Exhibit 99.1
Execution Copy
ASSET AND LAND PURCHASE AGREEMENT
BETWEEN
SHERATON DESERT INN CORPORATION
STARWOOD HOTELS AND RESORTS WORLDWIDE, INC.
SHERATON GAMING CORPORATION
SUN INTERNATIONAL HOTELS LIMITED
AND
SUN INTERNATIONAL NEVADA, INC.
Dated as of
May 17, 1999
TABLE OF CONTENTS
ARTICLE I
Terms and Definitions
SECTION 1.1 Terms and Definitions . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Terms and Usage Generally . . . . . . . . . . . . . . . . 11
ARTICLE II
Purchase and Sale of and Description of Assets
SECTION 2.1 Purchase and Sale. . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.2 Description of Assets . . . . . . . . . . . . . . . . . . 12
SECTION 2.3 Description of Excluded Assets . . . . . . . . . . . . . . 16
ARTICLE III
Contracts and Liabilities To Be Assumed
SECTION 3.1 Contracts . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.2 Assumed Liabilities . . . . . . . . . . . . . . . . . . . 18
SECTION 3.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV
Purchase Price
SECTION 4.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.2 Payment of Purchase Price; Extension Amount . . . . . . . 20
SECTION 4.3 Disbursement of Deposit. . . . . . . . . . . . . . . . . . 21
SECTION 4.4 Purchase Price Adjustment . . . . . . . . . . . . . . . . 22
ARTICLE V
Confidential Information
SECTION 5.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VI
Representations and Warranties of
each of Parents and Seller
SECTION 6.1 Parents' and Seller's Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 6.2 No Implied Representations . . . . . . . . . . . . . . . . 32
SECTION 6.3 Survival of Seller's Warranties . . . . . . . . . . . . . 33
ARTICLE VII
Representations and Warranties of SUN and Buyer
SECTION 7.1 SUN's and Buyer's Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 7.2 Survival of Buyer's and SUN'S Representations
and Warranties . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VIII
Title Insurance
SECTION 8.1 Title Policies and Exceptions . . . . . . . . . . . . . . 35
ARTICLE IX
Conduct of Business Prior to Closing
SECTION 9.1 Seller's Conduct . . . . . . . . . . . . . . . . . . . . . 37
SECTION 9.2 Operating Restrictions . . . . . . . . . . . . . . . . . . 39
ARTICLE X
Other Pre-Closing Obligations
SECTION 10.1 Access; Observers . . . . . . . . . . . . . . . . . . . . 42
SECTION 10.2 No Control . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 10.3 Xxxx-Xxxxx-Xxxxxx Filing . . . . . . . . . . . . . . . . 43
SECTION 10.4 Cooperation . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 10.5 Gaming and Other Licenses . . . . . . . . . . . . . . . . 44
SECTION 10.6 Best Efforts . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.7 Notice . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 10.8 Parcel Map Requirement . . . . . . . . . . . . . . . . . 45
SECTION 10.9 Additional Agreements of Seller . . . . . . . . . . . . . 45
ARTICLE XI
Conditions to Closing
SECTION 11.1 Buyer's Conditions . . . . . . . . . . . . . . . . . . . 46
SECTION 11.2 Seller's Conditions . . . . . . . . . . . . . . . . . . . 48
SECTION 11.3 Frustration of Closing Conditions . . . . . . . . . . . . 49
ARTICLE XII
Escrow
SECTION 12.1 Escrow . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 12.2 Investment . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XIII
Closing
SECTION 13.1 Time; Location. . . . . . . . . . . . . . . . . . . . . . 51
SECTION 13.2 Recordation of Deeds . . . . . . . . . . . . . . . . . . 51
SECTION 13.3 Payment of Closing Date Amount. . . . . . . . . . . . . . 51
SECTION 13.4 Certain Expenses . . . . . . . . . . . . . . . . . . . . 52
SECTION 13.5 Transfer of Possession . . . . . . . . . . . . . . . . . 52
ARTICLE XIV
[Intentionally Omitted] . . . . . . . . . . . 52
ARTICLE XV
Survival; Indemnification
SECTION 15.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 15.2 Indemnification . . . . . . . . . . . . . . . . . . . . . 52
SECTION 15.3 Calculation of Losses . . . . . . . . . . . . . . . . . . 53
SECTION 15.4 Procedures Relating to Indemnification . . . . . . . . . 53
SECTION 15.5 Other Claims . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 15.6 Exclusivity . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 15.7 No Consequential Damages . . . . . . . . . . . . . . . . 55
ARTICLE XVI
Termination
SECTION 16.1 Grounds for Termination . . . . . . . . . . . . . . . . . 55
SECTION 16.2 Effect of Termination . . . . . . . . . . . . . . . . . . 56
SECTION 16.3 Liquidated Damages. . . . . . . . . . . . . . . . . . . . 57
SECTION 16.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE XVII
Collection of Chips and Tokens;
Baggage and Safe Deposits
SECTION 17.1 Collection of Chips and Tokens . . . . . . . . . . . . . 58
SECTION 17.2 Baggage . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 17.3 Safe Deposits . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 17.4 Valet Parking . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE XVIII
Loss by Fire or Other Casualty; Condemnation
SECTION 18.1 Fire or Other Casualty; Condemnation . . . . . . . . . . 60
ARTICLE XIX
Employee and Employee Benefit Matters
SECTION 19.1 Salaries and Benefits . . . . . . . . . . . . . . . . . . 61
SECTION 19.2 Multiemployer Plan . . . . . . . . . . . . . . . . . . . 62
ARTICLE XX
Miscellaneous
SECTION 20.1 Entire Agreement . . . . . . . . . . . . . . . . . . . . 65
SECTION 20.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 20.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 20.4 Successors and Assigns . . . . . . . . . . . . . . . . . 66
SECTION 20.5 Closing Costs . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 20.6 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . 67
SECTION 20.7 Amendments . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 20.8 Further Assurances . . . . . . . . . . . . . . . . . . . 67
SECTION 20.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 20.10 Non-Waiver . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 20.11 No Third Party Benefitted . . . . . . . . . . . . . . . . 67
SECTION 20.12 Publicity; No Recordation . . . . . . . . . . . . . . . . 68
SECTION 20.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 20.14 Severability . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 20.15 Exhibits and Schedules . . . . . . . . . . . . . . . . . 68
SECTION 20.16 Finder's Fees . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 20.17 Cooperation . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 20.18 Consent to Jurisdiction . . . . . . . . . . . . . . . . . 69
EXHIBITS
Exhibit 10.6(b)-1 Timeshare Joint Venture Agreement
Exhibit 10.6(b)-2 Golf Course Management Agreement
Exhibit 10.6(b)-3 Marketing Alliance Agreement
Execution Copy
ASSET AND LAND PURCHASE AGREEMENT
This Asset and Land Purchase Agreement ("Agreement") is made and
entered into as of May 17, 1999 ("Effective Date") by and between Sheraton
Desert Inn Corporation, a Nevada corporation ("SDIC" or "Seller"), Starwood
Hotels and Resorts Worldwide, Inc., a Maryland corporation ("Starwood"),
Sheraton Gaming Corporation, a Nevada corporation ("SGC", and together with
Starwood, the "Parents"), Sun International Hotels Limited, an
international business company organized under the laws of the Commonwealth
of the Bahamas ("SUN") and Sun International Nevada, Inc., a Nevada
corporation and a wholly-owned subsidiary of SUN ("Buyer"), with reference
to the following facts:
A. SDIC and its affiliates own the Assets (as defined below).
B. SDIC and its affiliates desire to sell, and each of the Parents
desires to cause SDIC and its affiliates to sell, the Assets to Buyer and
Buyer desires to purchase, and SUN desires to cause Buyer to purchase, the
Assets and to assume certain liabilities associated with the Assets and
certain other liabilities, on the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein set forth, and other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I
Terms and Definitions
SECTION 1.1 Terms and Definitions.
(a) As used in this Agreement, the following terms shall
have the following meanings:
"Accountant" means Xxxxxx Xxxxxxxx LLP or such other
nationally recognized independent public accounting firm selected by Seller
and reasonably acceptable to Buyer and Seller.
"Accrued Interest" has the meaning set forth in Section
4.1(a).
"ACSM" has the meaning set forth in Section 8.1(e).
"Adjusted Purchase Price" has the meaning set forth in
Section 4.4(c).
"Affiliate" or "affiliate" means, in respect of any Person,
another Person which owns, controls, is controlled by or is under common
control with such Person, including any subsidiary or parent.
"Agreement" has the meaning set forth in the introductory
paragraph hereof.
"ALTA" has the meaning set forth in Section 8.1(e).
"Applicable Interest Rate" has the meaning set forth in
Section 4.1(a).
"Applicable Accrued Deposit" means an amount equal to the
sum of (x) $15,000,000 and (y) the product of (i) $15,000,000, (ii) a
fraction, the numerator of which shall be the number of days in the period
from and including date on which the Deposit is placed in the Escrow to but
excluding the Closing Date, and the denominator of which shall be 365 and
(iii) a rate of interest equal to one-half (1/2) of the average rate of
interest per annum for one-year U.S. Treasury Notes for such period.
"Assets" has the meaning set forth in Section 2.1.
"Assumed Contracts" has the meaning set forth in
Section 3.1.
"Assumed Liabilities" has the meaning set forth in Section
3.2(a).
"Balance Sheet" has the meaning set forth in Section 4.4(d).
"Business" means the hotel, casino (gaming), convention,
meeting, restaurant, bar, golf course, spa and recreational facilities and
functions of The Desert Inn Resort & Casino in Las Vegas, Nevada, and all
marketing and sales offices or other property owned, leased or occupied by
SDIC, its subsidiaries or affiliates relating to the Business whether on or
away from the Business Premises.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in New York or Nevada are authorized
by law to close.
"Business Premises" means and includes the Real Estate and
all sales offices or real property owned, leased or occupied by SDIC or its
subsidiaries or affiliates used solely in connection with the Business,
whether on or away from the Real Estate. To the extent not located on the
Real Estate, the Business Premises are listed in Schedule 2.2(f).
"Buyer" has the meaning set forth in the introductory
paragraph hereof.
"Buyer's Closing Conditions" has the meaning set forth in
Section 11.1.
"Buyer Material Adverse Effect" has the meaning set forth in
Section 7.1(c).
"Caesars Closing Date" has the meaning set forth in
Section 4.1(a).
"Xxxxxxx Xxxxx Agreement" means the Stock Purchase Agreement
entered into as of April 27, 1999, by and among Starwood, certain wholly
owned subsidiaries of Starwood and Park Place Entertainment Corp., a
Delaware corporation.
"Closing" has the meaning set forth in Section 13.1.
"Closing Date" has the meaning set forth in Section 13.1.
"Closing Date Amount" means the Purchase Price plus or minus
the estimated adjustment being made pursuant to Section 4.4.
"Closing Working Capital" has the meaning set forth in
Section 4.4(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Collective Bargaining Agreement" has the meaning set forth
in Section 19.1.
"Confidential Information" has the meaning set forth in
Section 5.1(b).
"Corner Land" has the meaning set forth in Section 2.2(b).
"Country Club Lane" means the real property described on
Schedule 1.1(a).
"Current Assets" has the meaning set forth in
Section 4.4(d).
"Current Liabilities" has the meaning set forth in
Section 4.4(d).
"Deeds" means collectively, the deeds to be delivered
pursuant to Section 11.1(c).
"Deposit" has the meaning set forth in Section 4.2(a).
"DIIC" has the meaning set forth in Section 2.2(m).
"DIIC Land" has the meaning set forth in Section 8.1(c).
"Dio Drive Vacated Area" means the real property described
on Schedule 1.1(b).
"Effective Date" has the meaning set forth in the
introductory paragraph hereof.
"Environmental Claim" means any claim for any Loss,
liability, cost or expense, including damage to or restoration of natural
resources, administrative or regulatory oversight costs, consultants' fees
and expenses, medical monitoring costs and property value diminution,
asserted by any third Person, including any governmental authority, and
arising under Environmental Law.
"Environmental Laws" means all Federal, state and local
laws, rules, regulations, decrees, ordinances and orders which regulate the
treatment, management, storage or use of Hazardous Materials or the release
of Hazardous Materials to the environment, or impose requirements relating
to environmental protection or restoration or to public or employee health
and safety.
"ERISA" has the meaning set forth in Section 19.2(b).
"Escrow" has the meaning set forth in Section 12.1.
"Escrowee" means Nevada Title Company, 0000 X. Xxxxxx
Xxxxxx, Xxx Xxxxx, Xxxxxx 00000, Attention: Xx. Xxxxx Xxxxxx, Title
Officer and Xxxx Xxxxxxxx, Escrow Officer.
"Excluded Assets" has the meaning set forth in Section 2.3.
"Excluded Liabilities" has the meaning set forth in Section
3.2(b).
"Extension Amount" has the meaning set forth in
Section 4.2(c).
"GAAP" has the meaning set forth in Section 4.4(d).
"Gaming Equipment" means "associated equipment" as defined
in NRS Section 463.0136, "gaming devices" as defined in NRS Section
463.0155, gaming tables, keno and sports book furniture and equipment and
all other equipment and paraphernalia, including (subject to those
exclusionary provisions of Section 2.2(g) concerning proprietary hardware
and software) computer equipment and computer software owned or licensed by
SDIC or its subsidiaries or affiliates and used in the conduct of gaming on
the Business Premises.
"Gaming Licenses" has the meaning set forth in Section 10.5.
"Gaming Receivable" means any "Credit instrument", as such
term is defined in Chapter 463 of NRS or any successor statute thereto.
"Golf Course Management Agreement" has the meaning set forth
in Section 9.1(i).
"Hazardous Materials" means any (a) oil, petroleum products,
flammable substances, explosives, radioactive materials, hazardous
materials, wastes or substances, toxic wastes or substances; and (b) any
chemical, material or substance defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "acute
hazardous waste," "extremely hazardous waste," "restricted hazardous
waste," "toxic substances," "toxic chemicals," "infectious wastes,"
"contaminants" or "pollutants" or words of similar import under any
applicable Environmental Law or otherwise regulated under applicable
Environmental Law.
"HSR Act" has the meaning set forth in Section 10.3.
"Indemnified Party" has the meaning set forth in
Section 15.3.
"Intangible Property" has the meaning set forth in
Section 2.2(j).
"Inventoried Baggage" has the meaning set forth in
Section 17.2.
"Inventoried Vehicles" has the meaning set forth in
Section 17.4.
"Inventories" has the meaning set forth in Section 2.2(q).
"ITT" means ITT Corporation, a Nevada corporation.
"knowledge" means, as of any date of determination, (a) with
respect to Seller, the actual knowledge or awareness, as of such date, of
Xxxxx Xxxxxxx, Xxxxxx Xxxxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxx or Xxxxx Xxxxx
and (b) with respect to Buyer, the actual knowledge or awareness, as of
such date, of Xxxxxx Xxxxxxx, Xxxxxxx Xxxxx or Xxxx Xxxxxxx. The words
"know", "knowing" and "known" shall be construed accordingly.
"Legal Requirements" means any applicable law, statute,
treaty, ordinance, code, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions and requirements
of all governments and governmental authorities having jurisdiction over
the Real Estate (including, for purposes hereof, any local Board of Fire
Underwriters), the Assets, the Business or over the operation thereof.
"Licenses" has the meaning set forth in Section 10.5.
"Losses" has the meaning set forth in Section 15.2.
"Marketing Alliance Agreement" has the meaning set forth in
Section 10.6(b).
"Material Adverse Effect" means a material adverse effect on
the business, assets, condition (financial or otherwise) or results of
operations of the Business or the Assets taken as a whole, including the
revocation or failure to obtain any Gaming License or any permit or license
necessary or required for the continued operation of the Casino, but shall
exclude any effect to the extent resulting from (i) any condition or event
that adversely affects the gaming industry generally or the gaming industry
in Nevada, (ii) general economic conditions, (iii) the implementation of
California Proposition No. 5 or the proposal, passage or implementation of
any similar law or initiative or (iv) the proposal or passage of any law or
other initiative restricting or adversely affecting the conduct of gaming
operations generally.
"Material Damage" means unrepaired damage as a result of
fire or other casualty to all or any Material Portion of the Business
Premises or the Assets such that the cost to replace or repair such damaged
Business Premises and Assets exceeds $50,000,000 or which results in any
Material Portion of the Business Premises or the Assets being unusable for
a period in excess of six months.
"Material Portion" means (i) all or any portion of the
Business Premises that represents at least 15% of the assessed value for
tax purposes of the Real Estate or (ii) 5% or more of the Corner Land.
"Multiemployer Plans" has the meaning set forth in Section
19.2(a).
"Nevada Gaming Authorities" means the Nevada State Gaming
Control Board, the Nevada Gaming Commission and the Xxxxx County Liquor and
Gaming Licensing Board.
"Nevada Power Land" means the real property subject to the
Nevada Power Sale Agreement, and consisting of a portion of the Corner
Land, as more fully set forth in Schedule 2.2(a).
"Nevada Power Sale Agreement" means that certain Property
Agreement between Nevada Power Company and SDIC, fully executed as of March
21, 1997, relating to the Nevada Power Land.
"Notice of Disagreement" has the meaning set forth in
Section 4.4(b).
"NRS" means Nevada Revised Statutes.
"Out Parcel" means the real property described on
Schedule 1.1(c).
"Outside Date" has the meaning set forth in Section 13.1.
"Parcel Map" has the meaning set forth in Section 6.1(z).
"parent" means a corporation, trust, partnership, limited
partnership, limited liability company or other entity or person which
directly or indirectly holds more than 50% of the beneficial equity
interest in or voting control of another such entity. Such other entity
shall be deemed the Subsidiary or subsidiary of its parent.
"Parents" has the meaning set forth in the introductory
paragraph hereto.
"Permits" has the meaning set forth in Section 6.1(e).
"Permitted Exceptions" has the meaning set forth in
Section 8.1(a).
"Permitted Liens" has the meaning set forth in Section
6.1(u).
"Person" means any general partnership, limited partnership,
corporation, limited liability company, joint venture, trust, business
trust, governmental agency, cooperative, association, individual or other
entity, and the heirs, executors, administrators, legal representatives,
successors and assigns of such person, as the context may require.
"Personal Property" has the meaning set forth in
Section 2.2(h).
"Property Taxes" means real, personal and intangible
property taxes and assessments, together with any interest, penalty or
other additional amount imposed by a taxing authority.
"PUC" has the meaning set forth in Section 2.2(m).
"Purchase Price" has the meaning set forth in
Section 4.1(a).
"Real Estate" has the meaning set forth in Section 2.2(a).
"Receivables" means all of Seller's and its subsidiaries'
and affiliates' accounts receivable, notes and loans receivable, Gaming
Receivables, Real Estate tenant receivables and ledger receivables and
other accounts generated by or otherwise relating to the Assets.
"Recording Instructions" has the meaning set forth in
Section 4.3.
"Representatives" has the meaning set forth in
Section 5.1(a) hereof.
"Required Records" has the meaning set forth in
Section 2.2(n).
"Residential Real Estate" has the meaning set forth in
Section 2.2(c).
"SGC" has the meaning set forth in the introductory
paragraph hereof.
"SDIC" has the meaning set forth in the introductory
paragraph hereof.
"Seller" has the meaning set forth in the introductory
paragraph hereof.
"Seller's Closing Conditions" has the meaning set forth in
Section 11.2.
"Sheraton" means ITT Sheraton Corporation, a Delaware
corporation.
"Starwood" has the meaning set forth in the introductory
paragraph hereof.
"Statement" has the meaning set forth in Section 4.4(a).
"Stock" has the meaning set forth in Section 2.2(m).
"Subsidiary" or "subsidiary" means a corporation, trust,
partnership, limited partnership, limited liability company, or other
entity more than 50% of the beneficial equity interest in or voting control
of which is directly or indirectly held by another person or entity. Such
other person or entity shall be deemed the "Parent" or "parent" of its
subsidiary.
"Survey" has the meaning set forth in Section 8.1(a).
"Tax" means any income, gross receipts, sales, use, real
estate, ad valorem, transfer, franchise, withholding, payroll, employment,
excise, severance, occupation, premium or property tax or other like
assessment or charge of any kind whatsoever, together with any interest,
penalty or other additional amount imposed by any taxing authority.
"Third Party Claim" has the meaning set forth in
Section 15.4(a).
"Timeshare Joint Venture Agreement" has the meaning set
forth in Section 10.6(b).
"Title Insurer" has the meaning set forth in Section 8.1(c).
"Title Policies" has the meaning set forth in
Section 8.1(c).
"Title Report" has the meaning set forth in Section 8.1(a).
"Transferred Software Programs" has the meaning set forth in
Section 2.2(h).
"Transfer Time" has the meaning set forth in Section 13.1.
"Union Employees" has the meaning set forth in
Section 9.2(k).
"WC Amount" has the meaning set forth in Section 4.4(c).
"Working Capital" has the meaning set forth in
Section 4.4(d).
SECTION 1.2 Terms and Usage Generally. The definitions referred
to in Section 1.1 shall apply equally to both the singular and plural forms
of the terms defined. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. All
references herein to Articles, Sections, Exhibits and Schedules shall be
deemed to be references to Articles and Sections of, and Exhibits and
Schedules to, this Agreement unless the context shall otherwise require.
All Exhibits and Schedules attached hereto shall be deemed incorporated
herein as if set forth in full herein. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation". The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement. References
to a Person are also to its successors and permitted assigns. Unless
otherwise expressly provided herein, any agreement, instrument or statute
defined or referred to herein or in any agreement or instrument defined or
referred to herein means such agreement, instrument or statute as from time
to time amended, modified or supplemented, including (in the case of
agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes, and references to
all attachments thereto and instruments incorporated therein.
ARTICLE II
Purchase and Sale of and Description of Assets
SECTION 2.1 Purchase and Sale. Subject to the terms and
provisions of this Agreement, each of SDIC, its subsidiaries and affiliates
shall, and each of the Parents shall cause each of the foregoing to, sell,
convey, transfer and assign to Buyer at the Closing, free and clear of all
liens and encumbrances (except Permitted Exceptions and Permitted Liens),
and Buyer shall purchase from SDIC or such subsidiaries or affiliates
(w) all of the tangible and intangible assets owned by SDIC or such
subsidiaries or affiliates and constituting, associated with or used or
usable in connection with the ownership or operation of the Business
existing as of the Effective Date, whether or not such assets are located
on or about the Business Premises, as augmented or diminished as permitted
by Section 9.2 in the ordinary course of the operation of the Business
between the Effective Date and the Transfer Time and all tangible and
intangible assets owned by SDIC or such subsidiaries or affiliates which
are necessary to cause all of Parents' and Seller's representations,
warranties and covenants contained herein to be materially true and correct
as of the Closing Date, except the Excluded Assets, (x) the Stock, (y) the
Corner Land and (z) the Residential Real Estate (collectively, the
"Assets"), including those items described in Section 2.2.
SECTION 2.2 Description of Assets. The term "Assets" shall
include:
(a) fee simple title to the real property described on
Schedule 2.2(a)(i), together with all buildings, improvements and fixtures
(other than such fixtures which are leased) located thereon, and all of
SDIC's right, title and interest in and to all hereditaments and rights
appurtenant thereto, including (i) any easements or rights of way
pertaining to or benefitting such real property, (ii) all water rights, air
rights and mineral, oil, gas and other hydrocarbon substance rights owned
by SDIC or such subsidiary's or affiliate's with respect to such real
property and (iii) any interest in streets, alleys, advantages, and any
strips or gores appurtenant thereto, if, and to the extent, included within
the perimeter boundaries of such real estate (collectively, the "Real
Estate"), subject in each case to the Permitted Exceptions; provided,
however, that Seller is making no representations and warranties as to the
status of title with respect to the Dio Drive Vacated Area, Country Club
Lane and the Out Parcel beyond those implied under Nevada Law by the grant,
bargain and sale deed);
(b) fee simple title to the Corner Land, excluding the
Nevada Power Land. As used herein, the "Corner Land" means (i) the real
property described in Schedule 2.2(b), together with all buildings,
improvements and fixtures (excluding leased fixtures) located thereon, and
(ii) all of SDIC's right, title and interest in and to all hereditaments
and rights appurtenant thereto, including (A) any easements or other rights
of way pertaining to or benefitting such real property, (B) all water
rights, air rights and mineral, oil, gas and other hydrocarbon substance
rights owned by SDIC with respect to such real property and (C) any
interest in streets, alleys, advantages, and any strips or gores
appurtenant thereto, subject in each case to the Permitted Exceptions;
(c) fee simple title to those certain parcels of real
property located in the County of Xxxxx, State of Nevada, and more
particularly described on Schedule 2.2(c), together with all buildings,
improvements and fixtures located thereon, and all of SDIC's right, title
and interest in and to all hereditaments and rights appurtenant thereto,
including (i) any easements or rights of way pertaining to or benefitting
such real property, (ii) all water rights, air rights and mineral, oil, gas
and other hydrocarbon substance rights owned by SDIC with respect to such
real property and (iii) any interest in streets, alleys, advantages, and
any strips or gores appurtenant thereto, if, and to the extent, included
within the perimeter boundaries of such real estate (collectively, the
"Residential Real Estate"), subject in each case to the Permitted
Exceptions;
(d) fee simple title to any real property contiguous to the
Real Estate, Corner Land and Residential Real Estate owned by SDIC or its
subsidiaries or affiliates as of the Effective Date, and located within the
area bounded by Las Vegas Boulevard, Sands Avenue, Paradise Road and Desert
Inn Arterial;
(e) subject to the Timeshare Joint Venture Agreement, all
of SDIC's right, title and interest in and to any development rights of
SDIC or its affiliates appurtenant to the Real Estate, the Corner Land and
Residential Real Estate;
(f) all right, title and interest in the Business Premises
not located on the Real Estate, the Corner Land and Residential Real
Estate, if any, as described in Schedule 2.2(f);
(g) all right, title and interest to any Gaming Equipment;
(h) all right, title and interest of SDIC or any of its
affiliates in and to all machinery, equipment, furniture, office equipment,
telephone and communications equipment, restaurant equipment, consumables,
inventory, merchandise, linen, utensils, liquor, food, vehicles, storage
tanks, spare and replacement parts, fuel, cleaning and office supplies and
other tangible property (other than Gaming Equipment) located on the Real
Estate, the Corner Land or the Residential Real Estate, including personal
computers and computer hardware and related transferable software non-
proprietary of SDIC, its subsidiaries or affiliates (the "Transferred
Software Programs"), but excluding (i) any and all proprietary computer
hardware or software of SDIC, its subsidiaries or affiliates (including
Starwood's Reservation software and SDIC's "forecasting program" financial
analysis software), (ii) any and all proprietary operating manuals and
other information and materials belonging to SDIC, its subsidiaries or
affiliates and (iii) any copyrights relating to any such software,
information and materials (collectively, and together with the Gaming
Equipment, the "Personal Property");
(i) to the extent assignable, all Permits affecting or
relating to the Business or the Assets;
(j) all right, title and interest of SDIC or any of its
affiliates to any and all copyrights, trademarks, trade names, service
marks, displays, symbols, color arrangements, designs, logos, applications,
registrations and other intangible personal property used or held for use
in the operation of the Business and/or the Assets, including "Desert Inn"
and any derivative names or marks and all logos, designs and other
intellectual property related thereto (but excluding "Sheraton", "ITT",
"Caesars", "ITT Sheraton Luxury Collection" and any derivative names or
marks and all logos, designs and other intellectual property related
thereto), and related applications and registrations, if any, and all other
intangible property or rights, and all goodwill associated therewith,
directly or indirectly relating thereto or used in the ownership, use or
operation of the Business or the Assets, (collectively, the "Intangible
Property");
(k) all right, title and interest of SDIC or any of its
affiliates in and to all benefits arising after the Transfer Time, if any,
from contracts, agreements, leases, licenses, commitments, sale and
purchase orders and other items included in the Assumed Contracts,
including all contracts, leases, agreements, claims and rights (and
benefits arising therefrom) with or against all persons whomsoever,
relating to the Business or the Assets or any portion thereof, including
all warranties, guaranties, indemnities, development agreements, supply
agreements, service agreements and/or franchise agreements, if any, and all
leases of personal property, regardless of whether SDIC or its subsidiaries
or affiliates is lessee or lessor thereunder, including matters of public
record;
(l) all plans, specifications, drawings, renderings, models
and photographs relating to the improvements located on the Real Estate and
the Residential Real Estate, or any proposed improvements on the Corner
Land, that are in the possession or control of SDIC or its subsidiaries or
affiliates and that are not proprietary to any third party, including those
commissioned or prepared in connection with the recent renovation of the
improvements on the Real Estate, and, to the extent transferable, any and
all warranties given to SDIC or its subsidiaries or affiliates by suppliers
and traders in connection with such renovations;
(m) all issued and outstanding shares of common stock, $100
par value per share (the "Stock"), of Desert Inn Improvement Co., a Nevada
corporation and a wholly owned subsidiary of SGC ("DIIC") and the corporate
minute books and stock records and business records of DIIC; provided,
however, that the parties hereto acknowledge that DIIC is a "Public
Utility" in accordance with the provisions of NRS Sections 704.020 and
704.329 and sale and transfer of the Stock contemplated hereby, which
constitutes more than twenty-five percent of the outstanding shares of
DIIC, requires prior authorization of the Nevada Public Utilities
Commission ("PUC");
(n) all books and records required by the Nevada Gaming
Authorities to be maintained at the Business Premises, and copies (Seller
may retain the originals) of such other books and records, if any, which
are necessary for the ongoing operations of the Business after the Transfer
Time (including only such employee records as it is lawful to transfer)
(collectively, the "Required Records");
(o) all advance reservations, bookings and room deposits
applicable to any period following the Closing, and originals of casino
credit files with respect to the casino operations, and any telephone
numbers used exclusively in connection with the Business;
(p) all customer lists relating to the Business prepared in
accordance with Section 9.1(h);
(q) all inventory purchased by SDIC or any of its
affiliates in the ordinary course of business and then located on the
Business Premises ("Inventories");
(r) all of SDIC's cash on hand and/or on deposit in banks
or other financial institutions, trade deposits, prepaid rent, security
deposits or other pre-expenses paid by SDIC, its subsidiaries or
affiliates, and rights arising therefrom, cash equivalents, coins and
marketable securities, whether or not such assets relate to SDIC's
ownership of Assets or SDIC's operation of the Business; and
(s) all Receivables existing as of the Transfer Time,
including the Receivable arising from Seller's sale of the Nevada Power
Land not theretofore paid.
SECTION 2.3 Description of Excluded Assets. Seller shall not,
and shall not cause its subsidiaries or affiliates to, sell, convey,
transfer or assign to Buyer, and Buyer shall not purchase or acquire from
Seller, any of the following assets, which shall remain the sole and
exclusive property of Seller (collectively, the "Excluded Assets"):
(a) all proprietary computer hardware and software of
Seller, Sheraton and its affiliates, including Starwood's Reservation
software and SDIC's "forecasting program" financial analysis software and
any copyrights relating to any such software, and any Intangible Property
involving the names "Sheraton," "ITT," "Caesars," "ITT Sheraton Luxury
Collection," including any derivative names and related marks, designs or
logos and all proprietary operating manuals and related knowhow;
(b) all of SDIC's right, title and interest in and to all
books and records, in whatever medium, including digitally or magnetically
stored data, files relating to the Business or the Assets, including all
financial statements, certified financial reports, gaming tax returns
(including supporting , originals of all credit reports and files,
including casino files and all books and accounting records relating to the
Business or the Assets in the possession or control of SDIC and its
subsidiaries and affiliates, save and except the Required Records; provided
that upon reasonable request by Buyer, Buyer shall be provided with access
and the right to copy the portions of such records that reasonably relate
to the Business or the Assets;
(c) all corporate charter, minute and stock record books,
corporate seals and tax returns and supporting schedules and documents of
Sheraton or SDIC or its subsidiaries or affiliates relating to the
Business, and all refunds, claims, entitlements or liabilities for income
taxes or other taxes of any type whatsoever which SDIC or its subsidiaries
or affiliates may hereafter receive or be responsible for by reason of its
ownership of the Assets or operation of the Business prior to the Transfer
Time; provided that upon reasonable request by Buyer, Buyer shall be
provided with the access and the right to copy the portions of such tax
materials that reasonably relate to the Business or the Assets;
(d) except as otherwise specifically provided for in this
Agreement, all insurance policies relating to the Business or the Assets
and all rights and claims thereunder, including refund claims;
(e) all claims and litigation and causes of action, and any
tax refunds relating to any of the Excluded Assets;
(f) all of SDIC's gaming chips and tokens (including all
(i) slot machine tokens not currently in circulation and (ii) "reserve"
chips, if any, not currently in circulation), except that at Buyer's
written election made within six months following the Effective Date, such
tokens may be acquired by Buyer at the Closing without further
consideration other than Buyer's assumption of SDIC's liability with
respect to tokens in circulation;
(g) any Assets sold or otherwise disposed of in the
ordinary course of business and as permitted by Section 9.2 during the
period from the Effective Date until the Transfer Time;
(h) all rights of indemnification, claims and causes of
action which relate to the conduct of the Business prior to the Transfer
Time, including those arising by operation of law or in equity or
otherwise, but excluding warranty claims with respect to the inventory or
the equipment described in Section 2.2(g) or 2.2(h) above, or product
liability against the suppliers or manufacturers thereof; and
(i) all issued and outstanding shares of common stock of
Sheraton Corner Enterprises Corporation, a Nevada corporation, all issued
and outstanding shares of common stock of Rimtech Marketing Incorporated, a
Nevada corporation, and all issued and outstanding shares of common stock
of Sheraton Tunica Corporation, a Delaware corporation.
ARTICLE III
Contracts and Liabilities To Be Assumed
SECTION 3.1 Contracts. The "Assumed Contracts" shall be all
contracts, agreements, licenses, leases, commitments, sales and purchase
orders and other orders relating to the Assets or Business and those
entered into by SDIC or its subsidiaries after the Effective Date and prior
to the Closing as permitted by Section 9.2 hereof.
SECTION 3.2 Assumed Liabilities.
(a) Buyer shall assume as of the Transfer Time and shall
pay, perform and discharge when due all obligations and liabilities of
whatever kind and nature, primary or secondary, direct or indirect,
absolute or contingent, known or unknown, of SDIC or its aforementioned
subsidiaries or affiliates to the extent arising out of or relating to the
Business or the Assets and to the extent arising or accruing after the
Transfer Time ("Assumed Liabilities"), including the following (other than
any Excluded Liabilities):
(i) all obligations and liabilities included as Current
Liabilities in the calculation of Closing Working Capital pursuant to
Section 4.4, including any such Current Liabilities for progressive
prizes associated with keno, slot machines and coin operated gaming
devices and sportsbook and racebook gaming;
(ii) all obligations and liabilities of SDIC or its subsidiaries
or affiliates under the Assumed Contracts not performed or not
required to have been performed as of the Transfer Time;
(iii) all liabilities to customers with respect to all unrefunded
cash deposits paid by such customers to SDIC or its subsidiaries or
affiliates prior to the Transfer Time to the extent included as a
Current Liability in the calculation of Closing Working Capital
pursuant to Section 4.4; and
(iv) all obligations and liabilities relating to Taxes relating to
the Business or the Assets with respect to any period ending after the
Transfer Time, but to the extent attributable to periods prior to the
Transfer Time, only to the extent included as a Current Liability in
the calculation of Closing Working Capital pursuant to Section 4.4.
(b) Buyer shall not assume any of the following obligations
and liabilities of Seller or its subsidiaries or affiliates (the "Excluded
Liabilities"), all of which shall be retained and paid, performed and
discharged when due by Seller or its subsidiaries or affiliates:
(i) any Loss or liability of Seller or its subsidiaries or
affiliates of any nature or description, whether liquidated or
contingent, to the extent (A) resulting from events or conditions
which occurred or existed prior to the Transfer Time, regardless of
whether they are due and payable before or after the Transfer Time or
(B) arising out of or relating to the Excluded Assets;
(ii) any Loss or liability incurred as the result of an
Environmental Claim, or any condition requiring correction,
investigation, remediation or monitoring under Environmental Law, in
either case to the extent arising from facts, conditions or
circumstances, known or unknown, occurring or existing at or before
the Transfer Time and related in any manner to the Assets; and
(iii) any Loss or liability relating to current or former employees
of the Business (and their eligible dependents and beneficiaries) with
respect to employment or benefit plans which accrued on or prior to
the Transfer Time, except to the extent specified in Article XIX or
included as a Current Liability in the calculation of Closing Working
Capital pursuant to Section 4.4.
(b) Buyer's obligations under this Section 3.2 will not be
subject to offset or reduction by reason of any actual or alleged breach of
any representation, warranty or covenant contained in this Agreement or any
document delivered in connection herewith or any right or alleged right to
indemnification hereunder.
SECTION 3.3 Consents. To the extent that the assignment of any
of the Assumed Contracts or other rights(including Permits, except as set
forth in Section 11.1(e)) to be transferred hereunder requires the consent
of any other party thereto (including Seller or any affiliate thereof), or
shall be subject to any option in any other person or entity by virtue of a
request for permission to assign or transfer, or by reason of or pursuant
to any transfer to Buyer, this Agreement shall not constitute a contract to
assign the same if any attempted assignment would be ineffective, impair
any material right of Buyer thereunder or give rise to such an option, and
Seller and Buyer shall use commercially reasonable efforts to procure
consent to any such assignment; provided, however, that in the event that
any such consent is not obtained at or prior to the Closing Date, such
event shall not cause the Closing to be delayed or constitute a default by
Seller of any obligation hereunder or result in a reduction of the Purchase
Price. If any such consent is not obtained, or if for any reason any such
assignment is not consummated, at Buyer's request, Seller shall reasonably
cooperate with Buyer to provide for Buyer the benefit, monetary or
otherwise, of any such Assumed Contract or other right, including
enforcement of any and all rights of Seller against the other party thereto
arising out of any breach or cancellation thereof by such party or
otherwise, and, at Buyer's request, by appointing Buyer as Seller's
representative and agent thereunder. Any such cooperation \(i) shall be at
Buyer's cost and expense and (ii) shall not cause Seller to violate any
such Assumed Contract.
ARTICLE IV
Purchase Price
SECTION 4.1 Purchase Price. (a) In consideration of the
foregoing sale, conveyance, transfer and assignment of the Assets, Buyer
shall pay to Seller the sum of $275,000,000 plus the sum of (1) if the
Closing occurs after the "Closing Date" under the Xxxxxxx Xxxxx Agreement
(the "Caesars Closing Date"), the Accrued Interest, (2) the aggregate
amount by which documented capital expenditures actually incurred by SDIC
as contemplated by Section 9.1(g)(i) exceeds an average of $225,000 per
month from and after January 1, 1999 and (3) an amount equal to 80% of all
documented capital expenditures up to $3,000,000 actually incurred by SDIC
pursuant to Section 9.1(g)(ii), and 100% of all documented capital
expenditures incurred by SDIC pursuant to Section 9.1(g)(ii) in excess of
such $3,000,000 (the "Purchase Price"). "Accrued Interest" means an amount
equal to the product of (i) $275,000,000 (less the Applicable Accrued
Deposit), (ii) a fraction, the numerator of which shall be the number of
days in the period from and including the Caesars Closing Date to but
excluding the Closing Date, and the denominator of which shall be 365 and
(iii) the average Applicable Interest Rate per annum for such period.
"Applicable Interest Rate" means (i) for any day during the period from the
Effective Date to the date which is fourteen months following the Effective
Date, a rate per annum equal to the lesser of (x) the applicable "rate of
interest" for revolving loans under the Credit Agreement among Starwood and
certain other borrowers and lenders named therein, dated February 23, 1998
(as amended to the date hereof) and (y) 7.00% and (ii) for any day
thereafter, 10.00%.
(b) The Purchase Price shall be subject to adjustment as
set forth in Section 4.4.
SECTION 4.2 Payment of Purchase Price; Extension Amount. The
Purchase Price and the Extension Amount shall be payable as follows:
(a) The sum of Fifteen Million Dollars ($15,000,000) in
immediately available funds (the "Deposit"), shall be delivered to Escrowee
no later than the tenth Business Day following the execution of this
Agreement, to be deposited in interest-bearing investments approved by
Buyer and Seller and held by Escrowee in accordance with the terms of this
Agreement.
(b) The Purchase Price less the Applicable Accrued Deposit
plus or minus an estimate, prepared by Seller (and reasonably satisfactory
to Buyer) and delivered to Buyer at least two Business Days prior to the
Closing Date, of any adjustment to the Purchase Price under Section 4.4,
shall be delivered to Buyer in immediately available funds on the Closing
Date.
(c) An extension amount of $1,000,000 in immediately
available funds (the "Extension Amount") shall be paid directly by Buyer to
Seller on the earliest to occur of (i) the Closing, (ii) termination of
this Agreement other than pursuant to Section 16.1(vi) or Section 16.1
(vii), and (iii) a date which is fourteen (14) months following the
Effective Date.
(d) Time is of the strictest essence of this Section 4.2.
SECTION 4.3 Disbursement of Deposit. Seller and Buyer shall
provide joint written instructions to Escrowee in customary form mutually
approved by Seller and Buyer, each of whose approval shall not be
unreasonably withheld (the "Recording Instructions"), which shall among
other things, govern the disbursement of the Deposit and the payment for
and obtaining the Title Policies, and other escrow and related charges;
provided, however, that such Recording Instructions shall provide that the
Deposit, together with any interest or other payments thereon, shall be
disbursed to Seller on the Closing Date. The Recording Instructions shall
comply with all applicable Code provisions. The Escrowee shall be
designated as the "reporting party" for purposes of the Code. The
Recording Instructions are intended to carry out the intent of this
Agreement and shall not be inconsistent with this Agreement.
SECTION 4.4 Purchase Price Adjustment. (a) Within 75 days
after the Closing Date, Buyer shall prepare and deliver to Seller a
statement (the "Statement"), certified by an officer of Buyer, setting
forth Working Capital as of the close of business on the Closing Date
("Closing Working Capital"). A physical inventory shall be conducted by
Seller and Buyer consistent with past practice and immediately prior to the
Closing Date for the purpose of preparing the Statement, and each of Seller
and Buyer and their respective independent auditors shall have the right to
observe the taking of such physical inventory. Any costs or expenses
incurred by the parties in connection with such physical inventory shall be
shared equally by Seller and Buyer.
(b) During the 30-day period following Seller's receipt of the
Statement, Seller and its independent auditors shall be permitted to review
the working papers relating to the Statement. The Statement shall become
final and binding upon the parties on the 30th day following delivery
thereof, unless Seller gives written notice of its disagreement with the
Statement (a "Notice of Disagreement") to Buyer prior to such date. Any
Notice of Disagreement shall (i) specify in reasonable detail the nature of
any disagreement so asserted and (ii) only include disagreements based on
mathematical errors or based on Closing Working Capital not being
calculated in accordance with this Section 4.4. If a Notice of
Disagreement is received by Buyer in a timely manner, then the Statement
(as revised in accordance with this sentence) shall become final and
binding upon Seller and Buyer on the earlier of (A) the date Seller and
Buyer resolve in writing any differences they have with respect to the
matters specified in the Notice of Disagreement or (B) the date any
disputed matters are finally resolved in writing by the Accountant. During
the 30-day period following the delivery of a Notice of Disagreement,
Seller and Buyer shall seek in good faith to resolve in writing any
differences that they may have with respect to the matters specified in the
Notice of Disagreement. During such period Buyer and its auditors shall
have access to any working papers of Seller's auditors prepared in
connection with the Notice of Disagreement. At the end of such 30-day
period, Seller and Buyer shall submit to the Accountant for arbitration any
and all matters that remain in dispute and which were properly included in
the Notice of Disagreement, in the form of a written brief. Seller and
Buyer shall use their reasonable efforts to cause the Accountant to render
a decision resolving the matters submitted to the Accountant within 30 days
following submission thereto. Judgment may be entered upon the
determination of the Accountant in any court having jurisdiction over the
party against which such determination is to be enforced. The fees and
expenses of the Accountant shall be borne equally by Buyer and Seller.
Each party shall bear the costs and expenses of its own counsel,
accountants and other advisers in connection with any such Notice of
Disagreement.
(c) The Purchase Price shall be increased by the amount by which
Closing Working Capital exceeds $5,000,000 (the "WC Amount"), and the
Purchase Price shall be decreased by the amount by which Closing Working
Capital is less than the WC Amount (the Purchase Price as so increased or
decreased shall hereinafter be referred to as the "Adjusted Purchase
Price"). If the Closing Date Amount is less than the Adjusted Purchase
Price, Buyer shall, and if the Closing Date Amount is more than the
Adjusted Purchase Price, Seller shall, within 10 Business Days after the
Statement becomes final and binding on the parties, make payment by wire
transfer in immediately available funds of the amount of such difference,
together with interest thereon at a rate equal to the rate of interest from
time to time announced publicly by Citibank, N.A. as its prime rate,
calculated on the basis of the actual number of days elapsed divided by
365, from the Closing Date to the date of payment.
(d) The term "Working Capital" means Current Assets minus
Current Liabilities. The terms "Current Assets" and "Current Liabilities"
mean the current assets and current liabilities, respectively, of the
Business other than Excluded Assets or Excluded Liabilities, as the case
may be, calculated in accordance with United States generally accepted
accounting principles ("GAAP"), applied on a basis consistent with Seller's
current practices (as reflected in the consolidated balance sheet of SDIC
dated as of December 31, 1998 and the applicable portions of the Caesars
Palace, Caesars Tahoe and Desert Inn Supplementary Combining Financial
Information as of December 31, 1998 (collectively, the "Balance Sheet").
Notwithstanding the foregoing, in addition to all other Current
Liabilities, (i) $300,000 for repairing the water utility system owned by
DIIC shall be included as a Current Liability in the calculation of Closing
Working Capital hereunder, less the amount of (x) all documented capital
expenditures for such repairs in excess of $200,000 for the year 1999 and
(y) all such documented expenditures in the year 2000 and (ii) all
unredeemed chips and tokens of Seller, and all progressive prizes
associated with keno, slot machines and coin operated gaming devices and
sportsbook and racebook gaming, in each case as of the Transfer Time, shall
be included as a Current Liability in the calculation of Closing Working
Capital hereunder.
(e) Following the Closing, Buyer shall not take any actions with
respect to the accounting books and records of the Business on which the
Statement is to be based that would obstruct or prevent the preparation of
the Statement and the determination of Closing Working Capital as provided
in this Section 4.4. During the period of time from and after the date of
delivery of the Statement to Seller through the resolution of any
adjustment to the Purchase Price contemplated by this Section 4.4, Buyer
shall afford to Seller and any accountants, counsel or financial advisers
retained by Seller in connection with any adjustment to the Purchase Price
contemplated by this Section 4.4 reasonable access during normal business
hours to the books and records of the Business (if within the control of
Buyer) to the extent relevant to the adjustment contemplated by this
Section 4.4).
ARTICLE V
Confidential Information
SECTION 5.1 Confidentiality. (a) Seller and Buyer each agree
that all Confidential Information will be kept confidential and will be
used solely in connection with this Agreement and the transactions
contemplated hereby, and that each of the parties and their respective
directors, trustees, officers, employees, advisors, agents, lenders and
consultants (collectively "Representatives") will not disclose in any
manner whatsoever any of the Confidential Information received by it;
provided, however, that (i) each party may make any disclosure of such
information to which the other party gives its prior consent and (ii) any
of such information may and shall only be disclosed to the parties'
respective Representatives to the extent such Representatives need to know
such information for the sole purpose of effecting the sale of the Assets
pursuant to this Agreement. Notwithstanding the foregoing, each of the
parties may make such disclosures (i) as may be required by law, (ii) in
connection with any proceedings before any regulatory bodies or agencies,
and (iii) to the Nevada Gaming Authorities. Upon the termination of this
Agreement for any reason, all Confidential Information in the possession of
either party or its Representatives shall be returned to the party that
provided such Confidential Information.
(b) The term "Confidential Information" means all
information and data furnished by either party or its Representatives to
the other party or its Representatives, in each case, in connection with
this Agreement or the transactions contemplated hereby and shall be deemed
to include all notes, analyses, compilations, studies, interpretations or
other documents prepared by any of the parties or their respective
Representatives that contain, reflect or are based upon, in whole or in
part, such information furnished to one party by or on behalf of the other
party. The term "Confidential Information" does not include information
that (i) was or becomes generally available to the public other than as a
result of a disclosure by a party or its Representatives acting in
violation of this provision, (ii) was known to a party or its
Representatives prior to being furnished to such party in accordance with
the terms of this Agreement or (iii) was or becomes available to a party on
a nonconfidential basis from a source other than a party or its
Representatives; provided, that the source of such information was not
known to the recipient to be bound by a confidentiality agreement or other
contractual, legal or fiduciary obligation of confidentiality with respect
to such information.
ARTICLE VI
Representations and Warranties of
each of Parents and Seller
SECTION 6.1 Parents' and Seller's Representations and
Warranties. Each of the Parents and Seller represents and warrants to
Buyer as follows:
(a) Each of SGC and SDIC is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nevada, and Starwood is a corporation duly organized, validly existing and
in good standing under the laws of the State of Maryland, in each case with
all requisite corporate power and authority to execute, enter into and
carry out its obligations under this Agreement, the Deeds and the other
agreements and instruments to be executed and delivered or caused to be
delivered by it in connection herewith. Each officer of the foregoing who
shall execute and deliver this Agreement on behalf of any of the foregoing
has been duly authorized to so act by all requisite action on the part of
such party.
(b) The execution, delivery, and performance of this
Agreement, the Deeds and the other agreements and instruments to be
executed and delivered by each of the Parents and SDIC in connection
herewith by the persons executing the same on behalf of such parties have
been or will be duly and validly authorized by all necessary corporate
action on the part of such parties, and this Agreement, the Deeds and such
other agreements and instruments constitute or as of the Closing will
constitute the legal, valid and binding obligations of each of them,
enforceable in accordance with their respective terms.
(c) The execution, delivery and performance of this
Agreement, the Deeds and the other agreements and instruments to be
executed and delivered by each of the Parents and SDIC in connection
herewith will not (i) violate the certificate of incorporation or by-laws
of any of the Parents or SDIC, (ii) violate any provision of law applicable
to any of the Parents or SDIC, the Business Premises or the Business, the
violation of which would have a Material Adverse Effect or which would
prevent the consummation of the transactions contemplated by this Agreement
or (iii) conflict with or result in the breach or termination of, or
constitute a default under or pursuant to any judgment, order, injunction,
decree or ruling of any court or governmental authority, or any other
agreement or instrument by which SDIC or the Assets are bound, or to which
any of them are subject, which conflict, breach, termination or default
would have a Material Adverse Effect or would prevent the consummation of
the transactions contemplated by this Agreement, or (iv) result in the
creation of any material lien, charge or encumbrance upon any of the Assets
which is not removed prior to the Closing other than, in each case,
Permitted Exceptions and Permitted Liens.
(d) Schedule 6.1(d) sets forth a list of all agreements
having a remaining term in excess of twelve (12) months following the
Effective Date and which may not be terminated without penalty on less than
90 days prior notice and which in each case require aggregate consideration
in cash or in kind in excess of $500,000 for the unexpired term thereof
relating to the Business. To the knowledge of each of the Parents and
Seller, all such Assumed Contracts are in full force and effect, neither
Seller nor any other party to any thereof is in material default
thereunder, and no event has occurred which, with notice or the passage of
time, or both, would constitute a material default by Seller or by any
other party to the Assumed Contracts.
(e) Schedule 6.1(e) represents a true, correct and complete
list of all material licenses, permits, certificates of occupancy,
franchises, consents, approvals and governmental authorizations
("Permits"), including liquor licenses and gaming licenses, currently
necessary for the ownership of the Assets and the operation of the
Business, including the business of, and the services provided by, DIIC.
No material default has occurred in the due observance or condition of any
material Permit which has not been heretofore corrected and, to the
knowledge of each of the Parents and Seller, no event has occurred which,
merely by notice or the passage of time, or both, would result in a
material default thereunder. The Permits are in full force and effect and
all the material requirements and conditions of the Permits have been fully
complied with.
(f) Except as set forth on Schedule 6.1(f), other than
personal property leased by Seller pursuant to the Assumed Contracts, all
personal property used by Seller in the operation and maintenance of the
Business is owned by Seller or its affiliates and constitutes a part of the
Assets. Except as set forth on Schedule 6.1(f), Seller has or will have at
Closing good and valid title to the personal property included in the
Assets that are conveyed at the Closing, free and clear of all liens,
security interests, claims, charges and encumbrances, except Permitted
Exceptions and Permitted Liens.
(g) Schedule 6.1(g) lists all the pending and registered
trademarks, service marks and trade names owned by SDIC or its affiliates
and used, or held for use, exclusively in connection with the Business.
All the Intangible Property is valid, in good standing, free and clear of
any encumbrances and is not being challenged in any way. To the knowledge
of the Parents and Seller, Seller is not currently infringing on any
trademark, service xxxx, trade name or copyright of another, and there is
no claim pending or, to the knowledge of each of the Parents and Seller,
threatened against Seller with respect to an alleged infringement of any
trademark, service xxxx, trade name or copyright owned by another nor, to
the knowledge of each of the Parents and Seller, does the operation of the
Business in the manner in which it has heretofore been operated give rise
to any such infringement. Seller has not granted any party or entity any
license to use any such Intangible Property.
(h) Schedule 6.1(h) identifies all contracts or
reservations for the use or occupancy of guest rooms, meeting and banquet
facilities, tee times for the golf course or other facilities of the
Business to be fulfilled after January 1, 2000, that are not terminable
without penalty on less than 90 days notice and that would result in
payments to Seller in excess of $100,000.
(i) Except as set forth in Schedule 6.1(i), to the
knowledge of each of the Parents and Seller, no agreements have been
entered into with any Person, including home builders, prospective home
buyers, owners, or occupants of the land surrounding the Business,
regarding: (A) the right to membership in the golf course included in the
Assets or the intent to operate such golf course as private or semi-private
country club, (B) the right to play golf on such golf course or (C) the
manner in which the Business will be operated, managed, maintained, or
improved.
(j) Except as described on Schedule 6.1(j), there are no
material actions, claims, suits, or proceedings (including gaming audits,
arbitrations, grievances, judicial proceedings, administrative proceedings
and tax consents) pending or, to any of the Parents' or Seller's knowledge,
threatened against Seller or DIIC or affecting Seller's or DIIC's rights,
in each case with respect to the Business, the Assets, at law or in equity,
before any Federal, state, municipal, or other governmental agency or
instrumentality, nor is any of the Parents or Seller aware of any
investigation with respect to any of the foregoing or any facts which to
their knowledge are reasonably likely to result in any such action,
investigation, suit or proceedings affecting Seller, DIIC, the Assets or
the Business. In addition, except as described on Schedule 6.1(j), there
are no material judgments, orders, awards or decrees currently in effect
against Seller or DIIC with respect to the ownership, marketing,
development or operation of any part of the Assets or the Business.
(k) With the exception of proposed pedestrian bridges and a
proposed beautification assessment, no material governmental assessment for
sewer, sidewalk, water, paving, roadways, electrical, power or other
improvements is pending, or to any of the Parents' or Seller's knowledge
threatened, with respect to the Assets.
(l) Except for the Nevada Power Sale Agreement or as set
forth on Schedule 6.1(l), no proceedings are presently pending or, to any
of the Parents' or Seller's knowledge, threatened, for the taking by
exercise of the power of eminent domain, or in any other manner for a
public or quasi-public purpose, of all or any part of the Real Estate, the
Corner Land or the Residential Real Estate. Except as set forth on
Schedule 6.1(l), to Parents' and Seller's knowledge, there is no plan,
study or effort by any governmental authority or agency that in any way
materially adversely affects or which would reasonably be expected to
materially adversely affect the present or future use or zoning of the Real
Estate, the Corner Land or the Residential Real Estate.
(m) Except as set forth on Schedule 6.1(m), there exist no
outstanding covenants or agreements in connection with the zoning or
development of the Real Estate, the Corner Land or the Residential Real
Estate or any portion thereof which would bind or require Buyer to perform
any material actions or pay any material monies in connection therewith.
(n) There is no pending or, to any of the Parents' or
Seller's knowledge, threatened curtailment or reduction of any utility
service to the Real Estate, the Corner Land or the Residential Real Estate
or any part thereof, and Seller has not received any written notice of any
such pending or threatened curtailment or reduction. No off-site
easements, parking or other facilities are by law or restrictive covenant
needed for the use and operation of the Real Estate, the Corner Land or the
Residential Real Estate.
(o) Except as would not reasonably be expected to have a
Material Adverse Effect:
(i) Seller has, and is in compliance with, all Permits required
under Environmental Law for the ownership and operation of the Assets;
(ii) Seller is in compliance with all Environmental Laws governing
the ownership or operation of the Assets;
(iii) there are no pending or threatened Environmental Claims
relating to Seller's ownership or operation of the Assets;
(iv) no Hazardous Materials have been released or disposed of,
whether by Seller or any other Person, at, on, under or from the
Assets in any manner or to any place that, in any such case, has
resulted in, or could reasonably be expected to result in, an
Environmental Claim;
(v) there is no requirement or restriction imposed by any
Environmental Law that will prohibit, impair or impede any currently
planned or projected, alteration by Seller or addition to or expansion
of any of the Assets;
(vi) there is no outstanding order pursuant to any Environmental
Law with which Seller has not complied pertaining to the closure or
cessation of sewer treatment services, operations and facilities
formerly provided with respect to the Business Premises; and
(vii) Seller is under no obligation pursuant to Environmental Law
to remove, encapsulate or otherwise treat any asbestos or asbestos-
continuing materials at or in the Business Premises.
(p) Seller is either the owner or the licensee of the
Transferred Software Programs and, except as set forth in the contracts or
agreements listed in Schedule 6.1(p), the Transferred Software Programs and
all rights thereunder are transferable to Buyer without restrictions other
than those restrictions that would not reasonably be expected to have a
Material Adverse Effect.
(q) Except as set forth on Schedule 6.1(q), neither the
Parents nor Seller has any knowledge of any material settlement, earth
movement, termite infestation, or damage affecting the Real Estate or the
Residential Real Estate, the Corner Land or any material defects in any
mechanical, electrical, plumbing, sewer, heating, air conditioning,
sprinkler systems, or irrigation systems at the Real Estate, the Corner
Land or the Residential Real Estate, all of which are in good operating
condition and repair.
(r) Except as may be shown on Schedules 6.1(j) and 6.1(l),
to the knowledge of each of Parents and Seller, neither SDIC nor any of the
Assets is in violation of, under investigation with respect to, threatened
to be charged with or given notice of any violation of, any law, rule,
regulation, ordinance or code, judgment, injunction, order or decree
applicable to the Assets or the conduct of the Business (including
Environmental Laws), except for violations that are not reasonably likely
to have a Material Adverse Effect. Seller has not received any notice from
any insurer that any portion of the Assets contains any defects or
conditions that are reasonably likely to materially adversely affect the
insurability of the Assets.
(s) Except as set forth on Schedule 6.1(s) and except for
the Excluded Assets, the Assets comprise all of the material assets,
property and rights of every type and description, real, personal and
mixed, tangible and intangible, used in the conduct of the Business as
presently conducted.
(t) Schedule 6.1(t) sets forth a list of all employee
benefit plans within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, and all other bonus, deferred
compensation, severance, incentive and equity-based compensation, pension,
profit-sharing and stock bonus plans, programs, policies and arrangements
in which employees of the Business participate. There are no material
unfunded liabilities in respect of employees (and their dependents and
beneficiaries) of the Business (or in respect of benefit plans in which
they participate) as to which Buyer could be liable.
(u) Seller will or will cause its affiliates to convey good
and valid title (subject to the provisions of Section 2.2(a) with respect
to the Dio Drive Vacated Area, Country Club Lane and the Out Parcel) to the
Assets (other than the Nevada Power Land), free and clear of all liens,
security interests, claims, charges and encumbrances (except (i) those
pertaining to the Assumed Contracts, (ii) such as are disclosed in
Schedule 6.1(f), (iii) to the extent bonded against mechanics', carriers',
workmen's, repairmen's or other like liens arising or incurred in the
ordinary course of business, (iv) liens arising under original purchase
price conditional sales contracts and equipment leases with third parties
entered into in the ordinary course of business and providing for periodic
payments, (v) liens for taxes, assessments and other governmental charges
(A) which charges are not due and payable or (B) to the extent bonded
against, which are being contested in good faith by appropriate proceedings
and (vi) other imperfections of title or encumbrances expressly permitted
hereunder or which arise after the Effective Date other than by Seller's
voluntary act and do not materially impair the continued use and operation
of the Assets to which they relate in the operation of the Business as
presently conducted (collectively, the "Permitted Liens"), and, subject to
Section 3.3, SDIC has or will have the right, power and authority to sell,
convey, transfer and assign the Assets (other than the Nevada Power Land
and the Stock) at the Closing as contemplated by this Agreement. No
material claims are being asserted that could reasonably be expected to
result in a Tax lien on the Assets.
(v) DIIC is duly organized, validly existing and in good
standing under the laws of the State of Nevada with all requisite power and
authority to conducts its business as presently conducted. The Stock
constitutes all issued and outstanding shares of common stock in DIIC. All
such outstanding shares of Stock have been duly authorized and validly
issued and are fully paid and nonassessable. There are no outstanding
options, warrants, right, calls, commitments, conversion rights, rights of
exchange, plans or other agreements or claims of any character providing
for the purchase, issuance or sale of any shares of the Stock other than as
contemplated by this Agreement. Except for the Stock, no other shares of
capital stock or securities of DIIC will be authorized, issued or
outstanding at the Closing.
(w) The conveyance of the Stock to Buyer will transfer to
Buyer valid title thereto free and clear of all liens, encumbrances,
restrictions, preemptive rights, options and claims of every kind subject,
however, to PUC restrictions.
(x) Except as set forth on Schedule 6.1(x), DIIC has no
material liabilities or obligations of any nature (whether absolute,
accrued, contingent, or otherwise).
(y) All offices which Seller owns, maintains or otherwise
uses in connection with the operation of the Business are set forth on
Schedule 6.1(y).
(z) Seller has filed with the Xxxxx County Planning
Commission an application for a parcel map determination in respect of the
Corner Land and the Nevada Power Land (the "Parcel Map").
SECTION 6.2 No Implied Representations. Buyer acknowledges that
except as expressly set forth in this Agreement and in the documents and
instruments delivered by Seller at the Closing, none of Starwood, ITT,
Sheraton, SGC, SDIC, or any of their respective parents, subsidiaries,
affiliates, agents or representatives or purported agents or
representatives has made, and none of the foregoing entities or Persons is
liable for or bound in any manner by, any express or implied warranties,
guaranties, promises, statements, inducements, representations or
information pertaining to the Assets or any part thereof, the physical
condition thereof, environmental matters, the income, expenses or operation
thereof, the financial prospects for the Business, the uses which can be
lawfully made of the Assets under applicable zoning or other laws or any
other matter or thing with respect thereto, including any existing or
prospective Permits. Without limiting the foregoing, Buyer acknowledges
and agrees that, except as expressly set forth in this Agreement and in the
documents and instruments delivered by or for Seller at the Closing, Seller
is not liable for or bound by (and Buyer has not relied upon) any verbal or
written statements, representations, warranties, agreements, arrangements,
understandings, investment bankers or real estate brokers "setups" or
offering materials or any other information respecting any or all of the
Assets furnished by Starwood, ITT, Sheraton, SGC, SDIC or any affiliate,
representative or other person representing or purportedly representing any
of the foregoing. Nothing contained in this Section 6.2 shall be deemed to
impair, limit or otherwise affect any rights of Buyer under this Agreement
in respect of the representations, warranties and covenants of Seller set
forth in this Agreement and the other provisions hereof binding on Seller.
SECTION 6.3 Survival of Seller's Warranties.
(a) All of Seller's representations and warranties
contained in this Article VI (other than those contained in
(i) Sections 6.1(a), 6.1(b) and 6.1(c), which shall survive the Closing
indefinitely and (ii) Section 6.1(o), which shall survive until twenty-four
(24) months after the date of the Closing), shall survive until eighteen
(18) months after the date of the Closing; provided, however, that Seller's
liability for breach of such representations and warranties shall not
expire as to any breach or alleged breach thereof if notice of such breach
or alleged breach is given by Buyer to Seller prior to eighteen (18) or
twenty-four (24), as applicable, months after the date of the Closing.
(b) Notwithstanding anything to the contrary set forth in
this Article VI, Seller shall have no liability to Buyer for breach of any
warranty and representation set forth in this Article VI or for breach by
Seller of any of its agreements set forth in Article VIII (other than with
respect to liability with respect to Taxes) unless and except to the extent
that the damages due to Buyer by reason of all such breaches exceeds
$1,000,000.
ARTICLE VII
Representations and Warranties of SUN and Buyer
SECTION 7.1 SUN's and Buyer's Representations and Warranties.
Each of SUN and Buyer represents and warrants to Seller as follows:
(a) Buyer is a Nevada corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada, and
SUN is an international business company duly organized, validly existing
and in good standing under the laws of the Commonwealth of the Bahamas, in
each case with all requisite corporate power and authority to enter into
and carry out its obligations under this Agreement and the other agreements
and instruments to be executed and delivered by it in connection herewith.
Each officer of SUN and Buyer who shall execute and deliver this Agreement
and such other agreements and instruments has been duly authorized to so
act by all requisite corporate action on the part of SUN and Buyer.
(b) The execution, delivery, and performance of this
Agreement and the other agreements and instruments to be executed and
delivered by SUN and Buyer in connection herewith by the persons executing
the same on behalf of SUN and Buyer have been duly and validly authorized
by all necessary corporate action on the part of SUN and Buyer and this
Agreement and such other agreements and instruments constitute the legal,
valid and binding obligations of each of them, enforceable in accordance
with their respective terms.
(c) The execution, delivery and performance of this
Agreement, and the other agreements and instruments to be executed and
delivered by SUN and Buyer in connection herewith will not (i) violate the
articles of association or memorandum of association or other similar
organizational documents of SUN or Buyer, (ii) violate any provision of law
applicable to SUN or Buyer, the violation of which would have a material
adverse effect on SUN's or Buyer's ability to consummate the transaction
contemplated by this Agreement or otherwise perform its obligations
hereunder ("Buyer Material Adverse Effect") or which would prevent the
consummation of the transaction contemplated by this Agreement, or
(iii) conflict with or result in the breach or termination of, or
constitute a default under or pursuant to any judgment, order, injunction,
decree or ruling of any court or governmental authority, or other agreement
or instrument by which Buyer or its properties are bound, or to which any
of them are subject, which conflict, breach, termination or default would
have a Buyer Material Adverse Effect or which would prevent the
consummation of the transactions contemplated by this Agreement.
(d) Neither SUN nor Buyer nor any of the principals of
either of them has ever been denied a Gaming License. SUN and its required
affiliates are currently licensed and in good standing to conduct gaming
activities in the State of New Jersey in accordance with the New Jersey
Gaming Control Act.
(e) SUN has arranged for, or will promptly following the
Effective Date arrange for, Buyer to have in its possession prior to the
Closing sufficient cash, available lines of credit or other sources of
immediately available funds to enable it to purchase the Assets and pay any
other amount to be paid by it hereunder.
SECTION 7.2 Survival of Buyer's and SUN's Representations and
Warranties. The representations and warranties of Buyer and SUN contained
in Sections 7.1(a), 7.1(b) and 7.1(c) shall survive the Closing
indefinitely.
ARTICLE VIII
Title Insurance
SECTION 8.1 Title Policies and Exceptions.
(a) Attached hereto as Schedule 8.1(a) is a preliminary
title report for each of the Real Estate, the Corner Land and each parcel
of the Residential Real Estate (collectively, the "Title Report"). All
title exceptions shown on the Title Report except those exceptions listed
on Schedule 8.1(a) and all matters disclosed by the surveys listed on
Part II of Schedule 8.1(a) (collectively, the "Survey"), copies of which
have been delivered to Buyer, are hereinafter referred to as the "Permitted
Exceptions". The Permitted Exceptions shall also include those other title
exceptions which are disclosed or become apparent to Buyer after the
Effective Date, which are not already Permitted Exceptions, which cannot be
removed by the payment of a sum of money, which are not caused by the
intentional act of Seller or Seller's affiliates after the Effective Date
and which do not materially adversely affect the value of the Real Estate,
the Corner Land or the Residential Real Estate, or the continued use
thereof as currently conducted, or as to which Buyer has not timely
objected. Buyer must notify Seller in writing of its objection to any such
subsequently arising matter on or before the date that is ten (10) days
after Buyer's receipt of notice thereof.
(b) Seller shall cause all title exceptions (other than
Permitted Exceptions) not approved by Buyer to be removed on or before the
Closing. Seller, however, shall have the right to (i) cause the Title
Insurer to remove a lien by bonding over it or (ii) obtain the commitment
of the Title Insurer to insure Buyer against loss or damage that may be
occasioned by such exceptions that are not Permitted Exceptions.
(c) Prior to the Closing, Buyer shall obtain a ALTA
extended owner's policy of title insurance (Form B-1970) (Amended 4-6-90),
issued by Nevada Title Company or, if Nevada Title Company is unable to do
so, by a title insurance company reasonably acceptable to Buyer in its
reasonable discretion ("Title Insurer"), insuring that Buyer has fee title
to the Real Estate, the Corner Land and the Residential Real Estate, and
DIIC has fee title to the real property described as parcels 46 and 47 in
the Title Report (the "DIIC Land") subject only to (i) the Permitted
Exceptions, (ii) liens for taxes not yet due and payable, (iii) all
standard exceptions, exclusions, conditions and stipulations from coverage
for the Title Insurer's Extended Coverage Form ALTA Owner's Policy of Title
Insurance, including any and all endorsements and affirmative coverage
customary in real estate sale transactions involving the magnitude and type
of the Assets (including, without limitation, an ALTA 3.1 Zoning
Endorsement and as to the DIIC Land, a non-imputation endorsement) as Buyer
shall reasonably request and (iv) those exceptions arising after the
Effective Date and approved by Buyer as provided above (the "Title
Policies"). The coverage amount of the Title Policies for the Real Estate
shall be no more than the amount of (i) $270,000,000 less (ii) the book
value, net of depreciation on Seller's books as at December 31, 1998, of
all furniture, fixtures, equipment and other personal property included in
the Assets. Buyer shall have the right to require the Title Insurer to
obtain facultative reinsurance, with direct access provisions against the
reinsurer with respect to the Title Policies in such amounts and with such
title companies as Buyer shall determine in its reasonable discretion.
(d) Buyer and Seller equally shall pay the premiums for the
Title Policies.
Buyer shall pay for non-standard endorsements and any
lender's coverage premiums. Buyer and Seller shall each cooperate
diligently to provide customary documents required by Title Insurer as
condition to issuance of the Title Policies.
(e) Seller shall order an update of the Survey, which shall
be certified to Buyer and its lenders, if any, the Title Insurer and any
other parties reasonably requested by Buyer. In addition, Seller shall
cause the updated Survey to be prepared and be certified as having been
prepared in accordance with "Minimum Standard Detail Requirements for
ALTA/ACSM Land Title Surveys" jointly established and adopted by the
American Land Title Association ("ALTA") and the American Congress of
Survey and Mapping ("ACSM") in 1997 and including all ALTA optional items
except No. 5 (Contour Maps) and No. 12 (Governmental Agency Survey
Requirements) and the updated Survey shall include a certification as to
whether or not the Real Estate, the Corner Land and the Residential Real
Estate are located in a floodplain or designated floodway and such
information as may be required by the Title Insurer to issue extended
coverage (consistent with all matters shown on such Survey) over all
general printed exceptions to title.
ARTICLE IX
Conduct of Business Prior to Closing
Each of the Parents and Seller agrees that, subject to the terms
and provisions of this Agreement, after the execution hereof and prior to
Closing (unless Buyer consents in writing otherwise):
SECTION 9.1 Seller's Conduct. Seller shall and shall cause each
of its subsidiaries and affiliates (as applicable) to:
(a) deliver the Assets to Buyer at the Closing in
substantially their present condition, except as otherwise permitted
herein, and prior to such time maintain and keep the Assets in
substantially the same repair, working order and condition as the Assets
are in on the Effective Date (ordinary wear and tear and damage from fire
or other casualty subject to Article XVIII excepted) so as to maintain the
Business Premises as a hotel and resort with a casino of substantially the
same quality as such establishment exists as of the Effective Date;
provided, however, that, except as expressly provided in this Agreement,
SDIC shall not be required to make or undertake capital improvements,
repairs (other than in the ordinary course of business) or replacements
with respect to the Assets prior to the Transfer Time;
(b) continue in the ordinary course the existing use and
operation of the Business;
(c) promptly notify Buyer of (i) any notice or other
communication from any Person alleging that the consent of such Person is
or may be required in connection with the transactions contemplated by this
Agreement, (ii) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement and (iii) any actions, suits, claims,
Environmental Claims, investigations or proceedings commenced or, to its
knowledge threatened against, relating to or involving or otherwise
affecting SDIC or the Business that, if adversely determined, would
reasonably be expected to result in a Material Adverse Effect or prevent or
preclude the consummation of the transactions contemplated by this
Agreement;
(d) maintain a supply of consumables, inventory and
operating equipment of the type included at substantially the levels
maintained on the date of execution of this Agreement (with such increases
or decreases due to seasonality as and consistent with practice in the
gaming industry in Las Vegas) and in sufficient amounts to allow the
efficient operation of the Business in a first-class manner;
(e) comply in all material respects with all Legal
Requirements relating to the Assets or the Business and promptly provide
Buyer with all notices alleging violations of any Legal Requirement
(including any violations under applicable Legal Requirements relating to
gaming) and cure, at its own expense such violations;
(f) use best efforts to preserve in force all Permits and
to cause all expiring Permits to be renewed prior to the Closing Date. If
any material Permit shall be suspended, revoked or otherwise challenged,
Seller shall promptly notify Buyer and shall take all measures necessary to
cause the reinstatement of such material Permit without any additional
limitation or condition;
(g) make the following capital expenditures:
(i) budgeted capital expenditures of not less than
$2,700,000 for calendar year 1999 for maintenance and repair in
respect of the Assets and, following December 31, 1999, capital
expenditures for such maintenance and repair of not less than an
average of $225,000 per month in the aggregate; and
(ii) capital expenditures to install and operate an
independent information technology system, consisting of hardware
and software, that will allow Buyer, after the Transfer Time, to
operate the Business as currently conducted, which system (x)
shall use the AS 400 platform and be reasonably acceptable to
Buyer, (y) shall include customer lists and related information
constituting Assets and (z) after the Transfer Time, shall not be
accessible by any Person other than Buyer and its affiliates;
(h) as promptly as practicable following the Effective
Date, create from the Xxxxxxx Xxxxx customer list a separate list of the
customers of the Desert Inn, and thereafter continue to maintain and update
such customer list; and
(i) enter into a golf course management agreement covering
the Desert Inn Golf Club and Pro Shop which is substantially consistent
with Exhibit 10.6(b)-2 (the "Golf Course Management Agreement").
SECTION 9.2 Operating Restrictions. Except as required by law,
as otherwise expressly provided in this Agreement or with the consent of
Buyer (such consent not to be unreasonably withheld or delayed), SDIC shall
not:
(a) create any mortgage, pledge, lien, encumbrance or
charge on any of the Assets which would bind any of the Assets following
Closing (other than Permitted Liens and Permitted Exceptions);
(b) sell or transfer the Business Premises, or any portion
thereof included as part of the Assets except transactions pursuant to the
Assumed Contracts or agreements entered into in the ordinary course of
business which sales or transfers would not, individually or in the
aggregate, reasonably be expected to materially impair the continued
operation of the Business as currently conducted;
(c) sell or transfer any Personal Property included as part
of the Assets except as contemplated by the Assumed Contracts or pursuant
to agreements entered into in the ordinary course of business which sales
or transfers would not, individually or in the aggregate, reasonably be
expected to materially impair the continued operation of the Business as
currently conducted;
(d) cancel or terminate (other than for cause or in the
ordinary course of business which would not, individually or in the
aggregate, reasonably be expected to materially impair the continued
operation of the Business as currently conducted) any of the Assumed
Contracts or, without Buyer's prior written consent, enter into any new
contracts (except for the Golf Course Management Agreement) which
(i) require payments in excess of $250,000, (ii) continue for more than
twelve months from the Effective Date or (iii) grant to any person any
material rights with respect to the Business or the Assets unless any such
contract can be terminated on 30 days' notice without liability to Buyer;
provided, however, that the entry by SDIC into any such contract shall not
constitute a breach or default under this Agreement or a failure of any
condition of the Closing if SGC shall assume all obligations under such
contract (and indemnify Buyer in respect thereof) and if SGC has the
ability to perform all such obligations without use of the Assets following
the Transfer Time;
(e) waive any material rights of substantial value that are
included as a part of the Assets;
(f) except for the Golf Course Management Agreement, enter
into any contracts or agreements with any affiliates of SDIC which will be
binding on Buyer after the Transfer Time;
(g) consent to, authorize or approve any change in the
zoning, land use classification, development rights or obligations for or
with respect to the Real Estate, the Residential Real Estate or the Corner
Land or any part thereof, except that Seller reserves the right to
consummate the Nevada Power Sale Agreement, continue to prosecute the
proposed subdivision of the Corner Land and continue, following the
execution and delivery of the Timeshare Joint Venture Agreement by the
parties thereto as contemplated by this Agreement, to further subdivide
portions of the Golf Course and Residential Real Estate in a manner
consistent with, or pursuant to, such Timeshare Joint Venture Agreement;
(h) enter into any lease, license, occupancy agreement or
other agreement or contract which allows for the use or occupancy of any
portion of the Real Estate, the Residential Real Estate or the Corner Land
other than (i) bookings in the ordinary course of business which would
result in aggregate payments to Seller of less than $100,000, (ii) the
conveyance contemplated by the Nevada Power Sale Agreement and (iii) golf
tournaments or events permitted by Section 9.2(i);
(i) except for tournaments or events occurring on or prior
to twelve months following the Effective Date, enter into any agreements
with respect to use of the golf course located on the Real Estate, or any
portion of such golf course, for any tournaments or events which require,
that the golf course be unavailable to the public or to guests of the
Business for more than one calendar day;
(j) market or solicit offers to sell, transfer, convey,
finance or refinance, directly or indirectly, any interest in the Assets or
in the owner of any Asset to any party other than Buyer, or directly or
indirectly negotiate, participate or encourage the submission of any
proposal with or from any other Person relating to the sale of the Assets,
nor shall Seller authorize any other Person to do any of the foregoing on
its behalf;
(k) except as set forth on Schedule 9.2(k), enter into any
collective bargaining or other agreements with any union for the employees
of the Business or enter into any agreement with any employee who will
remain an employee of the manager of the Business; provided, however, that
Seller (i) may engage in negotiations for and enter into successor
collective bargaining agreements to those collective bargaining agreements
referenced in Schedule 3.1(a) which have expired or are due to expire, or
may be terminated on seven (7) days' notice by either party thereto, prior
to the Transfer Time, (ii) may engage in negotiations and enter into a
collective bargaining agreement with the Professional, Clerical and
Miscellaneous Employees, Teamsters Local Union No. 995, which was certified
as the bargaining representative for the laundry workers at the Business
after an election held on October 30, 1998, and (iii) will be required to
engage in "effects bargaining", and may enter into agreements in connection
therewith, with the labor unions representing employees of the Business
(the "Union Employees"), and, provided, further, that any such entering
into collective bargaining agreements (or renewals thereof) will be on
commercially reasonable terms, and, in connection therewith, Seller will
undertake to involve Buyer, subject to agreement of the applicable labor
unions, in the foregoing negotiations;
(l) hire or solicit any employee of SDIC for employment at
any of Seller's or ITT's or its affiliates' other business or increase the
compensation of any such employee unless required by law or the terms of a
collective bargaining agreement, except for ordinary course merit increases
in compensation for non-union employees consistent with past practice for
such employees or for employees holding similar positions;
(m) except as required by applicable law (and then only
following notice to Buyer to the extent practicable) commence or commit to
any capital expenditures or capital project with respect to the Business or
the Assets which involves the payment of $500,000 or more;
(n) transfer, sell, assign, pledge, encumber or grant a
security interest in the Stock other than to Buyer. Notwithstanding any
provision in this Agreement to the contrary, the agreement contained in the
immediately preceding sentence shall survive the Closing Date until the
Stock is transferred to Buyer; or
(o) enter into any amendment, modification or supplement to
the Nevada Power Sale Agreement.
Buyer agrees to respond to Seller's request with respect to any
of the matters set forth in this Section 9.2 within 5 Business Days after
receipt by Buyer of Seller's written request, and the failure of Buyer to
respond within such 5 Business Day period shall be deemed to be approval
and consent thereto by Buyer.
ARTICLE X
Other Pre-Closing Obligations
SECTION 10.1 Access; Observers. (a) After the Effective Date
and prior to the Closing, upon prior written notice from Buyer and, if
requested by Seller, accompanied by a representative of Seller, Seller
shall (unless prohibited by law) give Buyer and its representatives,
employees and agents reasonable access during normal business hours to the
Business Premises and to the books and records relating to the Assets and
shall (unless prohibited by law) furnish Buyer during such period with such
information in Seller's possession concerning the Assets and operation of
the Business as Buyer may reasonably request. Seller and Buyer agree that
prior to Closing Seller shall have no obligation to give Buyer the names or
addresses of, or other identifying information with respect to, any of
Seller's customers or players, and Buyer shall not have any access to such
identifying information or to other proprietary information of SIDC and its
Affiliates not included among the Assets. Any such access and the
furnishing of any such information shall not unduly interfere with the
normal activities of the Business, and Buyer acknowledges that no
investigation by Seller or Buyer or other information received by Buyer
shall operate as a waiver or otherwise affect any representation, warranty
or agreement given or made by Seller hereunder. Notwithstanding the
foregoing, Buyer shall not have access to personnel records of SDIC
relating to individual performance or evaluation records, medical histories
or other information which in Seller's reasonable good faith opinion is
prohibited by Legal Requirements or the disclosure of which could subject
Seller to risk of liability.
(b) Buyer shall be responsible for its costs and expenses in
connection with any inspection or tests undertaken pursuant to this Section
10.1.
SECTION 10.2 No Control. Prior to the Transfer Time, Buyer
shall not directly or indirectly control, supervise, direct or interfere
with, or attempt to control, supervise, direct or interfere with, the
Assets or the Business. Until the Transfer Time, the operations and
affairs of the Business are the sole responsibility of and (subject to the
provisions of Article IX) under Seller's complete control.
SECTION 10.3 Xxxx-Xxxxx-Xxxxxx Filing. Buyer and Seller shall
use their commercially reasonable efforts to comply as expeditiously as
practicable with the requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended ("HSR Act"), to the extent applicable
to the transactions contemplated by this Agreement, and shall make their
initial filings with the Federal Trade Commission and the United States
Department of Justice as soon as practical and no later than sixty (60)
days after the Effective Date. Each party agrees to use its commercially
reasonable efforts to satisfy any requests for additional information or
other requirements imposed by the Federal Trade Commission or the
Department of Justice in connection with the transactions contemplated by
this Agreement as soon as practical and, if requested by any party, to
request early termination of any waiting period otherwise imposed by
statute. Buyer shall pay the filing fee, if any, required under the HSR
Act.
SECTION 10.4 Cooperation. Each party shall use its commercially
reasonable efforts to make or file all other required notifications and to
obtain all consents, approvals and authorizations, including the Permits,
which must be obtained by such party in order to consummate the
transactions contemplated hereby. Each party shall render the other its
full and complete cooperation in giving such notices or obtaining such
consents, approvals and authorizations, including the Permits. Each party
covenants and agrees promptly to furnish to the other all information and
data in the furnishing party's possession requested in writing by the
requesting party which such furnishing party has the right to disclose and
which is reasonable or necessary in order to assist the requesting party to
give the necessary notices or secure the permits, licenses and approvals
required as contemplated by this Agreement, including the Permits.
SECTION 10.5 Gaming and Other Licenses. (a) As soon as
practical after the Effective Date, but in no event later than 60 days
following the Effective Date, Buyer will file applications with the Nevada
Gaming Authorities on behalf of Buyer, the board of directors and executive
officers (if any) of Buyer, SUN and the board of directors and executive
officers of SUN for all required gaming licenses (the "Gaming Licenses"),
liquor licenses and for all other required licenses (collectively with the
Gaming Licenses and the liquor licenses, the "Licenses") in connection with
the Business, and all related necessary findings of suitability,
registrations and approvals, and no later than 120 days following the
Effective Date, Buyer will file such applications on behalf of all other
required parties in connection with the foregoing. Buyer will use its best
efforts to obtain the Licenses as soon as possible after the Effective
Date, and will respond promptly to all requests made by the Nevada Gaming
Authorities and/or the alcoholic beverage control authorities. Seller
shall cooperate in good faith to assist Buyer in obtaining the Licenses as
soon as possible after the Effective Date; provided, however, that the
foregoing shall not require SUN or Buyer, directly or indirectly, (i) to
divest, or agree to divest, any material assets of SUN or Buyer on the
Effective Date or (ii) to cease to conduct business or operations in any
jurisdiction in which SUN, Buyer or their respective subsidiaries conducts
business or operations as of the Effective Date.
(b) Seller will deliver to Buyer as promptly as practicable
following the filing thereof true, correct and complete copies of material
gaming financial reports, if any, filed by Seller with respect to the
Business with the State of Nevada or Nevada Gaming Authorities between the
Effective Date and the Closing.
SECTION 10.6 Best Efforts. (a) Subject to the terms and
conditions of this Agreement, each party shall use its best efforts to
cause the Closing to occur as promptly as practicable following the
Effective Date.
(b) Without limiting the generality of the foregoing, each of
Seller and Buyer or their respective affiliates, as applicable, shall use
its best efforts to negotiate in good faith as soon as possible after the
Effective Date, and enter into as promptly as practicable following such
Effective Date (or cause their respective affiliates to enter into, as the
case may be) (A) a timeshare joint venture agreement between Starwood or an
affiliate of Starwood and Buyer or an affiliate of Buyer, the terms of
which shall be substantially as set forth in Exhibit 10.6(b)-1 (the
"Timeshare Joint Venture Agreement"), and (B) a marketing alliance
agreement between Starwood or an affiliate of Starwood and Buyer or an
affiliate of Buyer, the terms of which shall be substantially as set forth
in Exhibit 10.6(b)-3 (the "Marketing Alliance Agreement").
SECTION 10.7 Notice. Each party covenants and agrees promptly
to notify the other of any claim, action, suit, proceeding or investigation
relating to the Business or this Agreement which is commenced or threatened
and becomes known to any of them between the Effective Date and the
Closing.
SECTION 10.8 Parcel Map Requirement. Except for any change
therefrom approved in writing by Buyer (such approval not to be
unreasonably withheld or delayed), Seller shall effect any parcelization of
the real property subject to the Parcel Map substantially in accordance
with the specifications of such Parcel Map.
SECTION 10.9 Additional Agreements of Seller. (a) Seller agrees
that except as set forth on Schedule 6.1(x) or as contemplated by this
Agreement, DIIC shall not incur any material liabilities other than for the
purchase of water from the Las Vegas Valley Water District. Seller will
pay for or cause to be paid for (but not by DIIC) any water purchased by
DIIC prior to the Closing which is not paid for by DIIC prior to the
Closing.
(b) Seller agrees that it will be solely responsible for the
payment of any fees or taxes due pursuant to any subsequent deficiency
determinations made under the Nevada Gaming Control Act (chapter 463 of the
NRS) which encompasses any period of time before the Closing Date. The
foregoing provision, required by the Nevada Gaming Control Act to be
included in this Agreement, shall not be construed to exonerate Buyer from
paying, or to require Seller to pay, for fees or taxes attributable to
operations of the Business from and after the Transfer Time.
ARTICLE XI
Conditions to Closing
SECTION 11.1 Buyer's Conditions. The obligation of Buyer to
consummate the Closing and the purchase of the Assets is conditioned upon
the satisfaction or waiver by Buyer as of the Closing Date of each of the
following conditions (collectively "Buyer's Closing Conditions"):
(a) Seller shall have delivered to Buyer a certificate of its
Chief Executive Officer or Chief Financial Officer, dated as of the Closing
Date, to the effect that all the terms, covenants, agreements and
conditions of this Agreement to be complied with and performed by Seller on
or prior to the Closing Date have been complied with and performed in all
material respects, and all the representations and warranties of Seller
herein qualified as to materiality are true and all such representations
and warranties not so qualified are true in all material respects as if
made on and as of such date (unless an earlier date is indicated in the
representation and warranty).
(b) Seller, Parents or their respective affiliates shall have
delivered, or cause to be delivered, to Buyer (i) any documents,
instruments or agreements called for under this Agreement which have not
previously been delivered; (ii) Bills of Sale, endorsements of certificates
of title and similar instruments of conveyance as appropriate, in customary
form covering title to the Personal Property; and reasonably satisfactory
to Seller's and Buyer's counsel; (iii) an Assignment of Trademarks and
intangible rights in customary form; (iv) an Assignment and Assumption of
Assumed Contracts in customary form and reasonably satisfactory to Seller's
and Buyer's counsel; (v) such other customary instruments of conveyance as
Buyer may reasonably request with respect to the Assets; (vi) a "nonforeign
affidavit", properly executed by an officer of SDIC in customary form
containing such information as is required by Section 1445(b)(2) of the
Code; (vii) Seller's customer and player lists and related documents,
instruments or agreements called for under this Agreement which have not
been previously delivered; and (viii) such other documents, instruments or
agreements as may be reasonably required by Buyer or its counsel to
transfer the Assets to Buyer and to effectuate the transactions
contemplated hereby.
(c) SDIC shall have delivered to Escrowee or to Buyer grant,
bargain and sale deeds conveying fee simple title to the Real Estate, the
Corner Land and the Residential Real Estate subject only to the Permitted
Exceptions (including the Nevada Power Sales Agreement) except as otherwise
expressly provided herein, in a form reasonably satisfactory to Buyer's and
Seller's counsel.
(d) Any waiting period, including extensions thereof,
applicable to the consummation of the transactions contemplated hereunder
required pursuant to the provisions of the HSR Act shall have either
expired without notice of objection to the transaction or been previously
terminated.
(e) Buyer shall have obtained all necessary approvals from the
Nevada Gaming Authorities, including Gaming Licenses, to operate the
Business substantially as currently conducted on the Effective Date.
(f) No injunction shall have been entered which prohibits or
makes impossible the consummation of the transactions contemplated hereby,
whether preliminary or permanent; provided, however, that Buyer and Seller
shall use their commercially reasonable efforts to prevent any such event
(including appealing any adverse decision).
(g) Buyer shall have received the Title Policies or commitments
therefor, and Seller shall have delivered to the Title Insurer such other
documents or affidavits as may be reasonably required as a condition to the
issuance of the Title Policies in the form herein required.
(h) Buyer shall have received from counsel to SDIC and Parents,
an opinion or opinions, dated as of the Closing Date, in form and substance
reasonably satisfactory to Buyer and its counsel, that: (i) each of SDIC
and the Parents is validly existing corporation organized and in good
standing under the laws of the state of its formation, and has all
necessary power to own the Assets, operate the Business and to consummate
the transactions contemplated hereby; and (ii) this Agreement and the other
agreements and instruments to be executed and delivered by Seller or the
Parents on or prior to the Closing Date have been duly and validly
authorized by Seller or the Parents and will on the Closing Date be valid
and binding on Seller and the Parents and enforceable in accordance with
their terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity (including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing) regardless of whether
considered in a proceeding in equity or at law.
(i) The Outside Date shall not have passed, except that the
same shall not be a condition for the benefit of Buyer to the extent of any
contributory delay by Buyer in performing its obligations hereunder.
SECTION 11.2 Seller's Conditions. The obligation of Seller to
consummate the Closing is conditioned upon the satisfaction or waiver by
Seller as of the Closing Date of each of the following conditions
(collectively "Seller's Closing Conditions"):
(a) Buyer shall have delivered to Escrowee or to Seller the
Closing Date Amount (less the Applicable Accrued Deposit).
(b) Buyer, SUN or their respective affiliates shall have
delivered, or cause to be delivered, to Seller a certificate, dated as of
the Closing Date, to the effect that all the terms, covenants, agreements
and conditions of this Agreement to be complied with and performed by Buyer
on or prior to the Closing Date have been complied with and performed in
all material respects, and all the representations and warranties of Buyer
herein qualified as to materiality are true and all such representations
and warranties not so qualified are true in all material respects on the
Closing Date as if made on and as of such date (unless an earlier date is
indicated in the representation and warranty).
(c) Buyer shall have delivered to Seller the instruments
and documents specified in Section 11.1 to be accepted and executed by
Buyer and any other documents, instruments and agreements called for under
this Agreement which have not previously been delivered.
(d) Seller shall have received from counsel to Buyer and
SUN an opinion or opinions dated as of the Closing Date, in form and
substance reasonably satisfactory to Seller and its counsel, that:
(i) each of Buyer and SUN is validly existing and in good standing under
the laws of the state or commonwealth of its formation, is duly qualified
to conduct business in such jurisdiction, and has all necessary corporate
power to consummate the transactions contemplated hereby; and (ii) this
Agreement and the other agreements and instruments to be executed and
delivered by Buyer or SUN on or prior to the Closing Date have been duly
and validly authorized by Buyer or SUN and will on the Closing Date be
valid and binding on Buyer and SUN and enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws affecting creditors'
rights generally from time to time in effect and to general principles of
equity (including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing) regardless of whether
considered in a proceeding in equity or at law.
(e) Any waiting period, including extensions thereof,
applicable to the consummation of the transactions contemplated hereunder
required pursuant to the provisions of the HSR Act shall have either
expired without notice of objection to the transaction or been previously
terminated.
(f) No injunction shall have been entered which prohibits
or makes impossible the consummation of the transactions contemplated
hereby, whether preliminary or permanent; provided, however, that Buyer and
Seller shall use their reasonable best efforts to prevent any such event
(including appealing any adverse decision).
(g) The Outside Date shall not have passed, except that
same shall not be a condition for the benefit of Seller to the extent of
any contributory delay by Seller in performing its obligations hereunder.
(h) Buyer shall have obtained all necessary approvals from
the Nevada Gaming Authorities, including Gaming Licenses, to operate the
Business substantially as conducted on the Effective Date.
SECTION 11.3 Frustration of Closing Conditions. Neither Buyer
nor Seller may rely on the failure of any condition set forth in this
Article XI to be satisfied if such failure was caused by such party's
failure to act in good faith or to use its best efforts to cause the
Closing to occur as required by Section 10.6.
ARTICLE XII
Escrow
SECTION 12.1 Escrow. If Buyer shall deliver the Deposit to
Escrowee pursuant to Section 4.2(a), then prior to or concurrently with
such delivery Buyer and Seller shall open an escrow (the "Escrow") with
Escrowee by delivery of a fully executed copy of this Agreement to
Escrowee, and by Buyer's delivery to Escrowee of the Deposit no later than
the tenth Business Day following the date of this Agreement. Escrowee will
notify Seller and Buyer when Escrow has been opened. This Agreement
together with the Recording Instructions shall constitute joint escrow
instructions to Escrowee. In addition, Seller and Buyer agree to be bound
by such other reasonable and customary escrow instructions as may be
necessary or reasonably required by Escrowee or the parties hereto in order
to consummate the purchase and sale described herein, or otherwise to
distribute and pay the funds held in Escrow as provided in this Agreement.
In the event of any inconsistency between the terms and provisions of such
supplemental escrow instructions and the terms and provisions of this
Agreement and the Recording Instructions, the terms and provisions of this
Agreement and the Recording Instructions shall control, absent an express
written agreement between Seller and Buyer to the contrary which
acknowledges this Article XII. The Assets described in Sections 2.2(a),
(b) and (c) shall be conveyed at the Closing through such Escrow and the
other Assets shall be conveyed at the Closing outside of such Escrow, all
in accordance with the terms and provisions of this Agreement.
SECTION 12.2 Investment. The Escrowee shall invest or deposit
all monies delivered to the Escrowee for deposit into the Escrow in such
account(s) at, or in such certificates of deposit issued by, such bank or
savings and loan association located in Las Vegas, Nevada, as Buyer shall
direct and as shall be reasonably satisfactory to Seller. Except as
otherwise expressly provided herein, all interest, dividends and other
income earned in respect of such deposited monies shall accrue to the
account and for the benefit of Buyer and shall be reinvested or deposited
as aforesaid.
ARTICLE XIII
Closing
SECTION 13.1 Time; Location. The consummation of the purchase
and sale of the Assets pursuant to this Agreement (the "Closing") shall be
held at the offices of Cravath, Swaine & Xxxxx, 000 Xxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 (or such other place as the parties shall agree) and
shall be deemed to occur at midnight following 11:59 P.M. Las Vegas time on
the Closing Date (the "Transfer Time"). The Closing shall occur on a date
(the "Closing Date") as soon as practicable, but no later than the sixth
Business Day after satisfaction (or waiver by the applicable party) of the
conditions set forth in Sections 11.1 and 11.2, and in any event on or
prior to November 17, 2000 (the "Outside Date").
SECTION 13.2 Recordation of Deeds. The Closing shall, for all
purposes under this Agreement, be deemed to have occurred as of the
Transfer Time. The matters and deliveries described in Article XI shall be
deemed accomplished concurrently. The recordation of the Deeds shall be
accomplished on the Closing Date, if possible, but in any event not later
than one Business Day following the Closing Date and then only provided
that the Title Insurer will insure over the gap.
SECTION 13.3 Payment of Closing Date Amount. Prior to the
Closing, Buyer shall deliver to Escrowee or to Seller the Closing Date
Amount less the Applicable Accrued Deposit by wire transfer of immediately
available funds. Except to the extent such amounts are included as a
Current Liability in the calculation of Closing Working Capital pursuant to
Section 4.4, the Escrowee shall withhold from the monies to be delivered to
Seller pursuant to the immediately preceding paragraph such amounts as
Seller and Buyer shall agree are necessary to comply with the provisions of
Nevada Revised Statutes ("NRS") 612.695, 360.525 and 616B.269 until such
time as Seller furnishes to Buyer and the Escrowee the receipts or
certificates provided for in said statute or, if not so provided for, such
evidence as Buyer may reasonably require in order to assure Buyer that the
applicable obligations have been satisfied. If Sellers do not produce such
receipts and certificates within the time period provided in said statute,
or if any lien or other claim therefor is asserted against Buyer or the
Assets by a governmental authority, the Escrowee shall pay such withheld
funds to the appropriate governmental authorities.
SECTION 13.4 Certain Expenses. Buyer and Seller shall equally
share the following expenses: (i) all real estate transfer taxes, (ii) any
and all sales and use taxes payable in respect of the transfer of the
Gaming Equipment and other applicable personal property to Buyer and
(iii) the costs of filing or publishing any and all notices or documents
required by law or this Agreement to be filed or published in connection
with Buyer's purchase of the Gaming Equipment and other applicable personal
property.
SECTION 13.5 Transfer of Possession. Possession of the Assets
shall be delivered to Buyer at the Transfer Time.
ARTICLE XIV
[Intentionally omitted]
ARTICLE XV
Survival; Indemnification
SECTION 15.1 Survival. Other than Sections 5.1(a) and 15.2
through 15.7, which shall survive indefinitely, and as otherwise provided
in Sections 6.3, 7.2 and 9.2(n), any covenants, agreements, representations
and warranties of the parties hereto contained in this Agreement, the Deeds
or in any other agreement, certificate or other writing delivered pursuant
hereto or in connection herewith shall not survive the Closing.
SECTION 15.2 Indemnification. Seller agrees to indemnify and
hold Buyer harmless from and against any and all damages, losses,
penalties, liabilities and expenses, including reasonable attorneys' fees
and expenses (collectively, "Losses"), which Buyer may incur by reason of
any action or claim arising from acts or omissions of Seller (or any of its
affiliates) prior to the Transfer Time, in connection with the Assets or
the Business and all liabilities in respect of the Assets or the Business
that are not Assumed Liabilities, all liabilities in respect of the
Excluded Assets, Excluded Liabilities and all liabilities in respect of
contracts assumed by SGC pursuant to Section 9.2(d). Buyer agrees to
indemnify and hold Seller and its affiliates harmless from and against any
and all Losses, which Seller or any of its affiliates may incur by reason
of (i) any action or claim arising after the Transfer Time from acts or
omissions of Buyer or otherwise arising out of the Assets or the Business
after the Transfer Time, including Buyer's failure to discharge any of the
Assumed Liabilities, (ii) any claims or actions arising in connection with,
or asserted by any broker contacted or retained by Buyer, or (iii) Seller's
cooperation with Buyer pursuant to Section 3.3 in providing Buyer with the
benefits of any Assumed Contract for which consent is not obtained.
SECTION 15.3 Calculation of Losses. The amount of any Loss for
which indemnification is provided under this Article XV shall be net of any
amounts recovered or recoverable by the party entitled to indemnification
hereunder (the "Indemnified Party") under insurance policies with respect
to such Losses and shall be (i) increased to take account of any net tax
cost incurred by the Indemnified Party arising from the receipt of
indemnity payments hereunder (grossed up for such increase) and
(ii) reduced to take account of any net tax benefit realized by the
Indemnified Party arising from the incurrence or payment of any such
Losses. In computing the amount of any such tax cost or tax benefit, the
Indemnified Party shall be deemed to recognize all other items of income,
gain, loss, deduction or credit before recognizing any item arising from
the receipt of any indemnity payment hereunder or the incurrence or payment
of any indemnified Losses. Any indemnification payment hereunder shall
initially be made without regard to this paragraph and shall be increased
or reduced to reflect any such net tax cost (including gross-
up) or net tax benefit only after the Indemnified Party has actually
realized such cost or benefit.
SECTION 15.4 Procedures Relating to Indemnification. (a) In
order for an Indemnified Party to be entitled to any indemnification
provided for under this Agreement in respect of, arising out of or
involving a claim or demand made by any person against the Indemnified
Party (a "Third Party Claim"), such Indemnified Party must notify the
indemnifying party in writing, and in reasonable detail, of the Third Party
Claim within 10 business days after receipt by such Indemnified Party of
written notice of the Third Party Claim; provided, however, that failure to
give such notification shall not affect the indemnification provided
hereunder except to the extent the indemnifying party shall have been
actually prejudiced as a result of such failure (except that the
indemnifying party shall not be liable for any expenses incurred during the
period in which the Indemnified Party failed to give such notice).
(b) If a Third Party Claim is made against an Indemnified
Party, the indemnifying party shall be entitled to participate in the
defense thereof and, if it so chooses and acknowledges its obligation to
indemnify the Indemnified Party therefor, to assume the defense thereof
with counsel selected by the indemnifying party; provided that such counsel
is not reasonably objected to by the Indemnified Party. Should the
indemnifying party so elect to assume the defense of a Third Party Claim,
the indemnifying party shall not be liable to the Indemnified Party for
legal expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof. If the indemnifying party assumes such defense,
the Indemnified Party shall have the right to participate in the defense
thereof and to employ counsel (not reasonably objected to by the
indemnifying party), at its own expense, separate from the counsel employed
by the indemnifying party, it being understood that the indemnifying party
shall control such defense.
(c) If the indemnifying party so elects to assume the
defense of any Third Party Claim, all of the indemnified parties shall
cooperate with the indemnifying party in the defense or prosecution
thereof. Whether or not the indemnifying party shall have assumed the
defense of a Third Party Claim, the Indemnified Party shall not admit any
liability with respect to, or settle, compromise or discharge, such Third
Party Claim without the indemnifying party's prior written consent (which
consent shall not be unreasonably withheld). If the indemnifying party
shall have assumed the defense of a Third Party Claim, the Indemnified
Party shall agree to any settlement, compromise or discharge of a Third
Party Claim which the indemnifying party may recommend and which by its
terms obligates the indemnifying party to pay the full amount of the
liability in connection with such Third Party Claim and which releases the
Indemnified Party completely in connection with such Third Party Claim.
SECTION 15.5 Other Claims. In the event any Indemnified Party
should have a claim against any indemnifying party under Section 15.2 that
does not involve a Third Party Claim being asserted against or sought to be
collected from such Indemnified Party, the Indemnified Party shall deliver
notice of such claim with reasonable promptness to the indemnifying party.
The failure by any Indemnified Party so to notify the indemnifying party
shall not relieve the indemnifying party from any liability which it may
have to such Indemnified Party, except to the extent that the indemnifying
party demonstrates that it has been materially prejudiced by such failure.
If the indemnifying party does not notify the Indemnified Party within 10
calendar days following its receipt of such notice that the indemnifying
party disputes its liability to the Indemnified Party, such claim specified
by the Indemnified Party in such notice shall be conclusively deemed a
liability of the indemnifying party under Section 15.2 and the indemnifying
party shall pay the amount of such liability to the Indemnified Party on
demand or, in the case of any notice in which the amount of the claim (or
any portion thereof) is estimated, on such later date when the amount of
such claim (or such portion thereof) becomes finally determined. If the
indemnifying party has timely disputed its liability with respect to such
claim, as provided above, the indemnifying party and the Indemnified Party
shall proceed in good faith to negotiate a resolution of such dispute and,
if not resolved through negotiations, such dispute shall be resolved by
litigation in an appropriate court of competent jurisdiction.
SECTION 15.6 Exclusivity. After the Closing, and except for a
party's right to recover damages for breach of a representation or warranty
(as limited by Sections 6.3 and 7.2), Section 15.2 will provide the
exclusive remedy for any Losses arising out of this Agreement, the Assets,
the Business or the transactions contemplated hereby.
SECTION 15.7 No Consequential Damages. Notwithstanding anything
to the contrary in this Agreement, in no event shall any party be obligated
to indemnify any Person, including any Indemnified Party, for any special
or consequential damages.
ARTICLE XVI
Termination
SECTION 16.1 Grounds for Termination. This Agreement may be
terminated at any time prior to the Closing:
(i) by mutual written agreement of Seller and Buyer;
(ii) by Seller if Buyer shall fail timely to make the
Deposit;
(iii) by Seller if the Closing shall not have been
consummated on or before the Outside Date other than by reason of
Seller's default, or by Buyer if the Closing shall not have been
consummated on or before the Outside Date, other than by reason
of Buyer's default;
(iv) by Seller if any of the conditions set forth in
Section 11.2 shall have become incapable of fulfillment and shall
not have been waived by Seller;
(v) by Buyer if any of the conditions set forth in
Section 11.1 shall have become incapable of fulfillment and shall
not have been waived by Buyer;
(vi) by Buyer pursuant to Section 18.1;
(vii) by Buyer upon a breach in any material respect of
any representation, warranty, covenant or agreement hereunder by
Seller unless (x) such breach is capable of being cured,
(y) Seller diligently seeks to cure such breach and (z) such
breach is cured prior to the Closing Date; and
(viii) by Seller upon a breach in any material respect of
any representation, warranty, covenant or agreement hereunder by
Buyer unless (x) such breach is capable of being cured, (y) Buyer
diligently seeks to cure such breach and (z) such breach is cured
prior to the Closing Date.
provided, however, that the party seeking termination (except pursuant to
clause (i)) is not in breach in any material respect of any of its
representations, warranties, covenants or agreements contained in this
Agreement.
SECTION 16.2 Effect of Termination. Except as set forth in this
Section 16.2 or in Section 16.3, if this Agreement is terminated as
permitted by Section 16.1, such termination shall be without liability of
either party (or any stockholder, director, officer, employee, agent,
consultant or representative of such party) to the other party to this
Agreement and the Deposit, together with any interest or other payments
made thereon during the Escrow, shall be irrevocably returned to Buyer by
the Escrowee within two (2) Business Days of such termination. If a
termination shall result from the willful failure of either party to
fulfill a condition to the performance of the obligations of the other
party, failure to perform a covenant of this Agreement or breach by either
party to this Agreement of any representation or warranty or agreement
contained herein, such party shall be fully liable for any and all Losses
incurred or suffered by the other party as a result of such failure or
breach.
SECTION 16.3 Liquidated Damages.
(a) BECAUSE OF THE MAGNITUDE AND THE UNIQUE NATURE OF THE
ASSETS, THE PARTIES ACKNOWLEDGE THAT SELLER'S DAMAGES IN THE EVENT OF
BUYER'S FAILURE TO CONSUMMATE THE CLOSING IN ACCORDANCE WITH BUYER'S
OBLIGATIONS HEREUNDER WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL OF
ASCERTAINMENT. BUYER AND SELLER HAVE EXPRESSLY NEGOTIATED THIS PROVISION,
AND HAVE AGREED THAT IN LIGHT OF THE CIRCUMSTANCES EXISTING AT THE TIME OF
EXECUTION OF THIS AGREEMENT, AN AMOUNT EQUAL TO THE DEPOSIT, TOGETHER WITH
INTEREST AND OTHER PAYMENTS MADE THEREON DURING THE PERIOD OF ESCROW,
REPRESENTS A REASONABLE ESTIMATE OF THE HARM LIKELY TO BE SUFFERED BY
SELLER IN THE EVENT THAT THE NEVADA GAMING AUTHORITIES DENY BUYER A GAMING
LICENSE TO OPERATE THE BUSINESS AS CURRENTLY CONDUCTED UP BY A FINAL NON-
APPEALABLE DECISION, THAT SELLER'S ACTUAL DAMAGES MIGHT WELL EXCEED THE
AMOUNT OF THE DEPOSIT, BUT THAT PROOF OF ACTUAL DAMAGES WOULD BE COSTLY OR
IMPRACTICAL. ACCORDINGLY, IN THE EVENT THAT THE NEVADA GAMING AUTHORITIES
DENY BUYER A GAMING LICENSE TO OPERATE THE BUSINESS AS CURRENTLY CONDUCTED
BY A FINAL NON-APPEALABLE DECISION, THEN SELLER SHALL BE ENTITLED TO
RECEIVE THE DEPOSIT (TOGETHER WITH SUCH INTEREST AND OTHER PAYMENTS) FROM
ESCROWEE AS ITS SOLE REMEDY AND AS LIQUIDATED DAMAGES; PROVIDED, HOWEVER,
THAT THE FOREGOING SHALL NOT IMPAIR OR LIMIT ANY REMEDY OF SELLER FOR ANY
BREACH OF THIS AGREEMENT BY SUN OR BUYER.
(b) Notwithstanding the foregoing, Seller's agreement to
accept the Deposit (together with interest and other payments made thereon
during the period of Escrow) as liquidated damages pursuant to
Section 16.3(a) for failure of the Nevada Gaming Authorities to grant Buyer
a Gaming License to operate the Business as currently conducted by a final
and non-appealable decision is expressly conditioned on Buyer's full
cooperation and that Buyer refrain from obstructing or interfering in any
way with Seller's exercise of such remedies and execute a release in form
reasonably satisfactory to Seller's counsel of any and all claims against
Starwood, ITT, Sheraton, SGC, SDIC and the Assets within three (3) Business
Days of Seller's demand therefor. In the event Buyer shall fail or refuse
so to cooperate with Seller in the termination of this Agreement, the
cancellation of Escrow, the payment of liquidated damages and the execution
and delivery of the foregoing described release in favor of Seller and its
affiliates, then Seller may elect to pursue any and all remedies available
to it at law or in equity. In the event of an action commenced by Seller
or Buyer over disposition of the Deposit or money damages asserted by Buyer
for Seller's alleged breach of this Agreement, the prevailing party shall
be entitled to recover, in addition to its costs of enforcement, including
attorneys' and consultants' fees, interest at ten (10%) percent per annum
on the sum ultimately recovered, calculated from the expiration of said
three (3) Business Days, and inclusive of interest earned on the Deposit
from and after said date.
(c) The parties acknowledge that, subject to the provisions
of Section 16.3(b), Buyer has the right to seek both money damages and
specific performance in the event of Seller's breach of this Agreement.
(d) In the event of Buyer's failure to timely consummate
the Closing, other than by reason of a failure of a Buyer's Closing
Condition, time being of the strictest essence of each and every provision
hereof, Seller shall be entitled to pursue any and all remedies available
to it at law or in equity (including retention of the Deposit).
SECTION 16.4 Survival. The provisions of Sections 5.1(a), 20.5,
20.6, 20.12, 20.16 and Sections 16.2 and 16.3 shall survive any termination
hereof pursuant to Section 16.1.
ARTICLE XVII
Collection of Chips and Tokens;
Baggage and Safe Deposits
SECTION 17.1 Collection of Chips and Tokens. Buyer shall
redeem, as Seller's agent but without any liability therefor, any chips or
tokens, racebook and keno tickets (from any series in use as of or prior to
the Transfer Time) of Seller relating to the use and operation of the
Business, which are presented by patrons of the Business or Buyer for
payment within the applicable Nevada statutory time periods for such
redemptions. Seller's chips and tokens, racebook and keno tickets, to the
extent redeemed by Buyer during such statutory periods, shall be redeemed
as often as weekly by Seller, upon delivery to Seller of such Seller's
chips, tokens, racebook and keno tickets redeemed. Seller agrees to make
arrangements for the additional redemption of its chips, tokens and xxxxxx
as required by Nevada law.
SECTION 17.2 Baggage. At the Transfer Time an authorized
representative of Seller shall perform the following functions for all
baggage, trunks and other property that was checked and placed in the care
of Seller: (i) seal all pieces of baggage with tape; (ii) prepare an
inventory ("Inventoried Baggage") of such items indicating the check number
applicable thereto; and (iii) deliver the Inventoried Baggage to an
authorized representative of Buyer and secure a receipt for the Inventoried
Baggage. Thereafter, Buyer shall be responsible for such Inventoried
Baggage.
SECTION 17.3 Safe Deposits. Safe deposit boxes in use by
customers at the Transfer Time will be sealed in a reasonable manner
mutually agreeable to Buyer and Seller. At the Transfer Time, Seller and
Buyer shall designate in writing their initial safe deposit
representatives. Representatives of both Buyer and Seller are to be
present when a seal is broken. Seller will have no further responsibility
for seals broken without the presence of Seller's representative. Buyer
will have no responsibility for loss or theft from a safe deposit box whose
seal was broken in the presence of Seller's representative. Seller will
make a representative available within one hour after Buyer notifies a
person or persons whom Seller will from time to time designate. All safe
deposit keys, combinations and records shall be delivered at the Transfer
Time to Buyer.
SECTION 17.4 Valet Parking. At the Transfer Time, an authorized
representative of Seller shall perform the following functions for all
motor vehicles that were checked and placed in the care of Seller:
(i) xxxx all motor vehicles with a sticker or tape; (ii) prepare an
inventory ("Inventoried Vehicles") of such items indicating the check
number applicable thereto; and (iii) transfer control of the Inventoried
Vehicles to an authorized representative of Buyer and secure a receipt for
the Inventoried Vehicles. Thereafter, Buyer shall be responsible for the
Inventoried Vehicles.
ARTICLE XVIII
Loss by Fire or Other Casualty; Condemnation
SECTION 18.1 Fire or Other Casualty; Condemnation. In the event
that prior to the Closing Date, a Material Portion of the Assets is
destroyed or suffers Material Damage, or if condemnation proceedings are
commenced against all or a Material Portion of the Business Premises,
Seller shall promptly give Buyer written notice of the occurrence of such
damage, destruction or condemnation proceeding. Buyer shall then have the
right, exercisable by giving notice of such decision to Seller within
10 Business Days after receiving such written notice from Seller of such
damage, destruction or condemnation proceedings, to terminate this
Agreement, in which case neither party shall have any further rights or
obligations hereunder and the Deposit, together with interest thereon in
Escrow, shall be returned to Buyer. If Buyer elects within such
10 Business Day period to accept the Assets in their then condition, all
proceeds of insurance (other than any business interruption insurance),
after deducting all reasonable expenses of Seller in repairing such damage,
if any, or Seller's share of any such condemnation awards (but exclusive of
awards for business interruption) shall be paid or assigned to Buyer at the
Closing with no reduction in the Purchase Price. In the event that, after
the Effective Date, there is damage to the Assets which does not constitute
Material Damage, Buyer shall not have the right to terminate the Agreement
by reason thereof and Seller will promptly repair or replace the affected
Assets at Seller's expense prior to or within a reasonable time after the
Closing Date or pay Buyer the cost of such repair or replacement as
determined below. Seller shall give Buyer written notice within
15 Business Days of the occurrence of any such non-Material Damage and of
Seller's election to repair or replace the affected Assets as provided
above or to pay Buyer the cost of such repair or replacement. If Seller
does not deliver the notice described above within such 15 Business Day
period, Seller shall be deemed to have elected to pay Buyer the cost of any
such repair or replacement. Any payment from Seller for the cost of the
repair or replacement shall be determined based on bids or other advice
from one or more qualified contractors, architects or engineers reasonably
acceptable to Seller. Any such payment from Seller shall be made within
10 days after the determination of the amount of such payment. In the
event of condemnation which is not of all or a Material Portion of the
Business Premises, Buyer shall not have the right to terminate this
Agreement by reason thereof and all condemnation awards payable to Seller
by reason thereof shall be paid or assigned to Buyer at the Closing with no
reduction in the Purchase Price. This Article XVIII is intended as an
express provision with respect to destruction and condemnation which
supersedes the provisions of the Nevada Uniform Vendor and Purchaser Risk
Act NRS Section 113.030 et seq.
ARTICLE XIX
Employee and Employee Benefit Matters
SECTION 19.1 Salaries and Benefits. SDIC shall pay, or cause to
be paid, on or before the Transfer Time in accordance with applicable law,
all salaries, wages and related payroll expenses (including payroll taxes,
social security and unemployment compensation taxes) and employee benefits
of employees or labor, vacation pay and sick pay which has accrued for the
period ending at the Transfer Time, to all employees of the Business;
provided that with the consent of any applicable labor union representing
Union Employees, Union Employees may be permitted to carry forward such
accrued vacation or sick pay, to be paid by Buyer, the amount of such
accrued items as of the Transfer Time to be included as a payable in the
calculation of Closing Working Capital pursuant to Section 4.4. Subject to
the second immediately following sentence, Buyer shall offer employment on
substantially the same terms (except that all such offers shall be for at-
will employment) to all current employees of the Business (including
employees who are on an approved leave of absence as of the Transfer Time).
Unless otherwise required by law or pursuant to the terms of any Collective
Bargaining Agreement, Buyer may condition any offer of employment to any
employees of the Business who are on an approved leave of absence as of the
Transfer Time upon their presenting themselves to Buyer for employment
within six months following the Transfer Time. All such offers of
employment shall be made (i) in accordance with all applicable laws and
regulations, and (ii) for Union Employees, in accordance with the terms of
each applicable collective bargaining agreement pertaining to such Union
Employees (each a "Collective Bargaining Agreement"). All employees of the
Business shall cease to be employees of Seller or its affiliates as of the
Transfer Time, and their period of employment by Buyer shall begin as of
the Transfer Time or, if later, the date that such employees present
themselves to Buyer for employment if they are not actively employed as of
the Transfer Time. With regard to Union Employees, Buyer shall
(i) recognize each labor union representing Union Employees as their
exclusive bargaining representative, (ii) assume, and become party to and
bound by the terms and conditions of, each Collective Bargaining Agreement
until its respective expiration date, (iii) comply with its legal
obligations under Federal labor law with regard to Union Employees, and
(iv) treat service with Seller prior to the Transfer Time in the same
manner as such service has been recognized by Seller for purposes of
determining seniority rights and benefits under the Collective Bargaining
Agreement (except where recognition of such service by Buyer would result
in a duplication of benefits provided). Seller covenants and agrees to
indemnify and hold Buyer harmless from and against any and all claims,
damages, and liabilities arising from or in connection with (a) any matters
involving the Business' employees, (b) any claims by employees of SDIC,
for wages, vacation and/or sick pay, other benefits, and all claims,
liabilities and rights of such employees, (c) and any claims for violation
of agreements with unions in all cases which arise from SDIC's employment
of such employees, or from acts or omissions, or in connection with events
occurring on or prior to the Transfer Time. Buyer covenants and agrees to
indemnify and hold Starwood, ITT Sheraton, SGC, SDIC and their respective
affiliates similarly harmless from all such matters described in the
preceding sentence in all cases which arise from Buyer's employment of such
employees, agreements with unions, acts or omissions, or in connection with
events occurring after the Transfer Time.
SECTION 19.2 Multiemployer Plan. With respect to each
Multiemployer Plan (as defined below), after the Closing:
(a) Buyer will be obligated to make contributions to the
Multiemployer Plans (as defined below) in accordance with all collective
bargaining agreements relating thereto and shall contribute to each such
Multiemployer Plan with respect to such operations for substantially the
same number of contribution base units for which SDIC has an obligation to
contribute to such Multiemployer Plan.
For purposes of this Agreement, the "Multiemployer Plans" shall
mean, collectively: (i) the Teamsters Security Fund for Southern Nevada;
(ii) the Western Conference of Teamsters Pension Trust Fund; (iii) the
Hotel Employees and Restaurant Employees International Union Welfare Fund;
(iv) the Southern Nevada Culinary Workers and Bartenders Pension Plan Trust
Agreement; (v) the Operating Engineers Local 501 Security Fund; (vi) the
Central Pension Fund of the International Union of Operating Engineers and
Participating Employers; (vii) the Hotel Employees and Restaurant Employees
International Union Welfare Fund; (viii) the American Federation of
Musicians' and Employers' Pension Fund; (ix) the Electrical Workers Health
and Welfare Trust Fund; (x) the National Employees Benefit Board; (xi) the
Nevada Resort Association-I.A.T.S.E. Local 720 Pension Trust; (xi) the
Nevada Resort Association-I.A.T.S.E. Local 720 Apprentice and Journeyman
Training and Education Trust; (xii) the Nevada Resort
Association-I.A.T.S.E. Local 720 Disability Trust; (xiii) xxx Xxxxxxxxxx
Health and Welfare Trust Fund; (xiv) the Construction Industry and
Carpenters Joint Pension Trust Fund; (xv) the Painters' Trust (welfare
fund); and (xvi) the I.B.P.A.T. Union and Industry National Pension Fund.
(b) Unless and until a variance or exemption is obtained in
accordance with section 4204(c) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), Buyer will provide to each Multiemployer
Plan, for a period of five plan years commencing with the first plan year
beginning after the Closing, a bond issued by a corporate surety company
that is an acceptable surety for purposes of section 412 of ERISA, or an
amount held in escrow by a bank or similar financial institution
satisfactory to the Multiemployer Plan, or such other security as may be
permitted under section 4204(a)(1)(B) of ERISA or regulations thereunder,
in an amount equal to the greater of:
(i) the average annual contribution required to be made by SDIC
to each Multiemployer Plan with respect to the operations thereunder
for the three plan years preceding the plan year in which the Closing
occurs, or
(ii) the annual contribution that SDIC was required to make with
respect to the operations under each Multiemployer Plan for the last
plan year before the plan year in which the Closing occurs,
which bond or escrow shall be paid to any such Multiemployer Plan if Buyer
withdraws from such Multiemployer Plan, or fails to make a contribution to
such Multiemployer Plan when due, at any time during the first five plan
years beginning after the Closing.
(c) If Buyer withdraws from any Multiemployer Plan in a complete
withdrawal or a partial withdrawal with respect to the union employees
within the period referred to in the preceding subsection 19.2(b), SDIC
agrees to be secondarily liable for any withdrawal liability SDIC would
have had at the Closing Date to such Multiemployer Plan, but for the
application of section 4204 of ERISA, if the withdrawal liability of Buyer
with respect to such Multiemployer Plan is not paid.
(d) Buyer shall indemnify and hold SDIC harmless from, against
and in respect of (and shall on demand reimburse SDIC for) the amount of
any secondary liability incurred by SDIC under section 4204 of ERISA which
is in excess of 50% of the potential withdrawal liability of SDIC
determined as of the Closing, such determination to be made on a plan-by-
plan basis; provided, however, that if withdrawal liability is triggered by
reason of Buyer's failure to comply with any provision of the preceding
Sections 19.2(a) or (b) (it being understood that any withdrawal by Buyer
from any Multiemployer Plan shall not be deemed such a failure to comply),
Buyer's indemnification of SDIC shall be without limitation for any such
secondary liability.
(e) In the event of a subsequent sale of Assets by Buyer during
the five-year period referenced in Section 19.2(b), Buyer agrees to use its
reasonable best efforts to comply with the provisions of section 4204(a)(1)
of ERISA if such sale of Assets would trigger secondary liability on Buyer.
(f) If SDIC is liquidated before the end of the first five plan
years beginning after Closing, then, except as may otherwise be required by
law, SDIC shall provide a bond, an amount in escrow or such other security
as may be permitted under section 4204(a)(1)(B) of ERISA or regulations
thereunder, equal to the present value of the withdrawal liability SDIC or
its affiliates would have had but for the application of section 4204 of
ERISA, which bond, amount in escrow or other security may be applied toward
the satisfaction of SDIC's secondary liability described in subsection
19.2(c) hereof.
(g) Buyer agrees to provide SDIC with reasonable advance notice
of any action or event which could result in the imposition of withdrawal
liability contemplated by this Section 19.2 and in any event Buyer shall
immediately furnish SDIC with a copy of any notice of withdrawal liability
it may receive with respect to the Multiemployer Plan, together with all
the pertinent details. In the event that any such withdrawal liability
shall be assessed against Buyer, Buyer further agrees to provide SDIC with
reasonable advance notice of any intention on the part of Buyer not to make
full payment of any withdrawal liability when the same shall become due.
ARTICLE XX
Miscellaneous
SECTION 20.1 Entire Agreement. This Agreement (and the
Schedules and Exhibits), the Timeshare Joint Venture Agreement and the
Marketing Alliance Agreement shall be deemed to be the complete and entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes any and all prior negotiations, correspondence,
understandings or other agreements or statements between the parties and/or
their representatives.
SECTION 20.2 Notices. All notices required, permitted or given
pursuant to the provisions of this Agreement shall be made in writing, and
either (a) hand delivered, (b) delivered by certified mail, postage
prepaid, return receipt requested or by reputable overnight courier,
(c) delivered by an overnight delivery service or (d) delivered by
facsimile machine followed within 24 hours by transmittal under option (a),
(b) or (c) above addressed as follows:
If to Parents or Seller:
In care of Starwood Hotels & Resorts Worldwide, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: General Counsel
Fax No.: (000) 000-0000
with a copy to:
Sidley & Austin
000 Xxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
If to SUN or Buyer:
Sun International Hotels Limited
Atlantis -- Executive Offices
Coral Towers
Nassau, The Bahamas
Attention: Xxxxxxx X. Xxxxx
Fax No.: (000) 000-0000
with a copy to:
Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
Notices shall be deemed delivered (i) on the date that is three
calendar days after the notice is deposited in the U.S. mail, if sent by
certified mail (one business day in the case of overnight courier service),
return receipt requested, (ii) on the date the hand delivery is made, if
hand delivered, (iii) on the date the transmission is made, if delivered by
facsimile machine and delivery is confirmed, and followed with notice by
mail, or (iv) on the date that the notice is delivered by an overnight
delivery service, if given by an overnight delivery service. The addressee
given above may be changed by any party by notice given in the manner
provided herein.
SECTION 20.3 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(REGARDLESS OF THE LAWS THAT MAY OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW).
SECTION 20.4 Successors and Assigns. Neither Buyer nor Seller
may assign this Agreement or any interest herein (by operation of law or
otherwise) to any other person without the prior written consent of the
other party hereto. All the terms, covenants and conditions of this
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. No
assignment or transfer permitted hereunder shall relieve any such assignor
or transferor of any of its obligations hereunder and any assignee or
transferee shall assume in writing (which writing shall be in form
reasonably satisfactory to Seller and Buyer) all of the undertakings of
assignor or transferor under this Agreement.
SECTION 20.5 Closing Costs. Seller and Buyer shall each bear
their respective costs of negotiating and completing this transaction,
including attorneys' and accountants' fees. The fees charged by Escrowee,
and any and all survey, title and recording fees, real and personal
property transfer fees, documentary Taxes or fees, and the costs of all
premiums with respect to the Title Policies in accordance with Section 8.1
shall be paid one-half by Seller and one-half by Buyer, except that the
costs of any ALTA endorsements or extended coverage premiums shall be borne
solely by Buyer. Seller and Buyer, on or before the Closing Date, shall
each deposit with Escrowee in immediately available funds on or prior to
the Closing Date an amount sufficient to cover each party's costs set forth
herein.
SECTION 20.6 Attorneys' Fees. A party in breach of this
Agreement shall, on demand, indemnify and hold harmless the other party for
and against all reasonable out-of-pocket expenses, including legal fees,
incurred by such other party by reason of the enforcement and protection of
its rights under this Agreement. The payment of such expenses is in
addition to any other relief to which such other party may be entitled.
SECTION 20.7 Amendments. This Agreement shall not be modified
except by an instrument in writing signed by the parties hereto.
SECTION 20.8 Further Assurances. From time to time, at the
request and expense of the requesting party, whether prior to, at or after
the Closing, each party agrees to and shall execute and deliver such
further instruments and take such other action as the requesting party may
reasonably request in order to effectuate the transactions set forth
herein.
SECTION 20.9 Headings. All of the Article and Section headings
herein are inserted for convenience only and shall have no meaning for
purposes of this Agreement.
SECTION 20.10 Non-Waiver. No delay or omission or exercise of a
right or remedy accruing to Seller on any breach or default by Buyer shall
impair any such right or remedy, and the same shall not be construed to be
a waiver of any such breach or default. No delay or omission in the
exercise of a right or remedy accruing to Buyer on any breach or default by
Seller shall impair any such right or remedy, and the same shall not be
construed to be a waiver of any such breach or default. Any waiver must be
in writing and executed by all the parties hereto and shall be effective
only the extent specifically allowed by such writing.
SECTION 20.11 No Third Party Benefitted. Except as provided in
Section 15.2, no term or provision of this Agreement is intended to be, nor
shall any term or provision of this Agreement be, for the benefit of any
person or entity not a party hereto, and no such other person or entity
shall have any right or cause of action hereunder.
SECTION 20.12 Publicity; No Recordation. Between the Effective
Date and the Closing Date (or earlier termination of this Agreement), the
parties shall consult with one another and coordinate the issuance of any
press release or similar public announcement or communication in respect of
the initial execution of this Agreement and any material new development
relating to the performance of this Agreement or the transactions
contemplated hereby; provided, however, that (i) the contents of the
initial press release announcing the Agreement and the transactions hereby
shall be agreed by the parties and (ii) no party shall be restrained, after
consultation with the other, from making such disclosure as it shall be
advised by counsel it is required by law (whether the laws of the United
States or another country) or by the applicable regulations of any stock
exchange to make. Buyer and Seller agree that neither this Agreement nor
any memorandum hereof shall be recorded.
SECTION 20.13 Counterparts. This Agreement may be executed in
any number of counterparts, which when so executed and delivered shall be
deemed an original, and such counterparts shall constitute one and the same
Agreement.
SECTION 20.14 Severability. The invalidity or unenforceability
of any one or more of the provisions of this Agreement or the Schedules
hereto (or any portion thereof) shall not affect the validity or
enforceability of any of the other provisions hereof (or the remaining
portion thereof).
SECTION 20.15 Exhibits and Schedules. Any Exhibits and
Schedules annexed hereto or referred to herein are hereby incorporated in
and made a part of this Agreement as if set forth in full herein, and any
matter disclosed in one Schedule hereto shall be deemed incorporated by
reference into each other Schedule hereto and disclosed in each such
Schedule.
SECTION 20.16 Finder's Fees. Each of Seller and Buyer agrees to
indemnify, defend (with counsel reasonably satisfactory to the other
party), and hold the other party and its successors and assigns and their
respective directors, officers, affiliates, representatives, stockholders,
employees and agents harmless from and against any and all claims, loss,
cost, damage and expense, including reasonable attorneys' fees and expenses
arising from, by reason of or in connection with any claim for or
entitlement to any fee, commission, compensation or reimbursement for
brokerage, finders, advisers or similar services by any person, firm or
entity claiming by, through or under Seller or Buyer, as applicable, or any
officer, director, agent or affiliate of Seller or Buyer, as applicable.
SECTION 20.17 Cooperation. Each party acknowledges that the
other may be a party to audits, investigations and other proceedings
following the Closing which relate to the Business or the Assets, and
agrees to reasonably cooperate with such other party in connection with
such proceedings.
SECTION 20.18 Consent to Jurisdiction. Each of the parties
hereto irrevocably submits to the exclusive jurisdiction of (a) the Supreme
Court of the State of New York, New York County, and (b) the United States
District Court for the Southern District of New York, for the purposes of
any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each of the parties hereto agrees, to the
extent permitted under applicable rules of procedure, to commence any
action, suit or proceeding relating hereto either in the United States
District Court for the Southern District of New York, or if such suit,
action or other proceeding may not be brought in such court for
jurisdictional reasons, in any court of the Supreme Court of the State of
New York, New York County. Each of the parties hereto further agrees that
service of any process, summons, notice or document by U.S. registered mail
to such party's respective address set forth in Section 20.2 shall be
effective service of process for any action, suit or proceeding in New York
with respect to any matters to which it has submitted to jurisdiction in
this Section 20.18. Each of the parties hereto irrevocably and
unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (i) the Supreme Court of the State of New York, New
York County, or (ii) the United States District Court for the Southern
District of New York, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the date first above written.
SHERATON DESERT INN CORPORATION,
By:
______________________________
Name:
Title:
STARWOOD HOTELS AND RESORTS WORLDWIDE, INC.,
By:
______________________________
Name:
Title:
SHERATON GAMING CORPORATION,
By:
______________________________
Name:
Title:
SUN INTERNATIONAL HOTELS LIMITED,
By:
______________________________
Name:
Title:
SUN INTERNATIONAL NEVADA, INC.,
By:
______________________________
Name:
Title:
