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Exhibit D
AMENDED AND RESTATED PURCHASE AGREEMENT
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THIS AMENDED AND RESTATED PURCHASE AGREEMENT (this "Agreement") is made
and entered into as of the _____ day of November, 1996, by and between BLACK
HAWK GAMING & DEVELOPMENT COMPANY, INC., a Colorado corporation ("Seller"), and
DIVERSIFIED OPPORTUNITIES GROUP LTD., an Ohio limited liability company, or its
nominee(s) as described in Section 29 ("Purchaser").
RECITALS
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Seller desires to sell to Purchaser certain Shares (as hereinafter
defined) and issue to Purchaser certain convertible notes (the "Notes") in the
aggregate principal amount of $6,000,000, and Purchaser desires to acquire the
Shares and the Notes from Seller. Seller and Purchaser acknowledge that this
Agreement is intended to memorialize their understanding of their agreements
contained in that certain letter of intent dated as of May 29, 1996 by and
between Seller and Purchaser, as subsequently modified.
AGREEMENTS
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NOW, THEREFORE, in consideration of the foregoing Recitals and of the
warranties, representations, agreements and undertakings hereinafter set forth,
the parties hereto do hereby represent, warrant, covenant and agree as follows:
1. CERTAIN DEFINITIONS
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For the purposes of this Agreement, the terms defined in this Section 1
shall have the meanings set out below. All capitalized terms not defined in this
Section 1 shall have the meanings ascribed to them in other parts of this
Agreement.
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(a) "Closing Date" shall mean November 12, 1996, as of the
close of business, or such other date as to which the parties may agree in
writing.
(b) "Closing" shall mean the closing on the Closing Date of
the transactions contemplated by this Agreement.
(c) "Annual Statement" shall mean Seller's Consolidated
Balance Sheet at December 31, 1995 and 1994 and the accompanying Consolidated
Statements of Income, Consolidated Statements of Cash Flows and Consolidated
Statements of Shareholders' Equity for Seller's three fiscal years then ended,
together with the schedules and notes related thereto, accompanied by the
applicable report of Deloitte & Touche L.L.P. ("Deloitte"), Certified Public
Accountants, as filed with the Securities and Exchange Commission ("SEC").
(d) "Interim Statement" shall mean Seller's unaudited
Consolidated Balance Sheet at September 30, 1996 and the accompanying
Consolidated Statements of Income and Statements of Cash Flow for the 9-month
period then ended, together with the notes relating thereto, as filed with the
SEC.
(e) "Xxxxxx Annual Statement" shall mean the Xxxxxx Hotel
Venture's (the "Xxxxxx") Balance Sheet at December 31, 1995 and 1994 and the
accompanying Statements of Income, Statements of Cash Flow and Statements of
Venturers' Investments and Advances for the Xxxxxx'x three fiscal years, then
ended, together with the schedules and notes related thereto, accompanied by the
applicable report for Deloitte, as filed with the SEC.
(f) "Financial Statements" shall mean the Annual Statement and
Interim Statement and the Xxxxxx Annual Statement.
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(g) "Material Adverse Effect" shall mean any event which
would, in the aggregate, have a material adverse effect upon the business,
assets, financial condition or results of operations of any of Seller on a
consolidated basis, the Xxxxxx or the Joint Venture (as hereinafter defined).
(h) "NASD" shall mean the National Association of Securities
Dealers, Inc.
(i) "NASD Approval" shall mean the approval of Seller's
shareholders as required by the rules and regulations of the NASD by virtue of
its Shares being traded on the National Market tier of the NASDAQ Stock Market
for Purchaser's acquisition of certain Shares upon conversion of the Second Note
(as hereinafter defined).
(j) "Purchaser Material Adverse Effect" shall mean any event
which would, in the aggregate, have a material adverse effect upon the business,
assets, financial condition or results of operations of Purchaser.
(k) "Shares" shall mean shares of Seller's common stock, $.001
par value.
2. ISSUANCE OF NOTES; OTHER PURCHASES; PRICE; SECURITY
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Seller agrees to issue and sell to Purchaser, and Purchaser
agrees to purchase from Seller, the Notes and certain of the Shares for the
purchase price and upon and subject to the terms, provisions and conditions
hereinafter set forth.
(a) (i) ISSUANCE OF FIRST NOTE. At Closing, Seller shall issue
and Purchaser shall acquire a Note in the principal amount of $1,500,000 (the
"First Note"). The First Note shall be in substantially the form and substance
of Exhibit A attached hereto and incorporated herein by reference. The First
Note shall contain, among other things, interest at a variable rate per annum
equal to Purchaser's cost of funds (estimated at LIBOR + 2%) and an annual
facility fee equal to 1/4 of 1% of the amount of the principal amount
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outstanding. Interest due on the First Note shall be payable on a quarterly
basis. In addition, the First Note shall provide that until the entire principal
balance of the Note is converted Seller shall pay Purchaser a profit
participation equal to 40% of the amount of cash flow distributed by the LLC (as
hereinafter defined) to Seller. Unless sooner converted as hereinafter
described, the principal due on the First Note shall be due and payable on the
second anniversary of the Closing Date. All or any portion of the unpaid
principal due shall be convertible into Shares at a conversion price of $5.25
per Share at any time upon the election of Purchaser and, if not yet fully
converted, shall, unless the provisions of Article XI of the Operating Agreement
(as hereinafter defined) for the LLC apply, be automatically converted into
Shares at such time as (i) Purchaser has acquired or received all necessary and
appropriate regulatory, licensing and other approvals from the Colorado Division
of Gaming (the "Division"), the Colorado Limited Gaming Control Commission (the
"Commission") and the state and local liquor licensing authorities and (ii) the
Commission approves the issuance to the LLC (as hereinafter defined) of a retail
gaming license. Pursuant to the terms of an Assignment, Pledge and Security
Agreement (the "Assignment") of even date herewith, the First Note shall be
secured by a first priority lien on 100% of Seller's membership interest in the
LLC and the products and proceeds thereof, including but not limited to its
capital interest, interest in the net profits and net cash flow of the LLC, and
all other rights and privileges associated with Seller's membership in the LLC.
(ii) ISSUANCE OF SECOND NOTE. Upon obtaining the NASD
Approval, Seller shall immediately issue and deliver to Purchaser and Purchaser
shall acquire a note in the principal amount of $6,000,000 (the "Second Note")
and the First Note shall be
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canceled. The Second Note shall be dated as of the Closing Date, contain all of
the other terms and conditions of the First Note and shall be secured in the
same manner as the First Note. The First Note and the Second Note are sometimes
collectively referred to hereinafter as the "Note" or the "Notes". It is the
intention of the parties that the Note is convertible into 1,142,857 Shares in
the aggregate. At the time of the issuance of the Second Note, Seller shall
issue a certificate to Purchase affirming that the representations and
warranties of Seller contained in this Agreement are true and correct as of the
date of the issuance of the Second Note with the same effect as if made on and
as of such date. In the event Seller does not obtain NASD Approval, Purchaser
shall have no further obligation to make any investment in or loan to Seller
beyond the $1,500,000 loan for the First Note. At such time, the Note shall be
deemed to have been canceled, the Shares acquired by Purchaser pursuant to
Section 2(a)(iii) below, shall be deemed to have been redeemed, and Purchaser
shall be deemed to have made a $2,500,000 capital contribution to the LLC and
the parties' interests in the LLC shall be adjusted in accordance with the
provisions of Section 4.2 of the Operating Agreement (as hereinafter defined).
(iii) PURCHASE OF SHARES. Seller shall sell and Purchaser
shall purchase 190,476 Shares at a price of $5.25 per Share for a total purchase
price of $1,000,000.
(b) PAYMENT OF PURCHASE PRICE FOR THE SHARES AND THE NOTE. The
purchase price for the Shares and the Notes shall be paid as follows:
(i) $2,500,000, the aggregate purchase price for
the 190,476 Shares and the First Note, shall
be paid to Seller by wire transfer or by
certified or bank check at the Closing.
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(ii) Provided Seller obtains the NASD Approval,
the balance of $4,500,000 shall be paid by
wire transfer or by certified or bank check
at such time as the lender to the LLC
requires such amount to be invested in the
LLC, or at such time as otherwise agreed to
by Seller and Purchaser.
(c) USE OF PROCEEDS. Seller shall use the proceeds to be
received from Purchaser's acquisition of Shares and Purchaser's loans described
in Sections 2(a) and 2(b), above, solely to fund Seller's capital contributions
to the LLC.
(d) ADDITIONAL PURCHASES OF SHARES BY XXXXXXXX, DAY AND XXXXX.
Pursuant to certain convertible notes (the "Subscription Notes") being executed
by Xxxxxx X. Xxxxxxxx ("Xxxxxxxx"), Xxxxx X. Day ("Day") and Xxxxxxx X. Xxxxx
("Xxxxx"), such parties shall be obligated to acquire up to in the aggregate
142,857 Shares at a purchase price of $5.25 per Share upon the terms and the
conditions set forth in the Subscription Notes, which Subscription Notes shall
contain terms and conditions materially agreeable to Purchaser and Seller. The
purchase price to be paid by such parties for the Subscription Notes pursuant to
this Section 2(d) shall be paid to the Seller in cash at the time Purchaser
makes the payment described in Section 2(b)(ii).
(e) SHARE ADJUSTMENTS. Notwithstanding any contrary provision
herein, in the event that subsequent to the date hereof there shall be any
change in the issued and outstanding Shares by reason of a stock dividend, stock
split, combination of shares, recapitalization, merger, separation,
reorganization, liquidation, consolidation, split-up, combination or exchange of
Shares, or transaction or event having an effect similar to any of the
foregoing, the number of and price for Shares to be acquired upon conversion of
the
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Notes or hereunder and the number of, and price for, Options (as hereinafter
defined) to be granted hereunder, shall be appropriately adjusted.
3. AGREEMENTS REGARDING SHARES OF CERTAIN KEY
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SHAREHOLDERS AND BOARD OF DIRECTORS
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(a) At or prior to the Closing, Purchaser and/or Xxxxxxx X.
Xxxxxx (Xx. Xxxxxx being hereinafter referred to as "Xxxxxx"), Xxxxxxxx and Day
shall have entered into a Shareholders' Agreement (the "Shareholders'
Agreement") with respect to the Shares owned or subscribed to by each of them or
their controlled entities or Shares which may be acquired upon conversion of the
Note. The Shareholders' Agreement shall be in the form of Exhibit B attached
hereto and shall provide, among other things, for a pro rata right of first
refusal among such parties.
(b) At or prior to Closing, Seller's Board of Directors (the
"Board") shall consist of seven persons, three of whom shall be nominees of
Purchaser. In addition at or prior to Closing, Xxxxxx shall be elected as Chief
Executive Officer and Co-Chairman of the Board of Seller.
(c) The Shareholders' Agreement shall provide for Xxxxxxxx and
Day to cause their Shares to be voted for the purpose of (i) effecting the
provisions of subparagraph (b) above and (ii) calling or causing Seller to call
a special meeting of shareholders of Seller to occur on or before January 31,
1997 (the "Special Meeting") in order to approve Purchaser's acquisition of the
Shares which may be acquired upon conversion of the Note and to approve the
proposals set forth in Section 3(d) below.
(d) The Shareholders' Agreement shall also contain provisions
whereby Xxxxxxxx and Day agree to vote or continue to vote at the Special
Meeting or otherwise,
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as the case may be, their Shares in favor of the following proposals which will
become effective at such time as Purchaser owns 820,000 or more Shares:
(i) The expansion of the Board to nine members with
Purchaser being entitled to nominate five members to the Board.
(ii) Adopting staggered terms for Seller's Board in
accordance with Section 0-000-000 of the Colorado Business Corporation Act and
nominees of Seller and Purchaser shall be nominated in each of three classes so
created on terms agreeable to the parties. No later than the next annual meeting
of shareholders following such time as Purchaser owns 820,000 or more Shares,
directors shall be nominated to the three classes as follows: Class I shall have
three directors (one nominee of Seller and two nominees of Purchaser), Class II
shall have three nominees (two nominees of Seller and one of Purchaser) and
Class III shall have three nominees (two nominees of Purchaser and one of
Seller).
(iii) Electing Xxxxxx as Chief Executive Officer and
Chairman of the Board of Directors of Seller.
(iv) If determined necessary by counsel to Seller and
Purchaser, an appropriate "poison pill" plan shall be submitted to Seller's
shareholders at such special meeting or at the next regularly scheduled meeting
of shareholders in order to protect Seller and its shareholders from unwarranted
and unwanted takeover attempts by unrelated third parties.
Pursuant to the Shareholders' Agreement, Xxxxxxxx and Day shall appoint
Xxxxxx as their proxy to vote their shares in accordance with this Section 3.
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(e) At or prior to Closing, Purchaser and Seller shall execute
and deliver a Registration Rights Agreement (the "Registration Agreement") in
the form of Exhibit C attached hereto. The Registration Agreement shall provide
for the registration of all Shares acquired by Purchaser hereunder, including
any Shares acquired pursuant to the Shareholders' Agreement.
4. AGREEMENTS REGARDING JOINT VENTURE AND MASTER JOINT
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VENTURE
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(a) At or prior to Closing, Purchaser and its affiliates and
Seller shall restructure that certain Joint Venture (the "Joint Venture") which
was previously formed by Seller and Purchaser's affiliate pursuant to a certain
Joint Venture Agreement dated December 15, 1994, as amended. The Joint Venture
shall be restructured into a limited liability company formed under the laws of
the State of Colorado (the "LLC"). At or prior to Closing, the parties shall
enter into the Operating Agreement for the LLC (the "Operating Agreement") on
terms mutually agreeable to the parties.
(b) At or prior to Closing, Seller and Purchaser shall also
have entered into a twenty year Master Joint Venture Agreement (the "Master
Joint Venture Agreement") on terms mutually agreeable to Seller and Purchaser.
5. REPRESENTATIONS AND WARRANTIES BY SELLER
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As a material inducement to Purchaser to enter into this
Agreement, Seller represents, warrants to and, where applicable, covenants with
Purchaser that as of the date hereof and as of the Closing Date:
(a) DUE ORGANIZATION. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado,
and each of Seller
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and the Xxxxxx has full corporate power and authority to own its properties and
to carry on its business as it is now being conducted, is duly qualified to do
business and is in good standing in all jurisdictions in which it is required to
be so qualified, except where the failure to so qualify or be in good standing
would not, in the aggregate, have a Material Adverse Effect, and has received
all necessary authorizations, consents, licenses and approvals of the Division,
the Commission and other governmental authorities material to the ownership of
its properties and assets and to the conduct of its business.
(b) POWER AND AUTHORITY; NO CONFLICTS. Seller has full power
and authority (corporate or otherwise) to enter into and carry out the terms of
this Agreement. The execution and delivery by Seller of this Agreement and the
other documents and instruments to be executed and delivered by Seller pursuant
hereto and thereto and the consummation of the transactions contemplated hereby
and thereby by Seller have been duly authorized by the requisite vote of the
Board of Seller. This Agreement has been duly and validly executed by Seller,
and constitutes, and when executed and delivered, each other document and
instrument to be executed and delivered by Seller pursuant hereto will
constitute, a valid and binding agreement of Seller enforceable against it in
accordance with their respective terms subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights generally and except to
the extent that the enforceability of rights and remedies may be limited by
general principles of equity. The execution and delivery of this Agreement does
not, and, subject to any requisite governmental or other consents or approvals,
the consummation of the transactions contemplated hereby will not, (i) violate
any provision of the Articles of Incorporation, as amended, of Seller, or the
Bylaws of Seller, (ii) violate or
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conflict with any law, ordinance, rule, regulation, order, judgment or decree to
which Seller or the Xxxxxx is subject or by which Seller or the Xxxxxx is bound,
or (iii) except as contemplated hereunder or set forth on Schedule 5(b), violate
or conflict with or constitute a material default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or will
result in the termination of, or accelerate the performance required by, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets under, any term or provision of any
material contract, commitment, understanding, arrangement, agreement or
restriction of any kind or character to which either Seller or the Xxxxxx is a
party or by which any of their respective assets or properties may be bound or
affected. Except for any required approval of Seller's shareholders, the
Division, the Commission and/or state and local liquor licensing authorities, no
consent, approval, authorization or action by any federal, state, local or
foreign governmental agency, instrumentality, commission, authority, board or
body (collectively, "Governmental Agency" or "Governmental Authority") or any
other third party is required in connection with the execution and delivery by
Seller of this Agreement and the other documents and instruments to be executed
and delivered by Seller pursuant hereto or the consummation by Seller of the
transactions contemplated herein or therein.
(c) CAPITAL STRUCTURE. The authorized capital stock of Seller
as of the date of this Agreement consists solely of Forty Million (40,000,000)
Shares, of which 2,481,567 are issued and outstanding, and Ten Million
(10,000,000) shares ("Preferred Shares") of a preferred class, $.001 par value,
of which none are issued and outstanding. Except as set forth on Schedule 5(c),
no Shares or Preferred Shares are held as treasury shares. All of the
outstanding shares of capital stock of Seller have been duly authorized and
validly issued
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and are fully paid and nonassessable and free from preemptive rights. Schedule
5(c) sets forth a list of each stock option, warrant or other right to acquire
securities of Seller (an "Option") outstanding on the date of this Agreement.
Seller's partners at the Casino have no rights to acquire Shares or other
securities of Seller. There are no outstanding options, warrants, convertible
securities, subscriptions or other rights or agreements providing for the
issuance or delivery of any additional shares of capital stock of Seller, except
the Options.
(d) VALID ISSUANCE OF SHARES. The Shares issuable upon
conversion of the Note have been duly and validly reserved for issuance, and
when issued and delivered in accordance with the terms of the Note, will be duly
and validly issued, fully paid and nonassessable.
(e) SUBSIDIARIES. Except as set forth on Schedule 5(e), Seller
has no subsidiaries, either wholly or partially owned and except for the Xxxxxx
and the Joint Venture, Seller has no interest as a partner or otherwise in any
partnership, joint venture or other business enterprise.
(f) SEC DOCUMENTS. Seller has made available to Purchaser a
true and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by Seller with the SEC since March 31, 1994 (as
such documents have since the time of their filing been amended, the "Seller SEC
Documents") which are all of the documents (other than preliminary material)
that Seller was required to file with the SEC since such date. As of their
respective dates, the Seller SEC Documents complied in all material respects
with the requirements of the Securities Act of 1933 or the Securities Exchange
Act of 1934, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Seller SEC Documents, and none of the Seller SEC
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Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of Seller included in the Seller SEC
Documents comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present
(subject, in the case of the unaudited statements, to normal, recurring audit
adjustments) the consolidated financial position of Seller as at the dates
thereof and the consolidated results of its operations and cash flows for the
periods then ended. To the best of its knowledge Seller is not now, nor has it
ever been, the subject of any inquiry or other investigation by the SEC ("SEC
Investigation"), nor, to the best knowledge of Seller, is any such SEC
Investigation pending or threatened.
(g) TITLE TO ASSETS. Each of Seller, the Xxxxxx and the Joint
Venture has good, marketable and valid title in and to all of its assets,
including all real, personal and intangible property, and, except as set forth
on Schedule 5(g), each holds its assets free and clear of any mortgage,
conditional sale agreement, title retention agreement, security interest, lease,
pledge, hypothecation, lien or other encumbrance.
(h) CONDITION OF ASSETS. All of the assets (whether owned or
leased) that are necessary for the conduct of the business of Seller, the Xxxxxx
and the Joint Venture are
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in normal operating condition, free from defects other than such minor defects
as do not materially interfere with the continued use thereof in normal
operations.
(i) INSURANCE. Each of Seller, the Xxxxxx and the Joint
Venture (a) maintains insurance policies with licensed insurance carriers on
such assets, properties and businesses and against such risks as is customary
for companies engaged in its business, or (b) has reserved on the Financial
Statements sufficient funds to cover all losses known to it arising from such
risks. Schedule 5(i) sets forth a list and brief description (specifying the
insurer and describing each pending claim thereunder) of all policies, binders
or reserves of fire, liability, workers' compensation, vehicular and other
insurance or self-insurance held by or on behalf of Seller, the Xxxxxx and the
Joint Venture. All such policies are in full force and effect and insure against
risks and liabilities to an extent and in a manner customary in the industry in
which such parties operate. Except for claims identified on Schedule 5(i), there
are no outstanding unpaid claims under any such policy, binder or reserve.
Except as set forth on Schedule 5(i), there will be no liability of Seller, the
Xxxxxx and the Joint Venture as of the Closing Date, under any such insurance
policy or ancillary agreement with respect thereto in the nature of a
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring prior
to the Closing Date. None of the Seller, the Xxxxxx nor the Joint Venture has
received notice of cancellation or nonrenewal of any such policy or binder.
There is no inaccuracy in any application for such policies or binders, or any
failure to pay premiums due.
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(j) DIVIDENDS AND DISTRIBUTIONS. From December 31, 1995 to the
date hereof, Seller has not declared or paid any dividends on any Shares or
Preferred Shares, nor has it made any other payments or distributions thereon to
its shareholders.
(k) SELLER DATA. Seller has made available to Purchaser its
corporate minutes, articles and regulations, books and records, all material
contracts, all loan documentation, all notes, all leases, evidence of all bank
accounts, an accurate and complete list of each insurance policy currently
providing coverage for the real and personal property owned, operated or leased
together with copies of such policies, information regarding employee
compensation and benefit plans, a list of all outstanding workers compensation
and unemployment claims, all licenses and permits that Seller has with respect
to its operations and with respect to the operations of the Xxxxxx and the Joint
Venture, and all outstanding citations or complaints relating to environmental,
health or safety laws or regulations (collectively, the "Seller Data"). Seller
acknowledges that Purchaser has relied on the Seller Data in deciding to execute
this Agreement and consummate the transactions contemplated hereby.
(l) UNDISCLOSED LIABILITIES. Except as set forth in Schedule
5(l), none of the Seller, the Xxxxxx nor the Joint Venture has any liabilities
or obligations of any nature, secured or unsecured (absolute, accrued,
contingent or otherwise and whether due or to become due), except (i)
liabilities and obligations that are fully reflected, reserved against or
disclosed in the Financial Statements, and (ii) liabilities and obligations
incurred in the ordinary course of business consistent with past practice.
(m) INVESTIGATION OR LITIGATION. Except for the investigation
with respect to the check cashing and bad check collection practices of the
Xxxxxx, and as set forth on
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Schedule 5(m), there is no investigation or review pending or to the best
knowledge of Seller threatened by any Governmental Agency or other party or
person with respect to Seller, the Xxxxxx or the Joint Venture; nor has any
Governmental Agency or other party or person indicated in writing to Seller an
intention to conduct any such investigation or review; nor, to the knowledge of
Seller, is there any valid basis for any such investigation or review. Except as
set forth on Schedule 5(m), there is no claim, action, suit or proceeding
pending before or, to the best knowledge of Seller, threatened against or
affecting Seller, the Xxxxxx or the Joint Venture at law or in equity by, any
Governmental Agency or other party or person, nor is there, to the best
knowledge of Seller, any valid basis for any such claim, action, suit or
proceeding.
(n) CERTAIN AGREEMENTS. Except as disclosed in the Seller SEC
Documents filed prior to the date of this Agreement or in Schedule 5(n) as of
the date of this Agreement, Seller is not a party to any oral or written (i)
consulting agreement not terminable on 60 days' or less notice, (ii) agreement
with any executive officer or other key employee of Seller, or (iii) agreement
or plan, including any stock option plan, stock appreciation rights plan, any of
the Plans (as defined in Section 5(o)), restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement.
(o) EMPLOYEE BENEFITS.
(i) Schedule 5(o) contains a true and complete list of
each bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance or
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termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, retirement or other
employee benefit plan, program, practice, agreement or arrangement, including,
without limitation, each "employee benefit plan" as defined in section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
sponsored, maintained, contributed to or required to be contributed to by Seller
or any trade or business, whether or not incorporated (an "ERISA Affiliate"),
whose employees would, for the purposes of applying certain provisions of the
Internal Revenue code of 1986, as amended (the "Code"), be aggregated with the
employees of Seller under Section 414(b), (c), (m), (n) and/or (o) of the Code
or which would be deemed to be a member of a "controlled group" within the
meaning of Section 4001(a)(14) of ERISA of which Seller is also a member, for
the benefit of current or former employees or directors of Seller and/or such
ERISA Affiliate (the "Plans").
(ii) Each of the Plans has been operated and
administered in all material respects in accordance with applicable laws,
including but not limited to ERISA and the Code. No violation of Section 404 of
ERISA has occurred with respect to any Plan.
(iii) There are no pending, or to the best knowledge of
Seller, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Plans or any trusts related
thereto.
(p) LABOR MATTERS. Seller has not entered into any collective
bargaining agreements or any other agreements with any labor organization or any
other person or group claiming to represent or bargain collectively for any of
Seller's, the Xxxxxx'x or the Joint Venture's employees. Except as set forth in
Schedule 5(p), there are no unfair labor practice charges, lawsuits, grievances
or administrative charges pending or to the best
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knowledge of Seller threatened, concerning or affecting Seller, the Xxxxxx or
the Joint Venture. Seller has received no written notice nor has there been any
proceeding or adjudication questioning whether or alleging or determining that
Seller, the Xxxxxx or the Joint Venture, is not in compliance, in all material
respects, with all federal, state and local laws and regulations with respect to
employment, employment practices and terms and conditions of employment.
(q) TAXES. Except as set forth in Schedule 5(q), Seller has
(i) timely filed all tax returns, schedules, declarations, and tax-related
documents including, without limitation, all Forms 5500 pertaining to the Plans
(collectively, "Returns") required to be filed in any jurisdictions to which it
or the Xxxxxx is or has been subject, (ii) timely paid in full all taxes,
interest and penalties with respect thereto subject to audit by the taxing
authorities by such jurisdictions and timely made all deposits of tax required
by all applicable taxing jurisdictions, (iii) fully accrued on its books an
amount sufficient to pay all taxes not yet due but related to operations through
the date hereof and will have accrued all taxes not yet due but which will
become due through the Closing Date, (iv) made timely payments of all taxes
required to be deducted and withheld from the wages paid to employees, and (v)
otherwise satisfied, in all material respects, all legal requirements applicable
to it with respect to all aforementioned obligations to taxing jurisdictions.
All Returns filed by Seller accurately reflect in all material respects their
income, expenses, deductions, credits and loss carryovers and the taxes due and
are otherwise accurate and complete in all material respects and have not been
amended. Seller has delivered to Purchaser true and complete copies of all
federal and state income and franchise tax returns for each of the taxable years
ended December 31, 1991 through December 31, 1995,
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inclusive. Except as set forth on Schedule 5(q), Seller has no knowledge that an
audit of any of the federal income tax returns of Seller or the Xxxxxx is in
progress and has no reason to believe that any such audit is contemplated. For
purposes of this Section, "tax" and "taxes" (when not modified by other words
such as "income" or "franchise") shall include all income, gross receipts,
franchise, excise, real and personal property, and other taxes imposed by any
federal, state, municipal, local, or other governmental agency, including
assessments in the nature of taxes.
(r) ABSENCE OF CERTAIN CHANGES. Since December 31, 1995,
except as disclosed in the Seller SEC Documents, none of Seller, the Xxxxxx nor
the Joint Venture has suffered any Material Adverse Effect.
(s) CONDUCT OF BUSINESS. Since the close of business on
September 30, 1996, except as set forth in Schedule 5(s), Seller has not, and
prior to the Closing Date will not have, without the prior written consent of
Purchaser:
(i) Issued, sold, redeemed, reclassified or
purchased any Shares or Preferred Shares or
other corporate securities, warrants or debt
instruments or, except as contemplated by
Section 8(c), granted any Options or other
rights in connection therewith.
(ii) Incurred, paid or settled any obligations,
commitments or liabilities, absolute,
accrued, contingent or otherwise, except
obligations, commitments or liabilities to
perform sales contracts, purchase orders or
similar commitments, in each case incurred,
paid or settled in normal amounts and in the
regular and ordinary course of Seller's
business.
(iii) Incurred any continuing contract or
commitment or other liability for the future
purchase of materials, supplies or equipment
which is not in the regular and ordinary
course of the business, or any contracts or
commitments for capital expenditures in
excess of Twenty-Five Thousand Dollars
($25,000) individually or One Hundred
Thousand Dollars ($100,000) in the
aggregate.
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(iv) Conducted its business other than in the
regular and ordinary course thereof.
(v) Sold, assigned, transferred, encumbered
or granted a security interest in respect
of any of its assets.
(vi) Entered into any pension, retirement,
deferred compensation, profit sharing,
bonus, retainer, consulting, welfare or
incentive compensation plan or
arrangement, or any contract, or any
fringe or other benefits or arrangements,
of, with or for any officer, director,
employee or any other person; or granted
any increase in the compensation payable,
or to become payable, by Seller to any of
its officers, directors, employees or
other persons (other than customary merit
increases of nonofficers), or in any
bonus, insurance, pension or other
benefit plan made for or with any of
them.
(vii) Terminated any material contract,
agreement, license or other instrument to
which it is a party other than in the
regular and ordinary course of business.
(viii) Changed its Articles of Incorporation,
Bylaws or any aspect of its corporate
structure.
(ix) Agreed to do any of the things or made
any commitment to take any of the types
of action specified in (i) through (viii)
above.
(t) LEGAL COMPLIANCE. Each of the Seller, the Xxxxxx and the
Joint Venture has complied in all material respects with all applicable laws,
rules, regulations, and ordinances of any Governmental Agency (including without
limitation, all laws and regulations of the Division and the Commission) having
jurisdiction, any trademark, tradename or copyright rules and regulations, and
any zoning, occupational safety or environmental protection laws or any laws
relating to the employment of labor. None of Seller, the Xxxxxx nor the Joint
Venture is in violation of, or in default under, any terms or provisions of any
mortgage, indenture, security agreement, lease, license, contract, agreement,
instrument, order, arbitration award, judgment, injunction or decree. Except
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with respect to the Casino Investigation, Seller has not received any notice nor
has there been any proceeding or adjudication questioning whether or alleging or
determining that the business of Seller, the Xxxxxx or the Joint Venture is or
has been conducted in violation of any law, ordinance, regulation, order,
decree, judgment or injunction. Seller has not received any notice nor has there
been any proceeding or adjudication questioning whether or alleging or
determining that they have not obtained all permits, licenses and other
authorizations which relate to the assets or the business of Seller, the Xxxxxx
or the Joint Venture. Seller has not received any written notice nor has there
been any proceeding or adjudication questioning whether or alleging or
determining that any of such parties is not in compliance in all material
respects with all material terms and conditions of such permits, licenses and
authorizations.
(u) ENVIRONMENTAL PROTECTION.
(i) Each of Seller, the Xxxxxx and the Joint Venture
is in compliance with all Environmental Laws (as hereinafter defined) applicable
to the business of such parties. Seller has disclosed to Purchaser all outside
consultants' reports, internal memoranda, legal documents and any other
information, written or otherwise (including without limitation, phase 1 and
phase 2 reports) in Purchaser's possession relating to its and their compliance
with all Environmental Laws.
(ii) "Environmental Laws" means all U.S. federal,
state, local and foreign laws and regulations relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata).
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(v) COPYRIGHTS, TRADEMARKS, TRADE NAMES, ETC. Schedule 5(v)
contains an accurate and complete list of all material copyrights, trademark
registrations, trademark applications, service marks, trade names and assumed
names used in Seller's, the Xxxxxx'x or the Joint Venture's business. Seller has
not received written notice nor has there been any proceeding or adjudication
questioning whether or alleging or determining that the use thereof by Seller
the Xxxxxx or the Joint Venture infringes on or conflicts with any existing
patents, trademarks or copyrights or any other rights of any person. Seller has
nor received any written notice of any material claim of a third party to the
use of any such names.
(w) CONTRACTS. Each contract and commitment (whether written
or oral) that individually involves potential future payments by or to Seller,
the Xxxxxx or the Joint Venture of $50,000 or more is disclosed on Schedule 5(w)
(except as otherwise indicated therein) and copies of such written contracts or
commitments have been provided to Purchaser. Seller is not, nor has it been
during the past three years, a partner in any partnership or a party to any
joint venture.
(x) FULL DISCLOSURE. There is no fact known to Seller which
has not been disclosed to Purchaser in writing, that has caused, or would
reasonably be anticipated to result in, a Material Adverse Effect.
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER. As a material
inducement to Seller to enter into this Agreement, Purchaser represents,
warrants to and, where applicable, covenants with Seller that as of the date
hereof and as of the Closing Date:
(a) DUE ORGANIZATION. Purchaser is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Ohio, has the
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requisite power and authority to own its properties and to carry on its business
as it is now being conducted.
(b) POWER AND AUTHORITY NO CONFLICTS. Purchaser has the
requisite power and authority to enter into and carry out the terms of this
Agreement. The execution and delivery of this Agreement and the other documents
and instruments to be executed and delivered by Purchaser pursuant hereto and
the consummation of the transactions contemplated hereby and thereby by
Purchaser have been duly authorized by the Manager of Purchaser. This Agreement
has been duly and validly executed and delivered by Purchaser and constitutes,
and when executed and delivered, the other documents and instruments to be
executed and delivered by Purchaser will constitute, valid and binding
agreements of Purchaser, enforceable against Purchaser in accordance with their
respective terms subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and except to the extent that the
enforceability of rights and remedies may be limited by general principles of
equity. The execution and delivery of this Agreement does not, and, subject to
any requisite governmental or other consents or approvals (including without
limitation, licensing approval of the Division and the Commission), the
consummation of the transactions contemplated hereby and thereby will not, (i)
violate any provision of the Articles of Organization or the Operating Agreement
of Purchaser, (ii) violate or conflict with any law, ordinance, rule,
regulation, order, judgment or decree to which Purchaser is subject or by which
Purchaser is bound (other than violations or conflicts which individually or in
the aggregate would not have a Purchaser Material Adverse Effect or which would
not prevent or delay the consummation of the transactions contemplated hereby),
or (iii) violate
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or conflict with or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or will result in the
termination of, or accelerate the performance required by, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or the assets under, any term or provision of any contract,
commitment, understanding, arrangement, agreement or restriction of any kind or
character to which Purchaser is a party or by which Purchaser or any of its
assets or properties may be bound or affected (other than, in any such instance,
violations, conflicts, defaults, terminations, accelerations, liens, security
interests, charges or encumbrances which individually or in the aggregate would
not have a Purchaser Material Adverse Effect or which would not prevent or delay
the consummation of the transactions contemplated hereby). Except for approval
of Seller's shareholders, any required licensing approval of the Division, the
Commission and state and local liquor licensing authorities, no consent,
approval, authorization or action by any Governmental Agency or any other third
party is required in connection with the execution and delivery by Purchaser of
this Agreement and the other documents and instruments to be executed and
delivered by Purchaser pursuant hereto or the consummation by Purchaser of the
transactions contemplated herein or therein.
(c) INVESTMENT PURPOSE. The Shares to be acquired by Purchaser
upon conversion of the Note are being acquired for Purchaser's own account and
not with the view to or for resale in connection with, any distribution or
public offering thereof within the meaning of the Securities Act of 1933 (the
"1933 Act"). Purchaser understands that the Shares have not been registered
under the 1933 Act by reason of their contemplated issuance in a transaction
believed to be exempt from the registration and prospectus delivery
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requirements of the 1933 Act pursuant to Section 4(2) thereof, and in
transactions believed to be exempt from the registration and/or qualification
provisions of the appropriate state securities laws. Purchaser has such
knowledge and experience in financial and business matters that it is capable of
independently evaluating the risks and merits of purchasing or acquiring the
Shares.
(d) GAMING APPROVAL. To the best of Purchaser's knowledge,
there are no facts or circumstances which exist which would preclude Purchaser
from obtaining any necessary approval from the Division and the Commission
and/or the appropriate state and local liquor licensing authorities.
7. CLOSING
-------
The Closing hereunder shall take place on the Closing Date by
the use of facsimile, U.S. Mail and overnight courier.
8. UNDERTAKINGS
------------
(a) Prior to the date hereof, Purchaser and its agents and
representatives commenced and, from and after the date hereof, shall be
permitted to continue Purchaser's due diligence review of Seller, in
anticipation of the Closing, and shall have full access to all relevant
information regarding Seller, its assets, the business and the Shares to
determine that all financial and other information has been and will be provided
to Purchaser is reasonably accurate. Purchaser acknowledges that such
information shall be and remain confidential until the Closing. In the event the
transactions contemplated by this Agreement do not close, Purchaser shall return
to the Seller all documents previously furnished to Purchaser by the Seller.
Purchaser and its agents and representatives hereby agree that they will not
divulge or use any confidential or other proprietary information regarding
Seller,
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except to the extent (i) required by law, (ii) otherwise available from third
parties, or (iii) previously known to Purchaser from sources other than the
Seller.
(b) Seller shall not divulge or use any confidential or
proprietary information regarding the Purchaser, except to the extent (i)
required by law, (ii) otherwise available from third parties, or (iii)
previously known to Seller from sources other than the Purchaser.
(c) At or prior to Closing, Seller's 1996 Employees' Incentive
Stock Option Plan (the "1996 Plan") shall have been expanded in a manner
satisfactory to Seller and Purchaser to provide for additional grants of Options
as follows: Options for 180,000 Shares to Purchaser's employees (including
Xxxxxx) as determined by Purchaser and Options for 120,000 Shares to Seller's
officers and employees as determined by Seller's Board. The exercise price of
such Options shall be $5.625 per Share. The vesting schedule for the Options
shall be 1/3 upon conversion of the entire unpaid principal balance of the Note,
and 1/3 each upon the first and second anniversary dates of such conversion.
Options held by certain officers and employees of Seller as approved by
Purchaser shall be amended in order to change the exercise price of such Options
to $5.625 per Share.
9. [INTENTIONALLY OMITTED]
10. GOVERNMENTAL REGULATION
-----------------------
(a) The parties hereto acknowledge that the business of Seller
and the proposed business of the Joint Venture is subject to stringent
government regulation including supervision by the Division and the Commission.
(b) The parties also acknowledge that Purchaser and certain of
its affiliates are presently seeking appropriate gaming licenses from the
Division (Xxxxxx has already
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obtained a key employee license), and that no assurance can be given that such
licenses will be issued or when such licenses may be issued.
(c) If any license, registration, application or other form of
required governmental filing for the Xxxxxx Hotel Casino (the "Xxxxxx Casino"),
the LLC's planned casino or otherwise, is denied, reserved, revoked or suspended
for any reason, including, but not limited to the participation of a person
unacceptable or unsuitable to the Division and the Commission or other
Governmental Authority, the affected party hereto (either Seller, Purchaser or
Xxxxxx) shall take all measures necessary to remedy or correct the deficiency.
In the case where the Division, the Commission or other Governmental Authority
denies or reserves approval for gaming operations or other business operations
of a party hereto because of the participation of an unacceptable or unsuitable
person, that party shall forthwith expel such person(s) and substitute a
person(s) acceptable to the Division, the Commission or other Governmental
Authority, or otherwise take measures to remedy or correct the deficiency.
(d) Pursuant to the Operating Agreement for the LLC (the
"Operating Agreement"), Purchaser and/or its affiliate has certain rights to
acquire Seller's interest in the LLC. Further, a member's interest in the LLC
may be automatically divested upon the occurrence of certain events. In the
event such rights to acquire Seller's interest have been exercised or Seller's
interest is divested and thereafter Seller exercises and fulfills certain
repurchase rights contained in the Operating Agreement, the parties intend that
Purchaser would thereafter be issued 1,142,857 Shares as part of the
consideration to be paid by Seller as part of the repurchase right (relating to
40% of Seller's Membership Interest (as defined
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in the Operating Agreement)) and all of the terms and conditions of this
Agreement would apply.
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
------------------------------------------------
The obligations of Purchaser hereunder are subject to the
following conditions, any of which may be waived in writing by Purchaser:
(a) REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties of Seller contained in this Agreement shall be
true and correct on the Closing Date and the date of issuance of the Second Note
with the same effect as if made on and as of such dates. All Schedules and all
other information furnished to Purchaser pursuant to this Agreement shall be
updated by Seller as of the Closing Date and the date of issuance of the Second
Note, if so required. The updating of said Schedules shall not, in any manner,
affect the representations and warranties of Seller nor relieve Seller from any
liability thereunder.
(b) PERFORMANCE OF AGREEMENTS AND CONDITIONS. Seller, Xxxxxxxx
and Day shall have performed and complied with all agreements and conditions
required by this Agreement to be performed and complied with by Seller, Xxxxxxxx
and Day as the case may be, prior to or at the Closing Date or the date of
issuance of the Second Note, as the case may be.
(c) PRESIDENT'S CERTIFICATE. Seller shall have delivered to
Purchaser a certificate from its President, dated the Closing Date, certifying
in such detail as Purchaser may reasonably request to Seller's fulfillment of
the conditions specified in subsections (a) and (b) above and such other
evidence as to Seller's compliance with the provisions of this Agreement as
Purchaser reasonably may request.
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(d) DUE DILIGENCE COMPLETION. Purchaser shall have completed
its due diligence investigation contemplated by Section 8(a) and such
investigation shall not, in Purchaser's sole discretion, have disclosed any
material variances from information heretofore provided by Seller to Purchaser.
(e) INJUNCTION. On the Closing Date there shall not be in
effect any injunction, writ, temporary restraining order or any other order of
any nature issued by a court or other governmental body or agency of competent
jurisdiction directing that the transaction provided for herein not be
consummated as herein provided, nor shall there be any litigation or proceeding
pending or threatened in respect of the transaction contemplated hereby.
(f) SHAREHOLDERS' AGREEMENT. Xxxxxxxx, Day and Xxxxxx shall
have entered into the Shareholders' Agreement.
(g) REGISTRATION AGREEMENT. Seller and Purchaser shall have
entered into the Registration Agreement.
(h) LLC. Seller and Purchaser shall have entered into all
documents necessary to restructure the Joint Venture into the LLC.
(i) MASTER JOINT VENTURE AGREEMENT. Seller and Purchaser shall
have entered into the Master Joint Venture Agreement.
(j) DELIVERY OF THE NOTE, THE SHARES AND SECURITY DOCUMENTS.
Seller shall have delivered to Purchaser the Note, certificates for the 190,476
Shares and shall have delivered all other instruments, certificates and other
documents required to be delivered hereunder in order to grant Purchaser the
security interests referenced in Section 2(a).
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(k) CONDITION OF BUSINESS AND PROPERTIES. Between the date of
this Agreement and the Closing Date, each of Seller, the Xxxxxx and the Joint
Venture shall have continued to operate its business in its regular and ordinary
course. On and before the Closing Date, the business and property of Seller, the
Xxxxxx and/or the Joint Venture shall not have been adversely affected in any
material way as a result of fire, accident or other casualty (whether or not
covered by insurance) or any labor dispute or act of God or the public enemy or
as the result of any judicial, administrative or governmental proceeding or
other event or condition.
(l) GOVERNMENTAL APPROVAL. Purchaser shall have obtained
licensing approval from the Division and the Commission, if required, and any
other necessary governmental or regulatory approval.
(m) EMPLOYMENT AGREEMENTS. Seller shall have entered into the
employment agreements in form satisfactory to Purchaser, in its sole discretion,
with Xxxxxx, Xxxxx and Xxxxxxx Xxxxxxxx.
(n) OPINION OF COUNSEL. Purchaser shall have received a legal
opinion from Xxxxx & Xxxxxx P.C., counsel for Seller, dated as of the Closing
Date, which opinion shall be mutually agreeable to Purchaser's counsel and
Seller's counsel.
(o) DELIVERY OF DOCUMENTS. Seller shall have delivered or
caused to have been delivered to Purchaser the documents contemplated by Section
15 not otherwise hereinabove specified.
Seller represents and warrants that it has not caused, and it covenants
and agrees that it shall not cause, any event that would prevent the
satisfaction of all of the conditions set
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forth in this Section 11. Seller covenants and agrees to take all action
reasonably required to satisfy such conditions.
12. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
---------------------------------------------
The obligations of Seller hereunder are subject to the
following conditions, any of which may be waived in writing by Seller:
(a) REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties of Purchaser contained in this Agreement shall be
true and correct on the Closing Date and the date of issuance of the Second Note
with the same effect as if made on and as of such dates.
(b) PERFORMANCE OF AGREEMENTS AND CONDITIONS. Purchaser shall
have performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by Purchaser prior to or at the
Closing Date and the date of issuance of the Second Note, as the case may be.
(c) PRESIDENT'S CERTIFICATE. Purchaser shall have delivered to
Seller the certificate of Purchaser's President, dated the Closing Date,
certifying in such detail as Seller reasonably may request to Purchaser's
fulfillment of the conditions specified in subsections (a) and (b) above and
such other evidence as to Purchaser's compliance with the provisions of this
Agreement as Seller reasonably may request.
(d) OPINION OF COUNSEL. Purchaser shall have delivered to
Seller an opinion of Xxxx Xxxxxx & Parks, counsel for Purchaser, dated the
Closing Date, which opinion shall be mutually agreeable to Purchaser's counsel
and Seller's counsel.
(e) INJUNCTION. On the Closing Date there shall not be in
effect any injunction, writ, temporary restraining order or any order of any
nature issued by a court or
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other governmental body or agency directing that the transactions provided for
herein not be consummated as herein provided, nor shall there be any litigation
or proceeding pending or threatened in respect of the transactions contemplated
hereby.
(f) DELIVERY OF DOCUMENTS. Purchaser shall have delivered to
Seller the documents contemplated by Section 15 not otherwise hereinabove
specified.
Purchaser represents and warrants that it has not caused, and it
covenants and agrees that it shall not cause, any event that would prevent the
satisfaction of all of the conditions set forth in this Section 12. Purchaser
covenants and agrees to take all action reasonably required to satisfy such
conditions.
13. INDEMNIFICATION BY SELLER
-------------------------
Seller shall and hereby does indemnify and hold Purchaser
harmless from and against and in respect of any and all loss, damage and expense
incurred by Purchaser, resulting from, arising out of, attributable to, or in
any manner connected with:
(i) Any matter in respect of which Seller
shall have made any misrepresentation,
breached any warranty made pursuant to
this Agreement or failed to fulfill any
covenant or agreement on the part of
Seller contained in this Agreement or in
any Exhibit, Schedule or certificate or
other document delivered, or to be
delivered, by Seller to Purchaser in
connection with this Agreement;
(ii) Any liability of Seller actual or
contingent, current or deferred, not
disclosed in the Financial Statements, or
any Exhibit or Schedule furnished
pursuant hereto; and
(iii) Any and all actions, suits, proceedings,
demands, assessments or judgments, costs
and expense (including reasonable legal
and accounting fees and investigation
costs) incident to the foregoing and the
enforcement thereof.
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If any event shall occur or any circumstance arise which might give
rise to a claim in respect of any matter against which Seller has indemnified
Purchaser hereunder, Purchaser promptly shall give notice thereof to Seller. If
the matter as to which indemnification may be sought is a claim by a third
party, such notice shall be given within thirty (30) days after said claim shall
have been presented to the President of Purchaser; otherwise such notice shall
be given promptly after the President of Purchaser shall determine that the
matter is one as to which indemnification is sought. Unless the parties
otherwise agree in writing, Seller shall defend against all such third-party
claims or otherwise satisfy said claims, at its sole cost and expense, through
counsel and accountants designated by it and approved by Purchaser, which
approval shall not be withheld unreasonably. Purchaser shall have the right to
participate with Seller in the defense of any such matter and shall make
available to Seller the business records of Purchaser for said purpose. If
Seller, after receipt of notification from Purchaser of a third-party claim,
fails to protest, defend or settle any such third-party claim, demand, suit or
proceeding promptly, diligently and in good faith, Purchaser shall have the
right at its discretion to settle, defend or pay the same, in which event,
Seller's indemnity shall extend to and include the amount of said settlement or
payment and/or the costs and legal expenses of such defense.
14. INDEMNIFICATION BY PURCHASER
----------------------------
Purchaser shall and hereby does indemnify and hold Seller
harmless from and against and in respect of any and all loss, damage and expense
incurred by Seller, resulting from, arising out of, attributable to, or in any
manner connected with:
(a) Any matter in respect of which Purchaser shall have
made any misrepresentation, breached any warranty
made pursuant to this Agreement or failed to fulfill
any covenant or agreement on the part
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of Purchaser contained in this Agreement or in any
Exhibit, Schedule or certificate or other document
delivered, or to be delivered, by Purchaser to Seller
in connection with this Agreement; and
(b) Any and all actions, suits, proceedings, demands,
assessments or judgments, costs or expenses
(including reasonable legal and accounting fees and
investigation costs) incident to the foregoing and
the enforcement thereof.
If any event shall occur or any circumstance arises which might give
rise to a claim in respect of any matter against which Purchaser has indemnified
Seller hereunder, Seller shall give notice thereof to Purchaser within thirty
(30) days after said claim shall have been presented to it and, unless the
parties otherwise agree in writing, Purchaser shall defend against said claim or
otherwise satisfy said claim, at its sole cost and expense, through counsel and
accountants designated by Purchaser and approved by Seller, which approval shall
not be unreasonably withheld. Seller shall have the right to participate with
Purchaser in the defense of any such matter and shall make available to
Purchaser the business records of Seller for said purpose. If Purchaser, after
receipt of notification from Seller of a thirty-party claim, fails to protest,
defend or settle any such third-party claim, demand, suit or proceeding
promptly, diligently and in good faith, Seller shall have the right in its
discretion to settle, defend or pay the same, in which event, Purchaser's
indemnity shall extend to and include the amount of said settlement or payment
and/or the costs and legal expenses of such defense.
15. DOCUMENTS TO BE DELIVERED AT CLOSING
------------------------------------
At the Closing on the Closing Date:
(a) Seller shall deliver or cause to be delivered to
Purchaser the following:
(i) The First Note being issued to Purchaser at Closing
and the documents required in order to grant Purchaser the
security
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interests and the certificates for the
190,476 Shares referenced in Section 2(a);
(ii) The Shareholders' Agreement referred to in
Section 3(a);
(iii) The Registration Agreement referred to in
Section 3(d);
(iv) The documents necessary to restructure the
Joint Venture into the LLC and the Master
Joint Venture Agreement referred to in
Section 4;
(v) The certificate referred to in Section
11(c),
(vi) A copy of the Seller's Articles of
Incorporation and Bylaws certified as of the
Closing Date by the Secretary thereof;
(vii) The Employment Agreements referred to in
Section 11(m);
(viii) The opinion of counsel referred to in
Section 11(n);
(ix) Certified resolutions of Seller's Board of
Directors authorizing and approving this
transaction; and
(x) Subscription Agreements executed by each of
Xxxxxxxx, Day and Xxxxx to evidence their
purchase obligations contained in Section
2(d); and
(xi) All other instruments not herein
specifically provided for but which are
reasonably necessary or desirable to
effectuate the purpose of this Agreement.
(b) Purchaser and/or Xxxxxx shall deliver to Seller the
following:
(i) The purchase price due at Closing pursuant
to Section 2(c);
(ii) The Shareholders Agreement referred to in
Section 3(c);
(iii) The Registration Agreement referred to in
Section 3(d);
(iv) The documents necessary to restructure the
Joint Venture into the LLC and the Master
Joint Venture Agreement referred to in
Section 4;
(v) Certified resolutions of the Manager of
Purchaser authorizing this transaction;
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(vi) The certificate referred to in Section
12(c);
(vii) The opinion of counsel referred to in
Section 12(d); and
(viii) All other instruments not herein
specifically provided for but which are
reasonably necessary or desirable to
effectuate the purpose of this Agreement.
16. BROKERAGE
---------
Each party represents and warrants to the other that no person
or persons assisted in or brought about the negotiation of this Agreement in the
capacity of broker, agent, finder or originator on behalf of it. Each party
("First Party") agrees to indemnify and hold harmless the other from any claim
asserted against such other party for a brokerage or agent's or finder's or
originator's commission or compensation in respect of the transaction
contemplated by this Agreement by any person purporting to act on behalf of
First Party.
17. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
-------------------------------------------
AGREEMENTS
----------
All representations, warranties and agreements made by Seller
and Purchaser pursuant hereto shall survive the closing of this transaction.
None of the representations, warranties and agreements shall be affected by any
investigation at any time made by or on behalf of Seller or Purchaser.
18. [INTENTIONALLY OMITTED]
19. REIMBURSEMENT OF EXPENSES OF PURCHASER
--------------------------------------
Upon the Closing, Seller shall reimburse Purchaser for and/or
pay directly on behalf of and in the name of Purchaser, all the fees and
expenses of Purchaser's attorneys'
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and accountants' fees incurred on or after May 29, 1996 in the negotiation and
consummation of the transactions contemplated hereby.
20. BINDING AGREEMENT
-----------------
All of the terms and provisions of this Agreement shall inure
to the benefit of, be enforceable by and be binding upon and enforceable against
the parties hereto and their respective heirs and personal representatives,
successors and assigns; provided, however, that except as specified in Section
29 hereof, none of the parties hereto may assign its rights or duties hereunder.
Nothing contained in this Agreement shall confer any rights or remedies upon any
other person, firm or corporation.
21. NOTICES
-------
Any notice or other communication required or permitted
hereunder shall be expressed in writing and delivered in person or sent by
certified or registered mail, return receipt requested, or sent by overnight
courier service such as Federal Express and confirmed by certified or registered
mail, return receipt requested, or sent by facsimile (receipt confirmed) to the
respective parties at the following addresses, or at such other addresses as the
parties shall designate by written notice to the other:
PURCHASER: Diversified Opportunities Group Ltd.
c/x Xxxxxx Entertainment Ltd.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Fax No.: (000) 000-0000
Copy To: Xxxx Xxxxxx & Parks
0000 XX Xxxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
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SELLER: Black Hawk Gaming & Development
Company, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, President
Fax No.: (000) 000-0000
Copy To: Xxxxx & Xxxxxx P.C.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxx, Esq.
Fax No.: (000) 000-0000
All notices shall be deemed received on the third business day after mailing or
the first business day after delivery to the overnight courier service or the
same business day if presently delivered or sent by facsimile.
22. SECTION HEADINGS
----------------
The section and subsection headings and any table of contents
listing the same contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
23. SCHEDULES AND EXHIBITS
----------------------
All Schedules and Exhibits referred to in this Agreement are
attached hereto and are hereby incorporated herein and made a part hereof.
24. COUNTERPARTS
------------
This Agreement may be executed in any one or more
counterparts, all of which taken together shall constitute one instrument.
25. COOPERATION
-----------
Each party shall cooperate and use its best efforts to
consummate the transaction contemplated herein. In addition, each party shall
cooperate and take such action and execute such other and further documents as
reasonably may be requested from
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time to time after the Closing Date by any other party to carry out the terms
and provisions and intent of this Agreement.
26. GENDER
------
Wherever the context of this Agreement so requires or permits,
the masculine herein shall include the feminine or the neuter, the singular
shall include the plural, and the term "person" shall also include "corporation"
or other business entity.
27. ENTIRE AGREEMENT
----------------
This Agreement contains the entire agreement between the
parties hereto, and it is understood and agreed that there are no other
covenants, representations or warranties other than those contained herein. This
Agreement may not be changed or modified except by a writing duly executed by
the parties hereto.
28. WAIVER OF PROVISIONS
--------------------
The terms, covenants, representations, warranties and
conditions of this Agreement may be waived only by a written instrument executed
by the party waiving compliance. The failure of any party at any time or times
to require performance of any provision of this Agreement shall in no manner
affect the right at a later date to enforce the same. No waiver by any party of
any condition or the breach of any provision, term, covenant, representation or
warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances shall be deemed to be or construed as a further or
continuing waiver of any such condition or of the breach of any other provision,
term, covenant, representation or warranty of this Agreement.
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29. ASSIGNMENT BY PURCHASER
-----------------------
Subject to any required approval of the Division, the
Commission and the state and local liquor licensing authorities, Purchaser may
assign its rights and obligations hereunder to corporations, limited liability
companies, partnerships, trusts or other entities which are under common control
with or controlled through equity ownership and/or voting control, by Purchaser
or Xxxxxx; it being acknowledged that (i) any entity managed either by Xxxxxx
Entertainment Ltd. ("JEL") or Xxxxxx, (ii) any entity in which either JEL or
Xxxxxx is one of the trustees and/or one of the beneficiaries or (ii) any entity
in which either JEL or Xxxxxx beneficially owns 15% or more of the outstanding
equity securities constitutes common control.
30. ARBITRATION
-----------
If any dispute shall arise between the parties pursuant to
this Agreement, such dispute shall be settled by arbitration pursuant to this
Section 30. In such event, either party hereto may serve upon the other party a
written notice demanding that the dispute be resolved pursuant to this Section
30. To the extent that any provision herein is inconsistent with any rule of the
AAA, this Agreement shall prevail. The dispute or claim shall be heard in
Chicago, Illinois by one (1) neutral arbitrator, if the parties can agree on the
selection of said arbitrator, or if unable to agree, each party shall select one
(1) arbitrator and the two arbitrators chosen shall select the third arbitrator.
If the dispute shall be heard by three (3) arbitrators, one (1) arbitrator will
be selected by the party initiating the arbitration at the time of the
submission to arbitration. Within seven (7) days after submission, the other
party will select an arbitrator. Within seven (7) days after the first two (2)
arbitrators are chosen, the third arbitrator will be selected. The third
arbitrator selected shall not have any
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relationship to either of the parties. The arbitrators shall apply the internal
law of the State of Colorado. Said arbitrator(s) shall be sworn faithfully and
fairly to determine the question at issue. The arbitrator(s) shall afford to the
parties a hearing and the right to submit evidence, with the privilege of cross
examination and the right to compel testimony by applying for subpoena powers to
appropriate judicial authority, on the question at issue, and shall, with all
possible speed, make his/their determination in writing and shall give notice to
the parties hereto of such determination. The concurring determination of the
arbitrator, if heard by one, or of any two of said three arbitrator(s) shall be
binding upon the parties hereto, or, in case no two of the arbitrators shall
render a concurring determination, then the determination of the third
arbitrator appointed shall be binding upon the parties hereto. The decision of
the arbitrators shall be final and binding upon the parties hereto and shall be
enforceable in any court having jurisdiction. Any arbitration shall be conducted
in accordance with the then prevailing Commercial Rules of the American
Arbitration Association, or the successor party thereto from time to time in
existence. The fees and expenses of the arbitrator(s) shall be divided equally
between the parties so involved. The parties shall each bear their own expenses
(including, but not limited to, attorneys' and witnesses' fees and expenses) in
any arbitration proceedings.
31. GOVERNING LAW
-------------
This Agreement shall be governed by and construed under the laws of the
State of Colorado.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above set forth.
SELLER:
BLACK HAWK GAMING &
DEVELOPMENT COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx, Chairman
PURCHASER:
DIVERSIFIED OPPORTUNITIES GROUP LTD.
By: XXXXXX ENTERTAINMENT LTD., its
manager
By: /s/ Xxxxx X. Xxxxxxxxxx
--------------------------------
Title: Vice President
-----------------------------
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EXHIBITS AND SCHEDULES
Exhibit Section Reference Description
------- ----------------- ------------
Exhibit A 2(a) First Note
Exhibit B 3(a) Shareholders' Agreement
Exhibit C 3(d) Registration Agreement
Schedule Section Reference Description
-------- ----------------- -----------
5(b) 5(b) Conflicts
5(c) 5(c) Capital Structure
5(e) 5(e) Subsidiaries
5(g) 5(g) Liens
5(i) 5(i) Insurance and Claims
5(l) 5(l) Liabilities
5(m) 5(m) Investigation
5(n) 5(n) Certain Agreements
5(o) 5(o) Plans
5(p) 5(p) Labor Matters
5(q) 5(q) Taxes
5(s) 5(s) Conduct of Business
5(v) 5(v) Proprietary Rights
5(w) 5(w) Contracts
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