Exhibit 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
BARRICK-GNL, LLC,
AS BUYER
POSTER FINANCIAL GROUP, INC.,
AS SELLER
AND
GNL, CORP.
NOVEMBER 8, 2004
TABLE OF CONTENTS
1. DEFINITIONS .............................................................5
2. PURCHASE AND SALE OF TARGET SHARES.......................................5
2.1 BASIC TRANSACTION..................................................5
2.2 PURCHASE PRICE.....................................................5
2.3 ESTIMATED PURCHASE PRICE...........................................5
2.4 POST-CLOSING WORKING CAPITAL ADJUSTMENT PROCEDURES ................5
2.5 POST-CLOSING WORKING CAPITAL ADJUSTMENT............................6
2.6 DEPOSIT............................................................6
2.7 PURCHASE PRICE ALLOCATION..........................................6
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND TARGET......................7
3.1 ORGANIZATION OF SELLER.............................................7
3.2 AUTHORIZATION OF TRANSACTION BY SELLER.............................7
3.3 NONCONTRAVENTION - SELLER..........................................7
3.4 BROKERS' FEES......................................................8
3.5 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER OF TARGET ........8
3.6 CAPITALIZATION OF TARGET...........................................8
3.7 TARGET SHARES......................................................8
3.8 NONCONTRAVENTION - TARGET..........................................8
3.9 FINANCIAL STATEMENTS...............................................9
3.10 EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END..................9
3.11 UNDISCLOSED LIABILITIES..........................................11
3.12 LEGAL COMPLIANCE.................................................11
3.13 TAX MATTERS......................................................12
3.14 TITLE TO ASSETS..................................................13
3.15 REAL PROPERTY....................................................13
3.16 INTELLECTUAL PROPERTY............................................14
3.17 TANGIBLE ASSETS..................................................16
3.18 INVENTORY AND SUPPLIES...........................................16
3.19 CONTRACTS........................................................16
3.20 NOTES AND ACCOUNTS RECEIVABLE....................................18
3.21 POWERS OF ATTORNEY...............................................18
3.22 INSURANCE........................................................18
3.23 LITIGATION.......................................................18
3.24 EMPLOYEES........................................................19
3.25 EMPLOYEE BENEFITS................................................19
3.26 GUARANTIES.......................................................21
3.27 ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS .......................21
3.28 REWARD PROGRAMS..................................................22
3.29 SUPPLIERS........................................................22
3.30 CERTAIN BUSINESS RELATIONSHIPS...................................23
3.31 SUFFICIENCY OF ASSETS............................................23
3.32 DISCLOSURE.......................................................23
4. REPRESENTATIONS AND WARRANTIES OF BUYER.................................23
4.1 ORGANIZATION OF BUYER.............................................23
4.2 AUTHORIZATION OF TRANSACTION......................................23
4.3 NONCONTRAVENTION..................................................24
4.4 BROKERS' FEES.....................................................24
4.5 FINANCING.........................................................24
4.6 LICENSING.........................................................24
4.7 LITIGATION........................................................24
4.8 INVESTMENT INTENT.................................................25
5. PRE-CLOSING COVENANTS...................................................25
5.1 GENERAL...........................................................25
5.2 NOTICES AND CONSENTS..............................................25
5.3 OPERATION OF BUSINESS.............................................25
5.4 PRESERVATION OF BUSINESS..........................................25
5.5 FULL ACCESS.......................................................25
5.6 CONFIDENTIAL AGREEMENTS...........................................25
5.7 NOTICE OF DEVELOPMENTS............................................25
5.8 EXCLUSIVITY.......................................................26
5.9 CONFIDENTIALITY...................................................26
5.10 BULLHEAD, ARIZONA FACILITY.......................................26
5.11 AMENDMENTS, RELEASES AND TERMINATIONS............................26
5.12 SELLER MASTER AGREEMENTS AND OTHER SHARED AGREEMENTS ............26
5.13 DISCLOSURE SCHEDULE UPDATES......................................27
5.14 LICENSE AGREEMENT, TRANSITION SERVICES AGREEMENT AND
EMPLOYEE/BENEFITS TRANSITION.....................................27
5.15 GOVERNMENTAL APPROVALS...........................................27
5.16 PUBLICITY........................................................28
6. POST-CLOSING COVENANTS..................................................28
6.1 GENERAL...........................................................28
6.2 LITIGATION SUPPORT................................................28
6.3 INSURANCE MATTERS; D&O INDEMNITIES................................29
6.4 TRANSITION........................................................30
6.5 CONFIDENTIALITY...................................................30
6.6 COVENANT NOT TO COMPETE...........................................30
6.7 NONSOLICITATION...................................................30
7. CONDITIONS TO OBLIGATION TO CLOSE.......................................31
7.1 CONDITIONS TO OBLIGATION OF BUYER.................................31
7.2 CONDITIONS TO OBLIGATION OF SELLER................................31
8. CLOSING.................................................................32
8.1 THE CLOSING.......................................................32
8.2 ACTIONS TAKEN AT CLOSING..........................................32
8.3 DELIVERIES AT THE CLOSING.........................................32
9. REMEDIES FOR BREACHES OF THIS AGREEMENT.................................34
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES........................34
9.2 WAIVER OF CLAIMS AGAINST TARGET...................................34
9.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER...................34
9.4 INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER..................34
9.5 LIMITS ON INDEMNIFICATION.........................................35
9.6 MATTERS INVOLVING THIRD PARTIES...................................35
10. TAX MATTERS............................................................36
10.1 TRANSFER TAXES...................................................36
10.2 COOPERATION......................................................36
10.3 WAGE REPORTING...................................................37
11. TERMINATION............................................................37
11.1 TERMINATION OF AGREEMENT.........................................37
11.2 EFFECT OF TERMINATION............................................38
12. MISCELLANEOUS..........................................................38
12.1 NO THIRD-PARTY BENEFICIARIES.....................................38
12.2 ENTIRE AGREEMENT.................................................38
12.3 SUCCESSION AND ASSIGNMENT........................................38
12.4 COUNTERPARTY.....................................................38
12.5 HEADINGS.........................................................38
12.6 NOTICES..........................................................39
12.7 GOVERNING LAW....................................................39
12.8 AMENDMENTS AND WAIVERS...........................................39
12.9 SEVERABILITY.....................................................39
12.10 EXPENSES........................................................40
12.11 CONSTRUCTION....................................................40
12.12 INCORPORATION OF EXHIBITS AND SCHEDULES.........................40
12.13 SUBMISSION TO JURISDICTION......................................40
EXHIBITS
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Exhibit A Defined Terms
Exhibit B Escrow Agreement
Exhibit C License Agreement
Exhibit D Sample Working Capital and Methodology
Exhibit E Transition Services Agreement
DISCLOSURE SCHEDULES
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Schedule 3.2 Authorization of Transaction by Seller
Schedule 3.3 Noncontravention - Seller
Schedule 3.5 Organization, Qualification and Corporate Power of Target
Schedule 3.6 Capitalization - Target
Schedule 3.7 Target Shares
Schedule 3.8 Noncontravention - Target
Schedule 3.9 Financial Statements
Schedule 3.10 Events Subsequent to Most Recent Fiscal Year End
Schedule 3.13(a) Tax Matters
Schedule 3.13(c) Tax Issues
Schedule 3.14 Title to Assets
Schedule 3.15 Real Property
Schedule 3.15(a) Real Property Exceptions
Schedule 3.15(a)(v) Leases, Subleases, Etc.
Schedule 3.16(a) Intellectual Property
Schedule 3.16(b) Intellectual Property Infringement
Schedule 3.16(c) Licensed Intellectual Property
Schedule 3.17(a) Location of Tangible Assets
Schedule 3.17(b) Certain Tangible Assets
Schedule 3.19(a) Certain Contracts
Schedule 3.19(b) Seller Master Agreements
Schedule 3.20 Notes and Accounts Receivable
Schedule 3.21 Powers of Attorney
Schedule 3.22 Insurance
Schedule 3.23 Litigation
Schedule 3.24(a) Employees
Schedule 3.24(b) Workers' Compensation
Schedule 3.25(a) Employee Benefits
Schedule 3.25(c) Multiemployer Plans
Schedule 3.26 Guarantees
Schedule 3.27(b) Environmental Approvals
Schedule 3.27(d) Environmental Condition Exceptions
Schedule 3.28 Reward Programs
Schedule 3.29 Suppliers
Schedule 3.30 Certain Business Relationships
Schedule 3.31 Sufficiency of Assets
Schedule 4.2 Authorization of Transaction by Buyer
Schedule 4.3 Noncontravention - Buyer
Schedule 5.11 Amendments, Releases and Terminations
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as
of November 8, 2004, by and among BARRICK-GNL, LLC, a Nevada limited liability
company ("Buyer"), POSTER FINANCIAL GROUP, INC., a Nevada corporation
("Seller"), and GNL, CORP., a Nevada corporation and a wholly-owned subsidiary
of Seller ("Target"). Buyer, Seller and Target are referred to collectively
herein as the "Parties."
BACKGROUND
Seller owns own all of the outstanding capital stock of Target.
This Agreement contemplates a transaction in which Buyer will
purchase from Seller, and Seller will sell to Buyer, all of the outstanding
capital stock of Target in return for cash.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
AGREEMENT
1. DEFINITIONS
Capitalized terms used herein shall have the meaning set forth on
Exhibit A hereto.
2. PURCHASE AND SALE OF TARGET SHARES
2.1 Basic Transaction. On and subject to the terms and conditions of
this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to
sell to Buyer, all of the Target Shares for the consideration specified in
this Section 2.
2.2 Purchase Price. The purchase price for the Target Shares (the
"Purchase Price") shall be Thirty One Million Dollars ($31,000,000) plus the
dollar value of the Closing Date Working Capital, estimated as provided in
Section 2.3 and adjusted post-Closing as provided in Section 2.4 (as adjusted
post-Closing, the "Final Purchase Price"); provided, however, that if no
adjustment to the Estimated Purchase Price is made pursuant to Section 2.4
post-Closing, then the Estimated Purchase Price shall be the Final Purchase
Price for purposes of this Agreement.
2.3 Estimated Purchase Price.
(a) Not later than two (2) days prior to the Closing Date, Buyer and
Seller shall prepare a statement of the estimated Closing Date Working Capital
of Target (the "Estimated Working Capital"). The Estimated Working Capital
shall be prepared using the Methodology, consistent with the Sample Working
Capital.
(b) The estimate of the Purchase Price for Closing (the "Estimated
Purchase Price") shall be equal to Thirty One Million Dollars ($31,000,000)
plus the Estimated Working Capital.
2.4 Post-Closing Working Capital Adjustment Procedures.
(a) Not later than sixty (60) days after the Closing Date, Buyer will
prepare and deliver to Seller a statement of Working Capital as of 12:01 a.m.
Laughlin, Nevada local time on the Closing Date (the "Closing Date Working
Capital"), which shall be prepared using the Methodology, consistent with the
Sample Working Capital and the Estimated Working Capital. Seller shall have
thirty (30) days following delivery of Buyer's calculation of the Closing Date
Working Capital to give Buyer written notice of any objection thereto (which
notice must contain a statement of the basis of Buyer's objection). In the
event that Seller does not object to Buyer's calculation of the Closing Date
Working Capital, then such calculation will be used in calculating the
adjustment to the Purchase Price hereunder. If Seller gives such notice of
objection, then the Parties shall cooperate in good faith to resolve the
issues for a period of no greater than fifteen (15) days from the date of
Seller's objection. If any issues remain unresolved at the end of such fifteen
(15) day period, then the disputed issues will be submitted to the Accountants
for resolution and final determination of the Closing Date Working Capital.
(b) If the Closing Date Working Capital issues in dispute are
submitted to the Accountants for resolution and final determination: (i) each
Party will furnish to the Accountants such workpapers and other documents and
information relating to the disputed issues as the Accountants may reasonably
request and are available to that Party or its accountants; (ii) each Party
will be afforded the opportunity to present to the Accountants any material
relating to such determination, and to discuss such determination with the
Accountants; (iii) the Accountants will be instructed to use all reasonable
efforts to complete their review and determination within thirty (30) days of
submission of the dispute by Buyer and Seller; (iv) each of Buyer and Seller
will, and will instruct their accounts, employees and advisors to, cooperate
with each other and the Accountants in such manner as may be reasonably
necessary for the Accounts to complete such review and determination within
such thirty (30) day time frame; (v) the determination by the Accountants, as
set forth in a notice delivered to both parties by the Accountants, will be
binding and conclusive on the parties; and (vi) the party that is
mathematically the furthest from the Accountant's final determination shall be
solely responsible for the fees and costs of the Accountants in connection with
such determination;
2.5 Post-Closing Working Capital Adjustment. Within five (5) business
days after any final determination of the Closing Date Working Capital under
Section 2.4:
(a) if the Closing Date Working Capital is less than Estimated
Working Capital, Seller shall deliver to Buyer, by wire transfer of
immediately available funds to an account designated by Buyer in writing, the
amount of such deficiency; and
(b) if the Closing Date Working Capital is greater than Estimated
Working Capital, Buyer shall deliver to Seller, by wire transfer of
immediately available funds to an account designated by Seller in writing, the
amount of such excess.
2.6 Deposit. On the date of this Agreement, Buyer has deposited the
amount of One Million Dollars ($1,000,000) into the Escrow Account with the
Escrow Agent, all pursuant to the terms and conditions of the Escrow Agreement
of even date herewith by and among Buyer, Seller and the Escrow Agent, which
is attached hereto as Exhibit B (the "Escrow Agreement"). Funds in the Escrow
Account will be disbursed in accordance with the terms of the Escrow
Agreement.
2.7 Purchase Price Allocation. As described in Section 3.13, Target
is a Qualified Subchapter S-Corporation Subsidiary (a "QSSS") under the Code
and, as a result, the sale of the Target Shares will be treated as a sale of
the assets of Target for federal income tax purposes. As a result, Buyer and
Seller must prepare and file an allocation of the Purchase Price among the
assets of Target in accordance with the provisions of Section 1060 of the
Code, and the regulations promulgated thereunder. Prior to Closing, Buyer and
Seller shall agree to a proforma allocation of an estimated Purchase Price,
based on Target's financial statements as of mutually agreed upon fiscal
month-end date of Target. Within sixty (60) days after determination of the
Final Purchase Price, Buyer shall adjust such proforma allocation based on the
Final Purchase Price and Target's financial statements as of the Closing Date,
and shall deliver such allocation to Seller in writing. Buyer and Seller agree
to use commercially reasonable efforts to agree upon both the proforma
allocation of such estimated Purchase Price and the final allocation of the
Final Purchase Price, and to use such final allocation in reporting the
transactions contemplated by this Agreement for federal income tax purposes.
In the event that Buyer and Seller fail to agree on such final allocation
within thirty (30) days of Buyer's delivery of the proposed allocation to
Seller, despite their commercially reasonable efforts to do so, Buyer and
Seller shall submit the matter to the Accountants for determination in
accordance with the dispute resolution procedures set forth in Section 2.4(b)
concerning any Working Capital adjustment.
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND TARGET
Seller and Target jointly and severally represent and warrant to
Buyer that the statements contained in this Section 3 are correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date, except as set forth in the disclosure schedules delivered by
Seller to Buyer on the date hereof (the "Disclosure Schedules"). Any matter
disclosed in one Disclosure Schedule shall be deemed disclosed only in
connection with the specific provisions of the Agreement to which it is
referenced or cross-referenced. The Disclosure Schedules are arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 3.
3.1 Organization of Seller. Seller is duly organized, validly
existing, and in good standing under the Laws of the State of Nevada.
3.2 Authorization of Transaction by Seller. Except as set forth on
Schedule 3.2, Seller has full corporate power and authority to execute and
deliver this Agreement and to perform his or its obligations hereunder. Except
as set forth on Schedule 3.2 and except for (i) Governmental Approvals
relating to compliance with Gaming Laws, Gaming Licenses or Liquor Licenses,
(ii) Governmental Approvals relating to compliance with state securities Laws
and (iii) Governmental Approvals as may be required under any Environmental,
Health and Safety Requirements pertaining to any notification, disclosure or
required approval triggered by the Closing or the transactions contemplated by
this Agreement, Seller need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement. This Agreement constitutes the valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms and conditions
except as such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar Laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity (regardless of whether enforcement is considered in a
proceeding at Law or in equity).
3.3 Noncontravention - Seller. Except as set forth on Schedule 3.3
and except in connection with Gaming Laws, Gaming Licenses or Liquor Licenses,
neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will violate any Law or Governmental
Order of any Governmental Entity to which Seller is subject. Except as set
forth on Schedule 3.3, neither the execution and the delivery of this
Agreement by Seller, nor the consummation of the transactions contemplated
hereby, will violate any or any provision of Seller's charter or bylaws or
conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify or cancel any material agreement, contract, lease, license, instrument,
or other arrangement to which Seller is a party or by which Seller is bound or
to which any of Seller's assets is subject.
3.4 Brokers' Fees. Neither Seller nor Target has any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
3.5 Organization, Qualification, and Corporate Power of Target.
Target is a corporation duly organized, validly existing, and in good standing
under the Laws of the State of Nevada, and is duly authorized to conduct
business and is in good standing under the Laws of each jurisdiction where
such qualification is required. Target has full corporate power and authority
necessary to carry on its businesses and to own and use the properties owned
and used by it. Schedule 3.5 lists the current directors and officers of
Target. Seller has delivered to Buyer correct and complete copies of the
charter and bylaws of Target (each as amended to date). The minute books
(containing the records of meetings of the stockholders, the board of
directors, and any committees of the board of directors), the stock
certificate books, and the stock record books of Target are correct and
complete. Target is not in default under or in violation of any provision of
its charter or bylaws. Target has no Subsidiaries.
3.6 Capitalization of Target. The authorized capital stock of Target
consists solely of 2,500 Target Shares, of which 100 Target Shares are issued
and outstanding. All of the issued and outstanding Target Shares have been
duly authorized, are validly issued, fully paid and nonassessable. There are
no outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require Target to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights
with respect to Target. Except as set forth on Schedule 3.6, there are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of Target. There are no outstanding or
authorized bonds, debentures, notes or other interests or securities of Target
having voting rights, or which are convertible into or exchangeable for equity
securities of Target, voting or otherwise.
3.7 Target Shares. Except as set forth on Schedule 3.7, Seller holds
of record and owns beneficially all of the issued and outstanding Target
Shares, free and clear of any restrictions on transfer (other than
restrictions under the Gaming Laws, the Securities Act and state securities
Laws), Taxes, Security Interests, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands. Seller is not a party
to any option, warrant, purchase right, or other contract or commitment that
could require Seller to sell, transfer, or otherwise dispose of any capital
stock of Target (other than this Agreement). Seller is not a party to any
voting trust, proxy, or other agreement or understanding with respect to the
voting of any capital stock of Target.
3.8 Noncontravention - Target. Except as set forth on Schedule 3.8,
neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will (i) violate any Law or
Governmental Order of any Governmental Entity to which Target or its assets is
subject, or any provision of the charter or bylaws of Target, or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel any agreement, contract, lease, license, instrument, or
other arrangement to which Target is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any
Security Interest upon any of its assets). Except as set forth on Schedule 3.8
and except for (i) Governmental Approvals relating to compliance with Gaming
Laws, Gaming Licenses or Liquor Licenses, (ii) Governmental Approvals relating
to compliance with state securities Laws and (iii) Governmental Approvals as
may be required under any Environmental, Health and Safety Requirements
pertaining to any notification, disclosure or required approval triggered by
the Closing or the transactions contemplated by this Agreement, Target is not
required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Entity in order for
the Parties to consummate the transactions contemplated by this Agreement.
3.9 Financial Statements. Attached to Schedule 3.9 are the following
financial statements relating to Target (collectively, the "Financial
Statements") (which shall be updated by Seller and Target with respect to each
fiscal month end occurring between the Signing Date and the Closing Date,
subject to the time needed to produce fiscal month end statements consistent
with Target's past practice): (i) audited combined balance sheets and
statements of operations and changes in division equity, and cash flow as of
and for the fiscal years ended December 31, 2001, December 31, 2002 and
December 31, 2003 (the "Most Recent Fiscal Year End") for Target; and (ii)
unaudited balance sheets as at September 30, 2004 and statements of operations
and cash flow (the "Interim Financial Statements") as of and for the period
from January 23, 2004, to September 30, 2004 (the date of the last fiscal
month end Interim Financial Statements hereunder is the "Most Recent Fiscal
Month End") for Target on a basis combined with related companies. The
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of Target as of such
dates and the results of operations of Target for such periods, are true,
correct and complete, and are consistent with the books and records of Target
(which books and records are correct and complete); provided, however, that
the Most Recent Financial Statements are subject to normal year-end
adjustments (which will not be material, individually or in the aggregate) and
lack footnotes and other presentation items.
3.10 Events Subsequent to Most Recent Fiscal Year End. Except as
disclosed on Schedule 3.10, since the Most Recent Fiscal Year End, the
business and assets of Target have been operated only in the Ordinary Course
of Business, there has been no material adverse change in the assets,
business, financial condition, operations or results of operations of Target,
and to the Knowledge of Seller and Target, there has been no event, fact or
circumstance which would reasonably be expected to have a material adverse
effect on the future operation of the business of Target if conducted in the
same manner as presently conducted, whether insured or not. Except as set
forth on Schedule 3.10 (which shall be separated according to each of the
subsections below, to the extent a Disclosure Schedule is required), and
except for matters undertaken in connection with the Acquisition, since the
Most Recent Fiscal Year End:
(a) Target has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, in the Ordinary Course of Business;
(b) Target has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and licenses)
either involving more than $25,000 or outside the Ordinary Course of Business;
(c) no party (including Target) has accelerated, terminated,
modified, or cancelled any agreement, contract, lease, or license (or series
of related agreements, contracts, leases, and licenses) involving more than
$25,000 to which Target is a party or by which any of them is bound;
(d) Target has not imposed any Security Interest upon any of its
assets, tangible or intangible;
(e) Target has not made any capital expenditure (or series of related
capital expenditures) either involving more than $100,000 or outside the
Ordinary Course of Business;
(f) Target has not made any capital investment in, any loan to, or
any acquisition of the securities or assets of, any other Person (or series of
related capital investments, loans, and acquisitions);
(g) Target has not issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any indebtedness for borrowed money
or capitalized lease obligation either involving more than $25,000 singly or
$100,000 in the aggregate;
(h) Target has not delayed or postponed the payment of accounts
payable and other Liabilities outside the Ordinary Course of Business;
(i) Target has not cancelled, compromised, waived, or released any
right or claim (or series of related rights and claims) either involving more
than $25,000 or outside the Ordinary Course of Business;
(j) Target has not granted any license or sublicense of any rights
under or with respect to any Intellectual Property;
(k) there has been no change made or authorized in the charter or
bylaws of any of Target;
(l) Target has not issued, sold, or otherwise disposed of any of its
capital stock, or granted any options, warrants, or other rights to purchase or
obtain (including upon conversion, exchange, or exercise) any of its capital
stock;
(m) Target has not declared, set aside, or paid any dividend or made
any distribution with respect to its capital stock (whether in cash or in kind)
or redeemed, purchased, or otherwise acquired any of its capital stock;
(n) Target has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its property in excess of $50,000, per
occurrence or in the aggregate;
(o) Target has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees outside the
Ordinary Course of Business;
(p) Target has not entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any existing
such contract or agreement;
(q) Target has not granted any increase in the base compensation of
any of its directors, officers, and employees outside the Ordinary Course of
Business;
(r) Target has not adopted, amended, modified, or terminated, to any
material extent any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee Benefit
Plan);
(s) Target has not made any other material change in employment terms
for any of its directors, officers, and employees outside the Ordinary Course
of Business;
(t) Target has not made or pledged to make any charitable or other
capital contribution outside the Ordinary Course of Business; and
(u) Target has not committed to do any of the foregoing.
3.11 Undisclosed Liabilities. Except as disclosed on Schedule 3.16(b),
Target has no Liability (and to the Knowledge of Seller and Target, there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability), except for (i) Liabilities set forth on the face of the
Interim Balance Sheet (rather than in any notes thereto), (ii) Liabilities
which have arisen after the Most Recent Fiscal Month End in the Ordinary Course
of Business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any material breach of contract, material breach of
warranty, tort, infringement, or material violation of Law) and (iii) other
Liabilities which will not have a material adverse effect on the business,
financial condition, operations or results of operations of Target, or on the
future operation of the business of Target if conducted in the same manner as
presently conducted.
3.12 Legal Compliance. Target and its Affiliates have, and to the
Knowledge of Seller and Target the predecessors of Target have, complied at all
times with all applicable Laws, Governmental Approvals and Governmental Orders,
including without limitation the Gaming Laws, Gaming Licenses and Liquor
Licenses. No action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against Target
alleging any failure so to comply, and neither Seller nor Target has Knowledge
of any such threatened action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand. Without limiting the generality of the
foregoing:
(a) Target has and will, immediately prior to Closing have, in full
force and effect, all Governmental Approvals necessary for it to own and
operate its assets, properties and businesses as now conducted. No action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced against Target relating to the revocation,
suspension, conditioning or failure of renewal of such Governmental Approvals,
and neither Seller nor Target has Knowledge of any such threatened action,
suit, proceeding, hearing, investigation, charge, complaint, claim or demand.
(b) Target has maintained and will at all times prior to Closing
maintain reserves for working capital, capital improvements, replacements and
contingencies to the extent, and in the amounts, required by Gaming Laws,
including any cash reserve requirements thereunder in the Ordinary Course of
Business, consistent with past practice (so long as such Ordinary Course of
Business and past practice is consistent with the minimum requirements of Law).
(c) From and after the Acquisition Target has never, and to the
Knowledge of Seller prior to the Acquisition Target has never: (i) applied for
a casino, racing or other Gaming License, or a Liquor License, which was
denied; (ii) experienced any revocation or failure to renew or maintain any
such license; or (iii) withdrawn or not applied for any such license or renewal
after being informed (orally or in writing) that issuance or renewal of such
license would be denied if applied for.
(d) Target has delivered to Buyer, and will provide Buyer with,
subject to applicable Laws, reasonable access to, copies of all correspondence
with the Nevada Gaming Authorities relating to Target's compliance with the
Gaming Laws and the rules and regulations of the Nevada Gaming Authorities and
the terms of its Gaming License. Neither Seller nor Target has Knowledge of any
threatened action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand relating to the revocation, suspension, conditioning or failure
of renewal of any such Gaming License, or relating to disciplinary action
against Target or any director, officer, employee or stockholder of Target.
(e) Seller and the respective directors, officers, employees and
stockholders of Seller and Target has and will have, immediately prior to
Closing, in full force and effect, all Governmental Approvals necessary for
Seller to own the Target Shares. No action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against Seller and the respective directors, officers, employees and
stockholders of Seller and Target relating to the revocation, suspension,
conditioning or failure of renewal of such Governmental Approvals, and neither
Seller nor Target has Knowledge of any such threatened action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand.
(f) Neither Target, Seller nor any of their respective directors,
officers, employees or stockholders has received any claim, demand, notice,
complaint or order relating to any violation of Gaming Laws in connection with
the operation of Target's businesses. There are no facts relating to the
operation of Target's businesses that, if known to the Nevada Gaming
Authorities, would result in the revocation, suspension, conditioning or
failure of renewal of any Governmental Approvals of Target, Seller or any of
their respective directors, officers, employees or stockholders.
(g) Neither Target, Seller nor, to the Knowledge of Target and Seller,
any of their respective directors, officers, employees or stockholders has made
any payments to any Person in connection with Target's business or assets,
which violate applicable Laws.
3.13 Tax Matters.
(a) Except as set forth on Schedule 3.13(a), all Tax Returns required
to be filed by Target or its Affiliates, as applicable, on or prior to Closing
Date have been properly completed and filed on a timely basis, and all such Tax
Returns were correct and complete in all respects. All Taxes previously due and
owing from or by Target (whether or not shown on any Tax Return) have been
paid. Target is not currently the beneficiary of any extension of time within
which to file any Tax Return. There are no ongoing or scheduled audits or
investigations relating to any Taxes or Tax Returns of Target. Target has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party.
(b) With respect to all Taxes imposed on Target by, or for which
Target is or could be liable to, taxing authorities which relate to taxable
periods or portions of periods ending on or before the Closing Date, all such
amounts required to be paid to taxing authorities or others on or before the
Closing Date have been or shall paid or adequately reflected on the Interim
Financial Statements.
(c) Except as set forth on Schedule 3.13(c), no issues have been
raised (or are currently pending) by any taxing authority in connection with
any Tax Return of Target, and no waivers of statutes of limitation with respect
to any such Tax Returns have been given by Seller, Target or its Affiliates, as
applicable, that have not expired or been revoked and no waivers of statute of
limitations have been requested from Target. Since January 23, 2004, no claim
has ever been made by a taxing authority in a jurisdiction where Target does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. Neither Seller nor Target expects any taxing authority to assess
any additional Taxes for any period for which Tax Returns have been filed.
There is no dispute or claim concerning any Tax Liability of Target either (A)
claimed or raised by any taxing authority in writing or (B) as to which Seller
or Target has Knowledge.
(d) Target has not made any payments, is not obligated to make any
payments, and is not a party to any agreement that under certain circumstances
could obligate it to make any payments that will not be deductible under Code
ss.280G. Target has disclosed on its federal income Tax Returns all positions
taken therein that could give rise to a substantial understatement of federal
income Tax within the meaning of Code ss.6662. Target is not currently a party
to any Tax allocation or sharing agreement, and all of Target's Liabilities
under previous Tax allocation or sharing agreements have been fully terminated
and released. Target has no Liability for the Taxes of any Person (other than
Target) under GNL Stock Purchase Agreement 13 Reg. ss.1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(e) There are no Security Interests for Taxes (other than for current
Taxes not yet due and payable and taxes being contested pursuant to appropriate
proceedings for which adequate reserves have been established) on any of the
assets of Target.
(f) Target is a QSSS under the Code.
(g) Neither Seller nor Target is a person other than a United States
person within the meaning of the Code.
3.14 Title to Assets. Except as set forth on Schedule 3.14, Target has
good and marketable title to, or a valid leasehold interest in, the properties
and assets used by it, located on the Real Property, or shown on the Interim
Balance Sheet or acquired after the date thereof, free and clear of all
Security Interests, except for properties and assets disposed of in the
Ordinary Course of Business since the date of the Interim Balance Sheet.
3.15 Real Property.
(a) Schedule 3.15 lists and describes briefly all real property that
Target owns, excluding the Bullhead Facility. With respect to the Real
Property, except as set forth on Schedule 3.15(a):
(i) Target has good, marketable and indefeasible fee title to
the parcel of real property, free and clear of any Security Interest,
easement, covenant, or other restriction, except for installments of
special assessments not yet delinquent and recorded easements,
covenants, and other restrictions which do not impair the current use,
occupancy, or value, or the marketability of title, of the Real
Property;
(ii) there are no pending or, to the Knowledge of Seller and
Target, threatened condemnation proceedings, lawsuits, or
administrative actions relating to the Real Property or other matters
adversely affecting the current use, occupancy, or value of the Real
Property;
(iii) the buildings and improvements located on the Real
Property are located within the boundary lines of the Real Property,
are not in violation of applicable setback requirements, zoning Laws
and ordinances (and none of the properties or buildings or
improvements thereon are subject to "permitted non-conforming use" or
"permitted nonconforming structure" classifications), and do not
encroach on any easement which may burden the Real Property, and the
Real Property does not serve any adjoining property for any purpose
inconsistent with the use of the Real Property, and the Real Property
is not located within any flood plain or subject to any similar type
restriction for which any permits or licenses necessary to the use
thereof have not been obtained;
(iv) all facilities located on the Real Property have
received all Governmental Approvals required in connection with the
ownership or operation thereof and have been operated and maintained
in accordance with applicable Laws, rules, and regulations, including
without limitation as may be applicable to the operation of hotels,
restaurants, casinos and businesses generally;
(v) except as disclosed on Schedule 3.15(a)(v) and other than
those with respect to guests, customers and invitees of the hotel,
casino and restaurant operations located on the Real Property in the
Ordinary Course of Business, there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to any
party or parties the right of use or occupancy of any portion of the
Real Property;
(vi) there are no outstanding options or rights of first
refusal to purchase the Real Property, or any portion thereof or
interest therein;
(vii) other than those with respect to guests, customers and
invitees of the hotel, casino and restaurant operations located on the
Real Property in the Ordinary Course of Business, and other than
tenants under any leases disclosed in Schedule 3.15(a)(v) who are in
possession of space to which they are entitled, there are no parties
other than Target in possession of the Real Property;
(viii) all facilities located on the Real Property are
supplied with utilities and other services necessary for the operation
of such facilities, including gas, electricity, water, telephone,
sanitary sewer, and storm sewer, all of which services are adequate in
accordance with their current use and all applicable Laws, ordinances,
rules, and regulations and are provided via public roads or via
permanent, irrevocable, appurtenant easements benefitting the Real
Property; and
(ix) the Real Property abuts on and has direct vehicular
access to a public road, or has access to a public road via a
permanent, irrevocable, appurtenant easement benefitting the parcel of
real property, and access to the property is provided by paved public
right-of-way with adequate curb cuts available.
(b) There is no real property leased or subleased to Target in
connection with the operation of its assets, properties and businesses.
3.16 Intellectual Property.
(a) Target owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property necessary for
the operation of the businesses of Target as presently conducted, all of which
are listed and described on Schedule 3.16(a). Except with respect to the
Intellectual Property which is the subject of the License Agreement (the
"Excluded IP"), each item of Intellectual Property owned or used by Target
immediately prior to the Closing hereunder will be owned or available for use
by Target on substantially similar terms and conditions immediately subsequent
to the Closing hereunder. Target has taken all necessary action to maintain and
protect each item of Intellectual Property that it owns or uses.
(b) Except as set forth on Schedule 3.16(b), Target has not interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of third parties, and neither Seller nor Target
have ever received or has any Knowledge of any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that any of Target must
license or refrain from using any Intellectual Property rights of any third
party). To the Knowledge of Seller and Target, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of Target.
(c) Schedule 3.16(c) identifies each item of Intellectual Property
that any third party owns and that Target uses pursuant to license, sublicense,
agreement, or permission. Seller has delivered to Buyer correct and complete
copies of all such licenses, sublicenses, agreements, and permissions (as
amended to date). With respect to each item of Intellectual Property required
to be identified in Schedule 3.16(c):
(i) the license, sublicense, agreement, or permission
covering the item is the legal, valid and binding obligation of
Target, and, to the Knowledge of Seller and Target (which Knowledge
shall not include, for purposes of this subsection, any requirement of
investigation other than an internal investigation of Seller and
Target), the legal, valid and binding obligation of the other parties
thereto, and is in full force and effect;
(ii) except with respect to the Excluded IP, the license,
sublicense, agreement, or permission will continue to be legal, valid
and binding obligation of Target, and, to the Knowledge of Seller and
Target (which Knowledge shall not include, for purposes of this
subsection, any requirement of investigation other than an internal
investigation of Seller and Target), any, the legal, valid and binding
obligation of the other parties thereto, and in full force and effect
on substantially similar terms following the consummation of the
transactions contemplated hereby;
(iii) except as set forth in Section 3.16(b), Target is not
in breach or default the license, sublicense, agreement, or
permission, and no event has occurred which with notice or lapse of
time would constitute a breach or default or permit termination,
modification, or acceleration thereunder;
(iv) no other party to the license, sublicense, agreement, or
permission is in material breach or default thereunder, and no event
has occurred which with notice or lapse of time would constitute a
material breach or default or permit termination, modification, or
acceleration thereunder;
(v) Target has not repudiated any provision of the license,
sublicense, agreement, or permission;
(vi) to the Knowledge of Seller and Target (which Knowledge
shall not include, for purposes of this subsection, any requirement of
investigation other than an internal investigation of Seller and
Target), no other party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
(vii) with respect to each sublicense, the representations
and warranties set forth in subsections (i) through (iv) above are
true and correct with respect to the underlying license;
(viii) to the Knowledge of Seller and Target, the underlying
items of Intellectual Property are not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(ix) to the Knowledge of Seller and Target, no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or
demand is pending or threatened which challenges the legality,
validity, or enforceability of the underlying item of Intellectual
Property; and
(x) Target has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
(d) With respect to all trade secrets and confidential business
information included within Target's Intellectual Property, such as the "Golden
Nugget Laughlin Customer Information" referenced on Schedule 3.16(a), Target
has the absolute right to use such trade secrets and confidential business
information, and the documentation relating to such trade secret and
confidential business information is current, accurate and sufficient in detail
and content to identify and explain it and to allow its full and proper use
without reliance on the knowledge or memory of any individual.
(e) Use by Target of the Intellectual Property listed and described on
Schedule 3.16(a) in a manner consistent with the operation of the businesses of
Target as presently conducted will not, except as disclosed on Schedule
3.16(b), interfere with, infringe upon, misappropriate, or otherwise come into
conflict with, any Intellectual Property rights of third parties. Except as
disclosed on Schedule 3.16(b), and to the Knowledge of Seller and Target, use
by Target of the Intellectual Property listed and described on Schedule 3.16(c)
does not and will not interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual Property rights of third
parties as a result of the continued operation of its businesses as presently
conducted.
3.17 Tangible Assets.
(a) Target owns or leases all buildings, machinery, equipment, and
other tangible assets necessary for the conduct of its businesses as presently
conducted. Each such tangible asset is free from defects (patent and latent),
has been maintained in accordance with normal industry practice, is in good and
safe operating condition and repair (subject to normal wear and tear which
would not negate the foregoing statement regarding condition and repair), and
is suitable for the purposes for which it presently is used. Except as
disclosed on Schedule 3.17(a), all such tangible assets are located at the Real
Property.
(b) Schedule 3.17(b) sets forth (i) each owned tangible asset (other
than inventory and supplies) having an acquisition cost of $50,000 or greater,
or which has an acquisition cost of less than $50,000 but which is material to
the business and operations of Target; (ii) each leased tangible asset having a
lease cost of $25,000 per year or which has a yearly lease cost of less than
$25,000 but which is material to the business and operations of Target; and
(iii) each live gaming device, each electronic gaming device and each item of
gaming-related equipment.
3.18 Inventory and Supplies. Target maintains and currently possesses
sufficient items of inventory and supplies for the normal operation of its
business in the Ordinary Course of Business. To the Knowledge of Seller and
Target, no such items of inventory and supplies are obsolete, damaged, or
defective, subject only to the reserve for inventory writedown set forth on the
face of the Interim Balance Sheet (rather than in any notes thereto) and as
adjusted for the passage of time through the Closing Date consistent with the
past practice of Target.
3.19 Contracts.
(a) Schedule 3.19(a) lists the following contracts and other
agreements to which Target is a party (separated according to each of the
subsections below, to the extent a Disclosure Schedule is required):
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $25,000 per annum or is otherwise material to
the business and operations of Target;
(ii) any agreement (or group of related agreements) for the
purchase or sale of inventory, commodities, supplies, products, or
other personal property, or for the GNL Stock Purchase Agreement 17
furnishing or receipt of services, the performance of which will
extend over a period of more than one year, involving consideration in
excess of $10,000 or is otherwise material to the business and
operations of Target;
(iii) any agreement concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements) under
which Target has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease obligation,
in excess of $100,000 or under which it has imposed a Security
Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement with Seller and its Affiliates;
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, parttime, consulting, or other basis providing annual
compensation in excess of $50,000 or providing severance benefits;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xi) any agreement under which the consequences of a default
or termination could have a material adverse effect on the business,
financial condition, operations or results of operations of Target, or
which would reasonably be expected to have a material adverse effect
on the future operation of the business of Target if conducted in the
same manner as presently conducted, and which is not otherwise
disclosed to Buyer in a Disclosure Schedule; or
(xii) any other agreement (or group of related agreements)
the performance of which involves consideration in excess of $25,000
or is otherwise material to Target and which is not otherwise
disclosed to Buyer in a Disclosure Schedule.
(b) Schedule 3.19(b) identifies all corporate-level contracts and
agreements of Seller or any Affiliate of Seller to which Target is a party or
under which Target receives goods, services or benefits or is otherwise
obligated, and under which contract or agreement Target will no longer be a
party or receive goods, services, or benefits after Closing (each, a "Seller
Master Agreement").
(c) Seller has delivered to Buyer a correct and complete copy of each
written agreement listed in Schedule 3.19(a) and a written summary setting
forth the terms and conditions of each oral agreement referred to in Schedule
3.19(a). With respect to each such agreement which is listed or required to be
listed on Schedule 3.19(a): (i) the agreement is the legal, valid and binding
obligation of Target and is in full force and effect; (ii) to the Knowledge of
Seller and Target (which Knowledge shall not include, for purposes of this
subsection, any requirement of investigation other than an internal
investigation of Seller and Target), the agreement is the legal, valid and
binding obligation of the other parties thereto; (iii) the agreement will
continue to be the legal, valid and binding obligation of Target, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (iv) to the Knowledge of Seller and Target
(which Knowledge shall not include, for purposes of this subsection, any
requirement of investigation other than an internal investigation of Seller and
Target), the agreement will continue to be the legal, valid and binding
obligation of the other parties thereto following the consummation of the
transactions contemplated hereby; (v) no party is in material breach or
default, and no event has occurred which with notice or lapse of time would
constitute a material breach or default, or permit termination, modification,
or acceleration, under the agreement; (vi) Target has not repudiated any
provision of the agreement; and (vii) to the Knowledge of Seller and Target
(which Knowledge shall not include, for purposes of this subsection, any
requirement of investigation other than an internal investigation of Seller and
Target), no other party has repudiated any provision of the agreement.
3.20 Notes and Accounts Receivable. All notes and accounts receivable
of Target are reflected properly on its books and records, are valid
receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the Interim Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with
the past practice of Target. Schedule 3.20 sets forth a list and aging of all
accounts and notes receivable of Target, as of the Most Recent Fiscal Month
End.
3.21 Powers of Attorney. Except as set forth on Schedule 3.21, there
are no outstanding powers of attorney executed on behalf of Target.
3.22 Insurance.
(a) Schedule 3.22 sets forth a list and description of each insurance
policy (including policies providing property, casualty, liability, and
workers' compensation coverage and bond and surety arrangements) to which
Target is a party, a named insured, or otherwise the beneficiary of coverage,
which description includes (i) the identity of the insurer and any insurance
agent for such policy, (ii) the name of the policyholder, and the name of each
covered insured; (iii) the policy number and the period of coverage; and (iv)
the scope (including an indication of whether the coverage was on a claims
made, occurrence, or other basis) and amount of coverage. Schedule 3.22 also
describes any self-insurance arrangements affecting Target.
(b) With respect to each such insurance policy: (i) the policy is in
full force and effect; (ii) neither Target nor any other party to the policy is
in breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse
of time, would constitute such a breach or default, or permit termination,
modification, or acceleration, under the policy; and (iii) to the Knowledge of
Seller and Target, no party to the policy has repudiated any provision thereof.
3.23 Litigation. Schedule 3.23 sets forth each instance in which
Target (i) is subject to any outstanding Governmental Order or (ii) is a party
to or, to the Knowledge of Seller and Target, is threatened to be made a party
to any action, suit, proceeding, hearing, or investigation of, in, or before
any Governmental Entity or before any arbitrator. Except as disclosed on
Schedule 3.23, all of the actions, suits, proceedings, hearings, and
investigations have arisen in the Ordinary Course of Business and none of the
actions, suits, proceedings, hearings, and investigations set forth in Schedule
3.23 would reasonably be expected, individually or in the aggregate, to have a
material adverse effect on the assets, business, financial condition,
operations or results of operations of Target, or the future operation of the
business of Target if conducted in the same manner as presently conducted.
Except as disclosed on Schedule 3.16(b), neither Seller nor Target has any
Knowledge of any Basis for any specific action, suit, proceeding, hearing, or
investigation which may be brought or threatened against Target and which would
reasonably be expected, individually or in the aggregate, to have a material
adverse effect on the assets, business, financial condition, operations or
results of operations of Target, or the future operation of the business of
Target if conducted in the same manner as presently conducted.
3.24 Employees.
(a) Schedule 3.24(a)(i) sets forth the name, position and current
annual compensation of all current employees of Target, together with the date
and amount of the last compensation increase for each such person. Except as
set forth on Schedule 3.24(a)(i), all employees of Target are employees at
will. Except as set forth on Schedule 3.24(a)(ii), no executive, key employee,
or group of employees has given notice of intent to terminate employment with
Target, and to the Knowledge of Seller and Target, no executive, key employee,
or group of employees has any plans to terminate employment with Target.
Schedule 3.24(a)(iii) lists those employees who are absent from work on short
or long-term disability leave or leave under the Family and Medical Leave Act
of 1993 or has notified the Company of his or her intent to take such leave.
There have been no actual or threatened labor disputes or work stoppages within
the last three years, and, to the Knowledge of Seller and Target, none are
expected. None of Target's employees are represented by a union and, to the
Knowledge of Seller and Target, no union organizing activities have taken or
are taking place.
(b) Schedule 3.24(b) sets forth the worker's compensation losses for
Target since January 23, 2004. Target has previously delivered to Buyer all
reports and filings made by Target pursuant to the Occupational Safety and
Health Act and similar state and local Laws, regulations and orders since
January 23, 2004.
(c) Target is not a party to or bound by any collective bargaining
agreement, nor has Target experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes. Target has not
committed any unfair labor practice.
3.25 Employee Benefits.
(a) Schedule 3.25(a) lists each Employee Benefit Plan that Target
maintains, to which Target contributes or has any obligation to contribute, or
in which any employee of Target participates:
(i) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all
respects with the applicable requirements of ERISA, the Code, and
other applicable Laws.
(ii) All required reports and descriptions (including Form
5500 Annual Reports, summary annual reports, PBGC-1's, Forms 1099R,
any required independent audit and summary plan descriptions) have
been timely filed and distributed appropriately with respect to each
such Employee Benefit Plan. The requirements of COBRA have been met
with respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(iii) All contributions (including all employer contributions
and employee salary reduction contributions) which are due have been
paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any period ending on or before
the Closing Date which are not yet due have been paid to each such
Employee Pension Benefit Plan or accrued in accordance with the past
practice of Target. All premiums or other payments for all periods
ending on or before the Closing Date have been or will be paid with
respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan.
(iv) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan meets the requirements of a "qualified plan"
under Code ss.401(a), has received, within the last two years, a
favorable determination letter from the Internal Revenue Service that
it is a "qualified plan," and Seller is not aware of any facts or
circumstances that could result in the revocation of such
determination letter.
(v) The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested
and nonvested Liabilities thereunder determined in accordance with
PBGC methods, factors, and assumptions applicable to an Employee
Pension Benefit Plan terminating on the date for determination.
(vi) Seller has delivered to Buyer correct and complete
copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue
Service, the most recent Form 5500 Annual Report, and all related
trust agreements, insurance contracts, and other funding agreements
which implement each such Employee Benefit Plan.
(b) With respect to each Employee Benefit Plan that any of Target or
any ERISA Affiliate maintains or ever has maintained or to which any of them
contributes, ever has contributed, or ever has been required to contribute:
(i) No such Employee Benefit Plan which is an Employee
Pension Benefit Plan (other than any Multiemployer Plan) has been
completely or partially terminated or been the subject of a Reportable
Event as to which notices would be required to be filed with the PBGC.
No proceeding by the PBGC to terminate any such Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been instituted
or, to the Knowledge of Seller and Target, threatened.
(ii) There have been no Prohibited Transactions with respect
to any such Employee Benefit Plan. No Fiduciary has any Liability for
breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of any
such Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment of
the assets of any such Employee Benefit Plan (other than routine
claims for benefits) is pending or, to the Knowledge of Seller and
Target, threatened. Neither Seller nor Target has any Knowledge of any
Basis for any such action, suit, proceeding, hearing, or
investigation.
(iii) Target has not incurred, and neither Seller nor Target
has any reason to expect that Target will incur, any Liability to the
PBGC (other than PBGC premium payments) or otherwise under Title IV of
ERISA (including any withdrawal liability as defined in ERISA ss.4201)
or under the Code with respect to any such Employee Benefit Plan which
is an Employee Pension Benefit Plan. No Employee Benefit Plan is
subject to Title IV of ERISA. No asset of Seller or Target is subject
to a lien under xx.xx. 4064 or 4068 of Title IV of ERISA.
(c) Target does not contribute to, has never contributed and has never
been required to contribute to, and has no Liability with respect to any
Mulitemployer Plan. Except as otherwise disclosed in Schedule 3.25(c), no
members of the Controlled Group other than Target contributes to, ever has
contributed to, or ever has been required to contribute to any Multiemployer
Plan. With respect to the Multiemployer Plans listed on Schedule 3.25(c), (i)
no member of the Controlled Group has made or suffered a "complete withdrawal"
or a "partial withdrawal," as such terms are respectively defined in sections
4203 and 4205 of ERISA, (ii) no member of the Controlled Group has any
withdrawal liability as defined in ERISA ss.4201 under any Multiemployer Plan,
(iii) no event has occurred that represents a material risk of a partial
withdrawal, (iv) no member of the Controlled Group has any contingent Liability
under section 4204 of ERISA, (iv) to the Knowledge of Seller or any member of
the Controlled Group, no circumstances exist that present a material risk that
any such Multiemployer Plan will go into reorganization and no liability under
Title IV of ERISA or Section 302 of ERISA has been incurred by Seller or any
member of the Controlled Group that has not been satisfied in full within the
period permitted by applicable law.
(d) Target does not maintain or contribute to, has never maintained or
contributed to, or ever has been required to, and has never been required to
maintain or contribute to any Employee Welfare Benefit Plan providing medical,
health, or life insurance or other welfare-type benefits for current or future
retired or terminated employees, their spouses, or their dependents (other than
in accordance with COBRA).
(e) Neither Seller nor Target will incur any liability under any
Employee Benefit Plan or similar arrangement as a result of the consummation of
the transactions contemplated by this Agreement. Any Employee Benefit Plan
listed on Schedule 3.25 can be terminated as of the Closing Date without
resulting in any liability to Buyer for additional contributions, penalties,
premiums, fees, fines, excise taxes or any other Liabilities.
3.26 Guaranties. Except as set forth on Schedule 3.26, Target is not a
guarantor or otherwise is liable for any Liability or obligation (including
indebtedness) of any other Person.
3.27 Environmental, Health, and Safety Matters.
(a) Target, its Affiliates and, to the Knowledge of Seller and Target,
Target's predecessors have complied and are in compliance with all
Environmental, Health, and Safety Requirements.
(b) Without limiting the generality of the foregoing, Target has
obtained and complied with, and is in compliance with, all Governmental
Approvals that are required pursuant to Environmental, Health, and Safety
Requirements for the occupation and operation of the Real Property and the
facilities and businesses located on the Real Property. All such Governmental
Approvals are listed and described on Schedule 3.27(b).
(c) Neither Target, its Affiliates nor, to the Knowledge of Seller and
Target, Target's predecessors have received any written or oral notice, report
or other information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements, or any Liabilities or potential
Liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations, relating to
Target or its facilities arising under Environmental, Health, and Safety
Requirements.
(d) Except as disclosed on Schedule 3.27(d), none of the following
exists at the Real Property or at any property or facility now or previously
owned or operated by Target: (i) underground storage tanks; (ii) groundwater or
monitoring xxxxx; (iii) asbestos-containing material in any form or condition;
(iv) materials or equipment containing polychlorinated biphenyls; (v)
landfills, surface impoundments, or disposal areas; or (vi) mold contamination.
(e) Target, its Affiliates and, to the Knowledge of Seller and Target,
Target's predecessors have not treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any substance,
including without limitation any hazardous substance, or owned or operated any
property or facility (and no such property or facility is contaminated by any
such substance) in a manner that has given or would give rise to liabilities,
including any liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, pursuant
to the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Solid Waste Disposal Act, as amended, or any other
Environmental, Health, and Safety Requirements.
(f) Neither this Agreement nor the consummation of the transaction
that is the subject of this Agreement will result in any obligations for site
investigation or cleanup, or notification to or consent of government agencies
or third parties, pursuant to any of the so-called "transactiontriggered" or
"responsible property transfer" Environmental, Health, and Safety
Requirements.
(g) Neither Target, its Affiliates nor, to the Knowledge of Seller
and Target, Target's predecessors have, either expressly or by operation of
Law, assumed or undertaken any liability of any other Person relating to
Environmental, Health, and Safety Requirements, including without limitation
any obligation for corrective or remedial action.
(h) No facts, events or conditions relating to the past or present
facilities, properties or operations of Target, its Affiliates or, to the
Knowledge of Seller and Target, Target's predecessors will prevent, hinder or
limit continued compliance with Environmental, Health, and Safety
Requirements, give rise to any investigatory, remedial or corrective
obligations pursuant to Environmental, Health, and Safety Requirements, or
give rise to any other Liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental, Health, and Safety
Requirements, including without limitation any relating to onsite or offsite
releases or threatened releases of hazardous materials, substances or wastes,
personal injury, property damage or natural resources damage.
3.28 Reward Programs. Schedule 3.28 lists and describes all reward,
rebate, bonus, price discount, promotional discount and similar programs
(each, a "Reward Program") of Target under which any customer or employee of
Target is entitled to receive any consideration or benefit thereunder. Such
schedule provides the aggregate current dollar value of the consideration or
benefit that each of Target's customers (as a group) or employees (as a group)
is entitled to receive under each applicable Reward Program. Target's
liabilities with respect to Reward Programs are reflected in and have been
accrued for in the Financial Statements in accordance with GAAP.
Notwithstanding the foregoing, Buyer understands and agrees that Buyer shall
not receive, and shall not be entitled to, any proprietary or confidential
information concerning the Reward Programs, including, without limitation,
customer or employee names or the current dollar value of the consideration or
benefit each individual customer or employee is entitled to receive under each
Reward Program, until the Closing shall have occurred.
3.29 Suppliers. Schedule 3.29 accurately lists the 20 largest
suppliers (measured by dollar volume and by year) to Target from whom
purchases have been made at any time during 2002, 2003 and year-to-date 2004,
together with aggregate purchases by supplier during such periods (which
information shall be segregated by year). To the Knowledge of Target, no such
supplier has threatened to cease or materially alter their business with
Target after the Closing.
3.30 Certain Business Relationships. Except as described on Schedule
3.30 and except for those assets and services which will be covered by the
Transition Services Agreement, neither Seller nor its Affiliates have been
involved in any business arrangement or relationship with Target within the
past 12 months, and neither Seller nor its Affiliates owns any asset, tangible
or intangible, which is used in the business of Target. Neither Seller nor any
director or employee of Target has any direct or indirect interest in any
competitor, supplier, customer, lessee or lessor, or in any other person with
whom Target maintains a material business relationship.
3.31 Sufficiency of Assets. Except for (i) the items set forth in
Schedule 3.31, (ii) the Seller Master Agreements and (iii) those assets and
services which are covered by the Transition Services Agreement and the
License Agreement, and subject to Target's continued compliance with Gaming
Laws, Target currently owns, licenses or leases from Persons that are not
Affiliates of Seller all assets and properties necessary and sufficient for
the operation of Target and its businesses as presently conducted.
3.32 Disclosure.
(a) The representations and warranties contained in this Section 3 do
not (i) contain any untrue statement of a fact which makes the statements or
information contained in this Section 3 misleading or (ii) omit to state any
fact necessary in order to make the statements and information contained in
this Section 3 not misleading.
(b) Buyer acknowledges that Seller has not provided Buyer with certain
documents or information relating to Target or the assets or businesses of
Target, consisting of any documents or information which are (i) prohibited
from being disclosed to Buyer due to confidentiality obligations of Seller or
Target or (ii) covered by attorney-client or other applicable privilege.
Notwithstanding the foregoing, Seller and Target jointly represent and warrant
that no such documents or information, if disclosed to Buyer, would set forth
any facts or circumstances which would (1) cause the statements set forth in
Section 3.32(a) to be untrue or misleading, (2) reasonably be expected to have
a material adverse effect on the assets, business, financial condition,
operations or results of operations of Target, or the future operation of the
business of Target if conducted in the same manner as presently conducted, (3)
disclose a contract or agreement containing any material indemnification
obligation of Target, (4) disclose a contract or agreement that was entered
into outside the Ordinary Course of Business of Target, or (5) disclose a
contract or agreement, or a group of related agreements, the performance of
which involves consideration in excess of $25,000, or is otherwise material to
the business and operations of Target, and which cannot be terminated at the
option of Target on notice of sixty (60) days or less.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that the statements contained
in this Section 4 are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date, except as set forth
in Annex II attached hereto.
4.1 Organization of Buyer. Buyer is a limited liability company duly
organized, validly existing, and in good standing under the Laws of the State
of Nevada.
4.2 Authorization of Transaction. Buyer has full limited liability
company power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms and conditions except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar Laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of whether
enforcement is considered in a proceeding at Law or in equity). Except as set
forth on Schedules 3.8 and 4.2, and except for (i) Governmental Approvals
relating to compliance with Gaming Laws, Gaming Licenses or Liquor Licenses,
(ii) Governmental Approvals relating to compliance with state securities Laws
and (iii) Governmental Approvals as may be required under any Environmental,
Health and Safety Requirements pertaining to any notification, disclosure or
required approval triggered by the Closing or the transactions contemplated by
this Agreement, Buyer need not give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement.
4.3 Noncontravention. Except as set forth on Schedule 4.3 and except
in connection with Gaming Laws, Gaming Licenses or Liquor Licenses, neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will violate any Governmental Order of any
Governmental Entity to which Buyer is subject. Except as set forth on Schedule
4.3, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will violate any
provision of Buyer's charter or bylaws or conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel under any agreement,
contract, lease, license, instrument, or other arrangement to which Buyer is a
party or by which it is bound or to which any of its assets is subject.
4.4 Brokers' Fees. Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
4.5 Financing. Buyer has obtained that certain Senior Financing
Commitment Letter, dated October 19, 2004, from Fortress Credit Corp. (the
"Commitment Letter"), which together with equity funds of Xxxxxxx Gaming Corp.
provides for the financing necessary to consummate the acquisition of the
Target Shares and to pay Buyer's portion of associated costs and expenses in
connection therewith. As of the date of this Agreement and as of the Closing
Date, the Commitment Letter together with its exhibits accurately sets forth
the material terms of the financing from Fortress Credit Corp. as contemplated.
The Commitment Letter has not been amended, modified, withdrawn, terminated or
replaced, except that it may be amended or replaced in a manner which (a) does
not adversely affect in a material manner the ability of Buyer to consummate
the acquisition of the Target Shares or (b) is not reasonably likely to cause a
material delay in the consummation of the acquisition of the Target Shares.
Buyer has delivered true, accurate and complete copies of the Commitment Letter
(and any amendment or replacement thereof, if any) to Seller.
4.6 Licensing. Buyer has no reason to expect that all Governmental
Approvals, including, without limitation, the Gaming Licenses and Liquor
Licenses, reasonably necessary for it to own and operate the gaming and liquor
operations of Target immediately after Closing will not be obtained.
4.7 Litigation. There is no action, suit or proceeding, claim,
arbitration or investigation, including indemnification matters, against Buyer
or any property or asset of Buyer, pending, or as to which Buyer has received
notice of assertion, or to the Knowledge of Buyer, threatened against, Buyer or
any property or asset of Buyer, before any Governmental Entity or arbitration
body, the adverse determination of which would reasonably be expected to have,
individually or in the aggregate, a material adverse effect on Buyer's ability
to consummate the acquisition of the Target Shares, and there is no
Governmental Order entered by or with any Governmental Entity or arbitration
award outstanding against Buyer or any property or asset of Buyer which would
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on Buyer's ability to consummate the acquisition of the Target
Shares and the transactions contemplated by this Agreement.
4.8 Investment Intent. Buyer understands that the Target Shares may
not be sold, transferred or otherwise disposed of, without registration under
the Securities Act or a valid exemption from registration under the Securities
Act and that in the absence of an effective registration statement covering the
Target Shares or a valid exemption from registration under the Securities Act,
the Target Shares must be held indefinitely. Buyer is acquiring the Target
Shares for its own account solely for the purpose of investment and not with a
view to, or for offer or sale in connection with, any distribution thereof.
5. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
5.1 General. Each of the Parties will use commercially reasonable
efforts to take all action and to do all things necessary, and to cooperate,
in order to consummate and make effective the transactions contemplated by
this Agreement (including satisfaction, but not waiver, of the closing
conditions set forth in Section 7).
5.2 Notices and Consents. Target will give any notices to third
parties, and will use commercially reasonable efforts to obtain any third
party consents that Buyer may request in connection with the Closing. Each of
the Parties will (and Seller will cause Target to) give any notices to, make
any filings with the appropriate Governmental Entities, and use commercially
reasonable efforts to obtain any Governmental Approvals in connection with the
Closing.
5.3 Operation of Business. Except with the prior written consent of
Buyer, which shall not be unreasonably withheld or delayed, Target will not
engage in any practice, take any action, or enter into any transaction outside
the Ordinary Course of Business. Without limiting the generality of the
foregoing, except with the prior written consent of Buyer, which shall not be
unreasonably withheld or delayed, Target will not declare, set aside, or pay
any dividend or make any distribution with respect to its capital stock or
redeem, purchase, or otherwise acquire any of its capital stock, or to
otherwise engage in any practice, take any action, or enter into any
transaction, of the sort described in Section 3.10, or to agree or obligate
itself with respect thereto.
5.4 Preservation of Business. Target will keep its business and
properties substantially intact, consistent with past practice (so long as such
practice is commercially reasonable), including its present operations,
physical facilities, working conditions, and relationships with lessors,
licensors, suppliers, customers, and employees.
5.5 Full Access. Target will, subject to all applicable Laws,
including without limitation the Gaming Laws, and subject to the provisions of
Section 3.28, permit representatives of Buyer to have access at all reasonable
times and upon prior notice, and in a manner so as not to interfere with the
normal business operations of Target, to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents of or
pertaining to Target.
5.6 Confidential Agreements. Seller and Target will use commercially
reasonable efforts to obtain such consents as may be reasonably necessary to
disclose to Buyer any contract or agreement not previously disclosed to Buyer
due to the confidentiality obligations of Seller and Target (as described in
Section 3.32(b)).
5.7 Notice of Developments. Target and/or Seller, as applicable, will
give prompt written notice to Buyer of any material adverse development causing
a breach of any of the representations and warranties in Section 3. Buyer will
give Seller prompt written notice of any material adverse development causing a
breach of any of the representations and warranties in Section 4. No disclosure
by any Party pursuant to this Section 5.7, however, shall be deemed in and of
itself to amend or supplement any Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
5.8 Exclusivity. Neither Seller, Target nor any of their Affiliates,
directors, officers or employees will (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any capital stock or other voting securities, or any substantial portion of
the assets, of Target (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. Seller will not vote the Target
Shares in favor of any such acquisition structured as a merger, consolidation,
or share exchange. Seller will notify Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
5.9 Confidentiality. Prior to Closing, the Parties agree to be bound
by the obligations set forth in that certain Confidentiality Agreement dated
September 8, 2004, by and between Target and Xxxxxxx Gaming Corp. (an Affiliate
of Buyer), and on the Signing Date Buyer will execute and deliver a joinder to
such Confidentiality Agreement. At Closing, the Parties agree that such
Confidentiality Agreement shall automatically terminate and be of no further
force and effect.
5.10 Bullhead, Arizona Facility. Target will take all action necessary
or desirable to transfer the assets, Liabilities and obligations of Target
relating to the Nevada Club Inn in Bullhead City, Arizona (the "Bullhead
Facility") out of Target.
5.11 Amendments, Releases and Terminations. Seller and Target will
take all action necessary or desirable to amend, release or terminate the
obligations of Target under any of the following contracts, agreements or
arrangements of Seller and/or Target, such that after the Closing, Target will
have no further obligation thereunder and will be released from any liability
or obligation thereunder that arose prior to Closing (whether or not asserted
or accrued prior to Closing): (a) all Seller Master Agreements; (b) all
contracts, agreements or arrangements reflecting liabilities or obligations
relating to the Bullhead Facility; (c) any contracts, agreements or
arrangements between Target and any of Seller or its Affiliates; (d) any
contracts, agreements or arrangements whereby Target guarantees any liability
or obligation of Seller or its Affiliates, or subjects Target's assets to
Security Interests for the benefit of Seller or its Affiliates; (e) any other
contracts, agreements or arrangements set forth on Schedule 5.11 or identified
as such in writing by Buyer prior to Closing; and (f) any powers of attorney
granted by Target in connection with any of the foregoing.
5.12 Seller Master Agreements and Other Shared Agreements. To the
extent that Buyer reasonably believes that Target will need to continue to
access or utilize the goods, services or benefits provided by or represented by
any particular Seller Master Agreement or other agreement which is shared
between Target and any other Affiliate of Seller after Closing, the Parties
will use commercially reasonable efforts to work together prior to Closing to
develop and implement a plan, method or arrangement by which Buyer may obtain
such goods, services or benefits, or substantially similar goods, services or
benefits after Closing. Such plan, method or arrangement may include, without
limitation, (i) making such goods, services or benefits part of and subject to
the Transition Service Agreement, (ii) contacting the other parties to such
Seller Master Agreement or shared agreement such that Buyer may (1) enter into
a contract or agreement directly with such party, (2) continue to utilize the
Seller Master Agreement or shared agreement for some limited time period after
Closing, upon terms and conditions mutually acceptable to the Parties and the
other parties thereto, or (3) split the contract so each of Target GNL Stock
Purchase Agreement 27 and Seller or its Affiliates are party to a separate,
independent contract or agreement, or (iii) Buyer seeking to replace such
goods, services or benefits with a new contract, agreement or arrangement.
5.13 Disclosure Schedule Updates.
(a) Prior to Closing, Seller and Target shall deliver to Buyer any
updates to the Disclosure Schedules of Seller and Target as may be necessary to
make the representations and warranties of Seller and Target hereunder true and
correct as of the Closing Date. Notwithstanding anything herein to the
contrary, no such updates or disclosures shall cure any breaches of
representations and warranties by Seller that may have existed as of the
Signing Date; provided, however, that any such breach may be waived in writing
by Buyer, in its sole discretion.
(b) Prior to Closing, Buyer shall deliver to Seller and Target any
updates to the Disclosure Schedules of Buyer as may be necessary to make the
representations and warranties of Buyer hereunder true and correct as of the
Closing Date. Notwithstanding anything herein to the contrary, no such updates
or disclosures shall cure any breaches of representations and warranties by
Buyer that may have existed as of the Signing Date; provided, however, that any
such breach may be waived in writing by Seller and Target, in their sole
discretion.
5.14 License Agreement, Transition Services Agreement and
Employee/Benefits Transition.
(a) The Parties hereby covenant and agree to prepare, negotiate in
good faith, and finalize (i) the License Agreement, (ii) the form of the
Transition Services Agreement and (iii) certain terms, conditions, covenants
and agreements relating to Buyer's contact with Target's employees prior to
Closing and the coordination and transition of such employees from the
pre-Closing Employee Benefit Plans of Seller and Target to the post-Closing
Employee Benefit Plans of Buyer and its Affiliates, and attach or identify such
agreements, forms, terms, conditions and covenants hereto within thirty (30)
days of the Signing Date. The Parties agree that the services provided under
the Transition Services Agreement may not be finalized until Closing, and that
the form of the Transition Services Agreement may to be attached hereto may
have blank schedules or other methods for later defining such services.
(b) Seller and Target acknowledge and agree that the License Agreement
will at minimum provide sufficient rights to Target in the Excluded IP to allow
Target's continued use of the Excluded IP in the Ordinary Course of Business,
in at least the same manner as presently conducted, for a period of two (2)
years from the Closing Date.
5.15 Governmental Approvals.
(a) The Parties shall cooperate with each other and use their
commercially reasonable efforts to (and, with respect to the Gaming Laws, and
antitrust Laws, if applicable, shall use their commercially reasonable efforts
to cause their respective directors and officers to) promptly prepare and file
all necessary documentation, to effect all applications, notices, petitions and
filings, to obtain as promptly as practicable all Governmental Approvals, and
to comply (and, with respect to the Gaming Laws, to cause their respective
directors and officers to comply) with the terms and conditions of all such
Governmental Approvals. Buyer and its respective directors and officers shall
use their commercially reasonable efforts to file within sixty (60) days after
the date of this Agreement all required initial applications and documents in
connection with obtaining the Governmental Approvals (including without
limitation under applicable Gaming Laws) and shall act reasonably and promptly
thereafter in responding to additional requests and comments in connection
therewith. The Parties acknowledge that this Agreement and the transactions
contemplated hereby are subject to the review and approval of the applicable
Gaming Authorities. Each of the Parties has the right to consult with the other
on, in each case subject to applicable Laws relating to the exchange of
information (including antitrust Laws and Gaming Laws), all the information
relating to the other Person and any of its Affiliates that appears in any
filing made with any third Person or Governmental Entity in connection with the
transactions contemplated by this Agreement. Without limiting the foregoing,
each of Seller and Buyer (the "Notifying Party") shall notify the other
promptly of the receipt of comments or requests from Governmental Entities
relating to Governmental Approvals, and shall supply the other with copies of
all correspondence between the Notifying Party or any of its representatives
and Governmental Entities with respect to questions regarding this Agreement;
provided, however, that none of the Seller or Target, on the one hand, and
Buyer, on the other hand, shall be required to supply the other with copies of
communications relating to the personal applications of individual applicants
or proprietary information.
(b) Each of Seller, Target and Buyer shall promptly notify the other
Party upon receiving any communication from any Governmental Entity whose
consent or approval is required for consummation of the transactions
contemplated by this Agreement that causes such Person to reasonably believe
that there is a reasonable likelihood that such consent or approval from such
Governmental Entity will not be obtained or that the receipt of any such
consent or approval will be materially delayed.
(c) Each of Seller and Target on the one hand, and Buyer, on the other
hand, shall use their/its respective commercially reasonable efforts to take,
or cause to be taken, all actions reasonably necessary to (i) defend any
lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated by this Agreement and (ii)
prevent the entry by any Governmental Entity of any Governmental Order
challenging this Agreement or the consummation of the transactions contemplated
by this Agreement, appealing as promptly as possible any such Governmental
Order and having any such Governmental Order vacated or reversed.
5.16 Publicity. Seller, Target and Buyer shall use all commercially
reasonable efforts to agree on the form and content of any press releases
regarding the transactions contemplated by this Agreement and thereafter shall
consult with each other before issuing, provide each other the opportunity to
review and comment upon and use all commercially reasonable efforts to agree
upon, any press release or other public statement with respect to any of the
transactions contemplated hereby and shall not issue directly or indirectly any
such press release or make directly or indirectly any such public statement
prior to such consultation and prior to considering in good faith any such
comments, except (i) as may be required by applicable Law or (ii) in connection
with (A) Seller complying with its obligations under the Securities Exchange
Act, (B) Buyer pursuing its financing arrangements or (C) the Parties complying
with their respective obligations under this Agreement.
6. POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the
Closing.
6.1 General. If at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party may reasonably
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 9).
Seller acknowledges and agrees that from and after the Closing, Buyer will be
entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to Target.
6.2 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving Target, each of the other Parties will cooperate
with it and its counsel in the contest or defense, make available their
personnel, and provide such testimony and information as shall be reasonably
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or
defending Party is entitled to indemnification therefor under Section 9).
6.3 Insurance Matters; D&O Indemnities.
(a) Upon any termination by Seller or its Affiliates of any
pre-Closing insurance coverage relating to Target under the general corporate
or other insurance policies of Seller after Closing, (i) no such termination of
any "occurrence" policy in force as of the Closing Date shall be effected so as
to prevent Target from retaining coverage under such policies for losses from
events occurring prior to the Closing Date; and (ii) no such termination of any
"claims-made" policy in force as of the Closing Date shall be effected so as to
prevent Target from retaining coverage under such policies for losses from
events occurring prior to the Closing Date to the extent the insurance company
or third party claims administrator shall have received written notice of
claims per the terms and conditions of said policy.
(b) Seller shall be solely responsible after the Closing Date for any
and all Liabilities related to any insurance claims of or relating to Target
filed prior to the Closing Date, including deductibles, self-insured
retentions, claims adjusting expenses, loss conversion factor expenses,
retroactive premium adjustments, collateral requirements and associated costs,
legal expenses, audits and any other costs that become due and payable under
the terms of the applicable policy in connection with any such claims. Seller
shall also be solely responsible for the administration of such claims. Target
shall be solely responsible for any and all insurance coverages and risk of
loss with respect to Target and its assets, business and operations for events
occurring on or after the Closing Date.
(c) To the fullest extent not prohibited by applicable Law, from and
after the Closing Date, all rights to indemnification now existing in favor of
the employees, directors or officers of Target with respect to their activities
as such prior to or on the Closing Date, as provided in its articles of
incorporation, bylaws, other organizational documents or indemnification
agreements in effect on the date of such activities or otherwise in effect on
the date hereof, shall survive the Closing and shall continue in full force and
effect for a period of not less than six years from the Closing Date, provided
that, in the event any claim or claims are asserted or made within such six
year period, all such rights to indemnification in respect of any claim or
claims shall continue until final disposition of such claim or claims. Target
shall be solely responsible for any and all indemnification claims or rights
for the employees, directors or officers of Target with respect to their
activities as such on and after the Closing Date.
(d) For a period of six years after the Closing Date, Seller shall
maintain, at its expense, directors' and officers' liability insurance policies
which provide coverage in scope and amount equivalent to those maintained by
any Person on behalf of Target prior to the Closing Date for the benefit of
those persons who are currently covered by such policies on terms no less
favorable than the terms of such current insurance coverage, for the purpose of
insuring the obligations of Seller with respect to periods prior to the Closing
Date as described in Section 6.3(c).
(e) The provisions of Sections 6.3(c) and 6.3(d) are intended to be
for the benefit of, and shall be enforceable by, the employees, directors or
officers of Target and their respective heirs, executors or administrators and
other representatives.
6.4 Transition. Except with respect to the contracts, agreements and
arrangements described in Section 5.11, Seller will not take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of Target from maintaining the
same business relationships with Target after the Closing as it maintained with
Target prior to the Closing. Seller will refer all customer inquiries relating
to the Target or the assets or businesses of Target to Buyer from and after the
Closing.
6.5 Confidentiality. Seller will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, the Transition Services
Agreement and the License Agreement, and deliver promptly to Buyer or destroy,
at the request and option of Buyer, all tangible embodiments (and all copies)
of the Confidential Information which are in his or its possession. In the
event that Seller is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena,
civil investigative demand, or similar process) to disclose any Confidential
Information, Seller will notify Buyer promptly of the request or requirement so
that Buyer may seek an appropriate protective order or waive compliance with
the provisions of this Section 6.5. If, in the absence of a protective order or
the receipt of a waiver hereunder, Seller is, on the advice of counsel,
compelled to disclose any Confidential Information to any tribunal or else
stand liable for contempt, Seller may disclose the Confidential Information to
the tribunal; provided, however, that the disclosing Seller shall use its
reasonable best efforts to obtain, at the request of Buyer, an order or other
assurance that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as Buyer shall designate. The
foregoing provisions shall not apply to any Confidential Information which is
generally available to the public immediately prior to the time of disclosure.
6.6 Covenant Not to Compete. For a period of two (2) years from and
after the Closing Date, Seller will not engage directly or indirectly in any
business that any of Target conducts as of the Closing Date in or around
Laughlin, Nevada (except for the continued operation of the Bullhead Facility
in the Ordinary Course of Business); provided, however, that no owner of less
than 1% of the outstanding stock of any publicly-traded corporation shall be
deemed to engage solely by reason thereof in any of its businesses. If the
final judgment of a court of competent jurisdiction declares that any term or
provision of this Section 6.6 is invalid or unenforceable, the Parties agree
that the court making the determination of invalidity or unenforceability shall
have the power to reduce the scope, duration, or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.
6.7 Nonsolicitation.
(a) For a period of two (2) years from and after the Closing Date,
Seller and its Affiliates will not directly solicit, influence or attempt to
solicit or influence any employee, consultant, advisor or independent
contractor of Target or its Affiliates to terminate their employment or
relationship with Target or its Affiliates; provided, however, that Seller and
its Affiliates may (i) conduct general searches for employees, consultants,
advisors or independent contractors by use of general advertisements or media
that are not directly targeted at the employees, consultants, advisors or
independent contractors of Target or its Affiliates or which are not otherwise
intended to circumvent the foregoing provision and (ii) continue to utilize or
solicit any consultant, advisor or independent contractor who provided services
to Seller prior to the Signing Date in connection with the businesses and
Affiliates of Seller other than Target and its businesses.
(b) For a period of two (2) years from and after the Closing Date,
Seller and its Affiliates will not engage in the direct or targeted
solicitation of any customers of Target and its Affiliates whom are identified
on the books, records, customer lists and databases of Seller, Target and their
Affiliates as being unique customers of Target as of the Closing; provided,
however, that Seller and its Affiliates may conduct general advertising or
other general methods of soliciting customers that do not directly target such
unique customers of Target or its Affiliates or which are not otherwise
intended to circumvent the foregoing provision.
7. CONDITIONS TO OBLIGATION TO CLOSE
7.1 Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(a) there shall have been no material adverse change in the assets,
business, financial condition, operations or results of operations of Target,
and there has been no event, fact or circumstance which would reasonably be
expected to have a material adverse effect on the future operation of the
business of Target if conducted in the same manner as presently conducted,
whether insured or not;
(b) the representations and warranties set forth in Section 3 shall be
true and correct in all material respects at and as of the Closing Date;
(c) Seller and Target shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(d) Seller and Target shall have obtained all of the third party
consents specified in Sections and Schedules 3.2, 3.3 and 3.8, and shall have
delivered the same to Buyer;
(e) Seller and Target shall have obtained all of the amendments,
releases and terminations described in Section 5.11, and shall have delivered
the same to Buyer;
(f) Seller and Target shall have completed the transfer of the assets,
liabilities and obligations of Target relating to the Bullhead Facility as
contemplated herein;
(g) no action, suit, or proceeding shall be pending or threatened
before any Governmental Entity wherein an unfavorable Governmental Order would
restrain, prohibit or prevent consummation of any of the transactions
contemplated by this Agreement or cause any of the transactions contemplated by
this Agreement to be rescinded following consummation; and
(h) Buyer shall have received all Governmental Approvals under
applicable Law (including without limitation the Gaming Laws) as are required
to consummate the transactions contemplate herein, all such approvals shall be
and remain in full force and effect, any applicable statutory waiting periods
shall have expired and no such authorization, consent or approval shall contain
any condition, limitation or restriction.
Buyer may waive any condition specified in this Section 7.1 if it executes a
writing so stating at or prior to the Closing.
7.2 Conditions to Obligation of Seller. The obligation of Seller and
Target to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Section 4 shall be
true and correct in all material respects at and as of the Closing Date;
(b) Buyer shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
(c) no action, suit, or proceeding shall be pending or threatened
before any Governmental Entity wherein an unfavorable Governmental Order would
restrain, prohibit or prevent consummation of any of the transactions
contemplated by this Agreement or cause any of the transactions contemplated by
this Agreement to be rescinded following consummation; and
(d) Buyer shall have received all Governmental Approvals under
applicable Law (including without limitation the Gaming Laws) as are required
to consummate the transactions contemplate herein, all such approvals shall be
and remain in full force and effect, any applicable statutory waiting periods
shall have expired and no such authorization, consent or approval shall contain
any condition, limitation or restriction.
Seller and Target, as applicable, may waive any condition specified in
this Section 7.2 if it executes a writing so stating at or prior to the
Closing.
8. CLOSING
8.1 The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxx Brignone
in Las Vegas, Nevada, commencing at 9:00 a.m. local time on the second (2nd)
business day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
(other than conditions with respect to actions the respective Parties will
take at the Closing itself) or such other date and/or in such other manner as
Buyer and Seller may mutually determine (the "Closing Date").
8.2 Actions Taken at Closing. All actions to be taken by Seller in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be in form and substance reasonably
satisfactory to Buyer. All actions to be taken by Buyer in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be in form and substance reasonably satisfactory to
Seller.
8.3 Deliveries at the Closing. At the Closing:
(a) Seller will deliver to Buyer the following items:
(i) Stock certificates representing all of the issued and
outstanding Target Shares accompanied by duly executed assignment
documents,
(ii) A certificate to the effect that each of the conditions
specified in Sections 7.1(a) through 7.1(f) are satisfied in all
respects;
(iii) The License Agreement, executed by Seller;
(iv) The Transition Services Agreement, executed by Seller;
(v) An opinion from counsel to Seller and Target, in form and
substance reasonably satisfactory to Buyer and its counsel, addressed
to Buyer and dated as of the Closing Date;
(vi) The resignations, effective as of the Closing, of each
director and officer of Target;
(vii) A closing statement setting forth the calculation and
disbursement of the Estimated Purchase Price, executed by Seller;
(viii) An officer's certificate of each of Seller and Target,
certifying as to true, correct and complete copies of the
organizational documents of Seller and Target, attaching good standing
certificates and approval resolutions of each of Seller and Target,
and including an incumbency and signature certification for each
officer of Seller and Target executing and delivering this Agreement
or the other documents, instruments and agreements contemplated
herein; and
(ix) Such other documents, instruments and agreements as may
be reasonably requested by Buyer and its counsel.
(b) Buyer will deliver to Seller the following items:
(i) The Estimated Purchase Price, by wire transfer of
immediately available funds to an account designated by Seller in
writing;
(ii) A certificate to the effect that each of the conditions
specified in Sections 7.2(a) and 7.2(b) are satisfied in all respects;
(iii) The License Agreement, executed by Buyer;
(iv) The Transition Services Agreement, executed by Buyer;
(v) An opinion from counsel to Buyer in form and substance
reasonably satisfactory to Seller, Target and their counsel, addressed
to Seller and dated as of the Closing Date;
(vi) A closing statement setting forth the calculation and
disbursement of the Estimated Purchase Price, executed by Buyer;
(vii) An officer's certificate of Buyer, certifying as to
true, correct and complete copies of the organizational documents of
Buyer, attaching a good standing certificate and approval resolutions
of Buyer, and including an incumbency and signature certification for
each officer of Buyer executing and delivering this Agreement or the
other documents, instruments and agreements contemplated herein; and
(viii) Such other documents, instruments and agreements as
may be reasonably requested by Seller and its counsel.
9. REMEDIES FOR BREACHES OF THIS AGREEMENT
9.1 Survival of Representations and Warranties. All of the
representations and warranties of contained in this Agreement shall survive the
Closing hereunder (regardless of any investigation or knowledge of the Parties
hereunder) and continue in full force and effect for a period of eighteen (18)
months thereafter; provided that (i) the representations and warranties
contained in Sections 3.13 and 3.27 shall survive for the respective statute of
limitations applicable to the matters described therein and (ii) the
representations and warranties contained in Sections 3.6, 3.7 and 3.14 shall
survive forever.
9.2 Waiver of Claims Against Target. From and after the Closing, each
of Seller and its Affiliates waives any claim or right to indemnification,
contribution, reimbursement or set-off or other rights to recovery against
Target with respect to the representations, warranties, covenants and
agreements of Target set forth in this Agreement and any document, instrument
or agreement delivered in connection herewith.
9.3 Indemnification Provisions for Benefit of Buyer. Regardless of any
pre-Closing investigation, examination or Knowledge of Buyer or its Affiliates,
from and after the Closing Seller agrees to reimburse, hold harmless and
indemnify Buyer, Target and their Affiliates from and against any Adverse
Consequences suffered by Buyer, Target or their Affiliates and directly or
indirectly resulting from, arising out of, relating to, in the nature of, or
caused by in connection with any of the following:
(a) Any inaccuracy in or breach of any representation and warranty of
Seller and Target hereunder, provided that Buyer makes a written claim for
indemnification against Seller pursuant to Section 12.6 within the applicable
survival period set forth in Section 9.1;
(b) Any or any failure to perform or comply with any covenant,
obligation or other provision of the Agreement of or applicable to Seller or
Target;
(c) Any of the contracts, agreements or arrangements which are the
subject of the amendments, releases and terminations described in Section 5.11;
(d) Any Liability of Target under the Stock Purchase Agreement by and
among Seller, Target, Mirage Resorts, Incorporated and certain other related
parties, dated as of June 24, 2003;
(e) Any matter arising out of or relating to Seller's or Target's
ownership and operation of the Bullhead Facility; and
(f) Any matter arising out of or relating to Seller's or Target's use
of the Intellectual Property represented by the matters disclosed on Schedule
3.16(b) prior to the Closing Date.
9.4 Indemnification Provisions for Benefit of Seller. Subject to the
provisions of Section 11.2(b) and regardless of any pre-Closing investigation,
examination or Knowledge of Seller or its Affiliates, from and after the
Closing Buyer agrees to reimburse, hold harmless and indemnify Seller and its
Affiliates from and against any Adverse Consequences suffered by Seller or its
Affiliates and directly or indirectly resulting from, arising out of, relating
to, in the nature of, or caused by in connection with any of the following:
(a) Any inaccuracy in or breach of any representation and warranty of
Buyer hereunder, provided that Seller makes a written claim for indemnification
against Buyer pursuant to Section 12.6 within the applicable survival period
set forth in Section 9.1;
(b) Any or any failure to perform or comply with any covenant,
obligation or other provision of the Agreement of or applicable to Buyer; and
(c) Any matter arising out of or relating to Buyer's or Target's use
of the Intellectual Property represented by the matters disclosed on Schedule
3.16(b) on or after to the Closing Date.
9.5 Limits on Indemnification. The indemnification provided for in
Sections 9.3 and 9.4 shall be subject to the following limitations:
(a) Except as otherwise provided below, Seller shall not be obligated
or liable for indemnification pursuant to Section 9.3(a) hereof unless and
until the aggregate amount of all Adverse Consequences suffered by Buyer,
Target and their Affiliates thereunder exceeds Two Hundred Fifty Thousand
Dollars ($250,000), whereupon Buyer, Target and their Affiliates shall be
entitled to indemnification under Section 9.3(a) for all Adverse Consequences
suffered in excess of such amount.
(b) Except as otherwise provided below, Seller shall not be obligated
or liable for indemnification pursuant to Section 9.3(a) in excess of Five
Million Dollars ($5,000,000).
(c) Except as otherwise provided below, Buyer shall not be obligated
or liable for indemnification pursuant to Section 9.4(a) hereof unless and
until the aggregate amount of all Adverse Consequences suffered by Seller and
its Affiliates thereunder exceeds Two Hundred Fifty Thousand Dollars
($250,000), whereupon Seller and its Affiliates shall be entitled to
indemnification under Section 9.3(a) for all Adverse Consequences suffered in
excess of such amount.
(d) Except as otherwise provided below, Buyer shall not be obligated
or liable for indemnification pursuant to Section 9.3(a) in excess of Five
Million Dollars ($5,000,000).
(e) Notwithstanding the foregoing, the limitations of this Section
shall not apply to (i) the representations and warranties of Seller and Target
contained in Sections 3.4, 3.6, 3.7, 3.11, 3.14, 3.25, 3.27 and 3.31 or (ii)
any breach constituting fraud or a knowing or intentional breach or
misrepresentation.
9.6 Matters Involving Third Parties.
(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Section 9, then the Indemnified Party shall promptly notify
each Indemnifying Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless (and then
solely to the extent) the Indemnifying Party is prejudiced thereby.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within fifteen
(15) days after the Indemnified Party has given notice of the Third Party Claim
that the Indemnifying Party will indemnify the Indemnified Party from and
against the entirety of any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim, (ii) the Indemnifying Party provides the Indemnified
Party with evidence acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third Party Claim
and fulfill its indemnification obligations hereunder, (iii) the Third Party
Claim involves only money damages and does not seek an injunction or other
equitable relief, (iv) settlement of, or an adverse judgment with respect to,
the Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice materially adverse
to the continuing business interests of the Indemnified Party, and (v) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 9.6(b), (i) the Indemnified Party
may retain separate co-counsel at its sole cost and expense and participate in
the defense of the Third Party Claim, (ii) the Indemnified Party will not
consent to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the Indemnifying
Party (not to be unreasonably withheld), and (iii) the Indemnifying Party will
not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnified Party.
(d) In the event any of the conditions in Section 9.6(b) is or becomes
unsatisfied, however, (i) the Indemnified Party may defend against, and consent
to the entry of any judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it may deem appropriate (and the Indemnified
Party need not consult with, or obtain any consent from, any Indemnifying Party
in connection therewith), (ii) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically for the costs of defending against
the Third Party Claim (including attorneys' fees and expenses), and (iii) the
Indemnifying Parties will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Third Party Claim to the fullest extent
provided in this Section 9.
10. TAX MATTERS
10.1 Transfer Taxes. The parties agree that all sales and transfer
Taxes and fees, if any, incurred in connection with this Agreement and the
transactions contemplated hereby will be borne equally by Buyer, on the one
hand, and by Seller, on the other hand.
10.2 Cooperation.
(a) Seller, on the one hand, and Buyer, on the other hand, agree to
furnish or cause to be furnished to each other, upon request, as promptly as
practicable, such information and assistance (including access to books and
records) relating solely to the business and operations of Target used in
connection with the preparation of any Tax Returns and shall make available
such knowledgeable employees of Buyer, Seller, Target or their respective
Affiliates as any party may reasonably request for the preparation of any
return for Taxes, claim for refund or audit, the prosecution or defense of any
claim, suit or proceeding relating to any proposed adjustment or the
calculations of any Taxes. For a period of seven years from and after Closing
Date, Buyer shall maintain and make available to Seller and its
representatives, upon the reasonable request of Seller and/or its Affiliates,
and Seller and/or its Affiliates shall maintain and make available to Buyer,
upon the reasonable request of Buyer, copies of any and all information, books
and records referred to in this Section. After such seven-year period, Buyer
and Seller may dispose of such information, books and records provided that,
prior to such disposition, Buyer shall give Seller and/or its Affiliates the
opportunity to take possession of, and Seller shall give Buyer the opportunity
to take possession of, such information, books and records.
(b) Buyer and Seller further agree, upon request prior to Closing or
for a period of two (2) years thereafter, to use commercially efforts to obtain
any certificate or other document from any Governmental Entity or any other
Person as may be necessary to mitigate, reduce or eliminate any Tax that could
be imposed on any of them with respect to the Target or the transactions
contemplated hereby.
(c) Buyer and Seller further agree, upon request prior to Closing or
for a period of two (2) years thereafter, to provide the other party with all
information that either party may be required to report pursuant to ss.6043 of
the Code and all Treasury Department Regulations promulgated thereunder.
10.3 Wage Reporting. Seller and Buyer agree to utilize the alternate
procedure set forth in Revenue Procedure 2004-53 with respect to wage
reporting.
11. TERMINATION
11.1 Termination of Agreement. The Parties may terminate this
Agreement as provided below:
(a) The Parties may terminate this Agreement by mutual written consent
at any time prior to the Closing;
(b) Provided that Buyer is not then in breach hereunder, Buyer may
terminate this Agreement by giving written notice to Seller at any time prior
to the Closing: (i) in the event Seller or Target has breached any
representation, warranty, or covenant contained in this Agreement in any
material respect, Buyer has notified Seller of the breach, and the breach has
continued without cure for a period of fifteen (15) days after the notice of
breach (provided, however, that if such breach can be cured, but not within
such fifteen (15) day period, then such fifteen (15) day period will be
extended for a reasonable time not longer than May 8, 2004, provided that
Seller and/or Target promptly commence and diligently pursue such cure); (ii)
in the event the License Agreement and/or the form of the Transition Services
Agreement have not been finalized by the Parties and attached hereto within
thirty (30) days of the Signing Date, as a result of Seller's failure to
negotiate the same in good faith; or (iii) if the Closing shall not have
occurred on or before May 8, 2005, by reason of the failure of any condition
precedent under Section 7.1 hereof;
(c) Provided that both Seller and Target are not then in breach
hereunder, Seller and Target may terminate this Agreement by giving written
notice to Buyer at any time prior to the Closing in the event the License
Agreement and/or the form of the Transition Services Agreement have not been
finalized by the Parties and attached hereto within thirty (30) days of the
Signing Date, as a result of Buyer's failure to negotiate the same in good
faith;
(d) Provided that both Seller and Target are not then in breach
hereunder, Seller and Target may terminate this Agreement by giving written
notice to Buyer at any time prior to the Closing: (i) in the event Buyer has
breached any representation, warranty, or covenant contained in this Agreement
in any material respect, Seller has notified Buyer of the breach, and the
breach has continued without cure for a period of fifteen (15) days after the
notice of breach (provided, however, that if such breach can be cured, but not
within such fifteen (15) day period, then such fifteen (15) day period will be
extended for a reasonable time not longer than May 8, 2004, provided that Buyer
promptly commences and diligently pursues such cure); or (ii) if the Closing
shall not have occurred on or before May 8, 2005, by reason of the failure of
any condition precedent under Section 7.2 hereof;
(e) Seller and Target may terminate this Agreement by giving written
notice to Buyer prior to the Closing in the event that Buyer fails to close the
transactions contemplated by this Agreement in accordance with the terms
hereof, through no fault of Seller or Target; and
(f) This Agreement shall automatically terminate if the Closing has
not occurred by May 8, 2005.
11.2 Effect of Termination.
(a) If any Party terminates this Agreement pursuant to Section 11.1,
all rights and obligations of the Parties hereunder shall terminate without any
Liability of any Party to any other Party (except for any Liability of any
Party then in breach, as may result from such breach, and except as expressly
set forth in Section 11.2(b)).
(b) If (i) Buyer terminates this Agreement under Section 11.1(b)
because of a failure to satisfy or waive the Buyer's condition to Closing set
forth in Section 7.1(h), (ii) Seller elects to unilaterally terminate this
Agreement under Sections 11.1(d) or 11.1(e), or (iii) if this Agreement
automatically terminates under Section 11.1(f) and both Seller and Target are
not then in breach hereunder, then in each instance the Deposit shall be paid
to Seller and any remaining portion of the Escrow Fund shall be returned to
Buyer. Such payment of the Deposit to Seller shall constitute liquidated
damages for any breach by Buyer of this Agreement, shall be Seller's and its
Affiliates' sole remedy for any such breach; upon such payment of the Deposit
to Seller, Buyer and its Affiliates shall be fully released from any further
liability, duty or obligation to Seller and its Affiliates.
(c) Other than as expressly set forth in Section 11.2(b), upon any
termination of this Agreement the Escrow Fund shall be returned to Buyer.
(d) The provisions of Sections 5.9, 11.2, 12.1, 12.7, 12.10 and 12.13
shall survive the termination of this Agreement.
12. MISCELLANEOUS
12.1 No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
12.2 Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
12.3 Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of Buyer and Seller (such approval not to be unreasonably
withheld or delayed); provided, however, that Buyer may (i) assign any or all
of its rights and interests hereunder to one or more of its Affiliates and (ii)
designate one or more of its Affiliates to perform its obligations hereunder
(in any or all of which cases Buyer nonetheless shall remain responsible for
the performance of all of its obligations hereunder).
12.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. Signature pages exchanged
by facsimile, electronic mail or other electronic communication shall be fully
binding.
12.5 Headings. The section headings contained in this Agreement are
inserted for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
12.6 Notices. Any and all notices required under this Agreement shall
be in writing and shall be (i) delivered personally, (ii) mailed, postage
prepaid, certified mail, return receipt requested, (iii) delivered via a
nationally recognized overnight courier service, or (iv) delivered via
facsimile transmission with regular mail to follow, addressed as follows:
If to Seller and Target: Poster Financial Group, Inc.
000 X. Xxxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxxxx Xxxxxxx, Esq.
With a Copy to: Xxxxxxx Brignone
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxxxxxxx Xxxxxx Xxxxxx, Esq.
If to Buyer: Barrick-GNL, LLC
c/o Barrick Gaming Corp.
Plaza Executive Offices
Xxx Xxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxx Xxxxxxxx
With a Copy to: Xxxxxxxxx Xxxxxxxx LLP
Xxx Xxxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx
All notices personally delivered shall be deemed given as of the date
of personal delivery. All notices mailed shall be deemed delivered as of two
business days after the date postmarked. All notices delivered via overnight
courier service shall be deemed delivered as of one business day after the date
deposited with such service. All notices sent via facsimile shall be deemed
delivered as of one business day after the date sent. Any changes in any of the
addresses listed herein shall be made by notice as provided in this Section
12.6.
12.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic Laws of the State of Nevada without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Nevada or any other jurisdiction) that would cause the application of the
Laws of any jurisdiction other than the State of Nevada.
12.8 Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Buyer, Seller and Target. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
12.9 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
12.10 Expenses. Each of the Parties and Target will bear their own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby. Seller agrees
that Target has borne or will bear Seller's costs and expenses (including any
of their legal fees and expenses) in connection with this Agreement or any of
the transactions contemplated hereby.
12.11 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of
any of the provisions of this Agreement. Any reference to any federal, state,
local, or foreign statute or Law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
12.12 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
12.13 Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Xxxxx County, Nevada in
any action or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court.
Each of the Parties waives any defense of inconvenient forum to the maintenance
of any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Any
Party may make service on any other Party by sending or delivering a copy of
the process to the Party to be served at the address and in the manner provided
for the giving of notices in Section 12.6 Nothing in this Section 12.13,
however, shall affect the right of any Party to serve legal process in any
other manner permitted by Law or at equity. Each Party agrees that a final
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by Law or at
equity.
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IN WITNESS WHEREOF, the Parties hereto have executed this Stock
Purchase Agreement as of the date first above written.
BUYER:
BARRICK-GNL, LLC,
a Nevada limited liability company
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxx
Title: President
SELLER:
POSTER FINANCIAL GROUP, INC.,
a Nevada corporation
By: /s/ Xxxxxxx X. Poster
--------------------------------
Name: Xxxxxxx X. Poster
Title: Chairman of Board & CEO
TARGET:
GNL, CORP.,
a Nevada corporation
By: /s/ Xxxxxxx X. Poster
--------------------------------
Name: Xxxxxxx X. Poster
Title: Chairman of Board & CEO
EXHIBIT A
"Accountants" means any nationally recognized CPA firm that does not
have a business relationship with either Buyer, Seller or any of their
respective Affiliates on the Signing Date or at the time such CPA firm is
engaged to perform the procedures in Section 2.4.
"Acquisition" means Seller's acquisition of the Target Shares from
Mirage Resorts, Incorporated, pursuant to the Stock Purchase Agreement by and
among Seller, Target, Mirage Resorts, Incorporated and certain other related
parties, dated as of June 24, 2003.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code ss.1504(a).
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Bullhead Facility" has the meaning set forth in Section 5.10.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in Section 8.1.
"Closing Date" has the meaning set forth in Section 8.1.
"Closing Date Working Capital" has the meaning set forth in Section
2.4(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code ss.4980B.
"Commitment Letter" has the meaning set forth in Section 4.5.
"Confidential Information" means any information concerning the
businesses and affairs of Target that is not already generally available to
the public.
"Controlled Group" has the meaning set forth in Code ss.1563.
"Deferred Intercompany Transaction" has the meaning set forth in Reg.
ss.1.1502-13.
"Deposit" means the $1,000,000 deposit referenced in Section 2.6.
"Disclosure Schedule" has the meaning set forth in Section 3.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension
Benefit Plan, (c) qualified defined benefit retirement plan or arrangement
which is an Employee Pension Benefit Plan (including any Multiemployer Plan),
or (d) Employee Welfare Benefit Plan or material fringe benefit or other
retirement, bonus, or incentive plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
ss.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
ss.3(1).
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of Law, all judicial and administrative
orders and determinations, all contractual obligations and all common Law
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation, each as amended and as
now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity which is treated as a single
employer with Seller for purposes of Code ss.414.
"Escrow Account" means an interest-bearing account into which the
Deposit is placed.
"Escrow Agent" means Chicago Title Insurance Company.
"Escrow Agreement" has the meaning set forth in Section 2.6.
"Escrow Fund" means the amount of funds held in the Escrow Account at
any given time.
"Estimated Purchase Price" has the meaning set forth in Section 2.3.
"Estimated Working Capital" has the meaning set forth in Section
2.3(a).
"Excess Loss Account" has the meaning set forth in Reg. ss.1.1502-19.
"Excluded IP" has the meaning set forth in Section 3.16(a).
"Fiduciary" has the meaning set forth in ERISA ss.3(21).
"Final Purchase Price" has the meaning set forth in Section 2.2.
"Financial Statement" has the meaning set forth in Section 3.9.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Gaming Authorities" means, collectively, (i) the Nevada Gaming
Commission, (ii) the Nevada State Gaming Control Board, (iii) the Xxxxx County
Liquor and Gaming Licensing Board, (iv) the City of Laughlin and (v) any other
Governmental Entity that holds regulatory, licensing or permit authority over
gambling, gaming or casino activities conducted by Target.
"Gaming Laws" means any federal, state, local or foreign statute,
ordinance, rule or regulation governing or relating to the ownership of Target
and the gambling, gaming or casino activities and operations of Target, as
amended from time to time.
"Gaming Licenses" means all licenses, permits, approvals,
authorizations, registrations, findings of suitability, waivers and exemptions,
that are necessary for Target to own and operate its gaming facilities and
related amenities under applicable Gaming Laws.
"Governmental Approvals" means any permit, license, certificate,
franchise, concession, approval, consent, permission, clearance, filing,
notice, right, designation, registration, qualification, authorization or order
issued, granted, given or otherwise made available by or under the authority of
a Governmental Entity or pursuant to any Law, including without limitation the
Gaming Licenses and Liquor Licenses.
"Governmental Entity" means any (a) nation, principality, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature, (b) governmental or quasigovernmental entity of any
nature, including any governmental division, subdivision, department, agency,
bureau, branch, office, commission, council, board, instrumentality, officer,
official, representative, organization, taxing authority or unit and any court
or other tribunal (foreign, federal, state or local) or (c) person or body
exercising, or entitled to exercise, any executive, legislative, judicial,
administrative, regulatory, police, military or taxing authority or power of
any nature, including the Gaming Authorities.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination, or award entered by or with any
Governmental Entity.
"Indemnified Party" has the meaning set forth in Section 9.6.
"Indemnifying Party" has the meaning set forth in Section 9.6.
"Intellectual Property" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks, service marks,
trade dress, logos, trade names, and corporate names, together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (c) all copyrightable works, all copyrights,
and all applications, registrations, and renewals in connection therewith, (d)
all mask works and all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business information
(including ideas, research and development, knowhow, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (f) all computer
software (including data and related documentation), (g) all other proprietary
rights, and (h) all copies and tangible embodiments thereof (in whatever form
or medium).
"Interim Financial Statements" has the meaning set forth in Section
3.9.
"Knowledge" means actual knowledge after reasonable investigation of
the executive officers and/or employees charged with responsibility for the
particular matter of Seller, Target or Buyer, as the context requires;
provided, however, that a duty to undertake an investigation external to
Seller, Target or Buyer, as the context requires, shall not be included in the
definition of "Knowledge" where excluded by the express terms of this
Agreement.
"Laws" or "Law" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental Entity including, without
limitation, all Gaming Laws.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"License Agreement" means the License Agreement governing Target's use
of the "Golden Nugget" trademark and related Intellectual Property from and
after Closing, which is attached hereto as Exhibit C.
"Liquor Licenses" means all those certain "off sale", "portable bar"
and other alcoholic beverage licenses issued by Governmental Entities to Target
pursuant to which the sale of alcoholic beverages is permitted in the
restaurants, bars, function rooms, casino floors and guest rooms on the Real
Property.
"Methodology" means the methodology by which the Sample Working
Capital was calculated, as further described on Exhibit D hereto.
"Interim Balance Sheet" means the balance sheet contained within the
Most Recent Financial Statements.
"Most Recent Fiscal Month End" has the meaning set forth in Section
3.9.
"Most Recent Fiscal Year End" has the meaning set forth in Section
3.9.
"Multiemployer Plan" has the meaning set forth in ERISA ss.3(37).
"Nevada Gaming Authorities" means, collectively, the Nevada Gaming
Commission, the Nevada State Gaming Control Board and any other governmental
entity or authority that holds regulatory, licensing or permitting authority
over gambling, gaming or casino activities within the State of Nevada.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity
and frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Process Agent" has the meaning set forth in Section 12.13.
"Prohibited Transaction" has the meaning set forth in ERISA ss.406 and
Code ss.4975.
"Purchase Price" has the meaning set forth in Section 2.2.
"QSSS" has the meaning set forth in Section 2.7.
"Real Property" means the real property described on Schedule 3.15,
together with all rights and interests appurtenant thereto.
"Reportable Event" has the meaning set forth in ERISA ss.4043.
"Retained Liabilities" means (i) all Liabilities arising from
operations (whether presently or formerly conducted) of Seller and its
Affiliates, other than from the operations of Target, (ii) any liabilities for
which Seller has expressly assumed liability under this Agreement and (iii) any
other liability not disclosed to Buyer, the failure to disclose which would,
individually or in the aggregate, be reasonably expected to have a material
adverse effect on Buyer or the business and operations of Target.
"Reward Program" has the meaning set forth in Section 3.28.
"Sample Working Capital" means the sample calculation of Working
Capital set forth on Exhibit D, as calculated in accordance with the
Methodology.
"Schedule" is a reference to a particular schedule within the
Disclosure Schedules.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable, (c) purchase
money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Seller Master Agreement" has the meaning set forth in Section
3.19(b).
"Signing Date" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Target" has the meaning set forth in the preface above.
"Target Share" means any share of the Common Stock, no par value per
share, of Target.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code ss.59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 9.6.
"Transition Services Agreement" means the Transition Services
Agreement by and among Buyer, Target and Seller, whereby Seller will provide
certain corporate, administration and other transition services to Buyer and
Target after Closing, attached hereto as Exhibit E.
"Working Capital" means current assets minus current liabilities, as
defined in GAAP and of the nature and type contained in the Target's most
recent balance sheet, and as prepared on a basis of accounting consistent with
the most recent audited financial statements, but including the amount of any
costs for which Buyer is liable to Seller hereunder and which this Agreement
sets forth and excluding (i) cash in banks or other financial institutions (but
not excluding cash physically located at the Target's premises), (ii) any
Retained Liabilities, (iii) any liabilities for income Taxes or receivables for
income Tax refunds, including any and all deferred Taxes, (iv) the balances of
any intercompany accounts, and (v) any asset value for prepaid insurance
premiums under policies not assumed by the Buyer (but including the estimated
liabilities under self-insured arrangements).
