EXHIBIT 2
SECOND AMENDMENT TO SALE AND PURCHASE AGREEMENT
THIS SECOND AMENDMENT TO SALE AND PURCHASE AGREEMENT (the "Second
Amendment") is executed and delivered this 20th day of January, 2005, by
and between Xxxxxxxxxx Development, LLP, a Mississippi limited liability
partnership as successor-in-interest, by way of assignment to Xxxxxxxxxx
Properties, LLC ("Purchaser"), and President Riverboat
Casino-Mississippi, Inc. ("PRC-Mississippi"), Vegas Vegas, Inc. ("VVI")
(each a debtor in Case No. 00-00000-000 pending in the United States
Bankruptcy Court for the Eastern District of Missouri (the "Bankruptcy
Court")), and President Xxxxxxxxxx Hotel, LLC ("PBLLC") (collectively
with PRC-Mississippi and VVI, "Sellers").
BACKGROUND
A. Sellers and Purchaser's predecessor in interest have previously
entered into that certain Sale and Purchase Agreement dated as of
November 15, 2004, as amended by that certain Amendment to Sale and
Purchase Agreement dated as of November 29, 2004 (as amended, the
"Purchase Agreement") concerning the sale and purchase of the owned and
leased real property and businesses commonly known as the President
Casino Xxxxxxxxxx Resort in Biloxi, Mississippi (the "Resort"). Unless
otherwise set forth herein, capitalized terms in this Second Amendment
have the meanings given to them in the Purchase Agreement.
B. Following the execution of the Purchase Agreement, PRC-Mississippi
and VVI issued a Notice of Auction and Bidding Procedures and Hearing to
Consider Approval of Sale (the "Notice of Auction") setting forth the
process, procedures and timing of (i) the submission by third parties of
higher and better offers to purchase the Resort, (ii) the qualification
of such third parties as qualified bidders to participate in an auction
of the Resort, and (iii) a Sale Order that is to be issued by the
Bankruptcy Court.
C. On January 13, 2005, the Purchaser received an assignment of all
of the right, title and interest of Xxxxxxxxxx Properties, LLC in and to
the Purchase Agreement.
D. Pursuant to the provisions of the Notice of Auction, Purchaser
participated in an outcry auction against a competing bidder, and (i)
agreed to certain modifications to the Purchase Agreement, and (ii)
increased the amount of the Base Price for the Assets to Eighty-Two
Million Dollars ($82,000,000), which Sellers determined to be the
highest and best offer for the Assets.
D. The Parties desire to amend the terms of the Purchase Agreement to
reflect such modifications and amount of the Base Price.
NOW, THEREFORE, the parties agree as follows:
1. Section 2.1(a) of the Purchase Agreement is hereby amended by
increasing the "Base Price" from Sixty-Six Million Dollars ($66,000,000)
to the amount of Eighty-Two Million Dollars ($82,000,000).
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2. Section 2.6 of the Purchase Agreement is hereby deleted in its
entirety and the following shall be inserted in lieu thereof:
"2.6 Allocation. The Purchase Price shall be allocated in accordance
with Code Section 1060 and reflected on an Internal Revenue Service
("IRS") Form Section 8594, which approval shall be prepared by Purchaser
and delivered to Sellers for approval, which shall not be unreasonably
withheld or delayed, within one hundred fifty (150) days after the
Closing Date and to be filed by Sellers with the IRS. After the
Closing, the parties shall make consistent use of such allocation, fair
market value and useful lives (specified in IRS Form Section 8594) for
all tax purposes and in all filings, declarations and reports with the
IRS in respect thereof. In the event of any action, audit, hearing,
investigation, litigation or any other proceeding in respect of the
foregoing, or any of the transactions contemplated herein, neither
Purchaser nor Seller shall contend or represent that such allocation is
not a correct allocation."
3. Section 5.2 of the Purchase Agreement is hereby deleted in its
entirety and the following shall be inserted in lieu thereof:
"5.2 Responsibility of Sellers. Sellers shall not be required to
expend a material amount of money or bring any action or proceeding or
do any other thing in order to deliver the Assets or title to the Land
as required by this Agreement. If Sellers deliver to Purchaser written
notice (the "Response Notice") that PBLLC is unable to convey the Assets
or title to the Land as required by this Agreement, Purchaser may, as
its exclusive remedy, elect by written notice given to Sellers within
fifteen (15) days after the Response Notice is given, either (a) to
accept such title as PBLLC is able to convey without any reduction or
abatement of the Purchase Price or (b) to terminate this Agreement in
which event the Deposit shall be returned to Purchaser. If Purchaser
fails to give notice of its election to terminate this Agreement within
such fifteen-day period, Purchaser shall be deemed to have waived said
objections and to have elected to proceed with the transactions
contemplated by this Agreement, but subject to any other conditions set
forth herein."
4. Article 10 of the Purchase Agreement is hereby deleted in its
entirety and the following shall be inserted in lieu thereof:
"ARTICLE 10
CLOSING
The consummation of the transactions described in this Agreement (the
"Closing") shall occur on or before March 31, 2005 (the "Closing Date")
at a location to be mutually agreed upon by the parties. The parties
agree to extend such Closing Date by up to a maximum of fifteen (15)
additional days at the option of Purchaser."
5. Article 18 of the Purchase Agreement is hereby amended by adding
the following to the end of the paragraph:
"The Sellers hereby agree from and after the Closing (if the Closing
occurs), to indemnify and hold harmless the Purchaser and its partners,
and each of their respective members, directors, officers, employees,
agents, stockholders and affiliates from, against and in respect of the
first Two Million Five Hundred Thousand Dollars ($2,500,000) of damages,
costs,
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liabilities, losses, judgments, penalties, fines, expenses and other
costs (including but not limited to reasonable attorney's fees) arising
from or relating to (a) any and all of the Excluded Assets and all
liabilities of Sellers that are not expressly assumed pursuant to, and
in accordance with, this Agreement, (b) the Purchaser's enforcement of
this obligation, and (c) any breaches of any representations and/or
warranties made by Sellers hereunder. Notwithstanding the foregoing, no
claim for indemnification for a breach of representations and/or
warranties may be made (i) unless and until such time as Purchaser has
sustained One Hundred Thousand Dollars ($100,000) of losses (the
"Deductible"), with indemnification available thereafter such that the
total indemnification available to Purchaser shall not exceed Two
Million Four Hundred Thousand Dollars ($2,400,000), and (ii) unless
written notice of claim is delivered to Sellers on or before July 31,
2005."
6. The Sellers shall deliver to Purchaser all of Sellers' work
papers, due diligence, surveys and other reports relating to the Resort
which are in their possession on the Closing Date or that may come into
their possession on a non-confidential basis after the Closing Date.
7. The Sellers agree to operate their businesses in the ordinary
course and consistent with past practices during and throughout the
period between the execution of this Second Amendment and the Closing
Date. Shall any action be taken or events occur in relation to the
Assets during such time period that is in violation of Seller's
pre-Closing obligations under the Purchase Agreement, or there be any
material adverse change in the Assets, Sellers shall immediately give
written notice of such actions or events, and in such event, Purchaser
shall have the right to terminate the Purchase Agreement and shall be
entitled to the remedies described in Section 12.1 of the Purchase
Agreement.
8. At Purchaser's request, Sellers agree to manage the operations of
the Resort after the Closing Date. PRC-Mississippi shall use its best
efforts to obtain Bankruptcy Court approval and applicable gaming
approvals to manage the operations of the casino after the Closing Date
in the same manner in which it is currently managing those operations.
The term of such management relationship shall end no later than six (6)
months after the Closing Date, or if later, the last day of the calendar
month on which Sellers' affiliate closes the sale of its St. Louis
casino operations. The following terms and conditions will be detailed
in a "Management Agreement" to be negotiated in good faith and to be
executed between the parties and presented to the Bankruptcy Court for
approval as soon as practicable after Purchaser's request.
* Purchaser shall pay to PRC-Mississippi on a monthly basis, $45,000.00
plus
reimbursement or direct payment (at the option of PRC-Mississippi) for
ordinary course expenses relating to the operation of the casino;
* Purchaser shall be responsible for any losses, and to the extent
legally
permissible shall be entitled to receive any profits, that may occur
during
the period in which PRC-Mississippi manages the operations of the
casino;
* The Management Agreement may be terminated upon thirty days written
notice
by Purchaser and may be extended by the written consent of both
Purchaser
and PRC-Mississippi. During the term, PRC-Mississippi shall keep
Purchaser
apprised of the date on which the St. Louis casino operations is
scheduled
to close, if the Management Agreement continues beyond the date that
is six
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(6) months after the Closing Date;
* The Management Agreement is subject to approval of the Bankruptcy
Court and
will be presented to that Court by PRC-Mississippi as soon as
possible;
* PRC-Mississippi shall provide all corporate services to Purchaser
during the
term of the Management Agreement necessary to coordinate the operation
and
sale of the Resort and/or Casino and the transition to Purchaser's
systems,
which services shall include, without limitation, use of the risk
management, general ledger and fixed asset software (as more described
in
Section 1.2(c) hereof).
* PRC-Mississippi agrees to continue to employ all employees necessary
to
operate the casino in the same manner as it is currently being
operated, it
being understood that Purchaser shall have a right to object to ant
such
individual's continuing employment. Notwithstanding anything to the
contrary in the Purchase Agreement, Purchaser shall not assume any
liabilities whatsoever relating to such employees, and Purchaser shall
receive no funds from Sellers as reimbursements or credits for any
such
liabilities that were to be assumed.
* PRC-Mississippi shall maintain insurance with respect to its workforce
and
operations as currently maintained, and shall also purchase additional
coverage for its SIR on its general liability coverage, such charges
to be
applied against operations.
* The parties agree that Purchaser may hire any employees it chooses
from such
pool of employees at no cost to Purchaser by the presentation of
written
notice to PRC-Mississippi at any time before the last day of the term
of the
Management Agreement.
* The Management Agreement is subject to the approval of both the
Mississippi
and Missouri Gaming Commissions.
9. Except to the extent amended by this Second Amendment, the
Purchase Agreement remains in force and effect in accordance with its
terms. This Second Amendment may be executed in counterparts, with
facsimile signatures to be treated as original signatures for all
purposes. Each counterpart shall constitute an original, and all of
them shall be treated as a single agreement.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have caused this Second Amendment to
be executed by their duly authorized representatives, on the day and
year first above written.
XXXXXXXXXX DEVELOPMENT, LLP
By: /s/ Xxx Xxxxxxxx, III
Name: Xxx Xxxxxxxx, III
Title: Partner
By: /s/ X.X. Xxxx
Name: X.X. Xxxx
Title: President
PRESIDENT RIVERBOAT CASINO-
MISSISSIPPI, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Sr. VP and CFO
VEGAS VEGAS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Sr. VP and CFO
PRESIDENT XXXXXXXXXX HOTEL, LLC
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Sr. VP and CFO
