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____________________________________
ASSET EXCHANGE AGREEMENT
____________________________________
Between
CONCORDE GAMING CORPORATION, a Colorado corporation,
CONCORDE CRIPPLE CREEK, INC. a Colorado corporation,
CONCORDE GAMING OF SOUTH DAKOTA, INC., a South Dakota corporation,
MIDWEST GAMING, INC., a South Dakota corporation
and
NORTH STAR CASINO LIMITED LIABILITY COMPANY
a Colorado limited liability company
_______________________________
Dated as of June 12, 1997
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
EXCHANGE OF ASSETS
Section 2.01. Agreement to Exchange Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.02. Conveyance of North Star Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.03. Conveyance of Concorde Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.04. Additional Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.05. Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.06. Concorde Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.07. North Star Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.08. Prorated Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.09. Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
NORTH STAR
Section 3.01. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.02. Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.03. Validity of Contemplated Transactions, etc . . . . . . . . . . . . . . . . . . . . . 11
Section 3.04. No Third Party Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.05. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.06. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.07. Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.08. Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.09. Tax and Other Returns and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.10. Books of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.11. Existing Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.12. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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Section 3.13. Condition of Tangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.14. Compliance with Law; Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.15. Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.16. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.17. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 3.18. Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.19. Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.20. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.21. Employee Benefit Plans and Arrangements . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.22. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.23. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.24. Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.25. Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.26. Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.27. Completeness of Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.28. Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.29. Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.30. No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF CONCORDE, CONCORDE SOUTH DAKOTA AND MIDWEST GAMING
Section 4.01. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.02. Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.03. Validity of Contemplated Transactions, etc . . . . . . . . . . . . . . . . . . . . . 23
Section 4.04. No Third Party Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.05. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.06. Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.07. Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.08. Tax and Other Returns and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.09. Books of Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.10. Existing Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.11. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.12. Condition of Tangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.13. Compliance with Law; Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.14. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.15. Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.16. Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.17. Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.18. Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.19. Completeness of Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.20. Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.21. No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01. Covenants of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI
CONDITIONS TO THE CLOSING
Section 6.01. Reciprocal Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.02. Conditions to Obligation of Concorde . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.03. Conditions to Obligation of North Star . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VII
CLOSING
Section 7.01. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.02. Concorde Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.03. North Star Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII
INDEMNIFICATION
Section 8.01. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.02. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.03. Procedures for Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.04. Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.05. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX
POST CLOSING MATTERS
Section 9.01. Discharge of Business Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.02. Maintenance of Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.03. Payments Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 9.04. UCC Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.05. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.06. Non-Solicitation; Noncompetition . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.07. Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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Section 9.08. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.09. Piggyback Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.10. Option to Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE X
TERMINATION
Section 10.01. Grounds for Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 10.02. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE XI
GENERAL PROVISIONS
Section 11.01. Sales, Transfer and Documentary Taxes, etc . . . . . . . . . . . . . . . . . . . . . 45
Section 11.02. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.03. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.04. Assignment and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.05. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.06. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 11.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.08. No Benefit to Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.09. Headings, Gender and "Person." . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.10. Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.11. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.13. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 11.14. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Exhibits
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Exhibit A Form of Personal Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Exhibit B Form of Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Exhibit C Form of Xxxx of Sale and Assignment and Assumption Agreement . . . . . . . . . . . . . C-1
Exhibit D Form of Xxxx of Sale and Assignment Agreement . . . . . . . . . . . . . . . . . . . . D-2
Exhibit E Form of Opinion of Counsel to Concorde . . . . . . . . . . . . . . . . . . . . . . . . E-1
Exhibit F Form of Xxxx of Sale and Assignment and Assumption Agreement . . . . . . . . . . . . . F-1
Exhibit G Form of Opinion of Counsel to North Star . . . . . . . . . . . . . . . . . . . . . . . G-1
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ASSET EXCHANGE AGREEMENT
THIS ASSET EXCHANGE AGREEMENT (the "Agreement"), dated as of June 12,
1997, is entered into by and among Concorde Gaming Corporation., a Colorado
corporation ("Concorde"), Concorde Cripple Creek, Inc., a Colorado corporation
and a wholly-owned subsidiary of Concorde ("Concorde Cripple Creek"), Concorde
Gaming of South Dakota, Inc., a South Dakota corporation and a wholly- owned
subsidiary of Concorde ("Concorde South Dakota"), Midwest Gaming, Inc., a South
Dakota corporation and a wholly-owned subsidiary of Concorde ("Midwest Gaming")
and North Star Casino Limited Liability Company, a Colorado limited liability
company ("North Star"). Concorde, Concorde Cripple Creek, Concorde South
Dakota, Midwest Gaming and North Star are referred to collectively herein as
the "Parties" and individually as a "Party."
RECITALS
A. North Star is engaged in the business of owning and operating
a casino located at 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx, known as the Golden
Gates Casino (the "Casino Business").
B. Midwest Gaming and Concorde South Dakota are engaged in the
business of owning, installing, operating and servicing video lottery machines
located in video lottery licensed bars and restaurants in South Dakota (the
"Video Lottery Business").
C. This Agreement sets forth the terms and conditions on which
Midwest Gaming and Concorde South Dakota will convey to North Star
substantially all of the assets used in the Video Lottery Business (the
"Concorde Assets") and North Star will convey to Concorde Cripple Creek
substantially all of the assets used in its Casino Business (the "North Star
Assets") in such a manner as to effect a like-kind exchange of assets under
Section 1031 of the Code.
NOW, THEREFORE, in consideration of the recitals and of the respective
covenants, representations, warranties and agreements herein contained, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
AGREEMENT
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. (a) The following terms used herein, have
the following meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person; provided that no party to this Agreement shall be deemed to be an
Affiliate of any other party to this Agreement solely by reason of its
ownership of common stock.
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"Xxxxxx Lease" means the lease to be entered into between Concorde and
Elevation 8000+, LLC ("E8000") relating to the East half of Xxx 00, Xxxxx 00
xxx Xxx 0, Xxxxx 49, both lots in the City of Blackhawk, County of Xxxxxx,
State of Colorado
"Casino Lease" means the lease to be entered into between Concorde and
E8000 relating to Xxxx 0-00, xxxxxxxxx, xx Xxxxx 00, Xxxx xx Xxxxxxxxx, Xxxxxx
of Xxxxxx, State of Colorado.
"Claim" means any claim of any nature whatsoever, including any demand,
liability, obligation, debt, cause of action, suit, proceeding, judgment,
award, assessment and reassessment.
"Closing" means the Casino Closing or the Video Lottery Closing, or
both, as the context may require.
"Closing Date" means the date of the Casino Closing or the Video
Lottery Closing, or both, as the context may require.
"Casino Closing" means the closing of the transfer of the North Star
Assets to Concorde Cripple Creek, which shall occur within five (5) days of the
satisfaction of the conditions set forth in Article VI.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, par value $0.01 per share, of
Concorde.
"Dollars" means U.S. Dollars unless otherwise specified.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, codes, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements and governmental restrictions, now in
effect, relating to human health, the environment or to emissions, discharges
or releases of pollutants, contaminants, Hazardous Substances or wastes into
the environment, including without limitation ambient air, surface water,
ground water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Substances or wastes or the clean-up or
other remediation thereof.
"Environmental Liabilities" means any and all liabilities of or
relating to Concorde or North Star, as the case may be (including any entity
which is, in whole or in part, a predecessor thereof), whether vested or
unvested, contingent or fixed, actual or potential, known or unknown, which (i)
arise under or relate to matters covered by Environmental Laws (including
without limitation any matters disclosed or required to be disclosed in the
Disclosure Schedule) and (ii) relate to actions occurring or conditions
existing on or prior to the Closing Date.
"Environmental Permits" means all permits, licenses, authorizations,
certificates and approvals of governmental authorities relating to or required
by Environmental Laws and necessary or proper for the business of Concorde or
North Star, as the case may be, as currently conducted.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" means generally accepted accounting principles applied on a
consistent basis.
"Hazardous Substances" means any toxic, radioactive, corrosive or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics, including, without
limitation, any substance regulated under Environmental Laws.
"Immediate Family Member" means, with respect to any Person, such
Person's spouse, parents, children and siblings.
"Intellectual Property Right(s)" means any trademark, service xxxx,
trade name and patent (including any registrations or applications for
registration of any of the foregoing) (registered or unregistered), other
governmental filings of every nature, all goodwill with all marks and names
assigned herewith, and other rights of every kind on a worldwide basis
associated therewith.
"Interim Date" means April 30, 1997.
"Lien" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset. For the purposes of this
Agreement, a Person shall be deemed to own subject to a Lien any property or
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such property or asset.
"Material Adverse Effect" means a material adverse effect or effect
which would reasonably be expected to have a Material Adverse Effect on the
condition (financial or otherwise), business, assets or results of operations
of Concorde or North Star, as the case may be.
"1933 Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Parking Lot Lease" means the lease to be entered into between Concorde
and E8000 relating to Xxxx 0-0, xxxxxxxxx, Xxxxx 00, Xxxx xx Xxxxxxxxx, Xxxxxx
of Xxxxxx, State of Colorado.
"Person" means an individual, corporation, partnership, association,
trust or other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Personal Guaranties" means the personal guaranties to be executed by
Xxxxx Xxxxxxxxxx and Xxxxx Xxxxxxxx to secure the repayment by North Star of
the Promissory Note in the form of Exhibit A attached hereto.
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"Promissory Note" means the promissory note on the principal amount of
$1.6 million to be executed by North Star in favor of Concorde in the form of
Exhibit B attached hereto.
"Real Property Option" means the option of North Star to acquire a 50%
interest in and to Xxxx 0-0, xxxxxxxxx, Xxxxx 00, Xxxx xx Xxxxxxxxx, Xxxxxx of
Xxxxxx, State of Colorado.
"Video Lottery Closing" means the closing of the transfer of the
Concorde Assets to North Star effective as of 6:00 a.m. Mountain Daylight
Time on June 16, 1997, or such later date as may be agreed upon between the
Parties.
(b) Each of the following terms is defined on the page
set forth opposite such term:
Term Page
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Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Association. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Cash Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Casino Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Concorde . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Concorde Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Indemnitee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Indemnitor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Indemnity Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
North Star . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
North Star Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
North Star Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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ARTICLE II
EXCHANGE OF ASSETS
Section 2.01. AGREEMENT TO EXCHANGE ASSETS. The Parties shall effect
an exchange of assets as set forth below.
Section 2.02. CONVEYANCE OF NORTH STAR ASSETS.
(a) North Star shall, by means of appropriate documentation, on
the Casino Closing Date, sell, transfer, assign, convey and deliver to Concorde
Cripple Creek, free and clear of all Liens other than Permitted Lien(s), all of
its right, title and interest in and to the North Star Assets as the same shall
exist on the Casino Closing Date except for the North Star Excluded Assets set
forth in Section 2.02(b). The North Star Assets shall consist of all the
assets of all descriptions of North Star used in the Casino Business, which
assets are specifically set forth on Schedule 2.02(a), on the Casino Closing
Date, including, without limitation, the following in which North Star has any
right, title or interest:
(i) all inventories of North Star located in
Colorado on the Casino Closing Date;
(ii) all accounts receivable, contract rights and
general intangibles and related records of North Star related to the Casino
Business, including bad checks receivable;
(iii) all rights in and to owned and leased real
property and improvements, appurtenances, easements, licenses, and other rights
and interests thereon and therein, including, without limitation, (A) North
Star's ownership and leasehold interest in certain real property described as
the East half of Xxx 0, Xxxxx 00 xxx Xxx 00, Xxxxx 00, Xxxx of Blackhawk,
County of Xxxxxx, State of Colorado and Lots 6-12, inclusive Block 39, City of
Black Hawk, County of Xxxxxx, State of Colorado, together with all improvements
and all rights (including, but not limited to, rights to adjacent vacated
streets or alleys, now or hereafter vacated, easements and appurtenances
thereto) (collectively, the "Real Property"); (B) all of the real property and
improvements owned by North Star and leased to third parties, and (C) all of
the machinery, tools, goods, equipment, furniture and fixtures located thereon
or elsewhere;
(iv) all motor vehicles used in the Casino
Business;
(v) all office equipment, computer hardware and
software and supplies used in the Casino Business;
(vi) $130,000 in cash, which represents cash held
in the Casino, including cash in the cage and machines;
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(vii) all prepaid expenses, deposits with landlords
and others, and current assets relating to the Casino Business;
(viii) all Intellectual Property Rights;
(ix) all rights under (A) all contracts, licenses,
leases, and other agreements to which North Star is a party, (B) permits, (C)
all policies of insurance, and (D) device fees (state and municipal);
(x) all goodwill and all going concern value
relating to the Casino Business;
(xi) all books, records and other memorialized
information of North Star relating primarily or exclusively to the Casino
Business;
(xii) all claims, causes of action or rights of
action by North Star related to the Casino Business;
(xiii) to the extent not included above, all mailing
lists; customer lists; sales records; materials, records, files and other data
relating to advertising; research statistical production, marketing and
promotional materials, records, files and other data and chips and tokens;
(xiv) all other tangible and intangible property
relating to the Casino Business.
(b) North Star Excluded Assets. The assets set forth on Schedule
2.02(b) are North Star Excluded Assets and shall not be North Star Assets
within the list in paragraph (a).
Section 2.03. CONVEYANCE OF CONCORDE ASSETS.
(a) Midwest Gaming and Concorde South Dakota shall by
means of appropriate documentation, on the Video Lottery Closing Date, sell,
transfer, assign, convey and deliver to North Star, free and clear of all
Liens, other than Permitted Liens, all of their right, title and interest in
and to the Concorde Assets as the same shall exist on the Video Lottery Closing
Date, except for the Concorde Excluded Assets set forth in Section 2.03(b).
The Concorde Assets shall consist of all the assets of all descriptions used in
the Video Lottery Business, which assets are specifically set forth on Schedule
2.03(a), on the Video Lottery Closing Date, including without limitation, the
following in which Midwest Gaming or Concorde South Dakota has any right, title
or interest:
(i) all inventories located in South Dakota;
(ii) all accounts receivable, contract rights and
general intangibles and related records pertaining to the Concorde Assets,
including bad checks receivable;
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(iii) all rights in and to owned and leased real
property and improvements, appurtenances, easements, licenses, and other rights
and interests thereon and therein relating to the Concorde Assets, including,
without limitation, (I) the Sunup Casino, (II) all video lottery space lease
and maintenance agreements, and (III) all of the machinery, tools, goods,
equipment, furniture and fixtures located thereon or elsewhere;
(iv) all motor vehicles used exclusively in the
Video Lottery Business;
(v) all office equipment, computer hardware and
software and supplies used in the Video Lottery Business;
(vi) all cash located in video lottery casinos in
the State of South Dakota;
(vii) all prepaid expenses, deposits with landlords
and others, and current assets relating to the Concorde Assets;
(viii) all rights under permits and device fees
(state and municipal) relating to the Concorde Assets;
(ix) all goodwill and going concern value relating
to the Concorde Assets;
(x) all claims, causes of action or rights of
action relating to the Concorde Assets;
(xi) to the extent not included above, all mailing
lists, customer lists; all sales records, materials, records, files and other
data relating to advertising; all research, statistical production, marketing
and promotional materials, records, files and other data relating to the
Concorde Assets;
(xii) all other tangible and intangible property
relating to the Concorde Assets.
(b) Concorde Excluded Assets. The following assets are
Concorde Excluded Assets and shall not be Concorde Assets within the list in
paragraph (a), each of which are specifically set forth on Schedule 2.03(b):
(i) Inventories of Concorde South Dakota and
Midwest Gaming located in North Sioux City, South Dakota and Concorde's office
equipment located at its principal office in Rapid City, South Dakota;
(ii) All accounts receivable and/or intercompany
advances from, to or between Concorde and its subsidiaries;
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(iii) Concorde's property and contractual rights
located in, or arising out of, North Sioux City, South Dakota and its principal
office in Rapid City, South Dakota;
(iv) Office equipment, computer hardware and
software, and supplies used in the Video Lottery Business in North Sioux City,
South Dakota;
(v) Cash located in video lottery casinos in
North Sioux City, South Dakota and in Concorde's bank accounts;
(vi) Prepaid insurance;
(vii) Cash due to the State of South Dakota plus
Concorde South Dakota's and Midwest Gaming's share from all space lease
agreements for video lottery machines and amusement devices through the Video
Lottery Closing.
Section 2.04. ADDITIONAL CONSIDERATION FOR THE NORTH STAR ASSETS. The
following additional consideration shall be transferred or paid by Concorde or
North Star on the Video Lottery Closing Date or the Casino Closing Date,
respectively:
(a)For the North Star Assets:
(i) Cash. Eight Hundred Seventy Thousand Dollars
($870,000) (the "Cash Purchase Price"), less adjustments pursuant to Section
2.08.
(ii) Common Stock. 1,743,333 shares of Common Stock
to be issued pursuant to instructions received from North Star prior to the
Casino Closing.
(b) For the Concorde Assets.
North Star shall pay Concorde $51,000, to be evidenced by a promissory note in
the form of Exhibit H.
Section 2.05. VIDEO LOTTERY ACQUISITION.
(a) At the Video Lottery Closing, North Star shall execute and
deliver to Concorde the Promissory Note which shall be secured by the Personal
Guaranties.
(b) In the event that the Casino Closing does not occur on or
before September 1, 1997, the Promissory Note shall be due and payable
according to its terms.
(c) In the event that the Casino Closing occurs on or before
September 1, 1997, then the Promissory Note shall be canceled and the Concorde
Assets shall be transferred in exchange for the consideration set forth in
Sections 2.03(a) and 2.04 hereof.
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Section 2.06. CONCORDE ASSUMPTION OF LIABILITIES. As of the Casino
Closing Date, Concorde Cripple Creek shall assume and agree to pay, discharge
or perform, as appropriate, the following liabilities and obligations of North
Star:
(a) liabilities arising out of special assessments,
business improvement district assessments and the Richmond Street bridge
assessment; and
(b) North Star's obligation in the outstanding balances
on the mortgages for the Real Property (the "North Star Mortgages").
All other debts, liabilities and obligations relating to the North
Star Assets or the operation of the Casino Business shall remain and be the
obligation and liability of North Star.
Section 2.07. NORTH STAR ASSUMPTION OF LIABILITY. As of the Video Lottery
Closing Date, North Star shall assume and agree to pay, discharge or perform,
as appropriate, all liabilities arising out of that certain Loan Agreement
dated October 14, 1996 between Concorde South Dakota and Xxxxxxxxx Xxxxx in the
aggregate amount of $33,841.05.
All other debts, liabilities and obligations relating to the Concorde Assets or
the operation of the Video Lottery Business shall remain and be the obligation
and liability of Concorde South Dakota and Midwest Gaming, as the case may be.
Section 2.08. PRORATED ITEMS. All personal property taxes, real property
taxes, progressive jackpot liabilities in excess of $71,500, unpaid vacation
earned by employees employed in the Casino Business, outstanding casino gift
certificates, and one-half of the dollar amount for the Casino's outstanding
chips and token liability shall be prorated between the Parties as of the
Casino Closing Date.
Section 2.09. ALLOCATION OF PURCHASE PRICE.. Concorde and North Star agree
to mutually agree upon and determine the allocation of the consideration
transferred hereunder for state and federal income tax purposes within 30 days
of the Closing Date and to timely file an Internal Revenue Service Form 8594.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
NORTH STAR
North Star hereby represents and warrants to each of Concorde, Concorde
South Dakota and Midwest Gaming that, except as set forth on a Disclosure
Schedule attached hereto, each of which exceptions shall specifically identify
the relevant subsection hereof to which it relates and shall be deemed to be
representations and warranties as if made hereunder:
Section 3.01. CORPORATE EXISTENCE. North Star is a limited liability
company duly organized, validly existing and in good standing under the laws of
the jurisdiction of its formation. North Star is
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duly qualified to do business and is in good standing as a foreign limited
liability corporation in each jurisdiction where the conduct of the Casino
Business by it requires it to be so qualified, except for those jurisdictions
where failure to be so qualified, individually or in the aggregate would not
have a Material Adverse Effect.
Section 3.02. CORPORATE EXISTENCE AND POWER. North Star has the
corporate power, authority and legal right to execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement by North
Star has been duly authorized by all necessary corporate and shareholder
action. This Agreement has been, and the other agreements, documents and
instruments required to be delivered by North Star in accordance with the
provisions hereof (the "North Star Documents") will be, duly executed and
delivered on behalf of North Star by duly authorized officers of North Star,
and this Agreement constitutes, and the North Star Documents when executed and
delivered will constitute, the legal, valid and binding obligation of North
Star, enforceable against North Star in accordance with their respective terms
except as the same may be limited by bankruptcy, moratorium, fraudulent
conveyance and similar laws affecting creditors rights generally and to the
application of general equitable principles.
Section 3.03. VALIDITY OF CONTEMPLATED TRANSACTIONS, ETC. Except for
governmental permits, authentications, consents and approvals which have been
obtained or will be obtained on or prior to each Closing Date, the execution,
delivery and performance of this Agreement by North Star does not and will not
violate, conflict with or result in the breach of any term, condition or
provision of, or require the consent of any other person under, (i) any
existing law, ordinance, or governmental rule or regulation binding upon or
applicable to North Star or the Casino Business, (ii) any judgment, order,
writ, injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which is applicable to North Star or the
Casino Business, (iii) the charter documents of North Star or any securities
issued by North Star, or (iv) to North Star's knowledge, after due inquiry, any
mortgage, indenture, agreement, contract, commitment, lease, plan or other
instrument, document or understanding, oral or written, to which North Star is
a party, by which North Star may have rights or by which any of the North Star
Assets may be bound or affected, or give any party with rights thereunder the
right to terminate, modify, accelerate or otherwise change the existing rights
or obligations of North Star thereunder.
Except for state gaming laws, to North Star's knowledge, after due
inquiry, no authorization, approval or consent of, and no registration or
filing with, any governmental or regulatory official, body or authority is
required in connection with the execution, delivery or performance of this
Agreement by North Star except where the failure to receive such authorization,
approval or consent or to make such registration or filing would not have a
Material Adverse Effect.
Section 3.04. NO THIRD PARTY OPTIONS. There are no existing
agreements, options, commitments or rights with, of or to any person to acquire
any of the North Star Assets or any interest therein, except for those
contracts entered into in the normal course of business consistent with past
practice for the sale of inventory of North Star.
Section 3.05. FINANCIAL STATEMENTS. North Star has delivered to
Concorde true and complete copies of (a) the balance sheets of North Star at
September 30, 1995 and September 30, 1994, and the
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related statements of income, cash flow and changes in Stockholders' equity for
the fiscal years then ended, certified by North Star's auditors; and (b)
unaudited balance sheet and related statements of income and cash flow for the
year ended September 30, 1996 and the period ended April 30, 1997
(collectively, the "Financial Statements"). Such Financial Statements,
including the related notes, fairly present, in all material respects the
financial position, assets and liabilities (whether accrued, absolute,
contingent or otherwise) of North Star at the dates indicated and such
statements of income, cash flow and changes in stockholders' equity fairly
present the results of operations, cash flow and changes in stockholders'
equity of North Star for the periods indicated, all of which have been prepared
in accordance with GAAP throughout the periods involved; provided, however,
that the interim financial statements are subject to normal year-end
adjustments (which will not be material) and lack footnotes and other
presentation items.
Section 3.06. ACCOUNTS RECEIVABLE. The accounts receivable of North
Star arising from the Casino Business are valid and genuine; have arisen solely
out of bona fide sales and deliveries of goods, performance of services and
other business transactions in the ordinary course of business consistent with
past practice; are not subject to valid defenses, set-offs or counterclaims;
and are collectible within the normal course of business consistent with past
practices at the full recorded amount thereof. The reserves accrued on the
books of North Star for doubtful accounts with respect to accounts, notes and
other receivables are in accordance with GAAP and are adequate.
Section 3.07. INVENTORY. All inventory of North Star used in the
conduct of the Casino Business, including without limitation raw materials,
work-in process and finished goods was acquired and has been maintained in the
ordinary course of the Casino Business; is of good and merchantable quality;
consists substantially of a quality, quantity and condition useable, leaseable
or saleable in the ordinary course of the Casino Business; is valued at
reasonable amounts based on the ordinary course of business of North Star
during the past six months; and is not subject to any write-down or write-off.
North Star is not under any liability or obligation with respect to the return
of inventory in the possession of wholesalers, retailers or other customers.
Section 3.08. ABSENCE OF UNDISCLOSED LIABILITIES. North Star has no
liabilities or obligations with respect to the North Star Assets, either direct
or indirect, matured or unmatured or absolute, contingent or otherwise, except:
(a) liabilities arising in the ordinary course of
business under any agreement, contract, commitment, lease or plan specifically
disclosed on the Disclosure Schedules or not required to be disclosed because
of the term or amount involved; and
(b) those liabilities or obligations incurred,
consistently with past business practice, in or as a result of the normal and
ordinary course of business since the Interim Date.
For purposes of this Agreement, the term "liabilities" shall include,
without limitation, any direct or indirect indebtedness, guaranty, endorsement,
claim, cost, expense, obligation or responsibility, fixed or unfixed, known or
unknown, asserted or unasserted, xxxxxx or inchoate, liquidated or
unliquidated, secured or unsecured.
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Section 3.09. TAX AND OTHER RETURNS AND REPORTS. All federal, state,
local and foreign tax returns, reports, statements and other similar filings
required to be filed by North Star (the "Tax Returns") with respect to any
federal, state, local or foreign taxes, assessments, interest, penalties,
deficiencies, fees and other governmental charges or impositions, (including
without limitation all income tax, unemployment compensation, social security,
payroll, sales and use, excise, privilege, property, ad valorem, franchise,
license, school and any other tax or similar governmental charge or imposition
under laws of the United States or any state or municipal or political
subdivision thereof or any foreign country or political subdivision thereof)
(the "Taxes") have been filed with the appropriate governmental agencies in all
jurisdictions in which such Tax Returns are required to be filed, and all such
Tax Returns properly reflect the liabilities of North Star for Taxes for the
periods, property or events covered thereby. All Taxes, including those
without limitation which are called for by the Tax Returns, or heretofore or
hereafter claimed to be due by any taxing authority from North Star, have been
properly accrued or paid. The accruals for Taxes contained in the North Star
Interim Balance Sheet are adequate to cover the tax liabilities of North Star
with respect to the Business as of that date and include adequate provision for
all deferred taxes, and nothing has occurred subsequent to that date to make
any of such accruals inadequate. North Star has not received any notice of
assessment or proposed assessment in connection with any Tax Returns and there
are not pending tax examinations of or tax claims asserted against North Star
or any of its assets or properties. North Star has not extended, or waived the
application of, any statute of limitations of any jurisdiction regarding the
assessment or collection of any Taxes. There are no tax liens (other than any
lien for current taxes not yet due and payable) on the North Star Assets or the
Casino Business. North Star has no knowledge of any basis for any additional
assessment of any Taxes. North Star has made all deposits required by law to
be made with respect to employees' withholding and other employment taxes,
including without limitation the portion of such deposits relating to taxes
imposed upon North Star.
Section 3.10. BOOKS OF ACCOUNT. The books, records and accounts of
North Star maintained with respect to the Casino Business accurately and fairly
reflect, in reasonable detail, the transactions and the assets and liabilities
of North Star with respect to the Casino Business. North Star has not engaged
in any transaction with respect to the Casino Business, maintained any bank
account for the Casino Business or used any of the funds of North Star in the
conduct of the Casino Business except for transactions, bank accounts and funds
which have been and are reflected in the normally maintained books and records
of the Casino Business.
Section 3.11. EXISTING CONDITION. Except as set forth on the
Disclosure Schedules, since the Interim Date, North Star has conducted the
Casino Business in the ordinary course of business and in substantially the
same manner as it was conducted prior to the Interim Date and there have been
no material adverse changes in the business, condition (financial or otherwise)
or results of the Casino Business' operations.
Section 3.12. TITLE TO PROPERTIES. North Star has good, valid and
marketable title to all of its properties and assets, real, personal and mixed,
which would be included in the North Star Assets if the Casino Closing took
place on the date hereof, which it owns, free and clear of all mortgages,
liens, pledges, security interests, charges, claims, restrictions and other
encumbrances and defects of title of any nature whatsoever, except for (i)
Liens for current real or personal property taxes not yet due and payable, (ii)
Liens disclosed in the Disclosure Schedules, (iii) worker's, carrier's and
materialmen's liens,
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and (iv) Liens that are immaterial in character, amount, and extent, and which
do not detract from the value or interfere with the present or proposed use of
the properties they affect ("Permitted Liens").
Section 3.13. CONDITION OF TANGIBLE ASSETS. All buildings,
structures, facilities, equipment and other material items of tangible property
and assets which would be included in the North Star Assets if the Casino
Closing took place on the date hereof are in good operating condition and
repair, subject to normal wear and maintenance, are useable in the regular and
ordinary course of business and conform to all applicable laws, ordinances,
codes, rules and regulations, and Authorizations relating to their
construction, use and operation. No person other than North Star owns any
equipment or other tangible assets or properties situated on the premises of
North Star or necessary to the operation of the Casino Business, except for
leased items disclosed in the Disclosure Schedule and for items of immaterial
value.
Section 3.14. COMPLIANCE WITH LAW; AUTHORIZATIONS. North Star has
complied in all material respects with each, and is not in violation of any,
law, ordinance, or governmental or regulatory rule or regulation, whether
federal, state, local or foreign, to which the Casino Business or the North
Star Assets is subject ("Regulations"). North Star owns, holds, possesses or
lawfully uses in the operation of the Casino Business all franchises, licenses,
permits, easements, rights, applications, filings, registrations and other
authorizations ("Authorizations") which are in any manner necessary for it to
conduct the Casino Business as now or previously conducted or for the ownership
and use of the assets owned or used by North Star in the conduct of the Casino
Business, free and clear of all liens, charges, restrictions and encumbrances
and in compliance with all Regulations except where the failure to have such
Authorizations will not have a Material Adverse Effect. All such
Authorizations are listed and described in the Disclosure Schedule. North Star
is not in default, nor has it received any notice of any claim of default, with
respect to any such Authorization. All such Authorizations are renewable by
their terms or in the ordinary course of business without the need to comply
with any special qualification procedures or to pay any amounts other than
routine filing fees. None of such Authorizations will be adversely affected by
consummation of the transactions contemplated hereby. No shareholder,
director, officer, employee or former employee of North Star or any affiliates
of North Star, or any other person, firm or corporation owns or has any
proprietary, financial or other interest (direct or indirect) in any
Authorization which North Star owns, possesses or uses in the operation of the
Casino Business as now or previously conducted. North Star has not had any
gaming license revoked, suspended or denied nor has withdrawn an application
with respect to a gaming license.
Section 3.15. TRANSACTIONS WITH AFFILIATES. No member, manager,
director or officer of North Star, or any member of his or her immediate family
or any other of its, his or her Affiliates, owns or has a 5% or more ownership
interest in any corporation or other entity that is or was during the last
three years a party to, or in any property which is or was during the last
three years the subject of, any material contract, agreement or understanding,
business arrangement or relationship with North Star relating to the Casino
Business or the North Star Assets.
Section 3.16. LITIGATION.
(a) No litigation, including any arbitration, public
investigation or other proceeding of or before any court, arbitrator or
governmental or regulatory official, body or authority is
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pending with respect to the Casino Business or the North Star Assets. North
Star is not a party to or subject to the provisions of any judgment, order,
writ, injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which may have a Material Adverse Affect
on the Casino Business or the North Star Assets.
(b) To the best knowledge of North Star, after due
inquiry, no litigation, including any arbitration, investigation or other
proceeding of or before any court, arbitrator or governmental or regulatory
official, body or authority is threatened in writing against North Star which
could reasonably be expected to have a Material Adverse Affect on the ability
of North Star to consummate the transactions contemplated hereby or with
respect to the Casino Business or the North Star Assets.
(c) To the knowledge of North Star, after due inquiry, no
officer, director or key management employee or Immediate Family Member of an
officer, director or key management employee of North Star has been convicted
in a criminal proceeding, is a named subject of a criminal proceeding which is
presently pending (excluding traffic violations and other minor offenses) or is
to the knowledge of North Star the subject of a criminal investigation.
Section 3.17. INSURANCE. North Star has furnished to Concorde a list
of, and true and complete copies of, all insurance policies and fidelity bonds
relating to the North Star Assets, the Casino Business, operations, employees,
officers or directors of North Star. There is no claim by North Star or any
Subsidiary pending under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds or in respect of which such underwriters have reserved their rights. All
premiums payable under all such policies and bonds have been paid timely and
North Star has otherwise complied fully with the terms and conditions of all
such policies and bonds except where the failure to have made payment or to be
in full compliance would not reasonably be expected to result in a Material
Adverse Effect. Such policies of insurance and bonds (or other policies and
bonds providing substantially similar insurance coverage) are in full force and
effect. Such policies and bonds are of the type and in amounts customarily
carried by Persons conducting businesses similar to those of North Star. North
Star does not know of any threatened termination of, premium increase with
respect to, or material alteration of coverage under, any of such policies or
bonds.
Section 3.18. CONTRACTS AND COMMITMENTS. Except as set forth in the
Disclosure Schedule, North Star is not a party to any written or oral:
(a) agreement, contract or commitment with any present or
former employee or consultant or for the employment of any person, including
any consultant, who is engaged in the conduct of the Casino Business involving
in any one case $10,000 or more;
(b) agreement, contract or commitment for the future
purchase of, or payment for, supplies or products, or for the performance of
services by a third party which supplies, products or services are used in the
conduct of the Casino Business involving in any one case $10,000 or more;
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(c) agreement, contract or commitment to sell or supply
products or to perform services in connection with the Casino Business
involving in any one case $10,000 or more;
(d) agreement, contract or commitment relating to the
Casino Business not otherwise listed on the Disclosure Schedule and continuing
over a period of more than six months from the date hereof or exceeding in any
one case $10,000 or more;
(e) distribution, dealer, representative or sales agency
agreement, contract or commitment relating to the Casino Business involving in
any one case $10,000 or more;
(f) lease under which North Star is either lessor or
lessee relating to the North Star Assets or any property at which the North
Star Assets are located;
(g) note, debenture, bond, equipment trust agreement,
letter of credit agreement, loan agreement or other contract or commitment for
the borrowing or lending of money relating to the Casino Business or agreement
or arrangement for a line of credit or guarantee, pledge or undertaking of the
indebtedness of any other person relating to the Casino Business;
(h) agreement, contract or commitment for any charitable
or political contribution in excess of $10,000 relating to the Casino Business;
(i) commitment or agreement for any capital expenditure
or leasehold improvement in excess of $10,000 relating to the Casino Business;
(j) agreement, contract or commitment limiting or
restraining North Star, the Casino Business or any successor thereto from
engaging or competing in any manner or in any business, nor, to North Star's
knowledge, is any employee of North Star engaged in the conduct of the Casino
Business subject to any such agreement, contract or commitment; or
(k) material agreement, contract or commitment relating
to the Casino Business not made in the ordinary course of Casino Business, or
any other material long term commitments or arrangements that require the
commitment of a material portion of North Star's resources.
Each of the agreements, contracts, commitments, leases, plans and
other instruments, documents and undertakings listed in the Disclosure Schedule
in response to this Section, or not required to be listed therein because of
the amount thereof, under which Concorde Cripple Creek is to acquire rights or
obligations hereunder is valid and enforceable in accordance with its terms;
North Star is, and all other parties thereto are, in compliance with the
provisions thereof; North Star is not, and no other party thereto is, in
default in the performance, observance or fulfillment of any material
obligation, covenant or condition contained therein; and no event has occurred
which with or without the giving of notice or lapse of time, or both, would
constitute a default thereunder. Furthermore, no such agreement, contract,
commitment, lease, plan or other instrument, document or undertaking contains
any contractual requirement with which there is a reasonable likelihood North
Star or any
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other party thereto will be unable to comply. No material written or oral
agreement, contract or commitment described therein requires the consent of any
party to its assignment in connection with the transactions contemplated
hereby.
Section 3.19. ADDITIONAL INFORMATION. The Disclosure Schedule
contains accurate lists and summary descriptions of the following:
(a) all inventory, equipment, furniture and fixtures of
North Star included in the North Star Assets, specifying such items as are
owned and such as are leased and, with respect to the owned property,
specifying its aggregate cost or original value and the net book value as of
the Interim Date and, with respect to the leased property as to which North
Star is lessee, specifying the identity of the lessor, the rental rate and the
unexpired term of the lease;
(b) all real property and interests in real property
owned, leased or otherwise held by North Star in the conduct of the Casino
Business or upon which the North Star Assets are located as of the Interim
Date, specifying which are owned and which are leased and, (i) with respect to
the owned property, specifying its cost or original value and the net book
value as of the Interim Date and reconciling the aggregate value of the assets
in such category to the amount of such category as of the Interim Date, and
(ii) with respect to the leased property, specifying the identity of the
lessor, the rental rate and the unexpired term of the lease;
(c) the name and address of every bank and other
financial institution in which North Star or its affiliates maintain an account
(whether checking, savings or otherwise), lock box or safe deposit box for the
Casino Business, and the account numbers and names of persons having signing
authority or other access thereto;
(d) the names and titles of and current annual base
salary or hourly rates for all employees of North Star engaged in the conduct
of the Casino Business, together with a statement of the full amount and nature
of any other remuneration, whether in cash or kind, paid to each such person
during the past or current fiscal year or payable to each such person in the
future and the bonuses accrued for, the vacation and severance benefits to
which, each such person is entitled; and
(e) all names under which North Star has conducted the
Casino Business during the last five years.
Section 3.20. LABOR MATTERS. North Star has not suffered any strike,
slowdown, picketing or work stoppage by any union or other group of employees
affecting the Casino Business and has not received notice of and does not have
knowledge of any threatened strike, slowdown, picketing or work stoppage by any
union or other group of employees affecting the Casino Business. North Star is
not a party to any collective bargaining agreement, no such agreement
determines the terms and conditions of employment of any employee of North
Star, no collective bargaining agent has been certified as a representative of
any of the employees of North Star, and no representation campaign or election
is now in progress, or to the knowledge of North Star, threatened with respect
to any of the employees of North Star.
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Section 3.21. EMPLOYEE BENEFIT PLANS AND ARRANGEMENTS.
(a) The Disclosure Schedule contains a complete list of
all Plans, whether formal or informal, whether or not set forth in writing, and
whether covering one person or more than one person, currently sponsored or
maintained by North Star or sponsored or maintained within the last 5 years.
For the purposes hereof, the term "Plan" refers to all employee welfare benefit
plans within the meaning of Section 3(1) of ERISA, and all employee pension
benefit plans within the meaning of Section 3(2) of ERISA.
(b) Neither North Star nor any Plan maintained by North
Star or to which North Star has or has had the obligation to contribute in
respect of its employees is in violation of the provisions of ERISA; no
reportable event, within the meaning of ERISA, Section 4043 (c)(1), (2),
(3), (5), (6), (7), (10) or (13), has occurred or is continuing with respect to
any such Plan, and no prohibited transaction, within the meaning of Title I of
ERISA has occurred with respect to any such Plan.
Section 3.22. INTELLECTUAL PROPERTY. The Disclosure Schedule
contains a list of all material Intellectual Property Rights owned or licensed
and used or held for use by North Star which are material to the Casino
Business taken as a whole, specifying as to each, as applicable: (i) the nature
of such Intellectual Property Rights; (ii) the owner of such Intellectual
Property Rights; and (iii) licenses, sublicenses and other agreements as to
which North Star is a party and pursuant to which any Person is authorized to
use such Intellectual Property Rights, including the identity of all parties
thereto, a description of the nature and subject matter thereof, the applicable
royalty and the term thereof. The Intellectual Property Rights are owned by,
or validly licensed to, North Star as indicated in the Disclosure Schedule.
North Star (i) has the exclusive right to use such Intellectual Property
Rights; (ii) has not conveyed, assigned or encumbered any Intellectual Property
Rights so as to interfere in any way with the operation of the Casino Business,
and (iii) all registrations and filings necessary to preserve the rights of
North Star in the Intellectual Property Rights have been made and are in good
standing.
Section 3.23. ENVIRONMENTAL MATTERS.
(a) Except as set forth in the Disclosure Schedule, North
Star has obtained all permits, licenses and other authorizations which are
required in connection with the conduct of the Casino Business under
Regulations relating to pollution or protection of the environment, including
Regulations relating to emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment (including without limitation ambient
air, surface water, groundwater, or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes.
(b) Except as set forth in the Disclosure Schedule, North
Star is in full compliance in the conduct of the Casino Business with all terms
and conditions of the required permits,
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licenses and authorizations, and is also in full compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in those laws or contained in
any regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder.
(c) Except as set forth in the Disclosure Schedule, North
Star is not aware of, nor has North Star received notice of, any past, present
or future events, conditions, circumstances, activities, practices, incidents,
actions or plans which may interfere with or prevent compliance or continued
compliance with those laws or any regulations, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered, promulgated or
approved thereunder, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, chemical, or
industrial, toxic or hazardous substance or waste.
(d) Except as set forth in the Disclosure Schedule, there
is no civil, criminal or administrative action, suit, demand, claim, hearing,
notice or demand letter, notice of violation, public investigation, or
proceeding pending or threatened against North Star in connection with the
conduct of the Casino Business relating in any way to Environmental Laws or any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder.
(e) There are no Environmental Permits that are
nontransferable or require consent to own and operate the Casino Business or
the North Star Assets.
Section 3.24. REAL PROPERTY.
(a) North Star has good title to, or in the case of
leased property has valid leasehold interests in, all personal property and
assets (whether tangible or intangible) included in the North Star Assets.
North Star has valid and insurable fee simple title to, or in the case of
leased real property have valid leasehold interests in, all real property
included in the North Star Assets. None of such property or assets (whether
real or personal) is subject to any Liens, except:
(i) Liens disclosed on the Disclosure Schedules;
(ii) Liens for taxes not yet due or being
contested in good faith (and for which adequate accruals or reserves have been
established); or
(iii) Liens of record which do not materially
detract from the value or materially interfere with any present use of such
property or assets.
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(b) To the knowledge of North Star, there are no
developments affecting any such property or assets (whether real or personal)
pending or, to the knowledge of North Star threatened, which might materially
detract from the value of such property or assets, or materially interfere with
any present use of any such property or assets.
(c) The plant and equipment owned by North Star has been
reasonably maintained consistent with standards generally followed in the
industry (giving due account to the age and length of use of same, ordinary
wear and tear excepted) and, to the knowledge of North Star, are adequate and
suitable for their present uses and, in the case of plants, buildings and other
structures (including the roofs thereof), are structurally sound.
(d) To the knowledge of North Star, all real property
currently has access to (i) public roads or valid easements for such ingress to
and egress from all such real property and (ii) water supply, storm and
sanitary sewer facilities, telephone, gas and electrical connections, fire
protection, drainage and other public utilities, in each case as is necessary
for the conduct of the Casino Business as heretofore conducted by North Star.
To the knowledge of North Star, none of the structures on any such owned or
leased real property encroaches upon real property of another person, and no
structure of any other person substantially encroaches upon any of such owned
or leased real property.
Section 3.25. ASSETS. Except for the North Star Excluded Assets, the
property and assets owned or leased by North Star, or which it otherwise has
the right to use, constitute all of the material property and assets held for
use or used in connection with the Casino Business, are generally adequate to
conduct the Casino Business as currently conducted by North Star. The North
Star Assets include all rights and property necessary to the conduct of the
Casino Business by Concorde Cripple Creek in the manner it is presently
conducted by North Star and no North Star Excluded Asset hereunder constitutes
property or rights material to the Casino Business.
Section 3.26. RESTRICTIONS. North Star is not a party to any
indenture, agreement, contract, commitment, lease, plan, license, permit,
authorization or other instrument, document or understanding, oral or written,
or subject to any charter or other corporate restriction or any judgment,
order, writ, injunction, decree or award which Materially Adversely Affects or
materially restricts the business, operations, assets, properties, prospects or
condition (financial or otherwise) of the Casino Business as presently
conducted.
Section 3.27. COMPLETENESS OF DISCLOSURE. Subject to any applicable
qualifications contained in any certificate, schedule, statement, document or
instrument, no representation or warranty by North Star in this Agreement nor
any certificate, schedule, statement, document or instrument furnished or to be
furnished to Concorde pursuant hereto, or in connection with the negotiation,
execution or performance of this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
required to be stated herein or therein or necessary to make any statement
herein or therein not misleading.
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Section 3.28. PURCHASE FOR INVESTMENT.
(a) North Star has received such information relating to
the business and affairs of Concorde which North Star has requested, and all
additional information which North Star has considered necessary to verify the
accuracy of the information so received. North Star has had the opportunity to
ask questions of and receive answers from Concorde concerning the terms and
conditions of the transactions contemplated by this Agreement. On the basis of
the foregoing, North Star is familiar with the operations, business plans and
financial condition of Concorde.
(b) North Star understands that Concorde proposes to
issue and deliver the Common Stock to North Star pursuant to this Agreement
without compliance with the registration requirements of the 1933 Act; that for
such purpose Concorde will rely upon the representations, warranties, covenants
and agreements contained herein; and that such non-compliance with registration
is not permissible unless such representations and warranties are correct and
such covenants and agreements performed. North Star is an "accredited
investor" as such term is defined in Rule 501 under the 1933 Act.
(c) North Star understands that, under existing rules of
the Securities and Exchange Commission (the "SEC"), North Star may be unable to
sell the Common Stock except to the extent that the Common Stock may be sold
(1) pursuant to an effective registration statement covering such securities
pursuant to the 1933 Act or (2) in a bona fide private placement to a Concorde
who shall be subject to the same restrictions on any resale or (3) subject to
the restrictions contained in Rule 144 under the 1933 Act.
(d) North Star has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Common Stock and is capable of bearing the
economic risks of such investment.
(e) North Star is purchasing the Common Stock for
investment for its own accounts and not with a view to, or for sale in
connection with, the distribution thereof within the meaning of the 1933 Act.
(f) North Star understands that the Common Stock will
bear the following legend:
"THE SECURITIES EVIDENCED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD OR TRANSFERRED UNLESS
THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH
ACT COVERING SUCH SECURITIES OR THE
COMPANY RECEIVES AN OPINION OF
COUNSEL (WHICH MAY BE COUNSEL OF THE
COMPANY) STATING THAT SUCH SALE OR
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TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT."
North Star further understands that each certificate issued will also
bear any legend required under any applicable state securities law.
Section 3.29. KNOWLEDGE. The phrase "to the knowledge of North Star"
means the actual and conscious awareness by either Xxxxx Xxxxxxxxxx or Xxxxx
Xxxxxxxx after due inquiry.
Section 3.30. NO BROKERS. All negotiations relative to this
Agreement have been carried on by North Star directly without the intervention
of any person, who may be entitled to any brokerage or finder's fee or other
commission in respect of this Agreement or the consummation of the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF CONCORDE, CONCORDE SOUTH DAKOTA AND MIDWEST GAMING
Each of Concorde, Concorde South Dakota and Midwest Gaming
(collectively, "Concorde") hereby represents and warrants to North Star that,
except as set forth on a Disclosure Schedule attached hereto, each of which
exceptions shall specifically identify the relevant subsection hereof to which
it relates and shall be deemed to be representations and warranties as if made
hereunder:
Section 4.01. CORPORATE EXISTENCE. Concorde is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Concorde is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction where the
conduct of the Video Lottery Business by it requires it to be so qualified,
except for those jurisdictions where failure to be so qualified, individually
or in the aggregate would not have a Material Adverse Effect.
Section 4.02. CORPORATE EXISTENCE AND POWER. Concorde has the
corporate power, authority and legal right to execute, deliver and perform this
Agreement. The execution, delivery and performance of this Agreement by
Concorde has been duly authorized by all necessary corporate action. This
Agreement has been, and the other agreements, documents and instruments
required to be delivered by Concorde in accordance with the provisions hereof
("Concorde's Documents") will be, duly executed and delivered on behalf of
Concorde by duly authorized officers of Concorde, and this Agreement
constitutes, and Concorde's Documents when executed and delivered will
constitute, the legal, valid and binding obligations of Concorde, enforceable
against Concorde in accordance with their respective terms except as the same
may be limited by bankruptcy, moratorium, fraudulent conveyance and similar
laws affecting creditors rights generally and to the application of general
equitable principles.
Section 4.03. VALIDITY OF CONTEMPLATED TRANSACTIONS, ETC. Except for
governmental permits, authentications, consents and approvals which have been
obtained or will be obtained on or prior to the
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Closing Date, the execution, delivery and performance of this Agreement by
Concorde does not and will not violate, conflict with or result in the breach
of any term, condition or provision of, or require the consent of any other
person under, (i) any existing law, ordinance, or governmental rule or
regulation binding upon or applicable to Concorde, (ii) any judgment, order,
writ, injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which is applicable to Concorde, (iii)
the charter documents of Concorde or any securities issued by Concorde, or (iv)
to the Concorde's knowledge, after due inquiry, any mortgage, indenture,
agreement, contract, commitment, lease, plan or other instrument, document or
understanding, oral or written, to which Concorde is a party, by which Concorde
may have rights or by which any of the Concorde Assets may be bound or
affected, or give any party with rights thereunder the right to terminate,
modify, accelerate or otherwise change the existing rights or obligations of
Concorde thereunder.
Except for state gaming laws, to Concorde's knowledge, after due
inquiry, no authorization, approval or consent of, and no registration or
filing with, any governmental or regulatory official, body or authority is
required in connection with the execution, delivery or performance of this
Agreement by Concorde except where the failure to receive such authorization,
approval or consent or to make such registration or filing would not have a
Material Adverse Effect.
Section 4.04. NO THIRD PARTY OPTIONS. There are no existing
agreements, options, commitments or rights with, of or to any person to acquire
any of the Concorde Assets or any interest therein, except for those contracts
entered into in the normal course of business consistent with past practice for
the sale of inventory of Concorde.
Section 4.05. ACCOUNTS RECEIVABLE. The accounts receivable of
Concorde arising from the Video Lottery Business are valid and genuine; have
arisen solely out of bona fide sales and deliveries of goods, performance of
services and other business transactions in the ordinary course of business
consistent with past practice; are not subject to valid defenses, set-offs or
counterclaims; and are collectible within the normal course of business
consistent with past practices at the full recorded amount thereof. The
reserves accrued on the books of Concorde for doubtful accounts with respect to
accounts receivable are in accordance with GAAP and are adequate.
Section 4.06. INVENTORY. All inventory of Concorde used in the
conduct of the Video Lottery Business, including without limitation raw
materials, work-in process and finished goods, was acquired and has been
maintained in the ordinary course of the Video Lottery Business; is of good and
merchantable quality; consists substantially of a quality, quantity and
condition useable, leaseable or saleable in the ordinary course of the Video
Lottery Business; is valued at reasonable amounts based on the ordinary course
of business of Concorde during the past six months; and is not subject to any
write-down or write-off. Concorde is not under any liability or obligation
with respect to the return of inventory in the possession of wholesalers,
retailers or other customers.
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Section 4.07. ABSENCE OF UNDISCLOSED LIABILITIES. Concorde has no
liabilities or obligations with respect to the Video Lottery Business, either
direct or indirect, matured or unmatured or absolute, contingent or otherwise,
except:
(a) liabilities arising in the ordinary course of business
under any agreement, contract, commitment, lease or plan specifically disclosed
on the Disclosure Schedules or not required to be disclosed because of the term
or amount involved or because such liabilities or obligations are not being
assumed by North Star; and
(b) those liabilities or obligations incurred,
consistently with past business practice, in or as a result of the normal and
ordinary course of business since the Interim Date.
For purposes of this Agreement, the term "liabilities" shall include,
without limitation, any direct or indirect indebtedness, guaranty, endorsement,
claim, cost, expense, obligation or responsibility, fixed or unfixed, known or
unknown, asserted or unasserted, xxxxxx or inchoate, liquidated or
unliquidated, secured or unsecured.
Section 4.08. TAX AND OTHER RETURNS AND REPORTS. All Taxes have been
filed with the appropriate governmental agencies in all jurisdictions in which
such Tax Returns are required to be filed, and all such Tax Returns properly
reflect the liabilities of Concorde for Taxes for the periods, property or
events covered thereby. All Taxes, including those without limitation which
are called for by the Tax Returns, or heretofore or hereafter claimed to be due
by any taxing authority from Concorde, have been properly accrued or paid. The
accruals for Taxes contained in the Concorde Interim Balance Sheet are adequate
to cover the tax liabilities of Concorde with respect to the Video Lottery
Business as of that date and include adequate provision for all deferred taxes,
and nothing has occurred subsequent to that date to make any of such accruals
inadequate. Concorde has not received any notice of assessment or proposed
assessment in connection with any Tax Returns and there are not pending tax
examinations of or tax claims asserted against Concorde with respect to the
Concorde Assets or the Video Lottery Business. Concorde has not extended, or
waived the application of, any statute of limitations of any jurisdiction
regarding the assessment or collection of any Taxes with respect to the
Concorde Assets or the Video Lottery Business. There are no tax liens (other
than any lien for current taxes not yet due and payable) on the Concorde Assets
or the Video Lottery Business. Concorde has no knowledge of any basis for any
additional assessment of any Taxes with respect to the Concorde Assets or the
Video Lottery Business . Concorde has made all deposits required by law to be
made with respect to employees' withholding and other employment taxes,
including without limitation the portion of such deposits relating to taxes
imposed upon Concorde.
Section 4.09. BOOKS OF ACCOUNT. The books, records and accounts of
Concorde maintained with respect to the Video Lottery Business accurately and
fairly reflect, in reasonable detail, the transactions and the assets and
liabilities of Concorde with respect to the Video Lottery Business. Concorde
has not engaged in any transaction with respect to the Video Lottery Business,
maintained any bank account for the Video Lottery Business or used any of the
funds of Concorde in the conduct of the Video Lottery Business except for
transactions, bank accounts and funds which have been and are reflected in the
normally maintained books and records of the Video Lottery Business.
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Section 4.10. EXISTING CONDITION. Except as set forth on the
Disclosure Schedules, since the Interim Date, Concorde has conducted the
Video Lottery Business in the ordinary course of business and in substantially
the same manner as it was conducted prior to the Interim Date and there have
been no material adverse changes in the business, condition (financial or
otherwise) or results of the Video Lottery Business' operations.
Section 4.11. TITLE TO PROPERTIES. Concorde has good, valid and
marketable title to all of its properties and assets, real, personal and mixed,
which would be included in the Concorde Assets if the Video Lottery Closing
took place on the date hereof, which it owns, free and clear of all mortgages,
liens, pledges, security interests, charges, claims, restrictions and other
encumbrances and defects of title of any nature whatsoever, except for
Permitted Liens.
Section 4.12. CONDITION OF TANGIBLE ASSETS. All buildings,
structures, facilities, equipment and other material items of tangible property
and assets which would be included in the Concorde Assets if the Closing took
place on the date hereof are in good operating condition and repair, subject to
normal wear and maintenance, are useable in the regular and ordinary course of
business and conform to all applicable laws, ordinances, codes, rules and
regulations, and Authorizations relating to their construction, use and
operation.
Section 4.13. COMPLIANCE WITH LAW; AUTHORIZATIONS. Concorde has
complied in all material respects with each, and is not in violation of any
Regulations to which the Video Lottery Business or the Concorde Assets is
subject. Concorde owns, holds, possesses or lawfully uses in the operation of
the Video Lottery Business all Authorizations which are in any manner necessary
for it to conduct the Video Lottery Business as now or previously conducted or
for the ownership and use of the assets owned or used by Concorde in the
conduct of the Video Lottery Business, free and clear of all liens, charges,
restrictions and encumbrances and in compliance with all Regulations except
where the failure to have such Authorizations will not have a Material Adverse
Effect. Concorde is not in default, nor has it received any notice of any
claim of default, with respect to any such Authorization. No shareholder,
director, officer, employee or former employee of Concorde or any affiliates of
Concorde, or any other person, firm or corporation owns or has any proprietary,
financial or other interest (direct or indirect) in any Authorization which
Concorde owns, possesses or uses in the operation of the Video Lottery Business
as now or previously conducted.
Section 4.14. LITIGATION.
(a) No litigation, including any arbitration, public
investigation or other proceeding of or before any court, arbitrator or
governmental or regulatory official, body or authority is pending with respect
to the Video Lottery Business or the Concorde Assets. Concorde is not a party
to or subject to the provisions of any judgment, order, writ, injunction,
decree or award of any court, arbitrator or governmental or regulatory
official, body or authority which may have a Material Adverse Affect on the
Video Lottery Business or the Concorde Assets.
(b) To the best knowledge of Concorde, after due inquiry,
no litigation, including any arbitration, investigation or other proceeding of
or before any court, arbitrator or
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governmental or regulatory official, body or authority is threatened in writing
against Concorde which could reasonably be expected to have a Material Adverse
Affect on the ability of Concorde to consummate the transactions contemplated
hereby or with respect to the Video Lottery Business or the Concorde Assets.
(c) To the knowledge of Concorde, after due inquiry, no
officer, director or key management employee or Immediate Family Member of an
officer, director or key management employee of Concorde has been convicted in
a criminal proceeding, is a named subject of a criminal proceeding which is
presently pending (excluding traffic violations and other minor offenses) or is
to the knowledge of Concorde the subject of a criminal investigation.
Section 4.15. CONTRACTS AND COMMITMENTS. Except as set forth in the
Disclosure Schedule, Concorde is not a party to any written or oral:
(a) agreement, contract or commitment with any present or
former employee or consultant or for the employment of any person, including
any consultant, who is engaged in the conduct of the Video Lottery Business
involving in any one case $10,000 or more;
(b) agreement, contract or commitment for the future
purchase of, or payment for, supplies or products, or for the performance of
services by a third party which supplies, products or services are used in the
conduct of the Video Lottery Business involving in any one case $10,000 or
more;
(c) agreement, contract or commitment to sell or supply
products or to perform services in connection with the Video Lottery Business
involving in any one case $10,000 or more;
(d) agreement, contract or commitment relating to the
Video Lottery Business not otherwise listed on the Disclosure Schedule and
continuing over a period of more than six months from the date hereof or
exceeding in any one case $10,000 or more;
(e) distribution, dealer, representative or sales agency
agreement, contract or commitment relating to the Video Lottery Business
involving in any one case $10,000 or more;
(f) lease under which Concorde is either lessor or lessee
relating to the Concorde Assets or any property at which the Concorde Assets
are located;
(g) note, debenture, bond, equipment trust agreement,
letter of credit agreement, loan agreement or other contract or commitment for
the borrowing or lending of money relating to the Video Lottery Business or
agreement or arrangement for a line of credit or guarantee, pledge or
undertaking of the indebtedness of any other person relating to the Video
Lottery Business;
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(h) agreement, contract or commitment for any charitable
or political contribution in excess of $10,000 relating to the Video Lottery
Business;
(i) commitment or agreement for any capital expenditure or
leasehold improvement in excess of $10,000 relating to the Video Lottery
Business;
(j) agreement, contract or commitment limiting or
restraining Concorde, the Video Lottery Business or any successor thereto from
engaging or competing in any manner or in any business, nor, to Concorde's
knowledge, is any employee of Concorde engaged in the conduct of the Video
Lottery Business subject to any such agreement, contract or commitment; or
(k) material agreement, contract or commitment relating to
the Video Lottery Business not made in the ordinary course of business, or any
other material long term commitments or arrangements that require the
commitment of a material portion of Concorde's resources.
Each of the agreements, contracts, commitments, leases, plans and other
instruments, documents and undertakings listed in the Disclosure Schedule in
response to this Section, or not required to be listed therein because of the
amount thereof, under which North Star is to acquire rights or obligations
hereunder is valid and enforceable in accordance with its terms; Concorde is,
and all other parties thereto are, in compliance with the provisions thereof;
Concorde is not, and no other party thereto is, in default in the performance,
observance or fulfillment of any material obligation, covenant or condition
contained therein; and no event has occurred which with or without the giving
of notice or lapse of time, or both, would constitute a default thereunder.
Furthermore, no such agreement, contract, commitment, lease, plan or other
instrument, document or undertaking contains any contractual requirement with
which there is a reasonable likelihood Concorde or any other party thereto will
be unable to comply. No material written or oral agreement, contract or
commitment described therein requires the consent of any party to its
assignment in connection with the transactions contemplated hereby.
Section 4.16. ADDITIONAL INFORMATION. The Disclosure Schedule
contains accurate lists and summary descriptions of the following:
(a) all inventory, equipment, furniture and fixtures of
Concorde included in the Concorde Assets as of the Interim Date, specifying
such items as are owned and such as are leased.
(b) all real property and interests in real property
owned, leased or otherwise held by Concorde in the conduct of the Video Lottery
Business or upon which the Concorde Assets are located as of the Interim Date,
specifying which are owned and which are leased and, with respect to the leased
property, specifying the identity of the lessor, the rental rate and the
unexpired term of the lease;
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(c) the names and titles of and current annual base salary
or hourly rates for all employees of Concorde engaged in the conduct of the
Video Lottery Business; and
(d) all names under which Concorde has conducted the Video
Lottery Business during the last five (5) years.
Section 4.17. ASSETS. Except for the Excluded Assets, the property
and assets owned or leased by Concorde, or which it otherwise has the right to
use, constitute all of the material property and assets held for use or used in
connection with the Video Lottery Business, are generally adequate to conduct
the Video Lottery Business as currently conducted by Concorde. The Concorde
Assets include all rights and property necessary to the conduct of the Video
Lottery Business by North Star in the manner it is presently conducted by
Concorde and no Concorde Excluded Asset hereunder constitutes property or
rights material to the Video Lottery Business.
Section 4.18. RESTRICTIONS. Concorde is not a party to any indenture,
agreement, contract, commitment, lease, plan, license, permit, authorization or
other instrument, document or understanding, oral or written, or subject to any
charter or other corporate restriction or any judgment, order, writ,
injunction, decree or award which Materially Adversely Affects or materially
restricts the business, operations, assets, properties, prospects or condition
(financial or otherwise) of the Video Lottery Business as presently conducted.
Section 4.19. COMPLETENESS OF DISCLOSURE. Subject to any applicable
qualifications contained in any certificate, schedule, statement, document or
instrument, no representation or warranty by Concorde in this Agreement nor any
certificate, schedule, statement, document or instrument furnished or to be
furnished to North Star pursuant hereto, or in connection with the negotiation,
execution or performance of this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
required to be stated herein or therein or necessary to make any statement
herein or therein not misleading.
Section 4.20. KNOWLEDGE. The phrase "to the knowledge of Concorde"
means the actual and conscious awareness by either Xxxxx X. Xxxx, Xxxxx X.
Xxxxx or Xxxxxx X. Xxxxxx after due inquiry.
Section 4.21. NO BROKERS. All negotiations relative to this Agreement
have been carried on by Concorde directly without the intervention of any
person who may be entitled to any brokerage or finder's fee or other commission
in respect of this Agreement or the consummation of the transactions
contemplated hereby.
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01. COVENANTS OF THE PARTIES.
(a) Best Efforts. Subject to the terms and conditions of
this Agreement, each of the Parties will use its best efforts to take, or cause
to be taken, all actions and to do, or cause
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to be done, all things necessary or desirable under applicable laws and
regulations to consummate the transactions contemplated by this Agreement.
Each of the Parties agrees to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as
may be necessary or desirable in order to consummate or implement expeditiously
the transactions contemplated by this Agreement.
(b) Certain Filings. Each of the Parties shall cooperate
with one another (i) in determining whether any action by or in respect of, or
filing with, any governmental body, agency, official or authority is required,
or any actions, consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (ii) in taking such actions or
making any such filings, furnishing information required in connection
therewith and seeking timely to obtain any such actions, consents, approvals or
waivers.
(c) Access; Cooperation. Through the Closing, each of the
Parties shall make available for inspection by the other or its agents or
representatives, during normal business hours and upon reasonable notice (i)
all premises utilized in the conduct of its business, (ii) all books of
account, contracts and other documents relating to or constituting a part of
the assets conveyed hereunder, (iii) the key management personnel, (iv)
financial and operating data relating to the assets conveyed hereunder, and (v)
such further information with respect to the assets conveyed hereunder, as such
other party, from time to time, shall reasonably request, provided that such
access shall not unduly interfere with the normal business operations.
(d) Notice of Certain Events. If prior to Closing, either
Concorde, on the one hand, or North Star, on the other hand, shall acquire
knowledge of any fact, law or circumstance which would be required to be
disclosed by such party to avoid a breach of its representations and warranties
contained in this Agreement, then such party shall immediately disclose such
fact, law or circumstance to the other party.
(e) Exclusivity. Each Party agrees it will not directly
or through agents, representatives or other affiliated parties, after the date
hereof and prior to Closing or termination of this Agreement, whichever is
earlier, (a) solicit, initiate, or encourage the submission of any proposal or
offer from any person relating to any (i) liquidation, dissolution or
recapitalization, (ii) merger or consolidation, (iii) acquisition or purchase
of securities or assets, or (iv) similar transaction or business combination
involving North Star or the North Star Assets or Concorde or the Concorde
Assets, as the case may be, or (b) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
person to do or seek any of the foregoing.
(f) Public Announcements. The Parties agree to consult
with each other before issuing any press release or making any public statement
with respect to this Agreement or the transactions contemplated hereby and,
except as may be required by applicable law or any listing agreement with any
national securities exchange, will not issue any such press release or make any
such public statement prior to such consultation.
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(g) Conduct of Business Until Closing Date. From the date
of this Agreement and until the Closing Date, except with the prior written
consent of the other Party, each of North Star, with respect to the North Star
Assets, and Concorde South Dakota and Midwest Gaming, with respect to the
Concorde Assets, covenants and agrees to conduct the Casino Business or the
Video Lottery Business, as the case may be, in the ordinary course and
consistent with past practices and use its best efforts to preserve intact its
business organization and goodwill, keep available the services of its present
officers and key employees and preserve the goodwill and business relationships
with suppliers, customers and others having business relationships with it.
Without limiting the generality of the foregoing, North Star and Concorde South
Dakota and Midwest Gaming shall:
(i) refrain from changing, in any material
respect, any of its business policies;
(ii) maintain and keep the North Star Assets or
the Concorde Assets, as the case may be, in good repair, working order and
condition consistent with past practices (except for obsolescence, ordinary
wear and tear and damage due to casualty);
(iii) perform all of its obligations under all
contracts, leases and any and all other agreements relating to or affecting the
Concorde Assets or the North Star Assets, as the case may be, except where the
failure to so perform would not have a Material Adverse Effect;
(iv) notify the other Party of any changes in the
terms of the insurance policies and binders;
(v) comply with all laws, ordinances, rules,
regulations and orders applicable to Casino Business or the Video Lottery
Business, as the case may be, or its operations, assets or properties in
respect thereof, the noncompliance with which might materially affect the
Casino Business or the Video Lottery Business, as the case may be, or the North
Star Assets or the Concorde Assets, as the case may be;
(vi) make any and all contributions, premium
payments, claim payments or other such payments that are (a) required by the
terms of a Plan, or (b) required to maintain a Plan in its form as of the date
of this Agreement;
(vii) refrain from
(A) taking any action with respect to
the grant of any severance or termination pay to any employees (except as
consistent with current practice or as currently provided with existing
arrangements) or with respect to any increase of benefits payable under any
severance or termination pay policies or agreements in effect on the date
hereof and applicable to employees;
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(B) entering into, adopting, modifying
or amending, in any material respect, any written employment, collective
bargaining, severance, consulting, bonus, incentive compensation, deferred
compensation, profit sharing, employee benefit, welfare benefit or other
agreement, plan or arrangement providing for compensation or benefits to
employees or independent contractors;
(C) increasing in any material respect
the compensation or fringe benefits of any employee or independent contractors
or paying any benefit or compensation not required by any existing agreement,
plan or arrangement; except, in the case of each of the foregoing, reasonable
actions consistent with past practices or in accordance with any existing
agreement, plan or arrangement;
(D) taking any action that could be
reasonably anticipated to have a Material Adverse Effect or that could cause
any representation or warranty set forth in Article III or Article IV hereof,
as the case may be, to be untrue or any condition to Closing not to be
satisfied;
(E) accelerate xxxxxxxx, shipments to
customers, payments from customers, orders from suppliers or payment of
accounts payable or adjust the level of inventory, except in the ordinary
course of business;
(F) except with the prior written
consent of the other Party, which consent shall not be unreasonably withheld,
entering into any agreement, waiver or other arrangement providing for an
extension of time with respect to the filing of any tax return or the payment
or assessment of any tax, governmental charge, payment or deficiency;
(G) shall not directly or indirectly,
sell or encumber all or any of the Concorde Assets or the North Star Assets, as
the case may be, other than in the ordinary course of business consistent with
past practice, or initiate or participate in any discussions or negotiations or
enter or any agreement to do any of the foregoing;
(H) except as specifically contemplated
by this Agreement or as otherwise consented to in writing by the other Party,
shall not adopt, enter into, amend in any respect, or terminate, any Plan or
any other employee benefit plan, program or arrangement of general
applicability, except as required by law.
(h) Confidentiality. Unless and until the Closing has been
consummated, each Party will hold, and shall cause its counsel, independent
certified public accountants, appraisers and investment bankers to hold in
confidence and not use any confidential data or information
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made available to it in connection with this Agreement with respect to the
Casino Business or the Video Lottery Business, as the case may be
(collectively, the "Confidential Information") using the same standard of care
to protect the Confidential Information as is used to protect its own
confidential information; provided, however, that any Party may use and include
Confidential Information in connection with the preparation and filing of any
registration statement or periodic report required pursuant to the 1993 Act and
the 1934 Act and in a prospectus prepared in connection with an underwritten
public offering. Notwithstanding anything herein to the contrary, the term
"Confidential Information" and the obligations of non-disclosure,
confidentiality and non-use relating thereto shall not include any information
or data which: (i) is or becomes known to the general public through no action
or fault of the Party; (ii) was already known to the Party prior to the date of
disclosure hereunder, as evidenced by the written records of the Party provided
that disclosure of such written record shall be in compliance with any
obligations of confidentiality to a third party; (iii) is or becomes known to
the Party from a third party not having a confidential relationship with the
other Party with respect hereto; or (iv) is developed by employees, agents or
consultants of the Party independently of and without reference to any
Confidential Information. If the transactions contemplated by this Agreement
are not consummated, each Party agrees that it shall either (i) return or cause
to be returned to the other Party, or (ii) destroy all written materials and
all copies thereof that were supplied to the Parties and that contain any such
Confidential Information.
(i) State Share. Concorde South Dakota will pay the
State of South Dakota its share of video lottery proceeds arising out of the
Concorde Assets and accrued through the Video Lottery Closing.
ARTICLE VI
CONDITIONS TO THE CLOSING
Section 6.01. RECIPROCAL CONDITIONS PRECEDENT. The obligations of
each of the Parties to consummate each Closing are subject to and shall be
conditioned upon the satisfaction (in whole or in part) by each, of each of the
following conditions on or prior to each Closing Date:
(a) All approvals, consents and authorizations from all
third persons and governmental agencies necessary for the consummation of the
transactions contemplated hereby shall have been obtained in accordance with
the requirements of applicable laws and agreements.
(b) The consummation of this Agreement shall not be
precluded by any order or injunction of a court of competent jurisdiction (each
Party agreeing to use its best efforts to have any such order reversed or
injunction lifted) nor shall there be pending a suit challenging the
consummation of this Agreement which states a claim with respect to this
Agreement not with merit, the upholding of which would restrain, prohibit or
condition, in any material respect, some or all of the transactions
contemplated hereby.
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Section 6.02. CONDITIONS TO OBLIGATION OF CONCORDE. The obligation of
Concorde to consummate the Closing is subject to and shall be conditioned upon
the satisfaction, or waiver (in whole or part), of each of the following
conditions on or prior to each Closing Date, except as otherwise provided:
(a) North Star's representations and warranties contained
in this Agreement, the Schedules and Exhibits hereto and in any list,
agreement, certificate or written statement referred to herein or delivered
pursuant hereto shall be true and correct in all material respects at and as of
the date hereof and shall be true and correct in all material respects at and
as of the Closing Date with the same effect as though such representations and
warranties were made on and as of the Closing Date.
(b) North Star shall have performed and complied in all
material respects with all agreements and conditions contained in this
Agreement that are required to be performed or complied with by it prior to or
at the Closing.
(c) North Star shall have executed and delivered to
Concorde the documents provided for in Article VII hereof.
(d) Prior to the Video Lottery Closing, Concorde shall
have entered into the Casino Lease. In addition, prior to the Casino Closing,
Concorde shall have entered into the Xxxxxx Lease and the Parking Lot Lease.
(e) Prior to the Casino Closing, neither the North Star
Assets nor the Casino Business shall have suffered any loss on account of fire,
flood, accident or any other calamity or casualty to an extent that would
interfere with the conduct of the Casino Business or impair the value of the
Casino Business as a going concern, regardless of whether any such loss or
losses have been insured against.
(f) Prior to the Casino Closing, North Star shall have
provided to Concorde title insurance for the real property being transferred in
the amount reasonably required by Concorde. The cost of the title insurance
shall be borne by North Star.
(g) Prior to the Casino Closing, Concorde shall have
received a gaming license permitting it to operate the Casino Business, as it
currently is operated by North Star.
(h) Prior to the Casino Closing, North Star shall have
exercised the Real Estate Option.
Section 6.03. CONDITIONS TO OBLIGATION OF NORTH STAR. The obligation
of North Star to consummate the Closing is subject to and shall be conditioned
upon the satisfaction, or waiver (in whole or part), of each of the following
conditions on or prior to each Closing Date, except as otherwise provided:
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(a) Concorde's representations and warranties contained in
this Agreement, the Schedules and Exhibits hereto and in any list, agreement,
certificate or written statement referred to herein or delivered pursuant
hereto shall be true and correct in all material respects at and as of the date
hereof and shall be true and correct in all material respects at and as of the
Closing Date with the same effect as though such representations and warranties
were made on and as of the Closing Date.
(b) Concorde shall have performed and complied in all
material respects with all agreements and conditions contained in this
Agreement that are required to be performed or complied with by it prior to or
at the Closing.
(c) Concorde shall have executed and delivered to North
Star the documents provided for in Article VII.
(d) Prior to the Video Lottery Closing, neither the
Concorde Assets nor the Video Lottery Business shall have suffered any loss on
account of fire, flood, accident or any other calamity or casualty to an extent
that would interfere with the conduct of the Video Lottery Business or impair
the value of the Video Lottery Business as a going concern, regardless of
whether any such loss or losses have been insured against.
(e) Prior to the Video Lottery Closing, North Star shall
have received a gaming license permitting it to operate the Video Lottery
Business, as it is currently operated by Concorde.
ARTICLE VII
CLOSING
Section 7.01. CLOSING. Each Closing shall be held in the offices of
Xxxxxxxx & Xxxxxxxx LLP, 5200 Republic Plaza, 000 00xx Xxxxxx, Xxxxxx, Xxxxxxxx
or at such other place as the Parties shall mutually agree.
Section 7.02. CONCORDE DELIVERIES. Concorde shall deliver or cause to
be delivered to North Star the following:
(a) At the Video Lottery Closing:
(i) the Xxxx of Sale and Assignment and Assumption
Agreement executed by Concorde South Dakota in the form of Exhibit C attached
hereto;
(ii) the Xxxx of Sale and Assignment Agreement executed by
Midwest Gaming in the form of Exhibit D hereto;
(iii) the title certificates to all vehicles included among
the Concorde Assets, endorsed for transfer to title to North Star;
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(iv) a FIRPTA Non Foreign Seller Affidavit certifying that
Concorde is not a foreign person within the meaning of Section 1445 of the
Code;
(v) resolutions of the Board of Directors of Concorde
authorizing the execution and delivery of this Agreement and the performance of
the transactions contemplated hereby, certified by the Secretary of Concorde;
(vi) opinion of Xxxxxxxx & Xxxxxxxx LLP, substantially in
the form of Exhibit E hereto; and
(vii) a certificate of the Secretary of State of the State
of Colorado dated not more than thirty (30) days prior to Closing attesting to
the existence, qualification and good standing of Concorde.
(b) At the Casino Closing:
(i) $870,000 in cash, less the adjustment provided for in
Section 2.08 hereof;
(ii) the stock certificate for the Common Stock; and
(iii) the Promissory Note marked "canceled."
Section 7.03. NORTH STAR DELIVERIES. North Star shall
deliver or cause to be delivered to Concorde the following:
(a) At the Video Lottery Closing:
(i) the Personal Guaranties;
(ii) the promissory notes in the Form of Exhibits B and H;
(iii) a certificate of the Secretary of State of the State
of Colorado dated not more than thirty (30) days prior to Closing attesting to
the existence, qualification and good standing of North Star;
(iv) resolutions of the managers and members of North Star
authorizing the execution and delivery of this Agreement and the performance of
the transactions contemplated hereby, certified by the Secretary of North Star;
(v) opinion of Morgan, Theeler, Xxxxxx & Xxxxxxxx,
substantially in the form of Exhibit G hereto; and
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(vi) counterpart signatures to the Bills of Sale listed in
Section 7.02(a)(i) and (ii).
(b) At the Casino Closing:
(i) the Xxxx of Sale and Assignment and Assumption
Agreement in the form of Exhibit F attached hereto;
(ii) the title certificates to all vehicles included among
the North Star Assets, endorsed for transfer to title to North Star;
(iii) a FIRPTA Non Foreign Seller Affidavit certifying that
North Star is not a foreign person within the meaning of Section 1445 of the
Code;
(iv) resolutions of the managers and members of North Star
authorizing the execution and delivery of this Agreement and the performance of
the transactions contemplated hereby, certified by the Secretary of North Star;
(v) opinion of Morgan, Theeler, Xxxxxx & Xxxxxxxx,
substantially in the form of Exhibit G hereto;
(vi) the title commitments for the Real Property; and
(vii) warranty deeds transferring the Real Property.
ARTICLE VIII
INDEMNIFICATION
Section 8.01. SURVIVAL. The covenants, agreements, representations
and warranties of the Parties contained in this Agreement or in any certificate
or other writing delivered pursuant hereto or in connection herewith shall
survive the Closing for a period of twelve (12) months after the Closing;
provided that (a) the representations and warranties contained in Section 3.23
shall survive for a period of five years after the Closing; and (b) the
representations and warranties contained in Section 3.09 shall survive for a
period of three years after the Closing. Notwithstanding the preceding
sentence, any covenant, agreement, representation or warranty in respect of
which indemnity may be sought under this Agreement shall survive the time at
which it would otherwise terminate pursuant to the preceding sentence, if
notice of the inaccuracy or breach thereof giving rise to such right of
indemnity shall have been given to the party against whom such indemnity may be
sought prior to such time.
Section 8.02. INDEMNIFICATION.
(a) North Star hereby indemnifies Concorde and its
respective Affiliates, partners, officers, directors, employees and agents (the
"Concorde Indemnities") against and agrees to hold them harmless from any and
all damage, loss, liability, claim, assessment, audit, fine,
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judgment, cost and expense (including without limitation reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection with
any action, suit or proceeding) ("Damages") incurred or suffered by Concorde
Indemnities arising out of (i) any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by North Star pursuant to this
Agreement; (ii) any and all liabilities and obligations of North Star of any
nature whatsoever, except for the obligations and liabilities of North Star
which are specifically assumed by Concorde pursuant to this Agreement; and
(iii) any liabilities arising out of the North Star Mortgages assumed hereunder
in excess of 50% of the total amount of each such mortgage, provided that the
provisions of this Section 8.02(a) shall be in full force and effect for a
period of twelve (12) months after the Closing, except that liabilities and
obligations relating to environmental and tax matters shall be in full force
and effect for a period of five years and three years, respectively, from the
date of the Closing and liabilities and obligations under Section 8.02(a)(iii)
shall survive until the North Star Mortgages have been paid in full.
(b) Concorde hereby indemnifies North Star and its
respective Affiliates, partners, officers, directors, employees and agents (the
"North Star Indemnities") against and agrees to hold them harmless from any and
all damage, loss, liability, claim, assessment, audit, fine, judgment, cost and
expense (including without limitation reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any action, suit or
proceeding) ("Damages") incurred or suffered by North Star Indemnities arising
out of (i) any misrepresentation or breach of warranty, covenant or agreement
made or to be performed by Concorde pursuant to this Agreement; (ii) any and
all liabilities and obligations of Concorde of any nature whatsoever, except
for the obligations and liabilities of Concorde which are specifically assumed
by North Star pursuant to this Agreement, provided that the provisions of this
Section 8.02(b) shall be in full force and effect for a period of twelve (12)
months after the Closing, except that liabilities and obligations relating to
environmental and tax matters shall be in full force and effect for a period of
five years and three years, respectively, from the date of the Closing.
Section 8.03. PROCEDURES FOR INDEMNIFICATION.
(a) The party seeking indemnification hereunder (the
"Indemnitee") shall notify (the "Indemnity Notice") the party against whom
indemnity is sought (the "Indemnitor") promptly; in the case of third-party
claims, such notice shall in any event be given within 20 days of the filing or
assertion of any claim against the Indemnitee stating the nature and basis of
such claim; provided, however, that any delay or failure to notify the
Indemnitor of any claim shall not relieve it from any liability except to the
extent that the Indemnitor demonstrates that the defense of such action is
materially prejudiced by such delay or failure to notify. In the case of third
party claims, the Indemnitor shall, within 10 days of receipt of notice of such
claim, notify the Indemnitee of its intention to assume the defense of such
claim. If the Indemnitor shall assume the defense of the claim, the Indemnitor
shall have the right and obligation (i) to conduct any proceedings or
negotiations in connection therewith and necessary or appropriate to defend the
Indemnitee, (ii) to take all other required steps or proceedings to settle or
defend any such claims, and (iii) to employ counsel to contest any such claim
or liability in the name of the Indemnitee or otherwise. If defendants in any
action include the Indemnitee and the
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Indemnitor, and the Indemnitee shall have been advised by its counsel that
there may be legal defenses available to the Indemnitee which are different
from or in addition to those available to the Indemnitor the Indemnitee shall
have the right to employ its own counsel in such action, and, in such event,
the fees and expenses of such counsel shall be borne by the Indemnitor. If the
Indemnitor shall not assume the defense of any such claim or litigation
resulting therefrom, the Indemnitee may defend against any such claim or
litigation in such manner as it may deem appropriate and the Indemnitee may
settle such claim or litigation on such terms as it may deem appropriate;
provided, however, that any such settlement shall be subject to the prior
consent of the Indemnitor, which consent shall not be unreasonably withheld.
Within 10 days after final determination with respect to a third party claim,
the Indemnitor shall pay to the Indemnitee the amount of Damages incurred by
Indemnitee in respect of which indemnity may be sought pursuant to this Section
8.03 In the case of a non-third party claim, payment of Damages incurred by
the Indemnitee shall be made by the Indemnitor within 10 days after receipt of
the Indemnity Notice by Indemnitor.
(b) A final determination of a disputed claim as to
Damages shall be (i) a judgment of any court determining the validity of a
disputed claim, if no appeal is pending from such judgment or if the time to
appeal therefrom has elapsed, (ii) award of any arbitration determining the
validity of such disputed claim, if there is not pending any motion to set
aside such award or if the time within which to move to set such award aside
has elapsed, (iii) a written agreement as to the termination of the dispute
with respect to such claim signed by all of the parties thereto or their
attorneys, (iv) a written acknowledgment of the Indemnitor that he or it no
longer disputes the validity of such claim, or (v) such other evidence of final
determination of a disputed claim as shall be acceptable to the parties.
Section 8.04. EQUITABLE RELIEF. In the event of a breach or
threatened breach by North Star of Section 9.06 hereof regarding noncompetition
and nonsolicitation, North Star hereby consents and agrees that Concorde shall
be entitled to an injunction or similar equitable relief restraining the
breaching party from committing or continuing any such breach or threatened
breach or granting specific performance of any act required to be performed by
North Star under any such provision, without the necessity of showing any
actual damage or that money damages would not afford an adequate remedy and
without the necessity of posting any bond or other security. Nothing herein
shall be construed as prohibiting or limiting Concorde from pursuing any other
remedies at law or in equity which it may have.
Section 8.05. ARBITRATION.
(a) All disputes under this Article VIII shall be settled
by arbitration in Rapid City, South Dakota, before a single arbitrator pursuant
to the rules of the American Arbitration Association (the "Association").
Arbitration may be commenced at any time by any party hereto by giving written
notice to each other party to a dispute that such dispute has been referred to
arbitration under this Section 8.05. The arbitrator shall be selected by the
joint agreement of North Star and Concorde, but if they do not so agree within
20 days after the date of the notice referred to above, the selection shall be
made pursuant to the rules from the panels of arbitrators maintained by such
Association. Any award rendered by the arbitrator
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shall be conclusive and binding upon the parties hereto; provided, however,
that any such award shall be accompanied by a written opinion of the arbitrator
giving the reasons for the award. This provision for arbitration shall be
specifically enforceable by the parties and the decision of the arbitrator in
accordance herewith shall be final and binding and there shall be no right of
appeal therefrom. Each party shall pay its own expenses of arbitration and the
expenses of the arbitrator shall be equally shared; provided, however, that if
in the opinion of the arbitrator any claim for indemnification or any defense
or objection thereto was unreasonable, the arbitrator may assess, as part of
his award, all or any part of the arbitration expenses of the other party
(including reasonable attorneys' fees) and of the arbitrator against the party
raising such unreasonable claim, defense or objection.
(b) To the extent that arbitration may not be legally
permitted hereunder and the parties to any dispute hereunder may not at the
time of such dispute mutually agree to submit such dispute to arbitration any
party may commence a civil action in a court of appropriate jurisdiction to
solve disputes hereunder. Nothing contained in this Section 8.05 shall prevent
the parties from settling any dispute by mutual agreement at any time.
ARTICLE IX
POST CLOSING MATTERS
Section 9.01. DISCHARGE OF BUSINESS OBLIGATIONS. From and after the
Closing Date, North Star and Concorde shall pay and discharge, in accordance
with past practice but not less than on a timely basis, all obligations and
liabilities incurred prior to the Closing Date in respect of the Casino
Business or the Video Lottery, as the case may be, its operations or the assets
and properties used therein (except for those expressly assumed hereunder),
including without limitation any liabilities or obligations to employees, trade
creditors and clients of the Casino Business or the Video Lottery Business, as
the case may be.
Section 9.02. MAINTENANCE OF BOOKS AND RECORDS. Each of North Star
and Concorde shall preserve until the fifth anniversary of the Closing Date all
records possessed or to be possessed by such party relating to the Concorde
Assets or the North Star Assets, as the case may be, prior to the Closing Date.
After the Closing Date, where there is a legitimate purpose, such party shall
provide the other parties with access, upon prior reasonable written request
specifying the need therefor, during regular business hours, to (i) the
officers and employees of such party and (ii) the books of account and records
of such party, but, in each case, only to the extent relating to the Concorde
Assets or the North Star Assets, as the case may be, prior to the Closing Date,
and the other parties and their representatives shall have the right to make
copies of such books and records; provided, however, that the foregoing right
of access shall not be exercisable in such a manner as to interfere
unreasonably with the normal operations and business of such party; and
further, provided, that, as to so much of such information as constitutes trade
secrets or confidential business information of such party, the requesting
party and its officers, directors and representatives will use due care to not
disclose such information except (i) as required by law, (ii) with the prior
written consent of such party, which consent shall not be unreasonably
withheld, or (iii) where such information becomes available to the public
generally, or becomes generally known to competitors of such party, through
source other than
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the requesting party, its affiliates or its officers, directors or
representatives. Such records may nevertheless be destroyed by a party if such
party sends to the other parties written notice of its intent to destroy
records, specifying with particularity the contents of the records to be
destroyed. Such records may then be destroyed after the 30th day after such
notice is given unless another party objects to the destruction in which case
the party seeking to destroy the records shall deliver such records to the
objecting party.
Section 9.03. PAYMENTS RECEIVED. North Star and Concorde each agree
that after the Closing they will hold and will promptly transfer and deliver to
the other, from time to time as and when received by them, any cash, checks
with appropriate endorsements (using their best efforts not to convert such
checks into cash), or other property that they may receive on or after the
Closing which properly belongs to the other party, including without limitation
any insurance proceeds, and will account to the other for all such receipts.
Section 9.04. UCC MATTERS. From and after the Closing Date, North
Star and Concorde will promptly refer all inquiries with respect to ownership
of the Concorde Assets or the North Star Assets, as the case may be, to the
other. In addition, each Party will execute such documents and financing
statements as the other may request from time to time to evidence transfer of
the assets hereunder, including any necessary assignments of financing
statements.
Section 9.05. FINANCIAL STATEMENTS. North Star, at Concorde's
expense, shall provide Concorde, within 30 days after Concorde's written
request therefor, with such financial statements relating to the Business or
the Assets as may be required by Rule 3-05 or Article 11 of Regulation S-X
promulgated under the 1933 Act, and the 1934 Act in connection with the
preparation and filing of any registration statement or periodic report by
Concorde pursuant to the 1933 Act or the 1934 Act, including without limitation
unqualified opinions thereon of independent public accountants and consents
thereof as required by the 1933 Act or the 1934 Act or the rules and
regulations thereunder. Concorde agrees to indemnify and hold harmless North
Star against any losses, claims, damages, liabilities or expenses, to which
North Star may become subject which arise out of the use or inclusion of the
financial statements of North Star in any registration statement or periodic
report filed by Concorde pursuant to the 1933 Act or the 1934 Act, other than
any losses, claims, damages, liabilities or expenses arising out of or related
to any inaccuracy or misrepresentation contained in the financial statements
provided by North Star to Concorde hereunder, and will reimburse North Star for
any legal and other expenses in connection with investigation setting,
compromising or paying any such loss, claim, damage, liability, expense or
action.
Section 9.06. NON-SOLICITATION; NONCOMPETITION. North Star
acknowledges and recognizes at all times for a period of three (3) years
subsequent to the Closing Date as follows:
(a) North Star will not directly or indirectly own,
manage, operate, finance, join, control or participate in the ownership,
management, organization, financing or control of, or be connected as an
officer, director, employee, partner, principal, agent, representative,
consultant or otherwise with any business or enterprise engaged in a business
the same as or similar to the Casino Business in Xxxxxx County, Colorado except
as a holder of fewer than 5%
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of the outstanding shares or other equity interests of a company whose shares
or other equity interests are registered under the 0000 Xxx.
(b) North Star will not directly or indirectly induce any
employee of the Company or any of its affiliates to engage in any activity in
which either North Star is prohibited from engaging by this Section 9.06 or to
terminate his employment with Concorde or any of its affiliates, and will not
directly or indirectly employ or offer employment to any person who was
employed by Concorde or any of its affiliates unless such person shall have
been terminated without cause or ceased to be employed by any such entity for a
period of at least 12 months.
(c) North Star will not use or permit its or their name to
be used in connection with any business or enterprise engaged in the business
the same as or similar to Concorde or its Affiliates or any other business
engaged in by Concorde or any of its Affiliates.
(d) North Star will not make any public statement, make
any unprovoked statements to regulatory agencies, nor take any such actions
where the primary purpose of such public statement, unprovoked statement or
action is intended to (i) impair the goodwill or the business reputation of
Concorde or any of its Affiliates or (ii) benefit a competitor of Concorde or
to be otherwise detrimental to the material interests of Concorde.
(e) North Star will not (i) disclose any customer lists or
any part thereof to any person, firm, corporation, association or other entity
for any reason or purpose whatsoever; (ii) assist in obtaining any of
Concorde's customers for any other similar business; (iii) encourage any
customer to terminate, change or modify its relationship with Concorde; or (iv)
solicit or divert or attempt to solicit or divert Concorde's customers.
(f) Concorde shall have the right, subject to applicable
law, to inform any other third party that Concorde reasonably believes to be,
or to be contemplating participating with North Star or receiving from North
Star in violation of this Agreement and of the rights of Concorde hereunder,
and that participation by any such third party with North Star in activities in
violation of this Section 9.06 may give rise to claims by Concorde against such
third party.
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The primary purpose of this Section 9.06 is Concorde's legitimate
interest in protecting its economic welfare and business goodwill. Concorde
and North Star further agree that this covenant shall in no way be construed as
a mere limitation on competition nor shall it be construed as a restraint on
North Star's right to engage in a common calling.
It is expressly understood and agreed that although Concorde and North
Star consider the restrictions contained in this Section 9.06 to be reasonable,
if a final judicial determination is made by a court of competent jurisdiction
that the time or territory or any other restriction contained in this Section
9.06 is an unenforceable restriction against North Star, the provisions of this
Section 9.06 shall not be rendered void but shall be deemed amended to apply as
to such maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any
court of competent jurisdiction finds that any restriction contained in this
Agreement is unenforceable, and such restriction cannot be amended so as to
make it enforceable, such finding shall not affect the enforceability of any of
the other restrictions contained herein.
Section 9.07. THIRD PARTY CONSENTS. To the extent that a Party's
rights under any agreement, contract, commitment, lease, Authorization or other
asset to be assigned to such Party hereunder may not be assigned without the
consent of another person, which consent has not been obtained, this Agreement
shall not constitute an agreement to assign the same if an attempted assignment
would constitute a breach thereof or be unlawful, and the other Party, at its
expense, shall use its best efforts to obtain any such required consent(s) as
promptly as possible. If any such consent shall not be obtained or if any
attempted assignment would be ineffective or would impair a Party's rights
under the asset in question so that it would not in effect acquire the benefit
of all such rights, the other Party, to the maximum extent permitted by law and
the asset, shall act after the Closing as the other Party's agent in order to
obtain for it the benefits thereunder and shall cooperate, to the maximum
extent permitted by law and the asset, with each Party in any other reasonable
arrangement designed to provide such benefits; provided, that each Party hereby
agrees to indemnify the other and its Affiliates, partners, officers,
directors, employees and agents against and agrees to hold them harmless from
any and all Damages incurred or suffered by them arising out of actions taken
pursuant to this Section 9.07.
Section 9.08. FURTHER ASSURANCES. Each Party from time to time after
the Closing, at the other Party's request, will execute, acknowledge and
deliver to the other Party such other instruments of conveyance and transfer
and will take such other actions and execute and deliver such other documents,
certifications and further assurances as the other Party may reasonably require
in order to vest more effectively in the other Party, or to put the other Party
more fully in possession of, the assets or business acquired hereunder, or to
better enable the other Party to complete, perform or discharge any of the
liabilities or obligations assumed by the other Party at the Closing. Each of
the parties hereto will cooperate with the other and execute and deliver to the
other parties hereto such other instruments and documents and take such other
actions as may be reasonably requested from time to time by any other party
hereto as necessary to carry out, evidence and confirm the intended purposes of
this Agreement.
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Section 9.09. PIGGYBACK REGISTRATION.
(a) If Concorde shall determine to register any of its
shares of Common Stock under the 1933 Act on Form S-1 or any other form of
registration statement then available for registration under the 1933 Act of
securities of Concorde and which is appropriate for inclusion of the Shares,
other than a registration relating solely to employee benefit plans, or a
registration relating to a corporate reorganization or other transaction under
Rule 145, or a registration on any registration form that does not permit
secondary sales, Concorde will:
(i) promptly give to North Star written notice
thereof; and
(ii) except as set forth in Section 9.09(b) below,
use its best efforts to include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all or any portion of the Shares specified in a written
request made by North Star and received by Concorde within thirty (30) days
after the written notice from Concorde described in clause (i) above is mailed
or delivered by Concorde. Such written request may specify all or a part of
the Shares to be so included in such registration.
(b) If the registration of which Concorde gives notice is
for a registered public offering involving an underwriting, then Concorde shall
so advise North Star as a part of the written notice given pursuant to Section
9.09. In such event, the right of North Star to registration pursuant to this
Section 9.09 shall be conditioned upon participation by North Star in such
underwriting and the inclusion of the Shares in the underwriting to the extent
provided herein, and (together with Concorde and the other holders of
securities of Concorde with registration rights to participate therein
distributing their securities through such underwriting) North Star entering
into an underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by Concorde.
The inclusion of the Shares shall be on the same terms and
conditions as the comparable securities, if any, otherwise being sold by
underwriters under such registration; or on terms and conditions comparable to
those normally applicable to offerings of securities in reasonably similar
circumstances in the event that no securities comparable to the Shares are
being sold through underwriters under such registration.
If in the opinion of the managing underwriter the registration
of all, or part of, the shares of Common Stock that North Star has requested to
be included is a greater number of shares than in the reasonable opinion of
Concorde's underwriter can be accommodated without adversely affecting the
proposed underwriting, then the amount of shares of Common Stock proposed to be
offered by North Star for registration shall be reduced to a number deemed to
be satisfactory to the managing underwriter. Nothing in this Section shall be
deemed to require Concorde to proceed with any registration of its securities
after giving the notice herein provided.
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Section 9.10. OPTION TO PURCHASE. North Star hereby grants Concorde a
first right and option to purchase the Sioux City VLCs for $51,000 (the "First
Right and Option"). Concorde, or its assigns, may exercise the First Right and
Option upon five (5) calendar days prior written notice to North Star. The
First Right and Option shall expire, unless earlier exercised, on September 1,
1997.
ARTICLE X
TERMINATION
Section 10.01. GROUNDS FOR TERMINATION. Anything herein or elsewhere
to the contrary notwithstanding, this Agreement may be terminated at any time
before the Closing Date only as follows:
(a) by mutual written agreement of North Star and
Concorde;
(b) by Concorde or North Star, respectively, by reason of
the failure of a condition to Closing under Section 6.02 as to Concorde, and
Section 6.03 as to North Star (unless the failure of a condition to Closing
results primarily from the actions or intentional inaction of the Party
terminating the Agreement).
(c) by Concorde if the Casino Closing shall not have
occurred by September 1, 1997, unless such time shall be extended by the
written consent of Concorde.
The Party desiring to terminate this Agreement shall give notice of
such termination to the other Party.
Section 10.02. EFFECT OF TERMINATION. In the event of the termination
and abandonment hereof pursuant to the provisions of Section 10.01, this
Agreement shall become void and have no effect, without any liability on the
part of any of the Parties or their directors or officers or stockholders in
respect of this Agreement. The provisions of Section 5.01(h) shall survive any
termination hereof pursuant to Section 10.01. Notwithstanding the foregoing,
in the event of (i) the willful failure by either Party to fulfill a condition
to the performance of the obligations of the other Party or (ii) the breach by
the other Party in the performance of such Party's covenants or agreements
hereunder, the Party who has failed to fulfill such condition or who has
breached any such covenants or agreements shall be fully liable to the other
Party for all costs and expenses of the other Party in connection with the
preparation, negotiation, execution and performance of this Agreement.
ARTICLE XI
GENERAL PROVISIONS
Section 11.01. SALES, TRANSFER AND DOCUMENTARY TAXES, ETC. Each Party
shall pay all federal, state or local sales, documentary and other transfer
taxes, if any, due as a result of the purchase, sale, use or transfer of its
assets hereunder in accordance herewith whether imposed by law and each Party
shall indemnify, reimburse and hold harmless the other in respect of the
liability for payment of or failure to pay any such sales, documentary and
other transfer taxes or the filing of or
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failure to file any reports required in connection therewith.
Section 11.02. EXPENSES. Except as otherwise provided in this
Agreement, each Party shall pay its own expenses incidental to the preparation
of this Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
Section 11.03. ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the Parties hereto with respect to the transactions
contemplated hereby. It shall not be amended or modified except by written
instrument duly executed by each of the parties hereto. Any and all previous
agreements and understandings between or among the parties regarding the
subject matter hereof, whether written or oral, are superseded by this
Agreement.
Section 11.04. ASSIGNMENT AND BINDING EFFECT. This Agreement may not
be assigned prior to the Closing by any party hereto without the prior written
consent of the other parties. Subject to the foregoing, all of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the successors and assigns of the Parties.
Section 11.05. WAIVER. Any term or provision of this Agreement may be
waived at any time by the party entitled to the benefit thereof by a written
instrument duly executed by such party.
Section 11.06. NOTICES. Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given only if delivered personally or sent by
telegram or by registered or certified mail, postage prepaid, as follows:
If to Concorde, Concorde Cripple Creek,
Concorde South Dakota or Midwest Gaming to:
Concorde Gaming Corporation
0000 Xxxx Xxxxxx
Xxxxx Xxxx, Xxxxx Xxxxxx 00000-0000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a required copy to:
Xxxxxxxx & Xxxxxxxx, LLP
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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If to North Star, to:
North Star Casino Limited Liability Company
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxx 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a required copy to:
Morgan, Theeler, Cogley & Xxxxxxxx
000 Xxxx Xxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other address as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver,
consent, approval or other communication will be deemed to have been given as
of the date so delivered, telegraphed or mailed.
Section 11.07. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law of conflicts)
of the State of Colorado.
Section 11.08. NO BENEFIT TO OTHERS. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit
of the parties hereto and, in the case of Article VIII hereof, the other
Indemnified Parties, and their heirs, executors, administrators, legal
representatives, successors and assigns, and they shall not be construed as
conferring any rights on any other persons.
Section 11.09. HEADINGS, GENDER AND "PERSON." All section headings
contained in this Agreement are for convenience of reference only, do not form
a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement. Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any
other number, singular or plural, and any other gender, masculine, feminine, or
neuter, as the context requires.
Section 11.10. SCHEDULES AND EXHIBITS. All Exhibits and Schedules
referred to herein are intended to be and hereby are specifically made a part
of this Agreement.
Section 11.11. SEVERABILITY. Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such
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invalidity or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 11.12. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and any party hereto may execute any such counterpart,
each of which when executed and delivered shall be deemed to be an original and
all of which counterparts taken together shall constitute but one and the same
instrument. This Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the parties. It shall
not be necessary in making proof of this Agreement or any counterpart hereof to
produce or account for any of the other counterparts.
Section 11.13. CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the Parties to express their mutual
intent and no rule of strict construction shall be applied against any Party.
Any reference to any federal, municipal or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless the context requires otherwise.
Section 11.14. ARBITRATION. Any controversy or claim arising out of
or relating to this Agreement (including the arbitrability of any controversy
or claim) shall be settled by arbitration in Rapid City, South Dakota. The
arbitration shall be conducted in accordance with the rules of the American
Arbitration Association. The arbitration shall be presided over by three
arbitrators who shall be selected in accordance with the commercial arbitration
rules of the American Arbitration Association. The cost of any arbitration
proceeding hereunder shall be borne equally by Concorde and North Star, subject
to the arbitrators awarding such costs otherwise. The award of the arbitrators
shall be binding upon the Parties. Except where expressly authorized by
statue, a Party shall only be entitled to be awarded damages for actual losses
suffered by the injured party plus reasonable costs (including reasonable
attorney's fees). Judgment upon the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officer or person as of the day and
year first above written.
CONCORDE GAMING CORPORATION
a Colorado corporation
By
--------------------------------------
Xxxxx X. Xxxx, President
CONCORDE CRIPPLE CREEK, INC.
a Colorado corporation
By
--------------------------------------
Xxxxx X. Xxxx, President
CONCORDE GAMING OF SOUTH DAKOTA, INC.
a South Dakota corporation
By
--------------------------------------
Xxxxx X. Xxxx, President
MIDWEST GAMING, INC.
a South Dakota corporation
By
--------------------------------------
Xxxxx X. Xxxx, President
NORTH STAR CASINOS LIMITED LIABILITY
COMPANY, a Colorado limited liability
company
By
--------------------------------------
Xxxxx Xxxxxxxxxx, President
G-1
