EXHIBIT 10.11
TAX ALLOCATION AND INDEMNITY AGREEMENT
TAX ALLOCATION AND INDEMNITY AGREEMENT (the "AGREEMENT"), dated as of
___________, 1998, by and between HILTON HOTELS CORPORATION, a Delaware
corporation ("HILTON"), and GAMING CO., INC., a Delaware corporation and wholly
owned subsidiary of Hilton, to be renamed _______________________ ("GAMING
CO.").
WHEREAS, Hilton, Gaming Co. and Hilton's other subsidiaries have
joined in filing consolidated federal Income Tax Returns and certain
consolidated, combined, unitary or similar state, foreign and local Tax Returns;
WHEREAS, pursuant to a Distribution Agreement dated as of ___________,
1998 by and among Hilton and Gaming Co. (the "Distribution Agreement"), Hilton
will distribute to the holders of its common stock all of the shares of common
stock of Gaming Co. (the "Distribution");
WHEREAS, pursuant to the Distribution Agreement, Gaming Co. will leave
the Hilton Group (as defined herein); and
WHEREAS, the parties hereto wish to provide for (i) the allocation of,
and indemnification against, certain liabilities for Taxes, (ii) the preparation
and filing of Tax Returns and the payment of Taxes with respect thereto and
(iii) certain related matters.
NOW THEREFORE, in consideration of the foregoing and the respective
covenants and agreements set forth below, the parties agree as follows:
ARTICLE I.
DEFINITIONS
When used herein the following terms shall have the following
meanings:
AFFILIATE: with respect to any corporation (the "given corporation"),
each entity that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the given
corporation. For purposes of this definition, "control" means the possession,
directly or indirectly, of 50% or more of the voting power or value of
outstanding equity interests.
AFFILIATED GROUP: an affiliated group of corporations within the
meaning of Code Section 1504(a) (and without regard to the exclusions contained
in Code Section 1504(b)) for the Taxable Period or, for purposes of any state,
foreign or local Tax matters that are filed on a
consolidated, combined, unitary or similar basis, any consolidated, combined,
unitary or similar group of corporations within the meaning of the
corresponding provisions of tax law for the jurisdiction in question.
AFTER-TAX BASIS: any indemnity payment made hereunder shall give
effect to, and be adjusted by the value of, any and all Tax Benefit(s) for
federal, state or other Income Tax purposes attributable to the payment of the
indemnified liability, which value shall be determined on an assumed basis by
(a) multiplying the amount of any applicable deductions, losses, offsets or
other Tax items (such amount determined as if such deductions, losses, offsets
or other Tax items will generate an immediate deduction for the full amount
ultimately available) by (i) 39% or (ii) if no state Tax Benefit shall result
therefrom (determined on a hypothetical basis by using the highest marginal
corporate Tax rate), 35% (such percentages to increase or decrease on a
percentage-for-percentage basis with any subsequent increases or decreases in
the current 35% maximum marginal federal Income Tax rate for corporations, and
100% minus the maximum marginal federal Income Tax rate for corporations (E.G.,
65%) of any increases or decreases in the maximum marginal state or local Income
Tax rate for corporations) and (b) valuing any credits or other direct
reductions of Tax on a dollar-for-dollar basis. For example, if a deductible
payment of $100 is indemnified hereunder, the indemnification payment with
respect thereto (applying the characterization set forth in Section 4.2) shall
be reduced by $39 to $61.
AUDIT: any audit, assessment of Taxes, other examination by any
Taxing Authority, proceeding or appeal of such a proceeding relating to Taxes,
whether judicial or administrative.
CARRYFORWARDS: as defined in Section 2.12 of this Agreement.
CLOSING DATE: the date on which the Distribution is effected by
Hilton.
CODE: the Internal Revenue Code of 1986, as amended, or any successor
thereto, as in effect for the Taxable Year in question.
COMBINED JURISDICTION: for any Taxable Period, any state, foreign or
local jurisdiction in which Hilton and a Hilton Affiliate (or two or more Hilton
Affiliates) for that period join in the filing of a consolidated, combined,
unitary or similar return for state, foreign or local Tax purposes.
CORPORATE SERVICES AGREEMENT: the Hilton Hotels Corporation Corporate
Services Agreement entered into by and between Hilton and Gaming Co. dated as of
_____________ which provides, among other things, that Hilton shall, during the
transition period specified therein, prepare or cause to be prepared, on Gaming
Co.'s behalf, certain Tax and Information Returns of Gaming Co. and Gaming Co.
Members.
DISPUTE RESOLUTION PROCEDURE: a procedure whereby (i) Hilton shall
select a representative of a nationally recognized accounting firm, (ii) Gaming
Co. shall select a representative of a second nationally recognized accounting
firm, (iii) the two representatives so selected shall together select a
representative of a third nationally recognized accounting firm
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(which firm shall not have received more than $___________ in fees from
either Hilton or Gaming Co. in any of the preceding five years) and (iv) the
three representatives together (or, if they are unable to agree, a majority
of them) shall, within a reasonable period of time, decide the issue(s)
submitted to them. Hilton and Gaming Co. shall each be responsible for the
fees of their respective representative, and the fees of the third
representative shall be shared equally by Hilton and Gaming Co. Any decision
rendered pursuant to a Dispute Resolution Procedure shall be final and
binding on all Post-Distribution Members and Gaming Co. Members.
DISTRIBUTION: as defined in the Preamble.
EFFECTIVE TIME: the time at which the Distribution becomes effective.
FINAL DETERMINATION: (i) a decision, judgment, decree, or other order
by a court of competent jurisdiction, which has become final and unappealable;
(ii) a closing agreement or accepted offer in compromise under Code Sections
7121 or 7122, or comparable agreements under the laws of other jurisdictions;
(iii) any other final settlement with the IRS or other Taxing Authority
(including the execution of IRS Form 870AD, or a comparable form under the laws
of other jurisdictions, but excluding any such form that reserves (whether by
its terms or by operation of law) the right of the taxpayer to file a claim for
refund and/or the right of the Taxing Authority to assert a further deficiency);
(iv) the expiration of an applicable statute of limitations; or (v) the
allowance of a refund or credit, but only after the expiration of all periods
during which such refund or credit may be recovered (including by way of
offset).
FINAL HILTON GROUP COMBINED TAX RETURN: as defined in Section 2.7(c)
of this Agreement.
GAMING CO.: as defined in the preamble to this Agreement.
GAMING CO. GROUP: Gaming Co. and each corporation that was a
Pre-Distribution Member and which would be a member of an Affiliated Group
with respect to which Gaming Co. would be the common parent during any
Post-Closing Taxable Period. For purposes of this Agreement, the Gaming Co.
Group shall exist from and after the day after the close of business on the
Closing Date. To the extent applicable to any state, foreign or local Tax
matters that are filed on a consolidated, combined, unitary or similar basis,
the "Gaming Co. Group" shall consist of all corporations joining with Gaming
Co. in the filing of a consolidated, combined, unitary or similar Tax Return
for the jurisdiction in question.
GAMING CO. MEMBER: a corporation that would be a member of the Gaming
Co. Group.
HILTON: as defined in the preamble to this Agreement.
HILTON GROUP: Hilton and each corporation that is a member of an
Affiliated Group with respect to which Hilton is the common parent.
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INCOME TAX(ES): with respect to any corporation or Affiliated Group,
any and all Taxes based upon or measured by net income (regardless of whether
denominated as an "income tax," a "franchise tax" or otherwise).
INCOME TAX RETURN: a Tax Return relating to the payment or receipt of
any refund of any Income Tax.
INFORMATION RETURN(S): with respect to any corporation or Affiliated
Group, any and all returns, reports, estimates, statements, declarations and
other filings (other than Tax Returns) required to be filed or supplied to any
Taxing Authority.
IRS: the Internal Revenue Service or any successor thereto, including
but not limited to its Representatives.
IRS RULING: The letter ruling issued by the IRS in response to the
Ruling Request.
MERGER AGREEMENT: That certain Agreement and Plan of Merger, dated as
of June 30, 1998 by and among Hilton; Gaming Co.; Gaming Acquisition
Corporation, a Minnesota corporation; Grand Casinos, Inc., a Minnesota
corporation; and GCI Lakes, Inc., a Minnesota corporation.
OVERDUE RATE: a variable rate of interest per annum equal to the
Federal short-term rate as established from time to time pursuant to Code
Section 1274(d).
POST-CLOSING STRADDLE PERIOD: with respect to any Straddle Period, the
portion beginning after the close of business on the Closing Date and ending on
the last day of such Taxable Year.
POST-CLOSING TAXABLE PERIOD: a Taxable Year that begins after the
close of business on the Closing Date.
POST-DISTRIBUTION HILTON GROUP: Hilton and each corporation that was a
Pre-Distribution Member and which would be a member of an Affiliated Group with
respect to which Hilton would be the common parent during any Post-Closing
Taxable Period. For purposes of this Agreement, the Post-Distribution Hilton
Group shall exist from and after the close of business on the Closing Date. To
the extent applicable to any state, foreign or local Tax matters that are filed
on a consolidated, combined, unitary or similar basis, the "Post-Distribution
Hilton Group" shall consist of all corporations joining with Hilton in the
filing of a consolidated, combined, unitary or similar Tax Return for the
jurisdiction in question.
POST-DISTRIBUTION MEMBER: a corporation that was a Pre-Distribution
Member and is a member of the Post-Distribution Hilton Group after the close of
business on the Closing Date.
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PRE-CLOSING STRADDLE PERIOD: with respect to any Straddle Period, the
portion beginning on the first day of such Taxable Year and ending on the close
of business on the Closing Date.
PRE-CLOSING TAXABLE PERIOD: a Taxable Year that ends on or before the
Closing Date.
PRE-DISTRIBUTION HILTON GROUP: Hilton and each corporation that would
be a member of an Affiliated Group with respect to which Hilton would be the
common parent during any Pre-Closing Taxable Period. For purposes of this
Agreement, the Pre-Distribution Hilton Group shall terminate at the close of
business on the Closing Date. To the extent applicable to any state, foreign or
local Tax matters that are filed on a consolidated, combined, unitary or similar
basis, the "Pre-Distribution Hilton Group" shall consist of all corporations
joining with Hilton in the filing of a consolidated, combined, unitary or
similar Tax Return for the jurisdiction in question.
PRE-DISTRIBUTION MEMBER: a corporation that was a member of the
Pre-Distribution Hilton Group at the close of business on the Closing Date.
REPRESENTATIVE(S): with respect to any person or entity, any of such
person's or entity's directors, officers, employees, agents, consultants,
accountants, attorneys and other advisors.
RULING REQUEST: The private letter ruling request filed by Hilton
with the IRS, as supplemented and amended from time to time, with respect to
certain federal Income Tax matters relating to the Distribution and other
related matters.
STRADDLE PERIOD: any Taxable Year beginning before and ending after
the close of business on the Closing Date.
TAX BENEFIT(S): (i) in the case of a Tax for which a consolidated
federal, or a consolidated, combined, unitary or similar state, foreign or local
Tax Return is filed, the amount by which the Tax liability of the Affiliated
Group is reduced (by deduction, entitlement to refund, credit, offset or
otherwise, whether available in the current Taxable Year, as an adjustment to
taxable income in any other Taxable Year or as a carryforward or carryback, and
including the effect on other Taxes of such reduction), plus any interest
received with respect to any related Tax refund, and (ii) in the case of any
other Tax, the amount by which the Tax liability of a corporation is reduced (by
deduction, entitlement to refund, credit, offset or otherwise, whether available
in the current Taxable Year, as an adjustment to taxable income in any other
Taxable Year or as a carryforward or carryback, and including the effect on
other Taxes of such reduction), plus any interest received with respect to any
related Tax refund, determined in the case of both (i) and (ii) on a basis
consistent with the computation of After-Tax Basis.
TAX PRACTICES: the most recently applied policies, procedures and
practices employed by the Hilton Group in the preparation and filing of, and
positions taken on, any Tax
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Returns of Hilton or any Pre-Distribution Member or Hilton Affiliate for any
Pre-Closing Taxable Period.
TAX RETURN(S): with respect to any corporation or Affiliated Group,
all returns, reports, estimates, statements, declarations and other filings
relating to, or required to be filed by any taxpayer in connection with, the
payment or receipt of any refund of any Tax.
TAX TREATMENT: as defined in Section 3.3 hereto.
TAXABLE PERIOD: a Pre-Closing Taxable Period, a Post-Closing Taxable
Period or a Straddle Period.
TAXABLE YEAR: a taxable year (which may be shorter than a full
calendar or fiscal year) or similar period with respect to which any Tax may be
imposed.
TAX(ES): any federal, state, foreign or local income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security, 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; EXCLUDING, HOWEVER, any "Transaction
Taxes" as defined in Section 6.05 of the Distribution Agreement.
TAXING AUTHORITY: the IRS or any other domestic or foreign
governmental authority responsible for the administration of any Tax.
ARTICLE II.
FILING OF TAX RETURNS AND PAYMENT OF TAXES
Section 2.1. PREPARATION AND FILING OF TAX RETURNS.
(a) BY HILTON. Hilton shall prepare and timely file (or cause to be
prepared and timely filed):
(i) all Tax and Information Returns of the Hilton Group
or any Pre-Distribution Member or group of Pre-Distribution Members
for all Pre-Closing Taxable Periods that are required to be filed
on or before the Closing Date;
(ii) all Tax and Information Returns of the Hilton Group
or any Pre-Distribution Member or group of Pre-Distribution Members
for all Pre-Closing Taxable Periods (other than such Returns that
relate solely to any Gaming Co. Member or group of Gaming Co.
Members) that are not required to be filed on or before the Closing
Date; and
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(iii) all Tax and Information Returns of the Hilton Group
or any Post-Distribution Member or group of Post-Distribution
Members for all Straddle Periods and Post-Closing Taxable Periods.
(b) BY GAMING CO.. Gaming Co. shall prepare and timely file (or
cause to be prepared and timely filed):
(i) all Tax and Information Returns that relate
solely to any Gaming Co. Member or group of Gaming Co.
Members for all Pre-Closing Taxable Periods that are not
required to be filed on or before the Closing Date; and
(ii) all Tax and Information Returns of the Gaming
Co. Group or any Gaming Co. Member or group of Gaming Co.
Members for all Straddle Periods and Post-Closing Taxable
Periods.
Pursuant to the Corporate Services Agreement, during a transition period
specified therein, certain Tax and Information Returns described in
Section 2.1(b) will be prepared (or caused to be prepared) by Hilton on Gaming
Co.'s behalf.
Section 2.2. PROVISION OF FILING INFORMATION. Gaming Co. (or Hilton, as the
case may be) shall cooperate and assist Hilton (or Gaming Co.) in the
preparation and filing of all Tax and Information Returns subject to Section 2.1
and any tax planning related thereto, and shall submit to Hilton (or Gaming Co.)
(i) all necessary filing information in a manner consistent with past Tax
Practices and (ii) all other information reasonably requested by Hilton (or
Gaming Co.) in connection with the preparation of such Tax Returns and any such
tax planning promptly after such request, including permission to copy any
applicable documents. It is expressly understood and agreed that Hilton's (or
Gaming Co.'s) ability to discharge its Tax and Information Return preparation
and filing responsibilities is contingent upon Gaming Co. (or Hilton) providing
Hilton (or Gaming Co.) with all cooperation, assistance and information
reasonably necessary or requested for the filing of such Tax and Information
Returns and that Gaming Co. (or Hilton) shall indemnify Hilton (or Gaming Co.),
if, and to the extent that, Taxes are increased as a result of material
inaccuracies in such information or failures to provide such information and
assistance on a timely basis.
Section 2.3. TAXABLE YEAR. Gaming Co. and Hilton agree that, to the
extent permitted by applicable law, (i) the Taxable Year of the Gaming Co.
Members included in the consolidated federal Income Tax Return of the Hilton
Group for the Taxable Period that includes the Closing Date (and all
corresponding consolidated, combined, unitary or similar state, foreign or local
Income Tax Returns of the Hilton Group) shall end at the close of business on
the Closing Date, and (ii) the Gaming Co. Group and each Gaming Co. Member shall
begin a new Taxable Year for purposes of such federal, state, foreign or local
Income Taxes on the day after the Closing
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Date. The parties further agree that, to the extent permitted by applicable
law, all federal, state, foreign or local Tax and Information Returns shall
be filed consistently with this position.
Section 2.4. ADVANCE REVIEW OF TAX RETURNS. At least thirty (30)
days prior to the filing of any federal Income Tax Return (including amendments
thereto) that includes a Gaming Co. Member, and at least fifteen (15) days prior
to the filing of any other Tax Return (including amendments thereto) that
includes a Gaming Co. Member, Hilton shall provide Gaming Co. with the portion
of such Tax Return related to the Gaming Co. Member. In the case of each Tax
Return (including amendments thereto) subject to the conformity requirements of
Section 2.5 and filed pursuant to Section 2.1(b), Gaming Co. shall provide
Hilton with copies of any such Tax Return at least thirty (30) days prior to the
filing thereof. Gaming Co. and its Representatives (or Hilton and its
Representatives, as the case may be) shall have the right to review all related
work papers prior to the filing of any such Tax Return. Hilton (or Gaming Co.,
as the case may be) shall consult with Gaming Co. (or Hilton) regarding its
comments with respect to such Tax Returns and shall in good faith (A) consult
with Gaming Co. (or Hilton) in an effort to resolve any differences with respect
to the preparation and accuracy of such Tax Returns and their consistency with
past Tax Practices and (B) consider Gaming Co.'s (or Hilton's) recommendations
for alternative positions with respect to items reflected on such Tax Returns;
PROVIDED, HOWEVER, that Hilton (or Gaming Co.) shall not be required to consider
any such recommendation if the result thereof would adversely affect the Taxes
of the Hilton Group or any Post-Distribution Member (or the Gaming Co. Group or
any Gaming Co. Member) for any Straddle Period or Post-Closing Taxable Period,
and Hilton (or Gaming Co.) may condition the acceptance of any such
recommendation upon the receipt of appropriate indemnification from Gaming Co.
(or Hilton) for any increases in Taxes that may result from the adoption of the
relevant alternative position.
Section 2.5. CONSISTENT POSITIONS ON TAX RETURNS. Hilton (or Gaming
Co., as the case may be) shall (i) prepare all Tax Returns filed pursuant to
this Agreement for all Taxable Years ended on or before December 31, 1999 in a
manner consistent with past Tax Practices, and (ii) prepare all Tax Returns
filed pursuant to this Agreement in a manner consistent with the IRS Ruling and
the Ruling Request, except in either (i) or (ii) as otherwise required by
changes in applicable law or material underlying facts or as the parties hereto
shall otherwise consent in writing, which consent shall not be unreasonably
withheld.
Section 2.6. STRADDLE PERIOD TAXES. For purposes of this Agreement,
Taxes attributable to Straddle Periods shall be allocated between the Pre- and
Post-Closing Straddle Periods, in Hilton's reasonable judgment with the consent
of Gaming Co., in the following manner:
(a) To the extent not impractical, on the basis of the actual
operations and taxable income for each such period, determined by closing the
books of the entity at the close of business on the Closing Date; or
(b) To the extent that an allocation based on a closing of the books
is impractical, on the basis of allocations of taxable income, loss, gain,
deduction and credits made for the entity for federal Income Tax purposes.
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Section 2.7. PAYMENT OF TAXES
(a) Hilton shall pay (i) (A) all Taxes shown to be due and payable
on all Tax Returns as filed pursuant to Sections 2.1(a) and 2.1(b)(i) hereof
and (B) all Taxes shown to be due and payable on all Tax Returns as filed
pursuant to Section 2.1(b)(ii) for Straddle Periods, to the extent allocable
to Pre-Closing Straddle Periods, and (ii) subject to Article III below, all
additional Taxes that shall thereafter become due and payable as a result of
a Final Determination with respect to all Tax Returns filed by Hilton
pursuant to Section 2.1(a) hereof; PROVIDED, HOWEVER, that Gaming Co. shall
reimburse Hilton for the amount of any such additional Taxes required to be
paid as a result of the operation of the foregoing Subsection 2.7(a)(ii)
within 15 days of receipt of notification from Hilton, if and to the extent
that such Tax Returns include one or more Gaming Co. Members and such
additional Taxes are allocable to one or more Gaming Co. Members as set forth
in Section 2.8 herein.
(b) Gaming Co. shall pay (i) all Taxes shown to be due and payable on
all Tax Returns filed by Gaming Co. pursuant to Section 2.1(b)(ii), (A) for
Straddle Periods, to the extent allocable to Post-Closing Straddle Periods, and
(B) for Post-Closing Taxable Periods and (ii) subject to Article III, all
additional Taxes that shall thereafter become due and payable as a result of a
Final Determination with respect to all Tax Returns filed by Gaming Co. pursuant
to Section 2.1(b) hereof.
(c) With respect to the 1998 Hilton Group consolidated federal Income
Tax Return and any Hilton Group Income Tax Return for any Combined Jurisdiction
for the Taxable Period that includes the Closing Date (together, a "Final Hilton
Group Combined Tax Return"), within 15 days of receipt of notice from Hilton,
Gaming Co. shall reimburse Hilton in an amount equal to fifty percent (50%) of
(i) any additional payment of Income Taxes required to be made by Hilton with
any request for extension of any Final Hilton Group Combined Tax Return and
(ii) any additional payment of Income Taxes required to be made by Hilton with
the filing of any Final Hilton Group Combined Tax Return. To the extent that
the amount of Income Taxes previously paid by Hilton with respect to the Taxable
Year reported on any Final Hilton Group Combined Tax Return exceeds the Income
Tax liability shown on such Income Tax Return, Hilton shall reimburse Gaming
Co., within 15 days of the filing of such Tax Return an amount equal to fifty
percent (50%) of such excess.
(d) With respect to all Tax Returns described in Section 2.7(a)(i)
above that relate solely to any Gaming Co. Member or group of Gaming Co.
Members, within 15 days of receipt of notice from Hilton, Gaming Co. shall
reimburse Hilton in an amount equal to one hundred percent (100%) of (i) any
additional payment of Taxes required to be made by Hilton with any request for
extension of the due date of such Tax Returns and (ii) any additional payment of
Taxes required to be made by Hilton with the filing of such Tax Returns. To the
extent that the amount of Taxes previously paid by Hilton with respect to the
Taxable Year reported on any Tax Return described in Section 2.7(a)(i) above
which relates solely to any Gaming Co. Member or group of Gaming Co. Members
exceeds the Tax liability shown on such
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Tax Return, Hilton shall reimburse Gaming Co., within 15 days of the filing
of such Tax Return, in an amount equal to one hundred percent (100%) of such
excess.
Section 2.8. ALLOCATION OF ADDITIONAL TAXES.
(a) For purposes of determining the reimbursement obligations of
Gaming Co. pursuant to Section 2.7(a) with respect to additional Taxes required
to be paid by Hilton pursuant to Section 2.7(a)(ii), such additional Taxes shall
be allocated in the following manner:
(i) Any additional Taxes that relate to Tax
Returns consisting solely of one or more Gaming Co. Members
shall be allocated in full to such Gaming Co. Members.
(ii) Any additional Taxes that relate to Tax
Returns consisting solely of Pre-Distribution Members, none
of which are Gaming Co. Members, shall be allocated in full
to such Pre-Distribution Members.
(iii) With respect to additional Taxes that relate
to Tax Returns that are filed on a consolidated, combined,
unitary or similar basis and that include at least one
Gaming Co. Member but do not consist solely of Gaming Co.
Members, such additional Taxes shall be allocated to the
Gaming Co. Members to the extent that such additional Taxes
result in an increase in the separate return tax liabilities
of the Gaming Co. Members as computed under Treasury
Regulation Section 1.1552-1(a)(2)(ii) in the case of a
consolidated federal Income Tax Return. In the case of
federal Taxes other than the regular Income Tax, similar
principles will apply with the application determined
separately for each separate type of Tax. Similarly, in the
case of consolidated, combined, unitary or similar state,
foreign or local Tax Returns, similar principles will apply
with the application determined separately for each separate
type of such Tax.
(b) Notwithstanding any other provision of this Agreement, for
purposes of this Section 2.8, the parties hereto intend that the following
entities shall be treated as if they were Gaming Co. Members, but only with
respect to Pre-Closing Taxable Periods and Pre-Closing Straddle Periods:
Bally's Grand Inc., a Nevada corporation; Bally's Grand Property Sub I, Inc., a
Nevada corporation; Bally's Casino Management, Inc., a Nevada corporation;
Hilton Gaming Corporation, a Nevada corporation; Paris Casino Corp., a Nevada
corporation; Xxxxxx International Hotels Corporation, a Nevada corporation;
Xxxxxx International Investment Corporation, a Nevada corporation; Xxxxxx
International Royalty Corporation, a Nevada corporation.
(c) With respect to any of the entities described in the preceding
Section 2.8(b), (i) Hilton shall not take any actions subsequent to the Closing
which could reasonably be expected
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to have a material and adverse effect on any indemnification obligation of
Gaming Co. hereunder, and (ii) Hilton shall, for all Pre-Closing Taxable
Periods and Pre-Closing Straddle Periods, under the principles set forth in
Section 2.4 above, in good faith afford Gaming Co. a reasonable opportunity
to review in advance any Tax Returns pertaining to such entities, and such
Tax Returns shall not be filed without the written consent of Gaming Co.,
which consent shall not be unreasonably withheld.
Section 2.9. AMENDMENTS TO TAX AND INFORMATION RETURNS. Hilton (or
Gaming Co., as the case may be) shall be entitled to amend Tax and Information
Returns filed by Hilton (or Gaming Co.) pursuant to Section 2.1; PROVIDED,
HOWEVER, that Gaming Co. (or Hilton) shall not amend for any reason whatsoever
any Tax or Information Return of Hilton, the Hilton Group, any Pre-Distribution
Member or group thereof or any Post-Distribution Member or group thereof (or of
Gaming Co., the Gaming Co. Group or any Gaming Co. Member or group thereof) for
any Taxable Period ending on or before December 31, 1999, except (A) pursuant to
the settlement or other resolution of an Audit subject to Article VI or (B) with
Hilton's (or Gaming Co.'s) written consent (which consent shall not be
unreasonably withheld, PROVIDED, HOWEVER, that such consent may be conditioned
upon the receipt of appropriate indemnification for any increases in Taxes that
may result from the amendment; PROVIDED, HOWEVER, that such prohibition shall
not extend to the correction of mathematical or material factual errors or other
adjustments necessary to conform such Tax and Information Returns to applicable
law or to comply with Section 2.5.
Section 2.10. REFUNDS OF TAXES. Hilton shall be entitled to any
refund of Taxes for which Hilton would be ultimately liable pursuant to a Final
Determination of such Taxes under Section 2.7(a), and Gaming Co. shall be
entitled to any refund of Taxes for which Gaming Co. would be ultimately liable
pursuant to a Final Determination of such Taxes under Section 2.7(a) or (b), in
each case taking into account Gaming Co.'s reimbursement obligations which
obligations are described therein and allocated pursuant to Section 2.8. If
Hilton or any Post-Distribution Member (or Gaming Co. or any Gaming Co. Member,
as the case may be) receives a Tax refund to which Gaming Co. or any Gaming Co.
Member (or Hilton or any Post-Distribution Member) is entitled pursuant to this
Agreement, Hilton (or Gaming Co.) shall pay (in accordance with Article IV) the
amount of such refund (including any interest received thereon) to Gaming Co.
(or Hilton) promptly after receipt thereof.
Section 2.11. CARRYBACKS. Gaming Co. shall notify Hilton promptly
of the existence of any items of deduction, loss or credit arising in a
Post-Closing Taxable Year that are required to be carried back to a Taxable
Period of the Hilton Group or any Pre-Distribution Member (other than to a
separate Tax Return of a member of the Gaming Co. Group). Gaming Co. hereby
expressly agrees (on its behalf and on behalf of all Gaming Co. Members and
successors thereto) that Hilton or any Post-Distribution Member may retain
any cash refund or reduction of a Tax liability or any other Tax Benefit
obtained by Hilton or any Post-Distribution Member (other than a member of
the Gaming Co. Group) as a result of any carryback without compensation to
Gaming Co. or any Gaming Co. Member. Notwithstanding Section 2.5, Gaming Co.
and Hilton agree that Gaming Co. shall elect to carry forward all such items
that affect Gaming Co. or any member of the Gaming Co. Group, or otherwise
take such steps to the extent permitted under
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applicable law to preserve the benefit to it of all items generated by Gaming
Co. or any member of the Gaming Co. Group.
Section 2.12. NOL, ITC, AMT AND FTC CREDIT BENEFITS. If any
Gaming Co. Members have attributable to them, under applicable federal and
state Income Tax law (including, without limitation, Code Section 1502 and
the Treasury Regulations promulgated thereunder), any net operating loss
carryforwards, investment tax credit carryforwards, alternative minimum tax
credit carryforwards or foreign tax credit carryforwards (the
"CARRYFORWARDS"), the parties hereto agree that the Gaming Co. Group and the
Gaming Co. Members shall be exclusively entitled to use and benefit from the
Carryforwards without compensation to the Hilton Group or any
Pre-Distribution Member. Hilton hereby agrees to take any action or make any
election reasonably required to permit Gaming Co. and the Gaming Co. Members
to utilize the Carryforwards; PROVIDED, HOWEVER, that no such action or
election shall be required if it would adversely affect in any way the Income
Tax liabilities of the Hilton Group or any Post-Distribution Member for any
Taxable Year. The parties also hereby agree that the provisions of this
Section 2.12 shall apply with respect to any similar carryforwards available
under applicable state, foreign or local Tax law.
Section 2.13. DISPUTES. If Hilton and Gaming Co. are unable to agree
on any calculation, numerical value, procedure or payment set forth in or
required by this Article II, such item shall be determined pursuant to the
Dispute Resolution Procedure.
ARTICLE III.
INDEMNIFICATION.
Section 3.1. BY HILTON.
(a) TAXES. Subject to Section 3.3, Hilton shall indemnify and hold
Gaming Co. and each Gaming Co. Member harmless (on an After-Tax Basis) against
any and all Taxes for which Hilton is ultimately liable pursuant to a Final
Determination of such Taxes under Section 2.7(a), taking into account Gaming
Co.'s reimbursement obligations described therein.
(b) MEMBER LIABILITY. Subject to Sections 3.2 and 3.3, Hilton shall
indemnify and hold Gaming Co. and each Gaming Co. Member harmless (on an
After-Tax Basis) against each and every liability for Taxes of the Hilton Group
asserted by any Taxing Authority under Treasury Regulation Section 1.1502-6 or
any similar law, rule or regulation.
Section 3.2. BY GAMING CO.. Subject to Section 3.3, Gaming Co.
shall indemnify and hold the Hilton Group and each Post-Distribution Member
harmless (on an After-Tax Basis) against the Taxes for which Gaming Co. is
ultimately liable pursuant to a Final Determination of such Taxes under Section
2.7(a) or (b), taking into account Gaming Co.'s reimbursement obligations
described therein.
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Section 3.3. ASSUMED TAX TREATMENTS
(a) The parties expressly agree for all purposes to treat the
Distribution as a tax-free distribution under Code Section 355 in accordance
with (i) the IRS Ruling and Ruling Request or (ii) an opinion of tax counsel as
described in Section 7.11 of the Merger Agreement (the "TAX TREATMENT"). Each
party hereto also expressly agrees not to take (and to cause each of its
Affiliates not to take) any action (except where such action is required by law)
that is inconsistent with the treatment of the Distribution and all related
transactions in accordance with the Tax Treatment and to take (and to cause each
of its Affiliates to take) any and all actions reasonably available to such
party (or Affiliate) to support and defend the Tax Treatment.
(b) Notwithstanding anything to the contrary in Sections 2.7, 3.1 or
3.2:
(i) If there is a Final Determination that results in
the disallowance, in whole or in part, of the Tax Treatment, and
either (A) there has been no material breach of Section 3.3(a) and
no Post-Distribution Member or Gaming Co. Member has taken actions
after the Distribution which result in such disallowance, or (B) if
one or more Post-Distribution Members and one or more Gaming Co.
Members have materially breached Section 3.3(a) or taken actions
after the Distribution which result in such disallowance, then any
liability of Hilton for Taxes as a result of such disallowance
shall be divided equally between Hilton and Gaming Co.
(ii) If there is a Final Determination that results in
the disallowance, in whole or in part, of the Tax Treatment, and
any Gaming Co. Member (and no Post-Distribution Member) has
materially breached Section 3.3(a) or has taken any action after
the Distribution which results in such disallowance, then Gaming
Co. shall indemnify and hold each Post-Distribution Member harmless
for any Taxes which would not have occurred but for such
disallowance.
(iii) If there is a Final Determination that
results in the disallowance, in whole or in part, of the Tax
Treatment, and any Post-Distribution Member (and no Gaming
Co. Member) has materially breached Section 3.3(a) or has
taken any action after the Distribution which results in
such disallowance, then Hilton shall indemnify and hold each
Gaming Co. Member harmless for any Taxes which would not
have occurred but for such disallowance.
Any such claim for indemnification shall otherwise be handled in the
manner specified under this Article III, but shall not affect in any manner the
provisions of Articles V and VI with respect to cooperation and control of
Audits.
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Section 3.4. CERTAIN REIMBURSEMENTS. Gaming Co. (or Hilton, as the
case may be) shall notify Hilton (or Gaming Co.) of any Taxes paid by the Gaming
Co. Group or any Gaming Co. Member (or the Hilton Group or any Post-Distribution
Member) which are subject to indemnification under this Article III; PROVIDED,
HOWEVER, that no Tax liability of $10,000 or less in the aggregate shall in any
event be indemnified hereunder. Any notification contemplated by this Section
3.4 shall include a detailed calculation (including, if applicable, separate
allocations of such Taxes between Pre- and Post-Closing Taxable Periods and
supporting work papers) and a brief explanation of the basis for indemnification
hereunder. Whenever a notification described in this Section 3.4 is given, the
notified party shall pay the amount requested in such notice to the notifying
party in accordance with Article IV, but only to the extent that the notified
party agrees with such request. To the extent the notified party disagrees with
such request, it shall, within 15 days of receipt of such notice, so notify the
notifying party, whereupon the parties shall use their best efforts to resolve
any such disagreement. To the extent not otherwise provided for in this Article
III or in Article IV, any payment made after such 15-day period shall include
interest at the Overdue Rate from the date of receipt of original notice of such
payment.
Section 3.5. LOSS OF TAX BENEFITS. Appropriate payments shall be
made between the parties to take account of subsequent losses of, or changes in,
any Tax Benefit that has been taken into account for purposes of determining the
After-Tax Basis of any indemnification payment.
ARTICLE IV.
METHOD, TIMING AND CHARACTER OF PAYMENTS REQUIRED BY THIS AGREEMENT.
Section 4.1. PAYMENT IN IMMEDIATELY AVAILABLE FUNDS; INTEREST. All
payments made pursuant to this Agreement shall be made in immediately available
funds. Except as otherwise provided herein, any payment not made within 15 days
of receipt of notice of such payment shall thereafter bear interest at the
Overdue Rate from the date of receipt of notice of such payment.
Section 4.2. CHARACTERIZATION OF PAYMENTS. Any payment (other than
interest thereon) made hereunder by Hilton to Gaming Co. or by Gaming Co. to
Hilton shall be treated by all parties for all purposes to the extent permitted
by law as a non-taxable dividend distribution or capital contribution made prior
to the close of business on the Closing Date. If, pursuant to a Final
Determination, it is determined that the receipt or accrual of any payment under
this Agreement (other than interest thereon) is, itself, subject to any Tax, the
party making such payment shall be required to pay an additional amount to cover
the additional Tax (on an After-Tax Basis), together with interest at the
Overdue Rate from the date the Tax accrues through the date of payment of the
additional amount.
ARTICLE V.
COOPERATION; DOCUMENT RETENTION; CONFIDENTIALITY.
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Section 5.1. PROVISION OF COOPERATION, DOCUMENTS AND OTHER
INFORMATION. Upon reasonable request by a requesting party, Hilton and Gaming
Co. shall promptly provide (and shall cause their respective Affiliates to
provide) such requesting party with such cooperation and assistance, documents,
and other information, without charge, as may be necessary or reasonably helpful
in connection with (i) the preparation and filing of any original or amended Tax
or Information Return, (ii) the conduct of any Audit involving to any extent
Taxes or Tax or Information Returns within the scope of this Agreement, or (iii)
the verification by a party of an amount payable hereunder to, or receivable
hereunder from, another party. Such cooperation and assistance shall include,
without limitation: (w) the provision on demand of books, records, Tax or
Information Returns, documentation or other information relating to any relevant
Tax Return; (x) the execution of any document that may be necessary or
reasonably helpful in connection with the filing of any Tax or Information
Return by the Hilton Group, a Pre-Distribution Member, a Post-Distribution
Member, the Gaming Co. Group or a Gaming Co. Member, or in connection with any
Audit of the type generally referred to in the preceding sentence, including,
without limitation, the execution of powers of attorney and extensions of
applicable statutes of limitations with respect to Tax or Information Returns
which Hilton may be obligated to file on behalf of Gaming Co. Members pursuant
to Section 2.1; (y) the prompt and timely filing of appropriate claims for
refund; and (z) the use of reasonable best efforts to obtain any documentation
from a governmental authority or a third party that may be necessary or helpful
in connection with the foregoing. Each party shall make its employees and
facilities available on a mutually convenient basis to facilitate such
cooperation.
Section 5.2. PARTICIPATION IN THE RULING REQUEST. With respect to
the Ruling Request, Hilton shall (i) afford Gaming Co. full opportunity to
review any submissions related to the Ruling Request and correspondence from the
IRS, and to participate in any proceedings related to the Ruling Request, (ii)
in good faith consult with Gaming Co. regarding its comments with respect to
such submissions and proceedings in an effort to resolve any differences with
respect to Hilton's positions with regard to such issues, (iii) in good faith
consider Gaming Co.'s recommendations for alternative positions with respect to
such issues, and (iv) provide Gaming Co. with final copies of such submissions
and correspondence. Hilton shall not make any representations in connection
with the Ruling Request that could reasonably be expected to have a material and
adverse effect on (A) any indemnification obligation of Gaming Co. hereunder or
(B) any Tax liability of the Gaming Co. Group or any Gaming Co. Member for any
Taxable Period, without the prior written consent of Gaming Co., which consent
shall not be unreasonably withheld. Moreover, Hilton Agrees that, at the
reasonable request of Gaming Co., Hilton shall cooperate with Gaming Co. and use
its reasonable best efforts to expeditiously obtain, at Gaming Co.'s expense,
supplemental rulings from the IRS confirming (x) the continuing validity of the
IRS Ruling, and (y) compliance on the part of Gaming Co. or any Gaming Co.
Member with its obligation under Section 3.3(a) to conform to the Tax Treatment.
Section 5.3. RETENTION OF BOOKS AND RECORDS. Hilton, each Post
Distribution Member, Gaming Co. and each Gaming Co. Member shall retain or cause
to be retained all Tax and Information Returns, and all books, records,
schedules, workpapers, and other documents relating thereto, until the
expiration of the later of (i) seven (7) years from the close of the Taxable
Year, (ii)
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all applicable statutes of limitations (including any waivers or extensions
thereof) and (iii) any retention period required by law (E.G., depreciation
or inventory records) or pursuant to any record retention agreement. The
parties hereto shall notify each other in writing of any waivers, extensions
or expirations of applicable statutes of limitations. The parties hereto
shall provide at least thirty (30) days prior written notice of any intended
destruction of the documents referred to in this Section 5.2. A party giving
such a notification shall not dispose of any of the foregoing materials
without first obtaining the written approval (which may not be unreasonably
withheld) of the notified party and, in lieu of destruction or disposition,
the notified party shall be permitted to take possession, at its sole cost,
of the foregoing materials which affect (or potentially affect) its liability
for Tax.
Section 5.4. CONFIDENTIALITY OF DOCUMENTS AND INFORMATION. Except
as required by law or with the prior written consent of the other party, all Tax
and Information Returns, documents, schedules, work papers and similar items and
all information contained therein which are within the scope of this Agreement
shall be kept confidential by the parties hereto and their Representatives,
shall not be disclosed to any other person or entity and shall be used only for
the purposes provided herein.
ARTICLE VI.
AUDITS.
Section 6.1. STATUS AND OTHER INFORMATION REGARDING AUDITS AND
DISPUTES. Upon the receipt by Hilton or any Post-Distribution Member (or Gaming
Co. or any Gaming Co. Member, as the case may be) of notice of, or relating to,
an Audit which asserts, proposes or recommends a deficiency, claim or adjustment
(including the receipt of a IRS Form 5701 or comparable form from any other
Taxing Authority) that, if sustained, would affect the liability for Taxes which
are subject to indemnification under this Agreement, Hilton (or Gaming Co.)
shall promptly notify Gaming Co. (or Hilton) in writing of the receipt of such
notice. Hilton (or Gaming Co.) shall use reasonable best efforts to keep Gaming
Co. (or Hilton) advised as to the status of Audits pertaining to Taxes subject
to indemnification under this Agreement. To the extent relating to any such
issue, Hilton (or Gaming Co.) shall promptly furnish Gaming Co. (or Hilton) with
copies of any inquiries or requests for information from any Taxing Authority or
any other administrative, judicial or other governmental authority, as well as
copies of any revenue agent's report or similar report, notice of proposed
adjustment or notice of deficiency.
Section 6.2. CONTROL AND SETTLEMENT.
(a) Hilton shall have the right to control, and to represent the
interests of all affected taxpayers in, any Audit relating, in whole or in part,
to any Pre-Closing Taxable Period or any other Taxable Period for which Hilton
is responsible, in whole or in part, for Taxes under Section 2.7(a) and Article
III, and to employ counsel of its choice at its expense; PROVIDED, HOWEVER,
that, with respect to such issues that may impact Gaming Co. or any Gaming Co.
Member for any Post-Closing Taxable Period or for which Gaming Co. may be
responsible in part under Section 2.7(a) and Article III, Hilton shall in good
faith (i) afford Gaming Co. full
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opportunity to observe at any such proceedings and to review any submissions
related to such issues, (ii) consult with Gaming Co. regarding its comments
with respect to such proceedings and submissions in an effort to resolve any
differences with respect to Hilton's positions with regard to such issues,
(iii) in good faith consider Gaming Co.'s recommendations for alternative
positions with respect to such issues, (iv) advise Gaming Co. of the reasons
for rejecting any such alternative position, and (v) provide Gaming Co. with
final copies of such submissions. In the event of any disagreement regarding
the proceedings, Hilton shall have the ultimate control of the Audit and any
settlement or other resolution thereof, PROVIDED, HOWEVER, that Hilton shall
not agree to settle any such proceeding in a manner that could reasonably be
expected to have a material and adverse effect on (A) any indemnification
obligation of Gaming Co. hereunder or (B) any Tax liability of the Gaming Co.
Group or any Gaming Co. Member for any Taxable Period, without the prior
written consent of Gaming Co., which consent shall not be unreasonably
withheld.
(b) Gaming Co. shall have the right to control, and to represent the
interests of all affected taxpayers in, any Audit relating solely to any
Post-Closing Taxable Period of the Gaming Co. Group or any Gaming Co. Member, or
relating to any other Taxable Period for which Gaming Co. is solely responsible
for Taxes under Section 2.7(b) and Article III, and to employ counsel of its
choice at its expense; PROVIDED, HOWEVER, that Gaming Co. shall in good faith
(i) afford Hilton full opportunity to observe at any such proceedings and to
review any submissions related thereto and (ii) not agree to settle any such
proceeding in a manner that could reasonably be expected to have a material and
adverse effect on (A) any indemnification obligation of Hilton hereunder or (B)
any Tax liability of the Hilton Group or any Post-Distribution Member for any
Taxable Period, without the prior written consent of Hilton, which consent shall
not be unreasonably withheld.
ARTICLE VII.
MISCELLANEOUS.
Section 7.1. EFFECTIVENESS. This Agreement shall be effective from
and after the Closing Date and shall survive until the expiration of any
applicable statute of limitations.
Section 7.2. ENTIRE AGREEMENT. This Agreement and the Distribution
Agreement, together with all documents and instruments referred to herein and
therein constitute the entire agreement and supersede and terminate all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
Section 7.3. GUARANTEES OF PERFORMANCE. Hilton and Gaming Co.
hereby guarantee the complete and prompt performance by the members of their
respective Affiliated Groups of all of their obligations and undertakings
pursuant to this Agreement. If, subsequent to the Effective Time, either Hilton
or Gaming Co. shall be acquired by another entity such that 50% or more of its
common stock is in common control, such acquirer shall, by making such
acquisition, simultaneously agree to jointly and severally guarantee the
complete and prompt
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performance by the acquired corporation and any Affiliate of the acquired
corporation of all of their obligations and undertakings pursuant to this
Agreement.
Section 7.4. SEVERABILITY. The invalidity of any portion hereof
shall not affect the validity, force or effect of the remaining portions hereof.
If it is ever held that any restriction hereunder is too broad to permit
enforcement of such restriction to its fullest extent, each party agrees that a
court of competent jurisdiction may enforce such restriction to the maximum
extent permitted by law, and each party hereby consents and agrees that such
scope may be judicially modified accordingly in any proceeding brought to
enforce such restriction.
Section 7.5. INDULGENCES, ETC. Neither the failure nor any delay on
the part of any party hereto to exercise any right under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right preclude any other or further exercise of the same or any other right, nor
shall any waiver of any right with respect to any occurrence be construed as a
waiver of such right with respect to any other occurrence.
Section 7.6. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, without regard
to any applicable conflicts of laws.
Section 7.7. NOTICES. All notices, requests, demands and other
communications required or permitted under this Agreement shall be made in the
manner provided in Section 9.05 of the Distribution Agreement.
Section 7.8. AMENDMENTS. This Agreement may be amended at any time
only by written agreement executed and delivered by duly authorized officers of
Gaming Co. and Hilton.
Section 7.9. ASSIGNMENTS. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by either of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
Section 7.10. HEADINGS; REFERENCES. The article, section and
paragraph headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
All references herein to "Article", "Sections" or "Exhibits" shall be deemed to
be references to Articles or Sections hereof or Exhibits hereto unless otherwise
indicated.
Section 7.11. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
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Section 7.12. PREDECESSORS AND SUCCESSORS. To the extent necessary
to give effect to the purposes of this Agreement, any reference to any
corporation, Affiliated Group or member of an Affiliated Group shall also
include any predecessors or successors thereto, by operation of law or
otherwise.
Section 7.13. TAX ELECTIONS. Nothing in this Agreement is intended
to change or otherwise affect any previous tax election made by or on behalf of
the Hilton Group (including the election with respect to the calculation of
earnings and profits under Code Section 1552 and the regulations thereunder).
Hilton, as common parent of the Hilton Group, shall continue to have sole
discretion to make any and all elections with respect to all members of the
Hilton Group for all Taxable Periods for which it is obligated to file Tax or
Information Returns under Section 2.1(a). Gaming Co., as common parent of the
Gaming Co. Group, shall have sole discretion to make any and all elections with
respect to all members of the Gaming Co. Group for all Taxable Periods for which
it is obligated to file Tax or Information Returns under Section 2.1(b);
PROVIDED, HOWEVER, that any such election for a Pre-Closing Taxable Period or
Pre-Closing Straddle Period shall be made only with the written consent of
Hilton, which consent shall not be unreasonably withheld.
Section 7.14. SPECIFIC PERFORMANCE. The parties hereto agree that
the remedy at law for any breach of this Agreement will be inadequate and that
any party by whom this Agreement is enforceable shall be entitled to specific
performance in addition to any other appropriate relief or remedy. Such party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable laws, each party waives any
objection to the imposition of such relief.
Section 7.15. FURTHER ASSURANCES. Subject to the provisions hereof,
the parties hereto shall make, execute, acknowledge and deliver such other
instruments and documents, and take all such other actions, as may be reasonably
required in order to effectuate the purposes of this Agreement and to consummate
the transactions contemplated hereby. Subject to the provisions hereof, each
party shall, in connection with entering into this Agreement, performing its
obligations hereunder and taking any and all actions relating hereto, comply
with all applicable laws, regulations, orders and decrees, obtain all required
consents and approvals and make all required filings with any governmental
agency, other regulatory or administrative agency, commission or similar
authority and promptly provide the other party with all such information as it
may reasonably request in order to be able to comply with the provisions of this
sentence.
Section 7.16. SETOFF. All payments to be made by any party under
this Agreement shall be made without setoff, counterclaim or withholding, all of
which are expressly waived.
Section 7.17. EXPENSES. Except as specifically provided in this
Agreement or in a Related Agreement, all fees and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expenses.
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Section 7.18. RULES OF CONSTRUCTION. Any ambiguities shall be
resolved without regard to which party drafted the Agreement.
IN WITNESS WHEREOF, Hilton and Gaming Co. have caused this Agreement
to be signed by their respective duly authorized officers as of the date first
above written.
HILTON HOTELS CORPORATION
--------------------------------
By:
Its:
GAMING CO., INC.
--------------------------------
By:
Its:
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