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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
dated as of
November 3, 2005
by and among
THE MAJESTIC STAR CASINO, LLC,
an Indiana limited liability company,
and
XXXXX ENTERTAINMENT RESORTS HOLDINGS, L.P.,
a Delaware limited partnership
with respect to the stock of
XXXXX INDIANA, INC.
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Table of Contents
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ARTICLE I SALE OF STOCK AND CLOSING...................................................1
1.01 Purchase and Sale...........................................................1
1.02 Purchase Price..............................................................1
1.03 Post-Closing Working Capital Adjustment to the Initial Purchase Price.......2
1.04 Closing.....................................................................4
1.05 Further Assurances; Post-Closing Cooperation................................5
1.06 Exclusions..................................................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER....................................6
2.01 Organization and Qualification..............................................6
2.02 Authority...................................................................6
2.03 Capitalization..............................................................7
2.04 No Conflict.................................................................7
2.05 Approvals and Filings.......................................................7
2.06 Financial Statements........................................................8
2.07 Absence of Changes..........................................................8
2.08 No Undisclosed Liabilities..................................................9
2.09 Taxes.......................................................................9
2.10 Company Property...........................................................11
2.11 Tangible Personal Property.................................................13
2.12 Intellectual Property Rights...............................................13
2.13 Contracts..................................................................14
2.14 Licenses and Compliance with Laws..........................................15
2.15 Indebtedness...............................................................16
2.16 Environmental Matters......................................................16
2.17 Labor Matters..............................................................18
2.18 Insurance..................................................................18
2.19 Employee Plans; Employees..................................................18
2.20 Legal Proceedings, Etc.....................................................20
2.21 Transactions with Affiliates...............................................21
2.22 Receivables................................................................21
2.23 Progressive Slots..........................................................21
2.24 Chips and Tokens...........................................................21
2.25 Brokers....................................................................21
2.26 Bank Accounts..............................................................21
2.27 Sufficiency of Assets and Contracts........................................21
2.28 Exclusive Representations; No Material Misstatements or Omissions..........22
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER................................22
3.01 Organization and Qualification of Purchaser................................22
3.02 Authority..................................................................22
3.03 No Conflicts...............................................................22
3.04 Governmental Approvals and Filings.........................................22
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3.05 Litigation.................................................................23
3.06 Securities Act Representations.............................................23
3.07 Brokers....................................................................23
3.08 Financial Capability.......................................................23
3.09 No Implied Representations.................................................23
ARTICLE IV COVENANTS OF SELLER........................................................24
4.01 Regulatory and Other Approvals.............................................24
4.02 HSR Filings................................................................24
4.03 Investigation by Purchaser.................................................24
4.04 Financial Statements and Reports; Filings..................................25
4.05 Conduct of Business........................................................26
4.06 Delivery of Books and Records, etc.; Removal of Property...................29
4.07 Non-Competition............................................................29
4.08 Title Insurance Policies and Exceptions....................................30
4.09 Fulfillment of Conditions..................................................31
4.10 Industrial Highway Lease...................................................31
4.11 Designation of Manager.....................................................31
4.12 Acquisition Proposal.......................................................31
4.13 Notice.....................................................................32
4.14 Affiliate Agreements.......................................................33
4.15 Players' Club..............................................................33
4.16 Intercompany Account Settlement............................................33
4.17 Destruction of Chips.......................................................33
4.18 Post-Closing Redemption of Chips...........................................34
4.19 Operation of BHR and BHPA..................................................34
4.20 Transition Services........................................................34
ARTICLE V COVENANTS OF PURCHASER.....................................................34
5.01 Regulatory and Other Approvals and Notifications...........................34
5.02 HSR Filings................................................................35
5.03 Fulfillment of Conditions..................................................35
5.04 Xxxxx Name.................................................................35
5.05 Notice.....................................................................36
5.06 Operation of BHR and BHPA..................................................36
5.07 Mutual Covenants...........................................................36
5.08 Financing Letter...........................................................36
5.09 Surety Bond................................................................37
ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER.....................................37
6.01 Representations and Warranties.............................................37
6.02 Performance................................................................37
6.03 Orders and Laws; Actions or Proceedings....................................37
6.04 Regulatory Consents and Approvals..........................................37
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6.05 No Material Adverse Effect.................................................38
6.06 Deliveries.................................................................38
ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLER........................................39
7.01 Representations and Warranties.............................................39
7.02 Performance................................................................39
7.03 Orders and Laws............................................................39
7.04 Regulatory Consents and Approvals..........................................39
7.05 Lender Consent.............................................................39
7.06 Initial Purchase Price.....................................................40
7.07 Proceedings................................................................40
7.08 Fairness Opinion...........................................................40
7.09 Deliveries.................................................................40
ARTICLE VIII TAX MATTERS AND POST-CLOSING TAXES.........................................40
8.01 Pre-Closing Taxes..........................................................40
8.02 Responsibility for Filing Tax Returns and Paying Taxes.....................41
8.03 Tax Indemnification........................................................43
8.04 Tax Cooperation............................................................43
8.05 Procedures Relating to Indemnification of Tax Claims.......................43
ARTICLE IX SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS..........44
ARTICLE X INDEMNIFICATION............................................................44
10.01 Indemnification............................................................44
10.02 Method of Asserting Claims.................................................46
10.03 Exclusive Remedies.........................................................48
10.04 Losses Net of Insurance....................................................49
10.05 Limitation on Liability Following Notice of Breach.........................49
10.06 Limitations on Indemnification for Workers' Compensation...................49
ARTICLE XI TERMINATION................................................................49
11.01 Termination................................................................49
11.02 Effect of Termination......................................................50
11.03 Termination Fee and Expense Reimbursement..................................51
ARTICLE XII DEFINITIONS................................................................52
12.01 Defined Terms..............................................................52
12.02 Construction of Certain Terms and Phrases..................................62
ARTICLE XIII MISCELLANEOUS..............................................................63
13.01 Notices....................................................................63
13.02 Bulk Sales Act.............................................................64
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13.03 Entire Agreement...........................................................64
13.04 Expenses...................................................................64
13.05 Confidentiality............................................................64
13.06 Waiver; Remedies...........................................................64
13.07 Amendment..................................................................64
13.08 No Third Party Beneficiary.................................................64
13.09 No Assignment; Binding Effect..............................................64
13.10 Headings...................................................................65
13.11 Consent to Jurisdiction; Venue.............................................65
13.12 Invalid Provisions.........................................................65
13.13 Publicity..................................................................65
13.14 Transfer Taxes.............................................................65
13.15 Governing Law..............................................................65
13.16 Counterparts...............................................................65
13.17 Independence of Covenants and Representations and Warranties...............66
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DISCLOSURE SCHEDULES
Section 2.03 Capitalization
Section 2.04 No Conflict
Section 2.05 Approvals and Filings
Section 2.06 Financial Statements
Section 2.07 Absence of Changes
Section 2.08 No Undisclosed Liabilities
Section 2.09(a) Taxes
Section 2.09(d) Audits
Section 2.09(e) Tax Claims
Section 2.09(h) Tax Rulings
Section 2.10(a) Company Property
Section 2.10(b) Violations
Section 2.10(i) Company Property - Construction
Section 2.11 Tangible Personal Property
Section 2.12(a) Intellectual Property Rights
Section 2.13(a) Contracts
Section 2.14(a) Licenses
Section 2.14(b) Compliance With Laws
Section 2.15 Indebtedness
Section 2.17 Labor Matters
Section 2.18 Insurance
Section 2.19(a) Employee Plans; Employees
Section 2.19(c) Employee Plans; Employees
Section 2.19(f) Employee Plans; Employees
Section 2.19(g) Employee Plans; Employees
Section 2.20 Legal Proceedings
Section 2.21 Transactions with Affiliates
Section 2.24 Chips and Tokens
Section 2.26 Bank Accounts
Section 4.05(f) Capital Expenditures
Section 4.15(f) Players' Club; Non-Solicitation of Unique Customers
EXHIBITS
Exhibit A Employee Payments
Exhibit B Target Working Capital
Exhibit C Working Capital Methodology
Exhibit D Title Report
Exhibit E Escrow Agreement
Exhibit F Xxxxx License
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated as of November 3, 2005 (the
"Agreement"), is entered into by and between THE MAJESTIC STAR CASINO, LLC, an
Indiana limited liability company ("Purchaser") and XXXXX ENTERTAINMENT RESORTS
HOLDINGS, L.P., a Delaware limited partnership ("Seller"). Capitalized terms not
defined elsewhere herein have the meanings set forth in Section 12.01.
WHEREAS, Seller is the owner of all the outstanding shares of capital
stock of Xxxxx Indiana, Inc. ("Xxxxx Indiana" or the "Company" and the shares of
Xxxxx Indiana are referred to herein as the "Shares");
WHEREAS, Xxxxx Indiana is the owner of (i) 50% of the outstanding
membership interest of Xxxxxxxxxx Harbor Riverboats, L.L.C. ("BHR") and (ii) 50%
of the outstanding membership interest of Xxxxxxxxxx Harbor Parking Associates,
LLC ("BHPA");
WHEREAS, the Company is engaged in the business of owning and operating
a riverboat casino (the "Riverboat") and land-based hotel located in Gary,
Indiana (collectively, the "Business"), and in connection therewith holds,
through its ownership interests in BHR and BHPA, an interest in the related
pavilion and parking deck;
WHEREAS, Seller desires to sell, and Purchaser desires to purchase, the
Shares for the consideration and on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
SALE OF STOCK AND CLOSING
1.01 Purchase and Sale. Upon and subject to the terms and conditions
hereof, Seller will sell, convey, transfer, assign and deliver to Purchaser and
Purchaser will purchase from Seller, the Shares.
1.02 Purchase Price.
(a) The purchase price for the Shares shall be Two
Hundred Fifty-Three Million Dollars ($253,000,000.00) (A) minus the sum of the
following: (i) 50% of the amount of long term debt and capitalized lease
obligations and other non-current liabilities of BHR and BHPA as of the Closing
Date ("Joint Venture Closing Date Indebtedness"), (ii) the amount of any long
term debt, capitalized lease obligations and other non-current liabilities of
the Company as of the Closing Date ("Company Closing Date Indebtedness"), (iii)
the $2.0 million Riverboat Owner's License transfer fee required under Indiana
law, (iv) the severance obligations to Employees in the amounts listed on
Exhibit A to the extent not satisfied by the Company prior to the Closing, (v)
the Commitment Fee and (vi) the Development Agreement Obligation, (B) plus or
minus the Estimated Working Capital Adjustment (pursuant to Section 1.02(b)) and
(C) plus or minus the Estimated Cash on Hand Adjustment (pursuant to Section
1.02(c)) (the net amount
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being the "Initial Purchase Price"). Upon execution of this Agreement, Purchaser
shall pay to Seller a deposit of Five Million Dollars ($5,000,000.00) (the
"Deposit"). At the Closing, the Deposit shall be credited against the Initial
Purchase Price. In the event this Agreement is terminated, the Deposit shall be
payable pursuant to the provisions of Section 11.02(b). The Initial Purchase
Price shall be subject to adjustment post-closing pursuant to Section 1.02(c)
and 1.03.
(b) Not less than three Business Days before the Closing
Date, Seller will provide Purchaser a written certification executed by the
Chief Financial Officer of Seller setting forth the estimated Initial Purchase
Price and calculation thereof, including the Joint Venture Closing Date
Indebtedness, the Company Closing Date Indebtedness, estimated Cash on Hand
Adjustment (pursuant to subsection (c)) (the "Estimated Cash on Hand") and
estimated Working Capital ("Estimated Working Capital") of the Company as of the
close of business on the day preceding the Closing Date. The Estimated Working
Capital shall be determined by Seller in accordance with the methodology set
forth in Section 1.03 for preparing the Working Capital Statement The "Estimated
Working Capital Adjustment" shall mean the amount by which the Estimated Working
Capital is more or less than Target Working Capital. The "Estimated Cash on Hand
Adjustment" shall mean the amount by which the Cash on Hand as of the Closing
Date is expected to be more or less than Minimum Cash.
(c) On the Closing Date, Seller will conduct a physical
count of the Casino Cash and provide bank confirmation of cash in the bank
(collectively, the "Cash on Hand"). Purchaser shall have the right to designate
representatives to monitor and observe such physical count. Based upon the
results of such physical count, Seller will provide Purchaser a written
certification executed by the Chief Financial Officer of Seller setting forth
the amount of Cash on Hand, and recalculation of the amount by which Cash on
Hand is more or less than Minimum Cash (the "Cash on Hand Adjustment"). Within
three Business Days after the Closing Date, (iii) if the Actual Cash on Hand is
greater than the Minimum Cash on Hand, Purchaser shall deliver by wire transfer
of immediately available funds to the account specified by Seller in writing for
the Initial Purchase Price, an amount equal to such excess minus the Estimated
Cash on Hand Adjustment (if such amount increased the Initial Purchase Price) or
plus the Estimated Cash on Hand Adjustment (if such amount decreased the Initial
Purchase Price); and (iv) if the Actual Cash on Hand is less than the Minimum
Cash on Hand then Seller shall deliver by wire transfer of immediately available
funds to an account specified by the Purchaser in writing, an amount equal to
such deficiency minus the Estimated Cash on Hand Adjustment (if such amount
decreased the Initial Purchase Price) or plus the Estimated Cash on Hand
Adjustment (if such amount increased the Initial Purchase Price).
1.03 Post-Closing Working Capital Adjustment to the Initial Purchase
Price.
(a) As promptly as practicable, but no later than sixty
(60) days after the Closing Date, Purchaser shall prepare and deliver to Seller
a statement setting forth the Working Capital (the "Working Capital Statement").
The Working Capital Statement shall be prepared (i) in accordance with GAAP;
(ii) consistent with the Company's past practice used in calculating the
components of working capital for the Financial Statements; and (iii) consistent
with the principles and methods set forth on Exhibit C (which Working Capital
calculation shall include a reserve for TITO liability as to the Actual Working
Capital but not the Target Working Capital
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and shall not include any reserves for income Taxes, real property Taxes or
gaming Taxes). In the event that the principles and methods set forth on Exhibit
C differ from the Company's past practices used in calculating the components of
working capital for the Financial Statements or from GAAP, the Estimated Working
Capital and the Actual Working Capital shall be determined in accordance with
the principles and methods set forth on Exhibit C. Following the delivery of the
Working Capital Statement, Purchaser shall give Seller and the independent
accountants of Seller access at all reasonable times to the properties, books,
records and personnel of the Company and the working papers of Purchaser and
Purchaser's auditors relating to the Working Capital Statement. Seller shall
have sixty (60) days following delivery to Seller of the Working Capital
Statement during which to notify Purchaser in writing of any dispute of any item
contained in the Working Capital Statement, which notice shall set forth in
reasonable detail the basis for such dispute and the Working Capital proposed by
Seller (the "Dispute Notice"). If Seller fails to notify Purchaser in writing of
any dispute within such sixty-day period, the Working Capital Statement shall be
deemed to be a "Final Statement." In the event that Seller shall so notify
Purchaser of any dispute on or prior to such sixtieth day, any amounts contained
in the Working Capital Statement that are not disputed by Seller in the Dispute
Notice shall be deemed to have been finally determined for purposes of
calculating the Actual Working Capital. For a period of fifteen (15) days
following the delivery of the Dispute Notice to Purchaser, the Chief Executive
Officer and Chief Financial Officer (or the person or persons performing similar
functions) of each of Purchaser and Seller shall attempt to resolve in good
faith the amounts disputed in the Dispute Notice. During such fifteen-day
period, Purchaser shall be permitted to review the working papers of Seller and
Seller's auditors relating to the Working Capital Statement and the Dispute
Notice, and Seller shall be permitted to review the working papers of Purchaser
and Purchaser's auditors relating to the Working Capital Statement. Amounts
resolved by such attempts within such fifteen (15) day period shall be deemed to
have been finally determined for purposes of calculating the Actual Working
Capital.
(b) If Purchaser and Seller are unable to resolve any
such dispute prior to the end of such fifteen (15) day period, an accounting
firm mutually acceptable to both Purchaser and Seller (the "Independent
Accounting Firm") shall be appointed by Purchaser and Seller to resolve such
dispute and such determination shall be final and binding on the parties to this
Agreement. If Purchaser and Seller cannot mutually agree on the selection of the
Independent Accounting Firm, Purchaser and Seller shall submit to such other
Person's independent accountants the name of a nationally recognized accounting
firm which does not at the time and has not in the prior two years provided
audit or other services to either the Purchaser or Seller or any of their
respective Affiliates, and the Independent Accounting Firm shall be selected by
lot from these two firms by the independent accountants of Purchaser and Seller.
The Independent Accounting Firm so appointed may not make any determination with
respect to any matter not set forth in the Dispute Notice and the Independent
Accounting Firm's determination shall not be more than the Working Capital set
forth in the Dispute Notice or less than the amount of the Working Capital set
forth in the Working Capital Statement. Each of Purchaser and Seller and their
respective independent accountants shall give the Independent Accounting Firm
access at all reasonable times to the properties, books, records and personnel
of the Company for purposes of reviewing the Dispute Notice and the Working
Capital Statement and calculating the Actual Working Capital. The Independent
Accounting Firm shall be instructed to use every reasonable effort to perform
its services within thirty (30) days of submission of the Dispute Notice and the
Working Capital Statement to it and, in any case, as promptly as practicable
after such
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submission. The Working Capital Statement, as modified by resolution
of any disputes by Purchaser and Seller or by the Independent Accounting Firm,
shall be deemed to be a "Final Statement."
(c) Any expenses relating to the engagement of the
Independent Accounting Firm shall be paid by Purchaser and Seller in inverse
proportion to the percentage of the dollar value of the disputed items prevailed
upon by each Person. Each of Purchaser and Seller shall pay all advisors' fees,
charges and expenses incurred by such Person in connection with the dispute.
(d) The Initial Purchase Price shall be adjusted as
follows: (i) if the Actual Working Capital is greater than the Estimated Working
Capital, then Purchaser shall within ten (10) days of Purchaser's receipt of the
Final Statement, deliver by wire transfer of immediately available funds to an
account specified by Seller in writing, an amount equal to such excess; and (ii)
if the Actual Working Capital is less than the Estimated Working Capital, then
Seller shall, within ten (10) days of Seller's receipt of the Final Statement,
deliver by wire transfer of immediately available funds to an account specified
by the Purchaser in writing, an amount equal to such deficiency.
1.04 Closing.
(a) The closing of the transactions contemplated hereby
(the "Closing") shall take place at the offices of Xxxxxx Xxxxxxx PLLC, 000
Xxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, at 9:00 a.m., local time, on the
later of (i) three Business Days following the date on which all conditions to
the obligations of both parties set forth in Articles VI and VII hereof shall
have been satisfied or validly waived, or (ii) or at such other time and place
or on such other date as Purchaser and Seller may mutually agree. The date on
which the Closing actually occurs is hereinafter referred to as the "Closing
Date," and the Closing shall be deemed to have occurred as of and with effect
from 7:00 a.m. central time on the Closing Date.
(b) At the Closing, Purchaser will deliver the (x)
Initial Purchase Price minus the Escrow Funds by wire transfer of immediately
available funds to a bank account designated in writing by Seller and (y) the
Escrow Funds to the Escrow Agent.
(c) At the Closing, Seller will assign and transfer to
Purchaser all of Seller's rights, title and interests in and to the Shares (free
and clear of all Liens, other than Permitted Liens) by delivery of stock
certificates or other evidence of transfer representing all of the Shares, duly
endorsed in blank (or accompanied by duly executed stock powers, and such other
instruments of conveyance, assignment and transfer, in form and substance
reasonably acceptable to Purchaser, as shall be effective to vest in Purchaser
all of Seller's rights, title and interests in and to the Shares). The stock
powers and any other instruments necessary to effect the transfer of the Shares
in and to Purchaser are collectively referred to herein as the "Assignment
Instruments."
(d) At the Closing, there shall also be delivered to
Seller, the Company and Purchaser the certificates and other contracts,
documents and instruments required to be delivered under Articles VI and VII.
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1.05 Further Assurances; Post-Closing Cooperation.
(a) From time to time after the Closing, at Purchaser's
request and without further consideration, Seller shall execute and deliver to
Purchaser such other instruments of sale, transfer, conveyance, assignment and
confirmation, provide such materials and information as are within Seller's
possession or control and take such other actions consistent with this Agreement
as Purchaser may reasonably deem necessary or desirable in order more
effectively to transfer, convey and assign to Purchaser, and to confirm
Purchaser's title to, the Shares and to the full extent permitted by Law, to put
Purchaser in actual possession and operating control of the Assets and
Properties of the Company other than the Excluded Rights, and otherwise to cause
Seller to fulfill its obligations under this Agreement and the Operative
Agreements.
(b) From time to time after the Closing, at Seller's
request and without further consideration, Purchaser shall execute and deliver
to Seller such instruments of transfer, conveyance, assignment and confirmation,
and provide such materials and information as are within Purchaser's or the
Company's possession or control and take such other actions consistent with this
Agreement as Seller may reasonably deem necessary or desirable in order to
transfer, convey and assign to Seller, and to confirm Seller's exclusive right
and title to, the Excluded Rights, and otherwise to fulfill Purchaser's
obligations under this Agreement.
(c) Following the Closing, each party will afford the
other party, their counsel and their accountants, during normal business hours,
reasonable access to the books, records and other data relating to the Business
in its possession or control with respect to periods prior to the Closing and
the right to make copies and extracts therefrom, to the extent that such access
may be reasonably required by the requesting party in connection with (i) the
preparation of Tax Returns or in connection with any audit, amended return,
claim for refund or any suit or proceeding with respect thereto, (ii) the
determination or enforcement of rights or obligations under this Agreement or
any of the Operative Agreements, (iii) compliance with the requirements of any
Governmental or Regulatory Authority or the obtaining of an approval from a
Governmental or Regulatory Authority, (iv) accounting and audit requirements,
(v) securities filings and other regulatory filings in accordance with Law and
(vi) any actual or threatened Action or Proceeding. Each party further agrees
for a period of six years commencing on the Closing Date not to destroy or
otherwise dispose of any such books, records and other data unless such party
first offers in writing to surrender such books, records and other data to the
other parties and such other party does not agree in writing to take possession
thereof within ten days after such offer is made.
(d) If, in order to properly prepare its Tax Returns,
other documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations hereunder,
a party needs to be furnished with additional information, documents or records
relating to the Business not referred to in paragraph (c) of this Section, and
such information, documents or records are in the possession or control of
another party hereto, such other party shall make its best efforts to furnish or
make available such information, documents or records (or copies thereof) at the
recipient's request, and the actual out-of-pocket cost and expenses of the
providing party shall be reimbursed by the other party.
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(e) Notwithstanding anything to the contrary in this
Section, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records that relate to
the matter in controversy shall be governed by applicable rules relating to
discovery, rather than by paragraphs (c) and (d) of this Section.
1.06 Exclusions. Notwithstanding anything herein that may be to the
contrary, Seller shall retain and not transfer, and Purchaser shall not purchase
or acquire, or have any ownership claim or right, in any of the following
(collectively, the "Excluded Rights"): (i) subject to the rights granted to the
Purchaser pursuant to the Xxxxx License, the name "Xxxxx" in all forms, and any
derivation thereof, and any tangible asset bearing, or intangible asset
incorporating, the name "Xxxxx" or Xxxxxx X. Xxxxx'x likeness, including
advertising and promotional materials, trademarks, signage, inventory and
supplies, chips and tokens; (ii) Books and Records which are Seller's corporate
records and which do not principally relate to the Company, provided, however,
that Purchaser shall have the right prior to or after the Closing to review and
make copies of such portions of such Books and Records that relate to or are
used by the Company; (iii) rights and claims of the Company in respect of
liabilities retained by Seller or removed by Seller from the Company prior to
the Closing, including, without limitation, tax refunds and credits attributable
to the operations of the Company prior to the Closing Date; and (iv) rights and
claims of the Company, if any, in respect of the Affiliate Agreements.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as set forth in this
Article II.
2.01 Organization and Qualification. Seller is a limited partnership
duly organized validly existing and in good standing under the laws of the State
of Delaware. Xxxxx Indiana is a corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware. Xxxxx Indiana has all
requisite corporate power and authority to own and operate its properties and
assets and to carry on its business as now being conducted. Xxxxx Indiana is
duly qualified and is authorized to do business and is in good standing as a
foreign corporation in all jurisdictions in which the nature of its activities
and of its properties makes such qualification necessary. Except for its
interests in BHR and BHPA, Xxxxx Indiana owns no equity securities of any other
corporation, limited partnership or similar entity and Xxxxx Indiana is not a
participant in any joint venture, partnership or similar arrangement.
2.02 Authority. Seller has full limited partnership power and authority
to execute and deliver this Agreement and the Operative Agreements to which it
is a party, to perform its obligations hereunder and thereunder to consummate
the transactions contemplated hereby and thereby, including, without limitation,
to sell and transfer the Shares. This Agreement has been duly and validly
executed and delivered by Seller. This Agreement constitutes, and upon the
execution and delivery by Seller of the Operative Agreements to which it is a
party, such Operative Agreements will constitute, legal, valid and binding
obligations of Seller enforceable against Seller in accordance with their terms.
Seller has, and as of the Closing Date will have, the full limited partnership
power and authority to convey, and will convey to Purchaser at Closing, good and
valid title to the Shares, free and clear of any and all Liens.
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2.03 Capitalization. The authorized capital stock of Xxxxx Indiana
consists of 1,500 shares of common stock (the "Company Common Stock"), 100
shares of which are issued and outstanding, all of which are owned of record and
beneficially by Seller free and clear of all Liens other than as set forth in
Section 2.03 of the Disclosure Schedule. None of the issued and outstanding
shares of Company Common Stock were issued or will be transferred under this
Agreement in violation of any preemptive or preferential rights of any Person.
Xxxxx Indiana does not have preferred stock authorized. All issued and
outstanding shares of the Company Common Stock (i) have been duly authorized and
validly issued, (ii) are fully paid and nonassessable, and (iii) were issued in
compliance with all applicable state and federal laws concerning the issuance of
securities, the Xxxxx Indiana Articles of Incorporation, the Xxxxx Indiana
Bylaws, and the terms of any Contract to which Seller or Xxxxx Indiana is a
party or bound. There are no bonds, debentures, notes or other indebtedness of
Xxxxx Indiana convertible into securities having voting rights. There are no
equity interest or other securities of Xxxxx Indiana reserved for issuance or
any outstanding subscriptions, options, warrants, rights, convertible or
exchangeable securities, proxy or shareholder agreements, or other Contracts
(other than this Agreement) granting to any Person any interest in or right to
acquire at any time, or upon the happening of any stated event, from Xxxxx
Indiana of any of its equity interests. Seller has not granted any proxy or
otherwise entered into any voting trust or voting agreement with any Person with
respect to the Shares.
2.04 No Conflict. Except as set forth in Section 2.04 of the Disclosure
Schedule, the execution and delivery by Seller of this Agreement does not, and
the execution and delivery by Seller of the Operative Agreements and the
performance by Seller of its obligations contemplated hereby and thereby will
not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the Organizational Documents of Seller or
Xxxxx Indiana;
(b) conflict with or result in a breach of any provision
of, constitute (with or without notice or lapse of time or both) a default
under, result in a modification or cancellation of, or give rise to any right of
termination or acceleration in respect of, any Contract to which Seller or Xxxxx
Indiana is a party or by which their respective Assets and Property may be
bound, other than Contracts between Xxxxx Indiana and BHPA's lender;
(c) result in the creation of any Lien upon, or any Person
obtaining the right to acquire, the Shares or any of the Assets and Property of
Xxxxx Indiana; or
(d) assuming all required consents and approvals set
forth in Section 2.05 of the Disclosure Schedule are obtained, violate or
conflict with any Law or Order to which Seller or Xxxxx Indiana or any Assets
and Property of Seller or Xxxxx Indiana is subject.
2.05 Approvals and Filings. No consent, approval or action of, filing
with or notice to any Governmental or Regulatory Authority or any other Person
(other than BHPA's lender) on the part of Seller is required in connection with
the execution, delivery and performance of this Agreement or any of the
Operative Agreements or the consummation of the transactions contemplated hereby
or thereby, except as disclosed in Section 2.05 of the Disclosure Schedule.
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2.06 Financial Statements.
(a) Attached as Section 2.06 of the Disclosure Schedule
are true and complete copies of the (x) audited balance sheets of the Company as
of December 31, 2002, December 31, 2003 and December 31, 2004 and the related
audited statements of operations, statements of capital and statements of cash
flows for the fiscal years then ended (including the notes thereto) (the
"Audited Financial Statements"), together with a true and complete copy of the
reports on such audited information by Ernst & Young, LLP, and all letters from
such firm with respect to the results of such audits, (y) the unaudited balance
sheet of the Company as of June 30, 2005 and the related unaudited statement of
operations and cash flows for the six months then ended (the "June Financial
Statements") and (z) the unaudited balance sheet of the Company as of September
30, 2005 and the related unaudited statement of operations and cash flows for
the nine months then ended (the "Unaudited Financial Statements" and, together
with the June Financial Statements and the Audited Financial Statements, the
"Financial Statements").
(b) All such Financial Statements (i) were prepared in
accordance with GAAP (except with respect to the absence of footnotes to the
Unaudited Financial Statements), (ii) fairly present in all material respects
the financial condition and results of operations of the Company as of the
respective dates thereof and for the respective periods covered thereby, subject
in the case of the Unaudited Financial Statements to normal year-end
adjustments, none of which will be material, and (iii) were compiled from Books
and Records of the Company regularly maintained by management and used to
prepare the financial statements of the Company. The Company has maintained its
Books and Records in a manner sufficient to permit the preparation of financial
statements in accordance with GAAP. The Company Financial Statements do not
include any tangible Assets and Properties that will not continue to be owned by
and physically present on Company Property after the Closing Date (except for
inventory sold in the Ordinary Course of Business and Excluded Rights). Other
than as relate to BHPA or BHR, there are no "off-balance sheet arrangements" (as
defined in Item 303(c) of Regulation S-K of the SEC) effected by the Company.
Ernst & Young, which has expressed its opinion with respect to the Audited
Financial Statements, is and has been throughout the periods covered by such
Audited Financial Statements "independent" with respect to the Company within
the meaning of Regulation S-X.
(c) The Company maintains internal accounting controls
and controls over financial reporting sufficient to provide reasonable assurance
that: (i) transactions are executed with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of its financial statements in accordance with GAAP and to maintain
accountability for its assets; (iii) access to its assets is permitted only in
accordance with management's general or specific authorization; (iv) the
reporting of its assets is compared with existing assets at regular intervals;
and (v) accounts, notes and other receivables and inventory are recorded
accurately, and proper and adequate procedures are implemented to effect the
collection thereof on a current and timely basis.
2.07 Absence of Changes. Except for the execution and delivery of this
Agreement, and the transactions to take place pursuant hereto on or prior to the
Closing Date, and except as disclosed in Section 2.07 of the Disclosure
Schedule, since June 30, 2005 there has not been any event or occurrence which
has had a Material Adverse Effect on the Company. In all material
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respects the Company has operated in the Ordinary Course of Business since June
30, 2005, except as disclosed in Section 2.07 of the Disclosure Schedule.
Without limiting the foregoing, except as disclosed in Section 2.07 of the
Disclosure Schedule, there has not occurred, between June 30, 2005 and the date
of this Agreement, any of the following:
(i) any split, combination or reclassification of any
of Xxxxx Indiana's capital stock;
(ii) incurrences by the Company of Indebtedness with
respect to the conduct of the Business in an aggregate principal amount
exceeding $25,000;
(iii) physical damage, destruction or other casualty
loss (whether or not covered by insurance) affecting any tangible asset of the
Company used or held for use in the conduct of the Business having a value in
excess of $2,500 for any single occurrence;
(iv) change in (A) any accounting, financial
reporting, inventory, credit, allowance or Tax practice or policy of the
Company, (B) any method of calculating any bad debt, contingency or other
reserve of the Company for accounting, financial reporting or Tax purposes, (C)
revaluation by the Company of any of its Assets and Properties (whether tangible
or intangible) or (D) any change in the manner of calculation of its slot club
liability;
(v) disposition of any Assets and Properties used or
held for use in the conduct of the Business and which were not replaced by
Assets and Properties of equal or greater value, other than Inventory in the
Ordinary Course of Business, and other dispositions not exceeding $25,000 in the
aggregate;
(vi) creation or incurrence of a Lien, other than a
Permitted Lien, on any Assets and Property used or held in the conduct of the
Business; or capital expenditures or commitments for additions to property,
plant or equipment used or held for use in the conduct of the Business
constituting capital assets not within the capital expenditures budget attached
as Section 4.05(f) of the Disclosure Schedule in an aggregate amount exceeding
$25,000; or
(vii) event, occurrence, development, state of
circumstances, facts or condition of any character that has had or would
reasonably be expected to have, individually or in the aggregate a Material
Adverse Effect on the Company.
2.08 No Undisclosed Liabilities. Except as reflected in Section 2.08 of
the Disclosure Schedule or in the Financial Statements, the Company has no
Liabilities of a type required by GAAP to be disclosed in the Financial
Statements, other than Liabilities incurred in the Ordinary Course of Business
subsequent to June 30, 2005.
2.09 Taxes.
(a) The Company has timely filed (taking into account all
valid extensions of time for filing) with the appropriate Taxing authorities all
material federal, state and local Tax Returns required by Law to be filed by the
Company and (b) the Company will timely file any such returns required by Law to
be filed (taking into account all valid extensions of time for filing) on or
prior to the Closing Date. Except as set forth in Section 2.09(a) of the
Disclosure
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Schedule, (i) such Tax Returns are (and, to the extent they will be
filed prior to the Closing Date, will be) complete and accurate in all material
respects, (ii) the Company does not have pending any request for an extension of
time within which to file Tax Returns and (iii) all Taxes due and owing by the
Company (whether or not shown on any Tax Return) have been paid. The Company has
withheld and paid all Taxes required to have been withheld and paid in
connection with any amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party.
(b) The Company has not been a member of an Affiliated
Group filing a consolidated Tax Return. Xxxxx Indiana has not filed consolidated
tax returns with any other party.
(c) The Company has no liability for the Taxes of any
Person other than the Company (i) under Reg. Section 1.1502-6 (or any similar
provision of state, local, or foreign law), (ii) as a transferee or successor,
(iii) by contract, or (iv) otherwise. The Company has no obligation under any
Tax sharing agreement or similar arrangement with any other Person with respect
to Taxes of such other Person.
(d) Except as reflected in Section 2.09(d) of the
Disclosure Schedule, (i) no federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of the Company (ii) the Company has not
received notice of any such pending audits or proceedings and (iii) there are no
outstanding waivers extending the statutory period of limitation relating to the
payment of Taxes due from the Company.
(e) Except as set forth in Section 2.09(e) of the
Disclosure Schedule, neither the IRS nor any other Taxing authority (whether
domestic or foreign) has asserted, or to the Knowledge of the Seller threatened
to assert, against the Company any material deficiency or material claim for
Taxes. The Company has disclosed on its federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of federal
income Tax within the meaning of Code Section 6662.
(f) There are no Liens for Taxes upon any Assets and
Property of the Company, except for Liens for Taxes not yet due and payable and
as to which adequate reserves have been established on the Financial Statements
of the Company.
(g) The Company is not a party to any agreement,
contract, arrangement or plan that has resulted or could result, separately or
in the aggregate, in the payment of (i) any "excess parachute payment" within
the meaning of Code Section 280G (or any corresponding provision of state, local
or foreign Tax law) and (ii) any amount that will not be fully deductible as a
result of Code Section 162(m) (or any corresponding provision of state, local or
foreign Tax law).
(h) Except as reflected in Section 2.09(h) of the
Disclosure Schedule, the Company has not received a written ruling from any
Taxing authority.
(i) The Company has not been a United States real
property holding corporation within the meaning of Code Section 897(c)(2) during
the applicable period specified in
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Code Section 897(c)(1)(A)(ii). The Company has not filed a consent under Code
Section 341(f) concerning collapsible corporations.
(j) The unpaid Taxes of the Company did not, as of the
date of the Unaudited Financial Statements, exceed the reserve for Tax Liability
(rather than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of the Unaudited
Financial Statements (rather than in any notes thereto). Since the date of the
Unaudited Financial Statements, the Company has not incurred any liability for
Taxes arising from extraordinary gains or losses, as that term is used in GAAP,
outside the Ordinary Course of Business consistent with past custom and
practice. The deferred tax balances of the Company as of the date of the
Unaudited Financial Statements are correct and accurate in all material respects
in accordance with GAAP. No material adjustments were made to the deferred tax
accounts from the date of the December 31, 2004 audited financial statements.
(k) Except as may result from actions taken by Seller as
permitted under Section 8.05, the Company will not be required to include any
item of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result of
any:
(i) change in method of accounting for taxable period
ending on or prior to the Closing Date;
(ii) intercompany transaction or excess loss account
described in Treasury Regulations under Code Section 1502 (or any corresponding
or similar provision of state, local or foreign income Tax law);
(iii) installment sale or open transaction
disposition made on or prior to the Closing Date; or
(iv) prepaid amount received on or prior to the
Closing Date.
(l) The Company has not made an election under Code
Section 382(1)(5). (m) The IRS has not advised the Company that it intends to
assert any tax deficiency other than as disclosed on Section 2.09(e) of the
Disclosure Schedule.
2.10 Company Property.
(a) The Company does not own any real property. Section
2.10(a) of the Disclosure Schedule lists all leases of real property by the
Company. Except as disclosed in Section 2.10(a) of the Disclosure Schedule, (i)
the Company has a valid leasehold interest in and to the Company Property (as
hereinafter defined), subject in each case to the express terms and conditions
of the applicable lease and otherwise free and clear of all Liens other than
Permitted Liens, Permitted Exceptions, the rights of the lessor pursuant to each
lease, and Liens on the fee estate and/or other interests in the real property
which is the subject of the lease which are superior to that held by the
Company, and (ii) the Company is in exclusive possession of (y) the real
property leased by the Company pursuant to the Real Estate Lease dated February
1, 2001 between Industrial Highway Corporation, as landlord, and the Company, as
tenant, as amended by Amendment dated April 4, 2001 and Lease Extension
effective February 1, 2005, and (z) the
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Land (as such term is defined in the Ground Lease dated as of August 29, 1997 by
and between BHR, as lessor, and Xxxxx Indiana Realty, LLC, as lessee)
(collectively, the "Company Property"). There is no material breach or violation
of or default by the Company, or, to the Knowledge of the Company, by any other
party thereto, under any lease with respect to the Company Property, whether or
not such breach, violation or default has been waived and no event has occurred
which, with notice or lapse of time or both, would constitute a material breach,
violation of, or default by the Company thereunder, or give rise to a right of
termination, modification, cancellation, foreclosure, imposition of a Lien,
prepayment or acceleration.
(b) Except as disclosed in Section 2.10(b) of the
Disclosure Schedule, to the Knowledge of the Company, none of the Company
Property or the Improvements, or the use and operation thereof, contravene or
violate any building, zoning, subdivision, land use, administrative,
occupational safety and health, the Americans with Disabilities Act,
environmental or other similar applicable Law in any material respect where the
Company is responsible to cure same under the applicable lease document. The
Company has not received any written notice from any Governmental or Regulatory
Authority advising the Company of (i) a violation of any such Laws or (ii) any
action which must be taken to avoid a violation thereof.
(c) The Company has obtained all material licenses and
permits required from all Governmental or Regulatory Authorities having
jurisdiction over the Company Property and the Riverboat.
(d) To the Knowledge of the Seller, there are no pending
or threatened condemnation proceedings relating to the Company Property.
(e) The Company has not received written notice of any
special Tax assessment relating to the Company Property or the Riverboat or any
portion thereof and, to the Knowledge of the Seller, there is no pending or
threatened special assessment.
(f) Except with respect to real property and/or
Improvements owned by BHR and/or BHPA, the Company Property, the Riverboat and
the Improvements constitute all of the real property and other Improvements
which the Company owns or in which the Company holds an interest.
(g) To the Knowledge of the Seller, the Riverboat and the
Improvements on the Land have no structural defects, and have been maintained in
all material respects in accordance with standard industry practice.
(h) The Company has not received any written notice which
remains outstanding and uncured of the Company's default in complying with the
terms and provisions of any of the covenants, conditions, restrictions or
easements constituting a Permitted Exception and to the Knowledge of the Seller,
no other party to such a document is in default thereunder.
(i) Except as disclosed in Section 2.10(i) of the
Disclosure Schedule, (x) since March 28, 2005, there has been no construction
performed by any third party on, or modifications to, the Company Property, and
(y) other than as set forth in the Title Report or otherwise disclosed to
Purchaser in writing, there are no unpaid bills or any matters or disputes
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created by the Company which, if such unpaid bills, matters and disputes are not
resolved on or before the Closing Date, could ripen into mechanic's liens
relating to the Company Property.
(j) The Company has paid all amounts owed by the Company for
utility and services under any lease of Company Property, and all business,
rent, sales or other taxes or fees imposed due to use of the Company Property to
the extent the same were due and payable.
(k) No escrow payments have been required by the landlords on
account of real estate Taxes.
2.11 Tangible Personal Property.
(a) The Assets and Property that constitute tangible personal
property owned by the Company are free and clear of all Liens other than
Permitted Liens, and the liens listed in Section 2.11 of the Disclosure
Schedule. The Assets and Property that constitute tangible personal property
owned by the Company are located at the Company Property or on the Riverboat or
on real property owned by BHR and/or BHPA.
(b) Except as set forth on Section 2.11 of the Disclosure
Schedule, (i) the Technology is in operational condition and has been maintained
in all material respects in accordance with the manufacturers guidelines of such
Technology, (ii) all other Assets and Properties that constitute tangible
personal property owned or leased by the Company are in reasonable working
order, subject to ordinary wear and tear, and (iii) such other Assets and
Property have been maintained in all material respects in accordance with
industry practice.
(c) Except for Excluded Rights and as set forth in Section
2.11 of the Disclosure Schedule, there are no Assets and Property that
constitute tangible personal property, including any slot machine used by the
Company, but owned by, or which will be required to be returned to, Seller or
any of its Affiliates, or which the Company will otherwise not be able to
continue using, following the Closing.
2.12 Intellectual Property Rights.
(a) Section 2.12(a) of the Disclosure Schedule lists all (i)
trademark and service xxxx registrations and applications and common law service
marks owned by the Company, (ii) trademark, service xxxx and tradename license
agreements to which the Company is a party, and (iii) computer software licenses
to which the Company is a party. The Company is not, nor has Seller or the
Company received any notice that the Company is, in default (or with the giving
of notice or lapse of time or both, would be in default) under any Contract to
use Intellectual Property. To the Knowledge of the Company, no such Intellectual
Property is being infringed by any other Person. Neither Seller nor the Company
has received notice that the Company is infringing any Intellectual Property of
any other Person in connection with the conduct of the Business, no claim is
pending or, to the Knowledge of the Company, has been made to such effect and,
to the Knowledge of the Company, the Company is not infringing any Intellectual
Property of any other Person in connection with the conduct of the Business.
Other than the Excluded Property, no other Intellectual Property is used by the
Company or is necessary for the use by the Company in the conduct of the
Business.
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(b) The Company owns or has a valid right to use, pursuant to
license, sublicenses, agreement or permission, the Intellectual Property
necessary for the operation of the Business as presently conducted, except where
such failure would not reasonably be expected to have a Material Adverse Effect.
2.13 Contracts.
(a) Section 2.13(a) of the Disclosure Schedule (with paragraph
references corresponding to those set forth below) contains a true and complete
list of each of the following Contracts or other arrangements (in each case,
other than as relate to BHR or BHPA), to which the Company is a party and by
which any of its Assets and Properties are bound (true and complete copies, (or,
if no written Contract, reasonably complete and accurate descriptions) of which,
together with all amendments and supplements thereto have been provided to the
Purchaser):
(i) all Contracts (excluding employee benefit plans)
providing for a commitment of employment or consultation services for a
specified or unspecified term to, or otherwise relating to employment or the
termination of employment of, any Employee;
(ii) all Contracts with any Person containing any
provision or covenant prohibiting or limiting the ability of the Company to
engage in business activity or compete with any Person in connection with the
Business or prohibiting or limiting the ability of any Person to compete with
the Company in connection with the Business;
(iii) all partnership, joint venture, shareholders'
or other similar Contracts with any Person in connection with the Business;
(iv) the Development Agreement;
(v) all collective bargaining or similar labor
Contracts covering any Employee; and
(vi) all other Contracts (other than employee benefit
plans and the leases identified on Schedule 2.10(a)) with respect to the
Business that (A) involve the payment or potential payment, pursuant to the
terms of any such Contract, by or to the Company of more than $25,000 annually
and (B) cannot be terminated within 30 days after giving notice of termination
without resulting in any material cost or penalty to the Company.
(b) As of the date of this Agreement, the Development
Agreement Obligation is approximately $2,068,566. The Company has in all
material respects performed and as of the Closing will have performed all
obligations required to be performed by it as of such dates under the
Development Agreement.
(c) There is no material breach or violation of or default by
the Company, or, to the Knowledge of the Company, by any other party thereto,
under any Contract listed on Section 2.13(a) of the Disclosure Schedule, whether
or not such breach, violation or default has been waived, and no event has
occurred which, with notice or lapse of time or both, would constitute a
material breach, violation of, or default by the Company thereunder, or give
rise to a
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right of termination, modification, cancellation, foreclosure, imposition of a
Lien, prepayment or acceleration.
2.14 Licenses and Compliance with Laws.
(a) Section 2.14(a) of the Disclosure Schedule contains a true
and complete list of all material Licenses held by the Company. Prior to the
execution of this Agreement, the Company has delivered to Purchaser true and
complete copies of all such material Licenses.
(b) Except as disclosed in Section 2.14(b) of the Disclosure
Schedule:
(i) the Company and each of its directors, officers
and persons performing management functions similar to officers collectively own
or validly hold, in the Company's name or in such individual's own name, all
Licenses that are material, individually or in the aggregate, to the Business;
(ii) each License is valid, binding and in full force
and effect and no event has occurred which could reasonably be likely to result
in the revocation, non-renewal, modification, supervision, limitations or
termination of any License that currently is in effect;
(iii) the Company is not, nor has it received any
written notice that it is, in default (or with the giving of notice or lapse of
time or both, would be in default) under any License;
(iv) the Company and each of its directors, officers
and persons performing management functions similar to officers are in
compliance with terms of the Licenses in all material respects;
(v) the execution, delivery and performance by the
Company of this Agreement and the Operative Agreements to which it is a party,
and the consummation of the transactions contemplated hereby and thereby, will
not (A) result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (B) result in or give to any
Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (C) result in the creation or
imposition of any Lien upon the Company or any of its Assets and Properties
under, any License;
(vi) the Business is not being conducted in material
violation of any Law (including, without limitation any Gaming Law);
(vii) other than with respect to normal oversight of
Governmental or Regulatory Authorities occurring in the ordinary course of
business, neither Seller nor the Company has received any written notice of any
pending investigation or review by any Governmental or Regulatory Authority with
respect to the Company, and, to the Knowledge of the Company, no such
investigation or review is threatened;
(viii) the Company has maintained and will maintain
at all times reserves for working capital, capital improvements, replacements
and/or contingencies to the
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extent, and in the amounts, required by the Gaming Laws, including the cash
reserve requirements thereunder;
(ix) the Company has not received any written claim,
demand, notice, complaint, court order or administrative order from any
Governmental or Regulatory Authority since January 1, 2005 under, or relating
to, any violation or possible violation of any Gaming Laws that did or would
result in fines or penalties of $100,000 or more and, to the Knowledge of the
Company, there is no fact or event which would reasonably be expected to result
in receipt of any such claim, demand, notice, complaint, Order from any
Governmental or Regulatory Authority, and
(x) none of the Company, Seller nor any of their
directors, officers, employees or stockholders, has made any payments to any
Person in connection with its business, which payments violate applicable Law,
including without limitation, the Foreign Corrupt Practices Act.
2.15 Indebtedness.
(a) Except as set forth in Section 2.15 of the Disclosure
Schedule, the Company has no outstanding intercompany Indebtedness or other
intercompany obligations to Seller (including its direct and indirect
subsidiaries and Affiliates) or any obligation to incur the same, and none of
Seller or any other Affiliate of Seller (including its direct and indirect
subsidiaries and Affiliates) has any Claim, on account of intercompany
Indebtedness or otherwise, against the Company. Following the Closing, the
Company will have no outstanding intercompany Indebtedness or other intercompany
obligations to Seller (including its direct and indirect subsidiaries and
Affiliates).
(b) Except for the matters set forth in Section 2.15 of the
Disclosure Schedule, and as otherwise reflected in the Financial Statements, as
of the Closing Date the Company will have no Indebtedness.
2.16 Environmental Matters.
(a) Definitions. The following terms, when used in this
Section, shall have the following meanings. Any of these terms may, unless the
context otherwise requires, be used in the singular or the plural depending on
the reference.
(i) For purposes of this Section only, the term "the
Company" shall mean Xxxxx Indiana and Xxxxx Indiana Realty, LLC.
(ii) "Hazardous Substance" shall mean any pollutant,
contaminant, chemical, waste and any toxic, infectious, carcinogenic, reactive,
corrosive, ignitable or flammable chemical or chemical compound or hazardous
substance, material or waste, whether solid, liquid or gas, including, without
limitation, any quantity of asbestos in any form, urea formaldehyde, PCB's,
radon gas, crude oil or any fraction thereof, all forms of natural gas,
petroleum products or by-products or derivatives, radioactive substance or
material, pesticide waste waters, sludges, slag and any other substance,
material or waste that is subject to regulation, control or remediation under
any Environmental Laws.
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(iii) "Environmental Laws" shall mean all regulations
of any Governmental or Regulatory Authority which regulate or relate to the
protection or clean-up of the environment, the use, treatment, storage,
transportation, generation, manufacture, processing, distribution, handling or
disposal of, or emission, discharge or other release or threatened release of,
Hazardous Substances or otherwise dangerous substances, wastes, pollution or
materials (whether gas, liquid or solid), the preservation or protection of
waterways, groundwater, drinking water, air, wildlife, plants or other natural
resources, or the health and safety of persons or property, including, without
limitation, protection of the health and safety of employees. Environmental Laws
shall include, without limitation, the Federal Insecticide, Fungicide,
Rodenticide Act, Resource Conservation & Recovery Act, Clean Water Act, Safe
Drinking Water Act, Atomic Energy Act, Occupational Safety and Health Act, Toxic
Substances Control Act, Clean Air Act, Comprehensive Environmental Response,
Compensation and Liability Act, Emergency Planning and Community Right-to-Know
Act, Hazardous Materials Transportation Act and all analogous or related
federal, state or local law, each as amended.
(iv) "Environmental Conditions" means a Release on
the Company Property.
(b) Company Property. During the period that the Company has
leased the Company Property, the Land and, to the Knowledge of the Company, the
balance of the Company Property has been leased or operated by the Company in
all material respects in compliance with all Environmental Laws and in a manner
that will not give rise to any fine, penalty or sanction against the Company
under Environmental Laws. Without limiting the foregoing, except as disclosed in
the Environmental Report, during the period that the Company has leased the
Company Property, (i) there is not and has not been any Hazardous Substance
used, generated, treated, stored, transported, disposed of or handled at the
Company Property, except for quantities of any such Hazardous Substances stored
or otherwise held on, under or about the Company Property in compliance with all
Environmental Laws in all material respects and necessary for the operation of
the Business, (ii) in all material respects, the Company has at all times used,
generated, treated, stored, transported, disposed of or otherwise handled their
Hazardous Substances in compliance with all Environmental Laws and in a manner
that will not result in fine, penalty or sanction of the Company under
Environmental Laws, and (iii) to the Knowledge of the Company, there is not now
any underground or above-ground storage tank or pipeline at the Land where the
installation, use, maintenance, repair, testing, closure or removal of such tank
or pipeline was not in compliance with all Environmental Laws in all material
respects and, there has been no Release from or rupture of any such tank or
pipeline, including, without limitation, any Release from or in connection with
the filling or emptying of such tank. The Company has, and at all times has had,
all Licenses, which are required under applicable Environmental Laws
("Environmental Permits") in connection with the conduct of the Business, and is
and at all times has been, in material compliance with the terms and conditions
of all such Environmental Permits.
(c) Notice of Violation. The Company has not received any
written notice of alleged, actual or potential responsibility for, or any
written inquiry or investigation regarding, (i) any Release or threatened
Release of any Hazardous Substance at any location, whether at the Company
Property or otherwise or (ii) an alleged violation of or non-compliance with the
conditions of any Environmental Permit.
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(d) Environmental Conditions. Except as set forth in the
Environmental Report, to the Knowledge of the Company, there are no
Environmental Conditions at the Land.
(e) Environmental Audits or Assessments. The Company has
delivered to Purchaser true, complete and correct copies of the Environmental
Report and all other environmental reports and updates thereto obtained by the
Company which have been conducted at the Company Property within five years from
the date of this Agreement.
(f) Proceedings. There are no Proceedings, including citizens
suits, pending or to the knowledge of the Company threatened, against the
Company based on Environmental Laws, or otherwise arising from the Company's
activities involving Hazardous Materials, including Proceedings under
Environmental Laws based on the generation, transportation, treatment, storage,
recycling or disposal of Hazardous Materials or the failure to have any required
Environmental Permits.
2.17 Labor Matters. The Company is not a party to any collective
bargaining agreement with respect to its Employees with any labor organization,
union, group or association, except as listed in Section 2.17 of the Disclosure
Schedule. To the Knowledge of the Company, there are no current activities of
any labor union to organize any non-union Employees of the Company. There is no
current labor strike or labor disturbance or, to the Knowledge of the Company,
threat thereof against the Company by or with respect to any Employees of the
Company nor is any grievance outstanding against the Company under any
collective bargaining agreement.
2.18 Insurance. Section 2.18 of the Disclosure Schedule contains copies
of all policies or binders of fire, liability, title, worker's compensation,
product liability and other forms of insurance maintained by the Company. There
has not been any failure to give notice or present any claim under any such
coverage in a due and timely fashion. There are no outstanding unpaid premiums
which are due and payable and no notice of cancellation or non-renewal of any
such coverage has been received by the Company. There are no outstanding
performance bonds covering or issued for the benefit of the Company other than
as described in Section 2.18 of the Disclosure Schedule. All such insurance
policies 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
in Section 2.18 of the Disclosure Schedule. 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.
2.19 Employee Plans; Employees.
(a) Section 2.19(a) of the Disclosure Schedule contains a true
and complete list of all employee benefit plans, including, but not limited to,
pension, profit sharing, incentive, bonus, deferred compensation, retirement,
stock option, equity purchase, severance, medical and hospitalization,
insurance, vacation, salary continuation, sick pay, welfare, fringe benefit and
other employee benefit plans, contracts, programs, policies and arrangements,
whether written or
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oral, which the Company maintains or has maintained, or under which the Company
has or had any obligations with respect to any employee, now or at any time
during the five year period ending on the Closing Date (the "Plans").
(b) The Company has no unfunded liabilities in connection with
any of the Plans, all contributions, premium payments and other payments due
from the Company to or under such Plans have been paid in a timely manner, and
all additional contributions, premium payments and other payments due on or
before the Closing Date shall have been paid by that date.
(c) Except as set forth in Section 2.19(c) of the Disclosure
Schedule, with respect to each of the Plans:
(i) each Plan has been established, maintained,
funded and administered in all material respects in accordance with its
governing documents, and all applicable provisions of ERISA, the Code, other
applicable law, and all regulations thereunder;
(ii) all material disclosures to employees and all
filings and other reports relating to each such Plan and required (under ERISA,
the Code, other applicable law, including federal and state securities laws, and
all regulations thereunder) to have been made or filed on or before the Closing
Date have been or will be duly and timely made or filed by that date;
(iii) there is no litigation, disputed claim (other
than routine claims for benefits), governmental proceeding, audit, inquiry or
investigation pending or, to the Knowledge of the Company, threatened with
respect to any such Plan, its related assets or trusts, or any fiduciary,
administrator or sponsor of such Plan;
(iv) Seller has delivered to Purchaser true and
complete copies of the following: the current Plan document (including a written
description of all oral Plans), any amendments thereto, and the related summary
plan description, if any; each trust or custodial agreement and each deposit
administration, group annuity, insurance or other funding agreement associated
with each such Plan; for the last three Plan years, the financial information or
reports (including any FASB required reports, if applicable), valuation reports,
and/or actuarial reports relating to each such Plan; all Internal Revenue
Service and other governmental agency rulings relating thereto, and all
applications for such rulings; and all filing and reports (including the Annual
Report Form 5500 series, if applicable) filed with any governmental agency at
any time during the three year period ending on the Closing Date, along with all
schedules and reports filed therewith;
(v) neither any such Plan nor any other person or
entity has engaged in a "prohibited transaction" (as defined in ERISA Section
406 or Code Section 4975) with respect to such Plan, for which no individual or
class exemption exists;
(vi) each Plan which is a "group health plan" (as
defined in Code Section 5000(b)(1)) has complied and will comply at all times up
to the Closing Date in all material respects with the applicable requirements of
ERISA Sections 601 and 602, Code Section
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162(k) (through December 31, 1988) and Code Section 4980B (commencing on January
1, 1989); and
(vii) no such Plan is an "employee welfare benefit
plan" (as defined in ERISA Section 3(1)) that provides benefits to or on behalf
of any person following retirement or other termination of employment (except to
the extent required by Code Section 4980B or Part 6 of subtitle B of Title I of
ERISA).
(d) With respect to each Plan which is an "employee pension
benefit plan" (as defined in ERISA Section 3(2)):
(i) no event has occurred and no condition exists
relating to any such Plan that would subject the Company or Purchaser to any tax
under Code Sections 4972 or 4979, or to any liability under ERISA Section 502;
(ii) to the extent applicable, no such Plan has
experienced any "accumulated funding deficiency" (as defined in Code Section
412), whether or not waived, at any time;
(iii) no such Plan is subject to Title IV of ERISA;
and
(iv) no such Plan is a "multiemployer plan" (as
defined in ERISA Section 3(37)).
(e) with respect to each Plan which is a "multiemployer plan"
(as defined in ERISA Section 3(37)), to the Knowledge of the Company, the
foregoing representations would also be true with respect to such multiemployer
plan; and Seller has delivered to Purchaser data which accurately discloses its
total contribution base units for each of the last eight consecutive Plan years.
(f) Section 2.19(f) of the Disclosure Schedule lists, for each
present Employee of the Company whose annual rate of compensation exceeds
$50,000, the name of such Employee and the current salary level and title of
such Employee, and the date of Employment and any bonus or incentive
compensation paid during 2005 or 2004 to each such Employee.
(g) Except as disclosed in Section 2.19(g) of the Disclosure
Schedule, no 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.
2.20 Legal Proceedings, Etc. Except as disclosed in Section 2.20 of the
Disclosure Schedule, there are no Actions or Proceedings pending by or against
or, to the Knowledge of the Company, threatened against, relating to or
affecting Seller or Xxxxx Indiana that questions 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 Seller or
the Company in connection with this Agreement or which is against Xxxxx Indiana
or its Assets
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and Properties and which involves an amount in excess of $25,000 (if insured) or
an amount in excess of $10,000 if not insured or if involving a workers'
compensation claim.
2.21 Transactions with Affiliates. Except as disclosed in Section 2.21
of the Disclosure Schedule, (i) there are no services provided to the Company by
any Affiliate for which an expense is not reflected in the Company's financial
statements, and (ii) since January 1, 2004, no items of tangible personal
property (other than cash) have been transferred by the Company to any Affiliate
of the Company. Seller has delivered to the Purchaser all third-party contracts
to which both the Company and Seller, or any of their Affiliates, is a party.
2.22 Receivables. Seller has delivered to the Purchaser a complete,
accurate and current copy of a list and the aging of the accounts receivable and
casino collection receivables, by customer, of the Company that are outstanding
as of September 30, 2005. All accounts receivable and casino collection
receivables as reflected in the Financial Statements or as will be reflected in
the Working Capital Statement (a) arose (or will arise) out of bona fide sales
and deliveries of goods, performance of services or other transactions in
connection with the business and (b) to the Knowledge of the Company, are not
subject to material defenses, setoffs or counterclaims other than normal
allowances.
2.23 Progressive Slots. The progressive slot machine Liabilities of the
Company (i) are measured on a daily basis, or otherwise in compliance with
applicable Gaming Laws, (ii) include any Liabilities of progressive slot
machines that have been removed from the casino floor and are required to be
returned to the casino floor and (iii) are reflected on the Company's Financial
Statements.
2.24 Chips and Tokens. Section 2.24 of the Disclosure Schedule sets
forth a list of all current series of chips and tokens of the Company. All
earlier series of chips and tokens issued by the Company have been properly
redeemed and returned, with no future liability of the Company. The Company has
not written off any chip or token Liabilities in the last five years.
2.25 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Company, Seller
and Purchaser without the intervention of any Person on behalf of Seller in such
manner as to give rise to any valid claim by any Person against Purchaser for a
finder's fee, brokerage commission or similar payment.
2.26 Bank Accounts. Section 2.26 of the Disclosure Schedule sets forth
the names and locations of all banks in which the Company has a bank account or
safe deposit box, if any, and the names of all Persons authorized to draw
thereon or to have access thereto
2.27 Sufficiency of Assets and Contracts. After the Closing, the
Company will own, have a valid leasehold interest in, or have possession of a
valid license to use, all the material Assets and Properties necessary for the
conduct of its Business as presently conducted, other than the Excluded Rights.
After giving effect to the Closing, the Company will not license or lease from
Seller or an Affiliate of Seller any Assets and Properties necessary for the
conduct of its Business as presently conducted, it being understood that
following the Closing the Company will no longer have the right to use the name
"Xxxxx" in the conduct of the Business.
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2.28 Exclusive Representations; No Material Misstatements or Omissions.
Except for the representations and warranties contained in this Agreement, the
Seller makes no other express or implied representations or warranties
concerning the Company or any of its Assets and Property or any transactions
contemplated hereby. The representations and warranties contained in this
Article II do not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the factual statements contained in this
Article II, in light of the circumstances under which they were made, not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as set forth in this
Article III.
3.01 Organization and Qualification of Purchaser. Purchaser is a
limited liability company duly organized, validly existing and in good standing
under the Laws of the State of Indiana. Purchaser is duly qualified and is
authorized to do business and is in good standing as a foreign corporation in
all jurisdictions in which the nature of its activities and of its properties
makes such qualification necessary. Purchaser is a citizen of the United States
within the meaning of Section 2 of the Shipping Act, 1916, as amended, qualified
to document and operate vessels in the coastwise trade of the United States.
3.02 Authority. Purchaser has full corporate power and authority to
execute and deliver this Agreement and the Operative Agreements to which it is a
party, to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby, including, without limitation, to
purchase the Shares. This Agreement has been duly and validly executed and
delivered by Purchaser. This Agreement constitutes, and upon the execution and
delivery by Purchaser of the Operative Agreements to which it is a party, such
Operative Agreements will constitute, legal, valid and binding obligations of
Purchaser enforceable against Purchaser in accordance with their terms.
3.03 No Conflicts. The execution and delivery by Purchaser of this
Agreement does not, and the execution and delivery by Purchaser of the Operative
Agreements, the performance by Purchaser of its obligations contemplated hereby
and thereby will not:
(a) conflict with or result in a violation or breach of any of
the terms, conditions or provisions of the Organizational Documents of
Purchaser;
(b) except as disclosed on Schedule 3.03(b), conflict with or
result in a breach of any provision of, constitute (with or without notice or
lapse of time or both) a default under, result in a modification or cancellation
of, or give rise to any right of termination or acceleration in respect of, any
Contract to which Purchaser is a party; or
(c) violate or conflict with any Law or Order to which
Purchaser or any assets of Purchaser is subject.
3.04 Governmental Approvals and Filings. Except as disclosed in
Schedule 3.04 to this Agreement, no consent, approval or action of, filing with
or notice to any Governmental or
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Regulatory Authority on the part of Purchaser are required in connection with
the execution, delivery and performance of this Agreement or the Operative
Agreements or the consummation of the transactions contemplated hereby or
thereby. To the knowledge of Purchaser, there is no fact or circumstance which
would reasonably be expected to prevent or materially delay the obtaining of any
consent or approval of any Governmental or Regulatory Authority by Purchaser
which is required to be obtained by Purchaser in connection with this Agreement.
3.05 Litigation. There are no material Actions or Proceedings pending
or, to the knowledge of Purchaser, threatened that question the validity of this
Agreement, Purchaser's right to enter into and perform this Agreement and
consummate the transactions contemplated hereby or any action taken or to be
taken by Purchaser in connection with this Agreement.
3.06 Securities Act Representations. Purchaser is acquiring the Shares
solely 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. Purchaser 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. Purchaser 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. Purchaser acknowledges that the Shares are
not registered under any securities laws and may not be resold or transferred
except pursuant to the registration and other provisions of applicable
securities laws or pursuant to an exemption from such registration.
3.07 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Purchaser or its
Affiliates with Seller without the intervention of any Person on behalf of
Purchaser or its Affiliates in such manner as to give rise to any valid claim by
any Person against Seller for a finder's fee, brokerage commission or similar
payment.
3.08 Financial Capability. Purchaser shall have at Closing sufficient
funds to pay the Initial Purchase Price.
3.09 No Implied Representations. Purchaser acknowledges and agrees
that, except as expressly set forth in this Agreement, neither Seller nor any of
its parents, subsidiaries, Affiliates, agents or representatives or purported
agents or representatives has made, and none of the foregoing entities or
Persons is liable for or bound in any manner by, any express or implied
warranties, guaranties, promises, statements, inducements, representations or
information pertaining to the Business, the Assets or Property of the Company or
any part thereof, the physical condition thereof, environmental matters, the
income, expenses or operation thereof, the financial prospects for the Business
or any other matter or thing with respect thereto, including any existing or
prospective Governmental Authorities provided that the foregoing shall not limit
any remedies of Purchaser with respect to any material furnished in writing by
Seller to Purchaser expressly for inclusion in its offering documents in
connection with the financing of the transactions contemplated hereby.
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ARTICLE IV
COVENANTS OF SELLER
Seller covenants and agrees with Purchaser that, at all times from and
after the date hereof until the Closing, Seller will and will cause the Company
to and, with respect to any covenant or agreement by its terms to be performed
in whole or in part after the Closing, for the period specified therein, Seller
will, comply with all covenants and provisions of this Article IV, except to the
extent Purchaser may otherwise consent in writing, such consent not to be
unreasonably withheld.
4.01 Regulatory and Other Approvals. Seller will, as promptly as
practicable, (i) take all commercially reasonable steps necessary or desirable
to obtain all consents, approvals or actions of, make all filings with and give
all notices to Governmental or Regulatory Authorities or any other Person
required of Seller to consummate the transactions contemplated hereby and by the
Operative Agreements, including, without limitation, those described in Section
2.05 of the Disclosure Schedule, (ii) provide such other information and
communications to such Governmental or Regulatory Authorities or other Persons
as Purchaser or such Governmental or Regulatory Authorities or other Persons may
reasonably request in connection therewith, (iii) cooperate with Purchaser in
connection with Purchaser's efforts to obtain from the City of Gary, Indiana an
amendment to the Development Agreement of Purchaser, terminating the Development
Agreement with the Company and releasing all remaining obligations thereunder of
the Company, including, without limitation, with respect to the Xxxxx
Foundation, which cooperation shall include the Company's execution of the
documents to implement the foregoing and (iv) cooperate with Purchaser in
connection with the performance of its obligations under Sections 5.01 and 5.02.
In furtherance of the foregoing, Seller shall prepare in conjunction with
Purchaser a joint application to the Indiana Gaming Commission seeking approval
of the purchase and sale contemplated by this Agreement and all necessary
related rulings and orders regarding the assumption by Purchaser of the control
and operation of the Business.
4.02 HSR Filings. In addition to, and without limiting Seller's
covenants in Section 4.01, Seller will (i) take promptly all actions necessary
to make the filings required by Seller or its Affiliates under the HSR Act, (ii)
comply at the earliest practicable date with any request for additional
information received by Seller or its Affiliates from the FTC or the DOJ
pursuant to the HSR Act, (iii) take all reasonable efforts to cooperate with
Purchaser in connection with Purchaser's filing under the HSR Act and in
connection with defending and/or resolving any antitrust investigation,
litigation or other inquiry concerning the transactions contemplated by this
Agreement commenced by either the FTC or the DOJ or state attorneys general or
private parties (other than the parties hereto), and (iv) pay half of any and
all filing fees due and payable in connection therewith.
4.03 Investigation by Purchaser.
(a) Subject to the terms of the Confidentiality Agreement
and to applicable Laws (including, without limitation, antitrust Laws and Gaming
Laws), Seller will (i) provide Purchaser and their respective officers,
directors, employees, agents, counsel, accountants, financial advisors,
consultants and other representatives, any Person who is considering providing
financing to Purchaser for all or any portion of the Final Purchase Price, any
appraiser
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of the Assets and Properties all of whom shall have an express duty of
confidentiality to Purchaser for the benefit of Purchaser, Seller and the
Company (collectively, "Purchaser Representatives") with reasonable access, upon
reasonable prior notice (not less than 24 hours), during normal business hours
(or at such other times as Seller may specify) and subject to reasonable
scheduling, to such Employees and agents of the Company who have significant
responsibility for the conduct of the Business, to the Company's and Seller's
accountants and to the Assets and Properties of the Company, and (ii) furnish
Purchaser and such other Persons with all such information and data (including,
without limitation, copies of Contracts, Licenses, and other Books and Records)
concerning the Business, the Assets and Properties of the Company as Purchaser
or any of such other Persons reasonably may request in connection with such
investigation and (iii) permit the Purchaser's senior officers to meet with
their respective personnel who are responsible for the Financial Statements,
internal controls, and disclosure controls and procedures of the Company to
discuss such matters as the Purchaser may deem reasonably necessary or
appropriate for the Purchaser to satisfy its obligations (if any) under SOX
after the Closing Date; provided, however, that (i) Purchaser shall not initiate
contact with Employees or other agents and representatives of the Company
without the prior written consent of such representatives of Seller as shall be
designated by Seller for such purpose (Seller's Representatives), and, at
Seller's option, a Seller Representative or other agent of Seller shall be
present at all such meetings with Employees or other agents and representatives
of the Company and (ii) Purchaser shall not unreasonably interfere with the
operation of the Business.
(b) Seller will reasonably cooperate with Purchaser to
enable Purchaser to consummate its financing (including using reasonable efforts
to provide access to the independent accountants of the Company); provided,
however, that upon request from Seller, Purchaser shall provide copies to Seller
of financing materials, including offering circulars and amendments thereto used
prior to the Closing Date, that contain information about the Company or Seller.
(c) Promptly following the execution of this Agreement,
Seller and Purchaser shall jointly conduct an inventory of (i) the tangible
Assets and Property (other than real property interests, inventory and supplies)
owned by the Company having an initial purchase price in excess of $10,000
(including installment payments), (ii) the tangible Assets and Property leased
by the Company (other than pursuant to individual leases having an annual rental
of less than $25,000 or that are terminable by the Company at or prior to the
Closing without material liability), and (iii) each live game (including gaming
tables), electronic gaming devices (including all slot machines), and other
gaming related equipment owned, leased or otherwise used by the Company which in
the case of owned equipment has an initial purchase price in excess of $10,000
and in the case of leased equipment having an annual rental in excess of
$10,000.
4.04 Financial Statements and Reports; Filings.
(a) As promptly as practicable and in any event not later
than 20 days after the end of each month ending after the date hereof and before
the Closing Date, Seller shall deliver to Purchaser true and complete copies of
the (i) unaudited balance sheet of the Company (including a trial balance which
includes all accounts supporting amounts on such balance sheet) and (ii) related
unaudited statements of operations and cash flows for each such month then
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ended. Such unaudited financial statements shall be prepared on a basis
consistent with the Unaudited Financial Statements specified in Section 2.06. In
addition, Seller shall cause the Company to make representatives of the
Company's management reasonably available upon request of Purchaser to discuss
the Company's operation of the Business.
(b) In addition to the foregoing, on or before November
14, 2005, Seller shall deliver to Purchaser a true and complete copy of the
reviewed balance sheet of the Company as of September 30, 2005 and the related
reviewed statement of operations and cash flows and statement of capital for the
nine months then ended (including the comparative statements and footnotes
thereto) (the "Reviewed September Financial Statements").
(c) Seller will cause the Company to deliver to Purchaser
true and complete copies of such other financial statements, reports and
analyses relating to the Business as may be prepared or received by the Company,
or as Purchaser may otherwise reasonably request.
(d) Seller will cause the Company to deliver copies of
all License applications and other filings made by the Company in connection
with the operation of the Business after the date hereof and before the Closing
Date with any Governmental or Regulatory Authority (other than routine,
recurring filings made in the Ordinary Course of Business consistent with past
practice).
(e) Subject to Gaming Laws, Seller shall cause the
Company to deliver to Purchaser promptly after they become available and, in any
case, within five (5) days after the end of each week, separate reports setting
forth the gross gaming win of the Company during such week. Such reports shall
be prepared in good faith and derived from the Books and Records of the Company.
4.05 Conduct of Business. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Closing, subject to the limitations and exceptions set forth below,
Seller agrees to cause the Company to, (i) carry on the Business and operations
in the Ordinary Course of Business, (ii) pay its debts when due (or within any
applicable grace periods, and subject to any good-faith dispute regarding any
debt) (iii) pay and otherwise perform its obligations in respect of Taxes and
Tax Returns of the Company in accordance with Section 8.02 herein, (iv) maintain
reserves for working capital, capital improvements, replacements and/or
contingencies to the extent, and in the amounts, in each case, required by the
Gaming Laws, including the cash reserve requirements thereunder, (v) maintain
the Company's Assets and Properties in good repair, order and condition (subject
to normal wear and tear and the obligations of the Company's lessors), replace
in the Ordinary Course of Business its inoperable, worn out or obsolete assets
with assets of quality consistent with past practice and, in the event of a
casualty, loss or damage to any property prior to the Closing Date, whether or
not its property is insured, either repair or replace such damaged property to
the condition it was in immediately prior to such casualty, loss or damage and
(vi) use all reasonable efforts consistent with past practices and policies to
keep available the services of its present officers and key Employees and
preserve its relationships with its customers, suppliers, distributors, and
others having business dealings with it. In furtherance and not in limitation of
the foregoing, Seller will cause the Company to refrain from:
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(a) disposing of any material item or portion of the
Assets and Properties used or held for use in the conduct of the Business, other
than Inventory or other current assets in the Ordinary Course of Business
consistent with past practice, or creating or incurring any Lien, other than a
Permitted Lien, on any Assets and Properties used or held for use in the conduct
of the Business;
(b) entering into, amending, modifying, terminating,
granting any waiver under or giving any consent with respect to any material
Contract or any material License other than in the Ordinary Course of Business
consistent with past practice without Purchaser's prior written consent, which
consent shall not be unreasonably withheld or delayed;
(c) violating, breaching or defaulting under in any
material respect, or taking or failing to take any action that would constitute
a material violation or breach of, or default under, any term or provision of
any Contract or any License;
(d) incurring, purchasing, canceling, prepaying or
otherwise providing for a complete or partial discharge in advance of a
scheduled payment date with respect to, or waiving any right of the Company
under, any Liability of or owing to the Company in connection with the Business,
other than in the Ordinary Course of Business consistent with past practice;
(e) engaging in any transaction with respect to the
Business with any officer, director or Affiliate of the Company, either outside
the Ordinary Course of Business or other than on an arm's-length basis;
(f) failing to make capital expenditures consistent with
the capital expenditure budget provided to the Purchaser attached as Section
4.05(f) of the Disclosure Schedule or making capital expenditures or commitments
for additions to property, plant or equipment constituting capital assets on
behalf of the Business not within the capital expenditure budget attached as
Schedule 4.05(f) other than gaming equipment, devices and products acquired in
the Ordinary Course of Business, except upon receipt of the written consent of
Purchaser or failing to undertake maintenance capital expenditures;
(g) increasing the Employees' cash compensation or
severance pay entitlements, or making any other material changes in the
Company's compensation and personnel policies except for reasonable and
customary periodic compensation increases and bonuses based on performance and
consistent with past practice or in accordance with the bonus programs
applicable generally to Employees (collectively, the "Bonus Program"), provided
the Company may enter into retention agreements with employees that do not
materially differ from those retention agreements referenced in Section 2.13(a)
of the Disclosure Schedule;
(h) (i) incurring or assuming any Indebtedness; (ii)
accelerating or delaying collection of notes or accounts receivable in advance
of or beyond their regular due dates or the dates when the same would have been
collected in the Ordinary Course of Business consistent with past practices;
(iii) delaying or accelerating in any material respect payment of any account
payable in advance of its due date or the date such Liability would have been
paid in the Ordinary Course of Business consistent with past practice; (iv)
assuming, guaranteeing, endorsing or otherwise becoming liable or responsible
(whether directly, contingently or
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otherwise) for the obligations of any other Person except in the Ordinary Course
of Business; (v) varying the Company's inventory practices in any material
respect from the Company's past practices, or (vi) except as required to do so
pursuant to any written agreements in existence on the date of this Agreement,
making or authorizing any loans, advances or capital contributions to, or
investments in, any other Person (including advances to employees);
(i) entering into any lease affecting the Company
Property or Improvements, or modifying or amending in any material respect, or
terminate, any of the existing leases with respect to the Company Property
(other than the Affiliate Agreements);
(j) entering into any Contract, or modifying, amending,
renewing or extending any obligation affecting the Company Property or
Improvements or any part thereof subsequent to the Closing Date, in each case
relative to any alterations or improvements to the Company Property;
(k) failing to maintain its existing insurance coverage
in all material respects of all types in effect as of the date hereof; provided,
however, in the event any such coverage shall be terminated or lapse, to the
extent available at reasonable cost, the Company may procure substantially
similar substitute insurance policies which in all material respects are in at
least such amounts and against such risks as are currently covered by such
policies;
(l) entering into any collective bargaining agreement or
any successor collective bargaining agreement or any amendment to any existing
collective bargaining agreement;
(m) making any change with respect to accounting policies
or procedures, other than as required by GAAP or any Governmental or Regulatory
Authority;
(n) taking or committing to take, any action that would
make any representation or warranty of the Seller contained herein inaccurate in
any respect at, or as of any time prior to, the Closing so as to cause the
conditions to the Seller to consummate the transactions contemplated herein not
to be satisfied;
(o) writing up, writing down or writing off the book
value of any assets of the Company, except in the Ordinary Course of Business
consistent with past practice and for depreciation and amortization in
accordance with GAAP consistently applied, and except as otherwise contemplated
by this Agreement with respect to intercompany accounts with Affiliates;
(p) making any distributions except for distributions of
cash in an amount which will not reduce Cash on Hand below the Minimum Cash on
the Closing Date;
(q) engaging in marketing, including the mailing of cash
based promotional activities, food and beverage complimentaries for BHR or hotel
complimentaries in a manner not consistent with past practices;
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(r) failing to continue to make any payments required
under the Development Agreement in a timely manner, including without
limitation, those relating to the Marina Access Road, or
(s) entering into any Contract to do or engage in any of the
foregoing.
4.06 Delivery of Books and Records, etc.; Removal of Property. On the
Closing Date, Seller will cause the Company to deliver or make available to
Purchaser at the location at which the Business is conducted all of the Books
and Records and such other Books and Records as are in the Company's possession
at other locations, and if at any time after the Closing the Company discovers
in its possession or under its control any other Books and Records or other
Assets and Property, it will forthwith deliver such Books and Records or other
Assets and Property to Purchaser; provided, however, such Books and Records as
constitute Excluded Rights shall be governed by the provisions of Section 1.06
herein.
4.07 Non-Competition.
(a) During the period commencing on the Closing Date and
ending on the third anniversary of the Closing Date with respect to the
following clauses (i) and (ii) and ending on the twelve month anniversary of the
Closing Date with respect to the following clause (iii) Seller agrees not to,
directly or indirectly through any of its present or future Affiliates, (i)
engage in the operation of any Competing Business (as defined in paragraph (e)
of this Section) within a 50-mile radius of Gary, Indiana (excluding the area
within the five mile radius of Navy Pier in Chicago, Illinois) (the
"Territory"), (ii) acquire, lease, be a controlling owner, controlling
shareholder, controlling partner, controlling member or controlling equity
holder of, exercise management control over, provide consulting services for, or
acquire or maintain a controlling interest in, any Competing Business that is
located in the Territory or (iii) except as provided in paragraph (b) of this
Section, hire, seek to hire, or recommend or solicit the hiring of, any
Employees who are hired by Purchaser as of the Closing Date or encourage any of
such Employees to terminate their employment with Purchaser unless Purchaser has
first terminated such Person's employment. This Section 4.07 shall continue to
apply to Seller if it is acquired by or merged with or into any other Person who
owns or operates a Competing Business. Further, a licensing by Seller or its
Affiliates of the name "Xxxxx" to any third Person who engages in the foregoing
activities within the Territory shall be deemed a violation of this Section 4.07
by Seller. As used herein, "controlling" means having possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise.
(b) The obligations of the Seller specified in clause
(iii) of paragraph (a) of this Section regarding Employees shall not apply to
hiring such Employees for other than hotel or casino employment.
(c) Seller recognizes that the covenants in this Section
4.07 and the territorial, time and other limitations with respect thereto are
reasonable and properly required for the adequate protection of the acquisition
of the Shares by Purchaser, and agrees that such limitations are reasonable with
respect to its activities and business. Seller agrees and acknowledges that the
violation of the covenants or agreements in this Section 4.07 would cause
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irreparable injury to Purchaser and that the remedy at law for any violation or
threatened violation thereof would be inadequate and that, in the event of a
breach of this Section 4.07, in addition to whatever other remedies may be
available against the Seller at law or in equity, Purchaser shall be entitled to
temporary and permanent injunctive or other equitable relief against the Seller
without the necessity of proving actual damages or posting bond. Seller also
waives any requirement of proving actual damages in connection with the
obtaining of any such injunctive or other equitable relief.
(d) It is the intention of each party hereto that the
provisions of this Section 4.07 shall be enforced to the fullest extent
permissible under the laws and the public policies of the State of Indiana, and
of any other jurisdiction in which enforcement may be sought, but that the
unenforceability (or the modification to conform with such laws or public
policies) of any provisions hereof shall not render unenforceable or impair the
remainder of this Agreement. Accordingly, if any term or provision of this
Section is determined to be illegal, invalid or unenforceable, either in whole
or in part, this Agreement shall be deemed amended to delete or modify, as
necessary, the offending provisions and to alter the balance of this Agreement
in order to render the same valid and enforceable to the fullest extent
permissible as aforesaid.
(e) For purposes of this Section 4.07, "Competing
Business" means the business of owning or operating one or more establishments
conducting a casino, bingo, poker, race book, sports book, race track or
"racino" business, including any of the foregoing which utilize the name
"Xxxxx"; provided, however, owning or operating any establishment operating
under a currently authorized Illinois gaming license shall not be deemed a
Competing Business.
4.08 Title Insurance Policies and Exceptions.
(a) Exhibit D hereto contains a copy of a title report
for the Company Real Property (the "Title Report") prepared by Chicago Title
Insurance Company (the "Title Company"), dated March 28, 2005. The (i) title
exceptions identified on Schedule B as items A - E, inclusive, F1 - F15,
inclusive, F25, F26 (but only to the extent (i) the Company is not a party, or
consented, to the matter(s) described in item F26, or (ii) the Purchaser has
knowledge of such matter(s), F27 - F51, inclusive, and F54 - F57, inclusive, on
the Title Report), and (ii) matters shown on ALTA/ASCM Land Title Survey Section
23, Twp. 37N. R9W, 2nd P.M., dated December 10, 2004, prepared by DLZ Indiana,
LLC as Project No. 0450-8140-70 (the "Existing Survey"), are hereinafter
referred to as "Permitted Exceptions".
(b) Seller shall cause all title exceptions set forth in
the Title Report, other than Permitted Exceptions, to be removed on or before
the Closing. Seller, however, shall have the right to (i) cause the Title
Company to remove any Liens by bonding over such Liens or (ii) obtain the
commitment of the Title Company to insure Purchaser against loss or damage that
may be occasioned by such exceptions that are not Permitted Exceptions.
(c) If reasonably required in order for Purchaser to
obtain updated title policies for the Land, the Company shall order an updated
survey to be prepared and certified to Purchaser, but otherwise comporting with
the Existing Survey, at the cost and expense of Purchaser.
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4.09 Fulfillment of Conditions. Seller shall execute and deliver, and
Seller shall cause the Company to execute and deliver, at the Closing each
Operative Agreement that the Company or Seller are required hereby to execute
and deliver as a condition to the Closing, shall take all commercially
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each other condition to the obligations of Purchaser contained in
this Agreement and will not take or fail to take any action that could
reasonably be expected to result in the nonfulfillment of any such condition.
Seller shall also execute or cause the Company as a member of BHR and BHPA to
execute and deliver at the Closing each Operative Agreement that BHR or BHPA is
required to execute and deliver as a condition to the Closing.
4.10 Industrial Highway Lease. Seller shall cause the Company not to
renew its lease with Industrial Highway Corporation.
4.11 Designation of Manager. Seller shall cause the Company to
designate Purchaser or any other such entity as Purchaser shall identify as the
Company's manager for all alcohol and tobacco related permits pending the
transfer of such permits to Purchaser.
4.12 Acquisition Proposal.
(a) From the date hereof until the Closing Date, Seller
shall not, and shall not authorize or permit any of its Representatives or other
Affiliates, to, directly or indirectly, take any of the following actions: (A)
encourage, solicit, initiate or induce (including by way of furnishing
non-public information) any Acquisition Proposal, (B) enter into any letter of
interest or similar document, agreement, commitment or understanding
contemplating or otherwise relating to any Acquisition Proposal or enter into
any agreement, arrangement or understanding requiring it to abandon, terminate
or fail to consummate the transactions contemplated by this Agreement, (C)
approve, endorse or recommend any Acquisition Proposal, (D) participate in any
way in discussions or negotiations with, or furnish any non-public information
of the Company or Seller to any Person in connection with an Acquisition
Proposal, or (E) take any other action to facilitate any inquiries or the making
of any proposal that constitutes, or could reasonably be expected to lead to,
any Acquisition Proposal. Seller shall immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing and enforce any
confidentiality agreements to which it or the Company is a party. Seller will
take the necessary steps to inform its Representatives of the obligations set
forth in this Section 4.12. It is agreed that any violation of the restriction
set forth in this Section 4.12 by any Representative of Seller shall constitute
a breach of this Section 4.12 by Seller. Notwithstanding the foregoing, in
response to a bona fide written Acquisition Proposal (i) that the Board of
Directors of Parent determines in good faith, after consultation with outside
legal counsel, requires Seller or Parent to provide information to, or to
participate in discussions or negotiations with the Person making such
Acquisition Proposal constitutes a Superior Proposal or could reasonably be
expected to lead to a Superior Proposal, and (ii) which Acquisition Proposal was
unsolicited and made after the date hereof and did not otherwise result from a
breach of this Section 4.12, Seller, after giving Purchaser written notice of
such action, may (x) furnish information with respect to the Company to the
Person making such Acquisition Proposal pursuant to an executed confidentiality
agreement containing terms and provisions at least as restrictive as those
contained in the Confidentiality Agreement between Seller and Purchaser,
provided that all such information has previously been provided to
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Purchaser or is provided to prior to or substantially concurrently with the time
it is provided to such Person, and (y) participate in discussions or
negotiations with the Person making such Acquisition Proposal regarding such
Acquisition Proposal.
(b) For purposes of this Agreement, "Acquisition
Proposal" means any offer or proposal from any person relating to, or that would
reasonably be expected to lead to, any direct or indirect (A) merger,
consolidation, business combination or similar transaction involving the
Company, (B) sale, lease or other disposition directly or indirectly by merger,
consolidation, business combination, share exchange, joint venture or otherwise
of Assets and Property of the Company representing substantially all of the
consolidated assets of the Company, (C) issuance, sale, or other disposition of
(including by way of merger, consolidation business combination, share exchange,
joint venture or any similar transaction) securities (or options, rights or
warrants to purchase, or securities convertible into or exchangeable for such
securities) representing more than 50% of the voting power of Xxxxx Indiana, (D)
transaction (including tender offer or exchange offer) in which any Person shall
acquire beneficial ownership, or the right to acquire beneficial ownership or
any "group" (as defined in Rule 13d-5(b)(1) under the Exchange Act) shall have
been formed which beneficially owns or has the right to acquire beneficial
ownership of more than 50% of the outstanding voting equity of Xxxxx Indiana or
(E) any combination of the foregoing (other than the transaction pursuant to
this Agreement.
(c) For purposes of this Agreement, "Superior Proposal"
means any bona fide written proposal made by a third party to consummate an
Acquisition Proposal on terms which Parent's Board of Directors determines in
good faith (i) to be more favorable to Parent's stockholders, from a financial
point of view, than the transactions contemplated by this Agreement, and (ii) is
reasonably capable of being completed on the terms proposed, taking into account
all financial, regulatory, legal and other aspects of such proposal.
(d) Seller shall, as promptly as practicable (and in no
event later than 2 Business Days after receipt thereof), advise Purchaser of any
inquiry received by it relating to any potential Acquisition Proposal and of the
material terms of any proposal or inquiry, including the identity of the Person
making the same, that it may receive in respect of any such potential
Acquisition Proposal, or of any information requested from it or of any
negotiations or discussions being sought to be initiated with it, shall furnish
to Purchaser a copy of any such proposal or inquiry, if it is in writing, or a
written summary of any such proposal or inquiry, if it is not in writing and
shall keep Purchaser fully informed on a prompt basis with respect to any
developments with respect to the foregoing.
4.13 Notice. Seller shall promptly notify Purchaser in writing of, and
shall use its reasonable best efforts to cure prior to the Closing Date, any
event, transaction or circumstance, as soon as practical after it becomes known
to Seller, that causes or may reasonably be expected to cause any covenant,
obligation or agreement of Seller under this Agreement to be violated or remain
unfilled in any material respect or that causes or may reasonably be expected to
cause any representation or warranty of Seller contained in this Agreement to be
untrue in any material respect. No written notice given pursuant to this Section
4.13 shall have any effect on the representations, warranties, covenants,
obligations or agreements contained in this Agreement
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for purposes of determining satisfaction of any condition contained herein,
except as set forth in Section 10.01.
4.14 Affiliate Agreements. On or before Closing, (i) Seller (or the
appropriate Affiliate of Seller) and the Company shall terminate the agreements,
or the Company's participation in the agreements, listed in Schedule 2.21 of the
Disclosure Schedule (the "Affiliate Agreements").
4.15 Players' Club.
(a) Section 4.15 of the Disclosure Schedule will include
as of the Closing Date (i) the Players' Club database for the Company comprised
of (x) customers who are not, or at any time during the prior twelve months were
not, also listed on the Lists of any other operating property of Seller or its
Affiliates (the "Unique Customers") and (y) customers who are also listed on the
Lists of any other operating property of Seller or its Affiliates, and (ii) a
list of each customer who had been included in the Players' Club database at any
time during the 24 months prior to the Closing Date but who are not included as
of the Closing Date.
(b) Seller shall take such actions as are necessary and
acceptable to Purchaser with respect to the information contained in the
Players' Club database to ensure that the Players' Club database as it relates
to the Unique Customers of the Company is the sole and exclusive property of the
Company from and after the Closing Date. Such actions shall include the
destruction of all tangible media (including that maintained in any computer
memory, storage media or similar form) containing the Players' Club database as
it relates to the Unique Customers. Neither Seller nor any Affiliate shall use
the Players' Club database relating to Unique Customers after the Closing Date
nor will Seller or any of its Affiliates engage in any direct or targeted
solicitation of any Unique Customers provided that the foregoing shall not be
deemed to restrict Seller's or its Affiliates untargeted or indirect
solicitation of customers for casinos located outside the Territory.
4.16 Intercompany Account Settlement. All intercompany accounts or
amounts payable (or accrued) by Seller or any of its Affiliates (other than the
Company), on the one hand, to the Company, on the other hand, shall prior to the
Closing Date, be netted against any intercompany accounts or amounts payable (or
accrued) by the Company, on the one hand, to Seller or any of its Affiliates
(other than Company), on the other hand, and the balance of any liability of the
Company, if any, shall be contributed by Seller to the capital of the Company
(collectively, the "Intercompany Account Settlement"). After giving effect to
the consummation of the Intercompany Account Settlement, the Company shall not
owe or be liable for the satisfaction of any intercompany accounts or amounts
payable (or accrued) to Seller or its Affiliates, and Seller and its Affiliates
shall not owe or be liable for the satisfaction of any intercompany accounts or
amounts payable (or accrued) to the Company.
4.17 Destruction of Chips. Pursuant to the Indiana Gaming Regulations,
Seller shall, at least thirty (30) days prior to the Closing, submit for
approval of the applicable Gaming Authorities a plan for the redemption and
destruction of all chips and tokens (both as of the Closing Date and at the
conclusion of the redemption period provided in Section 4.18 below).
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Purchaser agrees to cooperate fully with the Seller in effectuating the plan
that is approved by the Gaming Authorities.
4.18 Post-Closing Redemption of Chips. Pursuant to the Indiana Gaming
Regulations and as approved and directed by the Gaming Authorities, the Seller
shall, for a period of not less than six (6) months after the Closing, redeem
for cash all of Seller's gaming chips and tokens issued prior to the Closing.
The procedures implemented by Seller shall be those approved by the Gaming
Authorities, a copy of which shall be supplied to Purchaser as soon as
reasonably practicable. Purchaser acknowledges and agrees that to the extent the
Gaming Authorities allow, at the request of the Seller, Purchaser shall redeem
said chips and tokens and Seller shall reimburse Purchaser for said redemption
for amounts actually so redeemed. After the date hereof through the Closing,
Seller shall manage the chip Liability in the Ordinary Course of Business
consistent with past practices. Contemporaneously with the Closing, Purchaser
will cause the Company to use chips and tokens different than those used by the
Company prior to Closing.
4.19 Operation of BHR and BHPA. Seller shall not cause or permit BHR or
BHPA to delay payment of any liability, or otherwise conduct business other than
in the Ordinary Course of Business except with respect to the termination of the
Affiliate Agreement as completed by Section 4.14.
4.20 Transition Services. For 90 days following the Closing Date,
Seller shall provide to Purchaser such services as reasonably requested by
Purchaser and as necessary for Purchaser to operate the Company after the
Closing Date. Seller shall negotiate in good faith with Purchaser as to the
nature of the specific services to be provided. Seller shall charge Purchaser
its cost (without markup) for the provision of such services.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller that, at all times from and
after the date hereof until the Closing and, with respect to any covenant or
agreement by its terms to be performed in whole or in part after the Closing,
for the period specified therein, Purchaser will comply with all covenants and
provisions of this Article V, except to the extent Seller may otherwise consent
in writing.
5.01 Regulatory and Other Approvals and Notifications. Purchaser will,
as promptly as practicable, (i) take all commercially reasonable steps necessary
or desirable to obtain all consents, approvals or actions of, make all filings
with and give all notices to Governmental or Regulatory Authorities or any other
Person required of Purchaser to consummate the transactions contemplated hereby
and by the Operative Agreements (each, a "Regulatory Action"), (ii) provide such
other information and communications to such Governmental or Regulatory
Authorities or other Persons as Seller or such Governmental or Regulatory
Authorities or other Persons may reasonably request in connection therewith and
(iii) cooperate with Seller in connection with the performance of their
obligations under Sections 4.01 and 4.02. In furtherance of the foregoing,
Purchaser shall prepare in conjunction with Seller a joint application to the
Indiana Gaming Commission seeking approval of the purchase and sale
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contemplated by this Agreement and all necessary related rulings and orders
regarding the assumption by Purchaser of the control and operation of the
Business.
5.02 HSR Filings. In addition to, and without limiting Purchaser's
covenants in Section 5.01, Purchaser will (i) take promptly all actions
necessary to make the filings required by Purchaser or its Affiliates under the
HSR Act, (ii) comply at the earliest practicable date with any request for
additional information received by Purchaser or its Affiliates from the FTC or
the DOJ pursuant to the HSR Act, (iii) take all reasonable efforts to cooperate
with Seller in connection with Seller's filing under the HSR Act and in
connection with defending and/or resolving any antitrust investigation,
litigation or other inquiry concerning the transactions contemplated by this
Agreement commenced by either the FTC or the DOJ or state attorneys general or
private parties (other than the parties hereto), and (iv) pay half of any and
all filing fees due and payable in connection therewith.
5.03 Fulfillment of Conditions. Purchaser, on its own behalf and as a
member of BHR and BHPA, will execute and deliver at the Closing each Operative
Agreement that Purchaser is hereby required to execute and deliver as a
condition to the Closing. Purchaser will take all commercially reasonable steps
necessary or desirable and proceed diligently and in good faith to satisfy each
condition to the obligations of Seller contained in this Agreement, and will not
take or fail to take any action that could reasonably be expected to result in
the nonfulfillment of any conditions specified in of this Section.
Notwithstanding anything contained in this Agreement to the contrary, Purchaser
shall obtain any consent that may be required of the lender to BHPA in order to
consummate the transactions contemplated by this Agreement, and shall pay any
fee required by such lender related to obtaining its consent, and failure to
obtain such consent shall not be a condition to Purchaser's obligation hereunder
to purchase the Shares.
5.04 Xxxxx Name.
(a) As soon as practicable following the Closing,
Purchaser shall take all action necessary to cause the name and logo of the
business carried on by the Company to be changed, in each case, so that the name
or logo does not at any time thereafter contain the words "Xxxxx." Towards that
end, Purchaser shall execute and file with the Delaware Secretary of State an
amendment to the Certificate of Incorporation of the Company changing the name
of the Company, and with the United States Coast Guard such documentation as
necessary to change the titled name of the gaming vessel, to such names not
containing the name "Xxxxx" as Purchaser elects. Purchaser shall change the name
of the Xxxxx Indiana Foundation to such name not containing the name "Xxxxx" as
Purchaser elects. Purchaser shall designate a new internet domain name for the
Company not containing the name "Xxxxx" to which Seller will automatically
direct all hits to the domain name "xxxxxxxxxxxx.xxx." for a period of 360 days
following the Closing. Seller shall also automatically re-direct to Purchaser
all emails with the suffix "xxxxxxxxxxxx.xxx" for a period of 360 days following
the Closing.
(b) Promptly following the Closing, Purchaser shall take
such action as is necessary to ensure that any exterior fixture or fitting or
other asset visible from outside the business premises which contains the word
"Xxxxx" is changed, or covered up until such time as it is permanently changed.
Purchaser shall, within 90 days following the Closing, remove and
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destroy or deliver to Seller all exterior fixtures and fittings or other assets
visible from outside the business premises which contains the word "Xxxxx."
(c) Within 90 days following the Closing, Purchaser shall
remove and destroy or deliver to Seller all inventory, uniforms, hotel room
supplies, linen, china and other restaurant accessories, unused stationery and
promotional material which contains the words "Xxxxx" it being understood that
Purchaser can use such inventory or supplies during the 90 days period.
(d) Promptly following the Closing, Purchaser shall
commence such action as is necessary to ensure that any interior fixture or
fitting or other asset which contains the word "Xxxxx" is changed, or covered up
until such time as it is permanently changed. Within 90 days following the
Closing, Purchaser shall replace, and shall remove and destroy or deliver to
Seller, all interior fixtures or fittings on the business premises of the
Company, and such equipment or portion thereof, which contains the words
"Xxxxx."
(e) Purchaser shall conduct the removal of assets
containing the Xxxxx name in a discreet manner. Promptly following such 90 day
period, a responsible officer of Purchaser shall certify to Seller that all
assets of the Company containing the "Xxxxx" name were either destroyed under
the direction and control of the Purchaser or delivered to Seller. Except as
provided pursuant to the Xxxxx License, after the Closing Purchaser will not use
(and will cause the Company and each of its Affiliates not to use) the name
"Xxxxx" or any similar name or any logo incorporating such name or any similar
name in any manner, including in connection with the sale of any products or
services or otherwise in the conduct of its business.
5.05 Notice. Purchaser shall promptly notify Seller in writing of, and
shall use its reasonable best efforts to cure prior to the Closing Date, any
event, transaction or circumstance, as soon as practical after it becomes known
to Purchaser, that causes or may reasonably be expected to cause any covenant,
obligation or agreement of Purchaser under this Agreement to be violated or
remain unfilled in any material respect or that causes or may reasonably be
expected to cause any representation or warranty of Purchaser contained in this
Agreement to be untrue in any material respect. No written notice given pursuant
to this Section 5.06 shall have any effect on the representations, warranties,
covenants, obligations or agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein.
5.06 Operation of BHR and BHPA. Purchaser shall not cause or permit BHR
or BHPA to accelerate or prepay any liability, or otherwise conduct business
other than in the Ordinary Course of Business. Purchaser, as a member of BHR,
shall also execute and deliver at the Closing, and shall cause AMB Parking, LLC
as a member of BHPA, to execute and deliver at the Closing, each Operative
Agreement that BHR or BHPA is required to execute and deliver as a condition of
Closing.
5.07 Mutual Covenants. Purchaser shall comply with the obligations
imposed upon Purchaser in Sections 4.17 through 4.19 of this Agreement.
5.08 Financing Letter. Concurrently with Purchaser's execution and
delivery of this Agreement to the Company and Seller, Purchaser shall deliver to
the Company and Seller a commitment letter executed by Jefferies & Company
committing to provide financing in an
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amount not less than the Purchase Price with the proceeds thereof to be used
exclusively for the payment of the Purchase Price and related transaction
expenses and otherwise in form and substance reasonably satisfactory to Seller.
5.09 Surety Bond. At the Closing, Purchaser shall either (i) assume and
cause the Company to assume the indemnity obligations of Seller under that
certain General Agreement of Indemnity dated February 12, 1997 between Seller
and AIG, or (ii) post a replacement bond or take such other steps to cause the
IGC to release the Company's existing surety bond.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the Shares are
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by Purchaser
in its sole discretion):
6.01 Representations and Warranties. Each of the representations and
warranties made by Seller in this Agreement (other than those made as of a
specified date earlier than the Closing Date) shall be true and correct in all
respects on and as of the Closing Date as though such representation or warranty
was made on and as of the Closing Date. Any representation or warranty made as
of a specified date earlier than the Closing Date shall have been true and
correct in all material respects on and as of such earlier date.
6.02 Performance. Seller shall have performed and complied with each
agreement, covenant and obligation required by this Agreement to be so performed
or complied with by them at or before the Closing.
6.03 Orders and Laws; Actions or Proceedings. On the Closing Date,
there shall not be any Order or Law restraining, enjoining or otherwise
prohibiting or making illegal the consummation of any of the transactions
contemplated by this Agreement or any of the Operative Agreements, and there
shall not be pending on the Closing Date any Action or Proceeding in, before or
by any Governmental or Regulatory Authority which could reasonably be expected
to result in the issuance of any such Order or the enactment, promulgation or
deemed applicability to Purchaser or the transactions contemplated by this
Agreement or any of the Operative Agreements of any such Law.
6.04 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with, and notices to, any Governmental or Regulatory
Authority (including, without limitation, the Gaming Authorities exercising
jurisdiction over Purchaser and its Affiliates) necessary to permit Purchaser to
perform its obligations under this Agreement and the Operative Agreements and to
consummate the transactions contemplated hereby and thereby (i) shall have been
duly obtained, made or given, (ii) shall not be subject to the satisfaction of
any condition that has not been satisfied or waived, and (iii) shall be in full
force and effect. All terminations or expirations of waiting periods imposed by
any Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement and the Operative Agreements,
including under the HSR Act, shall have occurred.
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6.05 No Material Adverse Effect. There shall not have occurred any act
or event resulting in a Material Adverse Effect on the Company from the date
hereof through the Closing.
6.06 Deliveries. Seller shall have executed and delivered to Purchaser:
(i) all of the Operative Agreements required
hereunder to be executed and delivered by the Company and Seller;
(ii) certificates evidencing the Shares, duly
endorsed in blank or accompanied by a stock power duly executed in blank;
(iii) resignations and releases of each officer
and director of Xxxxx Indiana in a form satisfactory to the Purchaser;
(iv) an executed receipt for the Initial Purchase
Price;
(v) a copy of the Certificate of Incorporation of
Xxxxx Indiana, certified as of a date within three (3) Business Days of the
Closing Date by the Secretary of State of Delaware;
(vi) a copy, certified by the Secretary of (A)
Seller, of the resolutions of its board of directors authorizing the execution
and delivery of this Agreement and consummation of the transactions contemplated
by this Agreement, and in each case such resolutions shall be in full force and
effect and not revoked and (B) Xxxxx Indiana, of its Bylaws;
(vii) a good standing certificate for Xxxxx
Indiana issued by the Secretary of State of Delaware dated as of a date within
three (3) Business Days prior to the Closing Date;
(viii) a physical count of cash and Cash on Hand
of the Company certified in writing by the Chief Financial Officer of the
Seller, and bank reconciliations for each cash account dated as of the Closing
Date certified in writing by the Chief Financial Officer of the Seller;
(ix) duly executed copies of the consents and
approvals obtained by Seller in accordance with Section 2.04 and Section 6.04;
(x) evidence that the requisite consent from the
lenders under Seller's Credit Facility has been obtained;
(xi) evidence that all of the obligations of the
Company with respect to the Seller's Credit Facility have been discharged in
full and any Liens on the Shares, or on the Assets and Properties of the Company
have been released, other than Permitted Liens and capitalized lease obligations
which serve as a reduction to the Initial Purchase Price;
(xii) Section 4.15 of the Disclosure Schedule;
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(xiii) evidence of termination of the Affiliate
Agreements;
(xiv) an executed counterpart of the Xxxxx License in
a form mutually acceptable to Seller and Purchaser (the "Xxxxx License");
(xiv) an executed counterpart of the Escrow
Agreement; and
(xv) evidence that all stay bonus obligations to
Employees of the Company have been paid by Seller prior to the Closing Date.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder to sell the Shares are subject to
the fulfillment, at or before the Closing, of each of the following conditions
(all or any of which may be waived in whole or in part by Seller in its sole
discretion):
7.01 Representations and Warranties. Each of the representations and
warranties made by Purchaser in this Agreement shall be true and correct on and
as of the Closing Date as though such representation or warranty was made on and
as of the Closing Date.
7.02 Performance. Purchaser shall have performed and complied with each
agreement, covenant and obligation required by this Agreement to be so performed
or complied with by Purchaser at or before the Closing.
7.03 Orders and Laws. On the Closing Date there shall not be any Order
or Law restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Operative Agreements.
7.04 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with, and notices to, any Governmental or Regulatory
Authority (including, without limitation, the Gaming Authorities) necessary to
permit Seller to perform its obligations under this Agreement and the Operative
Agreements and to consummate the transactions contemplated hereby and thereby
(i) shall have been duly obtained, made or given, (ii) shall not be subject to
the satisfaction of any condition that has not been satisfied or waived, and
(iii) shall be in full force and effect. All terminations or expirations of
waiting periods imposed by any Governmental or Regulatory Authority necessary
for the consummation of the transactions contemplated by this Agreement and the
Operative Agreements, including under the HSR Act, shall have occurred.
7.05 Lender Consent. Seller shall have (i) obtained the requisite
consent of Seller's lenders under the Credit Agreement dated as of May 20, 2005
among Seller, Parent, the lenders party thereto, Xxxxxx Xxxxxxx & Co.,
Incorporated, as collateral agent, and the other agents and arrangers party
thereto ("Seller's Credit Facility"), (ii) amended Seller's Credit Facility in a
manner acceptable to Seller in its sole discretion, and (iii) obtained the
release of Seller from its obligations under the General Agreement of Indemnity
dated February 12, 1997 between Seller and AIG, and such consents, amendment,
and release shall be in full force and effect.
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7.06 Initial Purchase Price. Purchaser shall have paid to Seller the
Initial Purchase Price minus the Deposit and minus the Escrow Funds by wire
transfer of immediately available funds to an account designated in writing by
Seller.
7.07 Proceedings. All proceedings to be taken on the part of Purchaser
in connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Seller, and Seller shall have received copies of all such documents
and other evidences as they may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
7.08 Fairness Opinion. Seller shall have received a fairness opinion
from a nationally recognized investment banking institution in form and
substance satisfactory to Seller in its sole discretion.
7.09 Deliveries. Purchaser shall have executed and delivered to Seller:
(i) all of the Operative Agreements required
hereunder to be executed and delivered by the Purchaser;
(ii) a copy, certified by the Secretary of Purchaser,
of the resolutions of its board of directors authorizing the execution and
delivery of this Agreement and consummation of the transactions contemplated by
this Agreement, and in each case such resolutions shall be in full force and
effect and not revoked;
(iii) duly executed copies of the consents and
approvals obtained by Purchaser in accordance with Section 7.04;
(iv) an executed counterpart of the Xxxxx License
(v) an executed counterpart of the Escrow Agreement;
and
(vi) evidence of payment of the Escrow Funds to the
Escrow Agent, to be held by the Escrow Agent in accordance with the terms of the
Escrow Agreement.
ARTICLE VIII
TAX MATTERS AND POST-CLOSING TAXES
8.01 Pre-Closing Taxes. Seller shall be and remain liable for any Taxes
due pursuant to any subsequent deficiency determinations which relate to any
Pre-Closing Tax Return or the period of time prior to Closing with respect to
any Straddle-Period Tax Return. In the event the Company receives notice of, or
correspondence with respect to, any deficiency, proposed adjustment, assessment,
audit, examination, dispute or other claim with respect to such tax returns for
the period prior to the Closing Date (a "Tax Claim"), the Purchaser shall
promptly provide Seller with a copy of such notice or correspondence. Seller
shall have the right to control the defense and/or settlement of any Tax Claim,
subject to the provisions of Section 8.02(b).
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8.02 Responsibility for Filing Tax Returns and Paying Taxes.
(a) Purchaser shall prepare or cause to be prepared and file
or cause to be filed all (i) Tax Returns for the Company for all periods ending
on or prior to the Closing Date which are filed after the Closing Date
("Pre-Closing Tax Returns"); and (ii) all Tax Returns of the Company for all
periods which begin before the Closing Date and end after the Closing Date
("Straddle-Period Tax Returns"). Purchaser shall provide to Seller, at least
forty-five (45) days prior to the due date for filing, a draft of each such
Pre-Closing and Straddle-Period Tax Return for Seller's review and approval,
which approval shall not be unreasonably withheld or delayed. During such
forty-five (45) day period, Seller shall be permitted to review the books and
records of the Company and the working papers of the Company and Company's
accountants reasonably related to the preparation of such returns. To the extent
Seller's review and approval is unreasonably withheld or delayed, Seller shall
indemnify Purchaser for any fines, penalties or interest arising out of a delay
in filing such Pre-Closing and Straddle-Period Tax Return resulting therefrom.
Any dispute regarding the manner in which such returns should be prepared,
including any position taken or disclosure made therein, shall be resolved in
accordance with the procedure set forth in Section 1.03(b) of this Agreement.
Seller shall timely pay or cause to be paid (i) all Taxes relating to
Pre-Closing Tax Returns and (ii) all Taxes relating to the period ending on or
before the Closing Date for all Straddle-Period Tax Returns (Taxes of the
Company described in Sections 8.02(a)(i) and 8.02(a)(ii) are referred to as
"Pre-Closing Taxes") in each case to the extent such Pre-Closing Taxes (other
than income, gaming and property Taxes) exceed the reserve therefore on the
Final Statement. For purposes of this Agreement, in the case of any Taxes that
are imposed on a periodic basis and are payable for a taxable period that
includes (but does not end on) the Closing Date (the "Straddle Period"), the
portion of such Tax which relates to the portion of such taxable period ending
on the Closing Date shall (x) in the case of any Taxes other than Taxes based
upon or related to income or receipts, be deemed to be the amount of such Tax
for the entire taxable period multiplied by a fraction the numerator of which is
the number of days in the taxable period ending on the Closing Date and the
denominator of which is the number of days in the entire taxable period, and (y)
in the case of any Tax based upon or related to income or receipts be deemed
equal to the amount which would be payable if the relevant taxable period ended
on the Closing Date. In addition, any credits relating to a taxable period that
begins before and ends after the Closing Date shall be taken pro rata as though
the relevant taxable period ended on the Closing Date. All determinations
necessary to give effect to the foregoing allocations and the preparation of
such returns shall be made in a manner consistent with prior practice of the
Company providing substantial authority exists for such positions and such
positions are in accordance with any settlement reached with the Service for the
1995-2004 audit period.
(b) Without the prior written consent of Purchaser, which
shall not be unreasonably withheld, neither the Company nor Seller shall make or
change any election, change an annual accounting period, adopt or change any
accounting method, file any amended Tax Return, enter into any closing
agreement, settle any Tax Claim or assessment relating to the Company, surrender
any right to claim a refund of Taxes, consent to any extension or waiver of the
limitation period applicable to any Tax claim or assessment relating to the
Company, or take any other similar action relating to the filing of any Tax
Return or the payment of any Tax (collectively, a "Tax Action"), if such Tax
Action would have the effect of increasing the Tax liability of the Company for
any period ending after the Closing Date other than by reason of
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decreasing the federal net operating loss carryover of the Company existing on
the Closing Date to an amount not less than $2,000,000 (the "Minimum Net
Operating Loss Carryover"). In the event any Tax Action would reduce the net
operating loss carryover of the Company on the Closing Date below the Minimum
Net Operating Loss Carryover Seller may, at its option, (i) take such Tax Action
after obtaining the prior consent of Purchaser or (ii) take such Tax Action and
provide Seller with an Economic Equivalent Amount equal to $.40 multiplied by
the difference between the Minimum Net Operating Loss Carryover and the actual
net operating loss carryover of the Company on the Closing Date as a result of
such Tax Action (which product shall in no event exceed $800,000). For purposes
of the preceding sentence the phrase "Economic Equivalent Amount" shall mean (x)
a cash payment to Purchaser from Seller, (y) minimum tax credits within the
meaning of Section 53 of the Code which are available to offset the regular
corporate income Tax liability of the Company for taxable periods ending after
the Closing and which exceed the amount of such credits that would exist had the
Tax Action resulted in a net operating loss carryover of $2,000,000 as of the
Closing Date Date on a present value basis calculated using the mid-term
applicable federal rate in effect on the date of the Tax Action for each
affected year assuming the credit is utilized evenly over the next succeeding
five years, or (z) any combination of items (x) and (y). By way of example, if a
Tax Action reduces the actual federal net operating loss carryover of the
Company available on the Closing Date to $1,000,000, Seller may take such Tax
Action provided it pays Purchaser $400,000. In the alternative, if after such
Tax Action additional minimum tax credits are available, over what would have
been available had the Tax Action resulted in a $2,000,000 net operating loss
carryover, in an amount sufficient to offset $200,000 of regular corporate
income tax liability of the Company, Seller may take such Tax Action and pay the
Purchaser $200,000 notwithstanding that the Purchaser would assume the federal
net operating loss of $1,000,000.
(c) Without the prior written consent of Seller, with respect
to Pre-Closing Tax Returns and Straddle-Period Tax Returns, neither the Company
nor Purchaser shall make or change any election, change an annual accounting
period, adopt or change any accounting method, file any amended Tax Return,
enter into any closing agreement, settle any Tax claim or assessment relating to
the Company, surrender any right to claim a refund of Taxes, consent to any
extension or waiver of the limitation period applicable to any Tax claim or
assessment relating to the Company, or take any other similar action relating to
the filing of any Tax Return or the payment of any Tax, if such election,
adoption, change, amendment, agreement, settlement, surrender, consent or other
action would have the effect of increasing the Tax liability of the Company with
respect to any Pre-Closing Taxes or decreasing any Tax attribute of the Company
existing on or before the Closing Date unless such adjustment is required by
Law.
(d) Seller shall not seek any refund for Taxes paid relating
to that certain settlement agreement of the Company with the Indiana Department
of Revenue, dated March 23, 2005, unless Seller shall have posted, for the
benefit of Purchaser, security in the amount of $4,000,000 for any State of
Indiana Pre-Closing Taxes that may become payable by the Company as a result of
such refund application and any Losses related thereto, such security at
Seller's option to be in the form of a letter of credit or cash collateral.
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8.03 Tax Indemnification.
(a) After the Closing Date, Seller will indemnify and hold
harmless Purchaser from and against any and all claims, actions, causes of
action, liabilities, losses, damages, and reasonable out-of-pocket expenses and
costs resulting from, arising out of or relating to (i) Pre-Closing Taxes of the
Company; (ii) any Taxes of the Company measured by income or receipts
(including, without limitation, any Tax liability that arises solely by reason
of the Company being severally liable for any Tax of any current or former
Affiliate of the Company pursuant to Treasury Regulation "1.1502-6 or any
analogous state or local Tax provision) and all other Taxes of the Company
except those described in Section 8.03(b); and (iii) all Taxes described in
Section 8.01 in each case (except for income, gaming and property taxes), net of
any reserve therefor on the Final Statement. Notwithstanding the foregoing, the
Seller shall not indemnify and hold harmless the Purchaser from any liability
for Taxes for periods following the Closing Date or for Pre-Closing Taxes which
are attributable to a breach by the Purchaser of its obligations under Section
8.02(c) of this Agreement. The provisions of this Section 8.03(a) shall not be
subject to the limitations or procedures of Article X.
(b) Purchaser will be responsible for and Purchaser will
indemnify and hold Seller harmless against any all liabilities with respect to
Taxes for any Taxable year or period that begins after the Closing Date and,
with respect to any Straddle Period, the portion of such Straddle Period
beginning after the Closing Date. Notwithstanding the foregoing, the Purchaser
(and the Company) shall not indemnify and hold harmless the Seller from any
liability for Pre-Closing Taxes or which is attributable to a breach by the
Seller of its obligations under this Agreement. The provisions of this Section
8.03(b) shall not be subject to the limitations or procedures of Article X.
8.04 Tax Cooperation. After the Closing Date, Seller will cooperate
with Purchaser, and Purchaser will cooperate with Seller, in the preparation of
all Tax Returns and will provide (or cause to be provided) any records and other
information the other so requests, and will provide access to, and the
cooperation of its auditors. Seller will cooperate with Purchaser and Purchaser
will cooperate with Seller in connection with any Tax investigation, audit or
other proceeding.
8.05 Procedures Relating to Indemnification of Tax Claims.
(a) If one party is responsible for the payment of Taxes
pursuant to Sections 8.01-8.03 (the "Tax Indemnifying Party"), and the other
party (the "Tax Indemnified Party") receives a Tax Claim with respect to such
Taxes, the Tax Indemnified Party shall promptly deliver a copy of such notice to
the Tax Indemnifying Party. If a copy of a Tax Claim is not given to the Tax
Indemnifying Party within a sufficient period of time to allow such party
effectively to contest such Tax Claim, the Tax Indemnifying Party shall not be
liable to the Tax Indemnified Party (or any of its Affiliates or any of their
respective officers, directors, employees, stockholders, agents or
representatives) to the extent that the Tax Indemnifying Party's position is
actually prejudiced as a result thereof.
(b) With respect to any Tax Claim, the Tax Indemnifying Party
shall assume and control all proceedings taken in connection with such Tax Claim
(including selection of
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counsel) and pursue or forego any and all administrative proceedings with any
taxing authority with respect thereto, and may either pay the Tax claimed and
xxx for a refund or contest the Tax Claim in any permissible manner at its own
expense; provided, however, that the Indemnified Party has the right to review
and approve the settlement of the Tax Claim, such approval shall not be
reasonably withheld. Notwithstanding anything herein to the contrary, Seller may
defend and/or settle any Tax Claims (including by paying such Taxes and seeking
a refund) relating to Pre-Closing Taxes as permitted by Sections 8.01 and
8.02(b).
(c) With respect to any Tax Claim which Seller has the right
to control pursuant to the first sentence of this Section 8.05, Seller shall
promptly pay or cause the Escrow Agent to pay to the Taxing authority directly
the amount of any Liability as finally determined (provided that if Seller
elects to xxx for refund or contest such Liabilities, it shall make or cause the
Escrow Agent to make any payment for which refund is sought).
ARTICLE IX
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
The parties rights and remedies as set forth in Article X of this
Agreement with respect to the representations, warranties, covenants and
agreements of Seller and Purchaser contained in this Agreement will survive the
Closing until, and terminate on, the fifteen month anniversary of the Closing
Date with respect to all matters except with respect to the representations and
warranties contained in Sections 2.02, 2.03, 2.09, 3.01 and 3.02 which shall
survive until expiration of the applicable statute of limitations and provided
further that in the event of fraud, all representations and warranties shall
survive indefinitely; provided that any representation, warranty, covenant or
agreement that would otherwise terminate in accordance with the above provisions
of this Article IX will continue to survive if a Claim Notice or Indemnity
Notice (as applicable) shall have been timely given under Article X on or prior
to such termination date, until the related claim for indemnification has been
satisfied or otherwise resolved as provided in Article X. Notwithstanding
anything in this Agreement to the contrary, nothing in this Article IX shall
limit any covenant, obligation or agreement of the parties which by its terms
contemplates performance after the Effective Time.
ARTICLE X
INDEMNIFICATION
10.01 Indemnification.
(a) Subject to paragraph (c) of this Section and the other
Sections of this Article X, Seller shall indemnify the Purchaser Indemnified
Parties in respect of, and hold each of them harmless from and against, any and
all Losses (without duplication) suffered, incurred or sustained by any of them,
resulting from or arising out of, (i) any breach of representation or warranty
by the Seller in this Agreement (other than Section 2.09), (ii) the breach of
any covenant or agreement of Seller contained in this Agreement (other than
Section 4.12, as to which the provisions of Section 11.03 shall provide
Purchaser's exclusive remedy), (iii) a DLJ Claim, (iv) any claim for
indemnification by a former director of the Company, (v) any fines or penalties
payable to the Indiana Gaming Commission that relate to matters occurring prior
to the
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Closing Date, (vi) the Noa Litigation or any claim by Xxxxx Xxxxx, (vii) any
item of tangible Assets and Property (including each live game, gaming table,
electronic gaming device or other gaming related equipment) which is set forth
on the inventory conducted pursuant to Section 4.03(c) but which is not
physically present on the Improvements, the Riverboat or on real property owned
by BHR and/or BHPA as of the Closing Date, other than assets which have been
replaced by assets of equal or greater value or assets which have been the
subject of a known casualty loss and (viii) actual liability for workers
compensation claims or patron liability (including claims incurred but not
reported) from injuries occurring prior to the Closing Date, to the extent such
liability is in excess of the reserve therefor on the Actual Working Capital up
to the self insured retention limits in effect at the Closing Date. Seller's
obligations to indemnify the Purchaser Indemnifying Parties in respect of any
and all Losses arising out of any breach of the representations or warranties by
Seller in Section 2.09 (Taxes) of this Agreement, or amounts payable as a result
of the Pre-Closing Taxes shall be governed by Article VIII. Notwithstanding
anything in this Agreement to the contrary, Purchaser shall be deemed to have
waived its right to indemnification for any breach of any of Seller's
representations solely to the extent (x) the facts establishing the basis for
the breach were provided in a written notice to Purchaser under Section 4.13 and
(y) the uninsured Loss related to such breach (or all such breaches) does not
exceed $100,000.
(b) Subject to the other Sections of this Article X, Purchaser
shall indemnify Seller Indemnified Parties in respect of, and hold each of them
harmless from and against, any and all Losses suffered, incurred or sustained by
any of them or to which any of them becomes subject, resulting from, arising out
of or relating to (i) any breach of representation or warranty by Purchaser in
this Agreement, (ii) any breach of any covenant or agreement of Purchaser
contained in this Agreement or (iii) the operation of the Company and the
Business from and after the Closing Date.
(c) Notwithstanding anything to the contrary contained in this
Agreement, no amounts of indemnity shall be payable as a result of any claim in
respect of a Loss arising under Section 10.01(a)(i) unless and until Purchaser
Indemnified Parties have suffered, incurred or sustained Losses that would
otherwise be indemnifiable pursuant to Section 10.01(a)(i) in excess of
$1,000,000 in the aggregate (the "Seller's Threshold") (except as provided in
the next sentence), in which event Purchaser Indemnified Parties shall be
entitled to claim indemnity (including all related fees and costs) for the
amount by which such Losses exceed the Seller's Threshold, provided that the
aggregate Losses indemnified by Seller shall not exceed $30,000,000 (the "Cap").
The Seller's Threshold specified in the preceding sentence for entitlement to
claim indemnity under Section 10.01(a)(i) shall not apply to a breach of a
representation or warranty contained in Sections 2.02, 2.03, 2.09 or 2.11(a) and
any Loss with respect thereto shall not be counted against the Seller's
Threshold. Neither the Seller's Threshold nor the Cap shall apply in the event
of a claim for indemnity by Purchaser for any matter set forth in Article VIII
or in Sections 10.01(a)(iii)-(viii) or for any claim based on a breach of
Section 2.11(a). With respect to Losses which are not subject to the Seller's
Threshold or the Cap, the Seller shall remain liable for any such Losses.
(d) In the event that an Indemnifying Party:
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(i) consolidates with or merges into any other Person
and is not the continuing or surviving corporation or entity of such
consolidation or merger; or
(ii) transfers or conveys all or substantially all of
its properties and assets (whether in one transaction or a series of related
transactions) to any Person,
(iii) then, and in each such case, proper provision
shall be made in connection with the consummation of any such transaction so
that such successors and assigns shall assume the obligations of such
Indemnifying Party set forth in this Article X.
10.02 Method of Asserting Claims. All claims for indemnification by any
Indemnified Party under Section 10.01 shall be asserted and resolved only as
follows:
(a) In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under Section 10.01 or as to which
Seller's Threshold may be applied is asserted against or sought to be collected
from such Indemnified Party by a Person other than Seller or any Affiliate of
Seller or of Purchaser (a "Third Party Claim"), the Indemnified Party shall
deliver a Claim Notice with reasonable promptness to the Indemnifying Party and
in any event within 30 days of the time such Indemnified Party learns of such
claim or demand. If the Indemnified Party fails to provide the Claim Notice with
reasonable promptness after the Indemnified Party receives notice of such Third
Party Claim, the Indemnifying Party will not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been actually prejudiced by such
failure of the Indemnified Party. The Indemnifying Party will notify the
Indemnified Party as soon as practicable within the Dispute Period whether the
Indemnifying Party disputes its liability to the Indemnified Party under Section
10.01 and whether the Indemnifying Party desires, at its sole cost and expense,
to defend the Indemnified Party against such Third Party Claim. If the
Indemnifying Party has timely disputed its liability with respect to such claim,
the Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
within the Resolution Period, such dispute shall be resolved by arbitration, in
accordance with Section 10.02(c).
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the Indemnifying Party desires
to defend the Indemnified Party with respect to the Third Party Claim pursuant
to this Section 10.02(a), then the Indemnifying Party will have the right to
defend, with counsel reasonably satisfactory to the Indemnified Party, at the
sole cost and expense of the Indemnifying Party, such Third Party Claim by all
appropriate proceedings, which proceedings will be vigorously and diligently
prosecuted by the Indemnifying Party. The Indemnifying Party shall not, without
the prior written consent of the Indemnified Party, consent to any settlement
that (i) does not contain an unconditional release of the Indemnified Party from
the subject matter of the settlement, or (ii) with respect to any non-monetary
provision of such settlement, could, in the Indemnified Party's reasonable
judgment, have a Material Adverse Effect on the Company. The Indemnified Party
may, at the sole cost and expense of the Indemnified Party, at any time prior to
the Indemnifying Party's delivery of the notice referred to in the first
sentence of this Section 10.02(a)(i), file any motion, answer or other pleadings
or take any other action that the Indemnified Party reasonably believes to be
necessary or appropriate to protect its interests without such actions being
construed as a waiver of the Indemnified Party's
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rights to defense and indemnification pursuant to the Agreement. If requested by
the Indemnifying Party, the Indemnified Party will, at the sole cost and expense
of the Indemnifying Party, provide reasonable cooperation to the Indemnifying
Party in contesting any Third Party Claim that the Indemnifying Party elects to
contest. The Indemnified Party may retain separate counsel to represent it in,
but not control, any defense or settlement of any Third Party Claim controlled
by the Indemnifying Party pursuant to this Section (a)(i), and the Indemnified
Party will bear its own costs and expenses with respect to such separate counsel
except that the Indemnifying Party will pay the costs and expenses of such
separate counsel if (x) in the Indemnified Party's good faith judgment, it is
advisable, based on advice of counsel, for the Indemnified Party to be
represented by separate counsel because a conflict exists between the
Indemnifying Party and the Indemnified Party which makes representation of both
parties inappropriate under applicable standards of professional conduct or (y)
the named parties to such Third Party Claim include both the Indemnifying Party
and the Indemnified Party and the Indemnified Party determines in good faith,
based on advice of counsel, that defenses are available to it that are
unavailable to the Indemnifying Party. Notwithstanding the foregoing, the
Indemnified Party may retain or take over the control of the defense or
settlement of any Third Party Claim the defense of which the Indemnifying Party
has elected to control if the Indemnified Party irrevocably waives its right to
indemnity under Section 10.01 with respect to such Third Party Claim.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the Indemnifying Party desires
to defend the Third Party Claim pursuant to Section 10.02(a), or if the
Indemnifying Party gives such notice but fails to prosecute vigorously and
diligently or settle the Third Party Claim, then the Indemnified Party will have
the right to defend, at the sole cost and expense of the Indemnifying Party, the
Third Party Claim by all appropriate proceedings, which proceedings will be
prosecuted by the Indemnified Party in good faith or will be settled at the
discretion of the Indemnified Party without in any way waiving or otherwise
affecting the Indemnified Party's rights to indemnification pursuant to this
Agreement. The Indemnified Party will have full control of such defense and
proceedings, including any compromise or settlement thereof; provided, however,
that if requested by the Indemnified Party, the Indemnifying Party will, at the
sole cost and expense of the Indemnifying Party, provide reasonable cooperation
to the Indemnified Party and its counsel in contesting any Third Party Claim
which the Indemnified Party is contesting. The Indemnifying Party may
participate in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this Section 10.02(a)(ii), and the Indemnifying
Party will bear its own costs and expenses with respect to such participation.
(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its liability to the Indemnified
Party with respect to the Third Party Claim under Section 10.01 or fails to
notify the Indemnified Party within the Dispute Period whether the Indemnifying
Party disputes its liability to the Indemnified Party with respect to such Third
Party Claim, the Loss arising from such Third Party Claim will be conclusively
deemed a liability of the Indemnifying Party under Section and the Indemnifying
Party shall pay the amount of such Loss (subject to the Seller's Threshold and
the Cap, if applicable) to the Indemnified Party on demand following the final
determination thereof. If the Indemnifying Party has timely disputed its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party will proceed in good faith to negotiate a resolution of such dispute, and
if not resolved through
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negotiations within the Resolution Period, such dispute shall be resolved by
arbitration in accordance with Section 10.02(c).
(b) In the event any Indemnified Party has a claim under
Section 10.01 or as to which Seller's Threshold may be applied against any
Indemnifying Party that does not involve a Third Party Claim, the Indemnified
Party shall deliver an Indemnity Notice with reasonable promptness to the
Indemnifying Party and in any event within 30 days of the time such Indemnified
Party learns of such claim. The failure by any Indemnified Party to give the
Indemnity Notice shall not impair such party's rights hereunder except to the
extent that an Indemnifying Party demonstrates that it has been actually
prejudiced thereby. If the Indemnifying Party notifies the Indemnified Party
that it does not dispute the claim described in such Indemnity Notice or fails
to notify the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes the claim described in such Indemnity Notice, the
Loss arising from the claim specified in such Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under Section 10.01
and the Indemnifying Party shall pay the amount of such Loss (subject to the
Seller's Threshold and the Cap, if applicable) to the Indemnified Party on
demand following the final determination thereof. If the Indemnifying Party has
timely disputed its liability with respect to such claim, the Indemnifying Party
and the Indemnified Party will proceed in good faith to negotiate a resolution
of such dispute, and if not resolved through negotiations within the Resolution
Period, such dispute shall be resolved by arbitration, in accordance with
Section 10.02(c).
(c) All disputes between the parties arising under this
Article X shall be finally resolved by binding arbitration in Indianapolis,
Indiana before a single arbitrator, unless either party elects to have such
dispute resolved before a panel of three arbitrators, appointed pursuant to the
rules of the American Arbitration Association (the "AAA") then in effect
applicable to commercial disputes. Arbitration may be commenced at any time by
any party hereto giving written notice to the other party to a dispute that such
dispute has been referred to arbitration under this Section 10.02(c). The
arbitrator(s) shall be selected by the joint agreement of Seller and Purchaser,
but if they do not so agree within twenty (20) days after the date of the notice
referred to above, the selection shall be made pursuant to the rules and from
the panels of arbitrators maintained by the AAA. Any award rendered by the
arbitrator(s) shall be conclusive and binding upon the parties hereto and may be
enforced in accordance with the laws of the State of Indiana; provided, however,
that any such award shall be accompanied by a written opinion of the
arbitrator(s) giving the reasons for the award. Each party shall pay its own
expenses of arbitration and the expenses of the arbitrator(s) shall be equally
shared; provided, however, that if in the opinion of the arbitrator(s) any claim
for indemnification or any defense or objection thereto was unreasonable, the
arbitrator(s) may assess, as part of his or her award, all or any part of the
arbitration expenses of the other party (including reasonable attorneys' fees)
and of the arbitrator(s) against the party raising such unreasonable claim,
defense or objection.
10.03 Exclusive Remedies. The indemnification provisions of Section
8.03 (including the rights under the Escrow Agreement shall be the exclusive
remedy of Purchaser with respect to any alleged breach of the representations of
warranties contained in Section 2.09 and in Article VIII; the termination fee
and expense reimbursement provided in Section 11.03 shall be the exclusive
remedy of Purchaser with respect to any alleged breach of Section 4.12 or
termination by the terminating party as provided in Section 11.01(e)(due to
Seller's failure to
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obtain the requisite lender consent) or 11.01(h) (due to the Reviewed September
Financial Statements); the remedies related to the Deposit set forth in Section
11.02(b) or 11.02(c) shall be the exclusive remedy with respect to any
termination of the Agreement under the circumstances set forth therein; the
remedies provided in this Article X shall be the exclusive remedies available to
the parties with respect to any alleged breach of all other representations and
warranties contained in this Agreement except in the case of fraud; provided
however, Purchaser may seek equitable relief with respect to any alleged breach
of Section 4.07 or Section 4.15.
10.04 Losses Net of Insurance. The amount of any and all Losses
indemnified under this Agreement shall be determined net of any amounts
recovered by the Indemnified Party under insurance policies, indemnities or
other reimbursement arrangements with respect to such Losses. The amount of any
and all Losses indemnified under this Agreement shall be computed to take into
account and to deduct the amount of any provision reflected as a current
liability in the Final Statement specifically in respect of the matter giving
rise to such Loss.
10.05 Limitation on Liability Following Notice of Breach.
Notwithstanding anything to the contrary in this Agreement, following the
Closing, (a) Seller shall not be liable to any Purchaser Indemnified Party in
respect of any breach of a representation or warranty by Seller if (i) such
breach is disclosed to Purchaser prior to Closing, (ii) such breach would
constitute a failure of a condition to Purchaser's obligation to close, and
(iii) notwithstanding such notification, the Closing shall have occurred, and
(b) Purchaser shall not be liable to any Seller Indemnified Party in respect of
any breach of a representation or warranty by Purchaser if (i) such breach is
disclosed to Seller prior to Closing, (ii) such breach would constitute a
failure of a condition to Seller's obligation to close, and (iii)
notwithstanding such notification, the Closing shall have occurred.
10.06 Limitations on Indemnification for Workers' Compensation. With
respect to Seller's liability for workers' compensation benefits and related
medical expenses, Purchaser shall manage all such workers' compensation claims
and shall use its reasonable best efforts to mitigate Seller's liability for
workers' compensation benefits . Purchaser and Seller shall consult with and
cooperate with each other in managing the workers' compensation benefits and no
final settlement shall be entered into without the consent of Seller, which
shall not be unreasonably withheld.
ARTICLE XI
TERMINATION
11.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned before the Closing:
(a) upon the mutual written consent of Seller and Purchaser;
(b) by Seller, if Purchaser is in material breach of this
Agreement and such breach has not been cured within 30 days following delivery
of notice thereof to Purchaser;
(c) by Purchaser, if Seller is in material breach of this
Agreement and such breach has not been cured within 30 days following the
delivery of notice thereof to Seller;
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(d) by Purchaser, if the conditions to Purchaser's obligations
specified in Article VI are not satisfied (through no fault of Purchaser) or
validly waived by Purchaser;
(e) by Seller, if the conditions to Seller's obligations
specified in Article VII are not satisfied (through no fault of Seller) or
validly waived by Seller (provided that Seller's ability to terminate because
the condition set forth in Section 7.08 is not satisfied shall terminate on
November 16th, 2005);
(f) by either Seller or Purchaser, if the Closing has not
occurred by December 31, 2005;
(g) by Seller if (i) Seller has received a Superior Proposal,
(ii) in light of such Superior Proposal, the Board of Directors of Parent shall
have determined in good faith, after consultation with outside counsel, that it
is necessary to terminate this Agreement in order to comply with its fiduciary
duties under applicable law, (iii) Seller has notified Purchaser in writing of
the determination described in clause (ii) above, (iv) at least three Business
Days following receipt by Purchaser of the notice referred to in clause (iii)
above, and taking into account any revised proposal made by Purchaser following
receipt of the notice referred to in clause (iii) above, such Superior Proposal
remains a Superior Proposal and the Board of Directors of Parent maintains its
determination referred to in clause (ii) (it being understood and agreed that
any change to the financial or other material terms of such Superior Proposal
shall require a new notice to Purchaser under clause (iii) and a new three
Business Day period under this clause (iv)) and (v) Seller is, and at all times
has been, in compliance with Section 4.12;
(h) by Purchaser on or before November 18, 2005, if Seller
fails to deliver the Reviewed September Financial Statements by November 15,
2005, or if the Reviewed September Financial Statements demonstrate that the
Unaudited Financial Statements did not fairly present in all material respects
the financial condition and results of operations of the Company for the nine
months then ended.
11.02 Effect of Termination.
(a) Upon the termination of this Agreement in accordance with
Section 11.01 hereof, the parties shall be relieved of any further obligations
under this Agreement, other than any confidentiality obligations contained in
Section 13.05, the Termination Fee and expense reimbursement as provided in
Section 11.03, and the treatment of the Deposit as set forth in Section 11.02(b)
or 11.02(c).
(b) Upon the termination of this Agreement pursuant to Section
11.01(a), Section 11.01(c), Section 11.01(d) (for any reason other than failure
to satisfy the condition set forth in Section 6.04), Section 11.01(e) (for any
reason other than failure to satisfy the conditions set forth in Sections 7.01,
7.02, 7.04, 7.06, or 7.09), Section 11.01(g) or Section 11.01(h), the Deposit
shall be returned to Purchaser, without interest.
(c) Upon the termination of this Agreement for any reason
other than the circumstances in Section 11.02(b) under which the Deposit is
returned to Purchaser, the Deposit shall be retained by Seller. The parties
acknowledge and agree, (i) Seller would sustain substantial damages in the event
that transactions contemplated by this Agreement are not
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consummated as a result of Purchaser's failure to close or termination by Seller
for Purchaser's failure to cure a material breach under this Agreement; (ii)
Seller's actual damages in the event that transactions contemplated by this
Agreement are not consummated as a result of Purchaser's failure to close or
termination by Seller for Purchaser's failure to cure a material breach would be
difficult or impractical to determine, and the Deposit represents a reasonable
estimate of the harm likely to be suffered by Seller in the event that the
transactions contemplated by this Agreement are not consummated as a result of
Purchaser's failure to close or termination by Seller for Purchaser's failure to
cure a material breach; and (iii) that the retention of the Deposit shall be
Seller's sole and exclusive remedy for the events contemplated by this Section
11.02(c) and any material breach of this Agreement by Purchaser.
11.03 Termination Fee and Expense Reimbursement.
(a) In the event (i) Purchaser terminates this Agreement
pursuant to the provisions of Section 11.01(c) because Seller has breached or is
in breach of Section 4.12, or (ii) Seller terminates this Agreement pursuant to
the provisions of Section 11.01(e) or 11.01(g), and Seller thereafter enters
into an agreement to consummate an Acquisition Proposal (other than the
transactions contemplated by this Agreement) within nine (9) months of the date
of this Agreement, then upon entering into such agreement to consummate an
Acquisition Proposal, Seller shall pay, or cause to be paid, in same day funds
to an account provided in writing by Purchaser to Seller on the date of
termination of this Agreement, as applicable, $5.0 million (the "Termination
Fee"), in addition to the documented fees and expenses of professional advisors
incurred by Purchaser in connection with the transactions contemplated by this
Agreement (including, without limitation, reasonable fees and expenses of legal
counsel, accountants, investment bankers, brokers or other representatives or
consultants) (the "Reimbursement Expenses"). The parties acknowledge and agree
that (i) Purchaser would sustain substantial damages in the event that
transactions as contemplated by this Agreement are not consummated as a result
of Seller's failure to close; (ii) Purchaser's actual damages in the event that
transactions as contemplated by this Agreement are not consummated as a result
of the Seller's failure to close would be difficult or impractical to determine,
and the Termination Fee, together with the payment of the Reimbursement Expenses
represents a reasonable estimate of the harm likely to be suffered by Purchaser
in the event that the transactions as contemplated by this Agreement are not
consummated as a result of Seller's failure to close; and (iii) that the payment
of the Termination Fee, together with the return of the Deposit and payment of
the documented reasonable fees and expenses of the Purchaser's professional
advisors, shall be Purchaser's sole and exclusive remedy for the events
contemplated in this Section 11.03(a).
(b) In the event Seller terminates this Agreement pursuant to
Section 11.01(e) solely because of the failure to obtain the consent of its
lenders under, or an amendment to, Seller's Credit Facility, then Seller shall
pay to Purchaser concurrently with such termination the Termination Fee (which
fee shall be in addition to and not in lieu of any fee otherwise payable
pursuant to Section 11.03(a)) and the Deposit shall be returned pursuant to
Section 11.02(b)..
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ARTICLE XII
DEFINITIONS
12.01 Defined Terms. As used in this Agreement, the following defined
terms have the meanings indicated below:
"AAA" has the meaning ascribed to it in Section 10.02(c).
"Acquisition Proposal" has the meaning ascribed to it in Section 4.12.
"ACSM" means the American Congress on Surveying and Mapping.
"Action or Proceeding" means any action, suit, proceeding, arbitration
or Governmental or Regulatory Authority investigation or audit.
"Actual Cash On Hand" means Cash on Hand of the Company as set forth on
the Final Statement.
"Actual Working Capital" means Working Capital of the Company as set
forth on the Final Statement.
"Affiliate" means, when used with respect to a specified Person,
another Person that, either directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with the
Person specified. For purposes of this Agreement, neither BHR nor BHPA shall be
considered an Affiliate of the Company or the Seller.
"Affiliate Agreements" has the meaning ascribed to it in Section 4.14.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504(a) or any similar group defined under a similar provision of
state, local or foreign law.
"Agreement" means this Stock Purchase Agreement and the Exhibits, the
Disclosure Schedule and the Schedules hereto, as the same shall be amended from
time to time.
"ALTA" means the American Land Title Association.
"Assets and Properties" or "Assets and Property" of any Person means
all assets and properties of every kind, nature, character and description
(whether real, personal or mixed, whether tangible or intangible, whether
absolute, accrued, contingent, fixed or otherwise and wherever situated),
including the goodwill related thereto, operated, owned or leased by such
Person, including, without limitation, cash, cash equivalents, accounts and
notes receivable, chattel paper, documents, instruments, general intangibles,
real estate, equipment, inventory, goods and Intellectual Property.
"Assignment Instruments" has the meaning ascribed to it in Section
1.04(c).
"Audits" means the audit for the years 1995 through 1997, and the audit
for the years 2002 and 2003.
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"Audited Financial Statements" has the meaning ascribed to it in
Section 2.06(a).
"BHPA" means Xxxxxxxxxx Harbor Parking Associates, LLC.
"BHPA Lease" means that Parking Lease, dated June 19, 2000, as amended
to date, by and between BHPA, as lessor, and the Company, as lessee.
"BHR" means Xxxxxxxxxx Harbor Riverboats, L.L.C.
"Bonus Program" has the meaning ascribed to it in Section 4.05(g).
"Books and Records" of any Person means all files, documents,
instruments, papers, books and records relating to the business, operations,
condition of (financial or other), results of operations and Assets and
Properties of such Person, including without limitation financial statements,
Tax Returns and related work papers and letters from accountants, budgets,
pricing guidelines, ledgers, journals, deeds, title policies, minute books,
stock certificates and books, stock transfer ledgers, Contracts, Licenses,
customer lists, computer files and programs, retrieval programs, operating data
and plans and environmental studies and plans.
"Business" has the meaning ascribed to it in the forepart of this
Agreement.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the State of Indiana are authorized or obligated to
close.
"Cap" has the meaning ascribed to it in Section 10.01(c).
"Cash on Hand" means cash in the bank (including restricted cash) as of
7:00 a.m. central time on the Closing Date plus Casino Cash.
"Cash on Hand Adjustment" has the meaning ascribed to it in Section
1.02(c).
"Casino Cash" means all of the cash (and coin) in the Company's gaming
devices, cages and change banks (after giving effect to the contra accounts for
gaming chip and tokens purchased) coin vaults, safes, cash drawers and cash
registers at the premises of the Company at 7:00 a.m. central time on the
Closing Date.
"Claim Notice" means written notification pursuant to Section 10.02(a)
of a Third Party Claim as to which indemnity under Section 10.01 is sought by an
Indemnified Party, enclosing a copy of all papers served, if any, and specifying
the nature of and basis for such Third Party Claim and for the Indemnified
Party's claim against the Indemnifying Party under Section 11.01, together with
the amount or, if not then reasonably determinable, the estimated amount,
determined in good faith, of the Loss arising from such Third Party Claim.
"Closing" means the closing of the transactions as contemplated by
Section 1.04(a).
"Closing Date" has the meaning ascribed to it in Section 1.04.
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"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Commitment Fee" means the cost of the commitment letter from Xxxxxxxxx
& Company delivered to Purchaser concurrently with the execution of this
Agreement up to the lesser of (i) $1.3 million or (ii) 0.5% of the amount of the
committed financing.
"Company" has the meaning ascribed to it in the forepart of this
Agreement.
"Company Closing Date Indebtedness" has the meaning ascribed to it in
Section 1.02(a).
"Company Common Stock" has the meaning ascribed to it in Section 2.03.
"Company Property" has the meaning ascribed to it in Section 2.10(a).
"Competing Business" has the meaning ascribed to it in Section 4.07(e).
"Condition of the Business" means the business, financial condition,
results of operations, Assets and Properties and prospects of the Business.
"Confidentiality Agreement" means that certain Confidentiality
Agreement dated August 5, 2005, by and between Purchaser and Xxxxx Entertainment
Resorts, Inc.
"Contract" means any agreement, undertaking, obligation or
understanding, whether written or oral, or subject to conditions, including any
commitment, letter of intent, mortgage, indenture, note, loan, guarantee, lease,
sublease, license, contract, deed of trust, option agreement, right of first
refusal, security agreement, development agreement, operating agreement,
management agreement, service agreement, partnership agreement, joint venture
agreement, limited liability agreement, put/call arrangement, purchase, sale,
merger or other agreement, together with any amendments or modifications thereto
and restatements thereof.
"Deposit" has the meaning ascribed to it in Section 1.02(a).
"Development Agreement" means that certain Development Agreement
between the Company and the City of Gary, Indiana dated May 1, 1996, as amended
by an Addendum to Development Agreement dated July 2, 1996 and further amended
by Second Amendment to Development Agreement dated February 28, 2001.
"Development Agreement Obligation" means $2,068,566, representing the
unsatisfied amount of the investment commitment by the Company to the City of
Gary, Indiana set forth in Section 2.01 of the Development Agreement, net of the
value of the collateral securing the bond for such investment commitment, as may
be further reduced by any payments made by the Company prior to the Closing
Date, in whole or partial satisfaction of such investment commitment.
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"Disclosure Schedule" means the record delivered to Purchaser by the
Company and Seller herewith and dated as of the date hereof, containing all
lists, descriptions, exceptions and other information and materials as are
required to be included therein by the Company and Seller pursuant to this
Agreement.
"Dispute Notice" has the meaning ascribed to it in Section 1.03(a).
"Dispute Period" means the period ending 30 days following receipt by
an Indemnifying Party of either a Claim Notice or an Indemnity Notice.
"DLJ Claim" means payments made on any of the five claims filed by DLJ
Merchant Banking Partners III, L.P. in the cases filed in the U.S. Bankruptcy
Court, District of New Jersey (case nos: 04-46917, 04-46911, 04-46900, 04-46910,
04-46899), or any claims made by DLJ Merchant Banking Partners III, L.P. related
to the same subject matter.
"DOJ" means the Antitrust Division of the U.S. Department of Justice.
"Employee" means each employee or officer of the Company engaged in the
conduct of any part of the Business.
"Environmental Conditions" has the meaning ascribed to it in Section
2.16(a).
"Environmental Laws" has the meaning ascribed to it in Section 2.16.
"Environmental Permits" has the meaning ascribed to it in Section 2.16.
"Environmental Report" means the Phase I Environmental Site Assessment
dated June 2005 prepared by Xxxxxxx Xxxxx, Jr., Inc., Project Number 106123.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" means a company, trade or business which is treated
with Seller as a member of a controlled group of corporations or trades or
businesses under common control pursuant to Code (S)414(b), (c), (m) or (o).
"Escrow Agent" means Chicago Title Insurance Company.
"Escrow Agreement" means an agreement by and among the Escrow Agent,
Purchaser and Seller substantially in the form of Exhibit E attached hereto.
"Escrow Funds" means $45,000,000 as may be reduced by any amount or
amounts of any IRS claim for Taxes which are paid or otherwise satisfied by the
Company or Seller prior to Closing.
"Estimated Working Capital" has the meaning ascribed to it in Section
1.02(b).
"Excluded Rights" has the meaning ascribed to it in Section 1.06.
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"Final Purchase Price" means the Initial Purchase Price, as may be
adjusted in accordance with the terms set forth in Section 1.02 and 1.03.
"Final Statement" has the meaning ascribed to it in Section 1.03(a).
"Financial Statements" has the meaning ascribed to it in Section
2.06(a).
"Foreign Corrupt Practices Act" means the Foreign Corrupt Practices Act
of 1977, as amended from time to time, including the rules and regulations
promulgated thereunder.
"FTC" means the U.S. Federal Trade Commission.
"GAAP" means United States generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"Gaming Authorities" means the applicable gaming and liquor licensing
and Governmental or Regulatory Authorities of the States of Indiana, Mississippi
and Colorado and of the applicable counties, cities or other political
subdivisions within such states.
"Gaming Laws" shall mean the federal, state, local or foreign statutes,
ordinances, rules, regulations, permits, consents, approvals, licenses,
judgments, orders, decrees, injunctions and other authorizations governing or
relating to the current or contemplated casino and gaming operations and
activities of the Purchaser and Seller.
"Gaming Licenses" means all licenses (including Liquor Licenses),
permits, approvals, authorizations, registrations, findings of suitability,
waivers and exemptions, including any condition or limitation placed thereon,
that are necessary for the Company or the Purchaser to own and operate its
gaming facilities and related amenities under the applicable Gaming Laws.
"Governmental or Regulatory Authority" means any Gaming Authorities,
court, tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision.
"Hazardous Substance" has the meaning ascribed to it in Section
2.16(a).
"HSR Act" means (S)7A of the Xxxxxxx Act (Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended) and the rules
and regulations promulgated thereunder.
"Improvements" means all buildings, structures, facilities, fixtures,
and other improvements on the Company Property.
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"Indebtedness" means all liabilities and obligations, including
principal, interest, fees, penalties and expenses, relating to or arising from
(i) indebtedness of the Company for borrowed money, (ii) obligations of the
Company evidenced by bonds, notes, debentures, letters of credit or similar
instruments, (iii) obligations of the Company under conditional sale, title
retention or similar agreements or arrangements creating an obligation of the
Company with respect to the deferred purchase price of property (other than
customary trade credit), (iv) interest rate and currency obligation swaps,
xxxxxx or similar arrangements, (v) any bank overdraft accounts, (vi) all
obligations under leases that have been or should be in accordance with GAAP,
recorded as capital leases, (vii) all reimbursement, payment or similar
obligations, contingent or otherwise, under acceptances, letters of credit or
similar facilities, (viii) all obligations of another Person secured by any
Assets or Property of the Company, and (ix) all obligations of the Company to
guarantee any of the foregoing types of obligations on behalf of any Person
other than the Company.
"Indemnified Party" means any Person claiming indemnification under any
provision of Article X.
"Indemnifying Party" means any Person against whom a claim for
indemnification is being asserted under any provision of Article X.
"Indemnity Notice" means written notification pursuant to Section
10.02(b) of a claim for indemnity under Article X by an Indemnified Party,
specifying the nature of and basis for such claim, together with the amount or,
if not then reasonably determinable, the estimated amount, determined in good
faith, of the Loss arising from such claim.
"Independent Accounting Firm" has the meaning ascribed to it in Section
1.03(b).
"Indiana Code" means the Indiana Code Sections 1-1-1- et seq., as
amended.
"Infrastructure Obligation" means any obligation of the Company
relating to a marine access road infrastructure obligation pursuant to the
Development Agreement.
"Initial Purchase Price" has the meaning ascribed to it in Section
1.02.
"Intellectual Property" means all patents and patent rights, trademarks
and trademark rights, trade names and trade name rights, service marks and
service xxxx rights, service names and service name rights, brand names,
inventions, processes, formulae, copyrights and copyright rights, trade dress,
business and product names, logos, slogans, trade secrets, and copyright rights,
trade dress, business and product names, logos, slogans, trade secrets,
industrial models, processes, designs, methodologies, computer programs
(including all source codes) and related documentation, technical information,
manufacturing, engineering and technical drawings, know-how and all pending
applications for and registrations of patents, trademarks, service marks and
copyrights, and all rights to bring suit with respect to the foregoing and all
goodwill associated therewith.
"Intercompany Account Settlement" has the meaning ascribed to it in
Section 4.16.
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"Inventory" means all inventories of office, restaurant, bar, hotel,
casino and other supplies (including all foods and alcoholic and non-alcoholic
beverages), parts, packaging materials and other accessories related thereto
which are held at, or are in transit from or to, the locations at which the
Business is conducted, in each case, which are used or held for use by Seller in
the conduct of the Business, including any of the foregoing purchased subject to
any conditional sales or title retention agreement in favor of any other Person,
together with all rights of Seller against suppliers of such inventories held
for use in connection with the Business, as these shall exist on the Closing
Date.
"IRS" means the U.S. Internal Revenue Service.
"Joint Venture Closing Date Indebtedness" has the meaning ascribed to
it in Section 1.02(a).
"June Financial Statements" has the meaning ascribed to it in Section
2.06(a).
"Knowledge of the Company" or "Knowledge of the Seller" means the
actual knowledge of Xxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxx Xxxxxx and (solely with
respect to the Company) Xxxxx Xxxxxxxxx, Xxxxxxxxx Xxxx-Xxxxxxx,Xxx Xxxxxxxxx,
the four chief engineers for the Riverboat and the chief engineer for the hotel.
"Laws" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
"Liabilities" means all indebtedness, obligations and other liabilities
of a Person (whether absolute, accrued, contingent, fixed or otherwise, or
whether due or to become due).
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority, including without
limitation, Gaming Licenses and Liquor Licenses.
"Lien" means any security interest, pledge, mortgage, option, lien
(including environmental and Tax liens), assessment, lease, charge, encumbrance,
adverse claim, preferential arrangement, equitable interest, right of first
refusal or restriction of any kind, including any restriction on the use,
voting, transfer, receipt of income or other exercise of any attributes of
ownership.
"Lists" means all casino player, customer and patron lists, information
and databases of the Company.
"Liquor License" means those certain "off sale", "portable bar" and
other alcoholic beverage licenses issued by Government or Regulatory Authorities
pursuant to which the sale of alcoholic beverages is permitted.
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"Loss" or "Losses" means any and all damages, liability, injury, fines,
fees, penalties, deficiencies, losses and expenses (including, without
limitation, interest, court costs, fees of attorneys, accountants and other
experts or other expenses of investigations, litigation or other proceedings or
of any claim, default or assessment or determination or defense thereof and
amounts paid in settlement).
"Material Adverse Effect" means any circumstance, development, change
in, or effect that, individually or in the aggregate with any other
circumstances, developments, changes in, or effects taken as a whole, is or is
reasonably expected to be materially adverse to (i) the business or the
condition (financial or otherwise), results of operations, operations, assets,
liabilities or prospects of a Person, (ii) the ability of a Person to perform
its obligations under this Agreement or to consummate the transactions
contemplated by this Agreement but excluding any effect to the extent resulting
from (a) any condition or event which adversely affects the gaming industry
generally or the gaming industry in Indiana, (b) general economic conditions,
(c) a change in the condition of financial or securities markets in general, (d)
proposal or passage of any law or regulation restricting or adversely affecting
the conduct of gaming operations generally, or (e) fluctuations in the earnings
or financial condition of the Company during the period from September 30, 2005
to the Closing Date that result from gaming winnings so long as the Company has
been operating on a basis consistent with past practice concerning extensions of
credit and setting of gambling limits.
"Minimum Cash" means $10,000,000.
"Multiemployer Plan" means a multiemployer pension plan, as defined in
"3(37) of ERISA, with respect to Employees.
"Noa Litigation" means that certain action entitled Xxxx Xxx, Xxxxx
Xxxxxx Xxxxx, Xxxxxx Xxxxxx and Xxxxx Xxxxxx x. Xxxxx Hotels & Casino Resorts,
Inc., Xxxxx Xxx Mahal Associates, Xxxxx Xxxxxx Associates, L.P., Xxxxx Plaza
Associates, Xxxxx Indiana, Inc., Xxxxx X. Xxxxxx, Xxxx Xxxxxx and Xxxx Does 1-10
filed in the United States District Court for the State of New Jersey.
"Operative Agreements" means the Assignment Instruments, the Escrow
Agreement and the other documents delivered at Closing.
"Order" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Ordinary Course of Business" means an action taken by a Person if such
action is consistent with the past practices of such Person and is taken in the
normal day-to-day operations of such Person.
"Organizational Documents" means articles of incorporation, articles of
organization, bylaws, operating agreement, or similar organizational document.
"Parent" means Xxxxx Entertainment Resorts, Inc., a Delaware
corporation.
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"Pension Plan" means an employee pension benefit plan, as defined in
(S)3(2) of ERISA, which Seller and each ERISA Affiliate maintain, contribute to,
or are obligated to contribute to on behalf of Employees.
"Permitted Exceptions" has the meaning ascribed to it in Section
4.08(a).
"Permitted Lien" means (i) any Lien for Taxes not yet due or delinquent
or being contested in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP, or (ii) any statutory
Lien arising in the Ordinary Course of Business by operation of Law with respect
to a Liability that is not yet due or delinquent.
"Person" means any natural person, corporation, limited liability
company, general partnership, limited partnership, proprietorship, other
business organization, trust, union, association or Governmental or Regulatory
Authority.
"Plans" has the meanings ascribed to it in Section 2.19(a).
"Pre-Closing Tax Returns" has the meaning ascribed to it in Section
8.02(a).
"Pre-Closing Taxes" means all Taxes relating to the period ending on or
before the Closing Date and all Taxes relating to the Seller's portion of the
Tax Straddle Period liability.
"Purchaser" has the meaning ascribed to it in the forepart of this
Agreement.
"Purchaser Indemnified Parties" means Purchaser and its officers,
directors, employees, agents and Affiliates.
"Purchaser Representatives" has the meaning ascribed to it in Section
4.03(a).
"Regulatory Action" has the meaning ascribed to it in Section 5.01.
"Reimbursement Agreement" means that certain letter agreement dated
October 13, 2005 between Purchaser and Seller relating to the fees and expenses
of Ernst & Young, LLP.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata and otherwise as defined in any
Environmental Law.
"Representatives" has the meaning ascribed to it in Section 4.03(a).
"Resolution Period" means the period ending 30 days following receipt
by an Indemnified Party of a written notice from an Indemnifying Party stating
that it disputes all or any portion of a claim set forth in a Claim Notice or an
Indemnity Notice.
"Riverboat " has the meaning ascribed to it in the forepart of this
Agreement.
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"SOX" means the Xxxxxxxx-Xxxxx Act of 2002, as amended from time to
time, including the rules and regulations promulgated thereunder.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" has the meaning ascribed to it in the forepart of this
Agreement.
"Seller Indemnified Parties" means Seller and its respective officers,
directors, employees, agents and Affiliates.
"Seller's Credit Facility" has the meaning ascribed to it in Section
7.05.
"Seller's Threshold" has the meaning ascribed to it in Section
10.01(c).
"Shares" has the meaning ascribed to it in the forepart of this
Agreement.
"Straddle Period" means any taxable period beginning before and ending
after the Closing Date.
"Straddle-Period Tax Returns" has the meaning ascribed to it in Section
8.02(a).
"Superior Proposal" has the meaning ascribed to it in Section 4.12(c).
"Target Working Capital" shall have the meaning set forth in Exhibit B
hereto.
"Tax Claim" has the meaning ascribed to it in Section 8.01.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
gaming, premium, windfall profits, environmental (including taxes under Code
(S)59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not and any expenses incurred
in connection with the determination, settlement or litigation of any Tax
liability and shall include any liability for such amounts as a result either of
being (or having been) a member of a combined, consolidated, unitary or
affiliate group or of a contractual obligation to indemnify any Person, and
shall include any liability for such amounts relating to any other Person if
such liability is imposed by reason of law (including transferee or successor
liability). For the avoidance of doubt, the term Taxes as used in this Agreement
shall be deemed to include (a) the contractual obligation to pay 4% of adjusted
gross revenues under the Development Agreement and (b) 50% of any Taxes of BHR
or BHPA attributed to the period prior to the Closing Date or the Straddle
Period.
"Technology" means the ACSC Casino system including count room and TITO
ticket
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redemption equipment, InfoGenesis Point of Sales system, LMS hotel reservation
and billing and accounting system, Saflok hotel room key system, Hospitality
Network hotel in room movie system, Xxxx liquor dispensing system, NEC
telecommunications system, and existing data interfaces between the following
systems, telecommunications call accounting and LMS hotel reservations and
billing system; Hospitality Network hotel in room movie system and LMS hotel
reservations and billing system; Xxxx liquor system and InfoGenesis POS.
"Termination Fees" has the meaning ascribed to it in Section 11.03.
"Territory" has the meaning ascribed to it in Section 4.07(a).
"Third Party Claim" has the meaning ascribed to it in Section 10.02(a).
"Title Report" has the meaning ascribed to it in Section 4.08.
"Transfer Taxes" has the meaning ascribed to it in Section 13.14.
"Xxxxx Indebtedness" means the indebtedness of Seller under Seller's
Credit Facility and under the Indenture dated as of May 20, 2005 among Seller,
the guarantors party thereto, and U.S. Bank, National Association, as trustee.
"Xxxxx Indiana" has the meaning ascribed to it in the forepart of this
Agreement.
"Xxxxx License" means an agreement by and between Seller and the
Company substantially in the form of Exhibit F attached hereto.
"Unaudited Financial Statements" has the meaning ascribed to it in
Section 2.06(a).
"Unique Customers" has the meaning ascribed to it in Section 4.15(a).
"Working Capital" means the sum of those current assets less those
current liabilities specified in the Target Working Capital set forth on Exhibit
B and less (i) the Company's outstanding TITO liability as of the Closing Date
and (ii) the Company's outstanding liability for the Xxxxx Indiana Foundation as
of the Closing Date.
"Working Capital Statement" has the meaning ascribed to it in Section
1.03(a).
12.02 Construction of Certain Terms and Phrases. Unless the context of
this Agreement otherwise requires, (i) words of any gender include each other
gender; (ii) words using the singular or plural number also include the plural
or singular number, respectively; (iii) the terms "hereof," "herein," "hereby"
and derivative or similar words refer to this entire Agreement; (iv) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement; and (v) the phrases "Ordinary Course of Business" and "Ordinary
Course of Business consistent with past practice" refer to the business and
practice of Seller in connection with the Business. Whenever this Agreement
refers to a number of days, such number shall refer to calendar days unless
Business Days are specified. All accounting terms used herein and not expressly
defined herein shall have the meanings given to them under GAAP.
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ARTICLE XIII
MISCELLANEOUS
13.01 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or sent by a nationally recognized
overnight courier (providing proof of delivery) to the parties at the following
addresses or facsimile numbers:
If to Purchaser, to: The Majestic Star Casino, LLC
Xxx Xxxxxxxxxx Xxxxxx Xxxxx
Xxxx, Xxxxxxx 00000-0000
Attn: Xxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to: Xxxxxx Xxxxxxx PLLC
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Seller, to: Xxxxx Entertainment Resorts Holdings, L.P.
0000 Xxxxxxxxx
Xxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: Xxxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy of any notice to the Company Xxxxxx, Xxxxxx & Xxxxxxxx
or Seller to: 0 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section, be deemed given
upon delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided in this Section, be deemed given upon confirmation of
receipt, and (iii) if delivered by overnight courier in the manner described
above to the address as provided in this Section, be deemed given the Business
Day following deposit with such courier (in each case regardless of whether such
notice, request or other communication is received by any other Person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other party hereto.
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13.02 Bulk Sales Act. The parties hereto waive compliance with the bulk
sales act or comparable statutory provisions of each applicable jurisdiction.
13.03 Entire Agreement. This Agreement and the Operative Agreements
supersede all prior discussions and agreements among the parties with respect to
the subject matter hereof and thereof between the parties, and contain the sole
and entire agreement among the parties hereto with respect to the subject matter
hereof and thereof.
13.04 Expenses. Except as otherwise expressly provided in the
Reimbursement Agreement and in this Agreement (including, without limitation, as
provided with respect to the calculation of the Initial Purchase Price and in
Sections 5.02, 6.02 and 11.03), whether or not the transactions contemplated
hereby are consummated, each party will pay its own costs and expenses incurred
in connection with the negotiation, execution and closing of this Agreement and
the Operative Agreements and the transactions contemplated hereby and thereby.
13.05 Confidentiality. All documents and information concerning the
parties or any of their Affiliates furnished to the other party or such other
party's Representatives in connection with this Agreement or the transactions
contemplated hereby shall be held in confidence in accordance with the terms of
the Confidentiality Agreement.
13.06 Waiver; Remedies. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by Law or otherwise afforded, will be cumulative
and not alternative.
13.07 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
13.08 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under Article X.
13.09 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by Purchaser without the
prior written consent of Seller and the Company and any attempt to do so will be
void, except (i) for assignments and transfers by operation of Law and (ii) that
Purchaser may assign any or all of its rights, interests and obligations
hereunder (including, without limitation, its rights under Articles X and XII)
to (A) any financial institution providing purchase money or other financing to
Purchaser from time to time as collateral security for such financing and (B) a
wholly-owned subsidiary; provided that, in each instance, the party named herein
as Purchaser shall remain jointly and severally liable with each such assignee
for each and every obligation of Purchaser hereunder. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
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13.10 Headings. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
13.11 Consent to Jurisdiction; Venue. Each party hereto irrevocably
submits to the jurisdiction of any federal or state Courts located in Indiana in
any action, suit or proceeding arising out of or relating to this Agreement or
any of the Operative Agreements or any of the transactions contemplated hereby
or thereby, and agrees that any such action, suit or proceeding shall be brought
only in such court. Each party irrevocably waives, to the fullest extent
permitted by Law, any objection that it may now or hereafter have to the laying
of the venue of any such action, suit or proceeding brought in such a court and
any claim that any such action, suit or proceeding brought in such a court has
been brought in an inconvenient forum.
13.12 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof
and (iii) the remaining provisions of this Agreement will remain in full force
and effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.
13.13 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 Purchaser and Seller; 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
Governmental Authority, the Securities and Exchange Commission, any Gaming
Authorities and other Regulatory Authority) 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.
13.14 Transfer Taxes. Seller shall pay all transfer tax, stamp tax,
conveyance tax or similar taxes as a result of the transactions contemplated
hereby (collectively the "Transfer Taxes").
13.15 Governing Law. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Indiana applicable to a contract
executed and performed exclusively in such State, without giving effect to the
conflicts of laws principles thereof.
13.16 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
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13.17 Independence of Covenants and Representations and Warranties. All
covenants hereunder shall be given independent effect so that if a certain
action or condition constitutes a default under a certain covenant, the fact
that such action or condition is permitted by another covenant shall not affect
the occurrence of such default, unless expressly permitted under an exception to
such initial covenant. In addition, all representations and warranties hereunder
shall be given independent effect so that if a particular representation or
warranty proves to be incorrect or is breached, the fact that another
representation or warranty concerning the same or similar subject matter is
correct or is not breached will not affect the incorrectness or a breach of such
initial representation or warranty.
[Signature page and exhibits only follow]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officer of each party as of the date first above written.
PURCHASER: THE MAJESTIC STAR CASINO, LLC,
an Indiana limited liability company
By: /s/ Xxx X. Xxxxxx
--------------------------------------------------------
Name: Xxx X. Xxxxxx
Title: CEO/ President
SELLER: XXXXX ENTERTAINMENT RESORTS HOLDINGS, L.P.,
a Delaware limited partnership
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President, Chief Strategic
Officer of Xxxxx Entertainment Resorts, Inc.,
the general partner of Xxxxx Entertainment
Resorts Holdings, L.P.
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EMPLOYEE PAYMENTS
1. Xxxx Xxxxx $61,500
2. Xxxxxxx Xxxxxxxxx $62,400
3. Xxxxx Xxxxx $32,500
4. Xxxxx Dactelides $47,500
5. Xxxxxxx X. Xxxxxxx $15,000
6. Xxxxxxx Xxxx $13,000
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EXHIBIT B
TARGET WORKING CAPITAL COMPUTATION
CURRENT ASSETS
Accounts Receivable (net of allowance)(1) $ 1,213,193
Inventories(2) 119,506
Prepaid Expenses and Other Current Assets(3) 674,304
Total Assets 2,007,003
CURRENT LIABILITIES
Accounts Payable(4) (1,697,017)
Accrued Liabilities(5) (3,859,399)
Other Current Liabilities(6) (1,088,317)
Total Liabilities (6,644,733)
ADJUSTMENTS
Accrued Expenses BHPA 202,690
Target Working Capital (4,435,040)
(1) General Ledger Accounts 1200-000 to 1270-000
(2) General Ledger Accounts 1310-000 to 1390-000
(3) General Ledger Accounts 1410-000 to 1490-000
(4) General Ledger Accounts 2010-000 to 2320-003
(5) General Ledger Accounts 2410-000 to 2490-011
(6) General Ledger Accounts 2510-004 and 2510-010 and 2540-004 and
2570-002 and 2570-003
EXECUTION COPY
EXHIBIT C
WORKING CAPITAL METHODOLOGY
1. Restricted cash shall be based on the amount of cash, CD's or other
liquid assets used to secure a letter of credit, bond, or other
potential future obligations of the Company for the benefit of a third
party.
2. 2. Accounts receivables shall be valid trade accounts of the Company
representing obligations of third parties, customers or vendors
supported by accurate invoices or some other trade documentation, for
goods or services provided.
3. Allowance for doubtful accounts shall be those accounts receivable
items where it is anticipated that payment will not be made and such
accounts will contain documentation of the collection efforts.
4. Inventories will be based on a physical count of the items classified
into inventory, shall be exclusive of obsolete inventory and will be
maintained on a first in first out basis.
5. Prepaid expenses shall be those advance payments made by the Company
for which a future service is to be performed or goods delivered.
6. Accounts payables shall be valid trade accounts of the Company,
representing obligations of third parties, suppliers or vendors
supported by accurate invoices or some other trade documentation, for
goods or services received.
7. Accruals shall be valid and accurate obligations of the Company, that
are supported by documentation and when recorded to reflect the timely
and accurate expenses of the Company.
8. Other payables shall be those obligations of the Company that are
supported by accurate documentation.
9. Accrued progressive jackpots shall be based on the reading of the
progressive meters on the gaming devices of the Company.
10. Actual Working Capital (but not the Target Working Capital) will
include a reserve for TITO liability.
11. Deferred revenue and deposits shall be valid future revenue sources of
the Company, that shall be earned when a future service is performed,
and shall be supported by accurate documentation with evidence that
payment has previously been paid for such services.
12. Joint venture receivables and liabilities within in the Company's
working capital accounts shall be determined in an accurate manner and
should be able to be reconciled with the corresponding receivable or
liability on the joint venture's balance sheet.
EXECUTION COPY
EXHIBIT D
TITLE REPORT
EXECUTION COPY
EXHIBIT E
ESCROW AGREEMENT
EXECUTION COPY
EXHIBIT F
XXXXX LICENSE
