Joint Management Agreement - Headliners Entertainment Group Inc., Global Concepts Ltd., Edwardo Rodriguez, and Michael Margolies
JOINT MANAGEMENT AGREEMENT
DATE: March 7, 2005
PARTIES:
Headliners Entertainment Group, Inc. ("Headliners")
501 Bloomfield Avenue, Montclair, NJ 07042
Global Concepts, Ltd. ("Global Concepts")
14 Garrison Inn Lane, Garrison, NY 10524
Eduardo Rodriguez ("Rodriguez")
19 West Drive, Livingston, NJ 07039
The Rodriguez Family Trust ("Rodriguez Trust")
19 West Drive, Livingston, NJ 07039
Michael Margolies ("Margolies")
10 Garrison Inn Lane, Garrison, NY 10524
The Margolies Family Trust ("Margolies Trust")
10 Garrison Inn Lane, Garrison, NY 10524
PREMISES:
1. Rodriguez and Margolies are the officers and directors of
Headliners.
2. Margolies is the sole executive officer of Global Concepts,
and is one of the two directors of Global Concepts. Rodri
guez has served as a consultant to Margolies in the manage
ment of Global Concepts.
3. The parties believe that substantial economies can be accom
plished by implementing an arrangement under which Headliners
and Global Concepts can share the management services of
Rodriguez and Margolies.
NOW, THEREFORE, it is agreed:
1. Holding Company. Promptly after the execution of this
agreement, Rodriguez and Margolies will cause to be formed a New
Jersey limited liability company under the name "G&H Management,
LLC" (the "LLC"). The members of the LLC will be the Rodriguez
Trust and the Margolies Trust (the "Trusts"). The Trusts will
enter into an Operating Agreement with the LLC in the form annexed
hereto as Appendix A.
2. Contribution of Shares.
a. On August 15, 2005, Rodriguez, the Rodriguez Trust,
Margolies and the Margolies Trust will contribute to the LLC (i)
all shares of common stock of Headliners and Global Concepts then
held by them, and (ii) all rights, warrants or options to acquire
shares of common stock of Headliners or Global Concepts then held
by them. The parties will deliver to counsel for Headliners and
Global Concepts certificates for the shares with stock powers duly
endorsed for transfer to the LLC.
b. At any time when the Trusts remain members of the LLC, if
Rodriguez, the Rodriguez Trust, Margolies or the Margolies Trust
acquires any equity securities issued by Global Concepts or
Headliners, he or it shall immediately assign the securities to
the LLC and deliver the instruments representing the securities to
the LLC with appropriate instruments of transfer. The two excep
tions to the foregoing sentence are (i) that a party who purchases
securities on the public market shall have no obligation to assign
the securities to the LLC, and (ii) that the Margolies Trust shall
not assign to the LLC shares issued upon conversion of the Deben
ture issued pursuant to Section 9 of this agreement.
c. Each party to this agreement hereby gives to the LLC a
proxy with respect to any shares acquired by him or it and not
transferred to the LLC, whether by reason of the exceptions set
forth in Section 2(b) above or otherwise. The proxy shall be
coupled with an interest, shall be irrevocable, and shall permit
the LLC to vote the shares at any meeting of shareholders or to
give consents to shareholder action.
3. Board of Directors. Simultaneous with the execution of
this agreement, the Board of Directors of Headliners and the Board
of Directors of Global Concepts shall each take such action as is
necessary to elect each of Rodriguez and Margolies to serve as the
members of each Board. Margolies further agrees that upon Rodri
guez' nomination of an additional individual to serve as the third
member of one or both of the Boards of Directors, Margolies will
vote to elect such individual to serve as a member of the Board,
unless Margolies receives the advice of counsel to the corporation
that such a vote would constitute a breach of Margolies' fiduciary
duty to the corporation.
4. Termination of Agreements.
a. The following agreements are hereby terminated:
i. Affiliation Agreement dated December 31, 2001 among
Margolies, Rodriguez and Headliners.
ii. Employment Agreement dated December 31, 2001 between
Margolies and Headliners.
iii. Employment Agreement dated December 31, 2001 between
Rodriguez and Headliners.
iv. Consulting Agreement dated June 3, 2004 between Global
Concepts and the Rodriguez Trust.
v. Consulting Agreement dated September 9, 2004 between
Global Concepts and Rodriguez.
b. Margolies hereby resigns from his positions as:
i. Vice Chairman of Headliners; and
ii. Chairman and President of Global Concepts.
c. Margolies shall retain his positions as Secretary of
Headliners and Global Concepts.
5. Rodriguez Employment. Simultaneous with the execution of
this Agreement:
a. Headliners will enter into a five-year employment agree
ment with Rodriguez in the form annexed hereto as Appendix B.
b. Global Concepts will enter into a ten-year employment
agreement with Rodriguez in the form annexed hereto as Appendix C.
6. Margolies Consulting. Simultaneous with the execution of
this Agreement:
a. Headliners will enter into a five-year advisory agreement
with Margolies in the form annexed hereto as Appendix D.
b. Global Concepts will enter into a ten-year advisory
agreement with Margolies in the form annexed hereto as Appendix E.
7. Parity in Compensation. During the period commencing on
the date of this agreement and continuing until the death of
either Rodriguez or Margolies, the following covenants shall be
effective:
a. Parity Ratio. It is the intention of the parties that
the compensation and benefits received by Rodriguez and Margolies
from Global Concepts shall be equal. It is also the intention of
the parties that the compensation and benefits received by Rodri
guez and Margolies from Headliners shall be equal after Headliners
first pays to Rodriguez One Hundred Seventy-Five Thousand Dollars
($175,000) per annum. These formulae are referred to herein
collectively as the "Parity Ratio."
b. Executive Agreements. In the event that any of the
employment and advisory agreements annexed hereto is modified,
amended or replaced, or if any other agreement is made between
Rodriguez or Margolies, on the one hand, and Global Concepts or
Headliners, on the other hand, the contracting entity shall
simultaneously enter into a modification, amendment or other
agreement with the other individual as needed to maintain the
Parity Ratio.
c. Conveyance of Value. In the event that Headliners or
Global Concepts conveys any Item of Value to Rodriguez or
Margolies or provides any Benefit Program to Rodriguez of
Margolies, other than those Items of Value and Benefit Programs
specifically provided for in the employment and advisory
agreements annexed hereto, then, if necessary in order to maintain
the Parity Ratio, the entity providing the Item of Value or
Benefit Program shall provide to the other individual the same
Item of Value or Benefit Program or the cash equivalent of the
Item of Value or Benefit Program, at the discretion of the
recipient. This obligation shall apply in the event of
conveyances of value for consideration, provided that the
accommodation made to preserve the Parity Ratio shall take into
account the consideration given for the Item of Value or Benefit
Program.
d. Definitions. For purposes of this Section 7, "Global
Concepts" and "Headliners" shall mean and include any entity which
is a successor in interest to the business of the named entity.
"Rodriguez" and "Margolies" shall mean and include any member of
their immediate family, as well as any entity in which they or
members of their immediate family own more than ten percent of the
equity. "Item of Value" shall mean and include cash, securities,
personal property, payments for the individual's benefit, and
services performed for the individual's benefit. "Benefit Pro
gram" shall mean and include insurance, pension, profit sharing,
retirement and other such programs, whether fully or partially
funded by Global Concepts or Headliners.
8. Management Fees.
a. In consideration of the services of Rodriguez and
Margolies being provided by the LLC to Headliners, Headliners
shall pay to the LLC a fee of Five Thousand Dollars ($5,000) on
the first business day of each month, commencing on the first
month after the date hereof and terminating on the tenth anniver
sary of the date hereof.
b. In consideration of the services of Rodriguez and
Margolies being provided by the LLC to Global Concepts, Global
Concepts shall pay to the LLC a fee of Five Thousand Dollars
($5,000) on the first business day of each month, commencing on
the first month after the date hereof and terminating on the tenth
anniversary of the date hereof.
9. Margolies Debt.
a. As used herein, the term "Margolies Debt" shall refer to
the sum owed by Global Concepts to the Margolies Trust on December
31, 2004, as set forth in the audited financial statements of
Global Concepts. Promptly after the independent accountants
deliver to Global Concepts the audited financial statements for
the period ending December 31, 2004, Global Concepts shall issue
to the Margolies Trust a Convertible Debenture, in the form
annexed hereto as Appendix F, the principal amount of which shall
equal the Margolies Debt.
b. Within thirty (30) days after the issuance of the Con
vertible Debenture, Global Concepts shall prepare and file with
the Securities and Exchange Commission a registration statement
and such other documents, including a prospectus, as may be
necessary in the opinion of counsel for Global Concepts in order
to comply with the provisions of the Securities Act, so as to
permit a public sale by the Margolies Trust of the shares into
which the Convertible Debenture is convertible (the "Conversion
Shares"). In connection with the registration of the Conversion
Shares, Global Concepts covenants and agrees as follows:
i. Global Concepts shall register 200% of the number of
shares into which the Convertible Debenture is convert
ible on the date on which the registration statement is
filed. If on any date the number of shares subject to
the registration statement, as amended, is less than
125% of the number of Conversion Shares on that date,
Global Concepts will file an amendment to the registra
tion statement or a subsequent registration statement
that will increase the number of registered shares to
200% of the number of Conversion Shares on the filing
date.
ii. Global Concepts will use its best efforts to cause the
registration statement, and any required amendment
thereto, to be declared effective as promptly as practi
cable.
iii. Until either (i) all of the Conversion Shares have
been sold or (ii) the Margolies Trust will be able
to sell all of the remaining Conversion Shares in
the public market without a prospectus within a six
month period, Global Concepts will file such amend
ments to the registration statement as are necessary
in order to permit continued use of the prospectus.
iv. Global Concepts will furnish the Margolies Trust with
such number of prospectuses and amended prospectuses as
shall reasonably be requested.
v. Global Concepts will pay all costs, fees and expenses in
connection with the registration statements filed pursu
ant to this Section including, without limitation,
Global Concepts' legal and accounting fees, printing
expenses and blue sky fees and expenses.
10. Successors and Assigns.
a. This agreement will inure to the benefit of, and be
binding upon, the heirs, estates, or personal representatives of
Margolies or Rodriguez, and upon the successors or assigns of the
Trusts, Headliners or Global Concepts.
b. Whenever in this agreement reference is made to
Headliners or Global Concepts or to securities issued by
Headliners or Global Concepts, the reference shall be interpreted
to include any entity which succeeds to the business of Headliners
or Global Concepts, whether by merger, consolidation, share
exchange, or asset sale.
11. Arbitration; Governing Law. Any dispute under this
Agreement shall be submitted to arbitration under the American
Arbitration Association (the "AAA") in New York, New York, and
shall be finally and conclusively determined by the decision of a
single arbitrator selected according to the rules governing the
AAA. In connection with rendering his decisions, the Board of
Arbitration shall adopt and follow the laws of the State of New
Jersey unless the matter at issue is the corporation law of a
company's state of incorporation, in which event the corporation
law of such jurisdiction shall govern such issue.
IN WITNESS WHEREOF, the parties have made this agreement as
of the date set forth in its first line.
HEADLINERS ENTERTAINMENT GLOBAL CONCEPT, LTD.
GROUP, INC.
By: /s/ Eduardo Rodriguez By:/s/ Michael Margolies
---------------------------- ----------------------------
Eduardo Rodriguez, President Michael Margolies, Chairman
/s/ Eduardo Rodriguez /s/ Michael Margolies
---------------------------- ----------------------------
EDUARDO RODRIGUEZ MICHAEL MARGOLIES
THE RODRIGUEZ FAMILY TRUST THE MARGOLIES FAMILY TRUST
By:/s/ Lynn Rodriguez By:/s/ Elaine Margolies
---------------------------- --------------------------
Lynn Rodriguez, Trustee Elaine Margolies, Trustee
APPENDICES
A. Operating Agreement of G&H Management, LLC
B. Employment Agreement between Eduardo Rodriguez and Headliners
Entertainment Group, Inc.
C. Employment Agreement between Eduardo Rodriguez and Global
Concepts, Ltd.
D. Advisory Agreement between Michael Margolies and Headliners
Entertainment Group, Inc.
E. Advisory Agreement between Michael Margolies and Global
Concepts, Ltd.
F. Form of Convertible Debenture to be issued by Global Concepts
to The Margolies Family Trust.
<PAGE>
APPENDIX A
OPERATING AGREEMENT
OF
G&H MANAGEMENT, L.L.C.
LIMITED LIABILITY OPERATING AGREEMENT (this "Agreement") dated as
of March ___, 2005 between the persons listed on Schedule A hereto as
members (the "Members") .
WITNESSETH
WHEREAS, the Members desire to form a New Jersey limited liabil
ity company, to be known as G&H Management, L.L.C. (the "Company")
pursuant to the New Jersey Limited Liability Company Law (the "LLC
Law"); and
WHEREAS, the Members wish to create an Operating Agreement to
establish the rules and procedures that are to govern the conduct of
the business and affairs of the Company;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants hereinafter set forth, the Members, intending to be legally
bound, hereby mutually covenant and agree as follows:
ARTICLE ONE
Definitions
"Act" means the New Jersey Limited Liability Company Law, as
amended from time to time.
"Adjusted Capital Account Deficit" means, at any time with
respect to any Member, the deficit balance, if any, in such Member's
Capital Account, after giving effect to the following adjustments:
(a) Such Capital Account shall be increased by the amounts which
such Member is deemed obligated to restore as described in the
penultimate sentence of Treasury Regulation Section l.704-2(g)(l)
and Treasury Regulation Section 1.704-2(i)(5), or any successor
provisions; and
(b) Such Capital Account shall be reduced by the amount of the
items described in Treasury Regulation Sections l.704-
l(b)(2)(ii)(d)(4), (5) and (6).
The definition of Adjusted Capital Account Deficit is intended to
comply with Treasury Regulation Section 1.704-l(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
"Agreement" means this Operating Agreement, and any amendments
thereto.
"Articles" means the Articles of Organization filed with the New
Jersey Department of the Treasury for the purpose of forming the
Company.
"Capital Account" means, with respect to any Member, such Mem
ber's Capital Contribution to the Company as adjusted in accordance
with Section 6.2 hereof.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means G&H Management, L.L.C., a limited liability
company formed and constituted and governed under and pursuant to the
Act, the Articles and this Agreement, as such limited liability
company may from time to time be constituted.
"Company Minimum Gain" has the meaning set forth in Treasury
Regulation Section 1.704-2(d).
"Contribution" means any cash, property, services rendered, or a
promissory note or other binding obligation to contribute cash or
property or to render services that a Member contributes to the
Company in his or her capacity as a Member.
"Distribution" means the transfer of Property by the Company to
one or more of its Members in his or her capacity as a Member.
"Fiscal Year" means the calendar year.
"Global Concepts" means Global Concepts, Ltd., a Colorado corpo
ration and any successor in interest to that corporation by merger,
consolidation, share exchange or sale of substantially all of its
assets.
"Headliners" means Headliners Entertainment Group, Inc., a
Delaware corporation and any successor in interest to that corporation
by merger, consolidation, share exchange or sale of substantially all
of its assets.
"Majority In Interest of the Members" means, unless otherwise
provided in this Agreement, the Members whose aggregate share of the
current Profits of the Company constitutes more than one-half of the
aggregate of such shares of all Members.
"Manager" means a Person designated by the Members to manage the
property, business and affairs of the Company as provided in Section
4.2 of this Agreement.
"Member" means a Person who has been admitted as a member of the
Company and has a Membership Interest in the Company with the rights,
obligations, preferences and limitations specified herein.
"Membership Interest" means a Member's aggregate rights in the
Company, including, without limitation, the Member's right to a share
of the Profits and Losses of the Company, the right to receive Distri
butions from the Company and the right to vote and participate in the
management of the Company.
"Net Cash Flow" means, for each Fiscal Year or other period of
the Company, the gross cash receipts of the Company from all sources,
but excluding any amounts, such as gross receipts taxes, that are held
by the Company as a collection agent or in trust for others or that
are otherwise not unconditionally available to the Company, less all
amounts paid by or for the account of the Company during the same
Fiscal Year or other period (including, without limitation, payments
of principal and interest on any Company indebtedness, payment of a
management fee to the Managers pursuant to Section 4.11 hereof and
expenses reimbursed to the Managers under Section 4.12 hereof), and
less any amounts determined by the Managers to be necessary to provide
a reasonable reserve for working capital needs or any other contingen
cies of the Company. Net Cash Flow shall be determined in accordance
with the cash receipts and disbursements method of accounting and
otherwise in accordance with generally accepted accounting principles,
consistently applied. Net Cash Flow shall not be reduced by deprecia
tion, amortization, cost recovery deductions, depletion, similar
allowances or other non-cash items, but shall be increased by any
reduction of reserves previously established.
"Office" means the office of the Company, the location of which
is stated herein.
"One-Third Interest of the Members" means, unless otherwise
provided in this Agreement, the Members whose aggregate share of the
current Profits of the Company constitutes one-third of the aggregate
of such shares of all Members.
"Percentage Interest" means the interest of a Member in the Profits
and Losses of the Company. The Percentage Interest of each Initial Member
in the Limited Liability Company is recited in Section 6.3 hereof and
shown on Schedule A to this Agreement. The Percentage Interests of the
Initial Members and the Percentage Interests of other Members may be
modified upon the admission of new Members, and such modification shall
be evidenced by an addendum to this Agreement setting forth the modified
Percentage Interests, executed by the Initial Members.
"Person" means any association, corporation, joint stock company,
estate, general partnership, limited association, limited liability
company, joint venture, limited partnership, natural person, real
estate investment trust, business trust or other trust, custodian,
nominee or any other individual or entity in its own or any represen
tative capacity.
"Profits" or "Losses" means, for any Fiscal Year or portion
thereof, the taxable income or taxable loss of the Company for such
Fiscal Year or portion thereof, as determined for federal income tax
purposes, increased by the amount, if any, of tax-exempt income
received or accrued by the Company and reduced by the amount, if any,
of all expenditures of the Company described in Section 705(a) (2) (B)
of the Code (including expenditures treated as described in Section
705(a)(2)(B) of the Code under Treasury Regulation Section 1.704-1(b)
(2) (iv) (i)).
"Property" means all real, personal and mixed properties, cash,
assets, interests and rights of any type owned by the Company. All
assets acquired with Company funds or in exchange for Company Property
shall be Company Property.
"SEC" means the Securities and Exchange Commission.
"Tax Matters Member" means a Member of the Company designated by
the other Members pursuant to Section 4.2 hereof to act as tax matters
partner of the Company for purposes of Subchapter C of Chapter 63 of
Subtitle F of the Code.
"Treasury Regulations" means the Income Tax Regulations (final,
temporary and, as applicable, proposed) promulgated under the Code.
"Two-Thirds Interest of the Members" means, unless otherwise
provided in this Agreement, the Members whose aggregate share of the
current Profits of the Company constitutes two-thirds of the aggregate
of such shares of all Members.
ARTICLE TWO
Name, Purpose and Character of
Business, Place of Business, Term
Section 2.1 Name
The name of the Company formed and continued hereby is G&H
Management, L.L.C.
Section 2.2 Purpose and Character of Business.
The Company is formed for the purpose of holding equity securi
ties issued by Headliners and equity securities issued by Global
Concepts, and providing management services to Headliners and Global
Concepts.
Section 2.3 Place of Business; Registered Agent.
The principal place of business as well as the address of the
Company's registered office in New Jersey shall be located at 501
Bloomfield Avenue, Montclair, New Jersey 07042. The Company's regis
tered agent for service of process in the State of New Jersey shall be
Ed Rodriguez.
Section 2.4 Term
The term of the Company shall begin upon the filing of the
Articles or any later effective date as set forth therein and will
continue until dissolution pursuant to Article Eight of this Agreement
or by law.
ARTICLE THREE
Meetings of Members
Section 3.1 Annual Meetings.
Meetings of the Members shall be held annually on the first
business day in April. Meetings of Members may be held at such place
or places, within or without the State of New Jersey, as shall be
determined by the Managers and stated in the notice of the meeting or
in a duly executed waiver of notice thereof. Members of the Company
may participate in a meeting by means of conference telephone or
similar communications equipment by means of which all persons partic
ipating in the meeting can hear each other, and such participation
shall constitute presence in person at such meeting.
Section 3.2 Special Meetings.
A meeting of the Members for any purpose or purposes may be
called at any time by the Managers and shall be called at any time by
the Managers upon the written request of Members Holding of record in
the aggregate at least a One-Third Interest of the Members in the
Company entitled to vote at such meeting. Such notice shall state the
purpose for which such meeting is to be called.
Section 3.3 Notice of Meetings.
Every Member shall furnish the Company through the Managers an
address at which notices of meetings and all other notices may be
served on or mailed to him or her. Notice of each meeting of the
Members shall be given to each Member entitled to vote at such meeting
not less than ten (10) nor more than sixty (60) days before the day on
which the meeting is to be held, either by personally giving notice or
by delivering written notice thereof by mailing such notice in a
first-class postage prepaid envelope addressed to him or her at his
post-office address furnished by him to the Company, or if he or she
shall not have furnished to the Company his or her address, then at
his or her post-office address last known to the Company, or, in the
absence of knowledge on the part of the Company of any such post-
office address, then at the Office of the Company in the State of New
Jersey. Notice of a meeting of the Members shall provide the place,
date and hour of the meeting, indicate that it is being issued by or
at the direction of the Person or Persons calling the meeting, and
state the purpose or purposes for which the meeting is called. An
affidavit of any Manager that notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.
When a meeting is adjourned to another time and place, it shall not be
necessary to give any notice of the adjourned meeting if the time and
place to which the meeting is adjourned are announced at the meeting
at which the adjournment is taken, and at the adjourned meeting any
business may be transacted that might have been transacted at the
original date of the meeting.
Section 3.4 Waiver of Notice.
Notice of a meeting need not be given to any Member who submits a
signed waiver of notice, in person or by proxy, whether before or
after the meeting. The attendance of any Member at a meeting, in
person or by proxy, without protesting prior to the conclusion of the
meeting the lack of notice of such meeting, shall constitute a waiver
of notice by him or her.
Section 3.5 Quorum
A Majority in Interest of the Members of the Company entitled to
vote at a meeting shall constitute a quorum for the transaction of
business when present at such meeting either in person or by proxy.
When a quorum is once present to organize a meeting, it is not broken
by the subsequent withdrawal of any Members.
Section 3.6 Voting
When voting on any matter that requires the vote at a meeting of
the Members pursuant to the Act, the Articles, or this Agreement, each
Member shall vote in proportion to such Member's Percentage Interest.
Whenever any action is to be taken under the Act by the Members, it
shall, except as otherwise provided, be authorized by a Majority in
Interest of the Members' votes cast at a meeting of Members entitled
to vote thereon. No provision in this Agreement which provides for the
vote of a percentage in interest of the Members may be amended without
the consent of at least such percentage in interest of the Members.
Section 3.7 Proxies
Each Member entitled to vote at any meeting of Members may
authorize another Person or Persons to act as his or her proxy by an
instrument in writing signed by such Member or his or her attorney-in-
fact.
Section 3.8 Action Without a Meeting.
(a) Whenever Members of the Company are required or permitted to
take any action by vote, such action may be taken without a meeting,
without prior notice and without a vote, if consent or consents in
writing, setting forth the action so taken shall be signed by the
Members who hold the voting interests having not less than the minimum
number of votes that would be necessary to authorize such action at a
meeting at which all of the Members entitled to vote therein were
present and voted and shall be delivered to the office of the Company
by hand or by certified or registered mail, return receipt requested.
(b) Every written consent shall bear the date of signature of
each Member who signs the consent. No written consent shall be effec
tive to take the action referred to therein unless, within sixty (60)
days of the earliest dated consent delivered in the manner required by
this section, written consents signed by a sufficient number of
Members to take the action are delivered to the office of the Company
by hand or by certified or registered mail, return receipt requested.
(c) Prompt notice of the taking of action without a meeting by
less than unanimous written consent shall be given to those Members
who have not consented in writing but who would have been entitled to
vote thereon had such action been taken at a meeting. In the event
that the action that is consented to is such as would have required
the filing of articles or a certificate under any Section of the Act,
if such action had been voted on by Members at a meeting thereof, such
articles or certificate filed under such Section shall state, in lieu
of any statement required by such Section concerning any vote of
Members, that written consent has been given as provided in Section
407 of the Act.
ARTICLE FOUR
Management
Section 4.1 Management by Managers.
The management of the Company's business shall be vested in a
class of one or more Managers designated by the Members. The Members
hereby designate Ed Rodriguez to be the initial Manager of the Com
pany, and Ed Rodriguez hereby accepts and agrees to be bound by the
terms and conditions of this Agreement.
Section 4.2 Powers of Managers.
(a) Subject to the terms of this Agreement, the property, busi
ness and affairs of the Company will be managed, and the conduct of
its business will be controlled by, the Managers. Except as otherwise
provided hereunder, the Managers shall have all of the rights, powers
and obligations of a class of managers as provided in the Act and as
otherwise provided by law. Without limiting the generality of the
foregoing, the Managers shall have the following powers and the
Managers are authorized on behalf of the Company to do or cause to be
done the following:
(i) to supervise the property, business and affairs of the
Company and hire, on behalf of the Company, such profession
als or other experts as may be necessary or desirable in
connection therewith;
(ii) to make any and all filings on behalf of the Company and its
Members as they shall deem necessary, including, without
limitation, filings of articles or certificates with the
Department of the Treasury of the State of New Jersey and
the filing of such documents, forms and requests for exemp
tion as may be required pursuant to federal and state secu
rities laws;
(iii) to make such filings with governmental and other au
thorities and to take any and all other actions as may
be necessary to maintain the limited liability of the
Members of the Company;
(iv) to establish and maintain bank accounts, including savings
accounts and demand deposit accounts, and cash management
accounts; and
(v) to do generally all things in connection with any of the
foregoing, generally manage, oversee and administer the
property, business and affairs of the Company and execute
all documents on behalf of the Company in connection there
with, and sign or accept all checks, notes and drafts on the
Company's behalf and, except as expressly restricted herein,
pay as Company expenses all costs or expenses connected with
the operation or management of the Company.
(b) In the event that the Company makes an in-kind Distribution
described in Section 734 of the Code, or in the event of a transfer of
any Membership Interest permitted by this Agreement made and described
in Section 743 of the Code, the Managers, on behalf of the Company,
may, in their absolute discretion, file an election under Section 754
of the Code in accordance with the procedures set forth in the appli
cable Treasury Regulations promulgated thereunder.
Section 4.3 Managers as Agents.
The Managers shall be agents of the Company for the purpose of
its business, and the acts of the Managers, including the execution in
the name of the Company of any instrument, for apparently carrying on
in the usual way the business of the Company shall bind the Company,
unless (1) the Manager acting has in fact no authority to act for the
Company in the particular matter and (2) the Person with whom such
Manager is dealing has knowledge of the fact that such Manager has no
such authority. No Member, solely by reason of being a Member, shall
be an agent of the Company for the purpose of its business except to
the extent that authority has been expressly delegated to such Member
in writing by the Managers or by the provisions in this Agreement. An
act of a Member or the Managers that is not apparently for the carry
ing on of the business of the Company in the usual way shall not bind
the Company unless authorized in fact by the Company in the particular
matter. No act of a Member, a Manager or other agent of the Company in
contravention of a restriction on authority shall bind the Company to
Persons having knowledge of such restriction.
Section 4.4 Duties of Managers.
(a) Each Manager shall perform his or her duties in good faith
and with that degree of care that an ordinarily prudent person in a
like position would use under similar circumstances. In performing
their duties, each Manager shall be entitled to rely on information,
opinions, reports or statements, including financial statements and
other financial data, in each case prepared or presented by: (1) one
or more agents or employees of the Company, or (2) counsel, accoun
tants or other Persons as to matters that such Manager believes to be
within such Person's professional or expert competence, provided such
Manager has no knowledge concerning the matter in question that would
cause such reliance to be unwarranted. A Person who so performs his or
her duties in accordance with this section shall have no liability by
reason of being or having been a Manager of the Company.
(b) This Section 4.4 will not eliminate or limit (1) the liabil
ity of a Manager if a judgment or other final adjudication adverse to
him or her establishes that his or her acts or omissions were in bad
faith or were the result of active and deliberate dishonesty or that
he or she personally gained in fact a financial profit or advantage to
which he or she was not legally entitled or that, with respect to a
Distribution the subject of Section 508(a) of the Act, his or her acts
were not performed in accordance with Section 4.4 of this Article, or
(2) the liability of a Manager for any act or omission prior to the
adoption of a provision authorized by Section 417 of the Act.
(c) The Managers do not in any way guarantee the return of any
Member's Contribution or a profit for the Members from the Company's
business.
Section 4.5 Qualification of Manager
A Manager may, but need not, be a Member of the Company.
Section 4.6 Term of Managers.
Each Manager shall hold office and have the terms and responsi
bilities accorded to him or her by the terms hereof until resignation
or removal by the Members.
Section 4.7 Election of Managers
The initial Manager shall hold office until the earlier of the
first annual meeting of the Company and the election of his successor
or until resignation or removal by the Members. The Members shall
thereafter vote in accordance with Section 3.6 to elect or designate
any subsequent Managers of the Company. Any Manager of the Company may
be removed or replaced with or without cause by a vote of a Majority
in Interest of the Members entitled to vote thereon.
Section 4.8 Action by Managers.
The Managers shall manage the Company by the affirmative vote of
a majority of the Managers. Any action required or permitted to be
taken by the Managers may be taken without a vote if all of the
Managers consent thereto in writing and such writing is filed with the
records of the Company. The Managers may participate in a meeting by
means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting hear each
other. Such participation shall constitute presence in person at such
meeting.
Section 4.9 Resignation of Managers.
A Manager may resign at any time by giving written notice to the
Company. However, if such resignation violates any provision contained
in this Agreement or the provision of any contractual agreement
between such Manager and the Company, the Company may recover from
such Manager damages for such breach as provided in this Agreement or
by contract or law. The election of a Manager shall not of itself
create contract rights in favor of any such party.
Section 4.10 Vacancies
Vacancies occurring among the Managers shall be filled by the
vote of a Majority in Interest of the Members entitled to vote
thereon. Any Manager chosen to fill a vacancy shall serve the unex
pired term of his or her predecessor.
Section 4.11 Fees.
The Company shall pay the Managers (or any accountant, agent,
attorney, consultant or advisor to the Managers), fees in compensation
for services rendered to the Company only if such fee is approved in
writing by Members holding a Two-Thirds Interest of the Members. Any
such fees shall be treated as expenses of the Company and shall not be
deemed to constitute Distributions to the recipient of any Profit,
Loss or capital of the Company. The obligations of the Managers to be
performed under this Agreement will not be affected by a failure of
the Company to pay fees under this Section 4.11.
Section 4.12 Reimbursement
The Company shall reimburse the Managers for all ordinary and
necessary out-of-pocket expenses incurred by them on behalf of the
Company. Such reimbursement shall be treated as an expense of the
Company that shall be deducted in computing the Net Cash Flow and
shall not be deemed to constitute a distributive share of Profits or a
Distribution or return of capital to the Managers, and such reimburse
ment shall be made out of the assets of the Company (including the
proceeds of the initial sale of Membership Interests) to the extent
possible. The obligations of the Managers to be performed under this
Agreement will not be affected by a failure of the Company to reim
burse expenses under this Section 4.12.
Section 4.13 Indemnification.
To the fullest extent permitted by law, the Company shall indem
nify and hold harmless each Manager from and against any and all
losses, claims, damages, liabilities or expenses of whatever nature,
as incurred, arising out of or relating to the fact that such party
was or is a Manager of the Company. Notwithstanding the foregoing, no
indemnification may be made to or on behalf of a Manager if a judgment
or other final adjudication adverse to such Manager establishes (1)
that his or her acts were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the cause of
action so adjudicated, or (2) that he or she personally gained in fact
a financial profit or other advantage to which he or she was not
legally entitled.
Section 4.14 Interested Managers.
(a) No contract or other transaction between the Company and one
or more of the Managers or between the Company and any other limited
liability company or other business entity in which one or more of the
Managers are managers, directors or officers, or have a substantial
financial interest, shall be either void or voidable for this reason
alone or by reason alone that such Manager or Managers were present at
the meeting of Managers which approved such contract or transaction,
or that his or her or their votes were counted for such purposes, (i)
if the material facts as to such Manager's interest in such contract
or transaction and as to any such common managership, directorship,
officership or financial interest are disclosed in good faith or known
to the other Managers, and the Managers approve such contract or
transaction by a vote sufficient for such purpose without counting the
vote of such interested Manager or, if the votes of the disinterested
Managers are insufficient to constitute an act of the Managers pursu
ant to the terms hereof and of the Act, by unanimous vote of the
disinterested Managers; or (ii) if the material facts as to such
Manager's interest in such contract or transaction and as to any such
common managership, directorship, officership or financial interest
are disclosed in good faith or known to the Members entitled to vote
thereon, and such contract or transaction is approved by the vote of
the Members holding a Two-Thirds Interest of the Members.
(b) Common or interested Managers may be counted in determining
the presence of a quorum at a meeting of the Managers or a meeting of
the Members that approves any such contract or transaction.
Section 4.15 Voting of Securities
The Managers shall cast votes at meetings of the shareholders of
Headliners or Global Concepts, or shall execute consents in lieu of
meetings, as they consider in their reasonable judgment to be in the
best interests of the Company. As an exception to the foregoing
sentence, in the event that a meeting is held to elect members of the
board of directors of either Headliners or Global Concepts, or if
consents are executed in lieu of a meeting, the Managers shall take
such action, including casting votes or executing consents, so that
there is nominated and, if within the Managers' power, elected to the
Board two individuals designated by The Rodriguez Family Trust and one
individual designated by The Margolies Family Trust. Moreover, if at
any time an individual so designated and elected ceases to serve on
one of the boards for any reason, the Managers will take such action
as is within their power to cause a replacement designated by the same
Member to be elected to the board.
ARTICLE FIVE
Membership
Section 5.1 Nature of Interest.
A Membership Interest in the Company is personal property. A
Member has no interest in specific property of the Company.
Section 5.2 Admission of Members.
Following the effective date hereof, a Person may be admitted as
a Member of the Company through the transfer or assignment of a
Membership Interest upon the vote or written consent of Members
holding a Two-Thirds Interest of the Members.
Section 5.3 Transfer and Assignments of Membership Interests
A Membership Interest is assignable in whole or in part. The
assignment of a Membership Interest does not dissolve the Company.
Section 5.4 Rights of Assignee to Become a Member
An assignee of a Membership Interest shall not be entitled to
participate in the management or affairs of the Company or to exercise
any rights or powers of a Member. An assignee shall have no liability
as a Member solely as a result of an assignment. However, the assignee
of a Membership Interest may be admitted as a Member upon the vote or
written consent of a Majority in Interest of all of the Members in the
Company. An assignee who becomes a Member shall succeed to the rights,
powers, preferences and limitations, and shall be subject to the
restrictions and liabilities, of a Member.
Section 5.5 Liability Upon Assignment.
Whether or not an assignee of a Membership Interest becomes a
Member, the assignor of a Membership Interest is not released from any
liability under the Act or this Agreement, except liabilities that
arise after the effectiveness of the assignment and are pursuant to
the express terms of the Act. A Member shall cease to be a Member upon
the assignment of his or her Membership Interest.
Section 5.6 Withdrawal of a Member.
A Member may not withdraw from the Company without the vote or
written consent of a Majority in Interest of all of the Members in the
Company or as otherwise provided in the Act.
Section 5.7 Liability of Members. Managers and Agents.
(a) Neither a Member, a Manager nor an agent of the Company
(including a Person having more than one such capacity) shall be
liable for any debts, obligations, or liabilities of the Company or of
each other, whether arising in tort, contract or otherwise, solely by
reason of being a Member, a Manager or agent or acting (or omitting to
act) in such capacities or participating (as an employee, consultant,
contractor or otherwise) in the conduct of the business of the Com
pany. Each of the Members shall be liable only to make payment of his
or her respective Contribution hereunder and other payments as ex
pressly provided in this Agreement. No Member shall be required to
lend any funds to the Company or, after such Member's Contribution has
been paid, except as required by the provisions of the Act and Sec
tions 4.12 and 6.10 hereof, to pay any further capital or Contribu
tion, assessment or payment to the Company.
(b) No Member shall be liable for the return of any portion of
the Contribution of any other Member; the return of such Contributions
shall be made solely from Company assets. No Member shall be required
to pay the Company or any other Member any deficit in the Member's
Capital Account upon dissolution or otherwise.
Section 5.8 Parties to Actions.
No Member of the Company is or shall be a proper party to pro
ceedings by or against the Company, except where the object of such
proceedings is or shall be to enforce a Member's right against or
liability to the Company.
Section 5.9 Tax Matters Member
The Members shall cause there to be at all times one Member of
the Company that shall be the Tax Matters Member of the Company. The
initial Tax Matters Member shall be The Margolies Family Trust.
ARTICLE SIX
Contributions, Capital Accounts, Allocations
and Distributions
Section 6.1 Capital Contributions.
(a) The Contribution of a Member to the capital of the Company
shall be in cash, property or services rendered or a promissory note
or other obligation to contribute cash or property or to render
services. Each of the Members has made a Contribution to the Company
in the amount shown on Schedule A hereto.
(b) Subject to the provisions of Section 6.10 hereof, no Member
shall be required to make any Contribution to the Company other than
that set forth on Schedule A hereto. No Member shall be entitled to
withdraw any part of his or her Capital Account or Contribution except
as expressly provided in this Agreement.
Section 6.2 Maintenance of Capital Accounts.
(a) A Capital Account shall be established in the Company's
books for each Member by the Managers in accordance with the rules of
Treasury Regulation Section l.704-l(b)(2)(iv). Each Member's Capital
Account shall be:
(i) increased by:
(A) such Member's cash Contributions to the Company;
(B) the fair market value of the property contributed by
such Member to the Company (net of liabilities secured by such
contributed property that the Company is considered to assume or
take subject to); and
(C) the amount of Profits allocated to such Member;
and
(ii) decreased by:
(A) the amount of money distributed to such Member by the
Company;
(B) the fair market value of the Property distributed to
such Member by the Company (net of liabilities secured by such
Property that the Member is considered to assume or take subject
to); and
(C) the amount of Losses allocated to such Member.
(b) In accordance with Treasury Regulation Section l.704-
l(b)(2)(iv)(e), immediately prior to the actual or deemed distribution
of any Company asset, the Capital Accounts of all Members shall be
adjusted (consistent with the provisions hereof) to reflect the manner
in which the unrealized income, gain, loss and deductions inherent in
such property (that has not been reflected in the Capital Accounts
previously) would be allocated to the Members if there were a taxable
disposition of such property for the fair market value of such
property on the date of distribution. In determining such unrealized
gain or unrealized loss, the aggregate fair market value of any such
asset as of any date of determination shall be determined by the
Managers using such reasonable methods of valuation as they may adopt.
(c) The foregoing provisions and other provisions of this
Agreement relating to maintenance of Capital Accounts are intended to
comply with Treasury Regulation Section 1.704-1(b) and shall be
interpreted and applied in a manner consistent with such regulation.
In the event the Managers shall determine that it is prudent to modify
the manner in which the Capital Accounts, or any debits or credits
thereto, are computed in order to comply with such regulations, the
Managers, without the approval of the Members, may amend this
Agreement to reflect such modification, provided that such amendment
is not likely to have a material effect on the amounts distributed to
the Members pursuant to Article Eight upon dissolution of the Company.
Section 6.3 Allocations of profits and losses.
(a) The Percentage Interests of the Initial Members shall be:
The Rodriguez Family Trust - 51%; The Margolies Family Trust - 49%.
(b) Except as provided by Sections 6.4, 6.5 and 6.6, the Profits
and Losses of the Company shall be allocated in accordance with the
Percentage Interests of each Member. For income tax purposes only,
each item of income, gain, loss and deduction of the Company shall be
allocated among the Members in accordance with their respective shares
of Profits and Losses (taking into account the special allocations set
forth in Sections 6.4 through 6.6), subject to the rules of Section
704(c)(l)(A) of the Code and the Treasury Regulations promulgated
thereunder.
Section 6.4 Minimum Gain Chargeback Allocations.
Except as otherwise provided in Treasury Regulation Section
1.704-2(f), notwithstanding any other provision of this Article Six,
if there is a net decrease in Company Minimum Gain during any Company
fiscal year, each Member shall be specially allocated items of Company
income and gain for such year (and, if necessary, for subsequent
years) in an amount equal to such Member's share of the net decrease
in Company Minimum Gain, to the extent required and in the manner
provided by Section 1.704-2(g) of the Treasury Regulations. The items
to be so allocated shall be determined in accordance with Treasury
Regulation Sections 1.704-2(f)(6) and l.704-2(j)(2). This Section 6.4
is intended to comply with the minimum gain chargeback provision of
Treasury Regulation Section 1.704-2(f) and shall be interpreted
consistently therewith.
Section 6.5 Qualified Income Offset.
Except as provided in Section 6.4, in the event any Member
unexpectedly receives any adjustments, allocations, or distributions
described in Treasury Regulation Sections 1.704-1(b) (2) (ii) (d)(4),
(5), or (6), which create or increase an Adjusted Capital Account
Deficit, items of Company income and gain shall be specially allocated
to such Member in an amount and manner sufficient to eliminate, to the
extent required by the Treasury Regulations, the Adjusted Capital
Account Deficit created by such adjustments, allocations, or
distributions as quickly as possible; provided that an allocation
pursuant to this Section 6.5 shall be made if and only to the extent
that such Member would have an Adjusted Capital Account Deficit after
all allocations provided for in this Article Six have been tentatively
made as if this Section 6.5 were not in this Agreement. This Section
6.5 is intended to constitute a "qualified income offset" within the
meaning of Treasury Regulation Section 1.704-1(b) (2) (ii) Cd).
Section 6.6 Curative Allocations.
The allocations set forth in Sections 6.4 and 6.5 (the
"Regulatory Allocations") are intended to comply with certain
requirements of Treasury Regulation Section 1.704-1(b). The Regulatory
Allocations may not be consistent with the manner in which the Members
intend to divide Company Distributions. Accordingly, the Managers are
hereby authorized to divide other allocations of Profits, Losses and
other items among the Members as may be necessary so as to prevent the
Regulatory Allocations from distorting the manner in which Company
Distributions will be divided among the Members. In general, the
Members anticipate that this will be accomplished by specially
allocating items of income, gain, loss and deduction among the Members
so that the net amount of the Regulatory Allocations and such special
allocations to such Member is zero. However, the Managers shall have
discretion to accomplish this result in any reasonable manner.
Section 6.7 Liquidation of Securities
Upon receipt of securities of Headliners or Global Concepts, the
Company shall entrust the securities to a registered broker-dealer.
The Company will enter into a contract with the broker-dealer in a
form that will afford the Company the affirmative defense described in
Rule 10b5-1(c)(1) of the SEC . The contract will direct the broker-
dealer that commencing thirty days after the issuer files its
quarterly or annual report with the SEC the broker-dealer shall sell
the maximum amount of the securities as is permitted by SEC Rule 144,
except that the broker-dealer shall not sell for the account of the
Company on any one day a number of shares that exceeds the greater of
(i) twenty percent (20%) of the issue's trading volume on that day or
(ii) ten percent (10%) of the aggregate trading volume for the issue
for the five preceding trading days.
Section 6.8 Allocations and Distributions of Net Cash Flow and
Property.
Subject to this Article Six and except as otherwise provided in
Article Eight hereof (relating to the dissolution of the Company), any
Distribution of the Net Cash Flow shall be allocated on the basis of
the Percentage Interest of each Member.
Section 6.9 Distribution Rules
(a) Within thirty (30) days following the end of each calendar
quarter, the Company shall make a Distribution of the Net Cash Flow
for the quarter, less any deficit in Net Cash Flow that existed on the
first day of the quarter.
(b) All amounts withheld pursuant to the Code or any provision
of any state or local law with respect to any payment, Distribution or
allocation to the Company or the Members shall be treated as amounts
distributed to the Members pursuant to this Article Six for all
purposes of this Agreement. The Managers are authorized to withhold
from Distributions, or with respect to allocations, to the Members and
to pay over to any federal, state or local government any amounts
required to be so withheld pursuant to the Code or any provision of
any other federal, state or local law and shall allocate such amounts
to those Members with respect to which such amounts were withheld.
Section 6.10 Limitations on Distributions
(a) Notwithstanding any provision to the contrary contained in
this Agreement, the Company shall not make a Distribution to a Member
to the extent that, at the time of the Distribution, after giving
effect to the Distribution, all liabilities of the Company, other than
liabilities to Members on account of their Membership Interests and
liabilities for which recourse of creditors is limited to specified
property of the Company, exceed the fair market value of the assets of
the Company, except that the fair market value of property that is
subject to a liability for which the recourse of creditors is limited
shall be included in the assets of the Company only to the extent that
the fair value of such property exceeds such liability. A Member who
receives a Distribution in violation of this Section, and who knew at
the time of Distribution that the Distribution violated this Section,
shall be liable to the Company for the amount of the Distribution. A
Member who receives a Distribution in violation of this Section 6.10,
and who did not know at the time of the Distribution that the
Distribution violated this Section, shall not be liable for the amount
of the Distribution.
(b) This Section 6.10 shall not affect any obligation or
liability of a Member under this Agreement or other applicable law for
the amount of a Distribution. Unless otherwise agreed, however, a
Member who receives a wrongful Distribution from the Company shall
have no liability under this Agreement or other applicable law for the
amount of the Distribution after the expiration of three (3) years
from the date of the Distribution.
Section 6.11 Distribution Upon Withdrawal.
Except as provided in the Act, upon withdrawal as a Member of the
Company as provided in Section 5.6, any withdrawing Member shall be
entitled to receive (i) any Distribution to which he or she is
entitled under this Agreement and (ii) within a reasonable time after
withdrawal, an amount equal to the positive balance in such Member's
Capital Account as of the date of withdrawal after taking into account
all Capital Account adjustments for the Fiscal Year during which such
withdrawal occurs.
ARTICLE SEVEN
Accounting and Records
Section 7.1 Records.
The Company shall maintain the following records: (1) the full
name and mailing address of each Manager, (2) a current list of the
full name set forth in alphabetical order and last known mailing
address of each Member, together with the Contribution and the share
of profits and Losses of each Member or information from which such
share can be readily derived, (3) a copy of the Articles and all
amendments thereto or restatements thereof, together with executed
copies of any powers of attorney pursuant to which any certificate or
amendment has been executed, (4) a copy of this Agreement, any
amendments thereto and any amended and restated operating Agreement,
and (5) a copy of the Company's federal, state and local income tax or
information returns and reports, if any, for the three (3) most recent
fiscal years. The Company may maintain its records in other than a
written form if such form is capable of conversion into written form
within a reasonable time.
Section 7.2 Inspection.
Any Member may, upon not less than ten (10) days' notice to the
Managers, inspect and copy at his or her own expense, for any purpose
reasonably related to the Member's interest as a Member, the records
referred to in Section 7.1, any financial statements maintained by the
Company for the three (3) most recent fiscal years and other
information regarding the affairs of the Company as is just and
reasonable. However, the Managers shall have the right to keep
confidential from the other Members for such period of time as the
Managers deem reasonable, any information which the Managers
reasonably believe to be in the nature of trade secrets or other
information the disclosure of which the Managers in good faith believe
is not in the best interest of the Company or its business or which
the Company is required by law or agreement with a third party to keep
confidential.
ARTICLE EIGHT
Dissolution
Section 8.1 Dissolution.
The Company shall be dissolved and its affairs shall be wound up
upon the first to occur of the following: (1) the vote or written
consent of the Holders of a Two-Thirds Interest of the Members, or (2) the
entry of a decree of judicial dissolution under the Act.
Section 8.2 Judicial Dissolution.
On application by or for a Member, the superior court in the judicial
district in which the office of the Company is located may decree
dissolution of the Company pursuant to the Act whenever it is not
reasonably practicable to carry on the business in conformity with the
Articles or Agreement. A certified copy of the order of dissolution shall
be filed by the applicant with the Department of the Treasury of the State
of New Jersey within thirty (30) days of its issuance.
Section 8.3 Winding Up.
In the event of a dissolution of the Company, other than a judicial
dissolution pursuant to Section 8.2 hereof under the Act, the Members
may wind up the Company's affairs. Upon the showing of cause, the superior
court in the judicial district in which the office of the Company is
located may wind up the Company's affairs upon application of any Member,
or his or her legal representative or assignee, and in connection
therewith may appoint a receiver or liquidating trustee. Upon dissolution
of the Company, the Persons winding up the Company's affairs may, in
the name of and for and on behalf of the Company, prosecute and defend
suits, whether civil, criminal or administrative, settle and close the
Company's business, dispose of and convey the Company's property,
discharge the Company's liabilities and distribute to the Members any
remaining assets of the Company, all without affecting the liability of
Members, including Members participating in the winding up of the
Company's affairs.
Section 8.4 Distribution of Assets.
Upon the winding up of the Company, the assets shall be distributed as
follows: (1) to creditors, including Members who are creditors, to the
extent permitted by law, in satisfaction of liabilities of the Company,
whether by payment or by establishment of adequate reserves, other than
liabilities for Distributions to Members pursuant to Sections 6.8 and
6.11 hereof, (2) to Members and former Members in satisfaction of
liabilities for Distributions under Sections 6.8 and 6.11 hereof, and
(3) to Members for the return of their Contributions and in respect of
their Membership Interests in accordance with and to the extent of their
positive Capital Account balances after taking into account all Capital
Account adjustments for the taxable year during which such distribution
occurs.
Section 8.5 Articles of Dissolution
Within ninety (90) days following the dissolution and winding up of the
Company, or at any other time there are no Members, Articles of Dissolution
shall be filed with the New Jersey Department of the Treasury entitled
"Articles of Dissolution of G&H Management, L.L.C. The Articles of
Dissolution shall set forth (1) the name of the Company and, if it has been
changed, the name under which it was formed, (2) the date of filing of its
Articles and each subsequent amendment thereto or restatement thereof,
(3) the event giving rise to the filing of the Articles of Dissolution,
and (4) any other information the Persons filing the Articles of
Dissolution determine. The cancellation of the Articles shall be effective
at the time of filing of the Articles of Dissolution. The cancellation of
the Articles shall not affect the liability of the Members during the
period of winding up and termination of the Company.
ARTICLE NINE
Miscellaneous
Section 9.1 Amendments to Agreement.
This Agreement may be amended by the affirmative vote of the Holders of
Two-Thirds Interest of the Members, provided that no amendment to this
Agreement may be made without the written consent of each Member adversely
affected thereby.
Section 9.2 Binding Provisions.
The covenants and agreements contained herein shall be binding upon and
inure to the benefit of the heirs, executors, administrators, successors
and assigns of the respective parties hereto.
Section 9.3 No Waiver.
The failure of any Member or Manager to seek redress for violation, or
to insist on strict performance, of any covenant or condition of this
Agreement shall not prevent a subsequent act which would have constituted
a violation from having the effect of an original violation.
Section 9.4 Applicable Law.
This Agreement shall be construed and enforced in accordance with the
laws of the State of New Jersey without giving effect to conflicts of laws
principles thereof.
Section 9.5 Entire Agreement.
This Agreement constitutes the entire agreement among the parties. This
Agreement supersedes any prior agreement or understanding among the parties
and may not be modified or amended in any manner other than as set forth
herein or therein.
Section 9.6 Counterparts
This Agreement may be executed in several counterparts, all of which
together shall constitute one agreement binding on all parties hereto
notwithstanding that all the parties have not signed the same
counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Managers: Members:
The Margolies Family Trust
_______________________________
Ed Rodriguez By:__________________________
Elaine Margolies, Trustee
The Rodriguez Family Trust
By:__________________________
Lynn Rodriguez, Trustee
<PAGE>
Schedule A
Name and Address of Member Contribution Percentage Interest
--------------------------- ------------ -------------------
The Margolies Family Trust $10.00 49%
10 Garrison Inn Lane
Garrison, NY 10524
The Rodriguez Family Trust $10.00 51%
19 West Drive
Livingston, NJ 07039
* * * * *
<PAGE>
APPENDIX B
EMPLOYMENT AGREEMENT - EDUARDO RODRIGUEZ
AGREEMENT made as of the 7th day of March, 2005 by and between
HEADLINERS ENTERTAINMENT GROUP, INC., a Delaware corporation with
offices at 501 Bloomfield Avenue, Montclair, NJ 07042 (the
"Corporation"), and EDUARDO RODRIGUEZ, residing at 19 West Drive,
Livingston, NJ 07039 ("Rodriguez").
WHEREAS, the Corporation wishes to employ Rodriguez as President,
and to provide Rodriguez with assurance of compensation and terms of
employment which will competitively motivate Rodriguez, and Rodriguez
desires to be so employed.
NOW, THEREFORE, it is agreed:
1. Title; Capacities.
(a) The Corporation hereby employs Rodriguez as President. In
such capacity, Rodriguez shall be responsible for supervising the
implementation of the plans and policies adopted from time-to-time by
the Corporation's Board of Directors. Rodriguez shall be subject to
the supervision of the Corporation's Board of Directors.
(b) The Corporation understands and acknowledges that Rodriguez
is also employed as Chief Executive Officer of Global Concepts, Ltd.
Subject to the obligations attendant to that position, Rodriguez
agrees that he will devote all of his business time, labor, skill,
attention and best ability to the performance of his duties under this
Agreement. Rodriguez agrees to abide by such reasonable rules,
regulations, personnel practices and policies of the Corporation, and
any changes therein, which may be reasonably adopted from time to time
by the Corporation and delivered in writing to Rodriguez.
2. Compensation.
(a) Salary. The Corporation shall pay Rodriguez a salary at the
rate of Two Hundred Thousand Dollars ($200,000) per annum, payable on
such days when the salaries of other Corporation employees are paid.
(b) Benefits. Rodriguez shall be entitled to receive such
health, medical, disability and life insurance benefits as are made
available to executive employees of the Corporation.
(c) Automobile. The Corporation shall provide to Rodriguez, at
no cost to Rodriguez, an automobile for Rodriguez's business use and
purposes, including automobile insurance coverage, which said
automobile shall be selected by Rodriguez and shall be replaced every
two (2) years with a new vehicle. The initial vehicle to be provided
to Rodriguez by the Corporation shall be a model year 2005 or newer
and each replacement vehicle shall be at least the model year vehicle
for the year of replacement and shall be limited to a cost, exclusive
of insurance costs, of $1,000.00 per month.
(d) Reimbursement of Business Expenses. Rodriguez shall be
entitled to reimbursement of all reasonable business expenses actually
incurred by Rodriguez in the discharge of Rodriguez' duties hereunder,
including expenses for entertainment, travel, employee training and
similar items, upon submission to the Corporation with satisfactory
documentation thereof.
(e) Death/Disability Benefit. In the event that this Agreement
is terminated by reason of Rodriguez' death or disability, then
Rodriguez or his estate, as the case may be, shall be entitled to
receive monthly payments equal to those he would otherwise have
received pursuant to Section 2(a) during the remainder of the term of
this Agreement.
3. Term.
(a) The "Term" of this Agreement and of Rodriguez's employment
hereunder shall commence on the date of this Agreement and shall
terminate on January 31, 2010, unless earlier terminated pursuant to
Sec. 3(b) hereunder.
(b) Prior to January 31, 2010, Rodriguez's employment hereunder
may be terminated as follows:
(i) by Rodriguez, at will;
(ii) by the Corporation for Cause;
(iii) by the Corporation, upon the death or disability of
Rodriguez. "Disability" shall mean Rodriguez's inability to perform
Rodriguez's normal employment functions due to any medically
determinable physical or mental disability, which can last or has
lasted three months or is expected to result in death.
(c) As used herein, the term "Cause" shall mean only the follow-
ing: (i) conviction of a crime involving moral turpitude, (ii)
material, willful or gross misconduct by Rodriguez in the performance
of his duties hereunder; or (iii) the failure by Rodriguez to perform
or observe any substantial lawful obligation of such employment that
is not remedied within fifteen (15) days after the receipt of written
notice thereof from the Board of Directors (provided such neglect or
failure is unrelated to disability).
(d) Termination of Rodriguez's employment, when permitted
hereunder, may be effectuated by delivery of written notice to
Rodriguez, stating the grounds for termination. Such notice shall be
effective upon receipt.
(e) At any time during the Term of the Agreement, the Board of
Directors may remove Rodriguez from his positions as President, if
it determines that such removal is in the best interests of the
Corporation. Upon such removal, Rodriguez may assume another role
in the Corporation if Rodriguez and the Corporation so agree, or he
may have no further responsibilities to the Corporation. A removal
from office pursuant to this Section 3(e) shall not be deemed to be a
termination of this agreement, and Rodriguez shall remain employed
under the terms of this Agreement until the Agreement terminates
pursuant to either Section 3(a) or Section 3(b).
4. Covenant of Non-Competition. In consideration of the
undertakings by the Corporation herein, Rodriguez covenants for the
benefit of the Corporation and the shareholders thereof as follows:
(a) The "Restricted Period" for purposes of this Covenant shall
commence on the date of this agreement and shall continue for a period
ending on the date which is one year after the date on which Rodriguez
ceases to be employed by the Corporation.
(b) During the Restricted Period Rodriguez shall not, directly or
indirectly, as an employee, consultant or principal, through equity
ownership or otherwise, for himself or for any other person, engage
in, or assist any other person to engage in, any Competitive
Activities. For purposes hereof, "Competitive Activities" shall
include the following:
(i) Directly or indirectly soliciting, diverting, taking
away or attempting to solicit, divert, or take away any business
opportunities which became available to the Corporation or any of
its subsidiaries or affiliated entities during the Term of this
Agreement.
(ii) Engaging in the business of owning and/or operating
comedy clubs.
(iii) Hiring, offering to hire, enticing away or in
any manner persuading or attempting to persuade any person
affiliated (as employee or as independent contractor) with
the Corporation or any affiliate or subsidiary of the
Corporation to discontinue his relationship with such
company, or to become employed by any other entity.
5. Assignment. The Corporation and Rodriguez acknowledge that
the relationship established hereby is unique and personal and that
neither the Corporation nor Rodriguez may assign or delegate any of
their respective rights and/or obligations hereunder without the prior
written consent of the other party except as follows:
In the event of a future disposition of (or including) the
properties and business of the Corporation, substantially as an
entirety, by merger, consolidation, sale of assets, or otherwise, then
the Corporation shall be obligated to assign this Agreement and all of
its rights and obligations hereunder to the acquiring or surviving
corporation, and such acquiring or surviving corporation shall assume
in writing all of the obligations of the Corporation hereunder;
provided, however, that the Corporation (in the event and so long as
it remains in business as an independent going enterprise) shall
remain liable for the performance of its obligations hereunder in the
event of an unjustified failure of the acquiring corporation to
perform its obligations under this Agreement.
6. Indemnification. The Corporation shall indemnify Rodriguez to
the fullest extent authorized by the General Corporation Law of the
State of Delaware against claims or liability arising from his service
on behalf of the Corporation, whether pursuant to this Agreement or
pursuant to previous arrangements between the Corporation and
Rodriguez.
7. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
HEADLINERS ENTERTAINMENT GROUP, INC.
By:/s/ Michael Margolies
----------------------------
Michael Margolies, Secretary
/s/ Eduardo Rodriguez
----------------------------
EDUARDO RODRIGUEZ
<PAGE>
APPENDIX C
EMPLOYMENT AGREEMENT - EDUARDO RODRIGUEZ
AGREEMENT made as of the 7th day of March, 2005 by and between
GLOBAL CONCEPTS, LTD., a Colorado corporation with offices at 14
Garrison Inn Lane, Garrison, NY 10524 (the "Corporation"), and EDUARDO
RODRIGUEZ, residing at 19 West Drive, Livingston, NJ 07039
("Rodriguez").
WHEREAS, the Corporation wishes to employ Rodriguez as Chairman,
and to provide Rodriguez with assurance of compensation and terms of
employment which will competitively motivate Rodriguez, and Rodriguez
desires to be so employed.
NOW, THEREFORE, it is agreed:
1. Title; Capacities.
(a) The Corporation hereby employs Rodriguez as Chairman and
Chief Executive Officer. In such capacity, Rodriguez shall be
responsible for supervising the implementation of the plans and
policies adopted from time-to-time by the Corporation's Board of
Directors. Rodriguez shall be subject to the supervision of the
Corporation's Board of Directors.
(b) The Corporation understands and acknowledges that Rodriguez
is also employed as Chief Executive Officer of Headliners
Entertainment Group, Inc. Subject to the obligations attendant to
that position, Rodriguez agrees that he will devote all of his
business time, labor, skill, attention and best ability to the perfor-
mance of his duties under this Agreement. Rodriguez agrees to abide
by such reasonable rules, regulations, personnel practices and
policies of the Corporation, and any changes therein, which may be
reasonably adopted from time to time by the Corporation and delivered
in writing to Rodriguez.
2. Compensation.
(a) Salary. The Corporation shall pay Rodriguez a salary at the
rate of One Hundred Thousand Dollars ($100,000) per annum, payable on
such days when the salaries of other Corporation employees are paid.
(b) Benefits. Rodriguez shall be entitled to receive such
health, medical, disability and life insurance benefits as are made
available to executive employees of the Corporation.
(c) Reimbursement of Business Expenses. Rodriguez shall be
entitled to reimbursement of all reasonable business expenses actually
incurred by Rodriguez in the discharge of Rodriguez' duties hereunder,
including expenses for entertainment, travel, employee training and
similar items, upon submission to the Corporation with satisfactory
documentation thereof.
(d) Death/Disability Benefit. In the event that this Agreement
is terminated by reason of Rodriguez' death or disability, then
Rodriguez or his estate, as the case may be, shall be entitled to
receive monthly payments equal to those he would otherwise have
received pursuant to Section 2(a) during the remainder of the term of
this Agreement.
3. Term.
(a) The "Term" of this Agreement and of Rodriguez's employment
hereunder shall commence on the date of this Agreement and shall
terminate on January 31, 2015, unless earlier terminated pursuant to
Sec. 3(b) hereunder.
(b) Prior to January 31, 2015, Rodriguez's employment hereunder
may be terminated as follows:
(i) by Rodriguez, at will;
(ii) by the Corporation for Cause;
(iii) by the Corporation, upon the death or disability of
Rodriguez. "Disability" shall mean Rodriguez's inability to perform
Rodriguez's normal employment functions due to any medically
determinable physical or mental disability, which can last or has
lasted three months or is expected to result in death.
(c) As used herein, the term "Cause" shall mean only the follow-
ing: (i) conviction of a crime involving moral turpitude, (ii)
material, willful or gross misconduct by Rodriguez in the performance
of his duties hereunder; or (iii) the failure by Rodriguez to perform
or observe any substantial lawful obligation of such employment that
is not remedied within fifteen (15) days after the receipt of written
notice thereof from the Board of Directors (provided such neglect or
failure is unrelated to disability).
(d) Termination of Rodriguez's employment, when permitted
hereunder, may be effectuated by delivery of written notice to
Rodriguez, stating the grounds for termination. Such notice shall be
effective upon receipt.
(e) At any time during the Term of the Agreement, the Board of
Directors may remove Rodriguez from his positions as Chairman and/or
Chief Executive Officer, if it determines that such removal is in the
best interests of the Corporation. Upon such removal, Rodriguez
may assume another role in the Corporation if Rodriguez and the
Corporation so agree, or he may have no further responsibilities to
the Corporation. A removal from office pursuant to this Section 3(e)
shall not be deemed to be a termination of this agreement, and Rodriguez
shall remain employed under the terms of this Agreement until the
Agreement terminates pursuant to either Section 3(a) or Section 3(b).
4. Covenant of Non-Competition. In consideration of the
undertakings by the Corporation herein, Rodriguez covenants for the
benefit of the Corporation and the shareholders thereof as follows:
(a) The "Restricted Period" for purposes of this Covenant shall
commence on the date of this agreement and shall continue for a period
ending on the date which is one year after the date on which Rodriguez
ceases to be employed by the Corporation.
(b) During the Restricted Period Rodriguez shall not, directly or
indirectly, as an employee, consultant or principal, through equity
ownership or otherwise, for himself or for any other person, engage
in, or assist any other person to engage in, any Competitive
Activities. For purposes hereof, "Competitive Activities" shall
include the following:
(i) Directly or indirectly soliciting, diverting, taking
away or attempting to solicit, divert, or take away any business
opportunities which became available to the Corporation or any of
its subsidiaries or affiliated entities during the Term of this
Agreement.
(ii) Engaging in any business which is directly competitive
with a business operated by the Corporation or its subsidiaries
within one year prior to Rodriguez' engagement in the business.
(iii) Hiring, offering to hire, enticing away or in
any manner persuading or attempting to persuade any person
affiliated (as employee or as independent contractor) with
the Corporation or any affiliate or subsidiary of the
Corporation to discontinue his relationship with such
company, or to become employed by any other entity.
5. Assignment. The Corporation and Rodriguez acknowledge that
the relationship established hereby is unique and personal and that
neither the Corporation nor Rodriguez may assign or delegate any of
their respective rights and/or obligations hereunder without the prior
written consent of the other party except as follows:
In the event of a future disposition of (or including) the
properties and business of the Corporation, substantially as an
entirety, by merger, consolidation, sale of assets, or otherwise, then
the Corporation shall be obligated to assign this Agreement and all of
its rights and obligations hereunder to the acquiring or surviving
corporation, and such acquiring or surviving corporation shall assume
in writing all of the obligations of the Corporation hereunder;
provided, however, that the Corporation (in the event and so long as
it remains in business as an independent going enterprise) shall
remain liable for the performance of its obligations hereunder in the
event of an unjustified failure of the acquiring corporation to
perform its obligations under this Agreement.
6. Indemnification. The Corporation shall indemnify Rodriguez to
the fullest extent authorized by the Business Corporation Act of the
State of Colorado against claims or liability arising from his service
on behalf of the Corporation, whether pursuant to this Agreement or
pursuant to previous arrangements between the Corporation and
Rodriguez.
7. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
GLOBAL CONCEPTS, LTD.
By:/s/ Michael Margolies
------------------------------
Michael Margolies, Secretary
/s/ Eduardo Rodriguez
----------------------------
EDUARDO RODRIGUEZ
APPENDIX D
ADVISORY AGREEMENT - MICHAEL MARGOLIES
AGREEMENT made as of the 7th day of March, 2005 by and between
HEADLINERS ENTERTAINMENT GROUP, INC., a Delaware corporation with offices
at 501 Bloomfield Avenue, Montclair, NJ 07042 (the "Corporation"), and
MICHAEL MARGOLIES, residing at 10 Garrison Inn Lane, Garrison, NY 10524
("Margolies").
WHEREAS, Margolies has served as an executive officer of
Corporation since 2000, and Margolies is resigning from his position as
an executive officer of the Corporation; and
WHEREAS, the Corporation wishes to retain Margolies as an advisor
to the Board of Directors and to the Corporation's Chief Executive
Officer, and Margolies is willing to perform in that role.
NOW, THEREFORE, it is agreed:
1. Advisory Services.
(a) Upon request of the Corporation's Board of Directors or its
Chief Executive Officer or its Chief Operating Officer, Margolies shall
provide advice and consultation. Margolies will make himself available
as needed by the Corporation, at times to be mutually agreed upon based
on the business and personal obligations of Margolies and the
Corporation. Margolies shall not be required to devote any specific
amount of time to the performance of services hereunder, but shall devote
such time as will advance the interests of the Corporation.
(b) Margolies shall advise the Board and the Chief Executive
Officer regarding the business operations that are carried on by the
Corporation on the date of this agreement, as well as those business
acquisitions that the Corporation is pursuing on the date of this
agreement.
(c) Margolies agrees to also provide consulting services to the
Corporation in the areas of business development, investor relations,
public relations, and finance. Among the services that Margolies may
provide are the following:
- render professional advice and guidance in the development of a
strategic business plan for the purpose of raising capital and
fostering the growth of the Corporation;
- design a strategic financing plan commensurate with the
financial requirements of the Corporation, and assist the
Corporation by answering questions and advising on any
financial or strategic issues that may arise which affect the
Corporation;
- assist in the development of a strategy to accomplish
shareholder liquidity, including review of opportunities for
access to public markets;
- target potential merger and acquisition candidates for the
Corporation, including: initiating direct contact with such
candidates; determining if there is an interest on the part
of any such candidate; and establishing the qualification of
any interested candidates;
- Provide liaison with the investment and banking community in the
areas of equity financing, debt financing, and/or venture
capital;
- Provide due diligence and assist with negotiations and
structuring potential business opportunities and operations;
- Seek equity, debt, mezzanine short term financing, factoring,
accounts receivable, sale/lease back and additional financing
sources to meet the financial roadmap requirements for growth
and expansion. This will include negotiations, financial
modeling and highest and best use of financial resources;
- Assist the Corporation with various other transactional
services and/or provide miscellaneous financial advice as may
be requested by the Corporation and which is within the scope
of services provided by Margolies; and
- Assist in the preparation of such documents as may be useful
in accomplishing a private offering or a registered public
offering of securities. Margolies will also assist the
Corporation in managing such a capital raise.
2. Compensation.
(a) Consulting Fee. The Corporation will pay Margolies a fee at a
rate of Twenty-Five Thousand Dollars ($25,000) per annum throughout the
Term of this agreement. The fee will be payable on those days when the
Corporation regularly pays its executive officers, but no less than once
each month. The Corporation acknowledges that the services to be
provided by Margolies will be most valuable in the first year of the
Term. Accordingly, in the event that Margolies becomes unable to perform
his obligations hereunder by reason of death or disability, the
Corporation will continue to pay the fee throughout the Term to Margolies
or to his estate, as applicable.
(b) Other Benefits. Margolies shall be entitled to receive such
health, medical, and disability benefits as are made available to
executive employees the Corporation.
(c) Reimbursement of Business Expenses. Margolies shall be
entitled to reimbursement of all reasonable business expenses actually
incurred by Margolies in the discharge of Margolies' duties hereunder,
including expenses for entertainment, travel, employee training and
similar items, upon submission to the Corporation with satisfactory
documentation thereof.
3. Term.
(a) The "Term" of this Agreement shall commence on the date of
this Agreement and shall terminate on January 31, 2010, unless earlier
terminated pursuant to Sec. 3(b) hereunder.
(b) Prior to January 31, 2010, this Agreement may be terminated as
follows:
(i) by Margolies at any time, upon written notice to the
Corporation;
(ii) by the Corporation for Cause. As used herein, the term
"Cause" shall mean only the following: (A) conviction during the Term of
a crime involving moral turpitude, or (B) material, willful or gross
misconduct by Margolies in the performance of his duties hereunder.
4. Covenant of Non-Competition. In consideration of the
undertakings by the Corporation herein, Margolies covenants for the
benefit of the Corporation and the shareholders thereof as follows:
(a) The "Restricted Period" for purposes of this Covenant shall
commence on the date of this Agreement and shall continue for a period
ending on the date which is one year after the date on which this
Agreement terminates.
(b) During the Restricted Period Margolies shall not, directly or
indirectly, as an employee, consultant or principal, through equity
ownership or otherwise, for himself or for any other person, engage in,
or assist any other person to engage in, any Competitive Activities. For
purposes hereof, "Competitive Activities" shall include the following:
(i) Directly or indirectly soliciting, diverting, taking
away or attempting to solicit, divert, or take away any business
opportunities which became available to the Corporation or any of
its subsidiaries or affiliated entities during the Term of this
Agreement;
(ii) Engaging in any business which is directly competitive
with a business operated by the Corporation or its subsidiaries
within one year prior to Margolies' engagement in the business; or
(iii) Hiring, offering to hire, enticing away or in any
manner persuading or attempting to persuade any person affiliated
(as employee or as independent contractor) with the Corporation or
any affiliate or subsidiary of the Corporation to discontinue his
relationship with such company, or to become employed by any other
entity.
5. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
HEADLINERS ENTERTAINMENT GROUP, INC.
By:/s/ Ed Rodriguez
--------------------------------------
Ed Rodriguez, Chief Executive Officer
/s/ Michael Margolies
-------------------------------------
MICHAEL MARGOLIES
APPENDIX E
ADVISORY AGREEMENT - MICHAEL MARGOLIES
AGREEMENT made as of the 7th day of March, 2005 by and between
GLOBAL CONCEPTS, LTD., a Colorado corporation with offices at 14 Garrison
Inn Lane, Garrison, NY 10524 (the "Corporation"), and MICHAEL MARGOLIES,
residing at 10 Garrison Inn Lane, Garrison, NY 10524 ("Margolies").
WHEREAS, Margolies is the founder of the Corporation, and is
primarily responsible for its present operations, and Margolies is
resigning from his position as Chief Executive Officer of the
Corporation; and
WHEREAS, the Corporation wishes to retain Margolies as an advisor
to the Board of Directors and to the Corporation's new Chief Executive
Officer, and Margolies is willing to perform in that role.
NOW, THEREFORE, it is agreed:
1. Advisory Services.
(a) Upon request of the Corporation's Board of Directors or its
Chief Executive Officer or its Chief Operating Officer, Margolies shall
provide advice and consultation. Margolies will make himself available
as needed by the Corporation, at times to be mutually agreed upon based
on the business and personal obligations of Margolies and the
Corporation. Margolies shall not be required to devote any specific
amount of time to the performance of services hereunder, but shall devote
such time as will advance the interests of the Corporation.
(b) Margolies shall advise the Board and the Chief Executive
Officer regarding the business operations that are carried on by the
Corporation on the date of this agreement, as well as those business
acquisitions that the Corporation is pursuing on the date of this
agreement.
(c) Margolies agrees to also provide consulting services to the
Corporation in the areas of business development, investor relations,
public relations, and finance. Among the services that Margolies may
provide are the following:
- render professional advice and guidance in the development of a
strategic business plan for the purpose of raising capital and
fostering the growth of the Corporation;
- design a strategic financing plan commensurate with the
financial requirements of the Corporation, and assist the
Corporation by answering questions and advising on any
financial or strategic issues that may arise which affect the
Corporation;
- assist in the development of a strategy to accomplish
shareholder liquidity, including review of opportunities for
access to public markets;
- target potential merger and acquisition candidates for the
Corporation, including: initiating direct contact with such
candidates; determining if there is an interest on the part
of any such candidate; and establishing the qualification of
any interested candidates;
- Provide liaison with the investment and banking community in the
areas of equity financing, debt financing, and/or venture
capital;
- Provide due diligence and assist with negotiations and
structuring potential business opportunities and operations;
- Seek equity, debt, mezzanine short term financing, factoring,
accounts receivable, sale/lease back and additional financing
sources to meet the financial roadmap requirements for growth
and expansion. This will include negotiations, financial
modeling and highest and best use of financial resources;
- Assist the Corporation with various other transactional
services and/or provide miscellaneous financial advice as may
be requested by the Corporation and which is within the scope
of services provided by Margolies; and
- assist in the preparation of such documents as may be useful
in accomplishing a private offering or a registered public
offering of securities. Margolies will also assist the
Corporation in managing such a capital raise.
2. Compensation.
(a) Consulting Fee. The Corporation will pay Margolies a fee at a
rate of One Hundred Thousand Dollars ($100,000) per annum throughout the
Term of this agreement. The fee will be payable on those days when the
Corporation regularly pays its executive officers, but no less than once
each month. The Corporation acknowledges that the services to be
provided by Margolies will be most valuable in the first year of the
Term. Accordingly, in the event that Margolies becomes unable to perform
his obligations hereunder by reason of death or disability, the
Corporation will continue to pay the fee throughout the Term to Margolies
or to his estate, as applicable.
(b) Other Benefits. Margolies shall be entitled to receive such
health, medical, and disability benefits as are made available to
executive employees the Corporation.
(c) Reimbursement of Business Expenses. Margolies shall be
entitled to reimbursement of all reasonable business expenses actually
incurred by Margolies in the discharge of Margolies' duties hereunder,
including expenses for entertainment, travel, employee training and
similar items, upon submission to the Corporation with satisfactory
documentation thereof.
3. Term.
(a) The "Term" of this Agreement shall commence on the date of
this Agreement and shall terminate on January 31, 2015, unless earlier
terminated pursuant to Sec. 3(b) hereunder.
(b) Prior to January 31, 2015, this Agreement may be terminated as
follows:
(i) by Margolies at any time, upon written notice to the
Corporation;
(ii) by the Corporation for Cause. As used herein, the term
"Cause" shall mean only the following: (A) conviction during the Term of
a crime involving moral turpitude, or (B) material, willful or gross
misconduct by Margolies in the performance of his duties hereunder.
4. Covenant of Non-Competition. In consideration of the
undertakings by the Corporation herein, Margolies covenants for the
benefit of the Corporation and the shareholders thereof as follows:
(a) The "Restricted Period" for purposes of this Covenant shall
commence on the date of this Agreement and shall continue for a period
ending on the date which is one year after the date on which this
Agreement terminates.
(b) During the Restricted Period Margolies shall not, directly or
indirectly, as an employee, consultant or principal, through equity
ownership or otherwise, for himself or for any other person, engage in,
or assist any other person to engage in, any Competitive Activities. For
purposes hereof, "Competitive Activities" shall include the following:
(i) Directly or indirectly soliciting, diverting, taking
away or attempting to solicit, divert, or take away any business
opportunities which became available to the Corporation or any of
its subsidiaries or affiliated entities during the Term of this
Agreement;
(ii) Engaging in any business which is directly competitive
with a business operated by the Corporation or its subsidiaries
within one year prior to Margolies' engagement in the business; or
(iii) Hiring, offering to hire, enticing away or in any
manner persuading or attempting to persuade any person affiliated
(as employee or as independent contractor) with the Corporation or
any affiliate or subsidiary of the Corporation to discontinue his
relationship with such company, or to become employed by any other
entity.
5. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
GLOBAL CONCEPTS, LTD.
By:/s Ed Rodriguez
---------------------------------------
Ed Rodriguez, Chief Executive Officer
/s/ Michael Margolies
------------------------
MICHAEL MARGOLIES
<PAGE>
APPENDIX F
CONVERTIBLE DEBENTURE
FOR VALUE RECEIVED, GLOBAL CONCEPTS, LTD., a Colorado corporation
(hereinafter called "Company"), hereby promises to pay to THE MARGOLIES
FAMILY TRUST, 14 Garrison Inn Lane, Garrison, NY 10524 (the "Holder") the
sum of ____________________ ____________________________ Dollars
($_________________), with simple interest accruing at the annual rate of
6%. The principal and accrued interest shall be payable on January 1,
2009 (the "Maturity Date").
This Debenture has been entered into pursuant to the terms of the
Joint Management Agreement among the Company, the Holder and others.
The following terms shall apply to this Debenture:
ARTICLE I
CONVERSION RIGHTS
1.1 Conversion. The Holder is entitled, at its option, to
convert all or any part of the principal amount of the Debenture, plus
accrued interest, into shares (the "Conversion Shares") of the Company's
common stock, no par value ("Common Stock"), at the price per share (the
"Conversion Price") equal to the average of the closing bid prices of the
Company's Common Stock, as quoted by Bloomberg, LP, for the five (5)
trading days immediately preceding the Conversion Date (as defined
herein). No fraction of shares or scrip representing fractions of shares
will be issued on conversion, but the number of shares issuable shall be
rounded to the nearest whole share. To convert this Debenture, the
Holder hereof shall deliver written notice thereof, substantially in the
form of Exhibit "A" to this Debenture, with appropriate insertions (the
"Conversion Notice"), to the Company at its address as set forth herein.
The date upon which the conversion shall be effective (the "Conversion
Date") shall be deemed to be the date set forth in the Conversion Notice.
1.2 Adjustments. The number and kind of shares or other
securities to be issued upon conversion determined pursuant to Section
1.1 shall be subject to adjustment from time to time upon the happening
of certain events while this conversion right remains outstanding, as
follows:
A. Merger, Sale of Assets, etc. If the Company at any time
shall consolidate with or merge into or sell or convey all or
substantially all its assets to any other corporation, the conversion
right in this Debenture, as to the unpaid principal portion thereof and
accrued interest thereon, shall thereafter be deemed to evidence the
right to purchase such number and kind of shares or other securities and
property as would have been issuable or distributable on account of such
consolidation, merger, sale or conveyance, upon or with respect to the
securities subject to the conversion or purchase right immediately prior
to such consolidation, merger, sale or conveyance. The foregoing
provision shall similarly apply to successive transactions of a similar
nature by any such successor or purchaser.
B. Reclassification, etc. If the Company at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes, this Debenture,
as to the unpaid principal portion thereof and accrued interest thereon,
shall thereafter be deemed to evidence the right to purchase an adjusted
number of such securities and kind of securities as would have been
issuable as the result of such change with respect to the Common Stock
immediately prior to such reclassification or other change.
1.3 Reservation of Shares. During the period the conversion
right exists, Company will reserve from its authorized and unissued
Common Stock 150% of the number of shares of Common Stock issuable upon
the full conversion of this Debenture. Company represents that, upon
issuance, such shares will be duly and validly issued, fully paid and
non-assessable. Company agrees that its issuance of this Debenture shall
constitute full authority to its officers, agents, and transfer agents
who are charged with the duty of executing and issuing stock certificates
to execute and issue the necessary certificates for shares of Common
Stock upon the conversion of this Debenture.
1.4 Maximum Conversion. The aggregate conversion of principal
pursuant to this Article I shall not at any time exceed the Conversion
Limit, except that the Conversion Limit may be exceeded at any time when
an Event of Default has occurred and is continuing. The "Conversion
Limit" will equal the product of the principal amount of this Debenture
recited on its first page multiplied by a fraction, the numerator of
which is the number of months including and after the month in which the
Effective Date occurs, and the denominator of which is thirty-six (36).
The "Effective Date" will be date on which the Securities and Exchange
Commission declares effective the Registration Statement filed pursuant
to the Joint Management Agreement.
ARTICLE II
EVENTS OF DEFAULT
(a) An "Event of Default" shall mean any of the following:
(a) failure by the Company to pay amounts due hereunder within
fifteen (15) days of the date of maturity of this Debenture; (b) failure
by the Company's transfer agent to issue freely tradeable Common Stock to
the Holder within five (5) days of the Company's receipt of the attached
Notice of Conversion from Holder; (c) failure by the Company for ten (10)
days after notice to it to comply with any of its other agreements in the
Debenture; or (d) bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or
any law, or the issuance of any notice in relation to such event, for the
relief of Company's debt shall be instituted by or against the Company
and if instituted against Company are not dismissed within 45 days of
initiation events of bankruptcy or insolvency.
(b) Upon the occurrence of an Event of Default, the Holder may,
in its sole discretion, accelerate the Maturity Date for payment of the
principal amount of the Debenture and accrued interest thereon and may,
notwithstanding any limitations contained in this Debenture, convert the
principal amount in full and accrued interest thereon into shares of
Common Stock pursuant to Article I hereof.
ARTICLE III
MISCELLANEOUS
3.1 Failure or Indulgence Not Waiver. No failure or delay on the
part of Holder hereof in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other right, power or privilege. All
rights and remedies existing hereunder are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
3.2 Notices. All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall
be in writing and, unless otherwise specified herein, shall be (i)
personally served, (ii) delivered by reputable air courier service with
charges prepaid, or (iii) transmitted by facsimile, addressed as set
forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed effective (a)
upon hand delivery or delivery by facsimile, with accurate confirmation
generated by the transmitting facsimile machine, at the address or number
designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during
normal business hours where such notice is to be received) or (b) on the
second business day following the date of mailing by express courier
service, fully prepaid, addressed to such address, or upon actual receipt
of such mailing, whichever shall first occur. The addresses for such
communications shall be: (i) if to the Company, to: Ed Rodriguez, c/o
Headliners Entertainment Group, Inc., 501 Bloomfield Avenue, Montclair,
NJ 07042, telecopier: (973) 233-1299, with a copy by telecopier only to:
Robert Brantl, Esq., 322 4th Street, Brooklyn, NY 11215, telecopier: 718-
965-4042, and (ii) if to the Holder, to: Michael Margolies, 10 Garrison
Inn Lane, Garrison, NY 10524, telecopier: (845) 424-4003.
3.3 Assignability. This Debenture shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
the Holder and its successors and assigns.
3.4 Governing Law. This Debenture shall be governed by and
construed in accordance with the laws of the State of New York. Any
action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in the
state courts of New York or in the federal courts located in the state of
New York. Both parties and the individual signing this Agreement on
behalf of the Company agree to submit to the jurisdiction of such courts.
The prevailing party shall be entitled to recover from the other party
its reasonable attorney's fees and costs.
3.5 Redemption. This Debenture may not be redeemed or paid
without the consent of the Holder except as described herein.
IN WITNESS WHEREOF, the Company has caused this Debenture to be
signed in its name by an authorized officer as of the ____ day of March,
2005.
GLOBAL CONCEPTS, LTD.
By:________________________________
Eduardo Rodriguez, Chief
Executive Officer
<PAGE>
NOTICE OF CONVERSION
(To be executed by the Registered Holder in order to convert the
Debenture)
The undersigned hereby elects to convert $_________ of the
principal and $_________ of the interest due on the Debenture issued by
GLOBAL CONCEPTS, LTD. on March ____, 2005 into Shares of Common Stock of
GLOBAL CONCEPTS, LTD. (the "Company") according to the conditions set
forth in such Debenture, as of the date written below.
Date of
Conversion:______________________________________________________________
Conversion
Price:___________________________________________________________________
Shares To Be
Delivered:_______________________________________________________________
Signature:_______________________________________________________________
Print Name:______________________________________________________________
Address:_________________________________________________________________
________________________________________________________________________