EXHIBIT 2
EXECUTION COPY
RIVERBOAT CASINO SALE AND PURCHASE AGREEMENT
THIS RIVERBOAT CASINO SALE AND PURCHASE AGREEMENT (this "Agreement") is
entered into as of this 24rd day of February 2006, by and among:
(i) President Casinos, Inc., debtor and debtor-in-possession ("Seller")
in a chapter 11 bankruptcy case, Case No. 02-53005 (the "Seller Case")
pending in the United States Bankruptcy Court for the Eastern District of
Missouri (the "Bankruptcy Court");
(ii) President Riverboat Casino-Missouri, Inc., a Missouri corporation
(the "Company"), debtor and debtor-in-possession in a chapter 11 bankruptcy
case in the Bankruptcy Court that is jointly administered with the Seller
Case (the "Company Case" and, collectively with the Seller Case, the
"Case"); and
(iii) Pinnacle Entertainment, Inc., a Delaware corporation, or a
subsidiary thereof ("Buyer").
RECITALS
A. Seller is the owner of all of the Closing Shares (as herein defined)
of the Company.
B. The Company is the owner and operator of a riverboat casino, located
on the Mississippi River riverfront in St. Louis, Missouri and moored to a
barge known as Admiral Barge One and connected by a porte-cochere
(collectively, the "Riverboat Casino"), more particularly described as:
Name: The Admiral
Official No.: 204086
Name: Admiral Barge One
Official No.: 689603
C. An official committee of unsecured creditors (the "Committee") has
been appointed in the Company Case pursuant to section 1102 of the United
States Bankruptcy Code (the "Bankruptcy Code").
D. Seller, with the support of the Committee and holders of Seller's 12%
Senior Notes due 2001 and 13% Senior Notes due 2001 (the "Bondholders"),
desires to sell, and Buyer desires to purchase, the Closing Shares upon the
terms and conditions set forth in this Agreement and subject to further
action of the Bankruptcy Court.
E. Following execution of this Agreement, Seller and the Company shall
seek authority from the Bankruptcy Court to hold an auction at which Buyer's
offer for the Closing Shares shall be subject to higher and better offers of
third parties.
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AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and other good and valuable consideration, the receipt and
adequacy of which hereby is acknowledged, and with the intent to be legally
bound hereby, the parties agree as follows:
1. PURCHASE AND SALE OF CLOSING SHARES; RIVERBOAT CASINO ASSETS OWNED BY
THE COMPANY; TRADEMARK LICENSE.
(a) Closing Shares to be Sold. Subject to the provisions of this
Agreement, Seller shall sell and Buyer shall purchase, all of Seller's
right, title and interest in, to and under the Closing Shares, free and
clear of any lien, mortgage, security interest, pledge, encroachment,
easement, defect of title or other claim, charge or encumbrance of any
nature whatsoever, or any restriction on transferability, option, right of
first refusal, or restriction on the use, voting, transfer, receipt of
income or other exercise of any attributes of ownership (collectively,
"Encumbrances"), but subject in each case to applicable state and federal
securities laws.
(b) Riverboat Casino Assets Owned by the Company. Immediately
following the Closing, the Company shall have good and marketable title to
all assets, properties and rights owned by the Company or otherwise material
to the operation of the Riverboat Casino wherever such assets, properties
and rights are located, and whether real, personal or mixed, tangible or
intangible, which Riverboat Casino Assets, to the maximum extent permitted
under Section 1141(C) of the Bankruptcy Code, will be free and clear of all
claims and interests of creditors of the Company, other than the Company
Liabilities (as defined in Section 3(a)) (collectively, the "Riverboat
Casino Assets"); provided, however, the Riverboat Casino Assets shall not
include any of the Excluded Assets (as defined in Section 9(c)(vi) below).
The Riverboat Casino Assets shall include, but in no way be limited to, the
following assets and properties of the Company:
(i) the Riverboat Casino, together with its furniture, fixtures,
equipment, necessaries, uniforms, apparel, supplies held for consumption,
life saving equipment (including life boats and inflatable boats), spare
parts, radio equipment, cordage, general outfit and all other appurtenances
and appliances belonging to the Riverboat Casino, and the Company's parking
and transportation shuttles and other vehicles, whether aboard the Riverboat
Casino or on shore at the time of Closing;
(ii) all of the Company's right, title and interest in and to (A)
the Lease between the Company and the City of St. Louis Port Commission (the
"City Lease") and such other executory leases, subleases, easements,
licenses, concessions or other agreements made for the benefit of the
Company listed or described on Schedule 1(b)(ii)(A), whether written or
oral, granting to any person the right to use or occupy real property (the
"Parking Leases"; the City Lease and the Parking Leases are, collectively,
the "Real Property Leases"), (B) subject to the compliance by the Company
with the covenant contained in Section 8(a)(xviii), the Company's collective
bargaining agreement with Hotel Employees, Restaurant Employees Local 74,
AFL-CIO as provided in Schedule 6(h), and (C) other executory leases or
contracts either (I) listed on Schedule 1(b)(ii)(C) or (II) entered into
after the date of this Agreement in compliance with the provisions hereof
and designated in writing by Buyer as an "Assumed Executory Lease and
Executory Contract" by no later
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than five (5) Business Days (as defined in Section 2(d)(i)) after the date
on which the Company Plan of Reorganization (as defined in Section 9(c)
below) is filed (collectively, the "Assumed Executory Leases and Executory
Contracts"); provided, however, that if Seller or Company assumes any
executory lease or contract prior to the Closing and after the date of this
Agreement without the prior written consent of Buyer, such assumed executory
lease or contract shall be the sole responsibility of Seller or Company, as
applicable, and shall constitute an Excluded Asset within the meaning of
Section 9(c)(vi)(5) hereof unless and until such time, if any, as Buyer
agrees to accept such executory lease or contract.
(iii) subject to Section 2(e) below, all of the right, title and
interest of the Company and Seller in and to the following property if
acquired by the Company or Seller after the date of this Agreement but prior
to the Closing:
Parcel 1:
Lot "A" of Xxxxxxxx'x Subdivision, according to the plat thereof
recorded in Plat Book 70 page 29 of the St. Louis City Records and in
City Block 17 and 18 of the City of St. Louis, State of Missouri
Parcel 2:
Lot "C" of Xxxxxxxx'x Subdivision, according to the plat thereof
recorded in Plat Book 70 page 29 of the St. Louis City Records and in
City Block 18 of the City of St. Louis, State of Missouri
(Parcels 1 and 2 collectively referred to herein as the "Xxxxxxxx Lot") and
any and all rights and interest of the Company and/or Seller in and to the
Xxxxxxxx Lot as described in and arising under that certain letter
agreement, of even date herewith, among Seller, Company and Buyer
(collectively, "Additional Real Estate");
(iv) all gambling games, slot machines, tables, other gaming
equipment and associated equipment that are used by the Company in the
operation of the Riverboat Casino, together with the Company's inventory of
gaming chips, tokens, scrip, markers, gaming supplies and other items held
for use by the Company at the Riverboat Casino in the ordinary course of
business ("Gaming Equipment");
(v) all cash in cashiers' cages, vaults, carts, drawers, cash
registers and gaming devices and machines, and any other cash or cash
equivalents required to remain in the Company at all times as required by
the regulators of the Missouri Gaming Commission or the regulations of such
gaming commission ("Included Cash");
(vi) all food processing and preparation and washing equipment,
machines and fixtures, racks, trays, buffet tables, furniture, flatware,
serving xxxx, utensils, crockery, plates, cutlery and other similar items,
uniforms, napkins, linens and other tangible personal property held by the
Company for use in connection with its food service and dining facilities at
the Riverboat Casino;
(vii) to the extent relating to the Company's marketing and
operation of the Riverboat Casino, all books, records, files and papers,
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whether in hard copy or computer format, including books of account, sales
and promotional literature, manuals and data, sales and purchase
correspondence, customer lists, lists of present and former suppliers,
personnel and employment records of present or former employees, and
documentation developed or used for accounting or marketing purposes;
(viii) all of the Company's right, title and interest in and to
each of the following and all copies and other tangible embodiments thereof:
(A) the "Admiral" name and all variants and derivations thereof, and all
other fictitious business names, trademarks (registered and unregistered),
service marks, trade dress, logos, trade names and the goodwill of the
Company's business associated therewith, and all applications, extensions,
registrations, and renewals in connection therewith but excluding Seller's
Trademarks (as defined in Section 1(c) below), which may only be used by
Buyer pursuant to and in accordance with Section 1(c) hereof, (B) all
copyrightable works, all copyrights, and all applications, registrations and
renewals in connection therewith in both published works and unpublished
works and (C) all trade secrets and confidential and other business
information (including ideas, research and development, know-how, formulas,
works for hire, gaming, security and food service processes and techniques,
market research, tracking methods, census reports, designs, drawings,
specifications and business and marketing plans and proposals)
(collectively, "Intellectual Property");
(ix) all of the Company's right, title and interest in and to
licenses, permits, franchises, zoning rights, approvals, registrations,
consents and authorizations used in, or necessary to the operation of the
Riverboat Casino as presently operated or the other Riverboat Casino Assets,
including those listed in Schedule 6(i) (collectively "Gaming Licenses");
(x) all of the Company's right, title and interest in and to all
post office boxes, e-mail addresses, telephone and facsimile numbers and
domain names held for use in connection with the operation of the Riverboat
Casino;
(xi) all computer software, proprietary or otherwise (including
data and related documentation), sales and promotional literature, manuals,
customer and supplier correspondence, plats, architectural plans, drawings,
designs, blueprints, specifications and studies that are owned or used in
connection with the operation of the Riverboat Casino, in all cases in any
form or medium, other than the Excluded Software;
(xii) all know-how, trade secrets, customer tracking information,
customer databases, customer and supplier information, personnel
information, technical information, process technology, plans, drawings,
innovations, designs, ideas, proprietary blueprints and information and
other information, including player tracking information related to
Riverboat Casino Assets, and fixed asset, general ledger and risk management
data (the Company will provide Buyer with assistance to incorporate the
fixed asset, general ledger and risk management data into Buyer's computer
systems) owned or used by the Company in connection with the operation of
the Riverboat Casino;
(xiii) all inventory of merchandise held for resale and all food
and beverage inventory, including rights to vending and concession
inventory, held for sale or service to patrons and/or employees of the
Riverboat Casino (collectively, the "Inventory");
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(xiv) all prepaid expenses relating to the Riverboat Casino
("Prepaid Expenses");
(xv) all accounts receivable and related deposits, security, or
collateral therefor, including recoverable customer deposits and receivables
(collectively, the "Receivables");
(xvi) all security deposits deposited by or on behalf of the
Company as lessee or sublessee under the Assumed Executory Leases and
Executory Contracts existing on the Closing Date and all deposits of the
Company with utilities and other providers of services to the Riverboat
Casino (the "Security Deposits");
(xvii) all of the Company's rights to any indemnity payments and
insurance contracts, relating to the Riverboat Casino Assets held by the
Company;
(xviii) any credits, carryforwards, operating losses and other
attributes related to Taxes (as defined in Section 6(p)(i), but excluding
any refunds for Taxes described in Section 9(c)(vii)(11) below; and
(xix) At Buyer's election, any other asset (except assets included
in the definition of Excluded Assets) reflected on the Balance Sheet of the
Company dated as of November 30, 2005, and delivered to Buyer in accordance
with Section 6(d).
(c) Trademark License. In further consideration of the payment of the
Purchase Price, and the mutual covenants under this Agreement, Seller grants
to Buyer and Company a non-exclusive, fully paid-up right and license to use
the names "President", "President Riverboat Casino" and other related
trademarks and services marks of Seller (collectively, the "Seller's
Trademarks") under the common law and under any trademark or service xxxx
registrations in connection with (i) the exploitation of the Riverboat
Casino Assets within a one hundred fifty (150) mile radius of the St. Louis,
Missouri city limits and (ii) the advertisement of the Riverboat Casino
nationwide (the "Trademark License"). During the term of the Trademark
License, Seller shall not license the use of Seller's Trademarks to any
other Person. The Trademark License shall be effective for a period of two
(2) years from the Closing Date. Upon expiration of the Trademark License,
Buyer will cease all further use of Seller's Trademarks and Buyer will have
no further rights thereto. Any termination or expiration of the Trademark
License shall not terminate or otherwise affect any other provision of this
Agreement. As used herein, "Person" means any natural person, business
trust, corporation, partnership, limited liability company, joint stock
company, proprietorship, association, trust, joint venture, unincorporated
association or any other legal entity of whatever nature.
2. CONSIDERATION.
(a) Purchase Price. The aggregate consideration to be paid by Buyer to
Seller for the Closing Shares shall be the payment of a cash amount equal to
(A) Thirty-One Million Five Hundred Thousand Dollars ($31,500,000) (the
"Base Price"), less (B) the Deficiency (as defined in Section 2(d)), if any,
plus (C) the Surplus (as defined in Section 2(d)), if any (the "Purchase
Price"); but subject to reduction to the extent provided in Section 9(d)
below. The Purchase Price shall be payable as follows: (I) Buyer is paying a
refundable
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$1,500,000 cash deposit (the "Deposit") by wire transfer of immediately
available funds to an escrow account (the "Escrow Account") held in an
interest bearing account for the benefit of Buyer, by U.S. Bank National
Association as escrow agent under an Escrow Agreement in substantially the
form attached hereto as Exhibit A (the "Escrow Agreement") within three (3)
Business Days of the execution of this Agreement; and (II) on the Closing
Date, (x) the Deposit (with interest accrued thereon, if any) shall be paid
over to Seller from the Escrow Account, and (y) Buyer shall pay the Purchase
Price, less the Deposit (plus interest accrued thereon, if any), by wire
transfer of immediately available funds to such account or accounts as
Seller shall direct. The Purchase Price shall be subject to adjustment by
(A) the prorations set forth in Section 2(b), (B) the payment of any Cure
Amounts (as defined below) by Buyer in accordance with Section 2(c), (C) any
additional amount that becomes payable in accordance with Section 2(e), and
(D) any amounts which shall be credited toward the Purchase Price or become
payable to the Company, as the case may be, in accordance with Section 2(f).
If Buyer increases the amount of the cash consideration offered for the
Closing Shares or otherwise modifies the terms and conditions of its bid as
set forth in this Agreement in order to outbid a proponent of a higher and
better offer, then the Purchase Price shall automatically be increased by an
equal amount and/or the terms and conditions hereof shall be automatically
modified and, if Buyer is the successful bidder, Buyer and Seller shall
execute a written instrument to memorialize such increased Purchase Price
(and change in form of consideration, as applicable) and such modifications
to the terms and conditions hereof. All interest and other earnings on the
Deposit shall, whether or not the Closing occurs, be the property of Buyer.
In the event of a termination of this Agreement as provided in Section 16
hereof (other than a termination pursuant to Section 16(c)) then the
Deposit, with interest accrued thereon, if any, shall be immediately
returned to Buyer and both parties shall execute and deliver mutual escrow
instructions to Escrow Agent to that effect. If (1) the Bankruptcy Court
enters the Procedures Order (as defined in Section 9 below), (2) all
conditions set forth in Section 4 hereof have been satisfied (or on the
Closing Date will be satisfied) or waived by Buyer, and (3) Seller
terminates the Agreement pursuant to Section 16(c), then the Deposit
(excluding interest accrued thereon, if any, which interest shall in any
event be returned to Buyer) shall be forfeited to Seller, without prejudice
to any legal remedy for additional money damages that Seller may have, if
any, against Buyer as a result of such breach; provided, however, that
Seller's legal remedies hereunder shall be limited exclusively to money
damages; provided, further, that in no event shall Seller have the right to
specific performance or any other equitable remedy against Buyer in
connection with this Agreement or the transactions contemplated hereby.
(b) Costs and Prorations.
(i) To the extent applicable, all transfer, recording or similar
Taxes and fees and expenses incurred in connection with redocumentation of
the Admiral and Admiral Barge One with the United States Coast Guard shall
be borne by Seller, and Seller hereby undertakes to timely remit all such
amounts to the applicable authority and to prepare and file all proper Tax
Returns and reports with respect thereto.
(ii) All real and personal property Taxes and assessments, rents,
water rates and charges, electric, gas and telephone charges and all other
apportionable operating costs and charges and expenses with respect to the
Riverboat Casino Assets will be apportioned and adjusted between Seller and
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Buyer as of the Closing, provided that if the Closing will occur before the
Tax rate or assessment is fixed for the year in which the Closing takes
place, the apportionment of such real and personal property Taxes will be
made upon the basis of the Tax rate for the preceding year applied to the
latest assessed valuation, but such apportionment will be readjusted as soon
as the applicable rate and assessment is fixed. Seller and Buyer at Closing
shall execute and deliver a closing statement reflecting their reasonable
estimate of the prorations of expenses described above in a form reasonably
satisfactory to each party. Any net proration due to Buyer will reduce the
Purchase Price, and any net proration due to Seller will increase the
Purchase Price. To the extent adjustments cannot be determined as of
Closing, the parties shall make such post-Closing adjustments (by the
reduction or increase of the Purchase Price and payment of such amount by
which the Purchase Price is increased in cash to Seller or amount by which
the Purchase Price is reduced in cash to Buyer, as applicable) as are
appropriate and to resolve open items as soon as practicable after such
charges have been finally ascertained.
(c) Cure Amounts. Seller shall be solely responsible for all cure
amounts payable under Bankruptcy Code Section 365 to the extent necessary
for the Company to assume the Assumed Executory Leases and Executory
Contracts ("Cure Amounts"). Seller at its sole option shall either pay all
such Cure Amounts in cash no later than Closing, or shall direct Buyer in
writing to pay such Cure Amounts out of the Purchase Price (with a
corresponding reduction thereof) otherwise required by this Agreement to be
paid to Seller, in which case Buyer shall pay such Cure Amounts at Closing.
(d) Determination of Surplus or Deficiency; Post-Closing Purchase
Price Adjustment.
(i) On or before the seventh (7th) Business Day preceding the
Closing Date, Seller shall prepare and deliver to Buyer an interim balance
sheet (the "Estimated Closing Balance Sheet") of Seller as of the close of
business on the final day of the calendar month immediately preceding the
calendar month during which the Closing Date occurs (the "Test Month"),
together with a statement of Seller's Net Current Assets (as defined in
Section 2(d)(vi)) as of such date calculated in accordance with generally
accepted accounting principles ("GAAP") and the accounting practices of
Seller applied on a consistent basis. The amount of Net Current Assets set
forth in the Estimated Closing Balance Sheet shall be final and binding for
purposes of determining the amount of any Surplus or Deficiency used in
calculating the Purchase Price to be paid at Closing, unless Buyer delivers
in good faith a written statement that Buyer objects to the calculation of
Net Current Assets at least two (2) Business Days prior to the anticipated
Closing Date (the "Objection Notice") together with Buyer's determination of
the Net Current Assets as of the Test Month. Seller shall make available to
Buyer and its representatives the books, records and workpapers used to
prepare the Estimated Closing Balance Sheet. In the event of an Objection
Notice, Seller and Buyer shall negotiate in good faith during the period
preceding the Closing Date to resolve the dispute. If the dispute is not
resolved by the specified Closing Date, (A) Buyer shall pay the Purchase
Price at the Closing based upon the amount of any Deficiency or Surplus, as
applicable, calculated with reference to the Net Current Assets as
determined by Buyer or Seller (whichever is lower), and (B) Buyer shall
deposit into escrow pursuant to the Escrow Agreement, an amount (the
"Adjustment Escrow Deposit") equal to the difference between (i) the
Purchase Price calculated with reference to the
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higher Net Current Assets amount, and (ii) the amount of the Purchase Price
paid by Buyer at the Closing in accordance with clause (A) above. "Surplus"
means the amount, if any, by which Net Current Assets as determined in
accordance with this Section 2(d)(i) is a positive number and "Deficiency"
means the amount, if any, by which Net Current Assets as determined in
accordance with this Section 2(d)(i) is a negative number. "Business Day"
means any day other than Saturday, Sunday and any day on which banking
institutions in the State of Missouri are authorized by law to close.
(ii) As promptly as practicable after the Closing Date, but in no
event later than sixty (60) days after the Closing Date (such date on which
the Closing Balance Sheet is delivered, the "Closing Financial Statements
Delivery Date"), Buyer will prepare and deliver to Seller a balance sheet of
Seller as of the close of business on the day immediately preceding the
Closing Date (the "Closing Balance Sheet") and a calculation of Net Current
Assets as of such date, each in accordance with GAAP and the accounting
practices of Seller applied on a consistent basis. The Closing Balance Sheet
and the calculation of the Net Current Assets shall be accompanied by a
certificate of an officer of Buyer to the effect that the Closing Balance
Sheet presents fairly, in accordance with GAAP and the accounting practices
of Seller applied on a consistent basis, the financial condition of Seller
as of the close of business on the day immediately preceding the Closing
Date.
(iii) Seller and its financial advisors and/or accountants (the
"Seller's Advisors") will be entitled to reasonable access during normal
business hours to the relevant records, personnel and working papers of
Buyer to aid in their review of the Closing Balance Sheet and the
calculation of Net Current Assets therefrom. The Closing Balance Sheet and
the calculation of Net Current Assets therefrom shall be deemed to be
accepted by Seller and shall be conclusive for the purposes of the
adjustment described in Section 2(d)(iv) and (v) except to the extent, if
any, that Seller or Seller's Advisors shall have delivered, within thirty
(30) days after the Closing Financial Statements Delivery Date, a written
notice to Buyer setting forth objections thereto, specifying in reasonable
detail any such objection (it being understood that any amounts not disputed
as provided herein shall be paid promptly). If a change proposed by Seller
is disputed by Buyer, then Buyer and Seller shall negotiate in good faith to
resolve such dispute. If, after a period of thirty (30) days following the
date on which Seller gives Buyer notice of any such proposed change, any
such proposed change still remains disputed, then Buyer and Seller hereby
agree that a nationally recognized accounting firm reasonably and mutually
acceptable to Buyer and Seller (the "Accounting Firm") shall resolve any
remaining disputes. The Accounting Firm shall act as an arbitrator to make a
determination with respect to the issues that are disputed by the parties,
based on presentations by Seller and Buyer, and by independent review of the
Accounting Firm if deemed necessary in the sole discretion of the Accounting
Firm, which determination shall be limited to only those issues still in
dispute. The decision of the Accounting Firm shall be final and binding and
shall be in accordance with the provisions of this Section 2(d)(iii). The
fees and expenses of the Accounting Firm, if any, shall be shared equally by
Buyer and Seller. The date on which the Net Current Assets is finally
determined pursuant to this Section 2(d)(iii) is referred to hereinafter as
the "Determination Date."
(iv) If the amount of Net Current Assets used to calculate the
Purchase Price paid at Closing pursuant to Section 2(d)(i)(A) above is
greater
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than the amount of Net Current Assets as determined pursuant to Section
2(d)(iii) above, Seller shall pay to Buyer, as an adjustment to the Purchase
Price, an amount equal to such difference, and the Adjustment Escrow Deposit
shall be immediately returned to Buyer. Any payments required to be made by
Seller pursuant to this Section 2(d)(iv) shall be made within ten (10) days
of the Determination Date by wire transfer of immediately available funds to
an account designated by Buyer.
(v) If the amount of Net Current Assets used to calculate the
Purchase Price paid at Closing pursuant to Section 2(d)(i)(A) above is less
than the amount of Net Current Assets as determined pursuant to Section
2(d)(iii) above, Buyer shall pay to Seller, as an adjustment to the Purchase
Price, an amount equal to such difference. Any payments required to be made
by Buyer pursuant to this Section 2(d)(v) shall be made within ten (10) days
of the Determination Date first, by payment to Seller out of the Adjustment
Escrow Deposit made pursuant to Section 2(d)(i)(B) and then, to the extent
of any additional payment required to be made by Buyer, by wire transfer of
immediately available funds to an account designated by Seller. Any balance
of the Adjustment Escrow Deposit after payment of amounts required to be
paid to Seller under this subsection shall be immediately returned to Buyer.
(vi) For purposes of this Section 2(d), "Net Current Assets" means
an amount equal to:
(A) the sum of the respective book values of (1) Included Cash,
(2) Inventory, (3) Prepaid Expenses, (4) Security Deposits, (5) Receivables
(less any reserve for collectibility established in accordance with Seller's
past practice), and (6) the New Slots Reimbursement (as defined below), less
(B) the sum of the respective book values of (1) Accounts
Payable and (2) Accrued Expenses and Deferred Obligations, as defined in
Section 3(a)(iii);
in each case as the book values of such assets and liabilities are
determined in accordance with GAAP, except that the New Slots Reimbursement
shall be calculated as set forth in this subsection (vi). The term "New
Slots Reimbursement" means an amount that is equal to the sum of the
Depreciated Values, as of Closing, of all new slot machines installed on the
Riverboat Casino between the date this Agreement is executed and the Closing
Date with the prior written consent of Buyer, which shall not be
unreasonably withheld. The term "Depreciated Value" means, with respect to
each such new slot machine, an amount determined by multiplying:
(i) Company's direct acquisition cost (including freight and out-of-
pocket costs for third party installation, to the extent third party
installation is consistent with Company's past practice) of such new slot
machine, times
(ii) a percentage, not less than fifty percent (50%), equal to (a)
ninety percent (90%) less (b) the product of ten percent (10%) times the
number of months during which such slot machine has been in service as of
Closing (disregarding fractional months).
In no event, however, shall the amount of the New Slots Reimbursement exceed
Two Million Dollars ($2,000,000). Prior to committing to the purchase or
lease of new slot machines, the Company shall notify Buyer of the number and
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models of machines, the name of the vendor/lessor, and the estimated cost of
third party installation, if any. Buyer shall have ten (10) days within
which to notify Company of its approval, or of any objection to such
purchase, which objection must specify the basis for the objection. If Buyer
fails to deliver timely written notice of objection, Buyer shall be deemed
to have approved Company's proposed purchase or lease.
(e) Purchase Price of Additional Real Estate. If the Company
acquires the Additional Real Estate prior to Closing, then Buyer shall pay
to Seller additional Purchase Price in an amount equal to the lesser of (I)
Five Million Dollars or (II) sum of the Company's and/or Seller's reasonable
out- of-pocket costs to acquire the same (including but not limited to
closing costs, commissions and other expenses allocated to Company or
Seller, and excluding any attorneys fees of Company and/or Seller associated
with the acquisition or with participation in condemnation proceedings, if
applicable); provided, however, that in no event shall the Buyer or the
Company post- Closing, be responsible for any interest expense incurred by
Seller and/or Company with respect to indebtedness incurred for the
acquisition of such Additional Real Estate.
(f) Delay In Obtaining Confirmation Order. Seller believes that,
within 120 days after the Sale Order becomes a Final Order (as defined in
Section 4(a) below), Seller will be able to obtain the Confirmation Order.
The terms "Sale Order" and "Confirmation Order" are defined in Sections 9(b)
and 9(c), respectively. If, at the end of such 120 day period:
(i) the conditions in Sections 4(a) or 4(b) have not been
fulfilled, and
(ii) the conditions in Sections 5(b), 5(d), 5(e), 5(f) and 5(g)
have been fulfilled or duly waived by Seller, and
(iii) the conditions contained in Sections 4(i), 4(j), 4(m)(i)
and 4(o) have been fulfilled or duly waived by Buyer,
then the Base Purchase Price shall be subject to reduction on a daily basis
as set forth in this Section 2(f). If the conditions referenced in the above
clauses (ii) and (iii) (the "Outstanding Conditions") have not been
fulfilled or duly waived by the end of such 120 day period, but thereafter
are fulfilled or waived prior to the Seller obtaining the Confirmation
Order, then the Base Purchase Price shall be subject to reduction on a daily
basis effective on the date that the last of the Outstanding Conditions has
been fulfilled or duly waived. The reduction in the Base Purchase Price
shall be an amount equal to the product of Five Hundred Thousand Dollars
($500,000) times the number of whole months elapsed from the first day after
such 120 day period (or after fulfillment or waiver of all Outstanding
Conditions, if applicable), to the Closing Date, with any partial month to
be pro-rated based on the actual number of days elapsed. Notwithstanding the
foregoing, no reduction shall be made to the Base Purchase Price under this
Section 2(f) if the Confirmation Order is obtained on or before September
30, 2006, or on or before the 120th day after the Sale Order becomes a Final
Order, whichever is later.
3. COMPANY LIABILITIES.
(a) Buyer acknowledges that on and following the Closing, the
Riverboat Casino Assets will be subject to the following Liabilities (the
"Company
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Liabilities"), which obligations shall remain the obligations of the
Company:
(i) subject to Seller's obligations under Section 2(c), all of the
Company's respective obligations under the Assumed Executory Leases and
Executory Contracts (but not including obligations arising out of a Default
thereunder prior to the Closing), to the extent such obligations accrue from
and after the Closing Date (the term "Default", as used herein, meaning (A)
a breach, default or violation, (B) the occurrence of an event that with or
without the passage of time or the giving of notice, or both, would
constitute a breach, default or violation or cause an Encumbrance to arise,
or (C) with respect to any Contract (as defined in Section 6(h)), the
occurrence of an event that with or without the passage of time or the
giving of notice, or both, would give rise to a right of termination,
renegotiation or acceleration or a right to receive damages or a payment of
penalties);
(ii) all of the Company's respective obligations with respect to
accounts payable arising on or after June 20, 2002, the Case petition date,
and existing on the Closing Date, excluding the Administrative Claims (as
defined in Section 9(c)(viii)) for professional fees (the "Accounts
Payable"); and
(iii) (A) the accrued Liability of the Company as of Closing to pay
the ultimate winnings owed to individuals playing the Company's progressive
slot machines and games primary progressive reserve, games reserve for top
awards, slots reserve for top awards (it being agreed that the progressive
slot Liability shall be determined by a meter reading by Buyer and Seller at
Closing); (B) poker progressive reserve of the Company; (C) gift shop
certificate Liability of the Company; (D) the Company's lost and found
money; (E) the Company's customer safekeeping deposits; (F) players club
accrual (or other outstanding complementaries) of the Company; (G)
outstanding chips/tokens of the Company; (H) the Company's accruals for
unpaid wages, salary, holiday, vacation, personal day, sick day, severance
and other employee benefits, all as determined in accordance with good and
customary gaming practice; (I) all obligations of the Company for cash
compensation for the period since February 28, 2006 under a Management
Incentive Program in the amount identified on Schedule 6(f) hereto (provided
that amounts contingent on future performance of the Company shall be
estimated based on Company's year to date performance, and prorated on a per
diem basis between Seller and Buyer as of Closing), and (J) all obligations
of the Company with respect to other accrued expenses existing on the
Closing Date (collectively, "Accrued Expenses and Deferred Obligations");
(b) Following the Closing, neither Buyer nor the Company will assume
or otherwise have any responsibility with respect to any other Liability of
Seller or the Company not expressly included within the definition of
Company Liabilities, including the Excluded Liabilities (as defined in
Section 9(c)(viii)) and Buyer acknowledges that it shall have no monetary
recourse against Seller with respect to any such other Liability.
4. BUYER'S CONDITIONS. Buyer's obligation to purchase the Closing Shares is
expressly conditioned (unless waived by Buyer in writing) upon satisfaction
of each of the following conditions:
(a) The entry by the Bankruptcy Court of the Procedures Order, the
Sale Order and the Confirmation Order, as respectively defined in Section 9
below, each of which shall have become a Final Order. The Sale Order shall,
among
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other things, authorize the sale of the Closing Shares to Buyer free and
clear of all Encumbrances, and contain all of the provisions described in
Section 9(c) hereof. "Final Order" means an order or judgment of the
Bankruptcy Court, or the Commission for purposes of Section 4(i), which has
not been reversed, stayed, modified or amended, that is in full force and
effect, and as to which (I) the time to appeal or application for review by
a higher court has expired without any appeal or application for review
having been filed, or (II) any appeal or application for review by a higher
court that has been or may be taken has resulted in entry of an order
affirming the decision of the Bankruptcy Court or the Commission for
purposes of Section 4(i), with all additional review periods from that
affirmance having expired without any appeal or other application for review
thereof having been filed;
(b) The entry of such further orders as required to implement this
Agreement, including a Final Order under Section 365 or 1123(b)(2) of the
Bankruptcy Code authorizing assumption by Seller and/or the Company of
Assumed Executory Leases and Executory Contracts, with specific findings
that upon payment by Seller and/or the Company of the Cure Amounts, all
Defaults required to be cured in order for the Company to assume the Assumed
Executory Leases and Executory Contracts have been cured and that the
Company has provided adequate assurance of future performance necessary to
satisfy the requirements of Section 365 of the Bankruptcy Code;
(c) Receipt by Buyer on the Closing Date on board the Riverboat Casino
of the Riverboat Casino's drawings and specifications and other technical
information in Seller's or the Company's possession;
(d) The maintenance and delivery to Buyer of the original Certificates
of Documentation of the Admiral and Admiral Barge One, as applicable, issued
by the United States Coast Guard, National Riverboat Casino Documentation
Center;
(e) The receipt on the Closing Date by Buyer of the original stock
certificates evidencing the Closing Shares, free and clear of any
Encumbrances, but subject to applicable state and federal securities laws,
together with stock power or powers executed by Seller, conveying to Buyer
all of Seller's right, title and interest in and to the Closing Shares;
(f) Seller's representations and warranties set forth in Section 6
below, taken as a whole, shall be true and correct in all material respects
on the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement), which shall be certified by an
officer of Seller as of Closing, provided that for purposes of determining
whether such representations and warranties are true and correct in all
material respects, all "materiality" and/or "knowledge" qualifications
contained in such representations and warranties set forth in Section 6
shall be disregarded;
(g) Seller's representations and warranties set forth in Section 6(p)
below shall be true and correct in all respects on the Closing Date (as
though made then and as though the Closing Date were substituted for the
date of this Agreement), which shall be certified by an officer of Seller as
of Closing;
(h) Seller and the Company shall each have performed and complied in
all material respects with all obligations and covenants required to be
performed and observed by them under this Agreement prior to or as of the
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Closing, which shall be certified by an officer of Seller as of Closing;
(i) The Missouri Gaming Commission, or such other commission or
governmental authority having appropriate jurisdiction (the "Commission")
shall have issued all licenses, permits, approvals, consents, authorizations
and orders (which shall be Final Orders) as are required in order for Buyer
to acquire the Closing Shares and for the Company to lawfully operate the
Riverboat Casino following the Closing under the laws and regulations of the
State of Missouri, including the gaming license and liquor license described
in Schedule 6(i), (the "MGC Approval"), and the Company shall have
indefeasibly paid in full or settled all outstanding amounts owed to the
Commission as set forth on Schedule 6(l) hereof;
(j) All other necessary filings shall have been completed, waiting
periods observed and governmental approvals obtained as determined to the
reasonable satisfaction of Buyer, including Xxxx Xxxxx-Xxxxxx Anti-Trust
Improvement Act of 0000 (xxx "XXX Xxx"), if applicable;
(k) There shall not have occurred any material adverse change in the
business, operations, prospects or condition (financial or otherwise) of the
Company and the Riverboat Casino Assets, taken as a whole, other than any
change, event, occurrence, effect or state of facts relating to (I) any new
casino development or similar project in the St. Louis metropolitan area, or
(II) any condemnation proceeding involving, or other loss of use of, the
Xxxxxxxx Lot (a "Material Adverse Change");
(l) The Sale Order shall contain a finding that notice of the Sale
Motion was proper and the Confirmation Order shall contain a finding that
notice of the Confirmation Order was proper;
(m) Buyer shall have:
(i) performed at Buyer's expense, a Phase I environmental
assessment of the Riverboat Casino and all real property owned by the
Company or otherwise used in the operation of the Riverboat Casino Assets
(the "Environmental Assessment"), and the Environmental Assessment shall not
have disclosed any fact, condition or circumstance which, in Buyer's
reasonable judgment (and without any requirement to conduct any additional
environmental testing or analysis), could reasonably be expected to lead to
remedial investigation or remediation costs or other Liabilities in the
aggregate amount of $100,000 or more (a "Material Environmental Liability");
provided, however, that this condition 4(m)(i) shall lapse and shall be
deemed to have been satisfied in all respects on the date that is thirty
(30) days after the date of this Agreement, or if sooner, the day
immediately preceding the hearing on the Procedures Order referred to in
Section 9(a) below (the "Environmental Due Diligence Period"); provided,
further, that during the Environmental Due Diligence Period, Buyer and
Seller shall discuss possible solutions to any Material Environmental
Liability which may arise, including environmental insurance, a reduction of
the Purchase Price or other solution, any of which would require the mutual
written agreement of Buyer and Seller (in the sole and absolute discretion
of each); and
(ii) received from Seller a written report of the 2006 physical
survey of the Riverboat Casino to be conducted by ABS Consulting (the "ABS
Report"), which report shall state that the annual survey of the Riverboat
Casino required by the Missouri Gaming Commission for 2006 has been
completed,
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that the structure, watertight integrity and stability thereof are in
compliance with the Company's original stability letter dated November 10,
1994, and that the Riverboat Casino's major components are fit to continue
their intended purpose as a permanently moored casino platform and casino
entry platform, respectively, in the State of Missouri;
(n) Seller shall have delivered a certificate of its secretary dated
the Closing Date and certifying (I) that attached thereto is a true and
complete copy of the certificate or articles of incorporation and by-laws of
Seller and the Company as in effect on the date of such certification and
(II) as to the incumbency and specimen signature of each officer of Seller
and the Company executing this Agreement or any other document delivered in
connection herewith (such certificate to contain a certification by another
officer of Seller as to the incumbency and signature of the officer signing
the certificate referred to in this clause (n));
(o) Buyer shall have received, at Seller's expense, the commitment of
a title insurance company reasonably acceptable to Buyer ("Title Company")
as of the Closing Date to issue, with respect to the City Lease and (if
owned) the Xxxxxxxx Lot:
(i) an ALTA extended coverage leasehold title insurance policy in
the amount of $30,000,000 insuring leasehold title to the City Lease in the
Company and, if applicable, an ALTA extended coverage title insurance policy
in the amount of $5,000,000 (or such lesser amount representing the cost to
acquire tile to the Xxxxxxxx Lot) insuring fee title to the Xxxxxxxx Lot in
the Company, and (A) including an endorsement insuring Buyer against loss or
damage sustained by reason of the Title Company denying liability under the
new title policy by reason of knowledge imputed to the Company or Seller
through its officers and directors and other fiduciaries of company (the
"Non- Imputation Coverage"), (B) dated as of the Closing Date, and (C)
subject only to Permitted Exceptions (as defined below), or
(ii) an endorsement to any existing owner's coverage title
insurance policies insuring the Company and delivered to buyer which shall
include (A) if available, Non-Imputation Coverage, (B) updating the date of
the existing title policy to the Closing Date, and (C) insuring over any
matter which is not a Permitted Exception. For the purposes of this
Agreement, "Permitted Exceptions" means (1) liens for real property Taxes
and assessments for the current year, not yet delinquent, (2) liens or
encumbrances arising out of any activity of Buyer with respect to the City
Lease, (3) except as described on Schedule 4(o), those matters listed on
Schedule B of the title report or the existing title policy, as applicable,
a copy of which has been provided to Buyer prior to the date hereof, and (4)
those matters listed on Schedule B of any new title report or title policy,
as applicable, which are approved by Buyer at least ten (10) days prior to
Closing.
(p) Seller shall have delivered to Buyer with respect to the City
Lease, a Lease and Sublease Estoppel Certificate and Consent Agreement, in
substantially the form attached hereto as Exhibit B (with such changes
thereto as Buyer shall approve, such approval not to be unreasonably
withheld or delayed), duly executed by each of the parties thereto;
(q) Seller shall have delivered to Buyer with respect to the Parking
Leases, an estoppel certificate, in substantially the form attached hereto
as Exhibit C (with such changes thereto as Buyer shall approve, such
approval not
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to be unreasonably withheld or delayed), executed by each counterparty other
than the Company under any written Real Property Lease;
(r) The Main Office and the other Excluded Assets shall have been
effectively assigned and transferred, in such form and with such timing as
Buyer shall reasonably approve (including Buyer's satisfaction that the
resulting Taxes either will not be the responsibility of Company
post-Closing or will be fully accrued as a current liability in the
calculation of Net Current Assets), without representation or warranty of
the Company of any kind, to an entity other than the Company and the Company
shall no longer have any interest or Liability therein;
(s) A trademark assignment, in form and substance reasonably
satisfactory to Buyer and in a form recordable with the United States Patent
and Trademark Office, pursuant to which Seller shall have effectively
assigned and transferred to the Company each of the trademarks listed on
Schedule 6(g), each of which shall be deemed to be included in the Riverboat
Casino Assets;
(t) Receipt by Buyer on or prior to the Closing Date of the duly
executed resignations by the officers and directors from all of their
respective positions with the Company and such other evidence as Buyer may
request of termination of employment of such officers and directors by the
Company, in each case, concurrently with the Closing; and
(u) The Company shall have a current license from the Commission to
operate the Riverboat Casino which does not contain any newly imposed
conditions, restrictions or limitations that are not reasonably acceptable
to Buyer and that are not remedied by Seller prior to Closing.
5. SELLER'S CONDITIONS. Seller's obligation to sell the Closing Shares to
Buyer is expressly conditioned (unless waived by Seller in writing) upon
satisfaction of each of the following conditions:
(a) The (I) payment of the Purchase Price (less the Deposit (with
interest accrued thereon, if any)) by wire transfer from Buyer and (II) the
receipt of the Deposit (with interest accrued thereon, if any) from the
Escrow Agent;
(b) The receipt of copies (certified by the secretary of Buyer) of the
resolutions of Buyer's board or other documentation authorizing the
execution, delivery and performance of this Agreement and the transactions
and documents contemplated herein;
(c) The entry by the Bankruptcy Court of the Procedures Order, the
Sale Order and the Confirmation Order;
(d) Buyer's representations and warranties in Section 7 below, taken
as a whole, shall be true and correct in all material respects on the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement), which shall be certified by an
officer of Buyer as of Closing, provided that for purposes of determining
whether such representations and warranties are true and correct in all
material respects, all "materiality" and "in all material respects"
qualifications contained in such representations and warranties set forth in
Section 7 shall be disregarded;
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(e) Buyer shall have performed and complied in all material respects
with all obligations and covenants required to be performed and observed by
Buyer under this Agreement prior to or as of the Closing, which shall be
certified by an officer of Buyer as of closing;
(f) The MGC Approval shall have been obtained; and
(g) All necessary filings shall have been completed, waiting periods
observed and governmental approvals obtained for the sale of the Closing
Shares as determined to the reasonable satisfaction of Seller, including the
HSR Act.
6. SELLER'S REPRESENTATIONS. Seller hereby represents and warrants to Buyer
that the following statements contained in this Section 6 are correct and
complete as of the date of this Agreement:
(a) Seller has and on the Closing Date will have (in each case,
subject to liens and claims to be discharged upon the issuance of the Sale
Order) good and lawful title to and possession of the Closing Shares, free
and clear of all Encumbrances. The Company has and on the Closing Date will
have (in each case, subject to liens and claims to be discharged upon the
issuance of the Confirmation Order) good and lawful title to and possession
of the Riverboat Casino Assets, free and clear of all claims and interests
of creditors of the Company (to the maximum extent permitted under Section
1141(C) of the Bankruptcy Code), other than the Company Liabilities.
(b) Provided the Sale Order and the Confirmation Order are issued by
the Bankruptcy Court and subject to the other terms and conditions of this
Agreement, the Riverboat Casino and the other Riverboat Casino Assets shall
be owned by the Company following the Closing Date free and clear of all
claims and interests of creditors of the Company other than the Company
Liabilities. Provided the Sale Order and the Confirmation Order are issued
by the Bankruptcy Court, the Closing Shares shall be owned by Buyer
following the Closing Date free and clear of all Encumbrances. All of the
tangible personal property of the Company that is necessary for the
operation of the Riverboat Casino in the same manner as presently operated
by the Company is physically located at the Riverboat Casino or at the
properties covered by the Assumed Executory Leases and Executory Contracts.
Except as set forth in Schedule 6(b), all tangible personal property
included in the Riverboat Casino Assets are suitable for the purposes for
which they are used, in good working condition, reasonable wear and tear
excepted, and are free from any known defects. The Hull Certification
attached to Schedule 6(b) hereto is true and correct and is in full force
and effect.
(c) Seller and the Company are corporations duly organized, validly
existing and in good standing under the laws of the jurisdiction in which
they were incorporated and are qualified to do business as foreign
corporations in each jurisdiction where they are required to be qualified to
avoid Liability or disadvantage. Seller and Company have all requisite
corporate power and authority necessary to execute and deliver this
Agreement, sell the Closing Shares (in the case of Seller) and otherwise
perform their respective obligations under this Agreement and any documents
related hereto, subject only to the issuance of the Sale Order by the
Bankruptcy Court. Subject to the issuance of the Sale Order and the
Confirmation Order, this Agreement and any related document executed and
delivered by Seller and/or the Company (as applicable) has been, or will be,
duly executed and delivered by Seller and/or
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the Company (as applicable) and constitutes, or, when executed will
constitute, a valid and binding obligation of Seller and/or Company,
enforceable against Seller and/or Company in accordance with its terms,
subject only to the issuance of the Sale Order by the Bankruptcy Court.
(d) Attached to this Agreement as Schedule 6(d) are the audited
balance sheets of the Company as of February 28, 2002 and 2003, February 29,
2004 and February 28, 2005, the related unaudited statements of operations
and cash flows for the years then ended (the "Annual Financial Statements"),
and the unaudited balance sheet of the Company as of January 31, 2006 (the
"Balance Sheet") and the related statement of operations for the eight
months then ended (the "Interim Financial Statements", and together with the
Annual Financial Statements, the "Financial Statements"). The date of the
Balance Sheet is referred to herein as the "Balance Sheet Date." The
Financial Statements are, and the Post-Signing Financial Statements (as
defined in Section 8(v)) will be true, correct and complete and fairly
present in all material respects the financial position of the Company as of
the dates shown and the results of the Company's operations for the periods
covered thereby. The Financial Statements have been prepared in accordance
with GAAP applied on a consistent basis, except that the Financial
Statements lack full footnote disclosures and the Interim Financial
Statements are subject to year end adjustment consistent with prior periods.
(e) Schedule 6(e) attached to this Agreement sets forth a list of all
real property used by the Company in connection with its ownership and
operation of the Riverboat Casino. Except for the Xxxxxxxx Lot and the Real
Property Leases identified on Schedule 6(e), for easement rights which are
shown on the title policy as appurtenant to the City Lease and for public
rights of way, the lawful operation or occupancy of the Riverboat Casino
does not require use of any other real property, for parking, access,
support or any other purpose, and no other real property is now being used
in conjunction with the operation or occupancy of the Riverboat Casino.
Except for the Xxxxxxxx Lot and the Real Property Leases identified on
Schedule 6(e), the Company does not own, lease, license, hold or use any
other land, buildings or other interest, including any option, in real
property. A true and complete copy of each written Real Property Lease
identified on Schedule 6(e) has been delivered to Buyer, including all
amendments or modifications thereto and any other agreements related thereto
such as options, rights of first offer or rights of first refusal to
purchase the leased premises or any portion thereof. Each oral Real Property
Lease has been described in reasonable detail on Schedule 6(e). Each of the
Real Property Leases, and the leases described in Schedule 6(e), is in full
force and effect and no claim of Default by either tenant or landlord
thereunder has been made. The description of the leased premises in each
Real Property Lease describes the real property being used thereunder fully
and adequately. The Company has not received written notice of any
condemnation proceedings by any public authority relating to any of the real
property leased by the Company, except for any condemnation proceeding
involving the parking lot known as Xxxxxxxx Lot (a "Xxxxxxxx Proceeding"),
and, to Seller's Knowledge, none are pending. The Riverboat Casino has
adequate water supply, sanitary facilities, telephone, gas, electricity and
fire protection services and other public utilities sufficient to operate
the Riverboat Casino as it is presently operated. Except as set forth on
Schedule 6(e), the Company has the exclusive right to occupy the real
property leased pursuant to the Real Property Leases identified on Schedule
6(e) and the Company has not granted any leases, subleases, licenses,
concessions, options, or other agreements, written or
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oral, to any third party granting the right to use or occupy said real
property.
(f) Except as described on Schedule 6(f), and except with respect to
the Excluded Assets, the business of the Riverboat Casino has been conducted
in the ordinary course since the Balance Sheet Date, all accounts payable
have been paid in the ordinary course since the Balance Sheet Date, and
there has not been with respect to the Company any of the items specified
below since the Balance Sheet Date:
(i) any increase in the compensation payable or to become payable
to any director, officer, employee or agent of the Company, except for
increases for non-officer employees made in the ordinary course of business
or as otherwise consented to in writing by Buyer, nor any other change in
any employment or consulting arrangement, nor any incentive payments earned
by any director, officer, employee or agent of the Company;
(ii) any sale, assignment or transfer of any Riverboat Casino
Assets, or any additions to or transactions involving any Riverboat Casino
Assets, other than those made in the ordinary course of business or as
otherwise consented to in writing by Buyer;
(iii) other than in the ordinary course of business or pursuant to
the Company Plan of Reorganization, any waiver or release of any claim or
right or cancellation of any debt held (other than Excluded Liabilities);
(iv) any damage, destruction or loss, whether or not covered by
insurance, (A) materially and adversely affecting the Riverboat Casino
Assets or the operations, assets, properties or prospects of the Riverboat
Casino Assets or (B) of any item or items carried on its books of account
individually or in the aggregate at more than $100,000, or any material
repeated, recurring or prolonged shortage, cessation or interruption of
supplies or utility or other services required to operate the Riverboat
Casino Assets; and
(v) receipt of notice or actual or threatened labor trouble, strike
or other occurrence, event or condition of any similar character which has
had or would reasonably be expected to materially and adversely affect the
Riverboat Casino Assets or the transactions contemplated by this Agreement
or any other document delivered in connection herewith.
(g) Schedule 6(g) attached to this Agreement contains a complete and
accurate list and summary description of all registered Intellectual
Property owned by the Company or its affiliates. All copyrights, trademarks
and service marks that have been registered are currently in compliance with
all formal legal requirements (including the timely post-registration filing
of affidavits of use and incontestability and renewal applications), are
valid and enforceable, and are not subject to any maintenance fees or Taxes
or Actions falling due within ninety (90) days after the Closing Date. No
such copyright, trademark or service xxxx has been or is now involved in any
interference, reissue, reexamination, or opposition proceeding. To Seller's
Knowledge, none of the registered intellectual property of the Company
infringes, or has been alleged to infringe, any copyright, trademark,
service xxxx or other proprietary right of any other Person.
(h) Schedule 6(h) sets forth a list or description of all written or
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oral contracts, agreements, leases, instruments, or other documents or
commitments, arrangements, undertakings, practices or authorizations
material to the business of the Company, and that is binding upon the
Company or its property under any Applicable Law ("Contracts"), including
Contracts of the type described below:
(i) employment agreements; collective bargaining agreements,
multiemployer plan adoption agreements and other agreements affecting any
union employee of the Company; and deferred compensation agreements,
relocation agreements and other agreements affecting any nonunion employee
of the Company;
(ii) leases of any tangible personal property, including gaming
equipment, food service machinery and equipment, and office, printing or
computer equipment;
(iii) license agreements (other than the Gaming Licenses), whether
as licensor or licensee (excluding licenses from third parties implied by
the sale of a product and paid up licenses for commonly available shrink
wrap software applications);
(iv) joint venture agreements, affiliation and endorsement
agreements, advertising agreements with minimum purchase provisions or other
undertakings which have not yet been satisfied by the Company, and public
relations Contracts;
(v) Contracts by which any material product or service offered by
the Company or any material operating function of the Company (including
gaming, food service, personnel and security) have been outsourced to a
third party;
(vi) any guarantee or other pledging of the Company's credit or
financial resources for the obligations of officers, directors, employees or
affiliates of the Company or any other Person (except endorsements in the
ordinary course of business);
(vii) any Contract that has been entered into outside of the
ordinary course of the Company's business;
(viii) any other Contract which is material to the Company or to
the operation of the Riverboat Casino; and
(ix) any Contract to pay brokerage commissions or parking operation
or facilities fees with respect to the Real Property Leases.
Seller has delivered or made available to Buyer true and complete copies
of each Contract or has provided a summary of the material terms thereof,
all of which are in force and effect and may be assumed by the Company
subject to this Agreement or Buyer's consent, as applicable, provided the
Sale Order and Confirmation Order is obtained. Except as provided in
Schedule 6(h), there are no other material agreements material to the
business of the Company, that are binding upon the Company or its property
under any Applicable Law.
(i) Schedule 6(i) attached to this Agreement sets forth a list of all
Gaming Licenses of the Company. Other than Gaming Licenses listed on
Schedule 6(i), no other Gaming License or other governmental permit,
license,
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registration, certificate of occupancy, approval and other governmental
authorization is required for the complete operation of the Riverboat Casino
Assets as currently operated. All Gaming Licenses listed on Schedule 6(i)
are in full force and effect, and neither the Company nor Seller (as
applicable) is in Default thereunder. Complete and correct copies of all of
the Gaming Licenses have heretofore been delivered or made available to
Buyer by Seller.
(j) Except as set forth in Schedule 6(j) and other than the Case,
there is not pending or, to Seller's Knowledge, threatened any suit, Action,
arbitration or legal, administrative or other proceeding by or against or
affecting Seller, the Company or any of the Riverboat Casino Assets, other
than any Xxxxxxxx Proceeding and, to Seller's Knowledge, no basis exists
therefor, and there are no suits, Actions or proceedings pending in which
the Company is the plaintiff or claimant with respect to the Riverboat
Casino Assets. Except as set forth in Schedule 6(j) or as contemplated by
this Agreement, the Procedures Order, the Confirmation Order and the Company
Plan of Reorganization, neither Seller, the Company nor any of the Riverboat
Casino Assets is subject to any order, writ, injunction or decree of any
federal, state, local or foreign court, department, agency or
instrumentality or any award in any arbitration proceeding ("Court Orders").
Neither Seller nor the Company is in Default with respect to any Court
Orders. There is no Action, suit or proceeding pending or, to Seller's
Knowledge, threatened which questions the legality or propriety of the
transactions contemplated hereby.
(k) Schedule 6(k) lists the names, addresses, dates of hire, positions
and current annual compensation rates of all of the Company's employees and
officers as of the date indicated therein. The Company has paid in full to
all employees and officers, as and when such amounts have become due, or
made appropriate accruals therefor on its books of account, all salary,
wages, commissions, bonuses and other direct compensation for all services
performed by them. The Company has withheld or collected from each payment
made to each of its employees the amount of all Taxes required to be
withheld or collected therefrom, and the Company has paid the same when due
to the proper authorities. Except as disclosed in Schedule 6(k), there are
no controversies, grievances or claims pending with the Company by any of
the Company's employees, former employees or beneficiaries of employees of
the Company with respect to their employment or benefits incident thereto,
including sexual harassment and discrimination claims and claims arising
under workers' compensation laws which have not been resolved and, to
Seller's Knowledge, no basis exists therefor. Except as listed in Schedule
6(k), there is no union representation of the Company's employees, and, to
Seller's Knowledge, there has been no attempt by a labor organization to
organize the Company's employees into a collective bargaining unit.
(l) Except as described in Schedule 6(l), there has been no material
Default by the Company under any statute, law, ordinance, regulation, order
or rule of any federal, state, local or foreign government or any court or
tribunal of competent jurisdiction, administrative agency, department,
commission, instrumentality, body or other governmental authority or
instrumentality, domestic or foreign (each, a "Governmental Authority") that
have not previously been cured or for which all consequences of
noncompliance (including without limitation full payment of fines, penalties
and other amounts) have already occurred, and neither Seller nor the Company
has received any notices from any Governmental Authority regarding any
alleged material Defaults that are currently applicable to Seller, the
Company or any Riverboat Casino Assets under any Applicable Laws.
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(m) Except as set forth in Schedule 6(m), the Company is not a party
to, nor has the Company established, any pension, profit-sharing, cafeteria,
medical reimbursement, 401(k), retirement, deferred compensation, stock
option, incentive, vacation, hospitalization, medical, disability or life
insurance, severance, termination, bonus or other employee benefit plan,
contract, arrangement or understanding of the Company or any Person required
to be aggregated with, or treated as the same employer as the Company under
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or the Internal Revenue Code of 1986, as amended ("Code") (collectively
hereinafter referred to as an "ERISA Affiliate"), whether or not covered by
ERISA or qualified within the meaning of Section 401(A) of the Code, and
whether single-employer or multi- employer, which is presently in force or
which has been terminated within the six (6) calendar year period prior to
this year. The employee benefit and welfare plans set forth in Schedule 6(m)
do not qualify for the special provisions for multi-employer plans set forth
in 29 U.S.C. Section 1384 and this Agreement does not invoke a complete or
partial withdrawal as contemplated by 29 U.S.C. Section 1384, or the
attenuating penalties and liabilities to Buyer as set forth therein.
(n) Except as described in Schedule 6(n), neither the execution and
delivery by Seller and/or Company of this Agreement, nor the performance of
the transactions performed or to be performed by Seller and/or the Company
hereunder, (I) require any filing, consent, notice, registration,
renegotiation or approval of any third party (including any Governmental
Authority) or any customer, supplier, landlord, licensor or union or (II)
violate in any material respect or constitute a Default in any material
respect, or cause any payment obligation or Encumbrance to arise under (A)
any laws of any Governmental Authority, including all federal, state and
local statutes, regulations, ordinances, orders, decrees or any other laws,
common law theories or reported decisions of any court thereof ("Applicable
Law") or Court Order to which Seller or the Company is subject (other than
any approvals or orders of the Bankruptcy Court or any consent required
under the HSR Act), (B) the certificate or articles of incorporation or
bylaws of Seller or the Company, or (C) any Contract, Gaming License or
other document to which Seller or the Company is a party or by which the
Riverboat Casino Assets may be bound.
(o) The Company has authorized 1,000 shares of Company Common Stock of
which 1,000 shares are issued and outstanding (the "Closing Shares"), all of
which are owned of record by Seller. Other than the Closing Shares, there
are no other equity securities, options, warrants, convertible securities,
Contracts or rights of any kind to purchase or otherwise acquire any equity
securities of the Company. No shares of the capital stock of the Company are
held as treasury stock. All of the Closing Shares have been duly authorized
and validly issued, are fully paid and non-assessable, were not issued in
violation of the terms of any Contract binding upon the Company or any
holder thereof, and were issued in compliance with the certificate or
articles of incorporation and bylaws of the Company and all applicable
federal, state and foreign securities laws, rules and regulations. There are
no Contracts to which Seller or the Company is a party among any Persons
which (i) affect or relate to the voting or giving of written consents with
respect to any security, or (ii) restrict the transfer of the Closing
Shares.
(p) Taxes.
(i) The Company has filed (or there has been filed on its behalf)
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all Tax Returns that were required to be filed with respect to the Company
(including Tax Returns of any consolidated, affiliated, combined, unitary or
similar group of which the Company is or was a member to the extent the
Company would be liable for any Taxes imposed on the Company or any other
such member under Treasury Regulation Section 1.1502-6 or corresponding
provisions of state, local or foreign law or as a transferee or successor,
by contract or otherwise) under applicable laws and regulations. All such
Tax Returns were correct and complete in all material respects and were
prepared in substantial compliance with all applicable laws and regulations.
All Taxes due and owing by the Company, or of any consolidated, affiliated,
combined, unitary or similar group of which the Company is or was a member
(whether or not shown on any Tax Return) to the extent the Company would be
liable for any Taxes imposed on the Company or any other such member under
Treasury Regulation Section 1.1502-6 or corresponding provisions of state,
local or foreign law or as a transferee or successor, by contract or
otherwise, have been paid. Except as described in Schedule 6(p), the Company
is not currently the beneficiary of any extension of time within which to
file any Tax Return. As used herein, "Taxes" means all taxes, duties,
charges, fees, levies or other assessments imposed by any taxing authority
including income, gross receipts, value-added, excise, withholding, personal
property, real estate, sale, use, ad valorem, license, lease, service,
severance, stamp, transfer, payroll, employment, customs, duties,
alternative, add-on minimum, estimated and franchise taxes (including any
interest, penalties or additions attributable to or imposed on or with
respect to any such assessment). As used herein, "Tax Return" means any
return (including any information Tax Return), report, statement, schedule,
notice, form, declaration, claim for refund or other document or information
filed with or submitted to, any governmental body in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with
any legal requirement relating to any Tax.
(ii) The Company was properly includible in Seller's consolidated
federal income Tax Returns for all open Tax periods prior to and including
the Closing Date.
(iii) Neither Seller nor the Company has undergone a Code Section
382 change in ownership; provided, however, in the event that any portion of
the consolidated net operating loss carryforward allocable to the Company
under Treasury Regulations Section 1.1502-21(B) is determined to be subject
to a consolidated or subgroup 382 limitation, Seller shall elect in
accordance with Treasury Regulations Section 1.1502-95(C) to apportion to
the Company a portion of the consolidated Section 382 limitation (value
element, adjustment element and net unrealized build-in gains) sufficient to
permit the Company to absorb the apportioned consolidated net operating loss
carryforward that is otherwise available to the Company and its new
consolidated group; and provided, further, that Seller makes no
representation as to the effects of the transactions contemplated by this
Agreement.
(iv) No claim has ever been made by an authority in a jurisdiction
where the Company does not file Tax Returns that the Company is or may be
subject to taxation by that jurisdiction. There are no Liens for Taxes
(other than Taxes not yet due and payable) upon any of the assets of the
Company.
(v) Except as described in Schedule 6(p), no foreign, federal,
state, or local Tax audits or administrative or judicial Tax proceedings are
pending or being conducted with respect to the Company (including with
respect
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to any consolidated, affiliated, combined, unitary or similar group of which
the Company is or was a member to the extent the Company would be liable for
any Taxes imposed on the Company or any other such member under Treasury
Regulation Section 1.1502-6 or corresponding provisions of state, local or
foreign law or as a transferee or successor, by contract or otherwise).
Seller shall remit any refund of Taxes received by Seller to the extent such
refund is attributable to the Company or its business (including any refund
that may result from Tax proceedings as described in Schedule 6(p)), but
excluding any Tax refunds described in Section 9(c)(vii)(11). Except as
described in Schedule 6(p), neither Seller, to the extent attributable to
the Company, nor the Company has received from any foreign, federal, state,
or local taxing authority (including jurisdictions where the Company has not
filed Tax Returns) any (A) notice indicating an intent to open an audit or
other review, (B) request for information related to Tax matters, or (C)
notice of deficiency or proposed adjustment for any amount of Tax proposed,
asserted, or assessed by any taxing authority against the Company.
(vi) Neither Seller, to the extent applicable to the Company, the
Company nor any of their respective subsidiaries has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(vii) Neither Seller nor the Company are foreign persons and Seller
and the Company are "United States Persons" as defined in Code Section
7701(a)(3).
(viii) The Company will not be required to include any item of
income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a
result of any:
(A) change in method of accounting for a taxable period ending
on or prior to the Closing Date;
(B) "closing agreement" as described in Code Section 7121 (or
any corresponding or similar provision of state, local or foreign income Tax
law) executed on or prior to the Closing Date;
(C) installment sale or open transaction disposition made on or
prior to the Closing Date; or
(D) prepaid amount received on or prior to the Closing Date.
(ix) Seller will not treat the stock of the Company as worthless
under Code Section 165.
(x) Seller will not elect, on behalf of the Company, to reduce the
basis of the depreciable property of the Company under Code Section
108(b)(5).
(q) The Company does not have any direct or indirect liability,
indebtedness, obligation, commitment, expense, claim, deficiency, guaranty
or endorsement of or by any Person, whether accrued, absolute, contingent,
matured, unmatured, liquidated, unliquidated, known or unknown ("Liability")
except for (I) Liabilities which are adequately reflected and reserved
against in the Balance Sheet, and (II) Liabilities arising under the
Contracts, provided that none of the Liabilities described in this section
relates to any
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Default, breach of warranty, tort, infringement or violation of Applicable
Law or arose out of any action, order writ, injunction, judgment or decree
outstanding or claim, suit, litigation, proceeding, investigation or dispute
("Action").
Other than the representations and warranties contained in this Agreement,
Seller makes no representation or warranty as to the seaworthiness of the
Riverboat Casino or the condition or fitness of the Riverboat Casino or any
of the other Riverboat Casino Assets thereof for any particular purpose
other than the purpose for which they are currently used. For purposes of
this Agreement, "Seller's Knowledge" means the actual knowledge of any of
its executive officers as of the date of this Agreement, after reasonable
inquiry.
7. BUYER'S REPRESENTATIONS. As of the date hereof and as of the Closing,
Buyer hereby represents and warrants to Seller that (A) Buyer is a
corporation duly formed, validly existing and in good standing under the
laws of the jurisdiction identified in the preamble to this Agreement and is
in good standing under the laws of the State of Missouri, (B) Buyer has all
requisite power and authority necessary to enter into this Agreement and to
carry out its obligations hereunder, (C) Buyer is a citizen of the United
States within the meaning of 46 U.S.C. Section 2, authorized to own and
operate the Riverboat Casino in the coastwise trade, (D) Buyer has had full
opportunity to inspect the Riverboat Casino, its various components and
systems and the other Riverboat Casino Assets, and Buyer is relying solely
on the representations and warranties made by Seller herein and its own
evaluation of the seaworthiness of the Riverboat Casino and the condition
and fitness of the other Riverboat Casino Assets in connection with its
agreement to purchase the Riverboat Casino Assets, (E) all documents and
information furnished by Buyer to Seller with respect to Buyer's financial
condition, sources of financing and capability of operating a gaming
establishment are true and correct in all material respects, (f) other than
any filings required to be made under the HSR Act, the approval of the City
of St. Louis under the terms of the City Lease, and the approval of the
Bankruptcy Court, the Commission and the applicable liquor authorities, no
consent, approval or action of, filing with or notice to any governmental or
regulatory authority or other third party on the part of Buyer is required
in connection with the (I) execution, delivery and performance of this
Agreement or (II) consummation of the transactions contemplated hereby, (g)
the execution and delivery by Buyer of this Agreement and the performance by
Buyer of its obligations hereunder do not (I) conflict with or result in a
violation or breach of any of the terms, conditions or provisions of the
certificate of incorporation or By-laws of Buyer or (II) conflict with or
result in a violation or breach of any term or provision of any law or order
applicable to Buyer or any of its assets and properties, other than such
conflicts, violations or breaches that could not in the aggregate reasonably
be expected to adversely affect the validity or enforceability of this
Agreement and (h) Buyer has sufficient cash and/or available credit
facilities (and has provided Seller with evidence thereof) to pay the
Purchase Price and to make all other necessary payments of fees and expenses
in connection with the transactions contemplated by this Agreement,
including in respect of the Company Liabilities.
8. COVENANTS.
(a) Pre-Closing Covenants of Seller and Company. Seller hereby covenants
and agrees that prior to the Closing Date it shall (and shall cause the
Company, as applicable, to), and Company hereby covenants and agrees that
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prior to the Closing Date it shall:
(i) make available to Buyer's representatives true and correct
originals or copies of all records relating to the construction and
operation of the Riverboat Casino which are in Seller's or the Company's
possession (with Buyer to bear the cost of any copying costs) including
drawings and specifications;
(ii) cause the Riverboat Casino to be insured through and including
the Closing Date with the same coverages, limits, policies and underwriters
as in effect on the date hereof;
(iii) use all commercially reasonable efforts to cause those
conditions to the Closing which are reasonably within Seller's and/or the
Company's control to be timely satisfied;
(iv)(A) not amend, modify, terminate (partially or completely), grant
any waiver under or give any consent with respect to any Contract that is an
Assumed Executory Lease and Executory Contract, provided that Company may
amend its existing lease of office space to extend the term up to and
including January 31, 2007, at a rent not exceeding $5,200 per month; (B)
not materially Default under any Contract that is an Assumed Executory Lease
and Executory Contract, provided, that if such Default is cured prior to the
Closing, Seller shall not have breached this clause (B); (C) not create any
Encumbrance on any of the Riverboat Casino Assets other than the Company
Liabilities or pursuant to this Agreement or the Procedures Order or
otherwise in the ordinary course of business; (D) not compromise, settle or
otherwise adjust any Assumed Liability; (E) not alter the salaries or other
compensation payable to any employee in any material respect, other than in
the ordinary course of business with respect to employees with salaries and
bonuses of less than $50,000 and other than with respect to new employees
hired in the ordinary course of business; and (F) take all reasonable action
within its control to prevent any of the changes or events listed in Section
6(f) from occurring, in each case other than pursuant to the Company Plan of
Reorganization and this Agreement and other than in respect of claims not
being assumed by the Company;
(v) deliver to Buyer within fifteen (15) days after the end of each
calendar month unaudited financial statements of the Company for such month,
consisting of a balance sheet, a statement of income (including detailed
revenue classifications) and a statement of cash flows (all such financial
statements, the "Post-Signing Financial Statements");
(vi) give Buyer and its representatives (including Buyer's
accountants, counsel, consultants, employees and such other representatives
as Buyer may designate from time to time), upon reasonable notice and during
normal business hours, full access to the Riverboat Casino Assets, and all
Contracts, books, records and affairs of Seller and the Company related to
the Riverboat Casino Assets, and Seller shall cause its officers and
employees to furnish to Buyer copies of all documents, records and
information related to the Riverboat Casino Assets as Buyer or its
representatives may reasonably request;
(vii) subject to the restrictions set forth in this Agreement, use
commercially reasonable efforts (A) to operate the Riverboat Casino in the
ordinary course of business consistent with Seller's and the Company's
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practices during and prior to the period following the filing of its
bankruptcy petition, and (B) as necessary to cause the representations and
warranties of Seller in Section 6 to be true and correct in all material
respects as of the Closing Date;
(viii) notify Buyer, in writing, prior to implementing operational
decisions of a material nature outside the ordinary course of business and
obtain Buyer's written consent prior to entering into any Contract involving
an amount in excess of $75,000 or for a term extending more than ninety (90)
days beyond the Closing Date; provided, however, that if Buyer's consent is
not obtained where required, then the sole remedy of Buyer shall be to
require that the Contract in question be included among the Excluded Assets
under Section 9(c)(vii);
(ix) not take a position (or cause the Company to take a position) on
any income Tax Return, before any governmental agency charged with the
collection of any income Tax, or in any judicial proceeding that is in any
way inconsistent with the allocation of the Purchase Price as agreed to by
Seller and Buyer at or prior to the Auction (as defined in Section 9(a)
below);
(x) subject to the restrictions set forth in this Agreement, use (or
cause the Company to use) commercially reasonable efforts (but shall not be
required to increase wages or benefits) to keep available the services of
the current employees and agents of Seller and the Company and to maintain
its relations and goodwill with the suppliers, customers, distributors of
Seller or the Company and any others having a business relation with Seller
or the Company;
(xi) obtain Buyer's consent, in writing, prior to modifying or
terminating any Real Property Lease or abandoning any real property covered
by a Real Property Lease, or selling, transferring, or otherwise conveying
any interest in any other real property owned by the Company which supports
the Riverboat Casino operations (except real property that is among the
Excluded Assets), which consent shall not be unreasonably withheld;
(xii) promptly disclose to Buyer in writing any information set forth
in the Schedules that is no longer complete, true or applicable and any
information of the nature of that set forth in the Schedules that arises
after the date hereof and that would have been required to be included in
the Schedules if such information had been obtained on the date of delivery
thereof; provided, however, that none of such disclosures shall be deemed to
modify, amend or supplement the representations and warranties of Seller or
the Schedules hereto for the purposes of this Agreement (including Section 4
and Section 12 hereof) unless Buyer shall have consented thereto in writing;
(xiii) not treat the stock of the Company as worthless under Code
Section 165;
(xiv) not elect, on behalf of the Company, to reduce the basis of the
depreciable property of the Company under Code Section 108(b)(5);
(xv) promptly provide to Buyer a copy of the Phase I environmental
assessment report performed by Penn National Gaming, Inc. in August 2004
(the "Prior Environmental Assessment");
(xvi) pay the Accounts Payable, Accrued Expenses and Deferred
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Obligations of the Company consistent with its practices during the pendency
of the Company's bankruptcy proceeding;
(xvii) prior to acquiring any additional Gaming Equipment described in
Section 1(b)(iv), by purchase or by lease (with a term exceeding thirty days
or without an option to terminate at no cost to Company upon at most thirty
days' written notice) Seller and/or Company, as applicable, shall first
obtain the prior written consent of Buyer, in Buyer's sole and absolute
discretion;
(xviii) except with Buyer's prior written consent, not enter into any
amendment of or extension to any existing agreement between the Company and
the Hotel Employees, Restaurant Employees Local 74, AFL-CIO (any such
agreement, a "Union Agreement"); provided, however, that Buyer's prior
written consent shall not be required for any amendment or extension which
both (A) extends the Union Agreement for a period ending no sooner than 60
days and no later than 120 days after Closing, and (B) imposes no financial
or operational obligations on Company which are materially more onerous than
the contract terms previously disclosed by Company to Buyer;
(xix) assign to Company any and all interests of Seller in and to the
Contracts to be assumed by Buyer pursuant to Section 1(b)(ii) hereof, in a
form reasonably acceptable to Buyer;
(xx) promptly upon signing of this Agreement, Company shall request a
determination pursuant to Section 505(b) of the Bankruptcy Code of any
unpaid Missouri income Tax Liability of the Company, and Seller shall
request a determination pursuant to Section 505(b) of the Bankruptcy Code of
any unpaid income Tax Liability of a consolidated group which included the
Company as a member, in each case, incurred during the Tax year ending on
February 28, 2003 and February 29, 2004 and February 28, 2005; and
(xxi) promptly upon filing of the Tax Returns for the Tax year ending
on February 29, 2006 and prior to the Closing Date, Company shall request a
determination pursuant to Section 505(b) of the Bankruptcy Code of any
unpaid Missouri income Tax Liability of the Company, and Seller shall
request a determination pursuant to Section 505(b) of the Bankruptcy Code of
any unpaid income Tax Liability of a consolidated group which included the
Company as a member, in each case, incurred for the Tax year ending on
February 28, 2006;
(xxii) at the earlier to occur of the expiration of the software
maintenance agreement, or the Closing Date, enter into a new maintenance
agreement with respect to the Excluded Software so that none of the Assumed
Executory Leases and Executory Contracts cover maintenance for Excluded
Software;
provide, however, notwithstanding anything to the contrary herein, the
Company may, at any time and from time to time, distribute, dividend,
transfer, assign or otherwise dispose of any or all of the Excluded Assets;
provided, further, that, notwithstanding any other provision in this
Agreement, so long as the Company Plan of Reorganization is prepared and
prosecuted in good faith, the failure of the Company Plan of Reorganization
to be confirmed by the Bankruptcy Court shall not constitute a breach by
Seller of any covenant herein; and provided, further, that, notwithstanding
any other provision in this Agreement, nothing in this Agreement shall be
deemed to restrict or prohibit either the Company or the Committee from
including provisions in the Company Plan of Reorganization (including
provisions regarding the treatment
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of creditors) that either the Company or the Committee deem to be
appropriate or in furtherance of its fiduciary duties, so long as nothing so
included in the Company Plan of Reorganization is inconsistent with the
provisions of this Agreement.
(b) Post-Closing Covenant of Seller. Seller further covenants that:
(i) Seller will not treat the stock of the Company as worthless under
Code Section 165;
(ii) Seller will not elect, on behalf of the Company, to reduce the
basis of the depreciable property of the Company under Code Section
108(b)(5);
(iii) Seller shall apportion the consolidated Section 382 limitation
to Buyer under the circumstances and in the manner described in Section
6(p)(iii);
(iv) promptly upon the close of the Tax year in which the Closing Date
occurs and the filing of the relevant federal income Tax Return for such Tax
year, Seller shall request or cause [the liquidating trustee of the Seller's
estate] to request pursuant to Section 505(b) of the Bankruptcy Code a
determination of any unpaid Liability of the consolidated group which
included the Company as a member for income Tax incurred during the Tax year
of such group in which the Closing Date occurred;
(v) Seller shall prepare, in consultation with the Company, Missouri
income Tax Returns and, in respect of the filing of such Missouri income Tax
Returns, a Section 505(b) determination request letter for filing by the
Company with appropriate Missouri Taxing authorities for the short-Tax year
ending on the Closing Date, and Seller shall make appropriate reserves to
provide for payment of additional income Tax Liability if such short-year
Tax Returns are selected for examination by Missouri Taxing authorities and
such examination results in the assertion of additional Liability against
the Company;
(vi) the effective date of any plan of reorganization or liquidation
confirmed by the Bankruptcy Court in the Seller Case shall not occur until
either (a) the 60-day period provided for under Section 505(b)(2)(A)(i) of
the Bankruptcy Code expires without the consolidated group Tax Returns being
selected for examination in response to requests made in accordance with
Section 8(a)(xx) hereof (i.e. for Tax periods ending February 28, 2003,
February 29, 2004 and February 28, 2005), or (b) the 180-day period provided
for under Section 505(b)(2)(A)(ii) of the Bankruptcy Code expires in
response to requests regarding consolidated group Tax Returns made in
accordance with Section 8(a)(xx) hereof (i.e. for Tax periods ending
February 28, 2003, February 29, 2004 and February 28, 2005) and Seller has
made in consultation with Buyer appropriate reserves sanctioned by the
Bankruptcy Court to provide for payment of any additional income Tax
liability asserted against the Company or Seller's consolidated group; and
(vii) Seller shall not allow the Seller Case to be closed until either
(a) the 60-day period provided for under Section 505(b)(2)(A)(i) of the
Bankruptcy Code expires without the Tax Returns being selected for
examination in response to requests made in accordance with Sections
8(a)(xxi) and 8(b)(iv) and 8(b)(v) hereof (i.e. for the Tax period ending
February 28, 2006 and the Tax year in which the Closing Date occurs), or (b)
the 180-day period
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provided for under Section 505(b)(2)(A)(ii) of the Bankruptcy Code expires
in response to requests regarding Tax Returns made in accordance with
Sections 8(a)(xxi), 8(b)(iv) and 8(b)(v) (i.e. for the Tax period ending
February 28, 2006 and the Tax year in which the Closing Date occurs) and
Seller has made in consultation with Buyer appropriate reserves sanctioned
by the Bankruptcy Court to provide for payment of any additional income Tax
liability asserted against the Company or Seller's consolidated group.
Except as otherwise credited toward the Purchase Price pursuant to
Section 2(f), to the extent employees of Seller or the Company are owed
salary, wages or other benefits in connection with services rendered to
Seller and/or the Company through the Closing Date (excluding accrued
vacation pay), Seller and/or the Company (as applicable) shall pay all such
amounts (including any incentive pay) to its employees on a timely basis
after the Closing in accordance with Seller's regular payroll procedures.
Buyer acknowledges and agrees that, notwithstanding anything to the contrary
in this Agreement, following the Closing, Seller and/or any entity other
than the Company that will be responsible under the Company Plan of
Reorganization for distributing assets on or after the effective date of the
Company Plan of Reorganization to creditor classes may, at any time and from
time to time, distribute, pay-out, dividend, assign or otherwise dispose of
any of their respective assets, including without limitation the Excluded
Assets and the Purchase Price (collectively, "Distributions"), to their
respective creditors, provided, however, that this provision shall in no
event apply to the Company or be deemed to authorize the distribution of any
assets owned by the Company following the Closing.
(c) Covenants of Buyer.
(i) Buyer hereby covenants and agrees that it shall (A) use all
commercially reasonable efforts to cause those conditions to the Closing
which are reasonably within Buyer's control to be timely satisfied, and (B)
use all commercially reasonable efforts to cause the representations and
warranties of Buyer in Section 6 to be true and correct in all material
respects as of the Closing Date.
(ii) From the Closing Date until the date on which the Case is closed
and at Seller's expense, Buyer shall permit Seller and its authorized
representatives, upon reasonable notice to Buyer and at a time convenient to
Buyer, to have access to the books and records of Seller and the Company
being transferred to Buyer as part of the Riverboat Casino Assets, for the
purpose of obtaining any information necessary for the preparation and
filing of any Tax Returns or other reports to any governmental authority for
any period or for any other reason related to the Case. Buyer shall retain
such records consistent with Buyer's normal record retention policies.
(iii) Promptly after Buyer's receipt thereof, Buyer shall provide to
Seller a copy of the Environmental Assessment to be performed by Buyer under
Section 4(m).
(d) Tax Matters.
(i) Seller shall include the items of the Company (including any items
required to be taken into account by Treasury Regulations Sections 1.1502-13
and 1.1502-19) on Seller's consolidated federal income Tax Returns for all
periods through the ending of Seller's Tax year including the Closing Date
in
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accordance with Treasury Regulations Section 1.1502-76(b)(1)(ii)(A)(I) and
pay all federal income Taxes attributable to such income. Any items of the
Company that occur on the Closing Date other than items occurring after the
Closing which are outside the Company's ordinary course of business shall
not be subject to the next day rule as such rule is provided in Treasury
Regulations Section 1.1502-76(b)(1)(ii)(B). For all taxable periods ending
on or before the Closing Date, Seller shall cause the Company to join in
Seller's consolidated federal income Tax Return (and any consolidated,
affiliated, combined, unitary or similar other Tax Return where required or
previously filed) and, in jurisdictions where Company separately reports,
Seller shall cause to be filed with respect to the Company separate company
state and local income Tax Returns and shall cause to be timely paid any
Taxes imposed on Company. All such Tax Returns shall be prepared and filed
in a manner consistent with prior practice, except as required by a change
in applicable law or regulation. Buyer shall have the right, at its expense,
to review and comment on any such Tax Returns (and, as applicable,
determination request letters prepared in accordance with Section 505(b) of
the Bankruptcy Code) prepared by Seller. Buyer shall cause the Company to
furnish information to Seller as reasonably requested by Seller to allow
Seller to satisfy its obligations under this section in accordance with past
custom and practice. The Company and Buyer shall consult and cooperate with
Seller as to any elections to be made on Tax Returns of the Company for
periods ending on or before the Closing Date. Buyer shall include the
Company in its combined or consolidated income Tax Returns, as applicable,
for all periods other than periods ending on or before the Closing Date.
Buyer and Seller shall, and shall each cause its affiliates to, provide to
the other such cooperation and information, as and to the extent reasonably
requested, in connection with the filing of any Tax Return, determination of
Liability for Taxes, or conduct of any audit, litigation or other proceeding
with respect to Taxes, which cooperation and information shall include
providing copies of all relevant Tax Returns (including any relevant Tax
Return of Seller or any group of Seller that includes the Closing Date),
together with relevant accompanying schedules and workpapers.
(ii) Seller shall pay Buyer the amount of any Tax refund received by
Seller resulting from the carryback by Company of any post-closing income
Tax attribute of the Company into Seller's consolidated income Tax Return.
(iii) Seller shall allow the Company and its counsel to participate,
at its expense, in any audit of Seller's consolidated federal income Tax
Returns to the extent that such Tax Returns relate to the Company. Seller
shall not settle any such audit in a manner that would adversely affect the
Company after the Closing Date without the prior written consent of Buyer,
which consent shall not be unreasonably withheld or delayed.
(iv) Seller shall join Buyer, at Buyer's option, in making an election
under Code Section 338(h)(10) (and any corresponding elections under state,
local, or foreign Tax law) (collectively a "Section 338(h)(10) Election")
with respect to the purchase and sale of the stock of the Company hereunder.
Any Section 338(h)(10) Election must be made by Buyer, and Buyer shall be
required to notify Seller of such election, not later than 90 days prior to
the extended due date of Seller's federal income Tax Return (whether or not
extended) for the fiscal year during which the Closing occurs, provided that
Buyer shall in any event notify Seller within 30 days after Buyer has made
any Section 338(h)(10) Election. Seller will pay any Tax attributable to the
making of the Section 338(h)(10) Election. At the Closing, Seller will
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deliver to Buyer a fully executed IRS Form 8023 reflecting the Section
338(h)(10) Election and any similar form provided for under state, local or
foreign law.
(v) Seller shall, and shall cause the Company to, take all necessary
actions such that all Tax sharing agreements or similar agreements with
respect to or involving the Company shall be terminated as of the Closing
Date and such that, after the Closing Date, the Company shall not be bound
thereby or have any Liability thereunder.
(vi) Buyer shall pay to Seller all refunds of Taxes received by Buyer
or the Company after the Closing Date and attributable to Taxes paid by the
Company with respect to any pre-closing period or portion thereof (other
than those refunds to which Buyer is entitled pursuant to Section 8(d)(ii)).
Buyer shall not be required to seek any such Tax refund whether at Seller's
request or otherwise or whether through the filing of amended Tax Returns,
claims for refunds or otherwise, if Buyer believes the Company is not
reasonably entitled to seek such refund. In the event that Seller chooses to
seek any such Tax refund directly, Buyer, at Seller's reasonable expense,
will cooperate fully with Seller in preparing and filing any related claims,
amended Tax Returns or other documents (including but not limited to
relevant powers of attorney or other required authorizations that would
permit Seller to represent the Company and receive directly any Tax Refunds
resulting from Seller's filing such claims, amended Tax Returns or other
required documents). Buyer is entitled to waive the carryback of any net
operating loss or other item of the Company for any post-Closing period or
portion thereof.
(vii) Buyer shall not, and shall not cause, any Tax Return of the
Company for any period ending on or before the Closing Date to be amended
without the prior written consent of Seller.
(viii) Buyer shall not make, and shall not cause any election to be
made, other than the Section 338(h)(10) Election as permitted by Section
8(d)(iv), with respect to the Company that could increase the Tax Liability
of the Company for any period or portion thereof ending on or before the
Closing Date to the extent such election would cause the Company or Seller
to pay additional Taxes (excluding for this purpose any election that would
result solely in any reduction in any net operating loss carryforward
attributable to the Company for periods ending after the Closing Date).
(ix) Seller shall not make, and shall not cause any election to be
made, with respect to the Company that could increase the Tax Liability of
the Company for any period or portion thereof ending on or after the Closing
Date to the extent such election would cause the Company or Buyer to pay
additional Taxes (including for this purpose any election that would result
solely in any reduction in any net operating loss carryforward attributable
to the Company for periods ending on or before the Closing Date).
(x) Seller agrees that at Buyer's election, Seller shall cooperate
with Buyer in restructuring this transaction as a purchase of the assets of
the Company in order to achieve 1031 exchanges under the Code ("Exchange")
of some or all of the Riverboat Casino Assets, or with any arrangements for
deferred or multi-party Exchanges; provided, however, such election shall be
exercised by Buyer in writing on or before the date on which Qualified
Bidders (as defined in Section 9(a)) are required to submit their bids at
Auction and shall be accompanied by a proposed asset purchase agreement
granting the
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Company and Seller substantively the same rights and the same aggregate
consideration as are contained for Seller in this Agreement.
9. BANKRUPTCY COURT APPROVALS.
(a) Bid Protections, Procedures Order and Sale Motion. Promptly following
the execution of this Agreement (and in no event later than five (5)
Business Days thereafter), Seller will file a motion with the Bankruptcy
Court (the "Approval Motion") seeking an order of the Bankruptcy Court in
form reasonably satisfactory to Buyer and consistent with this Agreement
(the "Procedures Order") which:
(i) authorizes the payment by Seller and Company to Buyer of Six
Hundred Fifty Thousand Dollars ($650,000) (the "Break Up Fee"), in the event
this Agreement is terminated and a distribution of the Break Up Fee to Buyer
is required as provided in Section 16 hereof;
(ii) approves the sale of the Closing Shares to Buyer pursuant to this
Agreement, but subject to higher and better offers of third parties for the
Closing Shares or the Riverboat Casino Assets at an outcry auction to be
conducted pursuant to Section 363(B) of the Bankruptcy Code (the "Auction");
and
(iii) authorizes and directs Seller to pay fees and indemnity
obligation amounts due to U.S. Bank National Association pursuant to the
Escrow Agreement, attached hereto as Exhibit A, as allowed administrative
expenses of the Seller within the meaning of Section 503 of the Bankruptcy
Code.
Seller shall use its commercially reasonable efforts to obtain entry of
the Procedures Order within thirty (30) days after the execution of this
Agreement.
The Procedures Order shall provide that any Qualified Bidder may
structure its bid at the Auction as a purchase of the Riverboat Casino
Assets from the Company, rather than as a bid for the Closing Shares. Except
as otherwise permitted in this Agreement, each bid shall be substantially on
the terms of, or on more favorable terms for Seller or the Company (as
applicable) than, those set forth in this Agreement.
The Procedures Order shall provide that (i) if it is determined that a
Person other than Buyer has made the highest and/or best offer at the
Auction (the "Winning Buyer"), (ii) the Winning Buyer does not close on its
agreement for the sale of the Closing Shares or the Riverboat Casino Assets,
as applicable, and (iii) no other participant at the Auction who made a
superior offer to Buyer has the right or chooses to exercise the right to
close on the Closing Shares or the Riverboat Casino Assets, as applicable,
then Buyer shall have the option, at its sole discretion, to purchase the
Closing Shares or the Riverboat Casino Assets on the same terms as this
Agreement, as the same may be modified by the last bona fide bid of the
Buyer made at the Auction (the "Backup Option"). Such Backup Option must be
exercised, if at all, within ten (10) days after delivery of written notice
from Seller to Buyer that the Winning Buyer has not closed on the sale of
the Closing Shares or Riverboat Casino Assets. Notice of exercise of the
Backup Option shall be in writing delivered to Seller, together with Buyer's
xxxxxxx money deposit of $1,500,000 to be deposited with Escrow Agent on
terms substantially identical to those
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set forth in Exhibit A attached hereto. If the Backup Option is timely
exercised, then the parties shall proceed to the Closing under this
Agreement (as modified by Buyer's last bona fide bid at the Auction, and any
other modifications agreed to by both Seller and Buyer) in good faith, and
any specific time deadlines for a party's performance of an obligation, or
for exercise of a right or privilege, contained in this Agreement shall be
extended by a time period not greater than the period of time elapsed
between the date of the Auction and the date on which the Backup Option is
exercised. The Backup Option granted in this paragraph shall apply only to
with respect to Pinnacle Entertainment, Inc. or its designee, and not any
other party which may become the "Buyer" as a result of the Auction.
The Procedures Order shall also establish the following bidding rules for
the Auction: Each competing bidder shall, at least five (5) days before the
Auction, deliver to Seller and/or the Company, as applicable, (I) a
refundable cash deposit of $1,500,000, (II) reasonable proof of the
interested party's ability to consummate a purchase of the Closing Shares,
or the Riverboat Casino Assets, as applicable, including a copy of such
party's annual, quarterly and monthly financial statements for the most
recently ended fiscal periods, certified to be true correct and complete in
all material respects, and (III) an executed Sale and Purchase Agreement on
substantially the terms of, or on more favorable terms than those set forth
in, this Agreement, except as may be necessary to reflect an offer for the
purchase of only the Riverboat Casino Assets (and not the Closing Shares),
which Sale and Purchase Agreement shall (A) specify the amount of cash or
other consideration offered by the competing bidder for the Closing Shares,
and/or the Riverboat Casino Assets, as applicable, (B) not be subject to
unperformed due diligence or closing conditions, nor provide for an expense
reimbursement, break-up amount or Backup Option, and (C) constitute an
irrevocable offer by such competing bidder to complete its proposed purchase
upon the terms set forth therein. Once a competing bid that satisfies the
above-enumerated requirements has been submitted to Seller, the Company or
the Committee, such bid may be modified by the applicable bidder at any time
prior to the Auction to the extent that such modifications would, in the
opinion of the Committee, after consultation with Seller, the Company and
the Bondholders, improve the quality of such bid.
No competing offer will be considered unless the aggregate consideration
to Seller or the Company under such bid is at least $250,000 more than the
sum of the Purchase Price plus the Break Up Fee, and the Committee, after
consultation with the Bondholders, Seller and the Company, determines in its
sole discretion that such offer, taken as a whole, is a higher and/or better
bid than the bid set forth in this Agreement. In the event that the
Committee shall so determine that such bid is a higher and/or better bid
than that set forth in this Agreement, Buyer shall have the right to amend
this Agreement as necessary in its reasonable discretion in order to cause
Buyer's bid hereunder to be comparable to such higher and/or better bid.
Only those persons who have submitted an offer in compliance with this
section and the Procedures Order shall be a "Qualified Bidder." Each
Qualified Bidder shall be invited to attend the Auction at the Office of
Xxxxxxxx Xxxxxx LLP, which Auction must be attended in person. Seller and
the Company shall cause the Auction to commence at 10 a.m. (Central Time) on
May 16, 2006, provided the Procedures Order has been entered prior to such
date. Subject to the limitations set forth above, the opening price at such
Auction shall be the highest and/or best offer of a Qualified Bidder (as
determined by the Committee in its sole discretion after consultation with
the Bondholders, Seller and the Company). Subsequent bids shall be in
increments of $100,000 or such greater amount as
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designated by the Committee from time to time during the Auction. At the
request of Buyer, Seller shall provide or cause the Committee to provide its
valuation of any competing bid that constitutes the highest and/or best
offer at the time of such request.
Seller, the Company and the Committee shall consider bids submitted by
Buyer and the Qualified Bidders during the Auction and the Committee, after
consultation with the Bondholders, Seller and the Company, shall make a
determination of the highest and/or best offer in its sole discretion. The
determination of which bidder has submitted the highest and/or best offer
for the Closing Shares and/or the Riverboat Casino Assets, as applicable, at
the Auction shall be made by the Committee in its sole discretion after
consultation with the Bondholders, Seller and the Company, subject to the
final determination by the Court at the Sale Hearing referred to in Section
9(b). At the Sale Hearing, the Court shall consider the results of the
Auction and shall make a final determination of the highest and/or best
offer to the Company's bankruptcy estate. After the determination of the
winning bidder, Seller, or the Company, as applicable, shall promptly
execute the Sale and Purchase Agreement previously executed and submitted by
such winning bidder, together with any changes thereto necessitated by the
parties' actions at the Auction.
(b) Sale Order. Within three (3) Business Days following the Auction
Seller and the Company will file with the Bankruptcy Court a motion to
approve the sale of the Closing Shares (the "Sale Motion"), through which
they will seek an order of the Bankruptcy Court in form reasonably
satisfactory to Buyer and consistent with this Agreement (the "Sale Order");
and Seller and the Company shall use their best efforts to obtain a hearing
on the Sale Order (the "Sale Hearing") as soon as practicable after the
filing of the Sale Motion. The Sale Order shall, among other things (i)
order the sale of the Closing Shares to Buyer pursuant to Section 363(B) of
the Bankruptcy Code on the terms and conditions set forth in this Agreement
and authorize Seller and Company to proceed with this transaction, (ii)
order that the sale of the Closing Shares shall be free and clear of all
Encumbrances and provide for an injunction in favor of Buyer and its
property, including the Closing Shares, prohibiting any holder of a claim
from taking any action or enforcing any Encumbrance against the Closing
Shares or the Riverboat Casino Assets and (iii) include specific findings
that: (A) Buyer is a good faith purchaser of the Closing Shares and under
Section 363(m) of the Bankruptcy Code and is entitled to all protections
thereby; that Buyer is not a successor to Seller or Company and this
Agreement does not constitute a de facto merger or consolidation of Seller
and Buyer or Company and Buyer; Buyer is not a mere consolidation or
substantial continuation of Seller's or Company's business; Buyer is
entering the sale in good faith; (B) any objections to this Agreement and
related transactions are overruled, and that future objections to this
Agreement or related transactions are barred; (C) any subsequent bankruptcy
proceedings by Seller or the Company or reorganized Seller or dismissal of
the Case shall not affect this Agreement or related transactions; (D) that
Seller and Company have full authority to execute this Agreement; and all
necessary corporate action has been taken; no consents or approvals other
than those expressly provided in this Agreement are required for
consummation of this Agreement and related transactions; (E) approval of
this Agreement and consummation of the transactions are in best interest of
Seller and the Company and their respective creditors and estates; (F)
reasonable opportunity to object or be heard with respect to the Sale Motion
has been afforded to all interested entities; (G) this Agreement was
negotiated, proposed and entered
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by Seller, Company and Buyer, without collusion, in good faith, and from
arms length bargaining positions with parties represented by counsel and
financial advisors; (H) the terms and conditions of this Agreement and
related transaction are fair and reasonable; (I) the Bankruptcy Court
retains exclusive jurisdiction to enforce the Sale Order; and (J) such other
items as are reasonably acceptable to Buyer. Both Buyer's and Seller's
obligations to complete the sale and purchase of the Closing Shares are
conditioned upon the Bankruptcy Court's entry of the Sale Order and a
Confirmation Order as set forth in Section 9(c).
(c) Confirmation Order. Promptly following the Sale Hearing, Seller and
the Company shall seek an order of the Bankruptcy Court (the "Confirmation
Order") confirming a Plan of Reorganization of the Company (the "Company
Plan of Reorganization"). Both Buyer's and Seller's obligations to complete
the sale and purchase of the Closing Shares are conditioned upon the
Bankruptcy Court's entry of the Confirmation Order. Seller agrees that each
of the Company Plan of Reorganization and the Confirmation Order must be in
form and substance reasonably satisfactory to Buyer and shall not be
inconsistent with the provisions of this Agreement, and shall further
provide for the following:
(i) the Purchase Price shall be used to pay in full, as of the
effective date of the Company Plan of Reorganization, all allowed
pre-petition priority claims against and post-petition administrative
expenses of the Company other than Company Liabilities;
(ii) the portion of the Purchase Price allocated to the Riverboat
Casino Assets in accordance with the Procedures Order and/or the Sale Order
shall be used to fund the treatment provided under the Company Plan of
Reorganization of allowed secured and non-priority unsecured claims against
the Company;
(iii) except with respect to the Company Liabilities as described in
Section 3 hereof, the discharge of all secured and unsecured claims against
the Company;
(iv) except with respect to the Company Liabilities as described in
Section 3 hereof, the issuance of an injunction in favor of Buyer, the
Company and their respective properties, including the Riverboat Casino
Assets, prohibiting any holder of a claim against the Company in existence
as of the date immediately preceding the effective date of the Company Plan
of Reorganization from taking any action to collect, assess, enforce or
recover such claim;
(v) provide that Buyer shall be the owner of all of the Closing
Shares, which shall represent all of the issued and outstanding capital
stock of the Company;
(vi) ratify the findings in the Sale Order and include specific
findings that: (1) reasonable opportunity to object or be heard with respect
to the Confirmation Order has been afforded to all interested entities; and
(2) the Bankruptcy Court retains exclusive jurisdiction to enforce the
Confirmation Order;
(vii) the following assets shall be excluded from the Riverboat Casino
Assets (collectively, the "Excluded Assets"): (1) officer and crew personal
effects; (2) all cash (including checks received prior to the close of
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business on the Closing Date, whether or not deposited or cleared prior to
the close of business on the Closing Date) other than Included Cash; (3) all
commercial paper, certificates of deposit and other bank deposits, treasury
bills and other cash equivalents other than the Included Cash; (4) all
rights of the Company to claims or recoveries under Chapter 5 of the United
States Bankruptcy Code; (5) all contracts, leases and other agreements other
than the Assumed Executory Leases and Executory Contracts; (6) all rights of
Seller and/or the Company under the Seller's 401(k) plan and related trusts,
insurance policies, third party administration agreements and similar
arrangements sponsored by Seller for current or former employees of the
Company; (7) the building, improvements and tangible personal property
(other than certain items of tangible personal property used in the
operation of the Riverboat Casino and listed on Schedule 6(b)), located at
000 Xxxxx Xxxxxx, Xx. Xxxxx, Xxxxxxxx 00000 (the "Main Office"); (8) subject
to Buyer's rights under the Trademark License, all right, title and interest
of Seller in the name "President," "President Riverboat Casino" and variants
thereof, and all marks and logos, whether or not registered, incorporating
such names or portions thereof; (9) all risk management, general ledger and
fixed asset software (excluding data and related documentation), in each
case which are owned, used, or licensed by Seller as licensee or licensor in
connection with the Riverboat Casino ("Excluded Software"); (10) With
respect to the Excluded Assets, all outstanding claims arising under
Seller's insurance policies from damage to or with respect to such Excluded
Assets prior to the Closing Date; (11) all rights to any refunds for Taxes
accruing to the owner of the Riverboat Casino Assets for the period prior to
and including the Closing Date, including but not limited to all claims for
refund for Missouri state and local sales and use Taxes, regardless whether
such claims were actually filed prior to the Closing Date; (12) all rights
of recovery from insurers and other third parties (including those currently
being pursued in a suit styled IN THE MATTER OF THE COMPLAINT OF THE
AMERICAN MILLING COMPANY, UNLIMITED, H&B MARINE, INC., corporations and
AMERICAN MILLING, LP, a limited partnership, FOR EXONERATION FROM, OR
LIMITATION OF, LIABILITY, Case No. 4:98CV00575SNL (the "Limitation Action"),
and rights to recover in a claim against American Milling Company's excess
insurer, by Winterville Marine Service and/or Captain Xxxx X. Xxxxxxx, all
resulting from an allision on April 4, 1998, of the M/V Xxxx Xxxxx and her
barges with the Admiral; and (13) all rights of the Company to receive
restitution payments pursuant to any decree, award, judgment or other order
of a court of competent jurisdiction (including but not limited to orders
entered in respect of criminal law violations and settlements of contested
civil matters), as listed on Schedule 6(j) under the heading "Excluded
Restitution Payments." Following the Closing, Seller shall have access upon
reasonable prior notice to all papers, books and records (including
electronic records) of every kind and nature pertaining to the ownership and
operation of the Admiral prior to and after the allision with the Xxxx Xxxxx
on April 4, 1998 to the extent necessary to prove the damages resulting
therefrom; for the avoidance of doubt, such materials shall not be included
within the definition of Excluded Assets.
(viii) pursuant to Section 1141(c) of the Bankruptcy Code and other
than with respect to the Assumed Liabilities, the Company shall hold the
Riverboat Casino Assets free and clear of, all claims and interests of
creditors to the maximum extent permitted under Section 1141(c) of the
Bankruptcy Code (the "Excluded Liabilities"), and, without limiting the
foregoing, the Confirmation Order shall specifically provide that the
Company shall hold the Riverboat Casino Assets free and clear of each of the
following (which shall be deemed to be Excluded Liabilities): (1)
Liabilities for Taxes
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related to all Tax periods (or portions thereof) ending on or prior to the
Closing, including, without limitation, Liabilities for Taxes arising out of
distribution, dividend, transfer, assignment or any other permitted
disposition of any or all of the Excluded Assets prior to the Closing,
regardless of whether such Taxes relate to Tax periods (or portions thereof)
ending on or prior to the Closing; (2) Liabilities for any costs or expenses
incurred arising out of or related to the administration of the Bankruptcy
Case, including any accrued professional fees and expenses of attorneys,
accountants, financial advisors and other professional advisors
(collectively, the "Administrative Claims"); (3) Liabilities arising out of
or related to the Excluded Assets; (4) any Cure Amounts payable by Seller
pursuant to Section 2(c), (5) Liability for salary, wages or other benefits
of employees in connection with services rendered to Seller and/or the
Company, including incentive payments, through the Closing Date (excluding
accrued vacation pay) to the extent not accrued on Company's books and taken
into account in the determination of Net Current Assets at Closing, (6)
Liabilities of Seller under this Agreement, and (7) Liabilities arising out
of or related to the resignation and/or termination of the employment of the
officers and directors of the Company occurring prior to or concurrently
with the Closing in accordance with Section 4(t) hereof.
(ix) the assumption by the Company of the Assumed Executory Leases and
Executory Contracts under Section 365 of the Bankruptcy Code;
(x) the affirmation of each of the provisions of the Sale Order;
(xi) the retention by the Bankruptcy Court of exclusive jurisdiction
to enforce all provisions of the Confirmation Order relating to the Sale
Order; and
(xii) provide that the effective date of the Company Plan of
Reorganization shall not occur until either (a) the 60-day period provided
for under Section 505(b)(2)(A)(i) of the Bankruptcy Code expires without the
Missouri income Tax Returns of the Company being selected for examination in
response to requests regarding such Tax Returns made in accordance with
Section 8(a)(xx) hereof (i.e. for Tax periods ending February 28, 2003,
February 29, 2004 and February 28, 2005), or (b) the 180-day period provided
for under Section 505(b)(2)(A)(ii) of the Bankruptcy Code expires in
response to requests regarding the Company's Missouri income Tax Returns
made in accordance with Section 8(a)(xx) hereof (i.e. for Tax periods ending
February 28, 2003, February 29, 2004 and February 28, 2005) and Seller has
made in consultation with Buyer appropriate reserves sanctioned by the
Bankruptcy Court to provide for payment of any additional income Tax
liability asserted against the Company.
(d) Return of Deposit. If this Agreement is terminated in accordance with
Section 16 hereof for any reason (other than a termination by Seller
pursuant to Section 16(c)), then the Deposit (together with interest
thereon) shall be immediately returned to Buyer.
(e) Superpriority Claim. Buyer shall have (and is hereby granted by
Seller) a superpriority administrative expense claim senior to all other
administrative expenses in the Seller Case in an amount equal to the sum of
the Deposit (together with interest thereon) and the Break Up Fee. The grant
of the superpriority claim described herein shall be included in the
Procedures Order.
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10. MGC APPROVAL. Within thirty (30) Business Days after the issuance of the
Procedures Order, Buyer shall file with the Commission all applications,
certifications and other documents as may be appropriate to obtain the MGC
Approval, which applications, certifications and other documents shall be
limited only to matters directly related to those approvals and orders that
are necessary in order for the Company to lawfully operate the Riverboat
Casino under the laws and regulations of the State of Missouri, and make
available to Seller copies of all such materials (except personal
information and confidential financial information regarding Buyer's
directors, officers, employees and principal shareholders), together with
evidence of such filing; provided, however, Seller acknowledges that Buyer
has other pending applications and matters before the MGC and this provision
shall not limit or inhibit Buyer in such proceedings. Buyer shall use all
commercially reasonable efforts to comply with all requests of the
Commission and to obtain the MGC Approval and shall not to take any action
that could reasonably be expected to impede or delay the issuance by the
Commission of the MGC Approval or result in the refusal of the Commission to
issue the MGC Approval. From time to time at Seller's written request, Buyer
shall deliver a written update of the status of such application and the
most recent communications between Buyer and the Commission. Each of the
Company and Seller agrees (i) to disclose non-public information provided to
it by Buyer pursuant to this Agreement only to its representatives, agents,
professional advisors and employees that have a need to know such
confidential non-public information in connection with transactions
contemplated under this Agreement and (ii) to keep confidential and cause
its representatives, agents, professional advisors and employees to keep
confidential all non-public information provided to it by Buyer pursuant to
this Agreement that is designated by Buyer as confidential; provided that
nothing herein shall prevent Company or Buyer from disclosing any such
information (a) upon the request or demand of any governmental authority
having jurisdiction over it, (b) in response to any order of any court or
other governmental authority or as may otherwise be required pursuant to any
requirement of law, including applicable securities law, (c) in connection
with the enforcement of this Agreement or any other obligation of Buyer, and
(d) that has been publicly disclosed other than in breach of this Section.
Each of Company and Seller agrees that upon receipt of non-public
information from Buyer, it will use such information solely for the purpose
of evaluating, negotiating, enforcing or consummating the transactions
contemplated under this Agreement and for no other purposes. The obligations
of confidentiality contained in this Section 10 shall survive the Closing or
an earlier termination of this Agreement.
11. CLOSING The closing of the sale and purchase of the Closing Shares and
the other transactions contemplated hereby (the "Closing") shall occur as
promptly as practicable, and in any event on the date (the "Closing Date")
which is the tenth (10th) Business Day following the later to occur of
either: (1) the date on which the satisfaction (or written waiver) of the
conditions to Closing set forth in Sections 4 and 5 (other than conditions
with respect to actions the respective parties will take at the Closing
itself) occurs or (2) the closing of the books for the preceding calendar
month in which such conditions to Closing have been satisfied or waived. The
Closing shall occur at the principal office of Seller or as otherwise agreed
by the parties hereto.
(a) At Closing, Seller shall deliver to Buyer the instruments, documents
and agreements required to be delivered by Seller under Section 4 hereof.
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(b) At Closing, Buyer shall do or deliver to Seller the following:
(i) pay the Purchase Price less the Deposit (with interest accrued
thereon, if any) by wire transfer of immediately available funds to such
account or accounts as Seller shall direct in writing;
(ii) deliver to Seller irrevocable written authorization to apply the
Deposit (with interest accrued thereon, if any) against the Purchase Price;
and
(iii) deliver to Seller the instruments, documents and agreements
required to be delivered by Buyer under Section 5 hereof (to the extent
required to be delivered at such time).
12. BROKERS. Except for Libra Securities Corporation and other financial
advisors to Seller, which have been engaged by and at the expense of Seller,
each party hereto represents that it has not retained a broker or other
Person entitled to any commission or other compensation in connection with
the transaction contemplated herein. Each of Seller and Buyer shall
indemnify and hold the other harmless from and against the rights or claims
of any Person claiming through such party to be entitled to any such
commission or compensation; provided that Buyer is not responsible for
payment of Seller's advisors, including, without limitation, Libra
Securities Corporation.
13. DELIVERY. The Closing Shares shall be deemed delivered to Buyer
hereunder at St. Louis, Missouri, simultaneous with the Closing. Except as
otherwise provided in Section 2(b), Buyer shall not be responsible for any
sale, use or similar Taxes, fees and expense imposed in Missouri or
elsewhere upon or in connection with the sale of the Closing Shares.
14. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Notwithstanding
anything to the contrary herein, prior to the Closing, Buyer will not have
any recourse to Seller in the event any of the representations and
warranties made herein or deemed made are untrue as at any time of
expression thereof, except in the case of fraud and except that Buyer may
terminate this Agreement in accordance with Section 16 hereof and, if
applicable, shall have the right to receive payment of the Deposit and/or
Break Up Fee as provided in, and subject to the terms and conditions set
forth in, this Agreement; provided, however, that Buyer's obligation to
purchase the Closing Shares at Closing is expressly conditioned (unless
waived by Buyer in writing) upon satisfaction of each of the conditions set
forth in Section 4. The only remedy for a breach of such representations and
warranties shall be Buyer's option not to close and Buyer's right to
terminate this Agreement in accordance with and subject to the limitations
set forth in Sections 4 and 16. Without limiting the foregoing, following
the Closing, Buyer shall have no remedy whatsoever for any breach of any
representation or warranty made by Seller herein, except in the case of
fraud. All representations, warranties and (except as set forth in the
following sentence) covenants set forth in this Agreement or in any
certificate, document or other instrument delivered in connection herewith
shall terminate at the earlier of (I) the Closing and (II) termination of
this Agreement in accordance with Section 16; provided, however, that those
covenants that contemplate actions to be taken or restrict actions from
being taken after the Closing or termination of this Agreement, as the case
may be, shall survive in accordance with their terms.
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15. RISK OF LOSS.
(a) All risk of loss, whether total loss, constructive total loss or less
than total loss or constructive total loss, to the Riverboat Casino Assets
shall be borne by Seller prior to the Closing and any insurance proceeds for
events occurring prior to the Closing shall be for Seller's account,
regardless of when received. Buyer shall have no obligation to purchase the
Closing Shares if the Riverboat Casino suffers any material damage prior to
Closing which is not remedied by Seller to Buyer's reasonable satisfaction
prior to the Closing. In the event that the Riverboat Casino Assets suffer
damage which does not constitute a total loss or constructive total loss,
Buyer may, at its sole option, elect to purchase the Closing Shares, in
which case Seller shall assign to Buyer at Closing all of its rights to any
insurance proceeds payable with respect to such loss.
(b) All risk of loss, whether total loss, constructive total loss or less
than total loss or constructive total loss, to the Riverboat Casino Assets
shall be borne by Buyer subsequent to the Closing and any insurance proceeds
for events occurring subsequent to the Closing shall be for Buyer's account.
16. TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing Date:
(a) by Buyer or Seller upon written notice to the other party at any time
prior to the Closing (I) if the Confirmation Order has not been entered on
or before December 31, 2006, or the Procedures Order has not been entered on
or before the date that is forty (40) days after the date of this Agreement
(or such later date(s) as mutually agreed to by the parties with respect to
the foregoing) or (II) Closing shall not have occurred on or before the date
that is six (6) months after the date of the Bankruptcy Court's entry of a
Confirmation Order (or such later date as is mutually agreed to by the
parties hereto by reason of the failure of any condition precedent under
Section 4, provided that such failure did not result primarily from the
terminating party materially breaching any covenant contained in this
Agreement, or unless the terminating party shall have waived such condition
precedent in writing); provided that such period shall automatically be
extended by an additional six (6) months if the sole reason the Closing has
not occurred is due to the fact that MGC Approval has not been obtained
within the initial six (6) month period and there does not exist an event,
condition, or circumstance that Buyer reasonably determines may negatively
affect the granting of the MGC Approval (any such date being referred to
herein as the "Termination Date");
(b) by Buyer upon written notice to Seller if Buyer is in compliance in
all material respects with this Agreement and Seller or Company fails to
perform any material obligation required to be performed by Seller or
Company, as applicable, prior to or at the Closing, which failure continues
for twenty (20) Business Days after written notice from Buyer to Seller or
the Company, as applicable, of such failure;
(c) by Seller upon written notice to Buyer if Seller is in compliance in
all material respects with this Agreement and Buyer fails to perform any
material obligation required to be performed by Buyer prior to or at the
Closing, which failure continues for twenty (20) Business Days after written
notice from Seller to Buyer of such failure;
(d) by mutual written agreement of Buyer and Seller;
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(e) by Seller or Buyer upon written notice to the other if either (A)
Seller or Company, with the approval of the Bankruptcy Court, enters into a
contract for the sale of the Closing Shares or any Riverboat Casino Assets
to a Person other than Buyer or Buyer's designee, or (B) the Bankruptcy
Court approves a competing plan of reorganization or liquidating plan
relating to the Closing Shares not incorporating this Agreement (a
"Competing Plan");
(f) by Buyer upon written notice to Seller if any of the conditions of
Section 4 cannot be met and will not be waived by Buyer;
(g) by Seller upon written notice to Buyer if any of the conditions of
Section 5 cannot be met and will not be waived by Seller; and
(h) by Seller or Buyer after the Termination Date in the event the
Company Plan of Reorganization is not confirmed. Upon a valid termination of
this Agreement by Seller pursuant to subsection (c) above, the Deposit
(excluding interest accrued thereon, if any) shall be forfeited to Seller,
but without prejudice to any legal remedy for money damages that Seller may
have, if any, against Buyer as a result of such breach; provided, however,
that Seller's legal remedies hereunder shall be limited exclusively to money
damages; provided, further, that in no event shall Seller have the right to
specific performance or any other equitable remedy against Buyer in
connection with this Agreement or the transactions contemplated hereby. Upon
a valid termination of this Agreement pursuant to subsection (a), (b), (d),
(e), (f), (g) or (h), the Deposit (with interest accrued thereon, if any)
shall be immediately returned to Buyer and both parties shall execute mutual
escrow instructions to Escrow Agent to that effect. Upon a valid termination
of this Agreement pursuant to subsection (b), or subsection (e), the Break
Up Fee shall be paid to Buyer pursuant to the terms of this Agreement, in
full satisfaction of all claims of Buyer for breach of this Agreement, and
as liquidated damages
17. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Missouri, and where
applicable, the federal laws of the United States.
18. NO CONTRIBUTION. Following the Closing, Seller shall not seek, nor will
Seller be entitled to, contribution from, or indemnification by, the
Company, under the Company's charter documents, this Agreement, applicable
corporate laws or other laws or otherwise, in respect of amounts due from
Seller in connection with any claim or suit arising under this Agreement.
19. JURISDICTION. In the event any dispute shall arise in connection with
the interpretation of this Agreement or the respective rights and
obligations of the parties hereunder, each party submits to the exclusive
jurisdiction of the Bankruptcy Court for the resolution of such dispute.
20. NOTICES. All notices or other communications required or permitted to be
given under this Agreement shall be given in writing and delivered
personally or sent by registered mail (with postage prepaid) or recognized
courier or fax to the following address and fax number, or to such other
address as any party may from time to time designate in a notice to the
other.
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If to Buyer: Pinnacle Entertainment, Inc.
0000 Xxxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Irell & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: C. Xxxxx XxXxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Seller: President Casinos, Inc.
0000 Xxxxx Xxxxxx X. Xxxxxxxx Xxxx.
Xx. Xxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxxxx
President & Chief Operating Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxxxx Xxxxxx, LLP
One XX Xxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx and
Xxxxxx X. Xxxxxxx, Xx.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and with a copy to: Milbank, Tweed, Xxxxxx & XxXxxx XXX
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx and
Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and with a copy to: Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
000 Xxxxx Xx., Xxxxx 0000
Xx. Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any such notice or communication shall be deemed to have been duly served
(if given or made personally) immediately or (if given or made by facsimile)
upon evidence of transmission or upon confirmed answerback or (if given or
made by recognized courier) once the return receipt for the served notice
has been signed by the party receiving the notice or (if given or made by
letter) three (3) Business Days after posting or and in proving the same it
shall be sufficient to show that the envelope containing the same was duly
addressed, stamped and posted. Each notice or communication made by telefax
shall be followed by a confirmation copy to be sent by post. Failure to send
any confirmation copy shall have no effect on the validity or deemed
delivery of the notice or communication.
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21. FURTHER ASSURANCES. Seller and Buyer shall do and perform such other and
further acts and execute and deliver any and all such other and further
instruments as may be required by law or reasonably requested by the other
(and at such other party's cost) to establish, maintain and protect the
respective rights and remedies of the other and to carry out and effect the
intent and purpose of this Agreement.
22. ENTIRE AGREEMENT; COUNTERPARTS. This Agreement, together with a letter
agreement of even date concerning the Xxxxxxxx Lot, constitutes the entire
understanding of the parties and supersedes any and all other agreements,
written or oral, with respect to the subject matter hereof. This Agreement
may only be modified or amended by a written instrument signed by the party
or parties against which such modification or amendment is to be enforced.
Seller shall cause the Company to join in, and agree to be bound by, any
waiver, consent or agreement made or given by Seller under this Agreement.
This Agreement may be executed in two or more counterparts which together
shall constitute a single agreement.
23. BINDING EFFECT AND ASSIGNMENT. This Agreement shall be binding on the
parties hereto and inure to the benefit of their respective successors and
assigns. Buyer shall have the right to transfer or assign its rights in and
to this Agreement upon written notice of assignment to Seller: (i) to any
entity controlled by, controlling or under common control with Buyer, or
(ii) through collateral assignments to the Administrative Agent for the
benefit of Buyer's lenders as required under its credit facility; provided,
however, such assignment shall not relieve Buyer from the due performance of
all of Buyer's obligations under this Agreement.
24. HEADINGS; INTERPRETATION. The section and other headings contained in
this Agreement are inserted for convenience only and shall not affect in any
way the meaning or interpretation of this Agreement. Unless the context of
this Agreement clearly requires otherwise, (A) references to the plural
include the singular, the singular the plural, the part the whole, (B)
references to any gender include all genders, (C) "including" has the
inclusive meaning frequently identified with the phrase "but not limited
to," and (D) references to "hereunder" or "herein" relate to this Agreement.
Section, subsection, Schedule and Exhibit references are to this Agreement
unless otherwise specified. Each accounting term used herein that is not
specifically defined herein shall have the meaning given to it under GAAP.
25. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof. Any items listed or described on the Exhibits or Schedules
shall be listed or described under a caption that specifically identifies
the Section(s) of this Agreement to which the item relates (which, in each
case, shall constitute the only valid disclosure with respect to such
Section(s)).
[The balance of this page has been left blank intentionally.]
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IN WITNESS WHEREOF, the parties hereto have caused this Riverboat Casino
Sale and Purchase Agreement to be executed by their duly authorized
representatives as of the day and year first above written.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES (reference sec. 2(d)(iii) hereof).
SELLER:
PRESIDENT CASINOS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Sr. VP & CFO
COMPANY:
PRESIDENT RIVERBOAT CASINO-MISSOURI, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Name: Xxxxx X. Xxxxxxxx
Title: Sr. VP & CFO
BUYER:
PINNACLE ENTERTAINMENT, INC.
By: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: President
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