EXHIBIT 2.1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
AMONG
GREATE BAY CASINO CORPORATION
PPI CORPORATION
ADVANCED CASINO SYSTEMS CORPORATION
AND
ACSC ACQUISITIONS, INC.
DECEMBER 19, 2001
TABLE OF CONTENTS
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ARTICLE I Purchase and Sale of the Shares.................................................. 2
1.1 Agreement................................................................ 2
1.2 Closing.................................................................. 2
1.3 Delivery and Payment..................................................... 2
1.4 Post Closing Purchase Price Adjustment................................... 3
ARTICLE II Representations and Warranties of Seller........................................ 4
2.1 Due Organization......................................................... 4
2.2 Authorization............................................................ 4
2.3 No Breach or Conflict.................................................... 4
2.4 Third-Party Consents..................................................... 4
2.5 Enforceability........................................................... 5
2.6 Ownership of Shares; No Liens on Shares.................................. 5
2.7 Brokerage Fees........................................................... 5
2.8 Litigation............................................................... 5
2.9 Indebtedness............................................................. 5
2.10 Auction and Sale Efforts................................................. 6
ARTICLE III Representations and Warranties of the Company.................................. 6
3.1 Due Organization......................................................... 6
3.2 Authorization............................................................ 6
3.3 No Breach or Conflict.................................................... 6
3.4 Third-Party Consents..................................................... 7
3.5 Enforceability........................................................... 7
3.6 Capitalization........................................................... 7
3.7 Other Rights to Acquire Capital Stock.................................... 7
3.8 Subsidiaries............................................................. 7
3.9 Indebtedness............................................................. 8
3.10 Contracts and Agreements................................................. 8
3.11 Compliance With Laws..................................................... 8
3.12 Taxes.................................................................... 8
3.13 Licenses and Permits..................................................... 10
3.14 Financial Statements..................................................... 10
3.15 Conduct of the Business.................................................. 11
3.16 Brokerage Fees........................................................... 11
3.17 Litigation............................................................... 11
3.18 Employees; Compensation; Unions.......................................... 12
3.19 Insurance................................................................ 14
3.20 Environmental Matters.................................................... 14
3.21 Patents, Trademarks and Similar Rights................................... 14
3.22 Equipment, Property and Assets........................................... 15
3.23 Real Property............................................................ 15
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TABLE OF CONTENTS
(CONTINUED)
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3.24 Bank Accounts............................................................ 16
ARTICLE IV Representations and Warranties of Greate Bay.................................. 16
4.1 Due Organization......................................................... 16
4.2 Authorization............................................................ 16
4.3 No Breach or Conflict.................................................... 16
4.4 Third-Party Consents..................................................... 16
4.5 Enforceability........................................................... 17
4.6 Brokerage Fees........................................................... 17
4.7 Litigation............................................................... 17
4.8 Indebtedness............................................................. 17
4.9 Auction and Sale Efforts................................................. 17
ARTICLE V Representations and Warranties of Buyer....................................... 17
5.1 Due Organization......................................................... 17
5.2 Authorization............................................................ 18
5.3 No Breach or Conflict.................................................... 18
5.4 Third-Party Consents..................................................... 18
5.5 Enforceability........................................................... 18
5.6 Brokerage Fees........................................................... 18
5.7 Litigation............................................................... 18
5.8 Cash Consideration....................................................... 19
5.9 Securities Act Representations........................................... 19
ARTICLE VI Covenants of the Company, Seller and Greate Bay............................... 19
6.1 Inspection............................................................... 19
6.2 Conduct of Business Pending Closing...................................... 19
6.3 Tax Sharing Agreement.................................................... 21
6.4 Acquisition Proposals.................................................... 21
6.5 Cooperation; Closing..................................................... 22
6.6 Noncompetition........................................................... 22
ARTICLE VII Covenants of Buyer............................................................ 23
7.1 License and Maintenance Agreements....................................... 23
7.2 Cooperation; Closing..................................................... 23
ARTICLE VIII Conditions to the Company's, Seller's and Greate Bay's Obligations............ 23
8.1 Buyer's Representations and Warranties................................... 24
8.2 Buyer's Covenants........................................................ 24
8.3 Buyer's Deliveries....................................................... 24
8.4 Bankruptcy Court......................................................... 24
8.5 Consents................................................................. 24
8.6 Adverse Actions or Proceedings........................................... 24
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE IX Conditions to Buyer's Obligations............................................. 24
9.1 Consents................................................................. 24
9.2 The Company's, Seller's and Greate Bay's Representations and Warranties.. 24
9.3 The Company's, Seller's and Greate Bay's Covenants....................... 25
9.4 The Company's, Seller's and Greate Bay's Deliveries...................... 25
9.5 Bankruptcy Court......................................................... 25
9.6 Regulatory Approvals..................................................... 25
9.7 No Material Adverse Effect............................................... 25
9.8 Adverse Actions or Proceedings........................................... 25
ARTICLE X Bankruptcy Matters............................................................ 25
10.1 Bankruptcy Procedures.................................................... 25
10.2 The Sale Hearing......................................................... 26
10.3 The Sale Procedures...................................................... 26
10.4 Bankruptcy Court Approval................................................ 28
10.5 Bankruptcy Court Filings and Administrative Expenses..................... 28
10.6 Creditors' Claims........................................................ 28
10.7 Good Faith............................................................... 28
ARTICLE XI The Company's, Seller's and Greate Bay's Deliveries at Closing................ 29
11.1 Shares................................................................... 29
11.2 Bring-Down Certificate................................................... 29
11.3 Secretary's Certificate.................................................. 29
11.4 Escrow Agreements........................................................ 29
11.5 Sale Approval Order...................................................... 29
11.6 Releases................................................................. 29
11.7 Legal Opinion............................................................ 30
11.8 Xxxx Employment Agreement................................................ 30
ARTICLE XII Buyer's Deliveries at Closing................................................. 30
12.1 Purchase Price........................................................... 30
12.2 Bring-Down Certificate................................................... 30
12.3 Secretary's Certificate.................................................. 30
12.4 Escrow Agreements........................................................ 30
ARTICLE XIII Termination................................................................... 30
13.1 Termination.............................................................. 30
13.2 Effect of Termination.................................................... 31
ARTICLE XIV Indemnification............................................................... 32
14.1 Survival of Representations and Warranties............................... 32
14.2 Indemnification of Buyer................................................. 32
14.3 Indemnification of Seller................................................ 35
14.4 Exclusive Remedy......................................................... 36
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TABLE OF CONTENTS
(CONTINUED)
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14.4 Exclusive Remedy......................................................... 37
14.5 Defense of Third-Party Claims............................................ 37
14.6 Direct Claims............................................................ 37
ARTICLE XV Miscellaneous................................................................. 38
15.1 Further Assurances....................................................... 38
15.2 Publicity................................................................ 38
15.3 Expenses................................................................. 38
15.4 Transfer Taxes........................................................... 38
15.5 Governing Law; Dispute Resolution........................................ 39
15.6 Confidentiality.......................................................... 40
15.7 Notices.................................................................. 40
15.8 Headings; Gender; Interpretation......................................... 42
15.9 Counterparts............................................................. 42
15.10 Entire Agreement......................................................... 42
15.11 Modifications............................................................ 42
15.12 Assignment and Binding Effect............................................ 42
15.13 No Third Party Beneficiaries............................................. 42
15.14 Access to Records........................................................ 42
15.15 Guarantee................................................................ 43
ARTICLE XVI Definitions................................................................... 43
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EXHIBITS TO THE AGREEMENT
EXHIBIT A September 30, 2001 Working Capital
EXHIBIT B Primary Escrow Agreement
EXHIBIT C Secondary Escrow Agreement
EXHIBIT D Opinion of Counsel to Seller
EXHIBIT E Sale Approval Order
EXHIBIT F Sale Procedures Order
EXHIBIT G Third Amendment to Xxxx Employment Agreement
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SCHEDULES TO THE AGREEMENT
SCHEDULE 2.4 Required Seller Consents
SCHEDULE 2.6 Liens
SCHEDULE 2.7 Brokerage Fees
SCHEDULE 2.8 Litigation
SCHEDULE 2.9 Intercompany Indebtedness
SCHEDULE 3.4 Required Company Consents
SCHEDULE 3.9(a) Intercompany Indebtedness
SCHEDULE 3.10 Contracts and Agreements
SCHEDULE 3.11 Compliance With Laws
SCHEDULE 3.12(b) Taxes
SCHEDULE 3.12(e) Taxes
SCHEDULE 3.12(f) Taxes
SCHEDULE 3.12(g) Taxes
SCHEDULE 3.13(a) Licenses and Permits
SCHEDULE 3.13(b) Licenses and Permits
SCHEDULE 3.15 Conduct of the Business
SCHEDULE 3.17 Litigation
SCHEDULE 3.18(a) Employees; Compensation; Unions
SCHEDULE 3.18(b) Employees; Compensation; Unions
SCHEDULE 3.18(d) Employees; Compensation; Unions
SCHEDULE 3.18(i) Employees; Compensation; Unions
SCHEDULE 3.18(j) Employees; Compensation; Unions
SCHEDULE 3.18(k) Employees; Compensation; Unions
SCHEDULE 3.19 Insurance
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SCHEDULES TO THE AGREEMENT
(CONTINUED)
SCHEDULE 3.21 Patents, Trademarks and Similar Rights
SCHEDULE 3.23 Real Property
SCHEDULE 3.24 Bank Accounts
SCHEDULE 4.4 Required Greate Bay Consents
SCHEDULE 4.7 Litigation
SCHEDULE 4.8 Intercompany Indebtedness
SCHEDULE 5.7 Litigation
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "AGREEMENT") is made and entered
into this 19th day of December, 2001, by and among ACSC Acquisitions, Inc., a
Nevada corporation and wholly owned subsidiary of Bally Gaming, Inc. ("BUYER"),
Advanced Casino Systems Corporation, a Delaware corporation and wholly owned
subsidiary of Seller (the "COMPANY"), PPI Corporation, a New Jersey corporation
and direct parent of the Company ("SELLER"), and Greate Bay Casino Corporation,
a Delaware corporation and direct parent of Seller ("GREATE BAY").
HWCC-Holdings, Inc., a Texas corporation and the principal creditor of the
Debtors ("HWCC"), agrees to complete and perform its obligations hereunder and
acknowledges and consents to the terms and conditions of this Agreement and the
consummation of the transactions contemplated hereby by its signature on the
signature page hereof. Capitalized terms shall have the meanings set forth in
Article XVI.
W I T N E S S E T H
WHEREAS, Greate Bay, Seller and certain other affiliated entities of
Greate Bay other than the Company (collectively, the "DEBTORS") intend to file
petitions for relief under Chapter 11 of Title 11 of the United States Code in
the United States Bankruptcy Court for the District of Delaware (the "BANKRUPTCY
COURT");
WHEREAS, Seller owns all of the issued and outstanding shares (the
"SHARES") of common stock, par value $1.00 per share, of the Company ("COMMON
STOCK"), which constitute all of the issued and outstanding shares of capital
stock of the Company;
WHEREAS, the Company is engaged in the business of providing computer
services and information technology to companies in the gaming industry
(collectively, the "BUSINESS");
WHEREAS, Seller has conducted an auction for the sale of the Shares (the
"AUCTION"), and believes that Buyer has the highest and best bid, and has
entered into this Agreement to set forth the terms and conditions for a sale of
the Shares to Buyer pursuant to Section 363(f) of the Bankruptcy Code;
WHEREAS, Buyer desires to purchase and Seller desires to sell the Shares
on the terms and subject to the conditions set forth herein;
WHEREAS, HWCC is the principal creditor of the Debtors and has been
fully informed of the terms and conditions of this Agreement as set forth herein
and HWCC acknowledges and consents to the terms and conditions of this Agreement
and the consummation of the transactions contemplated hereby; and
WHEREAS, on the date hereof, the Company is entering into those certain
License Agreements and Maintenance Agreements between the Company, on the one
hand, and each of HWCC-Tunica, Inc., Hollywood Casino-Aurora, Inc., and
Hollywood Casino Shreveport, on the other hand (collectively, the "LICENSE AND
MAINTENANCE AGREEMENTS").
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual representations, warranties, promises and covenants herein contained, and
intending to be legally bound hereby, it is hereby agreed by Greate Bay, Seller,
the Company, HWCC and Buyer as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
1.1 Agreement. On the terms and subject to the conditions set forth in
this Agreement, Seller hereby agrees to sell all of the Shares to Buyer, and
Buyer agrees to purchase all of the Shares from Seller, for an aggregate
purchase price of FOURTEEN MILLION, SIX HUNDRED THOUSAND DOLLARS ($14,600,000)
(the "PURCHASE PRICE"), subject to adjustment based on the Actual Working
Capital of the Seller as of the Closing. If, as of the Closing Date, the
Company's working capital (as defined under United States generally accepted
accounting principles ("GAAP")), calculated from the closing balance sheet to be
delivered by the Company pursuant to Section 1.4(a) (the "CLOSING BALANCE
SHEET") and calculated in the same manner as the balance sheet as of September
30, 2001 set forth on Exhibit A (the "ACTUAL WORKING CAPITAL"), is less than
$5,100,000 or more than $6,100,000, then the Purchase Price shall be adjusted
pursuant to Section 1.4.
1.2 Closing. The closing of the transactions contemplated hereby (the
"CLOSING") shall take place at (a) the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP,
000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000, 47th Floor, at 9:00 a.m., local
time, on the later of (i) the first business day which is more than 10 days
after the Sale Approval Order has been entered by the Bankruptcy Court, provided
that the Sale Approval Order is not subject to stay by statute, rule, judicial
order or otherwise, and (ii) three business days following the date on which all
conditions to the obligations of both parties set forth in Articles VIII and IX
hereof shall have been satisfied or validly waived, or (b) or at such other time
and place or on such other date as Buyer and Seller may mutually agree. The date
on which the Closing actually occurs is hereinafter referred to as the "CLOSING
DATE."
1.3 Delivery and Payment. At the Closing, (a) Seller shall deliver or
cause to be delivered to Buyer the stock certificate or certificates evidencing
the Shares duly endorsed or accompanied by a duly executed stock power assigning
all of the Shares to Buyer and otherwise in good form for transfer, free and
clear of all liens, claims, charges, restrictions, security interests, rights of
others or other encumbrances (collectively, "LIENS") and (b) Buyer shall
deliver: (i) $11,000,000 (the "CLOSING PAYMENT") by wire transfer of immediately
available funds to a bank account designated in writing by Seller at Closing;
(ii) $1,000,000 (the "PRIMARY ESCROW FUNDS") by wire transfer of immediately
available funds to a bank account designated in writing by the escrow agent
jointly selected by Seller and Buyer (the "ESCROW AGENT"), to be held in
accordance with the terms of the Primary Escrow Agreement dated the date hereof
and entered into among Seller, Buyer, HWCC and the Escrow Agent and attached
hereto as Exhibit B (the "PRIMARY ESCROW AGREEMENT"); and (iii) $2,600,000 (the
"SECONDARY ESCROW FUNDS" and together with the Primary Escrow Funds, the "ESCROW
FUNDS") by wire transfer of immediately available funds to a bank account
designated in writing by the Escrow Agent, to be held in accordance with the
terms of the Secondary Escrow Agreement dated the date hereof and
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entered into among Seller, Buyer, HWCC and the Escrow Agent and attached hereto
as Exhibit C (the "SECONDARY ESCROW AGREEMENT").
1.4 Post Closing Purchase Price Adjustment.
(a) On or before the later of (i) ten business days after the
Closing Date or (ii) three business days after the Company delivers to Buyer the
Closing Balance Sheet, a representative of Buyer and a representative of Greate
Bay and HWCC shall jointly prepare and deliver to the Escrow Agent a mutually
agreed upon schedule that sets forth (i) the Company's Actual Working Capital as
of the Closing Date and (ii) the Post Closing Adjustment, if any, to the
Purchase Price. If the Company's Actual Working Capital as of the Closing Date
is less than $5,100,000, then the Purchase Price shall be reduced by the
difference between $5,100,000 and the Actual Working Capital. If the Company's
Actual Working Capital as of the Closing Date is more than $6,100,000, then the
Purchase Price shall be increased by the difference between the Actual Working
Capital and $6,100,000. Any such adjustment to the Purchase Price pursuant to
this Section 1.4(a) shall be referred to herein as the "POST CLOSING
ADJUSTMENT." A Post Closing Adjustment that results in a reduction of the
Purchase Price shall correspondingly reduce the Secondary Escrow Funds to be
distributed to Seller, or HWCC as Seller's designee, under the Secondary Escrow
Agreement. If a Post Closing Adjustment results in an increase of the Purchase
Price, all the Secondary Escrow Funds held under the Secondary Escrow Agreement
shall be distributed to Seller, or HWCC as Seller's designee, and the Buyer
shall pay the amount of such Post Closing Adjustment to Seller or its designee,
or HWCC as Seller's designee, pursuant to Section 1.4(e).
(b) If the parties are unable to agree upon a Post Closing
Adjustment within the period provided in clause (a) above, and the amount of the
disputed difference in the Post Closing Adjustment is less than or equal to
$75,000, then the Post Closing Adjustment shall be deemed to be the average of
the parties' respective Post Closing Adjustments. Any agreement among Buyer,
Seller and HWCC relating to the Post Closing Adjustment shall be final and
binding upon all of the parties hereto and any parties in interest in the
Debtor's bankruptcy cases.
(c) If the parties are unable to agree on a Post Closing
Adjustment within the period provided in clause (a) above, and the amount of the
disputed difference in the Post Closing Adjustment is greater than $75,000, then
the disputed matters shall be referred for final determination to a nationally
recognized accounting firm that is not the auditor for any of Alliance Gaming
Corporation, Buyer, Seller, the Company, Greate Bay or HWCC; provided, however,
that if the parties are unable to select such a firm within five business days
after the end of such period, the American Arbitration Association (the "AAA")
shall make such selection (any person so selected shall be referred to herein as
the "INDEPENDENT ACCOUNTANT").
(d) The Independent Accountant shall deliver to the Buyer, HWCC
and Greate Bay, as promptly as practicable and in any event within ten days
after its appointment, a written report setting forth its determination of the
Actual Working Capital and any Post Closing Adjustment. Such report shall be
final and binding upon all of the parties hereto and all parties in interest in
the Debtors' bankruptcy cases for purposes of the Post Closing Adjustment. The
fees, expenses and costs of the Independent Accountant shall be borne one half
by Buyer and one half by HWCC.
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(e) The Seller, Buyer, Company, Greate Bay and HWCC shall use
their reasonable best efforts to cause the Escrow Agent to distribute the
Secondary Escrow Funds held under the Secondary Escrow Agreement to the parties
in accordance with the final Post Closing Adjustment as determined pursuant to
this Section 1.4 as soon as practicable after its final determination. If the
Post Closing Adjustment results in an increase of the Purchase Price, Buyer
agrees to pay Seller, or HWCC as Seller's designee, the amount of such increase
within three business days after delivery of such final determination.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to the further representations and warranties set forth in
Article X, Seller hereby represents and warrants to Buyer as follows (with the
understanding that Buyer is relying materially on each such representation and
warranty in entering into and performing its obligations under this Agreement).
2.1 Due Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of New Jersey.
2.2 Authorization. Seller has the requisite corporate power and
authority to execute this Agreement and, subject to the approval of this
Agreement by the Bankruptcy Court, to perform its obligations hereunder. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all requisite
action on the part of Seller and, to the extent required, its stockholders.
2.3 No Breach or Conflict. Subject to the receipt of the approvals
described on Schedule 2.4 hereto and the approval of this Agreement by the
Bankruptcy Court, neither the execution and delivery of this Agreement, nor
compliance with the terms and provisions hereof or the consummation of the
transactions contemplated hereby, by Seller, will (a) conflict with or result in
a violation of any law, statute, ordinance, code, rule, regulation, restriction,
judgment, order, writ, injunction, decree, determination or award (collectively,
"LEGAL REQUIREMENTS") of any administrative, regulatory, judicial or
governmental authority (each, a "GOVERNMENTAL AUTHORITY") that is applicable to
Seller or any of its assets or property, (b) conflict with or result in a
violation of the Certificate of Incorporation or Bylaws of Seller, each as
amended to date, or (c) conflict with or result in a material breach of any of
the terms, conditions or provisions of any material agreement, instrument or
understanding to which Seller is a party or by which Seller or its assets or
property are bound, or constitute a default or cancel or accelerate any
obligations thereunder, except in the case of clauses (a) and (c), for any such
conflict or breach which would not limit or delay Seller's ability to perform
its obligations hereunder or to consummate the transactions contemplated hereby,
including, without limitation, transferring valid and enforceable title to all
of the Shares to Buyer at the Closing free and clear of any and all Liens.
2.4 Third-Party Consents. Each consent, approval and authorization of
any person or Governmental Authority required for the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby by
Seller is identified on Schedule 2.4
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hereto (collectively, the "REQUIRED SELLER CONSENTS"). All Required Seller
Consents of any person or Governmental Authority shall be obtained by Seller
prior to the Closing.
2.5 Enforceability. This Agreement has been duly executed and delivered
by Seller, and, subject to the approval of the Bankruptcy Court, constitutes a
valid and binding obligation of Seller enforceable against Seller in accordance
with its terms.
2.6 Ownership of Shares; No Liens on Shares. The authorized capital
stock of the Company consists of 1,000 shares of Common Stock. Of such shares,
1,000 shares are issued and outstanding, all of which are duly authorized,
validly issued, fully paid, and nonassessable. Except for the Shares, all of
which are owned by Seller, there are, and, as of the Closing there will be, no
other equity securities of the Company outstanding. None of the Shares were
issued or will be transferred under this Agreement in violation of any
preemptive or preferential rights of any person. Seller is the true and lawful
owner, of record and beneficially, of the Shares, free and clear of any Liens,
other than Liens described on Schedule 2.6 hereto, all of which Liens and any
other restrictions on transfer will be indefeasibly released or extinguished at
or prior to the Closing. None of the Shares are or will be at the Closing
subject to any outstanding agreements, commitments, options, warrants, calls, or
similar rights of any other person to acquire the same, nor will there be
outstanding as of the Closing any agreements, commitments, options, warrants,
calls, or similar rights of any other person to acquire securities exercisable
or exchangeable for or convertible into capital stock or other securities of the
Company; and Seller has, and as of the Closing Date will have, the full power
and authority to convey, and will convey to Buyer at Closing, good and
marketable title to the Shares, free and clear of any and all Liens.
2.7 Brokerage Fees. Except as set forth on Schedule 2.7, no broker,
finder, agent, representative or similar intermediary has acted for or on behalf
of Seller or Greate Bay in connection with this Agreement or the transactions
contemplated hereby, and no broker, finder, agent or similar intermediary is
entitled to any broker's, finder's or similar fee or other commission in
connection herewith, or the consummation of the transactions contemplated
hereby, based on any agreement or understanding with Seller or any action taken
by Seller.
2.8 Litigation. Except as set forth on Schedule 2.8 or Schedule 3.17,
there are no claims, causes of action, litigation, proceedings or investigations
(collectively "CLAIMS") pending or, to the knowledge of Seller, threatened (a)
by or against the Company or the Seller, or (b) that question the validity of
this Agreement, Seller's right to enter into and perform this Agreement and
consummate the transactions contemplated hereby or any action taken or to be
taken by any party in connection with this Agreement. Except as set forth on
Schedule 3.21, there are no Claims pending or, to the best knowledge of Seller
after due inquiry, are any such Claims threatened which (i) allege that the
Company is infringing or has infringed upon or otherwise is violating or has
violated the intellectual property or other rights of any third party or (ii)
could materially and adversely affect (a) the Company's ability to consummate
the transactions contemplated hereby and otherwise perform its obligations
hereunder, (b) the Business or (c) the rights, assets or properties of the
Company.
2.9 Indebtedness. Except as set forth on Schedule 2.9, neither Seller
nor any other Debtor (including their respective direct and indirect
subsidiaries and Affiliates) has any claim,
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as defined in Section 101(5) of the Bankruptcy Code, on account of intercompany
debt or otherwise, against the Company.
2.10 Auction and Sale Efforts. CIBC World Markets, an internationally
known investment banking firm, was engaged by Hollywood Casino Corporation, a
Delaware corporation ("HCC"), and together with Seller, conducted the Auction
prior to entering into this Agreement. As part of the Auction, Seller and CIBC
World Markets marketed the sale of the Shares to seven potential purchasers,
including Buyer, for more than four months. As a result of the Auction, Seller
believes (i) that Buyer has submitted the highest and best bid for the purchase
of the Shares, (ii) that the Purchase Price for the Shares is fair and (iii)
that a higher and better price is not likely to be obtained by further sale
efforts and/or longer market exposure. Seller, in consultation with HWCC,
believes that the sale of the Shares to Buyer under this Agreement represents a
sale for the full and fair market value of the Shares, and is in the best
interests of Seller, the other Debtors and the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to the further representations and warranties under Article X,
the Company represents and warrants to Buyer as follows (with the understanding
that Buyer is relying materially on each such representation and warranty in
entering into and performing its obligations under this Agreement).
3.1 Due Organization. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to conduct the Business as
heretofore and currently conducted. The Company is duly registered or qualified
and in good standing in every jurisdiction where the character of the properties
owned or leased by it, or the nature of the business conducted by it, makes
qualification to do business as a foreign entity necessary, except such
jurisdictions where a failure to so register or qualify could not reasonably be
expected to cause any material adverse change in or have any material adverse
effect on the Business, the Company, the prospects, financial condition or
results of operation of the Company, the operation of the Business or the
ability of the Company to consummate the transactions contemplated hereby (a
"MATERIAL ADVERSE EFFECT").
3.2 Authorization. The Company has the requisite corporate power and
authority to execute and deliver this Agreement and, subject to the approval of
this Agreement by the Bankruptcy Court, to perform its obligations hereunder.
The execution, delivery and performance hereof and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
Company corporate and stockholder action.
3.3 No Breach or Conflict. Subject to the receipt of the approvals
described on Schedule 3.4 and the approval of this Agreement by the Bankruptcy
Court, neither the execution and delivery of this Agreement, nor compliance with
the terms and provisions hereof nor the consummation of the transactions
contemplated hereby, by the Company, will (a) conflict with or result in a
violation of any material Legal Requirement of any Governmental Authority that
is
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applicable to the Company or any of its assets or property, (b) conflict with or
result in a violation of the Certificate of Incorporation or bylaws of the
Company, each as amended to date, (c) conflict with or result in a material
breach of any of the terms, conditions or provisions of any agreement,
instrument or understanding to which the Company is a party or by which the
Company or its assets or properties are bound, or constitute a default or cancel
or accelerate any obligations thereunder or (d) result in the creation of any
material Lien.
3.4 Third-Party Consents. Each consent, approval and authorization of
any person or Governmental Authority which is required for the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby by the Company (collectively, the "REQUIRED COMPANY CONSENTS") is set
forth on Schedule 3.4 hereto. All Required Company Consents from any person or
Governmental Authority shall be obtained by Seller prior to the Closing.
3.5 Enforceability. This Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
3.6 Capitalization. The authorized capital stock of the Company consists
of 1,000 shares of Common Stock. Of such shares, 1,000 shares are issued and
outstanding, all of which are duly authorized, validly issued, fully paid, and
nonassessable. Except for the Shares, all of which are owned by Seller, there
are, and, as of the Closing there will be, no other equity securities of the
Company outstanding. None of the Shares were issued or will be transferred under
this Agreement in violation of any preemptive or preferential rights of any
person. Seller is the true and lawful owner, of record and beneficially, of the
Shares, free and clear of any Liens, other than Liens described on Schedule 2.6
hereto, all of which Liens and other restrictions on transfer will be
indefeasibly released or extinguished at or prior to the Closing. None of the
Shares are, or will be at the Closing, subject to any outstanding agreements,
commitments, options, warrants, calls, or similar rights of any other person to
acquire the same. None of the Shares are, and as of the Closing, none of the
Shares will be, subject to any Liens or other restrictions on transfer thereof;
and, subject to the approval of the Bankruptcy Court, Seller has, and as of the
Closing Date will have, the full power and authority to convey, and will convey
to Buyer at Closing, good and marketable title to the Shares, free and clear of
any and all Liens.
3.7 Other Rights to Acquire Capital Stock. There are, and there will be
as of the Closing, no authorized or outstanding agreements, commitments,
warrants, options, or rights of any kind to acquire any capital stock or other
securities of the Company or any rights or securities exercisable or
exchangeable for or convertible into capital stock or other securities of the
Company.
3.8 Subsidiaries. The Company does not directly or indirectly have (or
possess any options or other rights to acquire) any subsidiaries or any direct
or indirect equity ownership interests in any other person.
7
3.9 Indebtedness.
(a) Except as set forth on Schedule 3.9(a), the Company has no
outstanding intercompany debt or other intercompany obligations to any of the
Debtors (including their respective direct and indirect subsidiaries and
Affiliates) or any obligation to incur the same, and none of Seller, Greate Bay
or any other Debtors (including their respective direct and indirect
subsidiaries and Affiliates) has any claim, as defined in Section 101(5) of the
Bankruptcy Code, on account of intercompany debt or otherwise, against the
Company.
(b) Other than trade debt incurred in the ordinary course of
business since September 30, 2001, any items set forth on the disclosure
schedules, or as otherwise reflected in the Financial Statements, the Company
has no other creditors.
3.10 Contracts and Agreements. Attached as Schedule 3.10 hereto is a
list of all written or oral contracts, commitments, leases, and other agreements
and instruments (including, without limitation, all mortgages, deeds of trust,
promissory notes, loan agreements, security agreements, pledge agreements and
other evidences of indebtedness, any confidentiality or non-disclosure
agreements, any collective bargaining or other labor or employment related
contracts, agreements or undertakings, or any other contracts, documents or
instruments of any kind) to which the Company is a party or by which the Company
or its assets or properties are bound, pursuant to which the Company or any
other party thereto is required to make payments or perform other obligations
with a value of $62,500 or greater per annum, or which are otherwise material to
the Business (collectively, the "COMPANY CONTRACTS"). Each Company Contract is a
lawful, valid and legally binding obligation of the Company and is in full force
and effect and enforceable against the Company in accordance with its terms.
Except as set forth on Schedule 3.10, the Company is not and, to the knowledge
of the Company, no other party to any Company Contract is, in material default
(and no event has occurred which, with the passage of time or the giving of
notice, or both, would constitute a material default) under any such Company
Contracts.
3.11 Compliance With Laws. Except as disclosed on Schedule 3.11, the
Company is in material compliance with all Legal Requirements applicable to the
Company. No claims or investigations alleging any violation by the Company of
any such Legal Requirements are pending or, to the best knowledge of the
Company, threatened.
3.12 Taxes.
(a) The Company, or Greate Bay on behalf of the Company, has
filed with appropriate agencies all tax returns required by law to be filed by
the Company. Such tax returns were properly prepared and reflect in all material
respects the full amount due thereunder.
(b) Except as disclosed on Schedule 3.12(b):
(i) no audit of any federal, state or municipal returns or
other tax returns filed by or on behalf of the Company is in progress or, to the
knowledge of the Company, threatened;
8
(ii) no extensions or waivers of statutes of limitations
with respect to any tax returns have been given by or, to the knowledge of the
Company, requested from the Company; and
(iii) to the knowledge of the Company, no claim has been
made by any taxing authority in any jurisdiction where the Company does not file
tax returns that it is or may be subject to tax in that jurisdiction.
(c) There exist no unpaid federal, state or local income or other
taxes with respect to the Company or the operation of the Business, except for
accrued taxes not yet due and payable or taxes subject to a bona fide dispute.
The taxes payable reported by the Company in the Interim Financial Statements
are adequate to cover the tax liabilities of the Company as of the date thereof
and nothing has occurred subsequently to make any such taxes payable inadequate
or inaccurate.
(d) There are no Liens for taxes (other than for current taxes
not yet due and payable) upon the assets of the Company.
(e) Except as set forth on Schedule 3.12(e), the Company is not a
party to or bound by any tax indemnity, tax sharing or tax allocation agreement,
nor any closing agreement or offer in compromise with any taxing authority.
(f) (i) Except as set forth on Schedule 3.12(f) and other than
the affiliated group of corporations of which Greate Bay is the common parent,
the Company has not been a member of an affiliated group of corporations within
the meaning of Section 1504 of the Internal Revenue Code of 1986, as amended
(the "CODE") or a member of a combined, consolidated or unitary group for state,
local or foreign tax purposes.
(ii) The Company has no liability for taxes of any person
(other than the Company) under Treasury Regulations Section 1.1502-6 (or any
corresponding provision of state, local or foreign income tax law), as
transferee or successor, by contract or otherwise.
(g) Except as set forth on Schedule 3.12(g), the Company is not a
party to any agreement, contract, arrangement or plan that has resulted or would
result, separately or in the aggregate, in connection with this Agreement or any
change of control of the Company, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(h) Seller is not a "foreign person" as that term is used in
Treas. Reg. Section 1.1445-2. The Company is not, nor has it been, a United
States real property holding corporation (as defined in Section 897(c)(2) of the
Code) during the applicable period specified in Section 897(c)(1)(a).
(i) There is currently no limitation on the utilization of net
operating losses, capital losses, built-in losses, tax credits or similar items
of the Company under Sections 269, 382, 383, 384 or 1502 of the Code and the
Treasury regulations promulgated thereunder.
(j) Neither Greate Bay nor any member of the consolidated group
of corporations of which it is the common parent has made an election (as
permitted under Treasury
9
Regulation Section 1.1502-20(g)) to reattribute the Company's net operating
losses to the consolidated group, and Greate Bay will not, and will not cause
any other member of the consolidated group, to make such election with respect
to net operating losses of the Company.
3.13 Licenses and Permits. Schedule 3.13(a) contains a list of all
federal, state, county, and local governmental licenses, certificates, permits
and orders (collectively, the "PERMITS") held or applied for by the Company. The
Company has complied in all material respects, and is in compliance in all
material respects, with the terms and conditions of all such Permits, and no
material violation of any such Permit has occurred. Except as disclosed on
Schedule 3.13(b) hereto, no additional Permit is required from any Governmental
Authority in connection with the conduct of the Business which, if not obtained,
would have a Material Adverse Effect. No claim has been made by any Governmental
Authority (and, to the best knowledge of the Company, no such claim is
anticipated) to the effect that any Permit is necessary in respect of the
Business that has not been obtained.
3.14 Financial Statements. The following financial statements (the
"FINANCIAL STATEMENTS") of the Company have been delivered to Buyer by the
Company:
(a) audited consolidated balance sheets, statements of income and
cash flow, and statements of changes in financial position of the Company as of
and for each of the years ended December 31, 2000 and 1999, together with, in
each case, the notes thereto and the report of Deloitte & Touche LLP certified
public accountants with respect thereto (collectively, the "AUDITED FINANCIAL
STATEMENTS"); and
(b) unaudited consolidated balance sheet, statements of income
and cash flow, and statement of changes in financial position of the Company as
of and for each of the nine months ended September 30, 2001 and 2000
(collectively, the "INTERIM FINANCIAL STATEMENTS").
The Financial Statements have been prepared in accordance with GAAP and
fairly and accurately present the financial position, results of operations, and
changes in financial position of the Company as of the indicated dates and for
the indicated periods (except, in the case of the Interim Financial Statements,
for the absence of notes thereto and subject to normal year-end audit
adjustments and accruals required to be made in the ordinary course of business
which are not materially adverse to and are consistent with past practices of
the Company). Except to the extent reflected or provided for in the balance
sheet included in the Interim Financial Statements, the Company has no
liabilities or obligations (whether absolute, contingent, or otherwise), other
than current liabilities incurred in the ordinary course of business subsequent
to September 30, 2001 and liabilities that are not material to the Business
taken as a whole; and the Company has no knowledge of any basis for the
assertion of any such liability or obligation. Since December 31, 2000, there
has been no material adverse change in the financial position, assets, results
of operations, or business of the Company, excluding any change resulting from
general economic conditions or relating to the industry of the Business
generally or arising from actions contemplated by the parties under this
Agreement or from the announcement of the transactions contemplated hereby.
10
3.15 Conduct of the Business. Except as disclosed in Schedule 3.15,
since September 30, 2001, the Company has conducted the Business only in the
ordinary course and there has not been any:
(a) change in any authorized or issued capital stock of the
Company; grant of any warrants, stock options or other rights to purchase shares
of capital stock of the Company; issuance of any options, warrants, rights or
securities or securities of any kind, including those exercisable or
exchangeable for or convertible into capital stock; grant of any registration
rights by the Company; purchase, redemption, retirement, or other acquisition by
the Company or any affiliate thereof of any shares of any such capital stock or
other securities of the Company; or declaration or payment of any dividend or
other distribution or payment in respect of shares of capital stock or other
securities of the Company;
(b) amendment to the Certificate of Incorporation or Bylaws of
the Company;
(c) except in the ordinary course of business, increase by the
Company of any bonuses, salaries, or other compensation to any employee,
stockholder, director or officer or entry into any employment, severance, change
of control or similar contract or arrangement with any director, officer, or
employee of any such entity;
(d) adoption or amendment of any Employee Benefit Plan or Other
Plan covering any employees of the Company which results in an increase in the
liability of the Company under any such plan, agreement or arrangement;
(e) sale (other than sales of inventory in the ordinary course of
business), lease, or other disposition of any material assets of the Company;
(f) material change in the accounting methods used by the
Company;
(g) except for those liabilities or obligations incurred in the
ordinary course of business or disclosed in the Financial Statements, incurrence
of any material amount of indebtedness or other liability or obligation not
reflected on the Financial Statements; or
(h) agreement, whether oral or written, by the Company to do any
of the foregoing.
3.16 Brokerage Fees. Except as set forth on Schedule 2.7, no broker,
finder, agent, representative or similar intermediary has acted for or on behalf
of the Company in connection with this Agreement or the transactions
contemplated hereby, and no broker, finder, agent or similar intermediary is
entitled to any broker's, finder's or similar fee or other commission in
connection herewith or in connection with the transactions contemplated hereby
based on any agreement or understanding with the Company or any action taken by
the Company.
3.17 Litigation. Except as set forth on Schedule 3.17, there are no
Claims pending or, to the knowledge of the Company, threatened (a) by or against
the Company, Seller or Greate Bay, or (b) that question the validity of this
Agreement, the Company's right to enter into and perform this Agreement and
consummate the transactions contemplated hereby or any action taken or to be
taken by any party in connection with this Agreement. Except as set forth on
11
Schedule 3.17 or Schedule 3.21, there are no Claims pending or, to the best
knowledge of the Company after due inquiry, are any such Claims threatened,
which (a) allege that the Company is infringing or has infringed upon or
otherwise is violating or has violated the intellectual property or other rights
of any third party, or (b) could affect (i) the Company's ability to consummate
the transactions contemplated hereby and to otherwise perform its obligations
hereunder, (ii) the Business, or (iii) the rights or assets or properties of the
Company.
3.18 Employees; Compensation; Unions.
(a) Schedule 3.18(a) lists the name of each present employee of
the Company and the current salary level and title of each such present
employee, and for each present employee of the Company whose annual rate of
compensation exceeds $50,000, the date of employment, position and the current
annual salary and any bonus or incentive compensation paid during 2001 for such
duties as to each such employee.
(b) Except as set forth on Schedule 3.18(b), the Company has no
Employee Benefit Plans or Other Plans covering its employees, nor does the
Company have any obligations (including but not limited to obligations to make
contributions) with respect to any of the foregoing.
(c) None of the employees of the Company or any member of the
Company's Controlled Group are unionized nor, to the knowledge of the Company,
has any effort been made to organize any such employees. There is no Claim or
grievance pending before any local, state or federal agencies or any court or
other Governmental Authority with respect to any labor stoppage, strike or
unresolved labor dispute, the outcome of which could materially and adversely
affect the operation of the Company, nor to the Company's knowledge, is any such
event threatened.
(d) Each Employee Benefit Plan (and related trust, insurance
contract or fund if the Employee Benefit Plan is funded through a trust or third
party funding vehicle) complies in form and in operation in all material
respects with the applicable requirements of ERISA and the Code, and has been
administered and operated in all material respects in accordance with all such
requirements. All required reports and descriptions required to be filed with
any Governmental Authority (including Form 5500 Annual Reports, Summary Annual
Reports, PBGC-1's and Summary Plan Descriptions) have been filed or distributed
appropriately with respect to each Employee Benefit Plan. Seller has delivered
or made available to Buyer correct and complete copies of the plan documents and
summary plan descriptions, most recent determination letters received from the
Internal Revenue Service, the two most recent Form 5500 Annual Reports, and all
related trust agreements, insurance contracts and other funding agreements which
relate to each Employee Benefit Plan. Except as set forth on Schedule 3.18(d),
since January 1, 1996, no Employee Benefit Plan of the Company has been audited
by any Governmental Authority, and none of Seller, Greate Bay or the Company has
received any written notice that such an audit will or may be conducted.
(e) Each Employee Pension Benefit Plan that is intended to meet the
requirements of a qualified plan under Code Section 401(a), has received a
favorable determination letter from the Internal Revenue Service that is current
and valid and to the
12
Company's knowledge no event has occurred since the date of such determination
letter that would operate to jeopardize such Employee Pension Benefit Plan's
qualification. All contributions (including employer contributions and employee
salary reduction contributions) to each Employee Pension Benefit Plan that are
required to be paid have been timely paid.
(f) All required premiums or other payments accruing for all
periods on or before the Closing Date have been or will have been paid with
respect to each Employee Benefit Plan that is an Employee Welfare Benefit Plan
or adequate reserves for such premiums or payments have been or will be set
aside therefor and have been or will be reflected in the Financial Statements.
(g) The Company has not engaged in or knowingly permitted to
occur and, to the knowledge of the Company, no other party has engaged in or
permitted to occur any transaction prohibited by Section 406 of ERISA or any
"prohibited transaction" under Section 4975(c) of the Code with respect to any
Employee Benefit Plan that is not exempt under Section 408 of ERISA or Section
4975 of the Code, that would subject the Company to any material liability. None
of Seller, Greate Bay or the Company has incurred or reasonably expects to incur
material excise tax liability under Chapter 43 and Chapter 47 under Subtitle D
of the Code. No ERISA Fiduciary has any material liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any Employee Benefit Plan and for
which the Company has any material liability. No action, suit, proceeding,
hearing or investigation with respect to the administration or the investment of
the assets of any Employee Benefit Plan (other than routine claims for benefits)
is pending or, to the knowledge of Seller, Greate Bay or the Company threatened.
(h) No Employee Benefit Plan which is an Employee Pension Benefit
Plan and no Employee Benefit Plan which is an Employee Pension Benefit Plan that
the Company, or any member of the Controlled Group that includes the Company,
sponsors or maintains, or has within the last five years sponsored or
maintained, or to which it contributes, or has within the last five years
contributed or been required to contribute, is subject to Title IV of ERISA or
Section 412 of the Code.
(i) Neither the Company nor any member of the Controlled Group
that includes the Company, contributes to, ever has contributed to, or ever has
been required to contribute to any Multiple Employer Plan or any Multiemployer
Plan or has any liability (including withdrawal liability) under any Multiple
Employer Plan or any Multiemployer Plan. Except as set forth on Schedule
3.18(i), neither the Company nor any member of the Controlled Group that
includes the Company, maintains or contributes, ever has maintained or
contributed, or ever has been required to maintain or contribute to any Employee
Welfare Benefit Plan providing medical, health or life insurance or other
welfare-type benefits for current or future retired or terminated employees,
their spouses or their dependents (other than in accordance with Code Section
4980B).
(j) Except as described in Schedule 3.18(j), each Employee
Benefit Plan or Other Plan can be amended or terminated at any time without
approval from any person, without advance notice, and without any liability
other than for benefits accrued prior to such amendment or termination.
13
(k) Except as described in Schedule 3.18(k), no Employee Benefit
Plan or Other Plan provides for any severance pay, accelerated payments, deemed
satisfaction of goals or conditions, new or increased benefits, forgiveness or
modification of loans, or vesting conditioned in whole or in part upon a change
in control of the Company or any plant closing.
3.19 Insurance. All insurance policies pertaining to the Company are
listed on Schedule 3.19 and are in full force and effect on the date hereof.
There are no material pending insurance claims or any factual basis therefor
other than as described on Schedule 3.19, and the Company has not received any
oral or written notice from any insurance carrier or provider (a) indicating
that there will be a material increase in the premiums charged for any such
policies, (b) disputing any obligation to pay any insurance claim presented to
any such insurance carrier or provider, or (c) indicating that any such
insurance carrier or provider intends to terminate, or refuse to renew, any such
insurance policy.
3.20 Environmental Matters.
(a) The Company has at all times possessed all permits,
authorizations, and approvals required by Environmental Laws for the conduct of
the Business and its operations (collectively, "ENVIRONMENTAL PERMITS"). The
Company is in material compliance with all Environmental Laws and Environmental
Permits. There are no claims or proceedings pending or threatened against the
Company alleging the violation of or non-compliance with Environmental Laws. The
Company is not aware of any facts, circumstances or conditions that could
reasonably be expected to result in the Company incurring material liabilities
under Environmental Laws. For purposes of this Section 3.20, (i) "ENVIRONMENTAL
LAWS" means any federal, state, local or foreign law, statute, ordinance, rule,
regulation, or treaty; all judicial, administrative, and regulatory orders,
judgments, decrees, permits, and authorizations; and common law relating to: (A)
the protection, investigation, remediation, or restoration of the environment or
natural resources; or (B) the handling, use, storage, treatment, disposal,
release or threatened release of any Hazardous Substance, or the protection of
the health and safety of employees or the public and (ii) "HAZARDOUS SUBSTANCE"
means any substance, material, or waste that is: (A) listed, classified or
regulated in any concentration pursuant to any Environmental Law; (B) any
petroleum hydrocarbon, asbestos-containing material, lead-containing paint or
plumbing, polychlorinated biphenyls, mold, radioactive materials or radon; or
(C) any other substance, material, or waste which may be the subject of
regulatory action by any governmental authority pursuant to any Environmental
Law.
3.21 Patents, Trademarks and Similar Rights.
(a) Set forth on Schedule 3.21 is a list of all patents, patent
applications, customized software, trade names, registered trademarks,
registered copyrights, registered service marks and applications for and
extensions and renewals of any of the foregoing (collectively, "INTELLECTUAL
PROPERTY") that are owned by the Company. Except as set forth in Schedule 3.21,
(i) all the Intellectual Property has been duly registered in, filed in or
issued by the appropriate governmental entity where such registration, filing or
issuance is necessary or appropriate, (ii) Company is the sole and exclusive
owner of, and the Company has the right to use, execute, reproduce, display,
perform, modify, enhance, distribute, prepare derivative works of and
sublicense, without payment to any other person, the customized software
included in the
14
Intellectual Property and the consummation of the transactions contemplated
hereby does not and will not conflict with, alter or impair any such rights,
(iii) during the past 18 months neither Seller nor any of its affiliates has
received any written or oral communication from any person asserting any
ownership interest in any Intellectual Property; and (iv) no Claim is pending
or, to the knowledge of the Company, threatened, asserting any infringement or
misappropriation by any third party of such Intellectual Property or the
violation or misappropriation of or the infringement by the Company of any
intellectual property rights of any person.
(b) Set forth on Schedule 3.21 is a list of all licenses for
intellectual property between the Company and any other person in respect of
intellectual property used by the Company in the Business or otherwise
(including the Intellectual Property), other than standard "shrink wrap"
licenses with respect to off the shelf computer software. No Claim is pending
or, to the best knowledge of the Company after due inquiry, threatened which
contests the Company's rights to use or license such licensed intellectual
property or the validity and enforceability of such licenses to use and exploit
the intellectual property subject thereto.
(c) All trade secrets have been maintained in confidence in
accordance with protection procedures customarily used in the industry to
protect rights of like importance. All former and current members of management
and key personnel of Company or any of its affiliates, including all former and
current employees, agents, consultants and independent contractors who have
contributed to or participated in the conception and development of Intellectual
Property (collectively, "PERSONNEL"), have executed and delivered to Company or
one of its predecessors a proprietary information agreement restricting, or are
otherwise bound by a legal obligation that restricts, such person's right to
disclose proprietary information of Company or one of its predecessors. No
Personnel have any Claim against Company in connection with such person's
involvement in the conception and development of any Intellectual Property and
no such Claim has been asserted or is threatened. None of the current officers
and employees of Company is a named inventor with respect to any United States
patents issued or applications pending for any device, process, design or
invention of any kind now used by Company in the conduct of the Business, which
patents or applications have not been assigned to Company pursuant to
assignments duly recorded in the United States Patent and Trademark Office.
3.22 Equipment, Property and Assets. Each item of tangible equipment or
property that is owned by the Company and material to the conduct of the
Business, whether reflected in the Financial Statements or otherwise, is in
satisfactory operating condition, except for reasonable wear and tear. All such
items which are leased by the Company are maintained in all material respects in
accordance with applicable manufacturer and lessor requirements.
3.23 Real Property. The Company owns no real property. Schedule 3.23
sets forth all real property leased by the Company, and , with respect to leased
real property, sets forth the commencement date, term, termination rights,
renewal rights and monthly rent of each such lease. Each lease of real property
is in full force and effect, and the Company is not, nor to the best knowledge
of the Company is any other party, in material breach or violation of any such
real property lease. Each such parcel of leased real property has been used or
occupied by the Company, at all times been used and occupied in compliance with
all applicable Environmental Laws.
15
3.24 Bank Accounts. Schedule 3.24 sets forth the name and location of
each bank, trust company, savings and loan association or other person at which
the Company maintains safe deposit boxes, checking, savings or operating
accounts or other accounts of any nature, along with account numbers, the
balance as of the date set forth on Schedule 3.24 and the names of persons
entitled to draw thereon, make withdrawals therefrom or otherwise have access
thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GREATE BAY
Subject to the further representations and warranties under Article X,
Greate Bay hereby represents and warrants to Buyer as follows (with the
understanding that Buyer is relying materially on each such representation and
warranty in entering into and performing this Agreement).
4.1 Due Organization. Greate Bay is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
4.2 Authorization. Greate Bay has the requisite corporate power and
authority to execute this Agreement and, subject to the approval of this
Agreement by the Bankruptcy Court, to perform its obligations hereunder. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all requisite
action on the part of Greate Bay and, to the extent required, its stockholders.
4.3 No Breach or Conflict. Subject to the receipt of the approvals
described on Schedule 4.4 hereto and the approval of this Agreement by the
Bankruptcy Court, neither the execution and delivery of this Agreement, nor
compliance with the terms and provisions hereof or the consummation of the
transactions contemplated hereby, by Greate Bay, will (a) conflict with or
result in a violation of any Legal Requirements of any Governmental Authority
that are applicable to Greate Bay or any of its assets or property, (b) conflict
with or result in a violation of the Certificate of Incorporation or Bylaws of
Greate Bay as amended to date, or (c) conflict with or result in a material
breach of any of the terms, conditions or provisions of any material agreement,
instrument or understanding to which Greate Bay is a party or by which Greate
Bay or its assets or property are bound, or constitute a default or cancel or
accelerate any obligations thereunder, except in the case of clauses (a) and
(c), for any such conflict or breach which would not limit or delay Greate Bay's
ability to perform its obligations hereunder or to consummate the transactions
contemplated hereby, including, without limitation, Seller transferring valid
and enforceable title to all of the Shares to Buyer at the Closing free and
clear of any and all Liens.
4.4 Third-Party Consents. Each consent, approval and authorization of
any person or Governmental Authority required for the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby by
Greate Bay is identified on Schedule 4.4 hereto (collectively, the "REQUIRED
GREATE BAY CONSENTS"). All Required Greate Bay Consents of any person or
Governmental Authority shall be obtained by Greate Bay prior to the closing.
16
4.5 Enforceability. This Agreement has been duly executed and delivered
by Greate Bay, and, subject to the approval of the Bankruptcy Court, constitutes
a valid and binding obligation of Greate Bay enforceable against Greate Bay in
accordance with its terms.
4.6 Brokerage Fees. Except as set forth on Schedule 2.7, no broker,
finder, agent, representative or similar intermediary has acted for or on behalf
of Greate Bay in connection with this Agreement or the transactions contemplated
hereby, and no broker, finder, agent or similar intermediary is entitled to any
broker's, finder's or similar fee or other commission in connection herewith, or
the consummation of the transactions contemplated hereby, based on any agreement
or understanding with Greate Bay or any action taken by Greate Bay.
4.7 Litigation. Except as set forth on Schedule 4.7 or Schedule 3.17,
there are no Claims pending or, to the best knowledge of Greate Bay after due
inquiry, threatened (a) by or against the Company or Greate Bay, or (b) that
question the validity of this Agreement, Greate Bay's right to enter into and
perform this Agreement and consummate the transactions contemplated hereby or
any action taken or to be taken by any party in connection with this Agreement.
Except as set forth on Schedule 3.21, there are no Claims pending or, to the
best knowledge of Seller after due inquiry, are any such Claims threatened which
(i) allege that the Company is infringing or has infringed upon or otherwise is
violating or has violated the intellectual property or other rights of any third
party, or (ii) could materially and adversely affect (a) the Company's ability
to consummate the transactions contemplated hereby and otherwise perform its
obligations hereunder , (b) the Business, or (c) the rights or assets or
properties of the Company.
4.8 Indebtedness. Except as set forth on Schedule 4.8, neither Greate
Bay nor any other Debtor (including their respective direct and indirect
subsidiaries and affiliates) has any claim, as defined in Section 101(5) of the
Bankruptcy Code, on account of intercompany debt or otherwise, against the
Company.
4.9 Auction and Sale Efforts. Greate Bay is aware of and has been
actively involved in the Auction prior to entering into this Agreement. Greate
Bay, in consultation with HWCC and Seller, believes that the sale of the Shares
to Buyer under this Agreement represents a sale for the full and fair market
value of the Shares.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Company, Seller and Greate
Bay as follows (with the understanding that the Company, Seller and Greate Bay
are relying materially on each such representation and warranty in entering into
and performing their respective obligations under this Agreement):
5.1 Due Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has the
requisite corporate power and authority to conduct its business as heretofore
conducted. Buyer is duly qualified or registered and in good standing in every
jurisdiction where the character of the properties owned or leased
17
by it, or the nature of the business conducted by it, makes qualification to do
business as a foreign entity necessary, except such jurisdictions where a
failure to so qualify or register could not reasonably be expected to have a
material adverse effect on Buyer, its financial condition or operation of its
business or the ability of Buyer to consummate the transactions contemplated
hereby.
5.2 Authorization. Buyer has the requisite corporate power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
The execution, delivery and performance hereof and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
Buyer corporate action.
5.3 No Breach or Conflict. Subject to receipt of the Required Buyer
Consents, neither the execution and delivery of this Agreement, nor compliance
with the terms and provisions hereof, or the consummation of the transactions
contemplated hereby, by Buyer, will (a) conflict with or result in a violation
of any Legal Requirement of any Governmental Authority that is applicable to
Buyer or any of its assets or properties, (b) conflict with or result in a
violation of the Certificate of Incorporation or Bylaws of Buyer, each as
amended to date, or (c) conflict with or result in a material breach of any of
the terms, conditions or provisions of any material agreement, instrument or
understanding to which Buyer is a party or by which Buyer or its assets or
property are bound, or constitute a default or cancel or accelerate any
obligations thereunder, except in the case of clauses (a) and (c), for any such
conflict, violation or breach which would not materially or adversely limit or
delay Buyer's ability to perform its obligations hereunder or to consummate the
transactions contemplated hereby.
5.4 Third-Party Consents. Each consent, approval and authorization of
any person or Governmental Authority required for the execution and delivery of
this Agreement by Buyer and the consummation of the transactions contemplated
hereby by Buyer (collectively, the "REQUIRED BUYER CONSENTS"), has been, or will
be prior to the Closing, obtained.
5.5 Enforceability. This Agreement has been duly executed and delivered
by Buyer, and constitutes a valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
5.6 Brokerage Fees. No broker, finder, agent, representative or similar
intermediary has acted for or on behalf of Buyer in connection with this
Agreement or the transactions contemplated hereby, and no broker, finder, agent
or similar intermediary is entitled to any broker's, finder's or similar fee or
other commission in connection herewith based on any agreement or understanding
with Buyer or any action taken by Buyer.
5.7 Litigation. Except as set forth on Schedule 5.7, there are no
material Claims pending or, to the knowledge of Buyer, threatened that question
the validity of this Agreement, Buyer's right to enter into and perform this
Agreement and consummate the transactions contemplated hereby or any action
taken or to be taken by Buyer in connection with this Agreement or which would
reasonably be expected to have a material adverse effect on Buyer,
18
its financial condition or operation of its business or the ability of Buyer to
consummate the transactions contemplated hereby.
5.8 Cash Consideration. Buyer has available to it, and at the Closing
shall have available to it, all funds necessary to pay the Purchase Price for
the Shares and to satisfy its payment obligations hereunder.
5.9 Securities Act Representations. Buyer is acquiring the Shares for
investment for its own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof in violation of the Securities
Act of 1933, as amended (the "SECURITIES ACT"). Buyer does not have any present
intention of selling, granting any participation in, or otherwise distributing
any of the Shares otherwise than pursuant to an effective registration statement
under the Securities Act or in a transaction exempt from the registration
requirements under the Securities Act and applicable state securities laws.
Buyer does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any third
person, with respect to any of the Shares.
ARTICLE VI
COVENANTS OF THE COMPANY, SELLER AND GREATE BAY
6.1 Inspection. From the date of this Agreement to the Closing, the
Company shall, and Greate Bay and Seller shall cause the Company to, give to
Buyer, its officers, agents, employees, counsel, accountants, engineers and
other representatives, reasonable access to the premises and books and records
relating to the Company and, to the extent permitted by law, cause the Company's
employees to furnish to Buyer such information related to the Company as Buyer
shall from time to time reasonably request; provided, however, that any such
investigation shall be conducted (a) through the Chairman of the Board of Greate
Bay or his designee, (b) during normal business hours and (c) in such a manner
as to not unreasonably to interfere with the operation of the Business by the
Company. From the date of this Agreement to the Closing, the Company shall also
provide Buyer with its monthly closing balance sheets as soon as practicable,
but at least within ten business days after the end of each applicable month.
6.2 Conduct of Business Pending Closing. Until the Closing the Company
shall, and Greate Bay and Seller shall cause the Company to, use commercially
reasonable best efforts to operate the Business in the ordinary course and
substantially in the manner as heretofore conducted, and use commercially
reasonable efforts not to take any action inconsistent with this Agreement.
Without limiting the scope of the foregoing, Greate Bay and Seller shall use
commercially reasonable best efforts to cause the Company:
(a) to use, preserve and maintain the assets (including, but not
limited, to the equipment and property) of the Company on a basis consistent
with past practice and keep such assets, taken as a whole, in satisfactory
working condition;
(b) to maintain adequate insurance covering the Company in effect
as of the date of this Agreement;
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(c) to pay all debts and obligations incurred by it in the
operation of the Business in the ordinary course of business consistent with
past practice;
(d) not to commit any act or omit to do any act, nor permit any
act or omission to act, which may cause a material breach of any Company
Contract;
(e) to maintain its books, accounts and records in accordance
with GAAP and on a basis consistent with past practice;
(f) not to enter into any agreement or arrangement for the sale
of a material amount of any of the assets of the Company (whether in one or more
transactions);
(g) except in the ordinary course of business, not to, without
the prior consent of Buyer, (i) offer employment to any person except in
accordance with past practices or (ii) grant any raises to employees of the
Company;
(h) to operate the Business in material compliance with all
applicable Legal Requirements;
(i) not to issue any capital stock or other securities of the
Company, or grant any warrants, options or other rights to acquire any capital
stock or other securities of the Company or any securities exercisable or
exchangeable for or convertible into capital stock or other securities of the
Company;
(j) not to, without the prior written consent of Buyer, create,
incur, assume, guarantee or otherwise become liable for any material amount of
indebtedness or any other material liability or obligation to any person (other
than deposit liabilities classified as unearned revenues incurred in the
ordinary course of business) or undertake or agree to do any of the foregoing;
(k) not to cancel, forgive, release, discharge, or waive any
material receivable, debt or obligation owed to the Company by or from any
person, or undertake or agree to do any of the foregoing;
(l) to promptly inform Buyer in writing of any material adverse
change in the financial condition, operations, assets or liabilities of the
Business, other than those affecting the Company's industry generally; or
(m) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
make any distribution in respect of its capital stock or otherwise make any
payments to stockholders in their capacity as such, or redeem or otherwise
acquire any of its securities or any securities of any of its subsidiaries.
Notwithstanding the foregoing, this Section 6.2 shall not prohibit the Company
from complying with existing contractual obligations, including, without
limitation, any payments made by the Company as a result of any tax sharing
payment obligations under Section 6.3, as well as any regular quarterly tax
sharing payments to Seller pursuant to the tax sharing agreement.
20
6.3 Tax Sharing Agreement.
(a) Within ten business days after the Closing Date, a
representative of Buyer and a representative of Greate Bay and HWCC shall
jointly prepare a schedule that sets forth the Company's obligations for taxes
attributable to the Company and its Business through the Closing Date under the
tax sharing agreement set forth on Schedule 3.12(e) (the "Tax Sharing Payment").
(b) If the parties are unable to agree upon the amount of Tax
Sharing Payment within such ten business day period, and the amount of the
disputed difference in the Tax Sharing Payment is less than or equal to $25,000,
then the Tax Sharing Payment shall be deemed to be the average of the parties'
respective independent determinations of the Tax Sharing Payment. Any agreement
among Buyer, Greate Bay and HWCC relating to the Tax Sharing Payment shall be
final and binding upon all of the parties hereto and any parties in interest in
the Debtor's bankruptcy cases.
(c) If the parties are unable to agree on the Tax Sharing Payment
within such ten business day period, and the amount of the disputed difference
of the Tax Sharing Payment is greater than $25,000, then the disputed matters
shall be referred for final determination to a tax professional of a nationally
recognized accounting firm that is not the auditor for any of Alliance Gaming
Corporation, Buyer, Seller, the Company, Greate Bay or HWCC; provided, however,
that if the parties are unable to select such an individual within five business
days after the end of the ten business day period, the AAA shall make such
selection (any person so selected shall be referred to herein as the
"INDEPENDENT TAX PROFESSIONAL").
(d) The Independent Tax Professional shall deliver to the Buyer,
HWCC and Greate Bay, as promptly as practicable and in any event within 10 days
after its appointment, a written report setting forth its determination of the
Tax Sharing Payment. Such report shall be final and binding upon all of the
parties hereto for purposes of the Tax Sharing Payment. The fees, expenses and
costs of the Independent Tax Professional shall be borne one half by Buyer and
one half by HWCC.
(e) Buyer shall cause the Company to pay HWCC, by delivery of
immediately available funds, the Tax Sharing Payment within three business days
after any final determination.
6.4 Acquisition Proposals. None of Greate Bay, Seller or the Company
shall, nor shall they authorize or permit any of their respective Affiliates or
direct or indirect subsidiaries to, nor shall any such Affiliate or subsidiary
authorize or permit any officer, director, stockholder, agent or representative
of thereof to directly or indirectly solicit, initiate or seek from any third
person (a "THIRD PERSON") the submission of any Acquisition Proposal. For
purposes of this Agreement, "ACQUISITION PROPOSAL" means any proposal with
respect to a merger, consolidation, share exchange or similar transaction
involving the Company, or any purchase of all or any significant portion of the
assets of the Company, or any equity or other ownership interest in or control
of the Company, other than the transactions contemplated hereby with Buyer.
Notwithstanding the foregoing, nothing contained in this Agreement or elsewhere
shall prevent Greate Bay or Seller, or any of their respective direct or
indirect subsidiaries,
21
(consistent with the fiduciary duties of the Debtors to obtain the highest and
best offer for the Shares), from (a) cooperating with or responding to
unsolicited inquiries from, or negotiating with, any Third Person who expresses,
or has expressed, prior to the date hereof, interest in an Acquisition Proposal,
including granting to such Third Person access to the books, records and
documents pertaining to the Debtors and the assets which are the subject of this
Agreement; (b) responding to unsolicited inquiries submitted by Third Persons,
subject, however, to the provisions of this Section 6.4; (c) providing notice of
the transactions contemplated hereby to all creditors and parties in interest
and any and all Third Persons who have heretofore expressed an interest in an
Acquisition Proposal; (d) cooperating, negotiating or entering into an agreement
with any Third Person that expresses or has expressed an interest in an
Acquisition Proposal on terms more favorable to the Debtors, as determined by
the boards of directors of the Debtors, than those contained in this Agreement
or (e) complying in all respects with an order of the Bankruptcy Court.
6.5 Cooperation; Closing. Seller, Greate Bay and the Company shall
cooperate fully with Buyer and use all commercially reasonable efforts to
satisfy promptly all conditions required hereby to be satisfied by the Company,
Seller and Greate Bay in order to expedite and consummate the transactions
contemplated hereby. Buyer, Seller, Greate Bay and the Company shall cooperate
fully with one another in executing such documents and instruments, and taking
such further actions, including, without limitation actions to obtain the
required consent of any Governmental Authority or any other person necessary or
helpful to expedite or consummate the transactions contemplated hereby.
6.6 Noncompetition.
(a) Seller and Greate Bay, for a period of five years from and
after the Closing and HWCC, for a period of three years from and after the
Closing, will not, and will not permit any of their respective direct or
indirect subsidiaries or Affiliates to:
(i) own, lease, manage, operate, control, participate in
the management or control of, be employed by, or maintain or continue any
interest whatsoever in any enterprise engaged in any business competitive with
the Business; provided, however, that each of Seller, Greate Bay, HWCC and their
respective direct or indirect subsidiaries or Affiliates may purchase or
otherwise acquire for investment purposes only up to 5% of the securities of any
publicly held company; or
(ii) employ or solicit the employment of any employee of
the Company, Buyer, Bally Gaming, Inc. and/or Alliance Gaming Corporation unless
(A) such employee resigns voluntarily (without any solicitation from Seller,
Greate Bay or any direct or indirect subsidiary or affiliate thereof,), (B)
Buyer consents in writing to such employment or solicitation, or (C) such
employee is terminated by his or her employer or the Company after the Closing
Date; or
(iii) induce, cause or attempt to induce or cause any
person to replace or terminate any Company Contract or other agreement or
arrangement relating to the Business with products or services of any other
person at any time after the Closing Date, except that any
22
actions taken pursuant to the License and Maintenance Agreements shall not be
deemed a breach of this clause (iii).
(b) For a period of two years from and after the Closing, HWCC
shall also be restricted from selling, transferring, licensing or otherwise
granting rights to any intellectual property (whether in tangible or intangible
form) to unrelated third parties that is derived from to or competes with the
Intellectual Property, including, but not limited to, improvements,
enhancements, or derivatives of such Intellectual Property. Notwithstanding the
foregoing, and subject to the conditions, restrictions and limitations set forth
in the License and Maintenance Agreements, nothing in this Section 6.6 shall
limit HWCC from selling, transferring, licensing or otherwise granting rights to
any intellectual property (whether in tangible or intangible form) after this
two year period, so long as such action doesn't otherwise violate the License
and Maintenance Agreements or this Section 6.6.
(c) Seller, Greate Bay and HWCC acknowledge and agree that any
remedy at law for any breach of this Section 6.6 would be inadequate and
consents to the granting by any court of an injunction or other equitable
relief, without the necessity of actual monetary loss being proved, in order
that a breach or threatened breach of this Section 6.6 may be effectively
enjoined.
ARTICLE VII
COVENANTS OF BUYER
7.1 License and Maintenance Agreements. From and after the Closing Date,
the Company shall, and Buyer shall cause the Company, (a) to comply in all
material respects with the terms and conditions of the License and Maintenance
Agreements and (b) not to omit to take any action or permit any act or omission
to occur which would cause a material breach of the License and Maintenance
Agreements.
7.2 Cooperation; Closing. Buyer shall cooperate fully with Seller,
Greate Bay and the Company and use all commercially reasonable efforts to
satisfy promptly all conditions required hereby to be satisfied by Seller,
Greate Bay and the Company in order to expedite and consummate the transactions
contemplated hereby. Buyer, Seller, Greate Bay and the Company shall cooperate
fully with one another in executing such documents and instruments, and taking
such further actions, including, without limitation actions to obtain the
required consent of any Governmental Authority and any third party necessary or
helpful to expedite or consummate the transactions contemplated hereby.
ARTICLE VIII
CONDITIONS TO THE COMPANY'S, SELLER'S AND GREATE BAY'S OBLIGATIONS
Each and every obligation of the Company, Seller and Greate Bay under
this Agreement shall be subject to the fulfillment, prior to or at the Closing,
of each of the following conditions, unless waived by Greate Bay in writing:
23
8.1 Buyer's Representations and Warranties. The material representations
and warranties made by Buyer in Article V hereof shall be true, complete and
correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made or given on
and as of the Closing Date, except to the extent any representation or warranty
expressly relates to an earlier date (in which case such representation and
warranty shall be true and correct in all material respects, on and as of such
earlier date).
8.2 Buyer's Covenants. Buyer shall have performed and complied with all
of the material terms, covenants and agreements set forth in this Agreement
which are required to be performed by Buyer on or before the Closing Date.
8.3 Buyer's Deliveries. Buyer shall have delivered the documents and
other items to be delivered by Buyer pursuant to Article XII hereof.
8.4 Bankruptcy Court. The Bankruptcy Court shall have entered the Sale
Approval Order substantially in the form of Exhibit E, and the implementation,
operation or effect of such order shall not be stayed or, if stayed, such stay
shall have been dissolved.
8.5 Consents. Buyer shall have obtained, with the reasonable cooperation
of the Company, Seller and Greate Bay, all material Required Buyer Consents.
8.6 Adverse Actions or Proceedings. There shall not be in effect any
order, judgment or decree restraining, enjoining or otherwise preventing the
consummation of the transactions contemplated hereby.
ARTICLE IX
CONDITIONS TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer under this Agreement shall be subject
to the fulfillment, prior to or at Closing, of each of the following conditions,
unless waived by Buyer in writing:
9.1 Consents.
(a) The Company, Seller and Greate Bay shall have obtained, with
the reasonable cooperation of Buyer, all Required Company Consents, Required
Seller Consents and Required Greate Bay Consents from gaming or gaming-related
Governmental Authorities.
(b) The Company, Seller and Greate Bay shall have obtained, with
the reasonable cooperation of Buyer, all Required Company Consents, Required
Seller Consents and Required Greate Bay Consents from any persons and
Governmental Authorities other than gaming or gaming related Governmental
Authorities, except where the failure to obtain such consents from
non-Governmental Authorities would not have a Material Adverse Effect.
9.2 The Company's, Seller's and Greate Bay's Representations and
Warranties. The representations and warranties made by the Company, Seller and
Greate Bay in Articles II, III, IV and X hereof shall be true, complete and
correct on and as of the Closing Date with the same
24
effect as though such representations and warranties had been made or given on
and as of the Closing Date, except to the extent any representation and warranty
expressly relates to an earlier date (in which case such representation and
warranty shall be true and correct in all material respects, on and as of such
earlier date), and except where the failure of any representation or warranty to
be true, complete and correct shall not have a Material Adverse Effect; provided
however, that this Material Adverse Effect qualifier shall apply only to this
Section 9.2, and shall not in any way affect or amend the scope or substance of
the representations and warranties made by the parties to this Agreement.
9.3 The Company's, Seller's and Greate Bay's Covenants. The Company,
Seller and Greate Bay shall have performed and complied with all of the terms,
covenants and agreements set forth in this Agreement which are required to be
performed by each of them respectively on or before the Closing Date except
where the failure to perform or comply would not have a Material Adverse Effect.
9.4 The Company's, Seller's and Greate Bay's Deliveries. The Company,
Seller, HWCC, HCC and Greate Bay shall have delivered the documents and other
items to be delivered by each of them pursuant to Article XI hereof.
9.5 Bankruptcy Court. The Bankruptcy Court shall have entered the Sale
Approval Order substantially in the form of Exhibit E, and the implementation,
operation or effect of such order shall not be stayed or, if stayed, such stay
shall have been dissolved.
9.6 Regulatory Approvals. In addition to the consents required pursuant
to Section 9.1 above, all Legal Requirements of any Governmental Authority
necessary for the consummation of the transactions contemplated by this
Agreement shall have been satisfied or validly waived, except where the failure
to satisfy such Legal Requirements would not have a Material Adverse Effect.
Immediately prior to the Closing, the Company shall have surrendered any gaming
licenses in any jurisdiction that Buyer requests.
9.7 No Material Adverse Effect. There shall not have occurred any
Material Adverse Effect from the date hereof through the Closing, provided,
however, that neither the sale of assets under Section 363(f) of the Bankruptcy
Code as contemplated pursuant to Article X nor the transactions contemplated
hereby shall be considered a Material Adverse Effect.
9.8 Adverse Actions or Proceedings. There shall not be in effect any
order, judgment or decree restraining, enjoining or otherwise preventing the
consummation of the transactions contemplated hereby.
ARTICLE X
BANKRUPTCY MATTERS
10.1 Bankruptcy Procedures. The provisions of this Agreement shall be
implemented through a sale of the Shares pursuant to a sale of assets under
Section 363(f) of the Bankruptcy Code, which sale shall be free and clear of all
Liens, interests or rights of any type or nature. This sale shall be implemented
as follows: upon commencement of the Debtors' Chapter 11 cases, Seller and
Greate Bay shall (i) file, and serve on all appropriate parties, a motion
seeking
25
an order substantially in the form of Exhibit E (the "SALE APPROVAL ORDER")
authorizing the assumption of this Agreement under Section 365 of the Bankruptcy
Code and approving the private sale of the Shares to Buyer under the terms of
this Agreement under Section 363 of the Bankruptcy Code, and (ii) file, and
serve on all appropriate parties, a motion seeking an order substantially in the
form of Exhibit F (the "SALE PROCEDURES ORDER") approving certain protections
for Buyer and the sale procedures set forth in Section 10.3 only in the event
the Bankruptcy Court does not enter the Sale Approval Order and requires Seller
to entertain competing bids for the Shares pursuant to an auction or otherwise.
Seller and Greate Bay hereby agree to use their best efforts to file petitions
for relief under Chapter 11 of Title 11 of the United States Code, together with
motions to obtain the Sale Approval Order and the Sale Procedures Order (in the
event the Court does not enter the Sale Approval Order), with the Bankruptcy
Court, no later than ten days after the date hereof. Seller and Greate Bay
further agree that the motion seeking the Sale Procedures Order shall be
scheduled to be heard at same hearing as the motion seeking the Sale Approval
Order and shall be withdrawn if the Bankruptcy Court enters the Sale Approval
Order.
10.2 The Sale Hearing. Seller and Greate Bay shall seek to conduct the
sale of the Shares pursuant to this Agreement and without further sales efforts
or competitive bidding for the reasons, among others, set forth in Section 2.10,
and shall request the Bankruptcy Court to enter the Sale Approval Order at the
first hearing before the Bankruptcy Court that is at least 20 days after the
filing and service of the motion to obtain the Sale Approval Order (23 days, if
notice is provided by regular mail). As more specifically set forth in Exhibit
E, the Sale Approval Order shall include: (a) provisions which authorize the
transactions contemplated hereby; (b) a finding that adequate notice of all
matters relating to the sale of the Shares to Buyer and the transactions
described in this Agreement has been given to all creditors and parties in
interest in the Debtors' bankruptcy cases; (c) an order that the sale of the
Shares is free and clear of all Liens, interests and any rights of other
parties, whether they are parties to pending litigation relating to or arising
in connection with the Shares or otherwise; (d) a finding that Buyer has acted
in good faith within the meaning of Section 363(m) of the Bankruptcy Code and
(e) provisions for the retention of jurisdiction in the Bankruptcy Court over
matters relating to the transactions contemplated hereby.
10.3 The Sale Procedures. If, and only if, the Bankruptcy Court requires
Seller to entertain competing bids for the Shares pursuant to an auction in the
Bankruptcy Court or otherwise, then the parties hereto agree that the procedures
governing such sale shall be as set forth hereinafter in this Section 10.3. As
set forth in Section 10.1, upon the commencement of the Chapter 11 cases, Seller
and Greate Bay shall make a motion to obtain the Sale Procedures Order approving
the various sale procedures and protections for Buyer as set forth below, which
motion shall be heard at the same hearing as the motion to obtain the Sale
Approval Order, but only as an alternative form of relief in the event that the
Bankruptcy Court does not enter the Sale Approval Order:
(a) An "OVERBID EVENT" shall occur if any of the following shall
occur: (i) the Bankruptcy Court shall approve or authorize any transaction for
the sale of the Shares or the Company to any person other than Buyer (or Buyer's
permitted assigns), whether in connection with a sale under Section 363 of the
Bankruptcy Code, confirmation of a plan of reorganization, or otherwise, or (ii)
the Bankruptcy Court shall approve or authorize any
26
transaction that is a competing or preclusive transaction, whether in connection
with a sale under Section 363 of the Bankruptcy Code, confirmation of a plan of
reorganization, or otherwise.
(b) Upon the closing of any transaction constituting an Overbid
Event, Seller or Greate Bay shall pay to Buyer a break-up fee of $400,000 (the
"BREAK-UP FEE") by wire transfer of immediately available funds to an account
designated by Buyer upon the consummation of the competing or preclusive
transaction from the proceeds of the closing of such transaction.
(c) Upon the first business day after the closing of any
transaction constituting an Overbid Event, but in any event, not more than 120
days after the occurrence of an Overbid Event, Seller or Greate Bay shall pay
Buyer for its out-of-pocket costs and expenses (including reasonable,
documented, legal, accounting, consulting and other consultant fees and
expenses) not to exceed $150,000 in the aggregate (the "EXPENSE REIMBURSEMENT"),
by wire transfer of immediately available funds to an account designated by
Buyer.
(d) The parties recognize that, notwithstanding this Agreement,
the Bankruptcy Court may entertain offers for the Shares ("COMPETING BIDS") from
other persons ("COMPETING BIDDERS"). In the event of any consideration of such
offers, whether in the form of an auction process or otherwise, the Sale
Procedures Order shall provide that:
(i) no Competing Bid will be accepted or approved by the
Debtors unless it is made pursuant to terms and conditions identical to
those contained in this Agreement (except with respect to the Purchase
Price and the identity of the proposed purchaser), and provides for
aggregate consideration having a value equal to at least the sum of (A)
the Purchase Price, plus (B) the Break-Up Fee, if any is required to be
paid on account of the competing bid, plus (C) the Expense
Reimbursement, plus (D) $500,000, and, if there is a bidding process,
each successive Competing Bid thereafter shall be in increments of at
least $100,000 net consideration to the Debtors in each round of
bidding;
(ii) no Competing Bid will be considered unless the
Debtors determine that the Competing Bidder has the capacity to complete
the purchase of the Shares and that the Competing Bid is not subject to
any financing or due diligence contingency;
(iii) Buyer shall have the right of first refusal to match
any Competing Bid conforming with the provisions contained herein,
including the last and final bid of any person prior to the time an
auction is declared to be complete. The effect of Buyer's exercise of
such right will be to award to Buyer the right to purchase the Shares,
without any further bidding being permitted, on the terms and subject to
the conditions described herein (except as to Purchase Price), and in
such event Buyer shall forfeit the Break-Up Fee; and
(iv) copies of all Competing Bids, motions, objections or
any other bankruptcy pleadings relating to the sale of the Shares shall
be delivered to Buyer by the Debtors within one business day of their
receipt by the Debtors.
27
(e) The obligations hereunder of Seller and Greate Bay, subject
to approval by the Bankruptcy Court (which shall be set forth in the Sale
Procedures Order), shall give rise to administrative expenses pursuant to
Section 503 of the Bankruptcy Code.
(f) By its acknowledgment of and consent hereto, HWCC represents
and warrants that it (i) does not intend to bid for the Shares, (ii) agrees with
and supports the procedures described in this Article X and (iii) waives any
right it may have to make a credit bid for the Shares, whether pursuant to
Section 363(k) of the Bankruptcy Code, pursuant to any plan of reorganization,
or otherwise.
10.4 Bankruptcy Court Approval. Seller and Greate Bay shall use their
best efforts to obtain the Sale Approval Order and the Sale Procedures Order (to
the extent required as set forth in Sections 10.1 and 10.3) as soon as possible.
(a) Both the Sale Approval Order and the Sale Procedures Order
shall be substantially in the form of Exhibits E and F, respectively.
(b) Seller and Greate Bay shall use their best efforts to give
due and proper notice, as is required by the Bankruptcy Code or otherwise, to
all required persons of all matters relating to or in connection with the
obtaining of the Sale Approval Order, the Sale Procedures Order and any other
order authorized or issued by the Bankruptcy Court.
10.5 Bankruptcy Court Filings and Administrative Expenses. Seller and
Greate Bay shall use their best efforts to promptly make any filings with, and
take all actions and use their respective best efforts to obtain any and all
consents, approvals and orders from, the Bankruptcy Court reasonably necessary
or appropriate for consummating the transactions contemplated by this Agreement.
Additionally, Seller and Greate Bay shall use their best efforts to file timely
with the Bankruptcy Court, and cause the other Debtors to file timely with the
Bankruptcy Court, all necessary monthly operating reports, schedules and other
required documents relating to the bankruptcy cases, and shall use their best
efforts to pay timely all United States Trustee fees and expenses of
administration arising under or relating to the bankruptcy cases. Seller and
Greate Bay hereby acknowledge that they are solely liable for any and all
administrative expenses arising in the bankruptcy cases and that Buyer shall
have no liability whatsoever relating thereto.
10.6 Creditors' Claims. Each of Greate Bay and Seller jointly and
severally represents and warrants that, aside from HWCC and any intercompany
debt among Debtors, the Debtors and the Company do not have any other
significant creditors, and the total amount owed to creditors of each of the
Debtors (other than HWCC or such intercompany debt) did not exceed $150,000 in
the aggregate as of September 30, 2001.
10.7 Good Faith. Seller, Greate Bay and the Company represent that they
believe Buyer is acting in good faith within the meaning of Section 363(m) of
the Bankruptcy Code, and that there are no agreements, understandings or special
arrangements other than those set forth in this Agreement. Buyer is not an
insider or affiliate, as such terms are defined in the Bankruptcy Code, of any
of the Debtors or the Company.
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ARTICLE XI
THE COMPANY'S, SELLER'S AND GREATE BAY'S DELIVERIES AT CLOSING
At Closing, the Company, Seller and Greate Bay, as applicable, shall
deliver the following to Buyer:
11.1 Shares. The stock certificates representing all of the Shares owned
by Seller, free and clear of any Liens, duly endorsed for transfer or
accompanied by stock powers duly executed in blank.
11.2 Bring-Down Certificate. A bring-down certificate executed by the
Company, Seller and Greate Bay to the effect that the representations and
warranties made by the Company, Seller and Greate Bay, as the case may be, in
Articles II, III, IV and X hereof are true and correct in all material respects
on and as of the Closing Date with the same effect as though such
representations or warranties had been made or given on and as of such date
(except to the extent any representation and warranty expressly relates to
earlier date, in which case such representation and warranty shall be true and
correct in all material respects, on and as of such earlier date) and that the
Company, Seller and Greate Bay have performed and complied with all of the
covenants set forth in Article VI hereof which are to be performed or complied
with by them on or before the Closing Date.
11.3 Secretary's Certificate. A certificate executed on behalf of the
Company, Seller and Greate Bay by the Secretary or Assistant Secretary of each
of the Company, Seller and Greate Bay authenticating the Company's, Seller's and
Greate Bay's respective charter and by laws, certifying as to the incumbency,
and authenticating the signatures of, those persons executing this Agreement and
any certificates or other documents delivered hereunder on behalf of the
Company, Seller and Greate Bay, as applicable, and certifying as to the adoption
and continuing effect of appropriate resolutions authorizing the Company's,
Seller's or Greate Bay's respective execution, delivery and performance of this
Agreement, copies of which resolutions shall be attached to such certificate and
certified as true, complete and correct in all respects.
11.4 Escrow Agreements. The Primary Escrow Agreement and the Secondary
Escrow Agreement, duly executed by HWCC and Seller.
11.5 Sale Approval Order. A certified copy of the Sale Approval Order.
11.6 Releases. Duly authorized and validly executed releases in form and
substance reasonably satisfactory to Buyer from each of Seller, Greate Bay, HWCC
and HCC irrevocably and indefeasibly waiving, releasing and extinguishing (a)
any and all Claims of Seller, Greate Bay, HWCC, HCC and their respective direct
and indirect subsidiaries and Affiliates against the Company or Buyer,
including, without limitation, claims relating to the tax sharing agreements set
forth on Schedule 3.12(e), but excluding enforcement of any obligations of Buyer
and the Company under this Agreement and (b) any and all debts, claims,
liabilities or similar rights of such persons against the Company, and any and
all such obligations owed to such persons by the Company.
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11.7 Legal Opinion. A legal opinion from counsel to the Company, dated
the Closing Date, substantially in the form attached hereto as Exhibit D.
11.8 Xxxx Employment Agreement. The Third Amendment to the Employment
Agreement, duly executed by Xxxxx Xxxx and the Company, substantially in the
form attached hereto as Exhibit G.
ARTICLE XII
BUYER'S DELIVERIES AT CLOSING
At Closing, Buyer shall deliver the following to the Company, Seller and
Greate Bay, as applicable:
12.1 Purchase Price. (i) By wire transfer of immediately available funds
to an account designated by HWCC, the Closing Payment, and (ii) by wire transfer
of immediately available funds to an account designated by the Escrow Agent, the
Escrow Funds.
12.2 Bring-Down Certificate. A bring-down certificate executed on behalf
of Buyer by Buyer's President to the effect that the representations and
warranties made by Buyer in Article V hereof are true and correct in all
material respects on and as of the Closing Date with the same effect as though
such representations or warranties had been made or given on and as of such date
(except to the extent any representation and warranty expressly relates to
earlier date, in which case such representation and warranty shall be true and
correct in all material respects, on and as of such earlier date) and that Buyer
has performed and complied with all of its covenants set forth in Article VII
hereof which are to be performed or complied with by Buyer on or before the
Closing Date.
12.3 Secretary's Certificate. A certificate executed on behalf of Buyer
by Buyer's Secretary authenticating Buyer's charter and bylaws, certifying as to
the incumbency, and authenticating the signatures of, officers executing this
Agreement and any certificates or other documents delivered hereunder on behalf
of Buyer, and certifying as to the adoption and continuing effect of appropriate
resolutions authorizing Buyer's execution, delivery and performance of this
Agreement, copies of which resolutions shall be attached to such certificate and
certified as true, complete and correct in all respects.
12.4 Escrow Agreements. The Primary Escrow Agreement and the Secondary
Escrow Agreement, duly executed by Buyer.
ARTICLE XIII
TERMINATION
13.1 Termination. This Agreement (and the transactions contemplated
hereby) may not be terminated except as follows:
(a) upon the mutual written consent of Greate Bay and Buyer;
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(b) by Greate Bay, if Buyer is in material breach of this
Agreement and such breach has not been cured within 30 days following the
delivery of notice thereof to Buyer;
(c) by Buyer, if the Company, Seller or Greate Bay is in breach
of this Agreement and such breach has not been cured within 30 days following
the delivery of notice thereof to Greate Bay; except where such a breach would
not have a Material Adverse Effect;
(d) by Buyer, if the conditions to Buyer's obligations specified
in Article IX are not satisfied (through no fault of Buyer) or validly waived by
Buyer;
(e) by Greate Bay, if the conditions to Greate Bay's obligations
specified in Article VIII are not satisfied (through no fault of Greate Bay,
Seller, the Company or HWCC) or validly waived by Greate Bay;
(f) by either Greate Bay or Buyer, if the Closing has not
occurred 30 days after the Sale Approval Order (the "SALE APPROVAL ORDER
PERIOD") has been entered and is no longer subject to stay by statute, rule,
judicial order or otherwise, provided, however, that if any conditions in
Article VIII or Article IX have not been satisfied by the expiration of the Sale
Approval Order Period, such period will be extended for up to three additional
30 day successive periods, provided that each party is diligently working in
good faith to satisfy any remaining conditions and both parties believe that
there is a reasonable probability that any such unsatisfied conditions will be
satisfied;
(g) by Buyer, if the Sale Approval Order has not been entered on
or before 75 days after the filing of the bankruptcy petitions by Seller and
Greate Bay through no fault of Buyer;
(h) by Buyer, if the Sale Procedures Order has not been entered
on or before 45 days after the filing of the bankruptcy petitions by Seller and
Greate Bay through no fault of Buyer, provided that the Sale Approval Order also
has not been entered on or before such time; or
(i) by Buyer or Greate Bay upon the occurrence of an Overbid
Event.
13.2 Effect of Termination. Upon the termination of this Agreement in
accordance with Section 13.1 hereof, the parties shall be relieved of any
further obligations under this Agreement (other than any confidentiality
obligations contained in Section 15.6, liabilities for breaches of this
Agreement occurring prior to such termination and obligations to pay, if
applicable, the Break-Up Fee and Expense Reimbursement as provided in Article
X); provided, however, if Buyer terminates this Agreement pursuant to Section
13.1(c) and Buyer is not then in material breach of this Agreement, Buyer shall
be entitled to receive the Expense Reimbursement as liquidated damages
hereunder.
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ARTICLE XIV
INDEMNIFICATION
14.1 Survival of Representations and Warranties. The representations and
warranties of each party contained in this Agreement or in any document or
instrument delivered pursuant hereto shall be deemed to be continuing and shall
survive the Closing and any investigations heretofore or hereafter made by any
party or its representatives for a period of 18 months after the Closing Date
(except to the extent that written notice of a Claim has been provided prior
thereto describing in reasonable detail the basis for such Claim, in which event
the applicable representation and warranty shall survive until the Claim is
resolved, but only to the extent the representation and warranty relates to
matters subject to the Claim); provided, however, that notwithstanding the
foregoing, liability for any fraudulent or illegal acts or statements (whether
or not relating to the subject matter of any representation or warranty herein)
shall survive in perpetuity or for the maximum period of time permitted by law.
The representations, warranties, covenants and agreements made by any party in
this Agreement shall not be effected, limited or compromised in any respect by
any due diligence investigation or any other inquiries or investigations by any
other party, regardless of the results thereof.
14.2 Indemnification of Buyer.
(a) Seller, Greate Bay and HWCC hereby agree to indemnify Buyer, its
parents, subsidiaries and Affiliates, and each of Buyer's, its parents',
subsidiaries' and Affiliates' respective officers, directors, stockholders,
employees and agents (collectively, the "BUYER INDEMNIFIED PARTIES") from and
against any and all damages, losses, Claims, Liabilities, demands, charges,
suits, penalties, expenses and costs (collectively, and including attorneys'
fees and costs of preparation, "INDEMNIFIED COSTS") which any of Buyer
Indemnified Parties may incur or sustain, or to which any of the Buyer
Indemnified Parties may be subjected, arising out of:
(1) any breach of any representation or warranty of the Company,
Seller or Greate Bay set forth herein, whether or not Buyer relied thereon or
had knowledge thereof;
(2) any breach in any respect of any covenant or agreement of the
Company (to the extent such covenant or agreement was to be performed or
complied with solely prior to Closing), Seller, Greate Bay or HWCC set forth
herein; or
(3) the operation of the business prior to the Closing Date;
provided, however, that the Primary Escrow Funds shall be the sole source of
funds available to indemnify and hold harmless the Buyer Indemnified Parties
pursuant to this Section 14.2(a), and shall be subject to the following
limitations:
(i) shall be limited to the amount of the Primary Escrow
Funds (as reduced by any payments made to the Buyer Indemnified Parties
out of the Primary Escrow Funds pursuant to Section 14.2(b)), for all
such Indemnified Costs of the Buyer Indemnified Parties;
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(ii) with respect to the obligation to indemnify and hold
harmless Buyer Indemnified Parties for their Indemnified Costs, such
obligation to indemnify and hold harmless Buyer Indemnified Parties for
all their Indemnified Costs shall only apply after such Indemnified
Costs exceed $150,000 (the "BASKET AMOUNT") in the aggregate, at which
time only those amounts in excess of the Basket Amount may be recovered;
(iii) the limitations contained in Section 14.4(a);
(iv) the amount of any Indemnified Costs shall be reduced
by any insurance recoveries or indemnities or contribution or similar
payments actually recovered by the Buyer Indemnified Parties from any
third party as a result of the incurrence of such Indemnified Costs or
the facts or circumstances giving rise thereto, net of any costs of
collection or other fees, costs and expenses actually incurred by Buyer
Indemnified Parties in obtaining any such insurance recoveries,
indemnities, contributions or similar payments (which amount expressly
excludes the payment or recovery of any proceeds from the Primary Escrow
Funds by any of the Buyer Indemnified Parties pursuant to this Article
XIV); and
(v) the availability of the Primary Escrow Funds to
indemnify and hold harmless Buyer Indemnified Parties for their
Indemnified Costs shall terminate 18 months after the Closing Date
(except to the extent that written notice of a Claim has been provided
prior thereto describing in reasonable detail the basis for such Claim,
in which event such a Claim shall survive until the Claim is resolved);
provided, however, that the foregoing limitations on recovery shall not apply to
any damages, losses, Claims, Liabilities, demands, charges, suits, penalties,
expenses or costs (including attorneys' fees and costs of preparation), incurred
by any of the Buyer Indemnified Parties as a result of any Wrongful Acts (as
defined in Section 14.4), for which such Buyer Indemnified Parties shall be
entitled to pursue any and all rights and remedies available at law or in equity
against Seller, Greate Bay and/or HWCC. The obligations of Seller and Greate Bay
under this Article XIV shall have the priority of a claim for the cost of
administration in the bankruptcy cases to be filed by Seller and Greate Bay as
contemplated hereby under Sections 503(b) and 507(a)(1) of the Bankruptcy Code.
(b) Notwithstanding anything contrary in this Agreement, HWCC hereby
agrees to indemnify and hold harmless the Buyer Indemnified Parties (the "HWCC
ADDITIONAL INDEMNIFICATION") from and against any and all Indemnified Costs
which any of the Buyer Indemnified Parties may incur or sustain, or to which any
of the Buyer Indemnified Parties may be subjected, arising out of:
(1) any Claim, known or unknown, made by the Oneida Indian tribe
relating to the Company or its intellectual property; or
(2) any allegations that the Company has infringed or is
infringing on intellectual property rights of the Oneida Indian Tribe;
provided, however, that the HWCC Additional Indemnification Amount (as defined
below) and the Primary Escrow Funds (as reduced by any payments made to the
Buyer Indemnified Parties
33
out of the Primary Escrow Funds pursuant to Section 14.2(a)) shall be the sole
source of funds available to indemnify and hold harmless the Buyer Indemnified
Parties pursuant to this Section 14.2(b), and shall be subject to the following:
(i) the HWCC Additional Indemnification obligation shall
be limited to a maximum of $750,000 in the aggregate for all Indemnified Costs
of the Buyer Indemnified Parties pursuant to this Section 14.2(b) (the "HWCC
ADDITIONAL INDEMNIFICATION AMOUNT");
(ii) the Buyer Indemnified Parties must seek recovery of
any Indemnified Costs under this Section 14.2(b), first against $250,000 of the
Primary Escrow Funds, second against the HWCC Additional Indemnification Amount,
and third against the Primary Escrow Funds (as reduced by any payments made to
the Buyer Indemnified Parties out of the Primary Escrow Funds pursuant to
Section 14.2(a) and this Section 14.2(b)); provided, however, that if the Buyer
Indemnified Parties are unable to obtain recovery from one of these sources
within forty-five days after their initial notice to Seller and HWCC of their
intent to do so, they may seek recovery from either the Primary Escrow Funds or
the HWCC Additional Indemnification Amount in their sole discretion;
(iii) the limitations contained in Section 14.4(a);
(iv) the amount of any Indemnified Costs under this
Section 14.2(b) shall be reduced by any insurance recoveries or indemnities or
contribution or similar payments actually recovered by the Buyer Indemnified
Parties from any third party as a result of the incurrence of such Indemnified
Costs or the facts or circumstances giving rise thereto, net of any costs of
collection or other fees, costs and expenses actually incurred by Buyer
Indemnified Parties in obtaining any such insurance recoveries, indemnities,
contributions or similar payments (which amount expressly excludes the payment
or recovery of any proceeds from the Primary Escrow Funds by any of the Buyer
Indemnified Parties pursuant to this Article XIV);
(v) the availability of the HWCC Additional
Indemnification to indemnify and hold harmless Buyer Indemnified Parties for
their Indemnified Costs under this Section 14.2(b) shall terminate 12 months
after the Closing Date (except to the extent that a lawsuit has been filed or an
alternative dispute resolution proceeding has been commenced by the Oneida
Indian tribe relating to the Company or its Intellectual Property), in which
event such dispute shall survive until final determination or resolution of such
dispute); and
(vi) the availability of the Primary Escrow Funds to
indemnify and hold harmless Buyer Indemnified Parties for their Indemnified
Costs under this Section 14.2(b) shall terminate 18 months after the Closing
Date (except to the extent that a lawsuit has been filed or an alternative
dispute resolution proceeding has been commenced by the Oneida Indian tribe
relating to the Company or its Intellectual Property), in which event such
dispute shall survive until final determination or resolution of such dispute);
provided, however, that the foregoing limitations on recovery shall not apply to
any damages, losses, Claims, Liabilities, demands, charges, suits, penalties,
expenses or costs (including attorneys' fees and costs of preparation), incurred
by any of the Buyer Indemnified Parties as a result of any Wrongful Acts, for
which such Buyer Indemnified Parties shall be entitled to pursue
34
any and all rights and remedies available at law or in equity against Seller,
Greate Bay and/or HWCC. The obligations of Seller and Greate Bay under this
Article XIV shall have the priority of a claim for the cost of administration in
the bankruptcy cases to be filed by Seller and Greate Bay as contemplated hereby
under Sections 503(b) and 507(a)(1) of the Bankruptcy Code.
14.3 Indemnification of Seller. Buyer agrees to indemnify and hold
harmless each of Seller and Greate Bay and their respective subsidiaries and
Affiliates and each of their respective officers, directors, shareholders,
employees and agents (collectively, the "SELLER INDEMNIFIED PARTIES") from and
against any and all Indemnified Costs which any of the Seller Indemnified
Parties may incur or sustain, or to which any of the Seller Indemnified Parties
may be subjected, arising out of:
(a) any breach of any representation or warranty of Buyer set
forth herein, whether or not the Company, Seller or Greate Bay relied thereon or
had knowledge thereof;
(b) any breach in any respect of any covenant or agreement of
Buyer or the Company (to the extent such covenant or agreement was to be
performed or complied with by the Company solely after the Closing) set forth
herein; or
(c) the operation of the Business from and after the Closing
Date.
provided, however, that the liability of Buyer to indemnify and hold harmless
the Seller Indemnified Parties for their Indemnified Costs:
(i) shall be limited to a maximum of $750,000 in the
aggregate for all such Indemnified Costs of the Seller Indemnified
Parties;
(ii) with respect to the obligation to indemnify and hold
harmless Buyer Indemnified Parties for their Indemnified Costs, such
obligation to indemnify and hold harmless Buyer Indemnified Parties for
all their Indemnified Costs shall only apply after such Indemnified
Costs exceed the Basket Amount, at which time only those amounts in
excess of the Basket Amount may be recovered;
(iii) the amount of any Indemnified Costs shall be reduced
by any insurance recoveries or indemnities or contribution or similar
payments actually recovered by the Seller Indemnified Parties from any
third party as a result of the incurrence of such Indemnified Costs or
the facts or circumstances giving rise thereto, net of any costs of
collection or other fees, costs and expenses actually incurred by Seller
Indemnified Parties in obtaining any such insurance recoveries,
indemnities, contributions or similar payments;
(iv) shall be subject to the limitations contained in
Section 14.4(b); and
(v) the availability of the Primary Escrow Funds to
indemnify and hold harmless Buyer Indemnified Parties for their
Indemnified Costs shall terminate 18 months after the Closing Date
(except to the extent that written notice of a Claim has been provided
prior thereto describing in reasonable detail the basis for such Claim,
in which event such a Claim shall survive until the Claim is resolved);
35
provided, further, that the foregoing limitations on recovery shall not apply to
any damages, losses, Claims, Liabilities, demands, charges, suits, penalties,
expenses or costs (including attorneys' fees and costs of preparation), incurred
by any of the Seller Indemnified Parties as a result of any Wrongful Acts of
Buyer, for which such Seller Indemnified Parties shall be entitled to pursue any
and all rights and remedies available at law or in equity against Buyer. Any
Indemnified Costs sustained by a Seller Indemnified Party shall be paid by Buyer
to HWCC in satisfaction of such obligation.
14.4 Exclusive Remedy. Without limiting the rights or remedies that any
party may have against any person for fraudulent or illegal conduct or any
knowing and willful breach of the representation, warranties, covenants and
agreements contained in this Agreement or for the knowing and willful
withholding of material information from the other parties to this Agreement
(collectively "WRONGFUL ACTS"):
(a) Subject to the exception for Wrongful Acts specified in
Sections 14.2(a) and 14.2(b) and the first sentence of this Section 14.4 (as to
which each party shall be entitled to pursue any and all rights and remedies
available to such person at law or in equity), the indemnification and
reimbursement provisions as provided in this Article XIV will be the sole and
exclusive remedy and recourse for any breach of this Agreement by the Company
(to the extent that such breach related to an agreement that is to be complied
with or performed by the Company prior to Closing), Seller, Greate Bay or HWCC
or any other claim by the Buyer Indemnified Parties under or with respect to
this Agreement or any of the transactions contemplated hereby, and none of the
Buyer Indemnified Parties nor any other person will have any other entitlement,
remedy or recourse, whether in contract, tort or otherwise, against the Company,
Seller, Greate Bay or HWCC, or any of their respective successors, permitted
assigns, heirs or representatives under or with respect to this Agreement, all
of such entitlements, remedies and recourses being hereby expressly waived by
each of the Buyer Indemnified Parties to the fullest extent permitted by law.
(b) Subject to the exception for Wrongful Acts specified in
Section 14.3 and the first sentence of this Section 14.4 (as to which each party
shall be entitled to pursue any and all rights and remedies available to such
person at law or in equity), the indemnification provided in this Agreement will
be the sole and exclusive remedy and recourse for any breach of this Agreement
by Buyer or any other claim by Seller Indemnified Parties under or with respect
to this Agreement or any of the transactions contemplated hereby, and none of
Seller Indemnified Parties will have any other entitlement, remedy or recourse,
whether in contract, tort or otherwise, against Buyer or its Affiliates,
successors, permitted assigns or representatives under or with respect to this
Agreement, all of such entitlements, remedies and recourse being expressly
waived by the Company, Seller and Greate Bay to the fullest extent permitted by
applicable law. In addition, and subject to this exception for Wrongful Acts (as
to which each party shall be entitled to pursue any rights and remedies
available to such person at law or in equity), $750,000 will be the maximum
amount of the indemnification and reimbursement obligations of Buyer hereunder,
and none of Buyer or any of its officers, directors, stockholders, successors,
permitted assigns, heirs or representatives will have any personal or other
liability therefor.
36
14.5 Defense of Third-Party Claims. Any party seeking indemnification
pursuant to this Article XIV (each, an "INDEMNIFIED PARTY") shall, (a) in the
case of a Buyer Indemnified Party, give prompt written notice to HWCC, Greate
Bay and/or its designated successors and assigns and (b) in the case of a Seller
Indemnified Party or Company Indemnified Party, give prompt written notice to
Buyer, on behalf of any and all persons who are obligated to provide
indemnification hereunder (each, an "INDEMNIFYING PARTY") of the commencement or
assertion of any action, proceeding, demand, or claim by a third party
(collectively, a "THIRD-PARTY ACTION") in respect of which such Indemnified
Party shall seek indemnification hereunder. Any failure so to notify HWCC,
Greate Bay or Buyer, as the case may be, shall not relieve such Indemnifying
Party from any liability that it may have to such Indemnified Party under this
Article XIV unless and to the extent the failure to give such notice materially
prejudices such Indemnifying Party. The Indemnifying Parties shall have the
right to assume control of the defense of, settle, or otherwise dispose of such
third-party action on such terms as they deem appropriate; provided, however,
that:
(i) The Indemnified Party shall be entitled, at his, her, or its
own expense, to participate in the defense of such Third-Party Action;
(ii) No Indemnifying Party shall consent to the entry of any
judgment or enter into any settlement acknowledging guilt, responsibility or
culpability of any Indemnified Party without that Indemnified Party's prior
written consent or that does not include as an unconditional term thereof the
giving by each claimant or plaintiff to each Indemnified Party of a release from
all liability in respect of such Third-Party Action; and
(iii) The Indemnifying Parties shall not be entitled to control
(but shall be entitled to participate at their own expense in the defense of),
and the Indemnified Party shall be entitled to have sole control over, the
defense or settlement, compromise, admission, or acknowledgment of any
Third-Party Action as to which the Indemnifying Parties fail to assume the
defense within a reasonable length of time.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any Third-Party Action pursuant to this Article XIV and, in
connection therewith, shall furnish such records, information, and testimony and
attend such conferences, discovery proceedings, hearings, trials, and appeals as
may be reasonably requested.
14.6 Direct Claims. In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 14.5 hereof because no
Third-Party Action is involved, the Indemnified Party shall notify Greate Bay,
HWCC and/or its designated successors and assigns or Buyer, as the case may be,
in writing of any Indemnified Costs which it claims are subject to
indemnification under the terms hereof. The failure of the Indemnified Party to
exercise promptness in such notification shall not amount to a waiver of such
claim unless the resulting delay materially prejudices the position of the
Indemnifying Parties with respect to such claim.
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ARTICLE XV
MISCELLANEOUS
15.1 Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto shall use all commercially reasonable
efforts to take, or cause to be taken, such action, to execute and deliver, or
cause to be executed and delivered, such additional documents and instruments
and to do, or cause to be done, all things necessary, proper or advisable under
the provisions of this Agreement and under applicable law to expedite and
consummate the transactions contemplated hereby.
15.2 Publicity. Any general notices, releases, statements or
communications to the general public or the press relating to this Agreement and
the transactions contemplated hereby shall be made only at such times and in
such manner as may be mutually agreed upon by Buyer and Greate Bay; provided,
however, that the parties hereto shall be entitled to issue such press releases
and to make such public statements and filings as are, in the opinion of their
respective legal counsel, required by applicable law (including any filings with
the Bankruptcy Court, the Securities and Exchange Commission, any gaming
commissions and other regulatory bodies) in which case the other party shall be
advised in advance and provided a copy of the public statement prior to its
release if such prior disclosure of the release can be made in a manner that
would not violate any applicable laws, including, but not limited to, Regulation
FD. Once information has been made available to the general public in accordance
with this Agreement, this section shall no longer apply to such information.
15.3 Expenses. Except as otherwise expressly provided for in this
Agreement, each party hereto shall pay its own expenses and costs relating to
the negotiation, execution and performance of this Agreement.
15.4 Transfer Taxes. In accordance with Section 1146(c) of the
Bankruptcy Code, the making or delivery of any instrument of transfer, including
the filing of any deed, assignment, lease or other document of transfer to
evidence, effectuate or perfect the rights, transfers and interest contemplated
by this Agreement (collectively the "TRANSFER DOCUMENTS"), shall be in
contemplation of a plan or plans of reorganization to be confirmed in the
Debtors' bankruptcy cases, and as such shall be free and clear of any and all
transfer tax, stamp tax, conveyance tax or similar taxes (collectively the
"TRANSFER Taxes"). Subject to Bankruptcy Court approval, the instruments
transferring the Shares to Buyer shall contain an endorsement in substantially
the following form:
Because this [instrument] has been authorized pursuant to Order of the
United States Bankruptcy Court for the District of Delaware, in
contemplation of a plan of reorganization of the Grantor, it is exempt
from transfer taxes, stamp taxes or similar taxes pursuant to 11 U.S.C.
Section 1146(c).
In the event Transfer Taxes are required to be paid in order to record the
Transfer Documents to be delivered to Buyer in accordance herewith, or in the
event any such Taxes are assessed at any time thereafter, such Transfer Taxes
incurred as a result of the transactions contemplated hereby shall be paid by
Buyer.
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15.5 Governing Law; Dispute Resolution. This Agreement shall be
construed and interpreted according to the laws of the State of Delaware without
reference to the rules of conflict of laws thereof.
(a) EACH OF THE PARTIES HERETO (INCLUDING, WITHOUT LIMITATION,
HWCC), HEREBY IRREVOCABLY: (i) WAIVES ANY RIGHT TO A TRIAL BY JURY IN CONNECTION
WITH ANY DISPUTES OR CLAIMS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR THE TRANSACTIONS, (ii) AGREES TO SUBMIT ANY SUCH DISPUTE OR CLAIMS ARISING ON
OR PRIOR TO THE CLOSING DATE SOLELY AND EXCLUSIVELY TO THE BANKRUPTCY COURT FOR
RESOLUTION, (iii) CONSENTS TO THE JURISDICTION OF THE BANKRUPTCY COURT IN ANY
SUCH DISPUTES OR CLAIMS ARISING ON OR PRIOR TO THE CLOSING DATE, (iv) CONSENTS
TO THE LAYING OF VENUE AND HEARING AND DETERMINATION OF ANY DISPUTES OR CLAIMS
ON OR PRIOR TO THE CLOSING DATE IN THE STATE OF DELAWARE IN FRONT OF THE
BANKRUPTCY COURT AND (v) WAIVES ANY ARGUMENT OR DEFENSE TO THE REQUIREMENTS OF
THIS SECTION 15.5(a) THAT SUCH FORUM IS INCONVENIENT OR AN OTHERWISE IMPROPER OR
INAPPROPRIATE FORUM AND VENUE FOR RESOLVING SUCH DISPUTES OR CLAIMS.
(b) Notwithstanding the foregoing, other than disputes or claims
arising out of the Post Closing Adjustment and Post Closing Tax Payment (which
claims shall be resolved pursuant to Section 1.4 and Section 6.3 herein
respectively), any disputes or claims arising out of or concerning this
Agreement after the Closing Date, including, but not limited to, any disputes or
claims arising out of the Primary Escrow Agreement, the Secondary Escrow
Agreement, and/or the indemnification procedures hereunder, whether arising
under theories of liability or damages based upon contract, tort or statute,
shall be determined exclusively by arbitration before a single arbitrator in
accordance with the then effective arbitration rules of the AAA; provided,
however, that the parties hereto may also bring an action in court for
injunctive relief. The arbitrator's decision shall be final and binding on the
parties hereto (other than with respect to matters subject to the foregoing
proviso) and judgment upon the award rendered by the arbitrator may be entered
in any court of competent jurisdiction. In recognition of the fact that
resolution of any disputes or claims in the courts is rarely timely or cost
effective for either party, the parties hereto enter this mutual agreement to
arbitrate in order to gain the benefits of a speedy, impartial and
cost-effective dispute resolution procedure (other than with respect to matters
subject to the proviso in the first sentence of this subparagraph (b)).
(c) Any arbitration shall be held in Phoenix, Arizona. The
arbitrator shall be neutral and impartial and shall be an attorney or retired
judge with substantial experience in contract disputes, selected by Buyer, on
the one hand, and Greate Bay and/or HWCC, on the other hand, alternately
striking names from a list of five such persons provided by the AAA office in
Phoenix, Arizona, following a request by the party seeking arbitration for a
list of five such attorneys or retired judges with substantial professional
experience in contract disputes. If either party fails to so strike names from
the list, the arbitrator shall be selected from the list by the other party.
39
(d) Each party shall have the right to take the deposition of one
individual and any expert witness designated by the other party. Each party
shall also have the right to propound requests for production of documents to
any party and the right to subpoena documents and witnesses for the arbitration.
Additional discovery may be made only where the arbitrator selected so orders
upon a showing of substantial need. The arbitrator shall have the authority to
entertain a motion to dismiss and/or a motion for summary judgment by any party.
(e) Each party may make written submissions and oral
presentations to the arbitrator. Any oral presentation may include argument from
counsel and testimony from live witnesses. The parties hereto agree that they
will attempt, and they intend that they and the arbitrator should use their best
efforts in that attempt, to conclude the arbitration proceeding and have a final
decision from the arbitrator within 60 days from the date of selection of the
arbitrator; provided, however, that the arbitrator shall be entitled to extend
such 60-day period for a total of two 30 day periods. The arbitrator shall
immediately deliver a written award with respect to the dispute to each of the
parties, who shall promptly act in accordance therewith.
(f) Buyer and HWCC shall split the fees and expenses of the
arbitrator, and each party shall pay its respective fees and expenses in
connection with any matters subject to the provision in Section 15.5(b) above.
Each party shall pay its own attorney fees and costs including, without
limitation, fees and costs of any experts; provided, however, that attorney fees
and costs incurred by the party that prevails in any such arbitration commenced
pursuant to this Section 15.5 or any judicial action or proceeding seeking to
enforce the agreement to arbitrate disputes as set forth in this Section 15.5 or
seeking to enforce any order or award of any arbitration commenced pursuant to
this Section 15.5 may be assessed against the party or parties that do not
prevail in such arbitration in such manner as the arbitrator or the court in
such judicial action, as the case may be, may determine to be appropriate under
the circumstances; provided, further, that if any party prevails on a statutory
claim that entitles the prevailing party to a reasonable attorney fees (with or
without expert fees) as part of the costs, the arbitrator may award reasonable
attorney fees (with or without expert fees) to the prevailing party in accord
with such statute. Any controversy over whether a dispute is an arbitrable
dispute or as to the interpretation or enforceability of this paragraph with
respect to such arbitration shall be determined by the arbitrator.
(g) In a contractual claim under this Agreement, the arbitrator
shall have no authority to add, delete or modify any term of this Agreement.
15.6 Confidentiality. Each of Buyer and the Company agrees that, unless
and until the transactions contemplated hereby shall have been consummated, the
Confidentiality Agreement dated July 17, 2001 between Buyer and Greate Bay (the
"CONFIDENTIALITY AGREEMENT") shall remain in full force and effect, except to
the extent disclosure is required by the Bankruptcy Court.
15.7 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
personally delivered or telecopied with confirmation of transmission, or five
days after mailed, certified or registered mail, with postage prepaid addressed
as follows (or to such other person or address as the party to receive such
notice may have designated from time to time by notice in writing pursuant
hereto):
40
If to the Company, Seller or Greate Bay:
Greate Bay Casino Corporation
Two Galleria Tower, Suite 2200
00000 Xxxx Xxxx, XX 00
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx
Telecopy: 000-000-0000
with a copy (which shall not constitute effective notice) to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx
Telecopy: 000-000-0000
If to Buyer and the Company (after Closing):
Alliance Gaming Corporation
0000 Xxxxx Xxxxxxx Xxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Xxxx Xxxxxx
Telecopy: 000-000-0000
With a copy (which shall not constitute effective notice) to:
Xxxxxx, Xxxx & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx
Telecopy: 000-000-0000
If to HWCC:
x/x Xxxxxxxxx Xxxxxx Xxxxxxxxxxx
Xxx Xxxxxxxx Xxxxx, Xxxxx 0000
00000 Xxxx Xxxx, XX 00
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Telecopy: 000-000-0000
With a copy (which shall not constitute effective notice ) to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
41
Attention: Xxxxxxx X. Xxxxxx
Telecopy: 000-000-0000
15.8 Headings; Gender; Interpretation. The headings to Articles and
Sections of this Agreement are for reference only and shall not be used in
construing the provisions hereof or otherwise affect the meaning hereof. The use
of the neuter pronoun "it" shall also refer to as appropriate to the masculine
and/or feminine gender. The use of the singular herein shall, where appropriate,
be deemed to include the plural and vice versa. Whenever the word "including,"
"includes" or words of similar import appear in this Agreement, they shall be
deemed to be followed by the words "without limitation."
15.9 Counterparts. This Agreement may be executed by facsimile signature
and in two or more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument.
15.10 Entire Agreement. This Agreement and the Confidentiality Agreement
embodies the entire agreement and understanding among the Company, Seller,
Greate Bay and Buyer and supersedes all prior agreements and understandings
related to the subject matter hereof and thereof. There are no representations,
warranties, covenants, promises or agreements on the part of either party to the
other hereto which are not explicitly set forth herein.
15.11 Modifications. Any modification, amendment or waiver of or with
respect to any provision of this Agreement or any agreement, instrument or
document delivered pursuant hereto shall not be effective unless it shall be in
writing and signed by the Company, Seller, Greate Bay, Buyer and HWCC and shall
designate specifically the terms and provisions so modified.
15.12 Assignment and Binding Effect. No party may assign this Agreement
or any interest herein without the prior written consent of the other parties
hereto and any purported assignment without such consent shall be void. Subject
to the foregoing, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, their respective successors and permitted
assigns.
15.13 No Third Party Beneficiaries. Except for the Indemnified Parties
(and in such case solely to the extent such parties are entitled to seek
indemnification under Article XIV) and as otherwise expressly set forth herein,
no person shall be deemed to be a third party beneficiary hereunder or entitled
to any rights hereunder.
15.14 Access to Records. For a period of three years (and for a period
of five years for tax purposes only) from and after the Closing, the Company,
Seller, Greate Bay, HWCC and Buyer shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with any (a) audit,
litigation or other proceeding with respect to taxes, (b) claim for
indemnification hereunder, (c) inquiry of any Governmental Authority, (d)
financial reporting and accounting matters (e) Claims arising with respect to
the transactions contemplated hereby. Such cooperation shall include the
retention and (upon any other party's request) the provisions of records and
information which are reasonably relevant to any such matter and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder; provided,
however, that no party shall be
42
obligated pursuant to this provision or otherwise to provide or disclose
confidential or proprietary information to any person without receiving a
customary confidentiality agreement in form and substance reasonably acceptable
to the party providing such information. Buyer shall (i) retain all books and
records with respect to the foregoing matters pertinent to the Business for a
period of five years from and after the Closing, (ii) abide by all record
retention agreements entered into with any Governmental Authority and (iii) give
Greate Bay, HWCC or their respective designated successors and assigns
reasonable written notice (and an opportunity to copy) prior to destroying or
discarding any such books and records proposed for destruction or discard.
15.15 Guarantee. Greate Bay and Seller each hereby jointly and severally
guarantees, as primary obligors and not as sureties, the performance of the
obligations of each other and the Company (to the extent the Company's
obligations are to be performed prior to Closing) under the terms of this
Agreement.
ARTICLE XVI
DEFINITIONS
"ACQUISITION PROPOSAL" shall have the meaning set forth in Section 6.3.
"ACTUAL WORKING CAPITAL" shall have the meaning set forth in Section
1.1.
"AFFILIATE" means any person that controls, is controlled by, or is
under common control with another company.
"AGREEMENT" means this Agreement and the Schedules and Exhibits hereto.
"AUCTION" shall have the meaning set forth in the Recitals.
"AUDITED FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 3.14(a).
"BANKRUPTCY COURT" shall have the meaning set forth in the Recitals.
"BASKET AMOUNT" shall have the meaning set forth in Section 14.2(b)(i).
"BREAK-UP FEE" shall have the meaning set forth in Section 10.3(b).
"BUSINESS" shall have the meaning set forth in the Recitals.
"BUYER" shall have the meaning set forth in the Preamble.
"BUYER INDEMNIFIED PARTIES" shall have the meaning set forth in Section
14.2.
"CLAIMS" shall have the meaning set forth in Section 2.8.
"CLOSING" shall have the meaning set forth in Section 1.2.
"CLOSING BALANCE SHEET" shall have the meaning set forth in Section 1.1.
43
"CLOSING DATE" shall have the meaning set forth in Section 1.2.
"CLOSING PAYMENT" shall have the meaning set forth in Section 1.3.
"CODE" shall have the meaning set forth in Section 3.12.
"COMMON STOCK" shall have the meaning set forth in the Recitals.
"COMPANY" shall have the meaning set forth in the Preamble.
"COMPANY CONTRACTS" shall have the meaning set forth in Section 3.10.
"COMPETING BIDDERS" shall have the meaning set forth in Section 10.3(d).
"COMPETING BIDS" shall have the meaning set forth in Section 10.3(d).
"CONFIDENTIALITY AGREEMENT" shall have the meaning set forth in Section
15.6.
"CONTROLLED GROUP" means, with respect to the Company, a group
consisting of each trade or business (whether or not incorporated) which,
together with the Company, would be deemed a "single employer" within the
meaning of Section 4001(b)(l) of ERISA or subsections (b), (c), (m) or (o) of
Section 414 of the Code.
"DEBTORS" shall have the meaning set forth in the Recitals.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan), (c) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee Welfare Benefit
Plan"; in each case, which the Company sponsors or maintains for the benefit of
its current or former employees, or to which it contributes (including employee
elective deferrals) or is required to contribute on behalf of its employees, or
with respect to which it has any obligations or liability.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA Sec.
3(1).
"ENVIRONMENTAL LAWS" shall have the meaning set forth in Section
3.20(a).
"ENVIRONMENTAL PERMITS" shall have the meaning set forth in Section
3.20(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA FIDUCIARY" has the meaning set forth in ERISA Section 3(21).
"ESCROW AGENT" shall have the meaning set forth in Section 1.3.
44
"EXPENSE REIMBURSEMENT" shall have the meaning set forth in Section
10.3(c).
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section 3.14.
"GAAP" shall have the meaning set forth in Section 1.1.
"GOVERNMENTAL AUTHORITY" shall have the meaning set forth in Section
2.3.
"GREATE BAY" shall have the meaning set forth in the Preamble.
"HAZARDOUS SUBSTANCE" shall have the meaning set forth in Section
3.20(a).
"HEREIN," "HEREOF" and "HEREUNDER" and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section,
Paragraph or other subdivision.
"HWCC" shall have the meaning set forth in the Recitals.
"HWCC ADDITIONAL INDEMNIFICATION" shall have the meaning set forth in
Section 14.2(b).
"HWCC ADDITIONAL INDEMNIFICATION AMOUNT" shall have the meaning set
forth in Section 14.2(b).
"INDEMNIFIED COSTS" shall have the meaning set forth in Section 13.2.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 14.5.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 13.5.
"INDEPENDENT ACCOUNTANT" shall have the meaning set forth in Section
1.4(c).
"INDEPENDENT TAX PROFESSIONAL" shall have the meaning set forth in
Section 6.3(c).
"INTELLECTUAL PROPERTY" shall have the meaning set forth in Section
3.21(a).
"INTERIM FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 3.14(b).
"INTERIM ORDER" shall have the meaning set forth in Section 10.1.
"KNOWLEDGE" or similar words and phrases such as "to the knowledge of"
shall mean, the actual knowledge of such person or entity and, as applicable,
the executive officers and directors of such entity.
"LEGAL REQUIREMENTS" shall have the meaning set forth in Section 2.3.
"LICENSE AND MAINTENANCE AGREEMENTS" shall have the meaning set forth in
the Recitals.
"LIENS" shall have the meaning set forth in Section 1.3.
45
"MATERIAL ADVERSE EFFECT" shall have the meaning set forth in Section
3.1.
"MULTIEMPLOYER PLAN" has the meaning set forth in ERISA Sec. 3(37).
"MULTIPLE EMPLOYER PLAN" has the meaning set forth in ERISA Sec.
4063(a).
"OTHER PLAN" means any contract, program or arrangement which provides
cash or non-cash benefits or perquisites to current or former employees of the
Company, but which is not an Employee Benefit Plan, including, without
limitations, any bonus, deferred compensation, executive compensation, fringe
benefit, incentive, severance, stock option, stock purchase, performance share,
stock appreciation or other equity based compensation, performance pay, loan or
loan guarantee, plant closing, change of control, or other non-ERISA plan.
"OVERBID EVENT" shall have the meaning set forth in Section 10.3(a).
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITS" shall have the meaning set forth in Section 3.13.
"PERSON" refers to any individual, corporation, partnership, limited
liability company, trust, governmental body or authority or other organization
or entity.
"PERSONNEL" shall have the meaning set forth in Section 3.21(c).
"POST CLOSING ADJUSTMENT" shall have the meaning set forth in Section
1.4(a).
"PROHIBITED TRANSACTION" has the meaning set forth in ERISA Sec. 406 and
Code Sec. 4975.
"PRIMARY ESCROW AGREEMENT" shall have the meaning set fort in Section
1.3.
"PRIMARY ESCROW FUNDS" shall have the meaning set fort in Section 1.3.
"PURCHASE PRICE" shall have the meaning set forth in Section 1.1.
"REPORTABLE EVENT" has the meaning set forth in ERISA Sec. 4043 and the
regulations promulgated thereunder.
"REQUIRED BUYER CONSENTS" shall have the meaning set forth in Section
5.4.
"REQUIRED COMPANY CONSENTS" shall have the meaning set forth in Section
3.4.
"REQUIRED GREATE BAY CONSENTS" shall have the meaning set forth in
Section 4.4.
"REQUIRED SELLER CONSENTS" shall have the meaning set forth in Section
2.4.
"SALE APPROVAL ORDER" shall have the meaning set forth in Section 10.2.
"SALE APPROVAL ORDER" shall have the meaning set forth in Section 10.2.
46
"SALE APPROVAL ORDER PERIOD" shall have the meaning set forth in Section
13.1.
"SALE PROCEDURES ORDER" shall have the meaning set forth in Section
10.3.
"SECONDARY ESCROW AGREEMENT" shall have the meaning set fort in Section
1.3.
"SECONDARY ESCROW FUNDS" shall have the meaning set fort in Section 1.3.
"SECURITIES ACT" shall have the meaning set forth in Section 5.9.
"SELLER" shall have the meaning set forth in the Preamble.
"SELLER INDEMNIFIED PARTIES" shall have the meaning set forth in Section
14.3.
"SHARES" shall have the meaning set forth in the Recitals.
"TAX SHARING PAYMENT" shall have the meaning set forth in Section
6.3(a).
"THIRD PERSON" shall have the meaning set forth in Section 6.3.
"THIRD-PARTY ACTION" shall have the meaning set forth in Section 14.5.
"TRANSFER DOCUMENTS " shall have the meaning set forth in Section 15.4.
"TRANSFERRED TAXES" shall have the meaning set forth in Section 15.4.
"WRONGFUL ACTS" shall have the meaning set forth in Section 14.4.
47
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ADVANCED CASINO SYSTEMS CORPORATION
By: /s/ Xxxx X. Xxxx
----------------------------
Name: Xxxx X. Xxxx
----------------------------
Title: Vice President
----------------------------
PPI CORPORATION
By: /s/ Xxxx X. Xxxx
----------------------------
Name: Xxxx X. Xxxx
----------------------------
Title: Vice President
----------------------------
GREATE BAY CASINO CORPORATION
By: /s/ Xxxx X. Xxxx
----------------------------
Name: Xxxx X. Xxxx
----------------------------
Title: Chief Executive Officer
----------------------------
ACSC ACQUISITIONS, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------
Title: Treasurer
----------------------------
The undersigned, HWCC-Holdings, Inc., a Texas corporation, for itself and its
Affiliates, hereby agrees to complete and perform its obligations hereunder and
acknowledges and consents to the terms and conditions of this Agreement and the
consummation of the transactions contemplated hereby:
HWCC-HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxx
----------------------------
Name: Xxxx X. Xxxxx
----------------------------
Title: Vice President
----------------------------
48
