EXHIBIT 2.2
REDEMPTION
AGREEMENT
by and among
J. Xxxxxx Xxxxxxxx Associates, Inc.
"Seller,"
and
President Xxxxxxxxxx Hotel, L.L.C.
"LLC"
and
Xxxxxxxxxx Hotel, Inc.
"BHI"
TABLE OF CONTENTS
Page No.
1. IDENTIFICATION OF THE PARTIES AND SUMMARY OF THE TRANSACTION......... 1
2. DESCRIPTION OF THE LLC'S ASSETS...................................... 1
(a) Real Property.................................................. 1
(b) Improvements................................................... 2
(c) Lease Interests................................................ 2
(d) Rights and Privileges.......................................... 2
(e) Lessee Interests............................................... 2
(f) Tangible Personal Property..................................... 3
(g) Intangibles.................................................... 3
3. REDEMPTION OF THE LLC INTEREST AND ISSUANCE OF CLASS A UNIT.......... 4
(a) Redemption of the LLC Interest................................. 4
(ii) Purchase Price................................................. 4
(iii) Escrow Deposit................................................. 5
(iv) Payment........................................................ 5
(v) Escrow Agent................................................... 5
(vi) Seller Interest................................................ 6
(b) Issuance of the Class A Unit................................... 8
(ii) Contribution................................................... 8
4. INVESTIGATIONS....................................................... 8
(a) Investigations................................................. 8
(b) Access to Information and the Property......................... 8
(c) Seller's Deliveries of Documents and Information............... 9
(d) Title and Survey Matters....................................... 12
5. REPRESENTATIONS AND WARRANTIES OF SELLER............................. 12
(a) Correct and Complete Copies.................................... 13
(b) Rent Roll...................................................... 13
(c) Lessee Leases True and Correct................................. 14
(d) No Leasing Commissions......................................... 14
(e) Assumed Contracts True and Correct............................. 14
(f) No Land Related Proceedings.................................... 14
(g) Adequate Utilities............................................. 15
(h) Permits........................................................ 15
(i) Good Standing; Binding Documents............................... 15
(j) No Construction Contracts...................................... 15
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Page No.
(k) Hazardous Materials............................................ 15
(l) Insurance Matters.............................................. 16
(m) Legal Proceedings.............................................. 16
(n) Not a Foreign Person........................................... 17
(o) No Merger...................................................... 17
(p) Capitalization................................................. 17
(q) Property Held in As Is Condition............................... 17
(r) Title to the LLC Interest, Class A Unit........................ 17
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE LLC AND BHI......... 17
(a) Good Standing; Binding Documents............................... 17
(b) Continued Employment........................................... 18
(c) Notification of Change......................................... 18
7. CONDITIONS PRECEDENT TO CLOSING...................................... 18
(a) LLC's and BHI's Conditions Precedent........................... 18
(b) Seller's Conditions Precedent.................................. 21
8. COVENANTS OF SELLER.................................................. 22
9. SELLER'S CLOSING DOCUMENTS........................................... 25
10. LLC'S AND BHI'S CLOSING DOCUMENTS.................................... 26
11. CONFIDENTIALITY...................................................... 27
12. PRORATIONS AND ADJUSTMENTS........................................... 28
(a) Rentals Generally.............................................. 28
(b) Prepaid Rents, Security Deposits and Promotional Funds......... 28
(c) Operating Expenses............................................. 28
(d) Property Taxes................................................. 29
(e) Capital Expenditures and Accounts Payable...................... 29
(f) Debt Service Payments, Payroll Expenses and Insurance Premiums
and Costs Not to be Prorated................................... 29
(g) Other Items.................................................... 29
(h) Procedures and Adjustments..................................... 29
(i) Post-Closing Reconciliation.................................... 30
(j) Safe Deposit Boxes............................................. 30
(k) Accrued Employee Benefits...................................... 30
13. CLOSING.............................................................. 30
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Page No.
14. CLOSING COSTS........................................................ 31
15. LOSS BY FIRE, OTHER CASUALTY OR CONDEMNATION......................... 31
(a) Destruction or Damage.......................................... 31
(b) Condemnation................................................... 31
(c) Notice......................................................... 32
16. CERTAIN DEFAULTS..................................................... 32
(a) Specific Performance by Seller................................. 32
(b) Liquidated Damages on BHI Default.............................. 32
(c) No Waiver...................................................... 33
17. INDEMNIFICATIONS..................................................... 33
(a) Indemnification by Seller...................................... 33
(b) Indemnification by the LLC and BHI............................. 34
18. NO BROKER............................................................ 34
19. MISCELLANEOUS........................................................ 35
(a) Entire Agreement............................................... 35
(b) Counterparts................................................... 35
(c) Time of the Essence............................................ 35
(d) Notices........................................................ 35
(e) No Other Representations....................................... 36
(f) Saving Clause.................................................. 36
(g) Standard of Interpretation..................................... 36
(h) Governing Law.................................................. 37
(i) Attorneys' Fees................................................ 37
(j) Binding Agreement; Assignment.................................. 37
(k) Exhibits....................................................... 37
(l) No Recording................................................... 38
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Redemption Agreement
1. IDENTIFICATION OF THE PARTIES AND SUMMARY OF THE TRANSACTION.
THIS REDEMPTION AGREEMENT (this "Agreement) is made this 22nd day of
July, 1997, by and among J. Xxxxxx Xxxxxxxx Associates, Inc., a Pennsylvania
corporation ("Seller"), President Xxxxxxxxxx Hotel, L.L.C., a Mississippi
limited liability company (the "LLC"), and Xxxxxxxxxx Hotel, Inc., a
Mississippi corporation ("BHI").
Summary of the Transaction
(a) The LLC has issued to Seller, and Seller is the sole record and
beneficial owner of, the entire issued and outstanding ownership interest in
the LLC (the "LLC Interest").
(b) In exchange for the issuance of the LLC Interest, Seller has agreed
to make a capital contribution to the LLC in the form of the assets described
in Section 2 of this Agreement.
(c) BHI desires to purchase, and the LLC desires to issue to BHI, the
Class A Unit (the "Class A Unit") as described in the Amended and Restated
Limited Liability Company Operating Agreement of the LLC attached hereto as
Exhibit M (the "Amended Operating Agreement") in exchange for the making of a
capital contribution by BHI to the LLC in the amount described in paragraph 3
of this Agreement.
(d) The LLC desires to redeem, and Seller desires that the LLC redeem,
the LLC Interest in exchange for the payment by the LLC to Seller of the
purchase price described in Section 3 of this Agreement and the issuance to
Seller of the Class B Unit (the "Class B Unit") as described in the Amended
Operating Agreement.
(e) Seller, BHI and the LLC desire that the transactions contemplated by
Section 1 of this Agreement occur on the Closing Date (as hereinafter defined)
in the order set forth above.
2. DESCRIPTION OF THE LLC'S ASSETS.
Seller represents and warrants to each of the LLC and BHI that Seller is
the sole record and beneficial owner of, and immediately following the
consummation of the transactions contemplated by this Agreement, the LLC will
be the sole record and beneficial owner of, the following property:
(a) Real Property. That certain real property located in the City of
Biloxi, Second Judicial District of Xxxxxxxx County, State of Mississippi,
comprised of the following (collectively, the "Land"): (i) that certain real
property containing the
Xxxxxxxxxx Beach Hotel and described in Exhibit A-1; (ii) that certain real
property containing the Xxxxxxxxxx Sun Golf Course and described in Exhibit X-
0; (iii) that certain real property known as the Beauvoir Parcel and described
in Exhibit A-3; (iv) that certain real property containing the Xxxxxxxxxx
Beach Marina and described in Exhibit A-4; (v) that certain real property
containing the Xxxxxxxxxx Tower and described in Exhibit A-5; (vi) that
certain real property situated south of the north right-of-way of U.S. Highway
90 and described in Exhibit A-6; (vii) that certain easement over the northern
portion of Southern Memorial Park and described in Exhibit A-7; and (viii)
that certain easement over the southern portion of Southern Memorial Park and
described in Exhibit A-8.
(b) Improvements. All buildings, structures, fixtures and other
improvements located on the Land (the "Improvements"), including the
Improvements commonly known as the "Xxxxxxxxxx Beach Hotel and Resort",
"Xxxxxxxxxx Tower", "Xxxxxxxxxx Beach Hotel and Resort Marina", and "Sun Golf
Course";
(c) Lease Interests. All of Seller's interest as lessor in all leases
covering the Land and Improvements, including that certain Restated Lease
Agreement between BH Acquisition Corporation and President Riverboat Casino-
Mississippi, Inc. effective July 15, 1992 (said lease, together with any and
all amendments, modifications, extensions, or supplements is hereinafter
referred to as the "Marina Lease") which leases, together with any and all
amendments, modifications, extensions or supplements thereto, are hereinafter
referred to collectively as the "Seller Lessor Leases" and are identified in
the Rent Roll (hereinafter defined) attached hereto as Schedule 5(b);
provided, however, Seller Lessor Leases shall not include (but the Property
shall include) leases to boat slip holders, which leases are terminable on no
more than thirty (30) days' notice, and are currently in effect on a month to
month basis;
(d) Rights and Privileges. All rights, privileges, easements and
appurtenances to the Land or the Improvements, including all mineral and
riparian and littoral water rights and all easements, rights-of-way and other
appurtenances (including any and all easements over, and any option to
purchase, the cemetery land adjacent to the Land and any of Seller's right,
title and interest in and to any crossing agreement over the railroad tracks
separating the Sun Golf Course from the Xxxxxxxxxx Beach Hotel and Resort)
used or connected with the beneficial use or enjoyment of the Land and the
Improvements (collectively, the "Appurtenances");
(e) Lessee Interests. All of Seller's interest as lessee under the
Public Tideland Lease dated September 6, 1992, by and between BH Acquisition
Corporation and the State of Mississippi (said lease, together with any and
all
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amendments, modifications, extensions or supplements thereto, is hereinafter
referred to collectively as the "Public Tideland Lease"), all of BH
Acquisition Corporation's interest as lessee under the Fastlands Lease dated
December 31, 1996, by and between BH Acquisition Corporation and the State of
Mississippi (said lease, together with any and all amendments, modifications,
extensions or supplements thereto, is hereinafter referred to collectively as
the "Fastlands Lease"), and all of Seller's interest as lessee under that
certain lease dated May 24, 1995, by and between BH Acquisition Corporation
and the Mississippi Division of the United Sons of Confederate Veterans, a
Mississippi corporation (said lease, together with any and all amendments,
modifications, extensions or supplements thereto, is hereinafter referred to
collectively as the "Beauvoir Lease"), and all of Seller's interest as a party
to any and all billboard or signage leases, licenses, occupancy agreements, or
other agreements relating to advertising rights, no matter where located (said
lease, licenses and agreements, together with any and all amendments,
modifications, extensions or supplements thereto, are hereinafter referred to
collectively as the "Advertising Leases and Agreements") (the Public Tideland
Lease, the Fastlands Lease, the Beauvoir Lease, and the Advertising Leases and
Agreements are hereinafter referred to collectively as the "Seller Lessee
Leases" and are identified on Exhibit B attached hereto; and the Land, the
Improvements, the Appurtenances, Seller's interest under the Seller Lessor
Leases, and Seller's interest as lessee under the Seller Lessee Leases are
sometimes collectively hereinafter referred to as the "Real Property");
(f) Tangible Personal Property. All tangible personal property,
equipment, furniture and supplies (collectively, the "Tangible Personal
Property") owned by Seller and used in the operation of the Real Property,
including all inventories of liquor, food, linen, china, glassware, silverware
and other operating equipment, equipment and other leases of personally,
billboards, work in process, computer equipment, software, computer data,
furniture, sales and customer records (including customer and guest lists and
credit histories), including the personal property inventoried on Schedule
4(c)(vii);
(g) Intangibles. All intangible property owned by Seller and used or
useful in connection with the foregoing, including all of Seller's goodwill
and all right, title and interest in and to any and all trademarks, trade
names (including the right of Seller to use the names "Xxxxxxxxxx Beach Hotel
and Resort", "Xxxxxxxxxx Tower", "Xxxxxxxxxx Beach Hotel and Resort Marina",
and "Sun Golf Course"; Seller agrees to change the name "Xxxxxxxxxx Inn" in
connection with its operation of that property not less than thirty (30) days
after Closing), contract rights, guarantees, licenses, approvals,
certificates, permits and warranties, including all of Seller's right, title
and interest in and to any Army Corps of Engineers, U.S. Coast Guard and
Mississippi Department of Maritime Resources permits and approvals and other
federal, state and local approvals and permits, to the extent transferable,
and telephone exchanges, relating to the Property, including the items
specifically described in Schedule 4(c)(viii) attached hereto (the "Intangible
Personal Property"). (The Real Property, the Improvements, the Tangible
Personal Property, and the Intangible Personal Property are sometimes
collectively hereinafter referred to as the "Property").
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Notwithstanding anything to the contrary contained in this Agreement the
Property of Seller to be transferred to the LLC does not and shall not include
the following: (i) that certain real property commonly known as the
"Xxxxxxxxxx Inn", including all appurtenances, improvements, and tangible and
intangible assets used solely in connection with Seller's ownership and
operation thereof; (ii) all cash on hand or in any bank or other accounts
(other than any Tenant security deposits required to be paid over or credited
to the LLC hereunder), and all accounts receivable of Seller, but solely to
the extent the same accrued during the period prior to or on the Closing Date;
(iii) any tax credits or attributes, including any tax refunds accruing to the
owner of the Property for the period prior to and including the Closing Date;
(iv) any insurance prepayments or refunds due and payable to Seller; (v) the
corporate minute book, stock records or other records pertaining to the
corporate existence of Seller; or (vi) any assets or property of Seller not
located in the State of Mississippi or not utilized in connection with the
ownership and operation of the real properties and improvements known as the
Xxxxxxxxxx Beach Hotel and Resort, Xxxxxxxxxx Tower, Xxxxxxxxxx Beach Hotel
and Resort Marina, and the Sun Golf Course. Seller shall have the right to
use the telephone switch for the Xxxxxxxxxx Beach Hotel and Resort and
Xxxxxxxxxx Tower for up to thirty (30) days following the Closing (provided
that Seller shall cause the LLC to be reimbursed for the use of such switch).
3. REDEMPTION OF THE LLC INTEREST AND ISSUANCE OF CLASS A UNIT.
(a) Redemption of the LLC Interest.
(i) Redemption. In consideration of the mutual undertakings of the
parties set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound, the LLC hereby agrees to redeem from Seller on the Closing Date
(subject to the terms and conditions hereinafter set forth) all of Seller's
right, title and interest in and to the LLC Interest.
(ii) Purchase Price. The purchase price for the LLC Interest is
Forty Million Five Hundred Thousand and no/100 Dollars ($40,500,000.00) (the
"Purchase Price"), subject to the terms and conditions set forth in this
Agreement. At Closing, the LLC shall deliver to Seller the sum of Thirty
Million Five Hundred Thousand and no/100 Dollars ($30,500,000.00) (plus or
minus the prorations and adjustments referenced in this Agreement) in cash or
certified funds; provided, that (A) $250,000 of said amount may be withheld by
the LLC's lender until Seller delivers a non-disturbance agreement from lessor
of the Beauvoir Lease, and (B) $400,000 of said amount may be withheld by the
LLC for the repairs, modifications or improvements to the hotel and restaurant
portions of the Property identified by the City of Biloxi officials during the
inspection of the Property on April 23, 1997 and any subsequent follow-up
inspections on or prior to the Closing Date for the purpose of the LLC
obtaining new permits for the Property. The LLC shall promptly deliver to
Seller any amount withheld less any sums expended to perform such repairs,
modifications and improvements if all work contemplated has been completed and
excess funds remain. The LLC shall use its best efforts (which shall not be
deemed to include the payment of money) to
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help Seller to obtain such non-disturbance agreement. Seller shall use
$2,000,000 of said amount to pay off those two certain promissory notes dated
February 15, 1996 made by Seller to PRC Management, Inc., each in the
principal amount of $1,000,000 (the "PRC Notes"). The balance of the Purchase
Price (being the sum of Ten Million and no/100 Dollars ($10,000,000.00) shall
be in the form of a member interest in the LLC in accordance with the terms of
Section 3(a)(vi) of this Agreement (the "Seller Interest"). In addition to the
cash portion of the Purchase Price as described above, the LLC shall assume,
pay and discharge when due Seller's obligations occurring after the Closing
with respect to the contracts relating to the Property that are listed on
Schedule 5(e) (the "Assumed Contracts").
(iii) Escrow Deposit. Concurrently with the signing hereof, BHI has,
unless waived by Seller, deposited in escrow (the "Escrow Deposit") with First
American Title Insurance Company ("Title Company"), Seven Hundred Fifty
Thousand and no/100 Dollars ($750,000.00) as BHI's xxxxxxx money deposit
hereunder by cashier's check or wire transfer of immediately available funds.
The Escrow Deposit will be held by Title Company in short-term and liquid
interest bearing Obligations of the United States Government or in an interest
bearing savings account or money market account with a financial institution
approved by the parties. If the redemption of the LLC Interest is consummated
as contemplated hereunder, the Escrow Deposit and accrued interest will be
paid to Seller and credited to the LLC on account of the Purchase Price. If
the redemption of the LLC Interest is not consummated because of (i) the
failure of any of the LLC and BHI's Conditions Precedent or any of the
Seller's Conditions Precedent (as defined in Section below), which failure is
not caused by the LLC's breach of this Agreement, (ii) the LLC's election
under Section hereof, the Escrow Deposit and accrued interest will be
immediately refunded to BHI upon BHI's written request to Title Company. If
the purchase and sale of the LLC Interest is not consummated for any other
reason (except for breach of this Agreement by Seller), the Escrow Deposit and
accrued interest shall be paid to and retained by Seller. Seller, BHI and the
LLC agree to execute such customary escrow agreement, consistent with this
paragraph, as may be reasonably required by Title Company in order to accept
the Escrow Deposit.
(iv) Payment. The balance of the Purchase Price (subject to the
prorations and adjustments hereinafter set forth) will be paid to Seller by
cashier's check or, at the LLC's election, wire transfer of immediately
available funds on the Closing Date.
(v) Escrow Agent. Seller and the LLC acknowledge that Title
Company is acting solely as escrow holder at their request and for their
convenience, that Title Company shall not be deemed to be the agent of either
of the other parties hereto and that Title Company shall not be liable to
either of the other parties hereto for any action or omission on its part
unless taken or suffered in bad faith or in willful disregard of the
provisions of this Agreement or unless the same constitutes gross negligence
on the part of Title Company. Title Company may act upon any instrument
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or other writing and upon signatures believed by it to be genuine without any
duty of independent verification. Title Company shall not be required or
obligated to determine any questions of law or fact. All fees and charges of
Title Company for acting as such under this Agreement shall be payable fifty
percent (50%) by Seller and 50 percent (50%) by the LLC. In addition, each of
Seller and the LLC shall indemnify and hold harmless Title Company from and
against all costs, claims and expenses, including reasonable attorneys fees
and litigation costs, incurred by Title Company in connection with the
performance of its duties hereunder (including, without limitations in an
interpleader action or other litigation relating to the disposition of the
Escrow Deposit), except with respect to acts or omissions taken or suffered by
Title Company in bad faith or willful disregard of the provisions of this
Agreement or which constitute gross negligence on the part of Title Company.
(vi) Seller Interest. The Seller Interest shall be identified in
and evidenced by the Articles of Organization and/or any other agreements
setting forth the creation or operation of the LLC, which Articles of
Organization (and other documents) shall contain the following terms and
conditions:
(1) an irrevocable right of Seller, its successors and
assigns, to receive a guaranteed payment in the amount of Ten Million Dollars
($10,000,000.00) plus monthly interest payments as hereinafter described
(collectively, the "Guaranteed Payment"), which Guaranteed Payments shall be
preferential to the right of any other member (or the affiliate of any member
of the LLC) to receive any payments or distributions from the LLC. The
Seller's Guaranteed Payment shall be distributed to Seller by no later than
three (3) years from the Closing Date, and beginning on the first day of the
next month following the Closing Date and continuing on the first day of each
month thereafter until the third anniversary date of the Closing Date, the
Guaranteed Payment shall include a monthly payment made to Seller (as a member
of the LLC following the Closing) equal to an amount computed by multiplying
$10,000,000.00 by (A) a rate per annum equal to 400 basis points over thirty
(30) day LIBOR (but such rate per annum shall in no event ever be less than a
rate of 8.75% per annum), and (B) a fraction equal to the number of days in
the applicable month or partial month divided by the number of days in the
calendar year of which that month is a part. The Seller's receipt at any time
of the Guaranteed Payment shall effect a complete liquidation of the Seller's
interest in the LLC.
(2) in the event that the Property, or any part thereof or
any interest therein is sold, conveyed, disposed of, alienated, hypothecated,
leased (except leases in the ordinary course of business), assigned, pledged,
mortgaged, further encumbered or otherwise transferred or the LLC shall be
divested of its title to the Property or any interest therein, in any manner
or way, whether voluntary or involuntary, then the LLC shall immediately
distribute any net proceeds of such transaction remaining after the full
payment by the LLC of all amounts due and owing to Xxxxxx Brothers Holdings,
Inc., its successors or assigns, to Seller as payment towards the Guaranteed
Payment;
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(3) for the period commencing on the Closing Date and
continuing through the third anniversary of the Closing Date, no member or
affiliate of a member of the LLC (other than Seller, its successors or
assigns) may receive a management fee, consulting fee, or other fee or payment
from the LLC (except payments for salaries and wages related to employees of
The President Riverboat Casino-Mississippi, Inc. who are involved in managing
the Property) unless the LLC has timely paid to Seller (A) the monthly payment
requirement of the Guaranteed Payment due and owing to Seller as set forth in
Section 3(a)(vi)(1) hereinabove, and (B) the remaining net proceeds of any
transaction as described in Section 3(a)(vi)(2) hereinabove. For the period
commencing on the third anniversary of the Closing Date, no member or any
affiliate of a member of the LLC (other than Seller, its successors or
assigns) may receive a management fee, consulting fee, or other fee or payment
from the LLC (except payments for salaries and wages related to employees of
The President Riverboat Casino-Mississippi, Inc. who are involved in managing
the Property) unless the LLC has timely paid to Seller the entire Guaranteed
Payment; and
The articles of organization and/or any other agreements setting
forth the creation or operation of the LLC shall also contain a provision
stating that the terms and conditions as set forth in Sections 3(a)(vi)(1),
(2) and (3) above may not be modified or amended without the prior written
consent of Seller.
Seller, BHI and the LLC agree that the Class B Unit as described in
the Amended Operating Agreement satisfies all of the requirements of this
Section 3(a)(vi) with respect to the Seller Interest. Seller agrees to accept
the Class B Unit on the Closing Date in satisfaction of the LLC's obligation
to deliver the Seller Interest.
The LLC shall not enter into any contract or agreement with any
member, principal or affiliate of the LLC except upon terms and conditions
that are intrinsically fair and substantially similar to those that would be
available on an arm's length basis with third parties other than an affiliate.
The LLC specifically agrees that the room rate charged (in any hotel on the
Property) to customers of the casino operated, leased, managed, or directly or
indirectly owned by the LLC's affiliate, The President Riverboat Casino-
Mississippi, Inc., its successors or assigns, on a portion of the Property
shall not be lower than $35.00 per night.
(b) Issuance of the Class A Unit.
(i) Issuance. In consideration of the mutual undertakings of the
parties set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound, the LLC hereby agrees to issue the Class A Unit to BHI on the
Closing Date (subject to the terms and conditions hereinafter set forth).
(ii) Contribution. In exchange for the Class A Unit, BHI shall make
a capital contribution to the LLC in the amount of Five Million Dollars
($5,000,000.00)
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(the "Capital Contribution"), to be delivered to the LLC on the Closing Date
in immediately available funds.
4. INVESTIGATIONS.
(a) Investigations. BHI acknowledges that it has inspected the Property
and that the Property is being acquired by the LLC in its "as is" condition
and will not be modified or improved by the Seller prior to Closing, subject
to Seller's representations and as herein contained. Nevertheless, BHI wishes
to have continued access to the Property from the date hereof through the
Closing Date. BHI shall be permitted to conduct further investigations of the
Property in accordance with this Section . Such investigation may include: a
physical inspection of the Property, including soil, geological and other
tests, engineering evaluations of the mechanical, electrical, HVAC and other
systems in the Improvements and review of the Plans (as hereinafter defined);
review of all governmental matters affecting the Property, including zoning,
environmental and building permit and occupancy matters; review and
verification of all financial and other information provided by Seller
relating to the operation of the Property, review of the condition of title to
the Property; review of the Seller Lessor Leases and Seller Lessee Leases; and
review of such other matters pertaining to an investment in the Property as
BHI deems advisable. Seller shall provide BHI with all information reasonably
requested pursuant to BHI's investigations within a reasonable period of time
(taking into account the nature and scope of the request) following BHI's
request.
(b) Access to Information and the Property. At any reasonable time
prior to the Closing Date and with prior notification to Seller, BHI, its
agents and representatives shall be entitled: (i) to enter onto the Property
to perform inspections and tests of the Property, including all leased areas
(subject to the rights of the Tenants (as hereinafter defined) and structural
and mechanical systems within the Improvements, (ii) to examine and copy (but
not audit) any and all books and records, if any, maintained by Seller or its
agents relating to receipts and expenditures pertaining to the Property since
the opening of BH Acquisition Corporation's business at the Property, and
(iii) to interview the Tenants. Seller shall provide BHI with all information
in Seller's possession or control that is reasonably requested by BHI within a
reasonable period of time after BHI's request (taking into account the nature
and scope of the request). BHI agrees to indemnify, defend (with counsel
reasonably acceptable to Seller) and hold harmless Seller from and against all
claims, demands, liabilities and damages arising or resulting from BHI's
investigations of the Property, provided, however, that BHI shall not be
liable to Seller for any claims, demands, liabilities or damages arising or
resulting from facts or conditions at the Property that existed prior to BHI's
investigations commenced or that were discovered by BHI during the course of
its investigations. BHI also agrees: (A) to promptly restore the Property to
its condition prior to the making of any tests and inspections, (B) to conduct
its investigations in a manner which will not disrupt Seller's business
operations at the Property, (C) not to perform any drilling or other invasive
testing at the Property
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without obtaining the prior written consent of Seller, which consent shall not
be unreasonably withheld or delayed and (D) to coordinate its investigations
with Seller, and to use BHI's reasonable efforts to provide Seller with
advance notice of any on-site investigation in order to afford Seller an
opportunity to have a representative present during such on-site
investigation. The obligations set forth in the two preceding sentences shall
survive the termination of this Agreement. BHI and its agents and contractors
shall provide Seller with evidence of liability insurance coverage (to be
reasonable in scope and amount) with respect to all site testing and other on-
site investigations to be performed on the Property prior to the Closing Date
(and all such insurance coverage shall name Seller as an additional insured).
BHI shall deliver to Seller, promptly after BHI's receipt of the same, a copy
of any and all environmental reports, preliminary title reports and
commitments, ALTA surveys, soils reports, and engineering and structural
reports respecting the Land and/or Improvements obtained by BHI from BHI's
contractor or contractors in the course of BHI's investigation of the
Property, as well as any and all test results obtained by BHI in connection
therewith. BHI's obligations in the preceding sentence shall survive the
termination of this Agreement.
(c) Seller's Deliveries of Documents and Information. No later than ten
(10) days following the execution hereof by all parties, unless Seller has
already delivered or furnished the same, Seller shall deliver to BHI the
following documents and information, in each case to the extent the same are
in the possession or control of Seller or any affiliate, agent or related
party of Seller (and for this purpose, President Casinos, Inc. shall not be an
agent, affiliate or related party of Seller):
(i) Copies of any and all title policies (together with
endorsements), title commitments, title reports, certificates of title, and
any documentation relating to liens, encumbrances, deeds of trust, mortgages,
judgments, rights-of-way or easements, covenants, conditions or restrictions,
other exceptions or matters of record relating to or affecting the Property
together with proper title record legal description for the Real Property.
(ii) A copy of any and all purchase agreements, deeds and other
conveyances pursuant to which Seller obtained ownership of the Property,
together with all amendments, modifications, and schedules and exhibits
attached thereto.
(iii) A copy of any and all Seller Lessor Leases and any other
agreements which are in effect thereto with the Tenants of the Property, and
all reciprocal easement agreements and similar agreements which are in effect
with respect to the Tenants and any other interested party, all as amended or
otherwise modified.
(iv) A copy of all Seller Lessee Leases, as amended or otherwise
modified.
9
(v) Copies of all certificate(s) of occupancy, zoning variances,
licenses, permits, authorizations and approvals relating to the Property from
governmental authorities having jurisdiction over the Property, including any
Army Corps of Engineers, Mississippi Department of Maritime Resources, and
U.S. Coast Guard permits and approvals (the "Governmental Approvals"),
together with copies of any other material notices and agreements in Seller's
possession relating thereto.
(vi) Copies of any and all environmental permits, notices, demands,
action letters, reports, assessments, audits, directives from any federal,
state or local agency, documentation of remedial procedures, or other
documentation relating to environmental matters relating to or affecting the
Property or any adjoining properties including, but not limited to, the
identification, to the best of Seller's knowledge, of which portion of the
Property has ever been or is now being used for the generation, manufacture,
storage, treatment disposal release or threatened release of any hazardous
substance, as that term is defined by CERCLA and Mississippi state law
descriptions, to the best of Seller's knowledge, of all waste disposal sites
on the Property; identification, to the best of Seller's knowledge, of the
locations of underground tanks and lines on the Property, whether in use or
abandoned, with a history of any spillage or leakage; a description, to the
best of Seller's knowledge, of waste storage, treatment and disposal practices
of wastes generated by the Property; a summary of all environmental testing
done at the Property together with written reports concerning such testing or
environmental matters affecting the Property (including all available Phase I,
Phase II, and soils reports relating to the Property) and any written
estimates about future expenditures for environmental programs relating
thereto; identification, to the best of Seller's knowledge, of all records
regarding compliance history with environmental permits including air, water,
underground storage, maritime, waste and sewer permits under federal, state,
and local rules and regulations; identification, to the best of Seller's
knowledge, of known events of noncompliance with permits and other
environmental regulation, and disclosure, to the best of Seller's knowledge,
of any anticipated changes in permit compliance levels; and any other reports
on the environmental condition of the Property.
(vii) A complete and full inventory of the Tangible Personal Property
(including furniture, fixtures and equipment; but excluding consumables),
containing descriptions of principal items or classes of equipment, and all
liens and encumbrances applicable to each item, attached hereto as Schedule
4(c)(vii).
(viii) A complete list and brief description of the Intangible
Personal Property, including any trademarks, service marks, trade names,
fictitious business names, brands, copyrights and other similar proprietary
rights issued, to, licensed by, owned by, or used by Seller or affiliates of
Seller in the ownership and operation of the Property, and all licenses,
leases, and transfers of trademarks, trade names, copyrights, and other
proprietary rights to which Seller is a party (whether granting the right or
receiving it), attached hereto as Schedule 4(c)(viii); also, any and all
customer lists, contact lists, and sales records (including guest history).
10
(ix) Copies of any and all insurance policies, insurance, insurance
claim documentation and related documentation relating to the Property or
relating to the operation thereof (the "Existing Insurance Policies"),
including, but not limited to, general liability insurance, fire and extended
coverage insurance, business interruption insurance, earthquake insurance,
hurricane and flood insurance and worker's compensation insurance.
(x) A copy of the xxxx or bills issued for the most recent year for
which bills have been issued for all real estate taxes (including assessed
value) and personal property taxes and a copy of any and all notices
pertaining to real estate taxes or assessment applicable to the Property (the
"Tax Bills"). Seller shall promptly deliver to BHI a copy of any such bills
or notices received by Seller after the date hereof even if received after the
Closing. A complete schedule setting forth when personal and property tax
payments were made and the date on which such payments are due and payable
each year, and a schedule describing any ongoing tax disputes, together with
copies of all revenue agents' reports and correspondence with respect to any
pending federal, state, provincial or similar tax proceedings for any open
years.
(xi) Copies of all UCC filings and security agreements pertaining to
the Property.
(xii) Copies of all documents, permits, licenses, searches and
reports under maritime law issued to Seller and relating to the Property or
operation thereof.
(xiii) A listing of any and all threatened legal actions or pending
lawsuits, whether on appeal or not, against Seller or affecting the Property
(to the best of Seller's knowledge), with evidence of insurance coverage
relating to the same and copies of all non-privileged documents relating
thereto.
(xiv) Copies of original "as built" plans and specifications of the
Improvements and any other plans and specifications relating to the Property
(collectively, the "Plans").
(xv) A copy of all outstanding management, operating, maintenance,
repair, service, pest control and supply contracts (including janitorial,
elevator, scavenger and landscaping agreements), equipment rental agreements,
all contracts for repair or capital replacement to be performed at the
Property, and any other contracts relating to or affecting the Property (other
than Seller Lessor Leases and Seller Lessee Leases), all as amended
(collectively, the "Contracts"), which form a part of the Assumed Contracts.
(xvi) A copy of all guarantees and warranties relating to the
Property.
(xvii) A complete copy of all surveys, reports or recommendations
prepared by or for Seller, or in Seller's possession or control, which relate
to the
11
Property's compliance with Title III of the Americans With Disabilities Act
and the regulations promulgated thereunder.
(xviii) Any other documents and information reasonably requested by BHI
relating to the Property.
(xix) To the extent available, a schedule of the adjusted tax bases
for Federal income tax purposes, of the Property, broken into reasonable and
customary components.
(d) Title and Survey Matters.
(i) BHI shall be responsible for obtaining from Title Company a
preliminary title report or commitment on the Real Property (the "PTR")
prepared by Title Company, together with any other title documents required by
BHI.
(ii) BHI shall be responsible for obtaining a survey of the Real
Property (the "Survey").
(iii) The title exceptions listed on Schedule 4(d) hereto shall
constitute "Permitted Encumbrances" hereunder. Notwithstanding the foregoing,
the following shall not constitute Permitted Encumbrances and instead shall
constitute "Disapproved Matters" hereunder: (A) any and all mortgages, deeds
of trust, and other monetary encumbrances, (B) any and all UCC security
interests and financing statements (other than with respect to an Assumed
Contract), and (C) any and all judgments, judgment liens and lis pendens.
Seller hereby agrees that all Disapproved Matters shall be removed of record
and deleted from the LLC's title insurance policy that it is to receive on the
Closing Date, at Seller's sole cost and expense, prior to or concurrently with
the Closing. In addition, Seller shall be obligated to remove or cure, or
cause to be cured, prior to or at Closing, any title or survey matters
affecting the Property which are caused or created by Seller after the date
hereof unless such matters are otherwise approved by BHI in its sole and
absolute discretion.
5. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to BHI that the following matters are true
and correct as of the date of the mutual execution and delivery of this
Agreement:
(a) Correct and Complete Copies. To the best of Seller's knowledge, the
Plans, certificates of occupancy, certificate of completion warranties,
operating statements, actual income and expense reports, and all other
contracts or documents required to be delivered to the LLC or BHI pursuant to
this Agreement are, or will be once delivered, true, correct and complete
copies. To the best of Seller's knowledge, Seller has (or, within the time
described in Section 4(C), will have) delivered to BHI or the LLC all
documents, reports and other materials described in Section 4(c) above.
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To the best of Seller's knowledge, the Governmental Approvals are in full
force and effect.
(b) Rent Roll. The rent roll attached hereto as Schedule 5(b) (the
"Rent Roll") is true, correct and complete and, as of the Closing, the updated
Rent Roll delivered at the Closing will be true, correct and complete. Such
Rent Roll describes all of the Seller Lessor Leases, and will describe all of
the Seller Lessor Leases at Closing. The Rent Roll sets forth in respect of
each Tenant space: the number identifying such space, the name of the Tenant
that to the best of Seller's knowledge is occupying such space, the number of
square foot comprising such space, the current base monthly rental payable
under the Seller Lessor Lease for such space and other charges payable by such
Tenant (including charges for real estate taxes, operating expenses and
similar items), the amount of the security deposit required under such Seller
Lessor Lease, the amount of the security deposit received from such Tenant,
less amounts previously applied or resumed to such Tenant, whether such Tenant
is entitled to any assigned storage spaces or any assigned parking spaces, the
commencement and expiration dates of the term of such Seller Lessor Lease,
whether such Tenant is entitled to any option to renew or lease additional
space, incentives, concessions, abatements, allowances, whether any rents or
other charges are in arrears or prepared and the period to which such
arrearages or prepayments relate and the date of such Seller Lessor Lease and
all amendments thereof. The copies of the Seller Lessor Leases and other
agreements with the tenants, licensees or other occupants under the Seller
Lessor Leases (the "Tenants") delivered to BHI are true, correct and complete
copies, and there are no other leases or occupancy agreements affecting the
Property. Seller further represents and warrants as follows with respect to
each of the Seller Lessor Leases: (i) the Seller Lessor Lease is valid and in
full force and effect, and enforceable in accordance with its terms, (ii) the
Seller Lessor Lease constitutes the entire agreement with such Tenant relating
to the Property, and has not been amended, modified or supplemented (in
writing or otherwise), except for such amendments, modifications and
supplements delivered to BHI, (iii) to the best of Seller's knowledge, the
Tenant under such Seller Lessor Lease is in possession of all of the property
leased to it under the Seller Lessor Lease, (iv) the Tenant has no right of
first refusal or option to purchase all or any portion of the Property
pursuant to the Seller Lessor Lease, except as set forth on Schedule 5(b), (v)
to the best of Seller's knowledge, there has been no material default or event
which, with the giving of notice or the passage of time, or both, would
constitute a material default by Seller or by the Tenant, and the Tenant has
not asserted any defense to, or offset or claim against its rent or the
performance of its other obligations under the Seller Lessor Lease except as
expressly provided by the terms of such Seller Lessor Leases or as set forth
on Schedule 5(b), and (vi) Seller has the full right to assign said Seller
Lessor Lease to the LLC.
(c) Lessee Leases True and Correct. The copies of the Seller Lessee
Leases delivered to BHI are true, correct and complete copies. To the best of
Seller's knowledge, the Seller Lessee Leases are in full force and effect,
without material
13
default by any party and without any claim made for the right of setoff,
except as expressly provided by the terms of such Seller Lessee Leases or as
disclosed to BHI in writing at the time of such delivery. The Seller Lessee
Leases constitute the entire agreements between Seller and the lessors under
such Seller Lessee Leases, have not been amended, modified or supplemented,
except for such amendments, modifications and supplements delivered to BHI,
and Seller has no other interest as lessee under any other lease used in
connection with the operation of the Property.
(d) No Leasing Commissions. Upon the Closing there will be no brokerage
or leasing fees or commissions or other compensation due or payable on an
absolute or contingent basis to any person, firm, corporation, or other
entity, with respect to or on account of any of the Seller Lessor Leases and
no such fees, commissions or other compensation shall, by reason of any
existing agreement, become due during the terms of any of the Seller Lessor
Leases or with respect to any renewal or extension thereof or the leasing of
additional space by any Tenant.
(e) Assumed Contracts True and Correct. True, complete and correct
copies of the Assumed Contracts listed on Schedule 5(e) will be delivered to
BHI prior to Closing. To the best of Seller's knowledge, the Assumed
Contracts are in full force and effect, without default by any party and
without any claims made for the right of setoff, except as expressly provided
by the terms of such Assumed Contracts or as disclosed to BHI in writing at
the time of such delivery. The Assumed Contracts constitute the entire
agreements with such contractors relating to the Property, have not been
amended, modified or supplemented, except for such amendments, modifications
and supplements delivered to BHI, and there are no other agreements with any
third parties (excluding, however, the Leases and Permitted Encumbrances)
which will give rise to a lien or any title exception against or affecting the
Property that will survive the Closing.
(f) No Land Related Proceedings. Except as set forth on Schedule 5(f),
to the best of Seller's knowledge (i) there are no condemnation,
environmental, zoning or other land-use regulation proceedings either
instituted or planned to be instituted, which would materially and
detrimentally affect the value of the Property, except for the City of Biloxi
notice of January 28, 1997, affecting a fifty foot (50') to one hundred sixty
square foot (160') right-of-way taking for a fall drainage system project at
Parcel D, XxXxxxxxx Avenue, copy attached hereto (as to which the LLC shall
have all rights to compensation), and (ii) there are no assessments affecting
the Property other than as set forth in the preliminary title report.
(g) Adequate Utilities. To the best of Seller's knowledge, all water,
sewer, gas, electric, telephone, and drainage facilities and all other
utilities required by law for the present use and operation of the Property
are installed to the boundary lines of the Real Property pursuant to valid
easements or other rights, and are connected pursuant to valid permits, and
Seller has received no notice from Tenants that such facilities are inadequate
to service the Property.
14
(h) Permits. To the best of Seller's knowledge, Seller possesses or has
obtained all material licenses, permits, certificates approvals, easements,
and rights-of-way, and proof of dedication, required from any and all
governmental authorities having jurisdiction over the Property or from private
parties for the present use and operation of the Property by Seller, to assure
the provision of legally required parking on the Property and to assure
vehicular and pedestrian ingress to and egress from the Property at all access
points currently being used.
(i) Good Standing; Binding Documents. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state
of its incorporation, duly qualified to do business in Mississippi, is not
insolvent, and is the successor to all of the assets and liabilities of BH
Acquisition Corporation. The LLC is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State
of Mississippi and is not insolvent. Other than the trade names identified in
Section 2(g) of this Agreement, BH Acquisition Corporation has not used any
other corporate name for the past five (5) years. This Agreement has been,
and all the documents executed by Seller or the LLC which are to be delivered
to the LLC or BHI at the Closing will be, duly authorized, executed, and
delivered by Seller or the LLC, are, and in the case of the documents to be
delivered will be, legal, valid and binding obligations of Seller or the LLC
enforceable against Seller or the LLC accordance with their respective terms
(except to the extent that such endorsement may be limited by applicable
bankruptcy, insolvency, moratorium and other principles relating to or
limiting the right of contracting parties generally), will be sufficient to
convey title (if they purport to do so), and do not, and in the case of the
documents to be delivered will not, violate any provisions of any agreement to
which Seller or the LLC is a party or to which it is subject.
(j) No Construction Contracts. At the Closing, there will be no
outstanding contracts made by Seller for the construction or repair of any
Improvements to the Property which have not been fully paid for and Seller
shall cause to be discharged all mechanics' or materialmen's liens arising
from any labor or materials furnished to the Property prior to the Closing
Date.
(k) Hazardous Materials. Except as disclosed to BHI in the written
reports and audits furnished to, or contracted or performed for or by, BHI,
and without independent investigation by Seller, and subject to the third
sentence of this paragraph, Seller has no actual knowledge that Seller uses,
treats, stores or disposes of, whether temporarily or permanently, any
Hazardous Materials (as hereinafter defined) at, on or beneath the Property.
The foregoing representation is made only with respect to Seller's actions.
Except (i) as disclosed to BHI in the written reports and audits furnished to,
or contracted or performed for or by, BHI, and without independent
investigation by Seller, and (ii) for quantities used by Seller or Tenants in
the normal course of their businesses and that do not violate any
Environmental Law (as defined below), and to Seller's current actual
knowledge, there is no presence, use, treatment, storage, release or disposal
of any Hazardous Materials at, on or beneath
15
the Property which has created or might create any liability of owners or
occupants of the Property, under any federal, state or local law or regulation
or which would require reporting to a governmental agency. For the purpose of
this Agreement, the term "Hazardous Materials" shall mean (i) any chemical
compound, material mixture or substance that is defined or listed in, or
otherwise classified pursuant to, any Environmental Law as a "hazardous
substance", "hazardous material", "hazardous waste", "extremely hazardous
waste", "acutely hazardous waste", "radioactive waste", "infectious waste",
"biohazardous waste", "toxic substance", "pollutant", "toxic pollutant",
"contaminant" as well as any formulation not mentioned herein intended to
define, list, or classify substances by reason of deleterious properties such
as ignitability, corrosivity, reactivity, carcinogenicity, toxicity,
reproductive toxicity, "EP toxicity", or "TCLP toxicity", (ii) petroleum,
natural gas, natural gas liquids, liquefied natural gas, synthetic gas usable
for fuel (or mixtures of natural gas and such synthetic gas) and ash produced
by a resource recovery facility utilizing a municipal solid waste stream, and
drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas, or
geothermal resources, (iii) asbestos in any form, (iv) urea formaldehyde foam
insulation, (v) transformers or other equipment which contain dielectric fluid
containing levels of polychlorinated biphenyls (PCBs) in excess of fifty (50)
parts per million, (vi) radon, and (vii) any other chemical, material or
substance that, because of its quantity, concentration, or physical or
chemical characteristics, exposure to which is limited or regulated for health
and safety reasons by any governmental authority, or exposure to which poses a
significant present or potential hazard to human health and safety or to the
environment if released into the workplace or the environment. The term
"Environmental Law" shall mean any and, all present federal, state and local
laws (whether under common law, statute, rule, regulation or otherwise),
permits, and other requirements of governmental authorities relating to the
environment or to any Hazardous Material (including CERCLA and the applicable
provisions of Mississippi laws and regulations).
(l) Insurance Matters. Seller has received no written notice from any
insurance carrier or any of the Tenants of any defects or inadequacies in the
Property, or in any portion thereof, which would materially and adversely
affect the insurability thereof or the cost of such insurance. Except as set
forth on Schedule 5(l), to the best of Seller's knowledge, there are no
pending insurance claims.
(m) Legal Proceedings. Except as set forth in Schedule 5(m), there are
no pending or, to the best of Seller's knowledge, threatened legal proceedings
or actions of any kind or character affecting the Property or Seller's
interest therein, or arising out of the ownership, management or operation of
the Property, this Agreement or the transactions contemplated hereby. Except
as delivered to BHI, there are no litigation documents relating to any of the
matters set forth in Schedule 5(m).
(n) Not a Foreign Person. Seller is not a "foreign person" within the
meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended
(the "Code"),
16
and Seller will furnish to the LLC, prior to the Closing, an affidavit in the
form attached hereto as Exhibit C.
(o) No Merger. None of the representations or warranties made in this
Agreement shall merge into any instrument or conveyance delivered at Closing,
and all such representations and warranties shall survive the Closing Date for
the period described below. Notwithstanding the foregoing, any cause of
action of BHI, any additional indemnified parties hereunder with respect to
BHI, or any of their respective successors or assigns against Seller by reason
of any breach by Seller of any of its representations and warranties made in
this Agreement shall continue until, but shall lapse as of, the date which is
two (2) years after the Closing Date.
(p) Capitalization. Seller is, and immediately prior to the Closing
Date, Seller will be, the sole record and beneficial owner of the LLC
Interest, and such ownership interest is duly and validly issued, fully paid
and nonassessable.
(q) Property Held in As Is Condition. Except as expressly provided in
this Agreement, the Property shall be conveyed to the LLC in AS IS, WHERE IS,
WITH ALL FAULTS condition and without warranties, express or implied,
including warranties of merchantability and fitness for a particular purpose
(except for the representations and warranties set forth in this Agreement).
(r) Title to the LLC Interest, Class A Unit. On the Closing Date,
Seller will own, beneficially and of record, the LLC Interest, free and clear
of any liens, encumbrances or claims whatsoever. Immediately following the
consummation of the transactions contemplated by this Agreement, BHI will be
the sole record and beneficial owner of the Class A Unit, free and clear of
any liens, encumbrances or claims whatsoever, and such Class A Unit, upon the
making of the Capital Contribution, will be validly issued, fully paid and
nonassessable.
Seller shall use all reasonable efforts to cause its representations and
warranties set forth in this Section to be true and correct on and as of the
Closing Date.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE LLC AND BHI.
The LLC and BHI represent, warrant and covenant to Seller as of the date
of the mutual execution and delivery of this Agreement, as follows:
(a) Good Standing; Binding Documents. BHI is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Mississippi, and is not insolvent. This Agreement has been, and all the
documents to be delivered by the LLC (or its assignee, as applicable) and BHI
to Seller at the Closing will be, duly authorized, executed and delivered by
the LLC (or such assignee) and BHI, are, and in the case of the documents to
be delivered will be, legal and binding obligations of the LLC (or such
assignee) and BHI enforceable in accordance with their respective terms
17
(except to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency, moratorium and other principles relating to or
limiting rights of contracting parties generally), and do not, and in the case
of the documents to be delivered will not, violate any provisions of any
agreement to which the LLC (or such assignee) or BHI is a party or to which it
is subject. There are no pending, or to the LLC's or BHI's knowledge,
threatened legal proceedings or actions against the LLC or BHI that could
impair the LLC's or BHI's ability to perform its duties and obligations under
this Agreement or any agreement to be entered into or delivered by the LLC or
BHI in connection with this Agreement.
(b) Continued Employment. Immediately following the Closing Date, the
LLC or its nominee shall employ all but approximately thirty (30) of Seller's
employees. All costs of accrued employee benefits (sick leave, vacation
leave, health and life insurance benefits, 401(k) plans, etc., if any) for the
employees hired by the LLC shall be credited to the LLC at the time of Closing
toward payment of the Purchase Price and adjusted after Closing, if necessary,
in accordance with Section . Nothing herein contained shall prevent the LLC
from exercising its right to fire or transfer any employee after the Closing
Date. The LLC shall have no liability with respect to employees of Seller not
hired by LLC.
(c) Notification of Change. The LLC and BHI shall promptly notify
Seller of any event or circumstance which makes any representation or warranty
of the LLC or BHI to Seller under this Agreement materially untrue or
misleading or any covenant of the LLC or BHI under this Agreement incapable of
being performed.
The LLC and BHI shall use all reasonable efforts to cause its
representations and warranties set forth in this Section to be true and
correct on and as of the Closing Date.
7. CONDITIONS PRECEDENT TO CLOSING.
(a) LLC's and BHI's Conditions Precedent. The following shall be
conditions precedent to the LLC's and BHI's obligation to consummate the
transactions contemplated herein (the "LLC and BHI's Conditions Precedent"):
(i) The availability to the LLC at Closing, from a bank, savings
and loan, insurance company, investment bank or other institutional lender, of
a nonrecourse first mortgage loan, in an amount equal to not less than Thirty
Million and no/Dollars ($30,000,000.00), for a term of not less than three (3)
years, with an annual interest rate not to exceed 400 basis points over thirty
(30) day LIBOR, a rate floor of four and three quarters percent (4.75%) per
annum, and a loan fee/additional interest of Seven Million and no/Dollars
($7,000,000.00) to be paid at maturity or repayment (in the event that the
loan is repaid in its entirety within the first 18 months then such loan
fee/additional interest to be reduced to Five Million Five Hundred Thousand
and no/Dollars ($5,500,000.00)), with a credit administration and servicing
18
fee not to exceed Fifteen Hundred and no/Dollars ($1,500.00) per month, and
with a lockbox arrangement to apply cash flow from the Property to prepayment
of the loan, to finance a portion of the Purchase Price of the Property. The
LLC shall use its best efforts to obtain the loan commitment and the funding
of the loan, and the LLC shall make timely application (within seven days of
the date hereof) to and thereafter timely provide all documents and
information as requested by prospective lenders. If such financing is not
available, the LLC may elect, in its sole discretion, to terminate this
Agreement by written notice given to Seller on or prior to the Closing Date,
in which event the Deposit and all interest earned thereon shall be returned
to the LLC and neither party shall have any further liability to the other.
(ii) Title Company shall be irrevocably committed to issue an ALTA
1970 Form B Owner's policy of title insurance insuring the LLC's interest in
the Real Property, dated the Closing Date, with a "Fairways" endorsement, a
non-imputation endorsement and the other endorsements set forth on Schedule
7(a)(ii), subject only to the Permitted Encumbrances (the "Title Policy");
provided, however, that if at Closing Title Company will not commit to issue
such Title Policy and the LLC and BHI shall not have waived in writing the LLC
and BHI's Condition Precedent set forth in this subsection (ii), Seller shall
be entitled to elect to extend the date for the Closing by up to a maximum of
ten (10) business days, by delivering written notice to BHI, to enable Seller
to obtain such commitment from another nationally recognized title insurance
company. In the event of any such extension by Seller, Seller shall bear all
costs and expenses incurred in connection with obtaining such alternative
commitment and alternative Title Policy to the extent the same exceed the
costs and expenses that the LLC would have incurred if Title Company had
issued such Title Policy.
(iii) Seller shall have executed and delivered to BHI a certificate
in the form attached at Exhibit D hereto ("Seller's Certificate") updating the
representations and warranties of Seller through Closing, and certifying that
Seller has complied in all material respects with its obligations under this
Agreement, which Seller's Certificate Seller covenants to deliver unless any
fact or circumstance has arisen since the date hereof and prior to the Closing
that would make any such representation, warranty or certification materially
untrue, in which case Seller shall deliver a Seller's Certificate describing
such fact or circumstance (a "Seller Defect Matter"). If the value of the
impact on the LLC or the Property of the Seller Defect Matter (the "Defect
Matter Value") is less than Two Million and no/Dollars ($2,000,000.00), then
Seller shall be entitled to elect to do one of the following by delivering
written notice to the LLC at or prior to Closing:
(1) cure such matter, so as to permit Seller to deliver a
Seller's Certificate free of any Seller Defect Matter, within fifteen (15)
days after Seller's election to proceed under this clause (1);
(2) give the LLC a credit against the Purchase Price at
Closing in an amount equal to the Defect Matter Value allocable to the Seller
Defect Matter,
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in which case such matter shall not be cured by Seller and Closing shall occur
as set forth in this Agreement, and Seller shall have no further obligation or
liability in connection with such Seller Defect Matter; or
(3) deposit an amount equal to the Defect Matter Value into
escrow pursuant to an escrow holdback agreement in form and substance
reasonably satisfactory to the LLC, BHI and Seller, in which case (A) Closing
shall occur as set forth in this Agreement, (B) Seller shall cure such Seller
Defect Matter within fifteen (15) days after Closing (provided, however, that
Seller shall continue to have an additional period in which to cure such
matter if it has commenced the cure of such matter during the initial fifteen
(15) day period and is diligently pursuing such cure); and (C) the LLC shall
provide Seller with access to the Property in order for Seller to effectuate
such cure. If Seller fails to cure such Seller Defect Matter, then the escrow
company shall disburse the amount held in escrow in the following order of
priority (i) to the LLC in an amount equal to the actual, documented and
verifiable costs incurred by the LLC to complete the cure of such matter, and
(ii) the remaining balance to the Seller, and Seller shall have no further
obligation or liability, in connection with such Seller Defect Matter. If
Seller fully cures such adverse matter or condition, then Seller shall have an
unconditional right to all amounts remaining in escrow thereafter and the LLC
shall promptly deliver a written direction to such escrow company to
immediately pay such amounts to Seller.
If the impact on the LLC or the Property of the Seller Defect Matter
is equal to or greater than Two Million and no/Dollars ($2,000,000.00), then
the LLC may elect, by delivering written notice to Seller and Title Company,
to either (i) waive such matter and consummate the transactions contemplated
hereby, in which event the LLC shall receive a credit against the Purchase
Price at Closing in an amount equal to the Defect Matter Value attributable to
such Seller Defect Matter, or (ii) terminate this Agreement and receive a
return of the Escrow Deposit and accrued interest.
Seller, BHI and the LLC shall attempt to agree upon, in good faith
and in the exercise of their respective reasonable business judgment, the
Defect Matter Value of each Seller Defect Matter, and if they are unable to
reach such agreement within fifteen (15) days after Seller's delivery of its
Seller Certificate, then either Seller or BHI shall be entitled to demand
binding arbitration of such matter, pursuant to the Rules of the American
Arbitration Association.
(iv) Seller shall have executed and delivered to BHI the Amended
Operating Agreement.
(v) No material breach or default by Seller shall have occurred
hereunder that has not been cured to BHI's reasonable satisfaction. BHI shall
provide Seller with written notice of any material breach or default by Seller
promptly upon BHI's discovering that such breach or default exists.
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(vi) No injunction or temporary restraining order which expressly
prohibits the transfer of the Property by Seller to the LLC or the issuance of
the Class A Unit to BHI shall have been issued by a court of competent
jurisdiction. Alternatively, if an injunction or temporary restraining order
expressly prohibiting the transfer of the Property by Seller to the LLC or the
issuance of the Class A Unit to BHI has been issued by a court of competent
jurisdiction, then a bond or other security as required by the court shall
have been posted or delivered by the party obtaining such injunction or
temporary restraining order. If such bond or other security has not been
posted or delivered by the party obtaining the injunction or temporary
restraining order, then the Closing shall occur in accordance with the terms
of this Agreement.
(vii) All other conditions precedent that this Agreement specifically
states must be satisfied as a condition to the LLC's and BHI's obligations
hereunder shall have either been satisfied or waived in writing by the LLC and
BHI.
Each of the LLC and BHI's Conditions Precedent may be waived in
whole or in part by BHI by written notice to Seller and at Closing, all of the
LLC and BHI's Conditions Precedent set forth herein shall either be satisfied
or so waived by BHI. Seller shall use all reasonable efforts to ensure that
the LLC and BHI's Conditions Precedent are satisfied prior to the Closing Date
contemplated hereunder, and except with respect to the LLC and BHI's Condition
Precedent set forth in Section above and as otherwise expressly provided in
this Agreement, Seller's sole obligation with respect to the satisfaction of
such LLC and BHI's Conditions Precedent shall be to use such reasonable
efforts.
(b) Seller's Conditions Precedent. The following shall be conditions
precedent to Seller's obligation to consummate the purchase and sale
transaction contemplated herein (the "Seller's Conditions Precedent"):
(i) The LLC shall have delivered the Purchase Price (subject
to the prorations and adjustments provided for in this Agreement), as required
hereunder.
(ii) BHI shall have executed and delivered to Seller a
certificate in the form attached at Exhibit E hereto ("Purchaser's
Certificate") updating the representations and warranties of BHI through
Closing, and certifying that BHI has complied in all material respects with
its obligations under this Agreement, which Purchaser's Certificate BHI
covenants to deliver unless any fact or circumstance has arisen since the date
hereof and prior to the Closing that would make any such representation
warranty or certification materially untrue, in which case BHI shall deliver a
Purchaser's Certificate describing such fact or circumstance.
(iii) No material breach or default by BHI shall have occurred
hereunder that has not been cured to Seller's reasonable satisfaction. Seller
shall provide BHI with written notice of any material breath or default by BHI
promptly upon Seller's discovering that such breach or default exists.
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(iv) BHI shall have executed and delivered to Seller the
Amended Operating Agreement.
(v) No injunction or temporary restraining order which
expressly prohibits the transfer of the Property by Seller to the LLC or the
issuance of the Class A Unit to BHI shall have been issued by a court of
competent jurisdiction. Alternatively, if an injunction or temporary
restraining order expressly prohibiting the transfer of the Property by Seller
to the LLC or the issuance of the Class A Unit to BHI has been issued by a
court of competent jurisdiction, then a bond or other security as required by
the court shall have been posted or delivered by the party obtaining such
injunction or temporary restraining order. If such bond or other security has
not been posted or delivered by the party obtaining the injunction or
temporary restraining order, then the Closing shall occur in accordance with
the terms of this Agreement.
(vi) All other conditions precedent that this Agreement
specifically states must be satisfied as a condition to Seller's obligations
hereunder shall have either been satisfied or waived in writing by Seller.
Each of Seller's Conditions Precedent may be waived in whole
or in part by Seller by written notice to BHI and at Closing, all Seller's
Conditions Precedent set forth herein shall either be satisfied or so waived.
BHI shall use all reasonable efforts to ensure that such Seller's Conditions
Precedent are satisfied prior to the Closing Date contemplated hereunder, and
except with respect to the Seller's Condition Precedent as set forth in
Section above, and as otherwise expressly provided in this Agreement, BHI's
sole obligation with respect to the satisfaction of such Seller's Conditions
Precedent shall be to use such reasonable efforts.
8. COVENANTS OF SELLER.
Seller hereby covenants to BHI, as follows:
(a) Prior to the Closing, Seller shall not execute any new Seller Lessor
Lease, nor terminate, renew, amend or modify any existing Seller Lessor Lease
without BHI's prior written consent, which consent shall not be unreasonably
withheld or delayed; provided, however, Seller shall be permitted to execute,
terminate, renew, amend and/or modify leases of boat slips in the marina
portion of the Property in the ordinary course of business without obtaining
BHI's consent provided all such leases are and remain terminable by the lessor
thereunder upon no more than thirty (30) days notice to the tenant thereunder.
BHI's consent to any such matter shall be deemed given by BHI if BHI fails to
respond to Seller's written request for such consent within ten (10) days
after BHI's receipt thereof. Notwithstanding the foregoing, Seller shall give
Xxxxxxx'x Spa a notice of termination of its Seller Lessor Lease prior to the
Closing. Prior to the Closing, Seller shall not, without BHI's prior written
consent, accept from any of the Tenants payment of rent or other charges more
than one month in advance. At the Closing, the security deposit provided for
under each of the Seller Lessor Leases
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shall be credited to the LLC and no Tenant or any other party shall have any
claim (other than for customary refund at the expiration of a Seller Lessor
Lease) to all or any part of any security deposit.
(b) Prior to the Closing, Seller shall not terminate, renew, amend or
modify any Seller Lessee Lease without BHI's prior written consent, which
consent shall not be unreasonably withheld or delayed. BHI's consent to any
such matter shall be deemed given by BHI if BHI fails to respond to Seller's
written request for such consent within ten (10) days after BHI's receipt
thereof.
(c) Prior to the Closing, Seller shall not, without the prior written
consent of BHI, which consent shall not be unreasonably withheld or delayed:
(i) enter into any new contract with respect to the Property which will
survive the Closing, nor (ii) renew, amend or modify any Assumed Contract
(provided Seller may amend or modify any Assumed Contract in the ordinary
course of business and such amendment or modification does not give rise to
any additional obligation that would be assumed by the LLC and that exceeds
Five Thousand and no/Dollars ($5,000.00), and provided all such Assumed
Contracts remain terminable by Seller and their successors upon no more than
thirty (30) days notice to the other party thereunder). BHI's consent to any
such matter shall be deemed given by BHI if BHI fails to respond to Seller's
written request for such consent within ten (10) days after BHI's receipt
thereof.
(d) The Existing Insurance Policies, or equivalent coverage, shall
remain continuously in force through the Closing Date.
(e) At all times prior to the Closing, Seller shall operate, and manage
the Property in a manner consistent with Seller's past practices, shall
maintain present services, shall maintain the Property in good repair and
working order, and shall perform in all material respects when due all of
Seller's obligations under the Seller Lessor Leases, the Seller Lessee Leases,
the Assumed Contracts, and the Governmental Approvals and the Permitted
Encumbrances and otherwise in accordance in all material respects with
applicable laws, ordinances, rules and regulations affecting the Property.
Seller shall, in the ordinary course of business of operating the Property,
maintain a level of inventory and supplies as required by Seller to operate
the Property in the manner as presently being operated by Seller. Seller
shall repair and replace (if necessary, as determined by Seller) any
furniture, fixtures or equipment that are damaged or become inoperable in the
ordinary course of business after the date hereof with respect to the hotel
and restaurant components of the Property. Except as otherwise provided
herein, the Property at the Closing will be in substantially the same
condition as it was on the date hereof, normal wear and tear excepted. None
of the Personal Property shall be removed from the Real Property, unless
replaced by Personal Property of equal or greater utility and value.
(f) Seller shall pay all bills and invoices for labor, goods, materials
and services of any kind relating to the Property, and employee salary,
worker's
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compensation and other accrued benefits, together with all applicable payroll
taxes, that became due and payable during the period on or prior to the
Closing.
(g) Seller agrees to pay any brokerage or leasing fee or similar
commission or other compensation with respect to the Seller Lessor Leases
which is or will become due and payable prior to the Closing.
(h) Except as provided in Section , (c) and (d), after the date hereof
and prior to the Closing, no part of the Property, or any interest therein,
will be alienated, liened, encumbered or otherwise transferred.
(i) Upon Seller's request, for a period of five (5) years after the
Closing, the LLC shall make all Seller's records with respect to the Property
available to Seller for inspection and copying (at Seller's expense) by
Seller's consultants.
(j) Seller shall notify BHI of any material change in any condition with
respect to the Property or of any event or circumstance which makes any
representation or warranty of Seller to BHI under this Agreement materially
untrue or misleading, or any covenant of Seller under this Agreement incapable
or less likely of being performed promptly after Seller becomes aware thereof.
(k) On the Closing Date, Seller shall deliver possession of the Property
to the LLC.
None of the covenants of Seller under this Agreement shall merge
into any instrument or conveyance at Closing, and all such covenants shall
survive the Closing Date.
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9. SELLER'S CLOSING DOCUMENTS.
On or before the Closing Date, Seller shall deliver or cause to be
delivered to the LLC (with copies to BHI) the following:
(a) A special warranty deed (the "Deed") in the form attached hereto as
Exhibit F executed by Seller, in recordable form, conveying to the LLC good
and clear record and marketable fee tide to the Real Property free and clear
of all claims, liens and encumbrances except the Permitted Encumbrances and
matters arising by or through the LLC.
(b) A xxxx of sale (the "Xxxx of Sale"), executed by Seller, assigning
and conveying to the LLC title to the Personal Property, free and clear of all
encumbrances (except the Assumed Contracts and any ad valorem taxes that are
not yet due and payable), in the form attached hereto as Exhibit G.
(c) An assignment and assumption agreement (the "Assignment"), executed
by Seller, assigning and conveying to the LLC all of Seller's right, title and
interest in and to the Assumed Contracts, in the form attached hereto as
Exhibit H.
(d) An assignment and assumption of lessor's interest in the Seller
Lessor Leases (the "Seller Lessor Lease Assignment"), executed by Seller, to
the LLC, in the form attached hereto as Exhibit I.
(e) An assignment and assumption of lessee's interest in the Seller
Lessee Leases (the "Seller Lessee Lease Assignment"), executed by Seller, in
recordable form, to the LLC, in the form attached hereto as Exhibit J.
(f) A legal opinion, reasonably acceptable to Title Company, the LLC and
BHI, with respect to Seller's authority to consummate the transactions
contemplated hereunder and execute and deliver the conveyances and other
agreements and instruments contemplated hereby.
(g) To the extent not previously delivered to the LLC, and to the extent
in the possession or control of Seller, originals of the Seller Lessor Leases,
Seller Lessee Leases, Assumed Contracts, certificate(s) of occupancy,
certificate of completion and other instruments evidencing the Governmental
Approvals.
(h) Any keys in the possession or control of Seller to all locks located
in the Property.
(i) Letters executed by Seller and its management agent, if any,
addressed to all Tenants, in the form of Exhibit K, notifying and directing
payment of all rent and other sums due from Tenants from and after the date of
the Closing to be made to the LLC or at its direction.
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(j) Executed estoppel certificates substantially in the form attached
hereto as Exhibit L, addressed to the LLC from each of the Tenants (other than
Tenants under any and all leases of boat slips in the marina portion of the
Property) under the Assumed Seller Lessor Leases, to the extent the same are
obtained by Seller.
(k) An executed Seller's Certificate, in the form attached hereto as
Exhibit D.
(l) A Rent Roll in the form attached hereto as Exhibit 5(b), prepared as
of the day of the Closing, certified by Seller to be true and correct through
the day of the Closing.
(m) An affidavit in the form attached hereto as Exhibit C, certifying
that Seller is not a "foreign person" within the meaning of Section 1445(f)(3)
of the Code, together with any similar form or affidavit required under
Mississippi state law.
(n) A gap affidavit, executed by Seller, in the form customarily used by
Title Company for similar transactions and reasonably acceptable to Seller.
(o) An owner's and contractor's affidavit and lien waiver in such form
as customarily required by Title Company for similar transactions and
reasonably acceptable to Seller.
(p) Pay-off letters and lien releases for all monetary encumbrances
(other than the Assumed Contracts) affecting the Property, in form acceptable
to Title Company.
(q) Documents, instruments or agreements called for hereunder which have
not previously been delivered.
(r) Consent to assignment by Lessors and contractors of all Seller
Lessee Leases and Assumed Contracts listed on Schedule 9(t).
(s) Schedule of Accrued Employee benefits as of the date of Closing, as
set forth in Paragraph , hereinafter.
(t) The Amended Operating Agreement executed by Seller.
(u) Any other documents, instruments or agreements reasonably necessary
to close the transaction as contemplated by this Agreement.
10. LLC'S AND BHI'S CLOSING DOCUMENTS.
(a) On or before the Closing, the LLC shall deliver or shall cause to be
delivered to Seller:
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(i) The Purchase Price by wire transfer of immediately available
funds or cashier's check.
(ii) An executed counterpart of the Xxxx of Sale.
(iii) An executed counterpart of the Assignment.
(iv) An executed counterpart of the Seller Lessor Lease Assignment.
(v) An executed counterpart of the Seller Lessee Lease Assignment.
(vi) An executed counterpart of an Assignment of Assumed Contracts.
(vii) A legal opinion, reasonably acceptable to Title Company and
Seller, with respect to the LLC's authority to consummate the transactions
contemplated hereunder and execute and deliver the agreements and instruments
that this Agreement contemplates the LLC will execute and deliver.
(viii) The Amended Operating Agreement.
(ix) The original PRC Notes marked "Paid," together with a
recordable satisfaction of the mortgage securing the same.
(x) Any other documents, instruments or agreements reasonably
necessary to close the transaction as contemplated by this Agreement.
(b) On or before the Closing, BHI shall deliver to Seller:
(i) The Amended Operating Agreement.
(ii) An executed Purchaser's Certificate (signed by BHI),
substantially in the form attached hereto as Exhibit E.
(iii) Any other documents, instruments or agreements reasonably
necessary to close the transaction as contemplated by this Agreement.
(c) On or before the Closing, BHI shall deliver to the LLC:
(i) The Capital Contribution by wire transfer of immediately
available funds or cashier's check.
(ii) The Amended Operating Agreement.
(iii) Any other documents, instruments or agreements reasonably
necessary to close the transaction as contemplated by this Agreement.
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11. CONFIDENTIALITY. Prior to the Closing Date, BHI shall treat as
confidential and shall not disclose or use, and will direct its
representatives not to disclose or use, to the detriment of Seller, any
information with respect to the LLC Interest or the Property which was
obtained by BHI as a result of its investigations, or furnished by the Seller
or its representatives to BHI or its representatives at any time or in any
manner in connection with the purchase and sale transaction contemplated by
this Agreement (the "Transaction"). Upon termination of this Agreement, BHI
shall either (i) return to Seller all of the information which BHI received
from Seller during its investigation, or (ii) immediately destroy all of such
information. The confidentiality and non-disclosure obligations contained in
this Section shall not apply if, and to the extent, BHI can demonstrate that:
(a) the information was known to BHI (as established by written documents
existing before disclosure of such information by Seller) prior to the earlier
of its investigation or its receipt of such information from the Seller, (b)
the information is or becomes part of the public domain other than by BHI's
(or its representatives) direct or indirect act, (c) the information is
legally disclosed to BHI by a third-party without confidential or proprietary
restrictions, or (d) similar information is independently developed by BHI
without access to the Seller's information. In the event that BHI or its
representatives are at any time requested or required by any court or any
other duly authorized governmental entity (by oral questions, interrogatories,
requests for information or documents, subpoena, or similar process) to
disclose any of the information from its investigation or received from
Seller, BHI agrees to provide the Seller with prompt notice of such request(s)
so that Seller may seek an appropriate protective order and/or waive
compliance with the provisions of this Section .
12. PRORATIONS AND ADJUSTMENTS.
Except as otherwise specified herein, all receipts and disbursements of
the Property shall be prorated as of 11:59 p.m. (CDT) on the Closing Date.
Prior to the Closing, Seller shall submit to BHI for its approval a tentative
prorations schedule showing the categories and amounts of all prorations
proposed. The parties shall agree on a prorations schedule that is consistent
with the provisions of this Section prior to or at the Closing.
(a) Rentals Generally. As used in this Agreement, the term "rentals"
includes fixed monthly and other periodic rentals, additional rentals,
percentage rentals, escalation rentals, operating cost pass-throughs and other
sums and charges payable under the Leases. The LLC shall be entitled to all
rentals and revenues accrued after the Closing Date, and Seller shall be
entitled to all rentals and revenues accrued on or prior to the Closing Date.
(b) Prepaid Rents, Security Deposits and Promotional Funds. All prepaid
rentals and security deposits (including all accrued interest, if any, payable
on the foregoing) made under any and all Seller Lessor Leases that have not
been applied by
28
Seller against the obligations of the Tenants thereunder in accordance with
the terms and conditions of such Seller Lessor Leases shall be credited to the
LLC at Closing.
(c) Operating Expenses. All ordinary operating expenses relating to the
Property other than taxes referred to below ("Expenses"), including utility
expenses for gas, water, electricity, heat, fuel, sewer and other utilities
relating to the Property and payments under the Contracts shall be prorated as
of the Closing Date. The LLC shall be responsible for all such amounts
accruing after the Closing Date, with Seller only being responsible for such
amounts accrued through the Closing Date.
(d) Property Taxes. All real and personal property and ad valorem
taxes, if any, whether payable in installments or not, including all
supplemental taxes attributable to the period prior to and including the
Closing Date for the calendar year in which the Closing occurs, shall be
prorated through the Closing Date, based on the latest available tax rate and
assessed valuation. If the amount of any installment of real or personal
taxes is not known as of the Closing Date, then a proration shall be made by
the parties based on a reasonable estimate of such taxes applicable to the
Property and the parties shall adjust the proration when the actual amount
becomes known, upon the written request of either party made to the other.
All bonds or special assessments against the Property due before or on the
Closing Date shall be paid by Seller and all bonds or special assessments due
after the Closing Date, which relate to events occurring prior to or on the
Closing Date, shall be prorated as of the Closing Date so that each party
bears the portion thereof allocable to its period of ownership.
(e) Capital Expenditures and Accounts Payable. All capital and other
improvements (including labor and material) which have been performed or
contracted for, by or on behalf of Seller prior to or on the Closing Date, and
all sums due for accounts payable which have been incurred with respect to the
Property prior to or on the Closing Date shall be paid by Seller and shall be
subject to the indemnification provisions of Section . The LLC shall furnish
to Seller for payment any bills for such period received after the Closing
Date, and the LLC shall have no further obligation with respect thereto, and
Seller agrees to indemnify and hold the LLC harmless for any claims related
thereto.
(f) Debt Service Payments, Payroll Expenses and Insurance Premiums and
Costs Not to be Prorated. Seller shall be responsible for all debt service
payments, payroll expenses and insurance premiums and costs payable or
accruing prior to or on the Closing Date, and shall be entitled to refunds on
cancellation of existing insurance policies, and there will be no prorations
for such items.
(g) Other Items. Such other items that are customarily prorated in
transactions of this nature shall be ratably prorated.
29
(h) Procedures and Adjustments. For purposes of calculating prorations,
Seller shall be deemed to hold title to the Property, and, therefore, entitled
to the income therefrom and responsible for the expenses payable by the day
upon which the Closing Date occurs. All such prorations shall be made on the
basis of the actual number of days of the month which shall have elapsed as of
the day of the Closing Date, and based upon a three hundred sixty-five (365)
day year. The prorations shall be effective as of the close of business on
the Closing Date using the best available computations of such items.
(i) Post-Closing Reconciliation. The amount of any prorations shall be
subject to adjustment in cash after the Closing as and when complete and
accurate information becomes available. All items of income and expense for
the period prior to and including the Closing will be for the account of
Seller and all items of income and expense for the period after the Closing
will be for the account of the LLC. Accruals of items for the account of
Seller or the LLC shall be in accordance with generally accepted accounting
principles. In the event of dispute between the parties on closing
adjustments, the dispute shall be decided by binding arbitration by any of the
following public accounting firms as may be mutually agreeable to Seller and
BHI and which is not then providing services to either Seller or the LLC:
Price Waterhouse, Peat Marwick, Deloitte & Touche, Coopers & Xxxxxxx, Xxxxxx
Xxxxxxxx or Xxxxx & Xxxxx. No such adjustments may be requested or demanded
more than sixty (60) days after Closing. The terms and provisions of this
Section shall survive the Closing.
(j) Safe Deposit Boxes. Seller shall deliver written notice to guests
who have safe deposit boxes at the Property advising such guests of the
transfer of the Property to the LLC and requesting that they verify the
contents of such safe deposit boxes to Seller on the day prior to Closing.
Seller, the LLC and BHI shall inventory and verify the contents of such safe
deposit boxes as part of the Closing. BHI shall have a designated individual
at the Property available to perform this function. After each safe deposit
box has been inventoried and verified by the respective guests to Seller, the
LLC and BHI, and in any case, upon transfer of control of the safe deposit
boxes to the LLC under this Agreement, the LLC shall thereafter be responsible
for maintaining the safe deposit boxes, and Seller shall have no further
responsibility regarding such safe deposit boxes. The LLC and BHI shall
indemnify, defend and hold Seller harmless from and against all claims,
damages and expenses (including attorney's fees) incurred by Seller as a
result of any claim with respect to the contents of any safe deposit box
arising after such transfer of control.
(k) Accrued Employee Benefits. All costs of accrued employee benefits
(sick leave, vacation leave, health, dental and life insurance benefits,
401(k) plans, etc., if any) shall be determined as of the date of Closing and
shall be credited to the LLC toward payment of the Purchase Price. If such
information is not available on the date of Closing it shall be subject to
adjustment in cash after the Closing in accordance with Section 12(h).
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13. CLOSING.
Subject to the satisfaction of all terms and conditions set forth in this
Agreement, the closing of the sale and purchase herein contemplated (the
"Closing") shall occur on July 24, 1997, or such earlier date as the Seller,
the LLC and BHI may mutually agree upon as the date for Closing, at the
offices of Page, Mannino, Peresich, Xxxxxxxxx & XxXxxxxxx, LLC, in Biloxi,
Mississippi. As used in this Agreement the "Closing Date" means the date the
transactions contemplated herein close. All escrow deposits will be applied
to the Purchase Price or to Seller's liquidated damages under the terms and
conditions hereof.
14. CLOSING COSTS.
The LLC shall pay (a) all title costs, including premiums, surveys,
endorsements and any legal fees of Title Company; (b) the fees for recording
the Deed, Seller Lessor Lease Assignment and Seller Lessee Lease Assignment;
and (c) all escrow fees for the Closing and costs incurred in connection with
the establishment and maintenance of the Deposit Escrow and the Holdback
escrow. Each party shall bear the expense of its own counsel; provided,
however, that to the extent Generally Accepted Accounting Principles require
that costs of an investment must be shown as an "Investment" on the Balance
Sheet of President Casinos, Inc., all such costs shall be reflected as
expenses of the LLC.
15. LOSS BY FIRE, OTHER CASUALTY OR CONDEMNATION.
(a) Destruction or Damage. In the event that prior to the Closing Date,
the Property, or any part thereof, is destroyed or damaged, the LLC shall
accept the Property on the Closing Date in its then physical condition with no
reduction in the Purchase Price and the LLC shall be entitled to receive an
assignment of all of Seller's rights to any insurance proceeds payable by
reason of such damage or destruction, and Seller shall execute and deliver to
the LLC a written assignment thereof (together with all of Seller's right to
compromise, settle or adjust any claims to such proceeds) at or prior to the
Closing. Seller shall cooperate with the LLC and BHI and take all reasonable
actions requested by BHI in order to give effect to and carry out the intent
and terms of such assignment provided that in no event shall Seller be
required to incur any cost or expense in doing so (and, subject to the
foregoing, Seller shall be relieved of any further obligation with respect to
the collection of such proceeds). Seller shall not compromise, settle or
adjust any claims to such proceeds without BHI's prior written consent, and
any proceeds received by Seller prior to the Closing Date shall be deposited
into the Closing escrow and disbursed to the LLC hereunder.
(b) Condemnation. In the event that prior to the Closing Date, the
Property, or any part thereof, is taken or becomes condemned or becomes the
subject of a pending or threatened taking or condemnation by any governmental,
quasi-
31
governmental or public authority, BHI shall have the right to proceed as set
forth in this Section .
(i) BHI shall have the right exercisable by giving notice to Seller
and Title Company within fifteen (15) days after BHI learns of the same, to
terminate this Agreement in the event that the condemnation or taking is, or
would be if consummated, a Material Taking Condition. As used herein, a
"Material Taking Condition" shall have occurred in the event that the Property
or any portion thereof is condemned or taken such that (A) access to or egress
from the Land or any portion thereof (as such access and egress exists on the
date of this Agreement) shall be materially impaired) or (B) BHI determines
reasonably and in good faith that its plans to develop and operate the
Property as a hotel, casino, marina and golf course destination resort will be
materially and adversely affected thereby. BHI shall include in any such
termination notice BHI's good faith explanation supporting BHI's determination
that a Material Taking Condition has occurred. In the event BHI delivers any
such termination notice, neither party shall have any further rights or
obligations hereunder except that the Escrow Deposit shall be immediately
refunded to BHI.
(ii) If BHI does not terminate the Agreement pursuant to the
foregoing provisions of this Section , then the LLC and BHI shall be required
to proceed to Closing, subject to the other terms and the LLC and BHI's
Conditions Precedent set forth in this Agreement, and the LLC shall accept the
Property on the Closing Date subject to such condemnation or taking with no
reduction in the Purchase Price, in which case the LLC shall be entitled to
receive an assignment of all of Seller's rights to any condemnation or taking
awards or proceeds payable by reason of such condemnation or taking awards, or
proceeds payable by reason of such condemnation or taking, and Seller shall
execute and deliver into the Closing Escrow or to the LLC a written assignment
thereof (together with all of Seller's rights to compromise, settle or adjust
any claims to such awards or proceeds) at or prior to the Closing. Upon
Seller's delivery of such assignment, Seller shall cooperate with BHI and take
all reasonable actions requested by BHI in order to give effect to and carry
out the intent and terms of such assignment, provided that in no event shall
Seller be required to incur any cost or expense in doing so (and, subject to
the foregoing, Seller shall be relieved of any further obligation with respect
to the collection of such awards and proceeds). If BHI proceeds under this
clause (ii), Seller shall not compromise, settle or adjust any claims to such
awards or proceeds without BHI's prior written consent and any awards or
proceeds received by Seller prior to the Closing Date shall be deposited in
the Closing Escrow and disbursed to BHI hereunder.
(c) Notice. Seller agrees to give BHI written notice of any
condemnation or taking, or threatened condemnation or taking, and any damage
or destruction of the Property, promptly after learning of the same. The
provisions of this Section shall survive the Closing.
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16. CERTAIN DEFAULTS.
(a) Specific Performance by Seller. IN THE EVENT THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT ARE NOT CONSUMMATED BY REASON OF A BREACH BY
SELLER OF THIS AGREEMENT, BHI AND THE LLC MAY, AS THEIR SOLE REMEDIES, EITHER
SEEK SPECIFIC PERFORMANCE OF SELLER'S OBLIGATIONS UNDER THIS AGREEMENT, OR
OBTAIN THE RETURN OF THE ESCROW DEPOSIT.
BHI'S INITIALS:/s/JSA SELLER'S INITIALS:/s/AB LLC'S INITIALS:/s/AB
------- ------- -------
(b) Liquidated Damages on BHI Default. IN THE EVENT THE REDEMPTION
CONTEMPLATED BY THIS AGREEMENT IS NOT CONSUMMATED BY REASON OF A BREACH BY BHI
OF THIS AGREEMENT, BHI SHALL CAUSE TITLE COMPANY TO PAY TO SELLER, WITHIN
FIFTEEN (15) DAYS AFTER SELLER'S WRITTEN REQUEST TO BHI, THE ESCROW DEPOSIT,
INCLUDING ALL ACCRUED INTEREST, AS FULL, AGREED AND LIQUIDATED DAMAGES FOR
SUCH BREACH, AND UPON THE PAYMENT OF SUCH AMOUNT TO SELLER THIS AGREEMENT
SHALL BECOME NULL AND VOID (EXCEPT FOR ANY PROVISIONS THAT THIS AGREEMENT
EXPRESSLY PROVIDES SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT) AND SELLER
AND BHI AND THE LLC SHALL THEREUPON BE RELEASED OF ALL FURTHER LIABILITY
HEREUNDER (EXCEPT WITH RESPECT TO ANY SUCH SURVIVING PROVISIONS). IT IS
HEREBY AGREED THAT SELLER'S ACTUAL DAMAGES IN THE EVENT OF SUCH BREACH BY BHI
WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO ASCERTAIN AND THAT THE AMOUNT
OF THE DEPOSIT REPRESENTS THE PARTIES' REASONABLE ESTIMATE OF SUCH DAMAGES.
SELLER SHALL NOT BE ENTITLED TO SEEK SPECIFIC PERFORMANCE OF THE LLC'S AND
BHI'S OBLIGATIONS UNDER THIS AGREEMENT.
BHI'S INITIALS:/s/JSA SELLER'S INITIALS:/s/AB LLC'S INITIALS:/s/AB
------- ------- -------
(c) No Waiver. No termination of this Agreement or the escrows
established hereunder by the LLC or Seller following any breach by the other
party shall be deemed to waive such breach or any remedy otherwise available
to the non-breaching party.
17. INDEMNIFICATIONS.
(a) Indemnification by Seller. Seller shall hold harmless, indemnify
and defend (with counsel reasonably acceptable to BHI and the LLC) BHI and the
LLC, any person or entity having a direct or indirect interest in BHI or the
LLC, any officer, director, employee, investment advisor, partner or
shareholder of or in BHI or the LLC or of or in any person or entity having a
direct or indirect ownership interest in BHI or the LLC, and the Property from
and against any and all obligations, liabilities, claims, liens, losses,
damages, costs and expenses (including reasonable attorneys' fees and costs)
(individually and collectively, a "Claim") which meet at least one of the
following criteria: (i) no matter how arising, are third party claims related
to the
33
Property and arise or become payable before or on the Closing Date, or are
third party related to or arise from any act, conduct or omission of Seller or
its affiliates, occurring at any time or times before or on the Closing Date,
or (ii) result from any inaccuracy in or breach of any representation or
warranty of Seller of which BHI did not have actual knowledge prior to
Closing, or result from any breach or default by Seller under this Agreement;
provided, however, that Seller shall not be obligated to indemnify the LLC or
BHI with respect to any inaccuracy in or breach of any representation or
warranty of Seller unless the actual cost to the LLC or BHI (excluding counsel
fees) incurred as a direct result thereof exceeds the sum of $30,000.00 for
all such alleged inaccuracies or breaches of a representation or warranty by
Seller. The LLC and BHI shall notify Seller of any such Claim within thirty
(30) days after it has notice of such Claim, but failure to notify Seller as
aforesaid shall in no case prejudice the rights of the LLC or BHI or any other
indemnified party hereunder except to the extent Seller shall be prejudiced by
such failure. Should Seller discharge or undertake to defend the LLC or BHI
or any other indemnified party and should it be determined thereafter that
such party was not entitled to be indemnified (but only because
indemnification was not proper under this Agreement, and not because the claim
was successfully defended), the LLC, BHI, or such party shall repay Seller all
cost and expense related to such discharge or defense including its attorney's
fees and costs. With respect to any Claims described in clause (i) above,
Seller's obligations under this Section shall survive the Closing Date for a
period of two (2) years. With respect to any claims described in clause (ii)
above, Seller's obligations under this Section shall survive the Closing Date
for a period of two (2) years.
(b) Indemnification by the LLC and BHI. The LLC and BHI shall hold
harmless, indemnify and defend (with counsel reasonably acceptable to Seller)
Seller, any person or entity having a direct or indirect interest in Seller,
any officer, director, employee, investment advisor, partner or shareholder of
or in Seller or of or in any person or entity having a direct or indirect
ownership interest in Seller, from and against any and all obligations,
liabilities, claims, liens, losses, damages, costs and expenses (including
reasonable attorneys' fees and costs) (individually and collectively, a
"Claim") which meet at least one of the following criteria: (i) no matter how
arising, are third party claims related to the Property and become payable or
accrue on or after the Closing Date, or are third party related to or arise
from any act, conduct or omission of the LLC, BHI or their affiliates,
occurring at any time or times on or after the Closing Date, or (ii) result
from any inaccuracy in or breach of any representation or warranty of BHI, or
result from any breach or default by BHI under this Agreement of which Seller
did not have actual knowledge prior to Closing. Seller shall notify BHI of
any such Claim within thirty (30) days after it has notice of such Claim, but
failure to notify BHI as aforesaid shall in no case prejudice the rights of
Seller or any other indemnified party hereunder except to the extent BHI shall
be prejudiced by such failure. Should the LLC or BHI discharge or undertake
to defend Seller or any other indemnified party and should it be determined
thereafter that such party was not entitled to be indemnified (but only
because indemnification was not proper under this Agreement and not because
the claim was successfully defended), Seller or such party
34
shall repay the LLC and BHI all cost and expense related to such discharge or
defense including its attorney's fees and costs.
18. NO BROKER.
Seller, the LLC and BHI all represent and warrant to the others that no
brokerage commission, finder's fee or other compensation is due or payable by
reason of either's actions in the transactions contemplated hereby. Each
party agrees to indemnify and hold the other harmless from and against any
losses, damages, costs and expenses (including reasonable attorneys' fees)
incurred by the other by reason of any breach or inaccuracy of the
representation and warranty contained in this Section . The parties'
respective obligations under this Section shall survive the termination of
this Agreement.
19. MISCELLANEOUS.
(a) Entire Agreement. Except for the other transaction documents
expressly contemplated by this Agreement, this Agreement is the entire
Agreement among the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements among the parties with respect to the
matters contained in this Agreement. Any waiver, modification, consent or
acquiescence with respect to any provision of this Agreement or with respect
to any failure to perform in accordance therewith shall be set forth in
writing and duly executed by or on behalf of the party to be bound thereby.
No waiver by any party of any breach hereunder shall be deemed a waiver of any
other or subsequent breach.
(b) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one and the same instrument. The signature
page of any counterpart may be detached therefrom without impairing the legal
effect of the signature(s) thereon provided such signature page is attached to
any other counterpart identical thereto except having additional signature
pages executed by other parties to this Agreement attached thereto.
(c) Time of the Essence. Time is of the essence in the performance of
and compliance with each of the provisions and conditions of this Agreement.
(d) Notices. Any communication, notice or demand of any kind whatsoever
which either party may be required or may desire to give to or serve upon the
other or upon any escrow holder hereunder shall be in writing and delivered by
personal service (including express or courier service), by electronic
communication whether by telex, telegram or telecopying, or by registered or
certified mail, postage prepaid, return receipt requested, addressed as
follows:
35
Seller (or the LLC before the Closing Date):
J. Xxxxxx Xxxxxxxx Associates, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx and
Xxxx Xxxxxxxxxx
Telecopy No. (000) 000-0000
With a copy to: Sable, Makoroff & Xxxxx, P.C.
Xxxxxxx Xxxxx, Xxxxx Xxxxxxxx
Xxxxx Xxxxxxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxx and Xxxx Xxxxxx
Telecopy No.: 412/471-2859
BHI (or the LLC on or after the Closing Date):
President Xxxxxxxxxx Hotel, Inc.
c/o President Casinos, Inc.
000 X. Xxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Attention: Xxxx Xxxxxxxxx and
Xxxxx Xxxxxxx
Telecopy No.: 314/622-3172
With a copy to: Xxxxxx Xxxxxxx, Esquire
Xxxxxxxx Xxxxxx
Xxx Xxxxxxxxxx Xxxxxx
Xx. Xxxxx, XX 00000
Telecopy No.: 314/552-7000
TITLE COMPANY: First American Title Insurance Company
c/o Xxxxx X. Xxxxx, Esq.
Page, Mannino, Peresich, Xxxxxxxxx & XxXxxxxxx
000 Xxxxx Xxxxxx Xxxx
Xxxxxx, XX 00000
Telecopy No.: 601/432-5539
Any party (including Title Company) may change its address for notice by
written notice given to the other in the manner provided in this Section .
Any such communication, notice or demand shall be deemed to have been duly
given or served on the date personally served, if by personal service, one (1)
day after the date of confirmed dispatch, if by electronic communication, or
on the date shown on the return receipt or other evidence of delivery, if
mailed.
36
(e) No Other Representations. The making, execution and delivery of
this Agreement by the parties hereto has been induced by no representations,
statements, warranties or agreements other than those expressly set forth
herein.
(f) Saving Clause. Wherever possible, each provision of this Agreement
shall be interpreted in such a manner as to be valid under applicable law,
but, if any provision of this Agreement shall be invalid or prohibited
thereunder, such invalidity or prohibition shall be construed as if such
invalid or prohibited provision had not been inserted herein and shall not
affect the remainder of such provision or the remaining provisions of this
Agreement.
(g) Standard of Interpretation. The language in all parts of this
Agreement shall be in all cases construed simply according to its fair meaning
and not strictly for or against any of the parties hereto for any reason
(including by virtue of the fact that this Agreement may have been drafted or
prepared by counsel for one of the parties, it being recognized that BHI and
Seller, and their respective counsel, contributed materially and substantially
to the preparation of this Agreement). Wherever the words "include" or
"includes" are used in this Agreement, they should be interpreted in a non-
exclusive manner as though the words "without limitation" immediately followed
the same. Section headings of this Agreement are solely for convenience of
reference and shall not govern the interpretation of any of the provisions of
this Agreement.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Mississippi without regard to
conflicts of law principles. Any action or proceeding seeking to enforce any
provision of, or based upon any right arising out of this Agreement shall be
brought by and against the parties in the United States District Court for the
Southern District of Mississippi (or, in the event that the dollar
jurisdictional amount for federal court jurisdiction are not met, then such
action shall be brought in the Circuit or Chancery Court in Xxxxxxxx County,
Mississippi), and each of the parties hereto hereby consents to the
jurisdiction of such courts in any such action or proceeding and waives any
objection to venue laid therein.
(i) Attorneys' Fees. If any action is brought by either party against
the other party hereunder, the prevailing party shall be entitled to recover
from the other party reasonable attorneys' court costs and expenses incurred
in connection with the prosecution or defense of such action. Any attorneys'
fees, court costs and expenses to which a party in connection with the
enforcement of a liquidated damages provision hereunder shall not be deemed
covered by such liquidated damages provision, but rather shall be in addition
to the liquidated damages thereunder. For purposes of this Agreement, the
term "attorneys' fees" or "attorneys' fees and costs" shall mean the fees and
expenses of counsel to the parties hereto, which may include printing,
photostating, duplicating and other expenses, air freight charges, and fees
billed for
37
law clerks, paralegals and other persons not admitted to the bar but
performing services under the supervision of an attorney.
(j) Binding Agreement; Assignment. This Agreement shall be binding upon
and inure to the benefit of each of the parties hereto and to their respective
transferees, successors, and assigns; provided, however, that neither this
Agreement nor any of the rights or obligations of Seller hereunder shall be
transferred or assigned by Seller, without the prior written consent of BHI.
BHI shall have the right to assign all of its right, title and interest under
this Agreement to any wholly-owned subsidiary of BHI at any time prior to the
Closing, whereupon such assignee shall succeed to all of the rights and
obligations of BHI hereunder, provided, however, that President Casinos, Inc.
shall be and remain liable for all obligations of BHI under this Agreement.
(k) Exhibits. All Exhibits and Schedules attached hereto are
incorporated herein by reference. All Exhibit, Schedule and Section
references in this Agreement refer to the sections of and the exhibits
attached to this Agreement, unless the context clearly indicates otherwise.
(l) No Recording. This Agreement shall not be recorded or filed in the
public land or other public records of any jurisdiction by either party and
any attempt to do so may be treated by the other party as a breach of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
SELLER: J. XXXXXX XXXXXXXX ASSOCIATES, INC.,
a Pennsylvania corporation
By:/s/ Xxxx Xxxxxxxxxx, Vice Pres.
---------------------------------
LLC: PRESIDENT XXXXXXXXXX HOTEL, L.L.C.,
a Mississippi limited liability
company
By: J. Xxxxxx Xxxxxxxx Associates,
Inc.,a Pennsylvania
corporation, Manager
By:/s/ Xxxx Xxxxxxxxxx, Vice Pres.
--------------------------------
BHI: XXXXXXXXXX HOTEL, INC., a
Mississippi corporation
By:/s/ Xxxx X. Xxxxxxxxx
------------------------------------
39
