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CONVERSION AGREEMENT
By and Between
VIVA GAMING & RESORTS INC.
and
MIDDLEMARCH PARTNERS LTD.
July __, 2001
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CONVERSION AGREEMENT
THIS CONVERSION AGREEMENT (this "Agreement") is made as of July __,
2001, by and between Viva Gaming & Resorts Inc., a Florida corporation with
headquarters at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(the "Company") and Middlemarch Partners Ltd., an offshore entity (the
"Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Conversion of Existing Debt into Equity
1.1 Cancellation of Existing Debt. Subject to the terms and
conditions of this Agreement, upon closing of this Agreement, as consideration
for the issuance of securities in Section 1.2 hereof, the $50,000 owing by the
Company to the Investor (the "Indebtedness") shall be cancelled.
1.2 Issuance of Securities. Subject to the terms and
conditions of this Agreement, upon closing of this Agreement, as consideration
for the cancellation of the Indebtedness, the Company agrees to issue at Closing
(as defined below) from its authorized but unissued capital stock and to give to
the Investor in exchange for the cancellation of the Indebtedness, 250,000
shares (the "Shares") of the Company's common stock, $.001 par value per share
(the "Common Stock").
1.3 Closing. (a) The cancellation of the Indebtedness and the
issuance of the Shares of Common Stock (the "Closing") shall take place as soon
as reasonably practical after the satisfaction of the conditions set forth in
Sections 4 and 5 hereof, at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, or at such other time and
place as shall be mutually agreed upon between the Investor and the Company (the
"Closing Date").
(b) At the Closing, the Company shall deliver to the
Investor a certificate for the Shares to be issued to the Investor in definitive
form and duly registered in the name of the Investor.
2. Representations and Warranties of the Company2. Representations and
Warranties of the Company. The Company hereby represents and warrants to the
Investor (it is expressly acknowledged and agreed that ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, the Company's newly appointed President and Chief Executive Officer
and Secretary and Chief Financial Officer, respectively, did not participate in
the drafting of this Agreement, related exhibits and schedules and shall have no
accountability whatsoever in connection with the information contained in this
Agreement, exhibits or schedules) that:
2.1 Organization; Good Standing; Qualification and Corporate
Power
2
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida and
has all requisite corporate power and authority to carry on its business as now
conducted and as proposed to be conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure so to qualify would have a material adverse effect on its business or
properties. True and correct copies of the Company's Articles of Incorporation,
as amended, and Bylaws have been provided to the Investor.
(b) The Company has all requisite legal and corporate
power and authority to execute and deliver this Agreement, to issue the Shares
of Common Stock, to carry out and perform its obligations under the terms of
this Agreement and to consummate the transactions contemplated hereby. All
necessary corporate action has been taken by the Company with respect to the
execution, delivery and performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby.
2.2 Capitalization and Voting Rights. The authorized capital
of the Company consists of, and will consist at the Closing of:
(a) Common Stock. 100,000,000 shares of Common Stock,
of which 8,942,700 shares are issued and outstanding as of the date hereof.
(b) Preferred Stock. 10,000,000 shares of preferred
stock, par value $0.10 (the "Preferred Stock"), no shares of which are issued
and outstanding as of the date hereof.
(c) Except as set forth on Schedule 2.2, there are no
outstanding options, warrants, rights (including conversion or preemptive
rights) or agreements for the purchase or acquisition from the Company of any
shares of its capital stock. The Company is not a party or subject to any
agreement or understanding of any kind, and, to the Company's knowledge, there
is no agreement or understanding of any kind between any individual,
corporation, partnership, limited liability company, association, trust or other
entity or organization, including a government or political subdivision or an
agency or instrumentality thereof (a "Person"), which affects or relates to the
acquisition, disposition or voting or giving of written consents with respect to
any security of the Company.
2.3 Subsidiaries; Interests of the Company. The Company does
not currently own or control, directly or indirectly, any equity interest in any
other Person, except as listed on Schedule 2.3.
2.4 No Breach. The execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions contemplated
herein will not (with the passage of time or otherwise):
(a) violate any provision of the Articles of
Incorporation or By-Laws of the Company;
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(b) violate, conflict with or result in the breach of
any of the terms of, result in a material modification of, otherwise give any
other contracting party the right to terminate, or constitute (or with notice or
lapse of time or both constitute) a default under, any contract or other
agreements to which the Company is a party or by or to which the Company or any
of its assets or properties may be bound or subject; or
(c) violate any law, rule or regulation to which the
Company is a party.
2.5 No Undisclosed Liabilities. There are no liabilities or
obligations of the Company of any kind whatsoever, liquidated or unliquidated,
whether accrued, direct, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
which could reasonably be expected to result in such a liability, other than (a)
liabilities included as part of the Company's unaudited balance sheet dated
▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇) liabilities incurred subsequent to March 31, 2001 in the
ordinary course of business consistent with past practice, which in the
aggregate are not material to the Company and (c) liabilities disclosed on
Schedule 2.5.
2.6 Authorization. This Agreement has been duly authorized,
executed and delivered by the Company and constitute the legal, valid and
binding obligations of the Company, enforceable in accordance with its terms,
subject to (i) applicable bankruptcy, insolvency, reorganization and moratorium
laws, (ii) other laws of general application affecting the enforcement of
creditors' rights generally and general principles of equity, (iii) the
discretion of the court before which any proceeding therefor may be brought and
(iv) rights to indemnity that may be limited by federal or state securities laws
or by public policy.
2.7 Valid Issuance of Stock.
(a) The outstanding shares of Common Stock are duly
and validly authorized and issued, fully paid, and non-assessable. The issuance,
sale and delivery of the Shares being purchased by the Investor hereunder have
been duly authorized by all requisite corporate action on the part of the
Company and paid for and delivered in accordance with the terms hereof for the
consideration expressed herein, will be duly and validly issued, fully paid and
non-assessable and free of any liens or encumbrances, except for restrictions
under applicable federal and state securities laws.
(b) Except as set forth in this Agreement, and on
Schedule 2.7, no other shares of Common Stock have been reserved for issuance by
the Company.
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2.8 Financial Statements. The Company has delivered to the
Investor (i) its audited income statement and balance sheet as of December 31,
2000, and (ii) its unaudited income statement and balance sheet as of March 31,
2001 (together, the "Financial Statements"). The Financial Statements (A) have
been prepared from the books and records of the Company, (B) present fairly the
financial condition of the Company at the balance sheet dates and its results of
operations, stockholders' equity and cash flows as at the dates and for the
periods therein specified and (C) have been prepared in accordance with
generally accepted accounting principles ("GAAP"), except, with respect to the
March 31, 2001 financial statements, for the absence of accompanying notes
thereto, applied on a consistent basis (except as required by changes
promulgated by accounting authorities) throughout the periods indicated. The
Financial Statements fairly present the financial condition and results of
operations of the Company as of the date and during the periods indicated
therein, subject to normal year end audit adjustments which are neither
individually nor in the aggregate expected to be material. At March 31, 2001, to
the best of the Company's knowledge, the Company had no material liability
(matured or unmatured, fixed or contingent) which was not provided for on the
balance sheet of the Company as of such date, and all reserves established by
the Company and set forth on such balance sheet were adequate for the purposes
for which they were established. There were no loss contingencies (as such term
is used in Statement of Financial Accounting Standards No. 5 issued by the
Financial Accounting Standards Board in March 1975) which were not adequately
provided for in the March 31, 2001 balance sheet.
2.9 Changes. Except as disclosed on Schedule 2.9, since March
31, 2001, there has not been:
(a) any change in the assets, liabilities, condition
(financial or otherwise), affairs, earnings, business, operations or other
prospects of the Company from that reflected in the balance sheet as at March
31, 2001, referred to in Section 2.8 above, except for changes in the ordinary
course of business, which, individually or in the aggregate have not been
materially adverse;
(b) any borrowings or other material change in the
liabilities or obligations of the Company, contingent or otherwise, whether due
or to become due, whether by way of guaranty, endorsement, indemnity, warranty,
or otherwise, except current liabilities incurred in the ordinary course of
business, none of which materially and adversely affects the business,
prospects, condition, affairs, properties, or assets of the Company;
(c) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties,
operation, or business of the Company;
(d) any waiver or compromise by the Company of a
material valuable right held by it or of a material debt owed to it;
(e) any loans made by the Company to its employees,
officers, or directors other than advances of expenses made in the ordinary
course of business;
(f) any declaration or payment of any dividend or
other distribution of the assets of the Company to stockholders or any direct or
indirect redemption, purchase, or acquisition of any securities of the Company
other than repurchases of Common Stock from terminated employees, consultants,
officers, and directors pursuant to written agreements;
(g) any labor organization activity or organized
labor trouble;
(h) any other event or condition of any character
which has materially and adversely affected the business, operations,
properties, or assets of the Company;
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(i) any increase in compensation of any of its
existing officers, or the rate of pay of its employees as a group, except as
part of regular compensation increases in the ordinary course of business, or
any material change of such officers' or employees' employment agreements;
(j) any resignation or termination of employment of
any officer, director or key employee of the Company and the Company has not
received any written notice of the impending resignation or termination of any
such officer, director or key employee;
(k) any material change in any material contract or
agreement by which the Company or any of its assets is bound or subject;
(l) any mortgage, pledge, transfer of a security
interest in, or lien, created by the Company with respect to any of its material
properties or assets, except for liens (i) incurred in the ordinary course of
business or (ii) for taxes not yet due or payable;
(m) any issuance of any capital stock, bonds or other
corporate securities by the Company or options, warrants or rights or agreements
or commitments to purchase or issue such securities or grant such options,
warrants or rights;
(n) any change in the accounting methods or practices
followed by the Company;
(o) any satisfaction or discharge of any lien, claim,
or encumbrance or payment of any obligation by the Company, except in the
ordinary course of business and that is not material to the business,
properties, prospects, or financial condition of the Company (as such business
is presently conducted and as it is presently proposed to be conducted); or
(p) any agreement to do or enter into any of the
foregoing.
2.10 Registration Rights. The Company has not granted, except
as set forth on Schedule 2.10, or agreed to grant any registration rights,
including piggyback registration rights, to any person.
2.11 Litigation. The Company is not a party to any legal
proceeding, the outcome of which could (i) adversely affect consummation of the
transactions contemplated herein or (ii) result in any representation or
warranty of the Company contained herein becoming inaccurate.
2.12 Title to Property and Assets. The Company has good and
marketable title to its property and assets free and clear of all mortgages,
liens, loans, and encumbrances, except such encumbrances and liens which arise
in the ordinary course of business and do not materially impair the Company's
ownership or use of such property or assets. With respect to the property and
assets it leases, the Company is in compliance in all material respects with
such leases and holds a valid leasehold interest free of any liens, claims, or
encumbrances. All of the Company's properties and assets are, in all material
respects, in good operating and usable condition, subject to normal wear and
tear.
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2.13 Agreements; Action.
(a) Except for agreements expressly contemplated by
this Agreement, there are no agreements, understandings, or proposed
transactions between the Company and any of its officers, directors, affiliates,
or any affiliate thereof.
(b) Except as contemplated by this Agreement or as
listed on Schedule 2.13 hereto, there are no agreements, understandings,
instruments or contracts to which the Company is a party or by which it is
bound, which (i) involve obligations (contingent or otherwise) of, or payments
to, the Company in excess of $100,000, (ii) are material to the conduct and
operations of the Company's business or properties, including, without
limitation, the license of any patent, copyright, trade secret, or other
proprietary rights to or from the Company or provisions restricting or affecting
the development, manufacture, or distribution of the Company's products or
services, or (iii) involve any employment or consulting arrangement, whether
written or oral, between the Company and any Person.
(c) Except as listed on Schedule 2.13 hereto, the
Company has not (i) declared or paid any dividends, or authorized or made any
distribution upon or with respect to any series or classes of its capital stock,
(ii) incurred any indebtedness for money borrowed or any other liabilities
individually in excess of $100,000 or, in the case of indebtedness and/or
liabilities individually less than $100,000, in excess of $200,000 in the
aggregate, or (iii) sold, exchanged, or otherwise disposed of any of its assets
or rights, other than the sale of its inventory in the ordinary course of
business.
(d) For the purposes of subsections (b) and (c)
above, all indebtedness, liabilities, agreements, understandings, instruments,
contracts, and proposed transactions involving the same Person (including
Persons the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) The Company is not a party to any indenture, loan
or credit agreement or any lease or other agreement or instrument or subject to
any charter or corporate restriction which has a material adverse effect on the
Company, or limits or restricts the ability of the Company to carry out its
obligations under this Agreement. The Company is not in default in any respect
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument material to its
business to which it is a party.
(f) The contracts, agreements and instruments listed
on Schedule 2.13 are valid, binding and in full force and effect in all material
respects, and are valid, binding and enforceable by the Company in accordance
with their respective terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief or other equitable remedies. The Company
is not in material default under any material contract, and, to the Company's
knowledge, no other party to any such contract is in material default.
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2.14 Compliance with Laws; No Defaults. The Company is not, in
violation of any provisions of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to the Company, except for violations that
have not had and would not reasonably be expected to have, individually or in
the aggregate, a material adverse effect upon the Company.
2.15 Insurance. The Company has in full force and effect fire,
casualty, and liability insurance policies, in such amounts and with such
coverage as is reasonable and prudent in view of the business and operations of
the Company.
2.16 Tax Matters. The Company (i) has filed all tax returns
that are required to have been filed by it with all appropriate governmental
agencies (and all such returns are true and correct and fairly reflect its
operations for tax purposes); and (ii) has paid all taxes owed or assessments by
it as indicated on such tax returns (other than taxes the validity of which are
being contested in good faith by appropriate proceedings). The assessment of any
additional taxes for periods for which returns have been filed is not expected
to exceed the recorded liability therefor and, to the Company's knowledge, there
are no material unresolved questions or claims concerning the Company's tax
liability. Except as disclosed on Schedule 2.16, to the Company's knowledge,
there is no pending dispute with any taxing authority relating to any of said
returns which, if determined adversely to the Company, would result in the
assertion by any taxing authority of any valid deficiency in a material amount
for taxes. The Company has withheld or collected from each payment made to each
of its employees the amount of all taxes, including, but not limited to, income
taxes, Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act
taxes required to be withheld or collected therefrom, and has paid the same to
the proper tax receiving officers or authorized depositaries, except for
failures to pay the same which, either individually or in the aggregate, have
not had, or may be reasonably expected to result in, a material adverse effect.
2.17 Governmental Regulation. The Company is not subject to
regulation under the Investment Company Act of 1940, or to any United States of
America, state or local statute or regulation limiting its or their ability to
incur Debt.
2.18 Securities Act.
(a) Assuming the accuracy of the representations of
the Investor set forth in Sections 3.4 and 3.6 hereof, no registration of any
security under the Securities Act of 1933, as amended (the "Securities Act") or
the securities laws of any state, is required in connection with the issuance,
execution and delivery of the Shares the manner contemplated hereunder.
(b) All outstanding capital stock of the Company has
been offered, issued and sold in material compliance with the requirements of
all Federal and state laws applicable to the offer, issuance and sale of
securities.
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2.19 Related Party Transactions. Except as set forth on
Schedule 2.19, no employee, officer, stockholder or director of the Company or
member of his or her immediate family is indebted to the Company, nor is the
Company indebted (or committed to make loans or extend or guarantee credit) to
any of them, other than (i) for payment of salary for services rendered, (ii)
reimbursement for reasonable expenses incurred on behalf of the Company, and
(iii) for other standard employee benefits made generally available to all
employees (not including stock option agreements outstanding under any stock
option plan approved by the Board of Directors of the Company). To the Company's
knowledge, no employee or officer of the Company has any direct or indirect
ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation that competes with the Company, except that employees, officers or
directors of the Company and members of their immediate families may own stock
in publicly traded companies that may compete with the Company. Except as set
forth in Schedule 2.19, to the best of the Company's knowledge, no officer or
stockholder or any member of their immediate families is, directly or
indirectly, interested in any material contract with the Company (other than
such contracts as relate to any such person's ownership of capital stock or
other securities of the Company and other than employment agreements).
2.20 SEC Documents. The Company has filed all required
reports, schedules, forms, statements and other documents with the SEC (the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchanges Act of 1934, as
amended (the "Exchange Act"), as the case may be, and the rules and regulations
of the SEC promulgated thereunder applicable to such SEC Documents and, except
to the extent that information contained in any SEC Document has been revised or
superseded by a later SEC Document, none of the SEC Documents contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except as set forth in the SEC Documents, neither the Company nor
any of its subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that, individually or in
the aggregate, would reasonably be expected to have a material adverse effect on
the Company.
3. Representations and Warranties of the Investor. The Investor hereby
represents and warrants to the Company that:
3.1 Organization and Existence; Good Standing. Investor is
duly organized and validly existing under the laws of its jurisdiction of
organization.
3.2 Authorization. This Agreement has been duly authorized,
executed and delivered by the Investor and constitute the legal, valid and
binding obligations of the Investor, enforceable in accordance with their
respective terms, subject to (i) applicable bankruptcy, insolvency,
reorganization and moratorium laws, (ii) other laws of general application
affecting the enforcement of creditors' rights generally and general principles
of equity (iii) the discretion of any court before which any proceeding therefor
be brought and (iv) rights to indemnity that may be limited by federal or state
securities laws or by public policy. All action required for the lawful
execution and delivery of this Agreement has been taken.
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3.3 Purchase Entirely for Own Account. The Shares to be
received by the Investor pursuant to the terms hereof will be acquired for
investment for the Investor's own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof. The Investor has
no present intention of selling, granting any participation in, or otherwise
distributing the Shares acquired by the Investor. The Investor has no contract,
undertaking, agreement or arrangement with any Person to sell or transfer, or
grant any participation to such Person or to any third Person, with respect to
any of the Shares to be acquired by the Investor.
3.4 Access to Information, Experience, Etc.
(a) The Investor has been furnished access to the
business records of the Company and such additional information and documents as
the Investor has requested and has been afforded an opportunity to ask questions
of, and receive answers from, representatives of the Company concerning the
terms and conditions of this Agreement, the purchase of the Shares, the
business, operations, market potential, capitalization, financial condition and
prospects of the Company, and all other matters deemed relevant to such
Investor.
(b) The Investor acknowledges that it has had an
opportunity to evaluate all information regarding the Company as it has deemed
necessary or desirable in connection with the transactions contemplated by this
Agreement, has independently evaluated the transactions contemplated by this
Agreement and has reached its own decision to enter into this Agreement.
3.5 Restricted Securities. The Investor understands that the
Shares to be acquired by the Investor have not been registered under the
Securities Act or the laws of any state and may not be sold or transferred, or
otherwise disposed of, without registration under the Securities Act and
applicable state securities laws or an exemption therefrom. The Investor will
sell or transfer, or otherwise dispose of, the Shares to be acquired by the
Investor only in a manner consistent with the representations and warranties set
forth herein and any applicable federal and state securities laws.
3.6 Legends. It is understood that the certificates evidencing
the shares of Common Stock may bear one or all of the following legends:
(a) THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT
TO THE SECURITIES EVIDENCED BY THIS CERTIFICATE, FILED AND MADE EFFECTIVE UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND SUCH APPLICABLE STATE SECURITIES
LAWS, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER SUCH ACT AND
SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.
(b) Any legend required by the Blue Sky laws of any
state.
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The legend referred to in clause (a) above shall be removed by the
Company from any certificate at such time as the holder of the securities
represented by the certificate delivers an opinion of counsel reasonably
satisfactory to the Company to the effect that such legend is not required in
order to establish compliance with any provisions of the Securities Act, or at
such time as the holder of such shares satisfies the requirements of Rule 144(k)
or such other substantially similar rule promulgated under the Securities Act
then in effect under the Securities Act; provided, that the Company has received
from the holder a written representation that (i) such holder is not an
affiliate of the Company and has not been an affiliate during the preceding
three (3) months, (ii) such holder has beneficially owned the shares represented
by the certificate for a period of at least two (2) years (or the period of time
then required by Rule 144(k) or such other substantially similar rule
promulgated under the Securities Act then in effect), and (iii) such holder
otherwise satisfies the requirements of Rule 144(k) as then in effect with
respect to such shares.
3.7 No Violation Neither the execution and delivery of this
Agreement nor the consummation by Investor of the transaction contemplated
hereby will (i) constitute a violation by Investor of any statute or law or any
rule, regulation or order of any governmental authority, (ii) constitute a
violation of, or a default under, or conflict with, any term or provision of the
organizational documents of the Investor, or (iii) constitute a violation of, or
a default under, or conflict with any contract, commitment, indenture or other
agreement, or any other private restrictions of any kind, to which Investor is a
party or by which it is bound.
4. Conditions of the Investor's Obligations at Closing. The obligations
of the Investor under Sections 1.1 and 1.2 of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against the Investor unless the Investor
has consented in writing thereto:
4.1 Representations of this Agreement. The representations and
warranties of the Company contained in Section 2 shall be true and correct in
all material respects on and as of the date of the Closing with the same effect
as though such representations and warranties had been made on and as of the
date of the Closing.
4.2 Compliance Certificate. The Chairman of the Board, ▇▇▇▇▇▇
▇▇▇, shall deliver to the Investor at Closing a certificate certifying to the
matters set forth in Section 4.1.
4.3 Share Certificates. The Investor shall have received a
certificate or certificates representing the Shares to be issued hereby, with
all such certificates registered in the name of the Investor.
4.4 Other Documents. The Investor shall have received all
documents they may reasonably request relating to the existence of the Company
and its authority to enter into and perform this Agreement, all in form and
substance reasonably satisfactory to the Investors.
4.5 Consents and Waivers. The Company shall have obtained any
and all consents and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement.
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4.6 Delivery of Gaming Machines. The delivery of all
components of all Gaming Machines constituting the Assets (as such terms are
defined in that certain Revised and Restated Gaming Equipment Sale Agreement, by
and between Phoenix Leisure, Inc. and ABD Gaming Supply, dated as of the date
hereof (the "Gaming Equipment Agreement")) shall have been completed.
5 Conditions of the Company's Obligations at Closing. The obligations
of the Company under Sections 1.1 and 1.2 of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against the Company unless the Company
has consented to such waiver in writing:
5.1 Representations of this Agreement. The representations and
warranties of Investors contained in Section 3 shall be true and correct in all
material respects on and as of the date of the Closing with the same effect as
though such representations and warranties had been made on and as of the date
of the Closing.
5.2 Evidence of Canceled Indebtedness. The Investor shall
deliver at the Closing evidence that the Indebtedness has been canceled pursuant
to the terms and conditions of this Agreement.
5.3 Delivery of Gaming Machines. The delivery of all
components of all Gaming Machines constituting the Assets (as such terms are
defined in the Gaming Equipment Agreement) shall have been completed.
6. Indemnity
6.1 Indemnification by the Company. Subject to the limits set
forth in this Article 6, the Company agrees to indemnify, defend and hold the
Investor and each of its directors and officers harmless from and against any
and all loss, liability, damage, costs and expenses (including interest,
penalties and attorneys' fees) (collectively, "Losses") that the Investor or any
of its affiliates may incur or become subject to arising out of or due to any
(i) inaccuracy of any representation or the breach of any warranty or covenant
of the Company contained in this Agreement (including, without limitation, the
Schedules, Annexes and Exhibits hereto and the certificates delivered hereunder)
or as provided herein, and (ii) any and all Losses arising from any actions,
suits, proceedings, claims, demands, assessments, judgments incidental to the
foregoing or the enforcement of such indemnification. The Company will reimburse
the Investor and each controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, liability, action or proceeding.
-12-
6.2 Indemnification by the Investor. Subject to the limits set
forth in this Article 6, the Investor agrees to indemnify, defend and hold the
Company harmless from and against any and all Losses that the Company or its
affiliates may incur or become subject to arising out of or due to (i) any
inaccuracy of any representation or the breach of any warranty or covenant of
the Investor contained in this Agreement (including, without limitation, the
Schedules, Annexes and Exhibits hereto and thereto and the Certificates
delivered hereunder) or as provided herein and (ii) arising out of the conduct
of the business of the Company from and after the date hereof, except to the
extent any such Loss arises out of or is related to any matter for which
Investor is entitled to be indemnified by Company hereunder. The Investor will
reimburse the Company for any legal or other expenses reasonably incurred by him
in connection with investigating or defending any such loss, claim, liability,
action or proceeding.
6.3 Survival. The representations and warranties of the
Company set forth in Article 2 of this Agreement shall survive the Closing until
the first anniversary of the Closing Date. The representations and warranties of
the Investor set forth in Article 3 of this Agreement shall survive the Closing
until the first anniversary of the Closing Date. The covenants and agreements of
the Company and the Investor shall survive the Closing, and shall continue in
full force and effect forever, except as otherwise explicitly limited by their
terms and as otherwise provided by applicable law.
6.4 Limitations. No Indemnified Person hereunder shall be
entitled to seek indemnification from an Indemnifying Person until and unless
the aggregate of all claims for indemnification by the Indemnified Person
exceeds $5,000, in which event the Indemnified Person shall be entitled to
indemnity for all amounts in excess of $5,000. The indemnification obligations
of the Company pursuant to this Agreement shall be limited to an aggregate of
$50,000.
6.5 Third Party Claims. In order for a party (the "Indemnified
Party") to be entitled to any indemnification provided for under this Agreement
in respect of, arising out of, or involving a claim or demand or written notice
made by any third party against the Indemnified Party (a "Third Party Claim")
after the Closing Date, such Indemnified Party must notify the Indemnifying
Party (the "Indemnifying Party") in writing of the Third Party Claim within 30
business days after receipt by such Indemnified Party of written notice of the
Third Party Claim; provided that the failure of any Indemnified Party to give
timely notice shall not affect his right of indemnification hereunder except to
the extent the Indemnifying Party has actually been prejudiced or damaged
thereby. If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled, if it so chooses, to assume the defense
thereof with counsel selected by the Indemnifying Party (which counsel shall be
reasonably satisfactory to the Indemnified Party). If the Indemnifying Party
assumes the defense of a Third Party Claim, the Indemnified Party will cooperate
in all reasonable respects with the Indemnifying Party in connection with such
defense, and shall have the right to participate in such defense with counsel
selected by it. The fees and disbursements of such counsel, however, shall be at
the expense of the Indemnified Party; provided, however, that, in the case of
any Third Party Claim of which the Indemnifying Party has not employed counsel
to assume the defense, the fees and disbursements of such counsel shall be at
the expense of the Indemnifying Party.
-13-
6.6 Reduction for Insurance. The gross amount which an
Indemnifying Party is liable to, for, or on behalf of the Indemnified Party
pursuant to this Article 6 (the "Indemnifiable Loss") shall be reduced
(including, without limitation, retroactively) by any insurance proceeds
actually recovered by or on behalf of such Indemnified Party related to the
Indemnifiable Loss. If an Indemnified Party shall have received or shall have
had paid on its behalf an indemnity payment in respect of an Indemnifiable Loss
and shall subsequently receive directly or indirectly insurance proceeds in
respect of such Indemnifiable Loss, then such Indemnified Party shall pay to
such Indemnifying Party the net amount of such insurance proceeds or, if less,
the amount of such indemnity payment.
7 Miscellaneous.
7.1 Representation. The Company has been represented by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ Frome ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP in connection with this transaction and
the documents executed in connection therewith. The Investor has not been
represented by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP in connection with
this transaction and the documents executed in connection therewith and has been
advised to seek independent counsel.
7.2 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided that the Company may not
assign, delegate or otherwise transfer any of its rights or obligations under
this Agreement without the consent of the Investor. Except as provided under
Section 7, neither this Agreement nor any provision hereof is intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.
7.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Florida, without regard to principles
of conflicts of laws and rules of such state. The parties hereto agree to submit
to the jurisdiction of any Federal or state court located in the State of Nevada
for the purpose of resolving any action or claim arising out of the performance
of the provisions of this Agreement.
7.4 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Further Assurances. Each party shall do and perform, or
cause to be done or performed, all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement, and the consummation of
the transactions contemplated hereby and thereby.
7.6 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
-14-
7.7 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given (i) upon personal delivery to the party to be notified, (ii)
four (4) days after deposit with the United States Post Office, by registered or
certified mail, postage prepaid, or (iii) one day after deposit with a reputable
overnight courier service and addressed to the party to be notified at the
address indicated for such party on the signature page hereto, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties, with a copy for the Company to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
7.8 Entire Agreement; Amendments and Waivers. This Agreement,
including the schedules and exhibits hereto constitute the full and entire
understanding and agreement among the parties with regard to the subjects
hereof. Any term of this Agreement may be amended and the observance of any term
of this Agreement may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the
Company and the Investor. Any amendment or waiver effected in accordance with
this Section 7.7 shall be binding upon the Investor and the Company.
7.9 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
-15-
7.10 Expenses. The Company shall be responsible for all costs
and expenses (except for any and all taxes incurred with the transaction shall
be the responsibility of each respective party) incurred in connection with the
transactions contemplated by this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
VIVA GAMING & RESORTS, INC.
By:
-----------------------------
Name:
Title:
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
MIDDLEMARCH PARTNERS LTD.
By:
----------------------------
Name:
Title:
Address:
------------------
------------------
------------------
-16-
TABLE OF CONTENTS
Page
1. Conversion of Existing Debt into Equity................................................................-2-
1.1 Cancellation of Existing Debt................................................................-2-
1.2 Issuance of Securities........................................................................-2-
1.3 Closing.......................................................................................-2-
2. Representations and Warranties of the Company..........................................................-2-
2.1 Organization; Good Standing; Qualification and Corporate Power................................-3-
2.2 Capitalization and Voting Rights..............................................................-3-
2.3 Subsidiaries; Interests of the Company........................................................-3-
2.4 No Breach.....................................................................................-4-
2.5 No Undisclosed Liabilities....................................................................-4-
2.6 Authorization.................................................................................-4-
2.7 Valid Issuance of Stock.......................................................................-4-
2.8 Financial Statements..........................................................................-5-
2.9 Changes.......................................................................................-5-
2.10 Registration Rights...........................................................................-6-
2.11 Litigation....................................................................................-7-
2.12 Title to Property and Assets..................................................................-7-
2.13 Agreements; Action............................................................................-7-
2.14 Compliance with Laws; No Defaults.............................................................-8-
2.15 Insurance.....................................................................................-8-
2.16 Tax Matters...................................................................................-8-
2.17 Governmental Regulation.......................................................................-8-
2.18 Securities Act................................................................................-9-
2.19 Related Party Transactions....................................................................-9-
2.20 SEC Documents.................................................................................-9-
3. Representations and Warranties of the Investor........................................................-10-
3.1 Organization and Existence; Good Standing....................................................-10-
3.2 Authorization................................................................................-10-
3.3 Purchase Entirely for Own Account............................................................-10-
3.4 Access to Information, Experience, Etc.......................................................-10-
3.5 Restricted Securities........................................................................-10-
3.6 Legends......................................................................................-11-
3.7 No Violation.................................................................................-11-
4. Conditions of the Investor's Obligations at Closing...................................................-11-
4.1 Representations of this Agreement............................................................-11-
4.2 Compliance Certificate.......................................................................-12-
4.3 Share Certificates...........................................................................-12-
4.4 Other Documents..............................................................................-12-
4.5 Consents and Waivers.........................................................................-12-
4.6 Delivery of Gaming Machines..................................................................-12-
5 Conditions of the Company's Obligations at Closing....................................................-12-
5.1 Representations of this Agreement............................................................-12-
5.2 Evidence of Canceled Indebtedness............................................................-12-
5.3 Delivery of Gaming Machines..................................................................-12-
6. Indemnity.............................................................................................-13-
6.1 Indemnification by the Company...............................................................-13-
6.2 Indemnification by the Investor..............................................................-13-
6.3 Survival.....................................................................................-13-
6.4 Limitations..................................................................................-13-
6.5 Third Party Claims...........................................................................-13-
6.6 Reduction for Insurance......................................................................-14-
7 Miscellaneous.........................................................................................-14-
7.1 Representation...............................................................................-14-
7.2 Successors and Assigns.......................................................................-14-
7.3 Governing Law................................................................................-14-
7.4 Counterparts.................................................................................-15-
7.5 Further Assurances...........................................................................-15-
7.6 Titles and Subtitles.........................................................................-15-
7.7 Notices......................................................................................-15-
7.8 Entire Agreement; Amendments and Waivers.....................................................-15-
7.9 Severability.................................................................................-15-
7.10 Expenses.....................................................................................-15-
-i-
Schedules, Exhibits and Annexes
-------------------------------
Schedule 2.2 Outstanding Warrants, Rights, etc.
Schedule 2.3 Subsidiaries
Schedule 2.5 Liabilities
Schedule 2.7 Shares Reserved for Issuance
Schedule 2.9 Changes
Schedule 2.10 Registration Rights
Schedule 2.11 Governmental Consents
Schedule 2.13 Agreements
Schedule 2.16 Tax Matters
Schedule 2.19 Related Party Transactions
-iii-
