
officers or directors of CTB, no consent or approval of any landlord or
mortgagee, no waiver of any lien or right of distraint or other similar right
and no consent, license, approval, authorization or declaration of any
governmental authority, bureau or agency is or will be required in connection
with the execution, delivery, performance, validity, enforcement or priority of
this Security Agreement.
Section 3. Location of Collateral and Records. CTB represents and warrants
that there are no places where the Collateral is used, stored or located, except
as set forth on Exhibit A annexed hereto, unless otherwise agreed to by BBT in
writing, and covenants that CTB will promptly notify BBT of any change in the
foregoing representation. CTB shall at all times maintain its records as to the
Collateral, its books of account and other records at its principal place of
business shown above. CTB further covenants that except for Collateral delivered
to BBT or its duly authorized agent CTB will not store, use or locate any of the
Collateral at any place other than the location set forth on Exhibit A hereto
unless otherwise agreed to by BBT in writing.
Section 4. CTB Name. CTB represents and warrants that it has not used or
conducted business under any name other than On Stage Entertainment, Inc. and
does not propose to use or conduct business under any name other than On Stage
Entertainment, Inc. and/or Country Tonite Branson, LLC or Country Tonite in the
future. Prior to use of any other names, CTB shall notify BBT in writing at
least 30 days prior to the use of any such proposed new, changed, modified or
assumed name.
Section 5. Perfection of Security Interest. CTB will join with BBT in
executing one or more financing statements pursuant to the UCC adopted by the
States of Nevada, Missouri and such other states in which BBT reasonably
believes a financing statement is necessary to protect its interests hereunder
or other notices appropriate under applicable law in forms satisfactory to BBT.
CTB hereby authorizes BBT to take all action (including, without limitation, the
filing of any UCC financing statements or amendments thereto without the
signature of the CTB) which BBT may deem necessary or desirable to perfect or
otherwise protect the liens and security interests created hereunder and to
obtain the benefits of this Security Agreement.
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All appropriate steps on the part of CTB requisite to the perfection of the
security interest of BBT in and to all property and interests which by the terms
hereof are to be subjected to the lien and security interest of this Security
Agreement have been or will be taken by CTB.
In the event that any state which now or hereafter has jurisdiction over
any collateral, enacts, in whole or in part, revised Article 9 of the Uniform
Commercial Code (1998 Official Text as approved by the American Law Institute
and the National Conference of Commissioners on uniform state laws)("Revised
Article 9"), the grant of security interest in this Security Agreement shall be
deemed to include all items or types of collateral reclassified by Revised
Article 9 into the items or types of collateral described therein, and with
respect to this Security Agreement shall specifically include all accounts,
deposit accounts, commercial tort claims, health-care-insurance receivables,
letter of credit rights, electronic chattel paper and all supporting
obligations, as such terms are defined in Revised Article 9. Borrower hereby
authorizes BBT to file any initial financing statement and amendment statement,
with or without Borrower's signature as permitted by Revised Article 9, in order
to perfect or maintain perfection of the security interests granted by this
Security Agreement.
Section 6. General Covenants. CTB shall:
6.1 upon the occurrence and continuation of an Event of Default
(hereinafter defined), furnish BBT from time to time, at its request, written
statements further identifying and describing the Collateral in such detail as
it may reasonably require;
6.2 advise BBT promptly, in sufficient detail, of any substantial change in
the Collateral, and of the occurrence of any event which would have an adverse
material effect on the value of the Collateral or on BBT's security interest
therein including, without limitation, any Event of Default or potential Event
of Default;
6.3 promptly execute and deliver to BBT such further agreements,
instruments, documents, certificates and assurances and take such further action
as BBT may from time to time reasonably deem necessary to perfect, protect or
enforce the security interests of BBT in the Collateral or otherwise to
effectuate the intent of this Security Agreement;
6.4 comply fully with the terms and provisions of the Notes and any other
agreements now or hereafter existing or entered into between CTB and BBT;
6.5 deliver to BBT promptly upon its request copies of all certificates,
schedules, lists, invoices, bills of lading, documents of title, original
purchase orders, receipts, chattel paper, instruments or other items relating to
any of the Collateral to the extent CTB has possession or control of same;
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6.6 make, stamp or record such entries or legends on any of the CTB's books
and records relating to the Collateral as BBT shall reasonably request from time
to time, including without limitation, notation of the security interest of BBT
on any certificates of title or other evidence of ownership outstanding with
respect thereto;
6.7 defend the Collateral at its own expense against any and all claims or
demands of third parties at any time claiming an interest in any of the
Collateral;
6.8 notify BBT in the event of a material loss or damage to the Collateral
or of any material adverse change in CTB's financial condition, business affairs
or with respect to any of the Collateral, or of any other occurrence which may
materially adversely affect the security interest of BBT therein;
6.9 all expenses incurred with respect to the purchase, delivery, use,
repair or other handling of the Collateral, as well as all taxes which will or
may become a lien on the Collateral, promptly when due; and
6.10 sell, exchange, lease or otherwise dispose of any of the Collateral
without the prior written consent of BBT except with respect to the sale of
inventory in the ordinary course of business; permit any liens or security
interests to attach to any of the Collateral; or permit any of the Collateral to
be levied upon under any legal process; or permit anything to be done that may
impair the security intended to be afforded by this Security Agreement. The
inclusion of proceeds in this Security Agreement does not authorize CTB to sell,
dispose of or otherwise use the Collateral in any manner not specifically
authorized by this Security Agreement.
Section 7. Affirmative Covenants.
Until payment in full of the Debt to BBT, CTB covenants and agrees that,
unless BBT consents in writing:
7.1 Repayment of Obligations. CTB will repay the Debt according to the
terms of this Security Agreement and the Notes.
7.2 Performance Under this Agreement, the Asset Purchase Agreement and the
Notes. CTB will perform all obligations required to be performed by it under the
terms of this Security Agreement, the Asset Purchase Agreement and the Notes and
any other agreements now or hereafter existing or entered into between CTB and
BBT.
7.3 Information. Upon BBT's written request, CTB shall provide BBT with
such information about the Collateral or the financial condition and operations
of CTB as BBT may from time to time reasonably request.
7.4 Corporate Existence and Maintenance of Properties. CTB shall maintain
and preserve its corporate existence and all rights, privileges and franchises
now enjoyed; and CTB shall conduct its business in an orderly, efficient and
customary manner, keep its properties in good working order and condition, and
from time to time make all needed repairs to, renewals of or replacements of its
properties (except to the extent that any of such properties is obsolete or is
being replaced) so that the efficiency of such property shall be fully
maintained and preserved. CTB shall file or cause to be filed in a timely manner
all reports, applications, estimates and licenses which shall be required by any
governmental authority and which, if not timely filed, would have a material
adverse effect on CTB or the Collateral.
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7.5 Payment of Indebtedness; Performance of Other Obligations. CTB shall
pay all indebtedness for borrowed money at maturity, all taxes, assessments and
other governmental charges which may be levied or assessed upon CTB or the
Collateral when due and all other obligations in accordance with customary trade
practices, and comply with all acts, rules, regulations and orders of any
legislative, administrative or judicial body or official applicable to the
Collateral, or any part thereof or to the operation of CTB's business. CTB shall
also observe and remain in compliance with all laws, ordinances, governmental
rules and regulations to which it is subject and obtain all licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its properties or the conduct of its business, and all covenants and conditions
of all agreements and instruments to which CTB is a party, which failure to
comply or failure to obtain would materially and adversely affect the business,
prospects, profits, properties or condition (financial or otherwise) of CTB.
7.6 Maintenance of Insurance. CTB shall maintain and pay for insurance upon
all Collateral, wherever located, covering casualty, hazard, public liability
and such other risks and in such amounts and with such insurance companies as
shall be reasonably satisfactory to BBT, and deliver such certificates of
insurance to BBT, naming BBT as loss payee and additional insured thereunder.
Each policy of insurance shall contain a clause requiring the insurer to give
not less than thirty days prior written notice to BBT before any cancellation of
the policy for any reason whatsoever. CTB hereby directs all insurers under such
policies of insurance on the Collateral to pay all proceeds payable thereunder
directly to BBT. CTB hereby irrevocably makes, constitutes and appoints BBT (and
all officers, employees or agents designated by BBT) as CTB's true and lawful
attorney (and agent-in-fact) for the purpose of making, settling, and adjusting
claims under such policies of insurance, endorsing the name of CTB on any check,
draft, instrument or other item or payment for the proceeds of such policies of
insurance and for making all determinations and decisions with respect to such
policies of insurance. If CTB fails to obtain and maintain any of the policies
of insurance or to pay any premium in whole or in part, then BBT may, at CTB's
expense, without waiving or releasing any obligation or default by CTB
hereunder, procure the same, but shall not be required to do so. Not less than
thirty days prior to the expiration date of the insurance policies required to
be maintained by CTB hereunder, CTB shall deliver to BBT one or more
certificates of insurance evidencing renewal of the insurance coverage required
hereunder plus such other evidence of payment of premiums therefore as BBT may
reasonably request.
7.7 Inspection. CTB shall permit employees or agents of BBT at any
reasonable time to inspect CTB's properties, and to examine or audit CTB's
books, accounts and records and make copies and memoranda of them and to discuss
the affairs, finances and accounts of CTB with its officers, employees and
independent public accountants (and by this provision CTB authorizes said
accountants to discuss the finances and affairs of CTB), all at such reasonable
times and as often as may be reasonably requested.
Section 8. Fixtures. It is the intent of CTB and BBT that none of the
Collateral is or shall be fixtures, as that term is used or defined in Article 9
of the UCC adopted by the States of Missouri and Nevada. Nevertheless, if the
Collateral or any part thereof is or is to become attached or affixed to any
real estate, CTB will, upon request, furnish BBT with a disclaimer or
subordination in form satisfactory to BBT from all persons having an interest in
the real estate to which the Collateral is attached or affixed, together with
the names and addresses of the record owners of, and all other persons having an
interest in, and a general description of, such real estate.
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Section 9. Events of Default. Any one or more of the following events shall
constitute an Event of Default hereunder:
9.1 CTB fails to observe and perform any monetary covenant, condition or
agreement of this Security Agreement, the Asset Purchase Agreement or the Notes
as and when the same is due and payable;
9.2 CTB fails to observe and perform any non-monetary covenant, condition
or agreement of this Security Agreement and continuance of such failure for more
than twenty days after written notice of such failure has been given to CTB by
BBT;
9.3 any default or event of default under the Notes shall occur and be
continuing;
9.4 any default or event of default under the Asset Purchase Agreement
shall occur and be continuing and shall not have been cured within any
applicable cure period;
9.5 any warranty, representation or other statement by or on behalf of CTB
contained in this Security Agreement, the Asset Purchase Agreement or the Notes
is false, misleading or incorrect in any material respect as of the date made or
during the term hereof;
9.6 any direct or indirect, voluntary or involuntary mortgage, pledge,
hypothecation, encumbrance, sale, lease, assignment or other transfer of the
Collateral or any portion thereof or any interest therein made or suffered by
CTB, unless made with the prior written consent of BBT or expressly permitted by
the terms of this Security Agreement;
9.7 CTB shall suspend or discontinue its business, or shall make an
assignment for the benefit of creditors or a composition with creditors, shall
be unable or admit in writing its inability to pay its debts as they mature,
shall file a petition in bankruptcy, shall become insolvent (howsoever such
insolvency may be evidenced), shall be adjudicated insolvent or bankrupt, shall
petition or apply to any tribunal for the appointment of any receiver,
liquidator or trustee of or for it or any substantial part of its property or
assets, shall commence any proceedings under any bankruptcy, reorganization,
arrangement, readjustment of debt, receivership, dissolution or liquidation law
or statute of any jurisdiction, whether now or hereafter in effect; or there
shall be commenced against CTB any such proceeding which shall remain
undismissed for a period of sixty days or more, or any order, judgment or decree
approving the petition in any such proceeding shall be entered; or CTB shall by
any act or failure to act indicate its consent to, approval of or acquiescence
in, any such proceeding or in the appointment of any receiver, liquidator or
trustee of or for it or any substantial part of its property or assets, or shall
suffer any such appointment to continue undischarged or unstayed for a period of
sixty days or more; or CTB shall take any action for the purpose of effecting
any of the foregoing; or
9.8 there shall occur any material uninsured damage to or loss, theft, or
destruction of any of the Collateral.
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Section 10. Rights and Remedies on Default. In the event of the occurrence
and continuation of any Event of Default hereunder, BBT shall at any time
thereafter have the right, with or without notice to CTB, as to any or all of
the Collateral, by any available judicial procedure, or without judicial
process, to take possession of the Collateral and without liability for trespass
to enter any premises where the Collateral may be located for the purposes of
taking possession of or removing the Collateral, and generally, to exercise any
and all rights afforded to a secured party under the UCC adopted by the States
of Missouri or Nevada or other applicable law. Without limiting the generality
of the foregoing, CTB agrees that BBT shall have the right to sell, lease, or
otherwise dispose of all or any part of the Collateral, whether in its then
condition or after further preparation or processing, either at public or
private sale, in lots or in bulk, for cash or for credit, with or without
warranties or representations, and upon such terms and conditions, all as BBT in
its sole discretion may deem commercially reasonable, and it shall have the
right to purchase all or any part of the Collateral at any such public sale;
and, if any Collateral shall require rebuilding, repairing, maintenance,
preparation, or is in process or other unfinished state, BBT shall have the
right to do such rebuilding, repairing, preparation, processing or completion of
manufacturing, for the purpose of putting the Collateral in such saleable or
disposable form as it shall deem reasonably appropriate and the costs and
expenses of the same shall be and become part of the Debt. At BBT's request, CTB
shall assemble the Collateral and make it available to BBT at reasonable places
which BBT shall select, whether at CTB's premises or elsewhere, and make
available to BBT without rent, all of CTB's premises and facilities for the
purpose of BBT's taking possession of, removing or putting the Collateral in
saleable or disposable form. The proceeds of any such sale, lease or other
disposition of the Collateral shall be applied first, to the expenses of
retaking, holding, storing, processing and preparing for sale, selling, and the
like, and to the reasonable attorneys' fees and legal expenses incurred by BBT
and then to the satisfaction of amounts due under the Notes, the Asset Purchase
Agreement and this Security Agreement and to the payment of any other amounts
required by applicable law, and any surplus proceeds shall be paid or delivered
by BBT to whomever is legally entitled to them. If, upon the sale, lease or
other disposition of the Collateral, the proceeds thereof are insufficient to
pay all amounts to which BBT is entitled hereunder, CTB will be liable for the
deficiency, together with interest thereon, at the rate prescribed in the Notes
and the reasonable fees of any attorneys employed by BBT to collect such
deficiency. To the extent permitted by applicable law, CTB waives all claims,
damages and demands against BBT arising out of the repossession, removal,
retention or sale of the Collateral.
Section 11. Costs and Expenses. Any and all fees, costs and expenses, of
whatever kind or nature, including the reasonable attorneys' fees and legal
expenses incurred by BBT in connection with the enforcing, foreclosing,
retaking, holding, storing, processing, selling or otherwise realizing upon the
Collateral and BBT's security interest therein, whether through judicial
proceedings or otherwise, or in defending or prosecuting any actions or
proceedings arising out of or related to the transactions to which this Security
Agreement relates, shall borne and paid by CTB on demand by BBT and until so
paid shall be added to the principal amount of the Debt and shall bear interest
at the applicable rates provided in the Notes.
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Section 12. Power of Attorney. CTB authorizes BBT upon the occurrence and
continuation of an Event of Default hereunder, and does hereby make, constitute
and appoint BBT and any officer or agent of BBT with full power of substitution,
as CTB's true and lawful attorney-in-fact, with power, in its own name or in the
name of CTB, to endorse any notes, checks, drafts, money orders, or other
instruments of payment (including payments payable under or in respect of any
policy of insurance) in respect of the Collateral that may come into possession
of BBT; to pay or discharge taxes, liens, security interests or other
encumbrances at any time levied or placed on or against the Collateral; to
demand, collect, receipt for, compromise, settle and ▇▇▇ for monies due in
respect of the Collateral; and, generally, to do, at BBT's option and at CTB's
expense, at any time, or from time to time, all acts and things which BBT deems
reasonably necessary to protect, preserve and realize upon the Collateral and
BBT's security interests therein in order to effect the intent of this Security
Agreement and the Notes, all as fully and effectually as CTB might or could do;
and CTB hereby ratifies all that said attorney shall lawfully do or cause to be
done by virtue hereof. This power of attorney shall be irrevocable for the term
of this Security Agreement and thereafter as long as any of the Debt shall be
outstanding.
Section 13. Notices. Any notice required hereunder shall be deemed duly
given if deposited in the mails, postage prepaid and sent by certified or
registered mail or delivered by a nationally recognized overnight delivery
service, addressed to BBT and to CTB at the respective addresses specified
herein or at such other address as such party shall have specified by notice
given in the same manner.
Section 14. Other Security. To the extent that the Debt is now or hereafter
secured by property other than the Collateral or by the guaranty, endorsement or
property of any other person, firm, corporation or other entity, then BBT shall
have the right in its sole discretion to pursue, relinquish, subordinate, modify
or take any other action with respect thereto, without in any way modifying or
affecting any of its rights and remedies hereunder.
Section 15. Modifications to Notes. CTB acknowledges that the Notes may be
extended and/or modified from time to time. Any such extension or modification
shall not require an amendment to this Security Agreement. All references in
this Security Agreement to the Notes shall be deemed to refer to such documents
as they may be modified or extended from time to time.
Section 16. Miscellaneous.
16.1 Beyond the safe custody thereof, BBT shall have no duty as to the
collection of any Collateral in its possession or control or in the possession
or control of any agent or nominee of BBT or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto.
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16.2 No course of dealing between CTB and BBT nor any failure to exercise,
nor any delay in exercising, on the part of BBT any right, power or privilege
hereunder, under the Notes or under any other document or agreement shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
16.3 All of BBT's rights and remedies with respect to the Collateral,
whether established hereby, by the Notes or by any other agreements, instruments
or documents or by law shall be cumulative and may be exercised singly or
concurrently.
16.4 The provisions of this Security Agreement are severable, and if any
clause or provisions shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Security Agreement in any jurisdiction.
16.5 This Security Agreement is subject to modification only by a writing
signed by the parties hereto.
16.6 The benefits and burdens of this Security Agreement shall inure to the
benefit of and be binding upon the respective successors and assigns of the
parties.
16.7 This Security Agreement may be executed in any number of counterparts,
each of which, when so executed and delivered, shall be an original; but such
counterparts shall together constitute but one and the same Security Agreement.
16.8 This Security Agreement shall be governed as to validity, construction
and performance by the laws of the State of Missouri.
16.9 Any capitalized term which is not specifically defined in this
Security Agreement shall have the meaning ascribed to such term in the Asset
Purchase Agreement.
16.10 This Security Agreement contains the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior or contemporaneous agreements with respect to such
subject matter.
Section 17. Term of Agreement. This Security Agreement shall continue in
full force and effect, and be binding upon CTB, until all of the Debt has been
fully paid and performed and such payment and performance has been acknowledged
in writing by BBT whereupon this Security Agreement shall terminate.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound, have
executed this Security Agreement as of the day and year first above written.
Country Tonite Branson, LLC
By:____________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President and CEO
BounceBack ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
By:____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
EXHIBIT A
Location of Collateral
Country Tonite Theatre
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇