SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 9, 1999
PENN NATIONAL GAMING, INC.
(Exact Name of Registrant Specified in Charter)
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Pennsylvania 0-24206 23-2234473
(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification No.)
Incorporation)
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825 Berkshire Boulevard
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Wyomissing, PA 19610
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(Address of Principal Executive Offices) (Zip Code)
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Registrants telephone number, including area code: (610) 373-2400
________ Not Applicable______________
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
On December 10, 1999, Penn National Gaming, Inc. (the "Registrant")
publicly announced that it has entered into a definitive agreement to purchase
all of the assets of the Casino Magic hotel, casino, golf resort, recreational
vehicle (RV) park and marina in Bay St. Louis, Mississippi and the Boomtown
Biloxi casino in Biloxi, Mississippi, from Hollywood Park, Inc. (NYSE: HPK -
news) for $195 million cash.
A copy of the press release issued by the Registrant on December 10,
1999 concerning the acquisition is filed herewith as Exhibit 99.1 and is
incorporated herein by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
PENN NATIONAL GAMING, INC.
(Registrant)
By \s\ Robert S. Ippolito
Robert S. Ippolito
Chief Financial Officer
Dated: December 17, 1999
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EXHIBIT INDEX
Exhibit
Number Description
99.1 Press Release -- Penn National Gaming to Acquire Two
Mississippi Casinos for $195 Million.
99.2 Asset Purchase Agreement between BSL, Inc. and Casino
Magic Corp. dated December 9, 1999.
99.3 Guaranty of Penn National Gaming, Inc. to Casino
Magic Corp. dated December 9, 1999.
99.4 Guaranty of Hollywood Park, Inc. to BSL, Inc. dated
December 9, 1999.
99.5 First Amendment to Asset Purchase Agreement between
BSL, Inc. and Casino Magic Corp. dated December 17, 1999.
99.6 Asset Purchase Agreement between BTN, Inc. and
Boomtown, Inc. dated December 9, 1999.
99.7 Guaranty of Penn National Gaming, Inc. to Boomtown,
Inc. dated December 9, 1999.
99.8 Guaranty of Hollywood Park, Inc. to BTN, Inc. dated
December 9, 1999.
99.9 First Amendment to Asset Purchase Agreement between
BTN, Inc. and Boomtown, Inc. dated December 17, 1999.
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EXHIBIT 99.1
Penn National Gaming to Acquire Two Mississippi
Casinos for $195 Million
BAY ST. LOUIS and BILOXI, Miss. & WYOMISSING, Pa.-- (BUSINESS WIRE)--Dec. 10,
1999--Penn National Gaming, Inc. (NASDAQ:PENN - news)announced today that it has
entered into a definitive agreement to purchase all of the assets of the Casino
Magic hotel, casino, golf resort, recreational vehicle (RV) park and marina in
Bay St. Louis, Mississippi and the Boomtown Biloxi casino in Biloxi,
Mississippi, from Hollywood Park, Inc. (NYSE:HPK - news) for $195 million cash.
In addition to acquiring all of the operating assets and related operations of
the Casino Magic Bay St. Louis and Boomtown Biloxi properties, Penn National
will enter into a licensing agreement to use the Boomtown and Casino Magic names
and marks at the properties being acquired.
The transaction is subject to certain closing conditions including the approval
of the Mississippi Gaming Commission, financing and expiration of the applicable
Hart-Scott-Rodino waiting period.
Casino Magic Bay St. Louis began operations in September 1992 on a permanently
moored barge in a marina with the adjoining land-based facilities situated on
590 acres. The three story land-based building houses restaurants, a gift shop
and a live entertainment venue. Casino Magic Bay St. Louis offers approximately
39,500 square feet of gaming space, with 1,132 slot machines and 42 table games.
The property has a 201 room hotel, an 1,800 seat arena for concerts and sporting
events, and is the only Casino in the Gulf Coast market with an 18-hole Arnold
Palmer-designed championship golf course on the same property as the gaming
facility. Casino Magic Bay St.
Louis is approximately 46 miles east of New Orleans, Louisiana.
Boomtown Biloxi opened in July 1994 and occupies 19 acres on Mississippi's
historic Back Bay of the Mississippi Gulf Coast. Boomtown Biloxi offers a
33,632-square foot casino constructed on a permanently moored barge. The casino
contains 1,308 slot machines and 35 table games. The dockside property includes
a land-based facility with restaurants and other non-gaming activities. The
casino is one-half mile from Interstate 110, which is the main highway
connecting Interstate 10 and Biloxi. The Mississippi Gulf Coast is marketed as
the "Playground of the South" and has long been a major tourist destination,
even prior to the advent of full casino gaming in 1992.
Commenting on the transaction, Peter M. Carlino, Chief Executive Officer of Penn
National, said, "The acquisition of these well established properties represents
a significant growth and expansion opportunity for Penn National that further
leverages our gaming industry property development, marketing and management
skills, while also expanding the geographic breadth of our operations.
"What attracted us to these properties was their very established base of
operations, supported by an extraordinary team of employees and operating
management, in what has proven to be one of the fastest growing gaming
jurisdictions in the country. Our vision for these well known properties is to
prudently invest in their expansion and renovation, including the addition of a
new hotel and other amenities. It is our intention to commence construction on
the new hotel, as well as enhancements to the restaurants and casino floor, at
the Casino Magic property, immediately following closing. We are also evaluating
possible enhancements to the Boomtown property and facilities."
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Penn National owns, operates and conducts wagering at its Penn National Race
Course, Pocono Downs Racetrack and at ten off-track wagering (OTW) facilities,
all located in Pennsylvania. Penn National also owns and operates Charles Town
Races, a live thoroughbred racing facility in Jefferson County, West Virginia,
which also features 1000 slot machines. Penn National's 50%-owned joint venture,
Pennwood Racing, Inc., owns and operates Freehold Raceway, and under a long-term
lease operates Garden State Park in New Jersey. The joint venture intends to
expand the facilities to include, subject to enabling legislation, off-track
wagering and telephone wagering.
This announcement contains forward-looking statements that involve risks and
uncertainties, including those relating to (i) the Company's beliefs regarding
the growth and expansion opportunities of each property, (ii) the Company's
ability to leverage its current skills at these new properties; (iii) the
Company's ability to expand and renovate each of the properties; and (iv)
information contained elsewhere in this document where statements are preceded
by, followed by or include the words "believes," "plans," "intends," "expects,"
""anticipates" or similar expressions. For such statements, the Company claims
the protection of the safe harbor for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995. Additional factors that
could cause actual results to differ from those contained in the forward-looking
statements include those set forth in the Company's Annual Report on Form 10-K
for the period ending December 31, 1998, which has been filed with the SEC.
Contact:
Robert Ippolito
Chief Financial Officer
610/373-2400
or
Joseph N. Jaffoni
Jaffoni & Collins Incorporated
212/835-8500 or penn@jcir.com
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EXHIBIT 99.2
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ASSET PURCHASE AGREEMENT
Between
BSL, INC., a Mississippi corporation,
and
CASINO MAGIC CORP., a Minnesota corporation
Dated as of December 9, 1999
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This ASSET PURCHASE AGREEMENT (together with the exhibits and schedules
hereto, the "Agreement") is entered into as of December 9, 1999 by and between
BSL, INC., a Mississippi corporation ("Buyer"), and CASINO MAGIC CORP., a
Minnesota corporation ("Seller") with reference to the following facts:
RECITALS
A. Seller, a wholly-owned subsidiary of Hollywood Park, Inc. ("HPI"),
is the owner (through one or more subsidiaries, including the Company) of
certain assets more particularly described in this Agreement, including both
real and personal property, tangible and intangible, used by it in the operation
of the Casino Magic-Bay St. Louis Casino in Bay St. Louis, Mississippi (the
"Business").
B. Buyer is a wholly-owned subsidiary of Penn National Gaming, Inc., a
Pennsylvania corporation ("PNG").
C. Seller desires to sell, and Buyer desires to purchase those assets,
as more particularly described in this Agreement and assume certain of the
liabilities as more particularly described in this Agreement, on the terms and
conditions set forth herein.
D. Concurrently with the execution and delivery of this Agreement, HPI
and PNG have executed and delivered the HPI Guaranty and the PNG Guaranty (as
such terms are defined below), respectively.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
1. DEFINITIONS. The following terms shall have the following meanings
when used in this Agreement:
"Accounts Receivable" shall have the meaning set forth in Section 2.1.4.
"Affiliate" shall have the meaning defined in Rule 12b-2 of Securities
Exchange Act of 1934, as amended.
"Asset Loss" shall have the meaning set forth in Section 12.14.
"Assigned Contracts" shall have the meaning set forth in Section 2.1.8.
"Assignment of Leases" shall have the meaning set forth in Section 3.5.
"Assumed Liabilities" shall have the meaning set forth in Section 3.3.3.
"Bank of America Loan Agreement" shall have the meaning set forth in
Section 4.3.
"Bill of Sale and Assignment and Assumption Agreement" shall mean a
Bill of Sale and Assignment and Assumption Agreement substantially in the form
of Exhibit A hereto, pursuant to which Buyer shall assume and agree to pay,
perform and discharge when due the Assumed Liabilities.
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"Budget" shall have the meaning set forth in Section 6.1.11.
"Business" shall have the meaning set forth in the recitals.
"Business Intellectual Property" shall have the meaning set forth in
Section 4.12.
"Caribbean Stud Liability" shall have the meaning set forth in Section
3.3.3.
"Cash Portion of the Purchase Price" shall have the meaning set forth
in Section 3.3.1.
"Closing" and "Closing Date" shall have the respective meanings set
forth in Section 3.1.
"Closing Balance Sheet" shall have the meaning set forth in Section
3.3.2.3.
"Commission" shall mean the Securities and Exchange Commission.
"Company" shall mean collectively (i) the subsidiary of Seller which
currently owns most of the Purchased Assets and operates the Business and (ii)
Casino Advertising, Inc. and Bay St. Louis Corp., which own the remaining
Purchased Assets.
"Company Level Financial Statements" shall mean the unaudited financial
statements of the Company consisting of summary balance sheets as of September
30, 1999 and December 31, 1998 and summary income statements showing actual
results for the nine month periods ended September 30, 1999 and September 30,
1998 and the unaudited financial statements of Casino Advertising, Inc. and Bay
St. Louis Casino Corp. consisting of consolidating balance sheets as of
September 30, 1999 and a consolidating income statement for Casino Advertising,
Inc. for the nine months ended September 30, 1999, attached hereto as Exhibit B.
"Computer System" shall have the meaning set forth in Section 7.10.
"Contract" shall mean any contract, agreement, license, sales order,
purchase order or other legally binding commitment, whether written or oral, by
which Company or any of the Purchased Assets are bound, or to which Seller is a
party or by which it is bound in either case relating primarily to the operation
of the Business.
"Cut-Over Period" shall have the meaning set forth in Section 7.10.
"Deposit" shall have the meaning set forth in Section 7.1.
"Disclosure Schedule" means the schedules delivered to Buyer by or on
behalf of the Seller, containing all lists, descriptions, exceptions and other
information and materials as included therein in connection with the
representations and warranties made by Seller in this Agreement.
"Employee Benefit Plan" shall have the meaning set forth in Section
4.28.
"Employees" shall have the meaning set forth in Section 4.27.
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"Environmental Claim" shall mean any action, administrative action,
arbitration, complaint, demand or proceeding made or commenced by any
Governmental Authority or third party alleging liability under or pursuant to
Environmental Laws.
"Environmental Laws" shall mean all laws, statutes, regulations, rules,
ordinances, by-laws, orders or determinations of any governmental or judicial
authority at the federal, state or local level, in effect as of the date of this
Agreement, which regulate or relate to the protection or clean-up of the
environment, the use, treatment, storage, transportation, generation,
manufacture, processing, distribution, handling or disposal of, or emission,
discharge or other release or threatened release of hazardous substances or
otherwise dangerous substances, wastes, pollution or materials (whether gas,
liquid or solid), the preservation or protection of waterways, groundwater,
drinking water, air, wildlife, plants or other natural resources, or the health
and safety of persons or property, including, without limitation, protection of
the health and safety of employees, other than laws, statutes, regulations,
rules, ordinances, by-laws, orders or determinations pertaining to land use
planning, zoning matters, and development entitlements.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall have the meaning set forth in Section 4.28.
"Escrow" shall have the meaning set forth in Section 3.6.
"Escrow Agreement" shall have the meaning set forth in Section 3.6.
"Escrow Holder" shall have the meaning set forth in Section 3.6.
"Excluded Assets" shall have the meaning set forth in Section 2.2.
"Excluded Liabilities" shall have the meaning set forth in Section 3.4.
"Existing Liens" shall have the meaning set forth in Section 4.20.
"Final Month End" shall have the meaning set forth in Section 6.1.11.
"Gift Certificate Liability" shall have the meaning set forth in
Section 3.3.3.
"Governmental Approval" shall mean any Consent of, with or to any
Governmental Authority.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including without limitation, any government authority, agency,
department, board, commission or instrumentality of the United States, any State
of the United States or any political subdivision thereof, including without
limitation, the Mississippi Gaming Commission.
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"Hazardous Substances" means any toxic, carcinogenic or hazardous
gaseous, liquid or solid material or waste that may or could pose a hazard to
the environment or human health or safety including (a) any "hazardous
substances" as defined by the federal Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss.ss. 9601 et seq., (b) any
"extremely hazardous substance," "hazardous chemical," or "toxic chemical" as
those terms are defined by the federal Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. ss.ss. 11001 et seq., (c) any "hazardous waste," as
defined under the federal Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act, 42 U.S.C. ss.ss. 6901 et seq., (d) any
"pollutant," as defined under the federal Water Pollution Control Act, 33 U.S.C.
ss.ss. 1251 et seq., as any of such laws in clauses (a) through (d) as amended,
and (e) any regulated substance or waste under any Laws or court orders that
have been enacted, promulgated or issued by any federal, state or local
governmental authorities concerning protection of the environment.
"Hired Employees" shall have the meaning set forth in Section 3.3.3.
"HPI" shall mean Hollywood Park, Inc., a Delaware corporation.
"HPI Guaranty" shall mean a guaranty by HPI of Seller's obligations
under this Agreement pursuant to a Guaranty dated as of the date hereof.
"HPI SEC Reports" shall have the meaning set forth in Section 4.6.
"HSR Act" shall have the meaning set forth in Section 4.4.
"Indemnified Party" shall mean, with respect to any Losses, the party
seeking indemnity hereunder.
"Indemnifying Party" shall mean, with respect to any Losses, the party
from whom indemnity is being sought hereunder.
"Intellectual Property" shall have the meaning set forth in Section
2.2.12.
"Internal Revenue Code" shall have the meaning set forth in Section
4.17.
"Inventory" shall have the meaning set forth in Section 2.1.5.
"Key Management Employees" shall have the meaning set forth in Section
7.4.
"Law" means any statute, law, ordinance, regulation, order or rule of
any Federal, state, local, foreign or other governmental agency or body or of
any other type of regulatory body, including those covering environmental,
energy, safety, health, transportation, bribery, recordkeeping, zoning,
antidiscrimination, antitrust, wage and hour, and price and wage control
matters.
"Leased Real Property" shall have the meaning set forth in Section
2.1.1.
"Leases" shall have the meaning set forth in Section 2.1.1.
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"Liability" shall mean any direct or indirect liability, indebtedness,
obligation, expense, claim, loss, damage, deficiency, guaranty or endorsement of
or by any Person, absolute or contingent, accrued or unaccrued, due or to become
due, liquidated or unliquidated.
"Lien" shall mean any lien, mortgage, pledge, hypothecation, security
interest, or encumbrance of any nature whatsoever.
"License Agreement" shall mean an agreement pursuant to which Seller
shall license to Buyer certain of the Company trademarks, trade names, logos and
marks and provides Buyer with an option to purchase such trademarks, trade
names, logos and marks for one dollar ($1.00) in the event Seller abandons them
in substantially the form of Exhibit C hereto.
"Licensed Persons" shall have the meaning set forth in Section 7.3.
"Liquidated Damages" shall have the meaning set forth in Section 7.1.2.
"Losses" shall mean any and all costs and expenses (including, but not
limited to, reasonable professionals' fees), damages, actions, suits,
proceedings, claims, demands, assessments, judgments and losses actually
incurred by the Indemnified Party, net of any insurance proceeds, in either case
to which the Indemnified Party is entitled by virtue of such costs, expenses,
actions, suits, proceedings, claims, demands, assessments, judgments, damages
and losses.
"Material Adverse Effect" shall mean a material adverse effect on the
financial condition, business or properties or assets of the Business or on the
Purchased Assets in each case taken as a whole.
"Mississippi Gaming Laws" shall have the meaning set forth in Section
4.4.
"Notes Payable and Long-Term Debt" shall have the meaning set forth in
Section 3.3.3.
"Occupancy Agreements" shall have the meaning set forth in Section 4.16.
"Other Asset Purchase Agreement" shall have the meaning set forth in
Section 3.1.
"Outside Date" shall have the meaning set forth in Section 3.1.
"Owned Real Property" shall have the meaning set forth in Section 2.1.1.
"Permitted Liens" shall have the meaning set forth in Section 7.2(b).
"Person" shall mean any natural person, firm, partnership, association,
corporation, company, trust, business trust, or other entity.
"PNG Guaranty" shall mean a guaranty by PNG of Buyer's obligations
under this Agreement pursuant to a Guaranty dated as of the date hereof.
[Definition Intentionally Omitted.]
"Preliminary Title Report" shall have the meaning set forth in Section
7.2.
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"Prepaid Items and Deposits" shall have the meaning set forth in
Section 2.1.6.
"Purchased Assets" shall have the meaning set forth in Section 2.1.
"Purchase Price" shall have the meaning set forth in Section 3.3.1.
"Real Property" shall have the meaning set forth in Section 2.1.
"Registration Statement" shall have the meaning set forth in Section
7.9.
"Release" means any release, spill, emission, leaching, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, or leaching into
the indoor or outdoor environment, or into or out of any property.
"Remainder Parcels" shall have the meaning set forth in Section 2.2.8.
"Replacement Cost" shall have the meaning set forth in Section 12.14.
"Representatives" shall have the meaning set forth in Section 6.3.
[Definition Intentionally Omitted.]
"September 30, 1999 Company Balance Sheet" shall mean the unaudited
summary balance sheet of the Company as of September 30, 1999 and the unaudited
consolidating balance sheets of Casino Advertising, Inc. and Bay St. Louis
Casino Corp. as of September 30,1999 included as part of the Company Level
Financial Statements.
"September 30, 1999 Company Income Statement" shall mean the unaudited
summary income statement of the Company for the nine months ended September 30,
1999 and the unaudited consolidating income statement of Casino Advertising,
Inc. for the nine months ended September 30, 1999, included as part of the
Company Level Financial Statements.
[Definition Intentionally Omitted.]
"Specified Conditions" shall have the meaning set forth in Section
8.1.6.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Taxes" means all taxes, duties, charges, fees, levies or other
assessments imposed by any taxing authority including income, gross receipts,
value-added, excise, withholding, personal property, real estate, sale, use, ad
valorem, license, lease, service, severance, stamp, transfer, payroll,
employment, customs, duties, alternative, add-on minimum, estimated and
franchise taxes (including any interest, penalties or additions attributable to
or imposed on or with respect to any such assessment).
"Tip Pool Liability" shall have the meaning set forth in Section 3.3.3.
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"Title Company" shall have the meaning set forth in Section 7.2.
"Title Policy" shall have the meaning set forth in Section 8.1.1.
"Transactions" shall mean the transactions contemplated by the
Transaction Documents.
"Transaction Documents" shall mean this Agreement, the Bill of Sale and
Assignment and Assumption Agreement, the License Agreement, Warranty Deed, HPI
Guaranty, the PNG Guaranty and such other documents as the parties shall
mutually agree are necessary to complete the Transactions.
"Unredeemed Chip Liability" shall have the meaning set forth in Section
3.3.3.
"Unredeemed Fun Center Premiums" shall have the meaning set forth in
Section 3.3.3.
"Warranty Deed" shall have the meaning set forth in Section 3.5.
2. TRANSFER OF PURCHASED ASSETS.
2.1. Transfer of Purchased Assets. Subject to the terms and conditions of this
Agreement, on the Closing Date, Seller will sell, convey, transfer, assign and
deliver to Buyer, and Buyer will purchase from Seller, all right, title and
interest of the Seller in and to the properties, assets and rights of every
nature, kind and description, tangible and intangible (including goodwill),
whether real, personal or mixed, wherever situated, whether accrued, contingent
or otherwise and whether now existing or hereinafter acquired (other than the
Excluded Assets) primarily related to or used primarily in connection with the
Business as the same may exist on the Closing Date (the "Purchased Assets"),
including without limitation all those items in the following categories that
conform to the definition of the term "Purchased Assets":
2.1.1. Real Property.
(a) That certain real property owned by the Company in the City of
Bay St. Louis, County of Hancock, State of Mississippi,
described on Schedule 2.1.1.(a), including the land,
improvements thereon and all rights, privileges and easements
which are appurtenant to such real property (the "Owned Real
Property").
(b) All of the Company's leasehold interests in those certain
leases ("Leases") described on Schedule 2.1.1(b) (the "Leased
Real Property").
The Owned Real Property and the Leased Real Property is collectively
referred to herein as the "Real Property."
2.1.2. Personal Property.
(a) All tangible personal property, including, but not limited to,
machinery and equipment, gaming equipment (including without
limitation, gaming tables, casino chips and slot machines),
furniture, supplies, inventory and trade fixtures owned by the
Seller and used in the Business that is reflected on the
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September 30, 1999 Company Balance Sheet or otherwise located
on the Real Property on the Closing Date and used in the
Business. All material items having an original cost of at
least $100,000 as of September 30, 1999, are described on
Schedule 2.1.2(a); and
(b) The leasehold interests created by all leases of tangible
personal property, including, but not limited to, machinery
and equipment, gaming equipment (including without limitation,
gaming tables and slot machines), furniture and tools, used in
the Business, including those personal property leases listed
on Schedule 2.1.2(b).
2.1.3. Casino Cash. All of the cash (and coin) in the Business' gaming devices,
cages and change banks (after giving effect to the contra accounts for gaming
chips and tokens purchased) at the premises of the Business, including the
restaurants, the hotel and golf center, as determined as of 12 a.m. on the
Closing Date (collectively, the "Casino Cash").
2.1.4. Accounts Receivable. All accounts receivable (including employee
advances) and notes receivable, including "markers," relating exclusively to the
Business (excluding intercompany receivables) in existence on the Closing Date
(the "Accounts Receivable"). For informational purposes, the Accounts Receivable
that were in existence as of September 30, 1999 are reflected on the September
30, 1999 Company Balance Sheet.
2.1.5. Inventory. All tangible goods held for future sale or use solely in the
Business and all inventories of supplies utilized solely in conducting the
Business, including, without limitation, beverages, foodstuff and other
consumable or perishable items and merchandise intended for sale or resale or
for use in connection with such sale or resale, including, without limitation,
(i) food and beverages, (ii) raw and uncooked food and other salable
merchandise, (iii) merchandise for sale in the gift shop and (iv) inventory of
the casino, hotel and restaurant products used in the Business (collectively,
"Inventory"), on the Closing Date. For informational purposes, the Inventory on
hand as of September 30, 1999 is reflected on the September 30, 1999 Company
Balance Sheet.
2.1.6. Prepaid Items and Deposits. All prepaid items and deposits paid by Seller
or the Company (excluding prepaid insurance, prepaid property taxes and any
items specifically excluded in Section 2.2 herein) primarily in connection with
the operation of the Business in existence on the Closing Date including,
without limitation, prepaid rent, prepaid supplies (collectively, "Prepaid Items
and Deposits"). For informational purposes, the Prepaid Items and Deposits as of
September 30, 1999 are reflected on the September 30, 1999 Company Balance
Sheet.
2.1.7. Books and Records. All books and records (other than personnel records
relating to or containing performance reviews and similar evaluations unless the
transfer is consented to by such personnel) in any form or medium and all files,
documents, papers, customer lists, owned computer software programs, intangible
personal property relating to the operation of Business' barge such as hull
drawings and vessel logs (to the extent such items are in Seller's or the
Company's possession), architectural plans, drawings and specifications,
advertising and promotional materials and purchasing records pertaining
primarily to the Purchased Assets, the Assumed Liabilities or otherwise to the
Business, subject to the Seller retaining copies or originals of the same, if
and as it so chooses;
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2.1.8. Assigned Contracts. The rights of Seller or the Company under all
Contracts relating primarily to the Business, including but not limited to (i)
the Contracts listed on any of the schedules or exhibits hereto (including all
Material Contracts (including the Leases) listed in Section 4.22 of the
Disclosure Schedule), (ii) all licenses transferable by Seller or the Company
relating to the Intellectual Property owned by unaffiliated third parties, (iii)
with respect to the Business, all unfilled orders outstanding as of the Closing
Date for the purchase of raw materials, goods or services by Seller or the
Company and all unfilled orders outstanding as of the Closing Date for the sale
of goods or services by Seller or the Company, and (iv) those entered into in
the ordinary course of business of the Business through the Closing Date, except
for any Contract that requires the consent to assignment of a party thereto and
for which such consent has not been obtained pursuant to Section 6.4 prior to
the Closing (the "Assigned Contracts"). Schedule 2.1.8 lists the monthly
contractual and lease (personal and real property) payments excluding the lease
payments made by Casino Advertising, Inc. in respect of the sign property;
2.1.9. Permits and Licenses. All transferable government business licenses,
permits, approvals, entitlements and equivalent
documents, including, without limitation, with respect to the Real Property;
2.1.10. Vehicles. All vehicles used primarily in the Business as of the Closing
Date. For information purposes only, such Vehicles are reflected on the
September 30, 1999 Company Balance Sheet and supporting schedules thereto.
2.1.11. Governmental Approvals. To the extent their transfer is permitted by
law, all Governmental Approvals, including all
applications therefor;
2.1.12. Other Rights. All guarantees, warranties, indemnities and similar
rights in favor of the Seller or the Company with respect
to any Purchased Asset; and
2.1.13. Other Assets. Excluding the Excluded Assets, any other assets of the
Company that are material to the operation of the
Business.
Subject to the terms and conditions hereof, at the Closing, the Purchased Assets
shall be transferred or otherwise conveyed to the Buyer free and clear of all
Liens excepting only Assumed Liabilities, Permitted Liens and such matters
described in Section 7.2.
The Purchased Assets shall include all assets described above that are acquired
by Seller or the Company for use in connection with the Business between the
date hereof and the Closing Date (except to the extent such assets would
constitute Excluded Assets), but shall exclude assets of the type described
above that are disposed of, sold or consumed after the date hereof in the
ordinary course of business. If, for any reason, any Excluded Assets are
physically transferred to Buyer, or Buyer otherwise gains access to any such
Seller property as a result of the transactions contemplated herein, no
16
assignment or license of such property to Buyer shall be implied and, as between
Buyer and Seller, all ownership interests and other rights of any kind in such
property shall remain with Seller. If Buyer to its actual knowledge does come to
possess or gain access to any Seller information or property other than the
Purchased Assets, Buyer shall (a) treat any such information as the confidential
information of Seller, (b) promptly notify Seller that Buyer possesses or has
access to such information or property, and (c) cooperate fully with Seller to
return to Seller or destroy such property promptly, as Seller may direct at its
option. Specifically, but without limitation, any information stored on the
computers transferred to Buyer hereunder, but not primarily related or material
to the Business shall, as between Buyer and Seller, remain the sole and
exclusive property of Seller.
2.2. Assets Not Transferred. Notwithstanding anything to the contrary contained
herein, the following assets and properties of Seller are specifically excluded
from the Purchased Assets and shall be retained by it (the "Excluded Assets"):
2.2.1. Cash and Cash Equivalents. Other than the Casino Cash, all working
capital, cash on hand and cash equivalents of Seller and its subsidiaries
(whether or not relating to the Business), including, but not limited to, bank
accounts, temporary cash investments, payroll accounts and petty cash banks;
2.2.2. Other Accounts Receivable. Other than the Accounts Receivable referred to
in Section 2.1.4, all accounts receivable, notes receivable and other
receivables (including receivables from third parties and Governmental
Authorities) of Seller and its subsidiaries;
2.2.3. Refund Claims. Rights to or claims for refunds of taxes and other
governmental charges to the extent attributable to any time or periods ending on
or prior to the Closing Date and the benefit of net operating loss
carry-forwards or other credits of Seller and its subsidiaries, whether or not
attributable to the Business;
2.2.4. Third Party Claims. Claims or rights against third parties, except those
arising with respect to events or breaches occurring after the Closing Date
under the Assigned Contracts; provided, however, that any rights of
indemnification, contribution or reimbursement that may exist under the Assigned
Contracts in respect of liabilities or obligations retained by the Seller and
its subsidiaries hereunder shall be Excluded Assets. In furtherance of the
foregoing, Buyer agrees to cooperate with Seller and, at Seller's direction and
at Seller's expense, shall pursue any such claims or rights on behalf of Seller
and shall pay over any amounts so collected to Seller so that Seller enjoys the
full benefits of such claims or rights;
2.2.5. Insurance. Subject to Section 12.14, all insurance policies and rights
and receivables thereunder, including but not limited to rights to any
cancellation value as of the Closing Date; 2.2.6. Unrelated Information.
Proprietary business information, records and policies that relate generally to
Seller, or any Affiliate, and are not used primarily in the Business, including,
but not limited to, management procedures and guidelines, proprietary financial
reporting formats, accounting procedures, personnel records relating to or
containing performance reviews or similar evaluations, instructions,
organization manuals and strategic plans;
2.2.7. Names. The names listed in Schedule 2.2.7 and all variants thereof;
17
2.2.8. Other Real Property. All real property and all rights appurtenant
thereto, and real property improvements, owned or leased by Seller and its
subsidiaries other than the Real Property (the "Remainder Parcels"), including
without limitation, the parcels described in Schedule 6.1.4.
2.2.9. Unrelated and Corporate Assets. All other assets of Seller and its
subsidiaries not specifically included in the Purchased Assets to be sold
hereunder, including, but not limited to (i) assets used or held for use other
than primarily in connection with the Business, (ii) office furniture and
equipment currently reflected on the books of Seller but which may be located on
the premises of the Business and that are listed on Schedule 2.2.9, and (iii)
Seller's corporate charter, taxpayer and other identification numbers, seals,
minute books and stock transfer books and Seller's ownership of stock in its
various subsidiaries;
2.2.10. Certain Contracts. The rights of Seller and its subsidiaries under any
Contract regarding any (i) non-transferable licenses for computer software and
other Intellectual Property and (ii) any Contract that requires the consent to
assignment of a party thereto and for which such consent has not been obtained
pursuant to Section 6.4 prior to the Closing;
2.2.11. Non-transferable Permits and Licenses. All non-transferable government
business licenses, permits and equivalent documents;
2.2.12. Intellectual Property. Other than as licensed under the License
Agreement, all (i) trademark and service mark registrations and applications
(whether or not relating to the Business) owned by Seller and its subsidiaries ,
(ii) trademark, service mark and trade name license agreements to which Seller
or any of its subsidiaries is a party, except as used specifically in the
operation of the Business as listed on Schedule 2.2.12 and as licensed,
sublicensed, transferred or assigned, as the case may be, by Seller to Buyer,
(iii) trade secrets (including customer lists and customer databases), except as
used specifically in the operation of the Business, (iv) copyrights, patents,
licenses, know-how and other proprietary intellectual property rights as are
necessary in connection with businesses of Seller and its subsidiaries, except
as used specifically in the operation of the Business, and (v) computer software
owned by Seller and its subsidiaries, except as used specifically in the
operation of the Business ("Intellectual Property"); and
2.2.13. Prepaid Items and Deposits. Other than the Prepaid Items and Deposits
described in Section 2.1.6, all prepaid items and deposits paid by Seller and
its subsidiaries including without limitation, prepaid insurance and prepaid
property taxes.
3. CLOSING, ESCROW, PURCHASE PRICE, ASSUMPTION OF LIABILITIES.
3.1. Closing. The consummation of the purchase and sale of the Purchased Assets
(the "Closing") shall occur on the date which is three (3) business days after
all contingencies and conditions set forth in Sections 8 and 12.14 are satisfied
or waived, and both parties shall use commercially reasonable efforts to cause
the Closing to occur no later than thirty (30) days after the date on which
Buyer receives the approval from the Mississippi Gaming Commission for the
Transactions and the transactions contemplated by the Other Asset Purchase
Agreement; provided, however, in no event shall the Closing take place later
than August 9, 2000, unless extended by the mutual written consent of Buyer and
Seller (the "Outside Date"). The Closing shall occur simultaneously with the
18
consummation of the purchase and sale of assets pursuant to that Asset Purchase
Agreement of even date herewith by and between Buyer and Seller relating to the
assets and business known as Boomtown Biloxi (the "Other Asset Purchase
Agreement"). The date upon which the Closing shall occur is sometimes referred
to in this Agreement as the "Closing Date." Closing of the purchase and sale of
the Real Property shall occur through Escrow upon recordation of the Warranty
Deed and Assignment of Leases and in the customary manner for the consummation
of real estate transactions in Hancock County. The Closing of the purchase and
sale of all other Purchased Assets shall take place at the offices of Irell &
Manella LLP, 1800 Avenue of the Stars, Suite 900, Los Angeles, California 90067,
on the Closing Date.
3.2. Simultaneous Delivery; Conditions Concurrent. All documents and other items
to be delivered at the Closing and in connection with the consummation of the
transactions contemplated by the Other Asset Purchase Agreement shall be deemed
to have been delivered simultaneously, and no delivery shall be effective until
all such items have been delivered.
3.3. Purchase Price and Assumption of Liabilities.
3.3.1. Purchase Price. The purchase price (the "Purchase Price") for the
Purchased Assets hereunder shall be: (a) $120,000,000 in cash (the "Cash Portion
of the Purchase Price"), subject to adjustment under Section 3.3.2 hereof. In
addition, Buyer shall assume the Assumed Liabilities pursuant to Section 3.3.3.
Concurrently with the execution of this Agreement, Buyer shall deliver to Seller
the Deposit as described in Section 7.1.
3.3.2. Adjustments to the Cash Portion of the Purchase Price. The Cash Portion
of the Purchase Price shall be adjusted in accordance with the following
procedures:
3.3.2.1 Additions to Cash Portion of the Purchase Price. The Cash Portion of the
Purchase Price shall be increased by the following:
(a) Casino Cash. The amount of Casino Cash as of the Closing,
(b) Accounts Receivable. The Accounts Receivable, valued by subtracting
therefrom the associated allowance for doubtful
accounts,
(c) Inventory. The Inventory, adjusted for any associated reserve for overstock
and obsolete items, and
(d) Prepaid Items and Deposits. The Prepaid Items and Deposits.
3.3.2.2 Subtractions from the Cash Portion of the Purchase Price. The Cash
Portion of the Purchase Price shall be decreased by the amount of each of the
Assumed Liabilities described in Section 3.3.3, except for the Assumed
Liabilities described in Sections 3.3.3(a), (b) and (n).
3.3.2.3 Closing Balance Sheet. Prior to the Closing Date, Seller shall prepare
and deliver to Buyer a calculation of the Cash Portion of the Purchase Price
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based on a balance sheet of the relevant items (the "Closing Balance Sheet")
dated as of the last day of the month immediately preceding the month in which
the Closing occurs. The Closing Balance Sheet shall be prepared in accordance
with generally accepted accounting principles consistently applied and shall
reflect Seller's good faith and fair estimate of the specific data as of the
date indicated. The Closing Balance Sheet shall be used to make the payment of
the Cash Portion of the Purchase Price on the Closing Date. If requested by
Buyer, Seller shall also deliver the supporting schedules for such calculation
showing, in reasonable detail, each item of Purchased Assets that increases the
Cash Portion of the Purchase Price and each item of Assumed Liability that
reduces the Cash Portion of the Purchase Price (the "Supporting Schedules").
3.3.2.4 Post-Closing Adjustment. Promptly after the Closing Date, Seller will
prepare and, within 30 days of the Closing Date, deliver to Buyer a calculation
of the Cash Portion of the Purchase Price based on a balance sheet of the
relevant items as of the Closing Date (the "Final Balance Sheet"), together with
Supporting Schedules thereto. The Final Balance Sheet shall be prepared in
accordance with generally accepted accounting principles consistently applied
and as though the parties had not consummated the transactions contemplated by
this Agreement. Following the Closing, either (i) Seller shall pay Buyer an
amount equal to the decrease, if any, between the Cash Portion of the Purchase
Price as reflected on the Final Balance Sheet or the Adjusted Final Balance
Sheet, as the case may be, as compared with the Cash Portion of the Purchase
Price as reflected on the Closing Balance Sheet or (ii) Buyer shall pay Seller
an amount equal to the increase, if any, between the Cash Portion of the
Purchase Price as reflected on the Final Balance Sheet or the Adjusted Final
Balance Sheet, as the case may be (the payment referred to in clause (i) or (ii)
above shall be referred to as the "Post-Closing Adjustment") as compared with
the Cash Portion of the Purchase Price as reflected on the Closing Balance
Sheet. Such payments shall be made by wire transfer or certified or bank
cashier's check within ten (10) business days of adoption of the Final Balance
Sheet or the notice from the Accounting Firm of the Adjusted Final Balance
Sheet, as the case may be. No payment shall be made by either party if the Cash
Portion of the Purchase Price as reflected on the Closing Balance Sheet is equal
to the Cash Portion of the Purchase Price as reflected on the Final Balance
Sheet or the Adjusted Final Balance Sheet, as the case may be.
3.3.2.4.1 Buyer's Adoption of Seller's Final Balance Sheet. If within fifteen
(15) business days following receipt of the Final Balance Sheet Buyer has not
given Seller notice of its objection to the Final Balance Sheet, specifying in
reasonable detail the nature and extent of the objection, then the Final Balance
Sheet shall be used in computing the Post-Closing Adjustment. If Buyer gives
notice of objection, then the issues in dispute will be submitted for resolution
to a "Big Five" Accounting firm mutually acceptable to Buyer and Seller
("Accounting Firm"). If the issues in dispute are submitted to the Accounting
Firm for resolution, each party will furnish to the Accounting Firm such
workpapers and other documents and information relating to the disputed issues
as the Accounting Firm may request and are available to that party (or its
independent public accountants), and will be afforded the opportunity to present
to the Accounting Firm any material relating to the determination and to discuss
the determination with the Accounting Firm. The Accounting Firm shall make the
final determination of the Final Balance Sheet (the "Adjusted Final Balance
Sheet") and such determination will be binding and conclusive on the parties,
and Seller and Buyer will each bear fifty percent (50%) of the fees of the
Accounting Firm for such determination.
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3.3.2.5 Consistent Accounting Principles. In preparing the Closing Balance
Sheet, the Final Balance Sheet and the Adjusted Final Balance Sheet, the parties
shall apply accounting principles on a consistent basis.
3.3.3. Assumed Liabilities. On the terms and subject to the conditions set forth
in this Agreement, at the Closing, Buyer shall assume and become responsible for
all of the following liabilities and obligations of Seller or the Company
arising out of the Business as presently or previously conducted, whether
absolute, contingent, accrued or otherwise, other than the Excluded Liabilities
(collectively, the "Assumed Liabilities"):
(a) Assigned Contracts. Any and all liabilities, obligations and
commitments arising out of or relating to events or occurrences or the
performance after the Closing under the Assigned Contracts;
(b) Post-Closing Operations. All liabilities and obligations arising out
of events or transactions after the Closing in
connection with the operation of the Business by Buyer;
(c) All Trade Payables. Any and all trade payables relating to the
Business or the Purchased Assets as of the Closing (other
than accrued wages
21
and unused vacation relating to the employees of the Business)
(the "Trade Payables");
(d) All Notes Payable and Long-Term Debt. Any and all current and
long-term notes payable and long-term debt, including all
accrued interest thereon, as of the Closing (excluding
intercompany notes payable and intercompany debt) relating to
the Business or the Purchased Assets (the "Notes Payable and
Long-Term Debt"). For information purposes, the Notes Payable
and Long-Term Debt as of September 30, 1999 are described on
Schedule 3.3.3(d);
(e) Unredeemed Chip Liability. Any and all unredeemed gaming chips
and tokens in circulation, whether relating to the operation
of the Business before, at or after the Closing (the
"Unredeemed Chip Liability"), which are presented by patrons
of the Business for payment within the applicable time periods
for legal redemption. For purposes of the adjustment to the
Purchase Price pursuant to Section 3.3.2.2, the Unredeemed
Chip Liability shall be discounted to reflect a reasonable
assumption of gaming chips and tokens which are not expected
to be redeemed and which discount shall be computed in
accordance with the methodology described in Schedule
3.3.3(e);
(f) Player Club Obligations and Promotions. Any and all
obligations with respect to outstanding player club points and
other promotions utilized in the Business, including any
awards given to patrons under a player rating system (the
"Player Club Obligations"). For purposes of the adjustment to
the Purchase Price pursuant to Section 3.3.2.2, the Player
Club Obligations shall be discounted to reflect a reasonable
assumption of the Player Club Obligations that are not
expected to be redeemed and which discount shall be computed
in accordance with the methodology described in Schedule
3.3.3(f);
(g) Progressive Slot Liability. The progressive liability for the slot
machines of the Business (the "Progressive Slot Liability");
(h) Caribbean Stud Liability. The liability for Caribbean stud games of
the Business (the "Caribbean Stud Liability");
(i) [Intentionally omitted.]
(j) Tip Pool Liability. The amount of tips collected by the
Company or the Seller for the benefit of the Hired Employees
(as defined below) as of the Closing (the "Tip Pool
Liability");
(k) Gift Certificate Liability. Any and all obligations with
respect to unredeemed gift certificates issued in connection
with the Business as of the Closing (collectively, the "Gift
Certificate Liability");
(l) Advance Reservations by Customers and Commitments to Tour
Operators. Any and all payments made to Seller or the Company
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in prepayment of services, including without limitation hotel
reservations and commitments to tour operators entered into by
the Seller or the Company in the ordinary course of business
that are outstanding at the Closing;
(m) Accrued Wages, Bonuses and Vacation. To the extent not paid
directly by Seller or the Company to employees of the Company
who accept Buyer's offer of employment as provided in Section
11.2.1 ("Hired Employees"), accrued liabilities relating to
accrued but unpaid wages and accrued bonuses and earned but
unused vacation under the Company's employee benefits policy
in effect as of the date hereof associated with the Hired
Employees, provided that Seller or the Company has exercised
its option under Section 11.2.3 to pay such wages, bonuses and
vacation pay to Buyer in the form of a reduction in the Cash
Portion of the Purchase Price; and
(n) Specific Undertakings. Any and all liabilities, obligations
and commitments specifically undertaken by Buyer pursuant to
any other provision of this Agreement.
3.4. Non-Assumption of Certain Liabilities. Buyer is not assuming, and shall not
be deemed to have assumed any liabilities, obligations or commitments of Seller
or the Company, whether contingent or non-contingent, liquidated or
unliquidated, asserted or unasserted, other than the Assumed Liabilities (the
"Excluded Liabilities"), all of which shall remain the liabilities, obligations
and commitments of Seller. The Excluded Liabilities shall include, but shall not
be limited to, the following:
3.4.1. Tax Liabilities. Liabilities for Taxes relating to the operation of
the Business through the Closing;
3.4.2. Indemnification Obligations. Seller's obligations to indemnify Buyer
as provided in Section 9;
3.4.3. Litigation. Except as otherwise provided in Section 9, all liabilities
with respect to litigation, actions, proceedings or arbitrations pending on the
Closing Date and those that are asserted after the Closing Date to the extent
that they relate to or arise from events that occurred prior to the Closing,
including, but not limited to, all Liabilities arising from those items
disclosed on Section 4.24 of the Disclosure Schedule;
3.4.4. Workers' Compensation Claims. All liabilities for workers' compensation
claims brought by Seller's or its subsidiaries' employees and which exclusively
relate to or which arise exclusively from events which occurred prior to the
Closing other than relating to any obligation to rehire any such employee after
the Closing Date;
3.4.5. Employee Claims. All liabilities arising from events, acts, omissions or
occurrences occurring before the Closing Date from claims (other than workers'
compensation claims), including any severance obligations related to the
consummation of the Transactions, brought by Seller's or its subsidiaries'
employees or other present or former employees of the Seller or its
subsidiaries;
3.4.6. Liabilities Relating to the Excluded Assets. All liabilities or
obligations arising prior to, on or after the Closing Date
23
with respect to or in connection with the Excluded Assets;
3.4.7. Employee Benefit Plan Liabilities. Liabilities relating to any employment
or labor claim or any claim relating to an Employee Benefit Plan or any
employment discrimination charge, sexual harassment claim or any ERISA based
claim for periods prior to the Closing Date;
3.4.8. Liabilities for Violations of Law. Liabilities relating to the
violation of any Law by Seller or Company;
3.4.9. Claims Arising Under Contracts or Permits Not Assumed. Liabilities
from claims arising under any Contract or Permit not
assumed by the Buyer hereunder;
3.4.10. Claims Under Contracts or Permits Relating to Pre-Closing Events.
Liabilities for claims arising under any Contract or Permit to the extent such
claim is based on acts or omissions of any Person which occurred prior to the
Closing;
3.4.11. Unknown Liabilities Relating to Pre-Closing Events. Liabilities of
Seller or Company unknown to the Seller at the Closing
to the extent they relate to events occurring prior to the Closing;
3.4.12. Liabilities for Money Borrowed Prior to Closing Date. Other than the
Notes Payable and Long-Term Debt assumed pursuant to Section 3.3.3(d),
liabilities for indebtedness for money borrowed by Seller or Company prior to
the Closing Date;
3.4.13. Environmental Liabilities. Any Liability of Seller or the Company for
Environmental Claims arising from or related to the
circumstances existing on or before the Closing Date; and
3.4.14. Other Liabilities. Any other Liability of Seller or the Company,
regardless of when made or asserted, that is not specifically assumed hereunder.
3.5. Deliveries at Closing. Seller and Buyer shall each deliver to the other
(or, through Escrow, in the case of the Real Property) such instruments and
funds as are necessary to consummate the purchase and sale of the Purchased
Assets, including the following:
(a) Seller shall deliver to Buyer:
1. A duly executed and acknowledged warranty deed with
covenants of warranty and other good and sufficient
instruments and documents of conveyance and transfer
(including without limitation all documents that may
be required for recording purposes), in form and
substance reasonably satisfactory to Buyer and its
counsel, as shall be necessary to convey, transfer
and assign to, and vest in, Buyer all of Seller's
good valid and marketable title, right, and interest
in and to the Owned Real Property ("Warranty Deed").
2. A duly executed and acknowledged assignment of leases
("Assignment of Leases") sufficient to assign to
Buyer good and valid leasehold interests in and to
all of the Leased Real Property.
24
3. The Bill of Sale and Assignment and Assumption Agreement, duly executed by
Seller.
4. The License Agreement, duly executed by Seller.
5. An affidavit directed to Buyer giving Seller's
taxpayer identification number and confirming that
Seller is not a "foreign person," which affidavit
shall be sufficient to relieve Buyer of any
withholding obligation under Section 1445 of the
Internal Revenue Code (provided, however, that if
Seller fails to deliver such affidavit, Buyer's
remedy shall be to withhold from the Purchase Price
in accordance with law).
6. Keys, access cards and other items necessary to obtain access to and within
the Business premises.
7. If required pursuant to Section 6.1.11 herein, cash
or immediately available funds equal to the shortfall
in capital expenditure spending by Seller or the
Company.
8. The officers' certificate and other items contemplated by Section 8.1.
9. Copies of any and all governmental and other third
party consents, waivers or approvals obtained by the
Seller or Company with respect to the transfer of the
Purchased Assets or the consummation of the
Transactions.
10. Copies, certified by the Secretary of the Seller and
the Company, of corporate resolutions authorizing the
execution and delivery of this Agreement and all
instruments and agreements to be executed and
delivered by the Seller and the Company in connection
herewith, and the consummation of the Transactions.
11. A certificate of good standing with respect to the Seller (dated within
five (5) business days of the Closing Date), issued
by the Secretary of State of Minnesota.
12. The legal opinion of counsel to Seller in the form attached hereto as
Exhibit E.
13. All such other instruments of assignment, transfer or
conveyance as shall, in the reasonable opinion of the
Buyer and its counsel, be necessary or desirable to
transfer to the Buyer the Purchased Assets, in
accordance with this Agreement and where necessary or
desirable in recordable form.
14. Such other instruments and documents as may be
reasonably required for Seller to perform its
obligations hereunder or as may be reasonably
required by Escrow Holder or the Title Company.
(b) Buyer shall deliver to Seller:
1. The Cash Portion of the Purchase Price less the Deposit, in cash or
immediately available funds.
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2. If required pursuant to Section 6.1.11 herein, cash
or immediately available funds equal to the excess
capital expenditure spending by Seller or the
Company.
3. The Bill of Sale and Assignment and Assumption Agreement, duly executed by
Buyer.
4. The Assignment of Leases, duly executed and acknowledged by Buyer.
5. The License Agreement, duly executed by Buyer.
6. The officers' certificate and other items contemplated by Section 8.2.
7. Copies, certified by the Secretary of the Buyer, of
corporate resolutions authorizing the execution and
delivery of this Agreement and all instruments and
agreements to be executed and delivered by the Buyer
in connection herewith, and the consummation of the
Transactions.
8. A certificate of good standing with respect to the Buyer (dated within
five (5) business days of the Closing Date), issued
by the Secretary of State of the State of Mississippi.
9. Copies of any and all governmental and other third
party consents, waivers or approvals obtained by the
Buyer with respect to the transfer of the Purchased
Assets or the consummation of the Transactions.
10. The legal opinion of counsel to Buyer in the form attached hereto as Exhibit
F.
11. Buyer's share of the costs set forth in Section 3.9.
12. Buyer's share of the expenses set forth in Section 12.2.
13. All such other instruments of assumption and other
third party consents, waiver or approvals obtained by
the Buyer at or prior to the Closing Date pursuant to
this Agreement or otherwise reasonably required in
connection herewith.
14. Such other instruments and documents as may be
reasonably required for Buyer to perform its
obligations hereunder or as may be reasonably
required by Escrow Holder or the Title Company.
3.6. Opening of Escrow. Within ten (10) days after mutual execution of this
Agreement, the parties shall open an escrow (the "Escrow") with First American
Title Insurance Company ("Escrow Holder") by delivering a copy of this Agreement
to Escrow Holder. Buyer, Seller and Escrow Holder will enter into an escrow
agreement (the "Escrow Agreement") substantially in the form of Exhibit G
attached hereto. In the event of any inconsistency between this Agreement, the
Escrow Agreement and any additional escrow instructions executed by the parties,
this Agreement shall be controlling.
26
3.7. The Escrow Holder. The duties of the Escrow Holder shall be as follows:
(a) to retain and safely keep all funds,
documents and instruments deposited with it;
(b) to confirm that all conditions to the Closing
specified in Section 8 have been met;
(c) upon the Closing, to deliver to the parties
entitled thereto all funds, documents and instruments to be
delivered through Escrow;
(d) upon the Closing, to cause the recordation in the
Office of the County Recorder of Hancock County of the
Warranty Deed, the Assignment of Leases and all other
documents to be recorded hereunder;
(e) to comply with the terms of this Agreement, the
Escrow Agreement and any additional instructions jointly
executed by Buyer and Seller.
3.8. Tax Allocation. Buyer and Seller shall mutually agree upon the allocation
of the Purchase Price to broad categories constituting components of the
Purchased Assets for purposes of Internal Revenue Service Form 8594. In the
absence of agreement prior to the Closing Date, the allocation of the Purchase
Price shall be determined by appraisal to be performed by a "Big Five"
accounting firm mutually acceptable to Buyer and Seller. The costs of the
appraisal shall be borne equally by Buyer and Seller. Each party will report
timely the purchase and sale of the Purchased Assets in accordance with the
agreed upon allocation among such broad categories for all federal, state, local
and other tax purposes. Buyer shall also furnish Seller with a form of reseller
certificate that complies with the requirements of applicable state taxation
laws.
3.9. Costs and Prorations.
3.9.1. Costs. Costs of the Closing and Escrow shall be allocated as follows:
Seller shall pay:
(a) one-half of the costs of preparing and recording the Warranty Deed, the
Assignment of Leases and all other documents to be
recorded at the Closing,
(b) all state and local documentary transfer, stamp or similar
taxes imposed in connection with the transfer of the Real
Property,
(c) all trustee's and other fees in connection with any deeds of trust which
shall be reconveyed at Closing,
(d) one-half of the fee of the Escrow Holder and the costs of the Escrow; and
(e) the cost of preparing the Preliminary Title Report.
27
(f) the standard coverage portion of the premium for the Title Policy.
Buyer shall pay:
(a) one-half of the costs of preparing and
recording the Warranty Deed, the Assignment of Leases and
all other documents to be recorded at the Closing,
(b) all state and local sales, use or similar taxes
imposed in connection with the transfer of the personal
property included in the Purchased Assets,
(c) the cost of preparation and recordation of its
mortgage, deed of trust, or other applicable financing
instruments, if any,
(d) one-half of the fee of the Escrow Holder and
the costs of Escrow, and
(e) the extended coverage portion of the premium for
the Title Policy and all endorsements thereto specified by
Buyer.
All other costs, if any, shall be apportioned in the customary manner
for real estate transactions in Hancock County.
3.9.2. Prorations. At Closing, the parties shall prorate as of the Closing
Date, the following with respect to the Business and
the Purchased Assets:
(a) Taxes: Real estate taxes, assessments, personal property taxes
and rent tax, if any, on all or any portion of the Purchased
Assets, based on the regular and supplemental tax bills for
the calendar year in which the Closing occurs. In the event
that the actual property taxes payable in respect of the
Purchased Assets are not ascertainable as of the Closing Date,
then the parties will prorate such taxes on the basis of the
latest available tax bill and will make such post-Closing
adjustment as may be necessary when the actual taxes are
determined. All taxes and assessments relating to periods
prior to and through the Closing shall be paid by Seller and
Buyer shall be responsible for all taxes and assessments
relating to periods after the Closing.
(b) Utilities: All utilities including gas, water, sewer,
electricity, telephone and other utilities supplied to the
Real Property shall be prorated as of the Closing Date. Seller
shall pay, prior to the Closing Date, all such amounts for
which a bill has been received or for which payments are
otherwise due prior to the Closing Date, and Buyer shall be
credited, and Seller shall be debited, with an amount equal to
all utility charges for the period from the date such bills
were issued or such payments were due until the Closing Date.
All meters shall be read as of the Closing Date.
(c) Assigned Contracts. Amounts payable under Assigned Contracts
shall be prorated on an accrual basis. Seller shall pay when
due all amounts for which a bill has been received prior to
the Closing Date. For bills received after the Closing Date,
Seller agrees to pay its prorated share when due or to
promptly reimburse Buyer if paid by Buyer.
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4. REPRESENTATIONS AND WARRANTIES OF SELLER.
As an inducement for Buyer to enter into this Agreement, Seller
represents and warrants to Buyer that except as set forth on any Disclosure
Schedule, each of the following statements is true and correct as of the date
hereof:
4.1. Organization, Corporate Power, and Authority. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota and is duly qualified to do business as a foreign corporation in the
jurisdictions in which it conducts its business, except where the failure so to
qualify would not reasonably be expected to have a material adverse effect on
Seller's ability to perform its obligations under the Transaction Documents.
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Mississippi. Seller or the Company, as the case
may be, has all requisite corporate power and authority to own, operate and
lease the Purchased Assets, to conduct the Business, to execute and deliver the
Transaction Documents to which it is a party and to perform its respective
obligations thereunder.
4.2. Authorization of Agreements. The execution, delivery and performance by
Seller of the Transaction Documents to which it is a party, and the consummation
by it of the Transactions, have been duly authorized by all necessary corporate
action by the Seller. This Agreement has been, and each other Transaction
Document to which Seller is a party will be at the Closing, duly executed and
delivered by Seller, and constitute, or will, when delivered, constitute, the
legal, valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, and other similar laws and equitable
principles relating to or limiting creditors' rights generally.
4.3. Effect of Agreement. The execution, delivery and performance by Seller of
the Transaction Documents, and the consummation by it of the Transactions, will
not violate the Certificate of Incorporation or By-laws of Seller or (assuming
compliance with the matters referenced in Section 4.4 hereof) any law,
regulation, order, judgment, award or decree of any Governmental Authority or
any indenture, Contract or other material instrument to which it is a party, or
by which Seller, the Business or the Purchased Assets are bound, or result in a
breach of or constitute (with due notice or lapse of time or both) a default
under, any such indenture, agreement or other instrument, or result in the
creation or imposition of any lien, charge, security interest or encumbrance of
any nature whatsoever upon any of the Purchased Assets, except to the extent
that (a) the effect of any such violation, breach or default is not reasonably
likely to have a Material Adverse Effect, (b) consents may be required under
that certain Amended and Restated Reducing Revolving Loan Agreement, dated as of
October 14, 1998, by and among HPI on the one hand and Bank of America National
Trust and Savings Association as Administrative Agent and the other Banks who
are parties thereto on the other hand (the "Bank of America Loan Agreement"),
and (c) consents may be required for assignment of certain of the Leases and
Contracts, which consents with respect to the Material Contracts (as defined
below) are listed on Section 4.22 of the Disclosure Schedule.
4.4. Governmental Approvals. Except as set forth in Section 4.4 of the
Disclosure Schedule and except for filings pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and except for
compliance with the applicable requirements of the Mississippi Gaming Control
Act and the regulations of the Mississippi Gaming Commission (collectively, the
29
"Mississippi Gaming Laws"), no approval, authorization, consent or order or
action of or filing with any court, administrative agency or other Governmental
Authority is required to be obtained by Seller for the execution and delivery by
Seller of the Transaction Documents or the consummation by it of the
Transactions.
4.5. Condition of Real Property. Neither Seller nor the Company has received
notice from any governmental body requiring Seller or the Company to make any
repairs or changes to the Real Property, except for written notices with which
Seller or the Company has fully complied.
4.6. HPI SEC Reports; Financial Statements.
4.6.1. HPI SEC Reports. Seller has made available to Buyer true and complete
copies of each effective registration statement, report, proxy statement or
information statement prepared and filed with Commission by the HPI since
December 31, 1997, including (i) the HPI's Annual Reports on Form 10-K for the
years ended December 31, 1997 and December 31, 1998, (ii) the HPI's Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 31, 1999, June 30,
1999, and September 30, 1999, (iii) HPI's Proxy Statements for its 1998 and 1999
annual meetings of stockholders, and (iv) HPI's Registration Statements on Form
S-4 dated February 6, 1998 and March 26, 1999 (collectively, including any such
reports and documents filed subsequent to the date hereof, the "HPI SEC
Reports"), as filed with the Commission. As of their respective dates, the HPI
SEC Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading with respect to the Business or the Purchased Assets in
relation to HPI and its subsidiaries taken as a whole. The audited consolidated
financial statements and unaudited interim financial statements of HPI included
in the HPI SEC Reports have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the financial position of
HPI as at the dates thereof and the results of its operations and changes in
financial position for the periods then ended, subject, in the case of the
unaudited interim financial statements, to normal year-end audit adjustments and
any other adjustments described therein.
4.6.2. Company Level Financial Statements. Complete and correct copies of the
Company Level Financial Statements are attached as Exhibit B. The Company Level
Financial Statements are consistent in all material respects with the books and
records of Seller, and there have not been any material transactions that have
not been recorded in the accounting records underlying such Company Level
Financial Statements that are required to be reflected thereon under generally
accepted accounting principles. The Company Level Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis, and fairly present in all material respects the financial
position of the Company as at the dates thereof and the results of operations
for the periods then ended, except for (a) the absence of notes to such
financial statements, (b) normal year-end adjustments and consolidating entries
necessary in presenting such balance sheets and income statements on a
consolidated basis with HPI and its other subsidiaries and any other adjustments
described therein, and (c) the accrual for income taxes payable as of the dates
and for the periods shown (which are not reflected in the Company Level
Financial Statements). The September 30, 1999 Company Balance Sheet does not
include any assets that are not intended to constitute part of the Business or
the Purchased Assets after giving effect to the Transactions (other than the
Excluded Assets). The September 30, 1999 Company Income Statement does not
30
reflect any operations that are not intended to constitute part of the Business
or the Purchased Assets after giving effect to the Transactions, and the
September 30, 1999 Company Income Statement reflects all expenses that
historically have been incurred by the Business (other than the Excluded
Liabilities) that are required to be reflected thereon under generally accepted
accounting principles.
4.7. Compliance with Regulations and Court Orders. The Seller is not in
violation of any court order or material regulation applicable to the Business
or to the Purchased Assets, and the Purchased Assets have not been used or
operated by the Seller or any other person or entity in violation of any court
order or any such material regulation, in either case where such violations
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
4.8. Third-Party Options. There are no existing Contracts with, or rights
in, any third party to acquire any of the Purchased
Assets or any interest therein.
4.9. Transactions with Affiliates. Except as disclosed in the HPI SEC Reports or
Section 4.9 of the Disclosure Schedule, none of the directors or officers of the
Seller, directly or indirectly, (a) owns or has an ownership interest in any of
the Purchased Assets having a value of $60,000 or more or in any property having
a value of $60,000 or more that is the subject of any Contract relating to the
Business or (b) has business arrangements or relationships of any kind with the
Seller involving $60,000 or more in the current fiscal year. Except as disclosed
in the HPI SEC Reports or Section 4.9 of the Disclosure Schedule, all such
Contracts, arrangements and relationships have been on substantially the same
terms and conditions as similar transactions between the Seller and
non-affiliated parties and are properly recorded on due books and records of the
Seller.
4.10. Accounts Receivable. The Seller has delivered to the Buyer a list and the
aging of the Accounts Receivable. All Accounts Receivable (a) are valid and
genuine, (b) arise out of bona fide sales and deliveries of goods, performance
of services or other transactions in connection with the Business, and (c) are
not subject to material defenses, setoffs or counterclaims to Seller's knowledge
other than normal returns and allowances.
4.11. Personal Property. Schedule 2.1.2(a) sets forth all items of tangible
personal property owned by Seller and used in the Business that is reflected on
the September 30, 1999 Company Balance Sheet having an original cost of at least
$100,000 as of September 30, 1999.
4.12. Patents, Copyrights and Trademarks. The Seller or the Company has obtained
registration of, holds licenses to, or has filed applications to register the
patents, copyrights, trademarks and service marks relating primarily to the
Business (collectively, the "Business Intellectual Property") listed in Section
4.12 of the Disclosure Schedule. To the knowledge of the Seller, the Business
Intellectual Property does not infringe upon any patents, registered copyrights,
trademarks, service marks or applications that are owned or claimed by any third
party, except in cases in which such infringement would not reasonably be
expected to result in a Material Adverse Effect. To the knowledge of the Seller,
all patents, registered copyrights, trademarks or service marks that are not
listed in Section 4.12 of the Disclosure Schedule and that are used in the
31
Business as formerly and presently conducted are not material or are embodied in
or related to third-party products and technology that the Seller or the Company
has lawfully purchased or licensed. To the knowledge of the Seller, the Seller
or the Company (i) lawfully owns or possesses the right to use all proprietary
information used in the conduct of the Business, and (ii) is not required to pay
any royalty, license fee or similar type of compensation in connection with the
conduct of the Business as a whole.
4.13. Overtime, Back Wage, Vacation, Discrimination and Occupational Safety
Claims. There are no claims pending or, to the knowledge of the Seller,
threatened against the Seller (whether under federal or state law, under any
employment agreement or otherwise) asserted by any present or former employee of
the Seller or any governmental agency, including, but not limited to, claims for
or on account of (a) wages, salary, severance or overtime pay, (b) vacation pay
or pay in lieu of vacation time off, or (c) any violation of any Regulation
relating to minimum wages or maximum hours of work. Except as disclosed in
Section 4.24 of the Disclosure Schedule, there are no claims pending against
Seller by any person (including any governmental agency) or, to the knowledge of
the Seller, threatened under or arising out of, and the Seller is not subject to
any judgment, order or inquiry relating to, any regulation relating to
discrimination, occupational safety in employment or employment practices.
4.14. Undisclosed Liabilities. Except as set forth in Section 4.14 of the
Disclosure Schedule, to the knowledge of Seller, as of the date of the September
30, 1999 Company Balance Sheet the Purchased Assets were not subject to any
material Liability which would constitute an Assumed Liability that has not been
adequately reflected, reserved against or given effect to in the September 30,
1999 Company Balance Sheet that is required to be reflected on the September 30,
1999 Financial Statements in accordance with generally accepted accounting
principles. To the knowledge of the Seller, as of the Closing Date the Purchased
Assets will not be subject to any material Liability which would constitute an
Assumed Liability that will not have been adequately reflected, reserved against
or given effect to in the Closing Balance Sheet or in the Final Balance Sheet
that is required to be reflected on the September 30, 1999 Financial Statements
in accordance with generally accepted accounting principles.
4.15. Full Disclosure. There are no materially misleading statements in any of
the representations and warranties made by the Seller in this Agreement, in any
Schedule, or in any of the certificates or instruments delivered by the Seller
pursuant hereto, and the Seller has not omitted any fact necessary to make such
representations and warranties not materially misleading.
4.16. Occupancy Agreements. Except for the agreements set forth in Section 4.16
of the Disclosure Schedule, (the "Occupancy Agreements") there are no material
leases or other agreements relating to the possession, occupancy, rights of
first refusal or options to purchase or lease of any portion of the Owned Real
Property.
4.17. "Foreign Person" Status. Seller is not a "foreign person" within the
meaning of ss.1445 of the Internal Revenue Code of 1986,
as amended (the "Internal Revenue Code").
4.18. Eminent Domain; Zoning. Except as disclosed in Section 4.18 of the
Disclosure Schedule, to Seller's knowledge, there are no actions, litigation or
proceedings pending, contemplated or threatened to take all or any portion of
the Real Property, or any interest therein, by eminent domain or to modify the
zoning of, the Real Property.
32
4.19. Absence of Certain Changes or Events. Except as disclosed in Section 4.19
of the Disclosure Schedule, the HPI SEC Reports filed and publicly available
prior to the date hereof or as disclosed on the September 30, 1999 Company
Balance Sheet, or as contemplated hereunder, since December 31, 1998, neither
Seller nor the Company has with respect to the Business or the Purchased Assets:
4.19.1. Material Obligations. Incurred any obligation or liability (fixed or, to
Seller's knowledge, contingent) material to the Business or the Purchased Assets
which would constitute an Assumed Liability, except normal trade or business
obligations and liabilities incurred in the ordinary course of business and
obligations and liabilities in connection with the Transactions;
4.19.2. Additional Liens. Mortgaged, pledged or subjected to any material
lien, security interest or other encumbrance any of the
Purchased Assets, (other than Existing Liens);
4.19.3. Disposition of Purchased Assets. Transferred, leased or otherwise
disposed of any material portion of the Purchased Assets,
except those acquired, disposed of, sold or consumed in the ordinary course of
business;
4.19.4. Compromise of Debts or Claims. Canceled or compromised any material
debt or claim relating primarily to the Business,
except in the ordinary course of business;
4.19.5. Waiver of Material Rights. Waived or released in writing any rights
of material value to the Business or the Purchased
Assets;
4.19.6. Rights in Licenses, Trademarks, Patents. Transferred or granted any
material rights under any material Intellectual Property relating primarily to
the Business (other than licenses granted by Seller or the Company in the
ordinary course of business);
4.19.7. Employee Compensation. Made or granted any material wage or salary
increase applicable generally to any group or classification of employees
working exclusively for the Business (other than in connection with Seller's or
the Company's general salary plan), entered into any written employment contract
with any officer or employee of Seller or the Company working exclusively for
the Business or made any material loan to, or entered into any material
transaction of any other nature with, any officer or employee of Seller or the
Company working exclusively for the Business;
4.19.8. Material Contracts. Entered into any Material Contract, except for (i)
Contracts listed in Section 4.22 of the Disclosure
Schedule, (ii) the Transaction Documents, and (iii) sales or purchases in the
ordinary course of business; or
4.19.9. Casualty Loss. Experienced any material damage, destruction or loss
(whether or not covered by insurance) to the Purchased
Assets in excess of $300,000; or
4.19.10. Material Adverse Change. Experienced any adverse change in the
financial condition, business, properties or assets of the Business or the
Purchased Assets that would reasonably be likely to result in a Material Adverse
33
Effect other than any such adverse change which results from economic conditions
which generally affect the industry in which the Seller operates or from
economic conditions generally.
4.20. Title to Purchased Assets, Absence of Liens and Encumbrances. Company has
good and valid title to all of the Purchased Assets (except for leased Purchased
Assets), in each case free and clear of all Liens, other than the liens
described in clauses (a)-(g) (collectively, "Existing Liens"): (a) liens for
taxes not yet due, (b) liens arising under the Bank of America Loan Agreement,
(c) imperfections in title, if any, not material in amount and which,
individually or in the aggregate, do not materially interfere with the conduct
of the Business, or the use of the Purchased Assets, (d) liens in the ordinary
course of business consistent with past practice, (e) the matters set forth
Section 4.20 of the Disclosure Schedule, (f) matters disclosed by the
Preliminary Title Report and any supplements thereto or otherwise of record, and
(g) matters which would be disclosed by a physical inspection or a current
survey of the Real Property. At the time of Closing, Seller will have good and
valid title to all of the Purchased Assets (except for leased Purchased Assets),
in each case free and clear of all Liens other than the liens described in
clauses (a), (c), (e), (f) and (g). Seller or the Company has, in all material
respects, the valid right to use, and enjoys peaceful and undisturbed possession
of, all personal property leased by it in the conduct of the Business. Except
for vehicles and equipment leased to the Seller under leases disclosed in
Section 4.20 of the Disclosure Schedule, as of the Closing no person other than
the Seller will own any material vehicles, equipment or other tangible assets or
properties necessary in or used primarily in the operation of the Business.
4.21. Sufficiency and Condition of Purchased Assets. The Purchased Assets, taken
as a whole, constitute all the material properties and assets relating to or
used or held for use in connection with the Business during the past 12 months
(except for assets or rights sold, disposed of or consumed in the ordinary
course of business and the Excluded Assets). Except for the Excluded Assets,
there are no material assets or properties used primarily in the operation of
the Business that, as of the Closing, will be owned by a Person other than the
Seller that will not be licensed or leased to the Buyer under valid, current
license arrangements or leases. All vehicles, equipment and other tangible
assets and properties, taken as a whole and not individually, whether owned or
leased, that are part of the Purchased Assets, are in good operating condition
(ordinary wear and tear excepted), are usable in the ordinary course of business
consistent with past practice, are free from any defects known to Seller, and,
to Seller's knowledge, conform to all applicable regulations relating to their
use and operations, except where the failure to be in good operating condition,
free from defects known to Seller, usable in the ordinary course of business or
in conformance with such regulations would not reasonably be expected to have a
Material Adverse Effect.
4.22. Material Contracts and Assigned Contracts. Section 4.22 of the Disclosure
Schedule sets forth each Contract (collectively, the "Material Contracts") that
meets all of the following criteria: (a) that obligates Seller or the Company to
pay an amount of $100,000 or more for any one Contract or series of related
Contracts, and (b) by which any or all the Purchased Assets are bound or to
which the Seller or the Company is a party and by which it is bound. Except as
indicated on Section 4.22 of the Disclosure Schedule, Seller has made available
to Buyer true and complete copies of all written Material Contracts, together
with all amendments thereto, and accurate descriptions of all oral Material
Contracts, listed, or required to be listed, on Section 4.22 of the Disclosure
Schedule. Except as set forth in Section 4.22 of the Disclosure Schedule, to
34
Seller's knowledge, (a) neither Seller, the Company nor the other parties
thereto is in material breach of any such Material Contract, (b) each Material
Contract is valid and enforceable in accordance with its terms for the periods
stated therein, and (c) there is not under any such Material Contract any
existing material default (including, but not limited to, any payment default)
or event of material default or event that, with notice or lapse of time or
both, would constitute such a material default. Seller or the Company has paid
or accrued for, or will pay or accrue for prior to the Closing, all amounts due
and owing prior to the Closing under the Assigned Contracts requiring the
payment of a specific sum(s) of money on a specific date(s) or as the result of
a specific occurrence(s). In addition, Seller or the Company has received all
amounts due and owing it from the other parties to the Assigned Contracts
requiring the payment of a specific sum(s) of money on a specific date(s) or as
the result of a specific occurrence(s) (except to the extent such amounts are
reflected as Accounts Receivable). All of the Assigned Contracts other than the
Material Contracts were entered into in the ordinary course of business.
4.23. Leases. Seller has made available to Buyer true and complete copies of all
of the Leases, together with all amendments thereto. Except as set forth in
Section 4.23 of the Disclosure Schedule, the Leases related to the Real Property
are in full force and effect and have not been modified, amended or supplemented
in any way, are valid and enforceable in accordance with its terms for the
periods stated therein. No material default (including, but not limited to, any
payment default) or event of material default or event under any such Lease
that, with notice or lapse of time or both, would constitute such a material
default. Seller or the Company has paid or accrued for, or will pay or accrue
for prior to the Closing, all amounts due and owing prior to the Closing under
the Leases requiring the payment of a specific sum(s) of money on a specific
date(s) or as the result of a specific occurrence(s).
4.24. Litigation. Except as disclosed in the HPI SEC Reports or as disclosed in
Section 4.24 of the Disclosure Schedule, there is no legal, administrative,
arbitral or other proceeding, claim, action, or governmental or regulatory
investigation of any nature pending or, to the knowledge of Seller, threatened
against or affecting the Purchased Assets which, either alone or in the
aggregate, could reasonably be likely to have a Material Adverse Effect.
4.25. Commissions. Except as otherwise provided in Section 12.2 herein and
except for an asserted finder's fee claimed by Jay Osman, neither the Seller nor
any of its directors, officers, employees or agents have employed or incurred
any liability to, any broker, finder or agent for any brokerage fees, finder's
fees, commissions or other amounts with respect to the Transactions.
4.26. Labor and Employment Matters. Except as set forth in Section 4.26 of the
Disclosure Schedule, insofar as it relates to the Purchased Assets or the
Business (a) there is no unfair labor practice charge or complaint against
Seller or the Company pending, or, to Seller's knowledge, threatened in writing
against Seller or the Company; (b) there is no labor strike, dispute, slowdown
or stoppage pending or, to Seller's knowledge, threatened in writing against or
materially affecting Seller or the Company; (c) there is no representation claim
or petition pending before the National Labor Relations Board; (d) there are no
collective bargaining agreements applicable to the employees of Seller or the
Company and no such agreements are currently being negotiated, nor to Seller's
knowledge has there been any organizational activity taking place with respect
to the Business; and (e) during the past five (5) years with respect to the
35
Business, neither Seller nor Company has conducted a lockout of any of its
employees, nor has Seller or Company been subject to, or, to the knowledge of
the Seller, threatened in writing with, any strike, slowdown, picketing or work
stoppage by any union or other group of employees, any secondary boycott with
respect to the products or services of the Business, or any other material labor
trouble or other material occurrence, event or condition of a similar character.
The Seller is in compliance with all regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours,
except where the failure to be in such compliance would not reasonably be
expected to have a Material Adverse Effect. There has been no "mass layoff" or
"plant closing" as defined by the Worker Adjustment and Retraining Notification
Act ("WARN") with respect to the Business within the 60 days prior to the date
of this Agreement.
4.27. Severance Obligations. The consummation of the Transactions will not
entitle any current or former employee who is or was employed by Seller or the
Company exclusively in connection with the operation of the Business (the
"Employees") to severance payment, provided that Buyer offers employment to each
of the Employees under terms substantially identical to the terms under which
such employee is currently employed.
4.28. Employee Benefit Plans. Except as set forth in Section 4.28 of the
Disclosure Schedule, there are no liens against the Purchased Assets under
Section 412(n) of the Internal Revenue Code or Sections 302(f) or 4068 of ERISA.
Neither Seller nor any corporation, trade, business or other entity under common
control with Seller, within the meaning of Sections 414(b), (c), (m) or (o) of
the Internal Revenue Code, or under Section 4001 of ERISA (an "ERISA Affiliate")
is or was obligated (a) to contribute to any plan subject to Title IV of ERISA
other than a multiemployer plan within the meaning of Section 3(37) of ERISA, or
(b) to any multiemployer plan within the meaning of Section 3(37) of ERISA for
any material amount of delinquent contributions thereto or for any amount on
account of any withdrawal liability. As of the Closing, Buyer will have no
obligation to contribute to, or any liability in respect of, (i) any employee
benefit plan within the meaning of Section 3(3) of ERISA, or (ii) any other
benefit arrangement, obligation, or practice, whether or not legally
enforceable, to provide benefits, other than salary, as compensation for
services rendered, to one or more present or former employees, directors,
agents, or independent contractors, including, without limitation, any similar
employment, severance or other arrangement or policy (whether written or oral)
providing for insurance coverage (including self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, fringe benefits, or retirement benefits, or for profit sharing,
deferred compensation, bonuses, stock options, stock appreciation or other forms
of incentive compensation or post-retirement insurance, compensation or
benefits, executive compensation/severance policies or agreements, sick leave,
vacation pay, any plans subject to Section 125 of the Internal Revenue Code
("Employee Benefit Plan"), sponsored or maintained by Seller or any ERISA
Affiliate, or to which Seller or any ERISA Affiliate was obligated to
contribute. The Seller and its ERISA Affiliates will not, in connection with the
transactions contemplated by this Agreement, cease to provide any group health
plan coverage to their employees in a manner which would cause Buyer to be
deemed a successor employer of such Seller or its ERISA Affiliates within the
meaning of Proposed Treasury Regulations Section 54.4980B-9 Q&A8(c). There are
no pending or threatened claims by or on behalf of any Employee with respect to
any Employee Benefit Plan, other than those made in the ordinary operation of
such plans. No Employee Benefit Plan is presently under audit or examination
36
(nor has notice been received of a potential audit or examination) by the IRS,
the Department of Labor, or any other governmental entity, and no matters are
pending with respect to any Employee Benefit Plan under the CAP or VCR programs
set forth in Revenue Procedure 98-22. Section 4.28 of the Disclosure Schedule
lists all Employee Benefit Plans sponsored, maintained or contributed to by
Seller for the benefit of Employees working for the Business. Seller shall
deliver to Buyer any amendments, summary plan descriptions, other descriptions,
plan documents or other related documents for all Employee Benefit Plans
sponsored, maintained or contributed to by Seller immediately before the Closing
Date for the benefit of Employees working for the Business, which shall give
Buyer sufficient information about the terms and provisions of such Employee
Benefit Plans to enable Buyer to satisfy its obligations under Section 11.2.1 of
this Agreement. In the event that Seller requests pursuant to Section 11.2.1
that Buyer cause a defined contribution plan qualified under Section 401(a) of
the Internal Revenue Code and maintained or sponsored by Buyer or its Affiliates
to accept assets from the Hollywood Park, Inc. 401(k) Investment Plan (the
"Seller 401(k) Plan"), Seller shall make the following representations regarding
the Seller 401(k) Plan: (i) the Seller 401(k) Plan has received a favorable
determination letter from the Internal Revenue Service which has not been
revoked, and Seller has no knowledge of any facts which could cause the
revocation of such determination letter, (ii) the Seller 401(k) Plan has been
maintained, operated, and administered substantially in accordance with its
terms and with the requirements of the Internal Revenue Code and ERISA, and
(iii) all required contributions to the Seller 401(k) Plan have been timely
made.
4.29. Operation of the Business. Except as described on Section 4.29 of the
Disclosure Schedule, (a) in all material respects, the Business has been
conducted only through the Seller or the Company and not through any other
divisions or any direct or indirect subsidiary or Affiliate of the Seller, and
(b) no material part of the Business has been operated by any Person other than
the Seller or the Company. No Person other than the Seller or Company owns or
possesses any material assets or properties that have been used in the Business,
other than Persons who have granted to the Seller leasehold interests in or
valid licenses to use other assets or properties used in the Business pursuant
to Contracts; all Material Contracts with respect thereto are listed on Section
4.22 of the Disclosure Schedule.
4.30. Environmental Matters. Except as disclosed in Section 4.30 of the
Disclosure Schedule:
4.30.1. Seller holds and is in material compliance with all permits,
certificates, licenses and governmental approvals, consents and authorizations
required under applicable Environmental Laws for Seller to own and operate the
Business ("Environmental Permits");
4.30.2. To Seller's knowledge, Seller and all real property owned, operated or
leased by Seller are in material compliance with applicable Environmental Laws;
4.30.3. To Seller's knowledge, neither the Business nor Seller has been notified
by any Governmental Authority or third party (i) of any pending or threatened
Environmental Claim against the Business or Seller in connection with the
Business or (ii) that either the Business or Seller in connection with the
Business may be a potential responsible party for environmental contamination or
any Release of Hazardous Substances;
4.30.4. Neither the Business nor Seller in connection with the Business has
entered into or agreed to any consent decree or order with respect to or
affecting the Purchased Assets relating to compliance with any Environmental Law
or to investigation or cleanup of Hazardous Substances under any Environmental
Law;
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4.30.5. To Seller's knowledge, no Releases of Hazardous Substances have occurred
at, from, in, on, to or under any property currently or formerly owned, operated
or leased by the Business or Seller in connection with the Business or any
predecessor of the Business or Seller in connection with the Business, and no
Hazardous Substances are present in, on or about or are migrating to or from any
such property that could reasonably be expected to give rise to an Environmental
Claim by a Governmental Authority or third party against the Business or Seller;
4.30.6. To Seller's knowledge, neither of the Business nor Seller in connection
with the Business nor any predecessor thereof, have transported or arranged for
the treatment, storage, handling, disposal or transportation of any material
amount of any Hazardous Substance to any location that could reasonably be
expected to result in an Environmental Claim against the Business or Seller;
4.30.7. To Seller's knowledge, there is no amount of asbestos, ureaformaldehyde
material, polychlorinated biphenyl containing equipment or lead paint containing
materials in, at or on any property owned, leased or operated by the Business or
the Seller in connection with the Business;
4.30.8. There are no environmental investigations, studies, audits or tests in
the possession of any Seller with respect to any property currently or formerly
owned, leased or operated by either Seller in connection with the Business
thereof which have not been delivered to Buyer prior to execution of this
Agreement; and
4.30.9. To Seller's knowledge, there are no aboveground or underground storage
tanks located on, in or under any properties currently or formerly owned,
operated or leased by the Business or Seller in connection with the Business or
any predecessor of the Business or Seller in connection with the Business.
4.31. Guaranties. There are no guaranties, letters of credit or performance
bonds with respect to any obligations or liabilities of the Business which would
be Assumed Liabilities.
4.32. Licenses and Compliance. The Company and each of its directors, officers
and gaming managers possess all licenses (including gaming licenses issued by
the Mississippi Gaming Commission), permits, authorizations, approvals, findings
of suitability, franchise and orders ("Company Permits") of any governmental or
regulatory authority which are necessary for the Company to engage in the
business of owning and operating the casino facilities and the businesses and
operations owned and operated by the Company, each of which is in full force and
effect in all material respects, except such permits, licenses, variances,
exemptions, orders and approvals which the failure to hold, individually or in
the aggregate, is not having and could not reasonably be expected to have a
Material Adverse Effect. The Company is in compliance with the terms of the
Company Permits and all other Federal, state, local or foreign statutes, rules,
regulations, findings of suitability, license, registration or other
authorization, including any condition or limitation thereon (including any
Federal, foreign or state laws relating to currency transactions), except
failures to so comply which, individually or in the aggregate, are not having
and could not reasonably be expected to have a Material Adverse Effect. No event
has occurred which permits, or upon the giving of notice or passage of time or
both would permit, revocation, non-renewal, modification, suspension or
termination of any Company Permit that currently is in effect the loss of which
either individually or in the aggregate would reasonably be expected to have a
Material Adverse Effect. The Company and each of its respective directors,
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officers and gaming managers are in compliance with the terms of the Company
Permits, except for such failures to comply, which singly or in the aggregate,
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. No investigation or review by any governmental entity
with respect to the Company is pending or, to the best knowledge of the Seller,
threatened, nor has any governmental entity indicated an intention to conduct
the same, other than those the outcome of which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. Except
as disclosed in this Section 4.32, to the best knowledge of the Seller, neither
the Company nor any director, officer of gaming manager of the Company has
received any written claim, demand, notice, complaint, court order or
administrative order from any governmental entity in the past three years,
asserting that a license of it or them, as applicable, issued by the Mississippi
Gaming Commission, should be revoked or suspended. The Seller knows of no facts,
which, if known to the regulators under the Mississippi Gaming Laws, could
reasonably be expected to result in the revocation or suspension of a license of
the Company, or of any officer, directors or gaming manager, under any
Mississippi Gaming Laws or would be reasonably expected to disqualify the
Company from licensing by the Mississippi Gaming Commission. The Company has not
suffered a suspension or revocation of any material license held under the
Mississippi Gaming Laws.
4.33. Taxes. Seller (i) has filed or will file in true and correct form all Tax
Returns required to be filed by it, and (ii) has timely paid or has made
appropriate provision for on its or the HPI's balance sheet (in accordance with
generally accepted accounting principles) all material taxes whether or not
shown to be due on or with respect to such tax returns or claimed to be due from
it by any governmental authority with respect to any liability for taxes, except
in the case of clauses (i) or (ii) for failures which would not reasonably be
expected to result in a Material Adverse Effect. There are no Liens with respect
to taxes upon any of the Purchased Assets, except for current taxes not yet due.
4.34. Year 2000. Except as disclosed in the HPI SEC Reports, Seller has taken
all actions reasonable and appropriate to confirm that there will be no Material
Adverse Effect to the Business or the Business' electronic systems or material
interruptions in the Business by reason of the advent of the year 2000;
provided, however, that no representation or warranty is being made with the
respect to Business' third party systems suppliers.
4.35. Leased Employees. Seller does not employ and has not employed any "leased
employees" as defined in Section 414(n) of the Internal Revenue Code in
connection with the Business.
4.36. Affirmative Action Programs. Seller has not and does not presently
participate in, and is not required to participate in by
any Law, any affirmative action programs.
4.37. Utilities. To Seller's knowledge, all material water, sewer, gas,
electric, telephone and all other utilities for the present use and operation of
the Business are installed to the property lines thereof, are all connected and
operating, are adequate to service such property as presently configured and to
permit present usage of such property.
4.38. Real Property. Schedule 2.1.1.(a) and Schedule 6.1.4 lists all of the
real property owned by Company.
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5. REPRESENTATIONS AND WARRANTIES OF BUYER.
As an inducement for Seller to enter into this Agreement, Buyer
represents and warrants to Seller that each of the following statements is true
and correct as of the date hereof:
5.1. Organization, Corporate Power and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Mississippi and is duly qualified to do business as a foreign corporation in the
jurisdictions in which Buyer conducts its business, except where the failure so
to qualify will not have a material adverse effect on Buyer's ability to perform
its obligations under the Transaction Documents. Buyer has all requisite
corporate power and authority to acquire, own, lease and operate the Purchased
Assets, to conduct the Business and to execute and deliver the Transaction
Documents to which it is a party and to perform its obligations thereunder.
5.2. Authorization of Agreement. The execution, delivery and performance by
Buyer of the Transaction Documents to which it is a party, and the consummation
by it of the Transactions, have been duly authorized by all necessary corporate
action by Buyer. This Agreement has been, and each other Transaction Document to
which Buyer is a party will be at the Closing, duly executed and delivered by
Buyer and constitute, or will, when delivered, constitute, the legal, valid and
binding obligations of Buyer, enforceable against Buyer in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally.
5.3. Effect of Agreement. The execution, delivery and performance by Buyer of
the Transaction Documents to which it is a party, and the consummation by it of
the Transactions, will not violate the Certificate of Incorporation or By-laws
of Buyer or (assuming compliance with the matters referenced in Section 5.4
hereof) any law, regulation, order, judgment, award or decree of any
Governmental Authority or any material indenture, material agreement or other
material instrument to which Buyer is a party, or by which Buyer or its
properties or assets are bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under, any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge, security interest or encumbrance of any nature
whatsoever upon any of the properties or assets of Buyer, except to the extent
the effect of any such violation, breach or default will not be materially
adverse to Buyer's ability to fulfill its obligations under the Transaction
Documents to which it is a party.
5.4. Approvals. Except as set forth in Schedule 5.4 and except for filings
pursuant to the HSR Act and under the Mississippi Gaming Laws, no approval,
authorization, consent or order or action of or filing with any court,
administrative agency or other Governmental Authority is required to be obtained
by Buyer for the execution and delivery by Buyer of the Transaction Documents to
which it is a party or the consummation by it of the Transactions. Except as set
forth on Schedule 5.4, Buyer has received all required consents from its
lender(s) and any other parties necessary for Buyer to execute this Agreement
and consummate the Transactions.
5.5. Commissions. Except as otherwise provided in Section 12.2 herein and except
as set forth on Schedule 5.5, neither Buyer nor any of its directors, officers,
employees or agents have employed, or incurred any liability to, any broker,
finder or agent for any brokerage fees, finder's fees, commissions or other
amounts with respect to the Transactions.
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5.6. Financing. PNG has delivered to Seller a true and complete copy of a letter
from Lehman Brothers dated November 24, 1999 stating that Lehman Brothers is
"highly confident" of its ability to arrange for at least $311,400,000 of
financing to be used to fund the Cash Portion of the Purchase Price for the
Transactions and the transactions contemplated by the Other Asset Purchase
Agreement. There have been no changes or amendments to such Lehman Brothers
letter. The information PNG has prepared and supplied to Lehman Brothers for
purposes of issuing such letter is, in all material respects, true and correct,
and neither PNG nor Buyer has any reason to believe that the conditions to
funding identified in the Lehman Brothers' letter will not be satisfied by the
Closing Date.
5.7. Investigation of the Purchased Assets. Except as expressly provided in
Sections 4.20 and 4.21 hereof, Buyer is purchasing the Purchased Assets without
any warranties, representations or guaranties, either express or implied, from
or on behalf of Seller, including, but in no way limited to, any warranty of
condition, merchantability, habitability or fitness for a particular use or
purpose, marketability, prospects for future development or compliance with law,
and Buyer hereby expressly waives any such implied warranties or representations
relating to the Purchased Assets or any matter affecting the Purchased Assets.
Buyer has heretofore undertaken and will as of the Closing Date have made all
such inquiries and investigations regarding the Purchased Assets and all matters
relating thereto as Buyer deems necessary or appropriate under the
circumstances, and that based upon the same, Buyer will be relying thereon and
on the representations, warranties and other provisions set forth herein and in
the Transaction Documents. All material prepared by third parties and delivered
to Buyer by Seller, its agents, or any other person acting for or on behalf of
Seller, whether in the form of maps, surveys, reports, studies, and all other
review matters have been furnished by Seller to Buyer solely as a courtesy, and
neither Seller nor its agents has verified the accuracy of such information or
the qualifications of the persons preparing such information.
5.8. Licensing. Neither PNG nor Buyer knows of no facts, which, if known to the
regulators under the Mississippi Gaming Laws, could reasonably be expected to
disqualify either of them, any of their subsidiaries or any of the Licensed
Persons from licensing under the Mississippi Gaming Laws or which would prevent
or materially delay the grant of licenses or approvals under the Mississippi
Gaming Laws necessary for Buyer to consummate the Transactions. Neither PNG nor
Buyer knows of any reason why either of them, any of their subsidiaries, or any
of the Licensed Persons would be denied a gaming license or approval necessary
under the Mississippi Gaming Laws to consummate the Transactions or of any
reason why such licensing or approval would be materially delayed.
6. COVENANTS OF SELLER.
6.1. Conduct of Business. During the period from the date hereof to the Closing
Date, unless Buyer consents otherwise in writing (which consent shall not be
unreasonably withheld), Seller shall, and shall cause Company to,:
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6.1.1.
Ordinary Course. Conduct the Business only in the ordinary
course, except as contemplated by this Agreement;
6.1.2. Preservation of Goodwill. Use reasonable commercial efforts to
preserve the goodwill of those of its suppliers, customers
and distributors having business relations with the Business;
6.1.3. Maintain Insurance. Maintain any insurance coverage existing as of the
date hereof against loss or damage to the Purchased
Assets;
6.1.4. Sale of Purchased Assets. Not transfer or encumber any of the Purchased
Assets except (a) for any transfer or encumbrance in the ordinary course of
business and (b) the sale of the real estate parcels described on Schedule 6.1.4
for which Seller or the Company shall be entitled to retain the proceeds;
6.1.5. Maintenance of Purchased Assets. Use reasonable commercial efforts to
maintain the Purchased Assets, in the aggregate, in a condition comparable to
their current condition, reasonable wear, tear and depreciation excepted, and
except for Purchased Assets disposed of, sold or consumed in the ordinary course
of business;
6.1.6. Assigned Contracts. Not materially amend any Assigned Contract or be in
default under any Material Contract (other than to the extent that the execution
of this Agreement and the consummation of the Transactions may or may be alleged
to constitute a default under any Material Contract);
6.1.7. Leases. Not materially amend any Lease or be in default under any
Lease (other than to the extent that the execution of
this Agreement and the consummation of the Transactions may or may not be
alleged to constitute a default under any Lease);
6.1.8. Charter and Bylaws. Not materially amend its Certificate of
Incorporation or bylaws in a manner that would have an adverse
effect on the Transactions;
6.1.9. Employment Contracts. Except for agreeing to any "stay bonuses" or
special severance agreements, not materially increase the compensation or other
remuneration of any of the Company's current officers or key Employees without
Buyer's written approval, which approval shall not be unreasonably withheld.
6.1.10. Material Contracts. Not to enter into, renew, extend, adjust or modify
any Contract (excluding standing purchase orders for food and beverage items
ordered in the ordinary course of business) that would obligate the Company or
Seller to pay over the term of the contract more than $100,000, if made in the
ordinary course of business, or $200,000, if not made in the ordinary course of
business.
6.1.11. Capital Expenditures. Continue with its capital expenditures based upon
the Company's Capital Expenditure Budget for Fiscal Year 2000 which is attached
hereto as Schedule 6.1.11 ("Budget") through the month end ending on or prior to
the Closing Date (the "Final Month End") equal to the capital expenditures
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called for by the Budget prorated on a monthly basis, with the failure to do
being governed solely by the next sentence. In the event that by the Closing
Date Seller or the Company has not made capital expenditures equal to capital
expenditures called for by the Budget on a monthly prorated basis through the
Final Month End, at the Closing Seller shall pay to Buyer the amount of the
shortfall in capital expenditure spending. Conversely, in the event that by the
Closing Date Seller or the Company has made capital expenditures in excess of
the capital expenditures called for by the Budget on a monthly prorated basis
through the Final Month End, at the Closing Buyer shall pay to Seller the amount
of such excess in capital expenditure spending.
6.1.12. U.S. Highway 90. Use reasonable efforts to continue processing the
permits relating to the proposed road connecting the Business to U.S. Highway
90, provided, however, Seller will have no obligation to build such road.
6.1.13. Transfer of Employees. Not transfer any current Employee of the
Business to HPI or any of its subsidiaries.
6.2. Access. Seller will (a) during ordinary business hours and upon reasonable
notice from Buyer, permit Buyer and its authorized representatives to have
access to all Purchased Assets, including without limitation books, records,
offices and other facilities and properties of the Business, in order to make
such inspections, tests, and investigations as Buyer shall deem appropriate, (b)
furnish, as soon as reasonably practicable, to Buyer or its authorized
representatives such financial and operating data and other information in
Seller's possession with respect to the Purchased Assets as Buyer may from time
to time reasonably request, (c) make available copies of all insurance policies
covering the Purchased Assets and the Assumed Liabilities, (d) make available to
the Buyer a copy of each material report, schedule or other document (to the
extent accessible to Seller without undue effort) filed or received by the
Seller since November, 1996 with respect to the Purchased Assets with any
Governmental Authority having jurisdiction over the Purchased Assets and (e)
otherwise reasonably cooperate in the examination or audit of the Business by
Buyer; provided, however, that (i) any such inspection shall be conducted in
such a manner as to not interfere unreasonably with the operation of the
Purchased Assets, (ii) neither the Seller nor the Company shall be required to
take any action that would constitute a waiver of the attorney-client privilege,
(iii) neither the Seller nor the Company need supply the Buyer with any
information that the Seller is legally prohibited from supplying and (iv) with
respect to customer data, Buyer's employees may only review customer data
information at the premises of the Business and in the presence of
representatives of Seller and Buyer shall not make copies of such information.
Without Seller's prior written consent, Buyer shall not be entitled or permitted
(i) to perform or cause to be performed any invasive actions or any drilling, or
(ii) to initiate any inquiry or request (including any inquiry or request
relating to any zoning variance, zoning change or conditional use permit)
directed at any governmental official with respect to the Real Property;
provided, however, that nothing in this clause shall be deemed to prevent Buyer
from inspecting or reviewing any or all records of any federal, state, or local
governmental authority. Buyer shall immediately repair any and all damage
resulting from the acts or omissions of Buyer or Buyer's agents, employees,
contractors, representatives or subcontractors relating to the whole or any part
of the Real Property. Buyer shall indemnify, defend and hold Seller harmless
from and against any and all claims and liens arising out of the respective
activities of Buyer and its authorized representatives in and about the Real
Property prior to the Closing or earlier termination of this Agreement.
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6.3. No Solicitation. Except as provided in this Section, Seller shall not, and
Seller shall cause its Affiliates and the respective officers, directors,
employees, investment bankers, attorneys, accountants and other representatives
and agents (collectively, "Representatives") of Seller and its Affiliates not
to, directly or indirectly, initiate, solicit, encourage or participate in
negotiations or discussions relating to, or provide any information to any
person concerning, or take any action to facilitate the making of, any offer or
proposal which constitutes or is reasonably likely to lead to any proposal
(other than any proposal by Buyer or its Affiliates) regarding any sale, lease,
exchange, transfer or other disposition of all or a substantial portion of the
Business or the Purchased Assets, or any inquiry with respect thereto, or agree
to approve or recommend any such proposal.
6.4. Consents. As promptly as practicable after the date hereof, Seller shall
make all required filings with governmental bodies and other regulatory
authorities, and use all reasonable efforts to obtain all permits, approvals,
authorizations and consents of all third parties, required for Seller to
consummate the Transactions. Seller and Buyer shall use reasonable efforts to
obtain such consents to the assignment of the Contracts as may be required.
Notwithstanding anything herein to the contrary, the parties hereto acknowledge
and agree that at the Closing, Seller will not assign to Buyer any Contract that
by its terms requires, prior to such assignment, the consent of any other
contracting party thereto unless such consent has been obtained prior to the
Closing Date. With respect to each such Contract not assigned on the Closing
Date, after the Closing Date, Seller shall continue to deal with the other
contracting party(ies) to such Contract as the prime contracting party, and
Buyer and Seller shall use reasonable efforts to obtain the consent of all
required parties to the assignment of such Contract. Such Contract shall be
promptly assigned by Seller to Buyer after receipt of such consent after the
Closing Date, and thereafter shall be deemed to be an Assigned Contract for all
purposes hereunder. Notwithstanding the absence of any such consent, Buyer shall
be entitled to the benefits of such Contract accruing after the Closing Date to
the extent that Seller may provide Buyer with such benefits without violating
the terms of such contract; Buyer agrees to perform at its sole expense all of
the obligations of Seller to be performed under such Contract after the Closing
Date.
6.5. Transfer of Purchased Assets to Seller. Prior to the Closing, Seller shall
take all action necessary to transfer the Purchased Assets from its subsidiaries
(by merger or otherwise) or to otherwise cause such entities to take such action
as may be necessary so that the sale of the Purchased Assets contemplated hereby
shall be completed on the Closing Date. In furtherance thereof, the Seller shall
execute and deliver such additional instruments of conveyance and transfer as
the Buyer may reasonably require, in order to more effectively vest in it, and
put it in possession of, the Purchased Assets.
6.6. Supplement to Disclosures. Between the date hereof and the Closing Date,
Seller shall promptly disclose to the Buyer in writing any material information
set forth in the Disclosure Schedules that is no longer complete, true or
applicable and any material information of the nature of that set forth in the
Disclosure Schedules that arises after the date hereof and that would have been
required to be included in the Disclosure Schedules if such information had been
obtained on the date of delivery thereof. For purposes of determining the
accuracy of the representations and warranties contained in Section 4 and the
fulfillment of conditions precedent set forth in Section 8.1.3, the Disclosure
Schedules shall be deemed to include only that information contained therein on
the date of this Agreement and as the same may be amended or supplemented with
44
Buyer's consent; provided, however, that the disclosure by Seller to Buyer after
the date hereof and prior to the Closing of such material information that
arises after the date hereof (in the instance where Buyer does not consent to an
amendment or supplement to the Disclosure Schedules) shall not be deemed a
breach of any provision of this Agreement, but instead shall only relate to
whether the conditions to Closing under Section 8.1.3 have been satisfied.
6.7. Solicitation of Employees. For a period of two (2) years from the Closing
Date, neither HPI nor any of its subsidiaries shall solicit the employment of
any of the employees at the Business so long as they are employed by the
Business; provided, however, that the foregoing shall not prohibit HPI or any of
its subsidiaries (a) from engaging in any general advertising or other indirect
method of soliciting prospective new employees which is not intended to
circumvent the foregoing provision or (b) from hiring any such employees who
apply to HPI or any of its subsidiaries for employment on an unsolicited basis.
6.8. Non-Competition. Except for projects described on Schedule 6.8, for a
period of five (5) years from the date hereof, neither HPI or any of its
subsidiaries will operate a gaming operation, other than any currently existing
gaming operation (as such operations may be expanded from time to time), within
one hundred miles of the Business; provided, however, that the term "currently
existing gaming operation" shall include gaming operations owned or operated by
third parties. It is the desire and intent of the parties to this Agreement that
this Section 6.8 be enforced to the fullest extent permissible under the law and
public policies of each jurisdiction in which enforcement is sought. If this
Section 6.8 is determined to be illegal or unenforceable in any jurisdiction -
because it extends for too long a time, because its geographic scope is too
great, because the business it covers is too broad or for any other reason or
reasons - there shall be deemed to be made those changes, and only those
changes, necessary so that it is valid and enforceable in such jurisdiction or
jurisdictions.
6.9. Environmental Permits. Seller shall use commercially reasonable
efforts to cooperate with Buyer in the transfer from Seller
to Buyer of all Environmental Permits.
6.10. Non-Solicitation of Unique Customers. For purposes of this Section 6.10,
the term "Active Customers" means customers of the Business who in the twelve
months prior to the Closing Date have either (i) registered points in the player
point system of the Business or (ii) had their gaming play at the Business'
table games tracked by the Business. For purposes of this Section 6.10, the term
"Unique Customers" means customers who, as of the date hereof, are listed on the
customer lists for the Business and who are not, as of the date hereof, listed
on the customer lists of any other operating property of HPI or its subsidiaries
(other than the customer list of the "Business" being purchased by Buyer under
the Other Asset Purchase Agreement). From and after the date hereof until the
second anniversary of the Closing Date, neither HPI nor any of its subsidiaries
(other than Business or the "Business" being purchased by Buyer under the Other
Asset Purchase Agreement) shall intentionally engage in any direct or targeted
solicitation of any of the Unique Customers; provided, however, that the
foregoing shall not prohibit HPI or any of its subsidiaries from engaging in any
general advertising or other indirect method of soliciting customers which does
not target any Unique Customers or which is otherwise not intended to circumvent
the foregoing provision. On the Closing Date, Seller shall furnish to Buyer a
list of the Active Customers who are also Unique Customers.
6.11. Monetary Liens. Seller shall remove all monetary liens encumbering the
Purchased Assets, including liens arising under the Bank of America Loan
Agreement, unless caused by or created by Buyer or any agent of Buyer, prior to
Closing.
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6.12. Additional Financial Statements. Seller shall provide such cooperation as
Buyer may reasonably request in connection with the preparation of audited
financial statements of the Business which may be necessary for Buyer's Form 8-K
relating to the Transactions, provided, however, that Buyer and Seller shall
each be responsible for paying one-half the fees and costs of Arthur Andersen
LLP or any other independent public accountants that assist Buyer in preparing
and/or auditing such financial statements.
7. COVENANTS OF BUYER.
7.1. Deposit.
7.1.1. Deposit. Concurrently with Buyer's execution of this Agreement, Buyer
shall deliver to Escrow Holder the sum of Three Million Dollars ($3,000,000), in
cash or immediately available funds (the "Deposit"). The Deposit plus accrued
interest thereon shall be credited against the Purchase Price at the Closing. In
the event that the Closing does not occur for any reason prior to termination of
this Agreement, the Deposit plus accrued interest thereon shall be refundable to
Buyer, except where Closing does not occur as a result of (i) Buyer's failure to
obtain the financing contemplated by Section 8.1.11 herein, (ii) a material
breach by Buyer of any of its representations or warranties under this
Agreement, (iii) a material breach by Buyer of any of its covenants under this
Agreement, or (iv) the failure of the Mississippi Gaming Commission to grant to
Buyer, its Affiliates and Licensed Persons all approvals and licenses necessary
for Buyer to consummate the Transactions for any reason (provided that, if such
failure to grant such approvals and licenses is either (a) solely as a result of
the Mississippi Gaming Commission's imposition of Specified Conditions on Buyer,
or (b) solely as a result of the Mississippi Gaming Commission's failure to take
any action with respect to Buyer's application for such approvals and licenses
necessary to consummate the Transactions (provided that Buyer is using its
reasonable efforts to diligently pursue all such approvals and licenses has not
withdrawn its application to the Mississippi Gaming Commission or taken any
action which would otherwise preclude or prevent the Mississippi Gaming
Commission from taking such action with respect to Buyer's application), then
this clause (iv) shall not entitle Seller to retain the Deposit plus accrued
interest thereon), in which instances the Deposit plus accrued interest thereon
shall be released by the Escrow Holder to Seller immediately upon Seller's
written demand.
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7.1.2.
LIQUIDATED DAMAGES. IF THE CLOSING DOES NOT OCCUR UNDER THE
CONDITIONS DESCRIBED UNDER CLAUSE (I), (II) OR (IV), BUT NOT CLAUSE (III), OF
SECTION 7.1.1 OF THIS AGREEMENT, BUYER AND SELLER AGREE THAT IT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX ACTUAL DAMAGES, AND THAT THE DEPOSIT
PAID BY BUYER PLUS ACCRUED INTEREST THEREON ("LIQUIDATED DAMAGES") IS A
REASONABLE ESTIMATE OF SELLER'S DAMAGES IN SUCH EVENT. RECEIPT OF SAID
LIQUIDATED DAMAGES SHALL BE SELLER'S SOLE AND EXCLUSIVE REMEDY IN THE EVENT
CLOSING DOES NOT OCCUR AS AFORESAID. SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE
READ AND UNDERSTAND THE PROVISIONS OF THIS PARAGRAPH AND BY THEIR INITIALS
IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS. IN NO EVENT SHALL SELLER'S
ACCEPTANCE OF THE LIQUIDATED DAMAGES BE A LIMIT OF ANY KIND ON BUYER'S INDEMNITY
AND DEFENSE OBLIGATIONS IN THIS AGREEMENT.
Seller's Initials: Buyer's Initials:
Casino Magic Corp. BSL, INC.
By:__/s/GMF______________ By:_/s/JAL ___________
Its: Authorized Signatory Its:_Vice President___
7.2. Title Matters.
(a) Within three (3) days following mutual execution of this Agreement, Buyer
shall request First American Title Insurance Company (the "Title Company"), to
prepare a preliminary title report with respect to the Real Property setting
forth the legal description of the Real Property and containing such exceptions
as the Title Company would specify in a standard coverage form of owner's policy
of title insurance with respect to the Owned Real Property and a standard
coverage form of leasehold policy of title insurance with respect to the Leased
Real Property and to deliver said preliminary title report to Buyer and Seller
and, in addition, to deliver to Buyer and Seller legible copies of all documents
of record or in its possession identified as exceptions in said preliminary
title report (such preliminary title report and legible copies of documents are
hereinafter collectively referred to as the "Preliminary Title Report").
(b) Buyer may, not later than twenty (20) days following the date of its receipt
of the Preliminary Title Report (and also not later than twenty (20) days
following the date of Buyer's receipt of any supplemental Preliminary Title
Report modifying the legal description of the Real Property or containing
exceptions not contained on the original Preliminary Title Report and not caused
by Buyer, together with legible copies of all documents identified as additional
exceptions), give written notice to Seller disapproving any items specified or
identified in said Preliminary Title Report or supplemental Preliminary Title
Report which, if not removed, would have a Material Adverse Effect on the
operation of the Business, as conducted by Seller or the Company. If Buyer does
not timely give notice of disapproval as aforesaid, then Buyer shall be deemed
to have approved all items on the Preliminary Title Report and any supplemental
Preliminary Title Report, as the case may be. Exceptions approved or deemed
approved by Buyer pursuant to this Section 7.2 shall be referred to collectively
as the "Permitted Exceptions".
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(c) If Buyer shall timely give notice of disapproval as aforesaid,
then Seller, at Seller's expense, may elect to attempt to
remove any exception to title to which Buyer objects. If
Seller is unable or unwilling to remove any such exception,
Seller shall not be in default hereunder as a result hereof,
and Buyer's sole remedy shall be to terminate this Agreement
by written notice delivered to Seller and Escrow Holder within
ten (10) business days after Seller has notified Buyer in
writing of Seller's inability or unwillingness to remove such
exception. In the event that Buyer terminates the Agreement
pursuant to this subsection, the Deposit along with accrued
interest shall be refunded upon written notice to Seller and
Escrow Holder of Buyer's election to terminate the Agreement.
7.3. Permits and Consents. As promptly as practicable after the date hereof, but
in any event no later than the deadlines described in the next two sentences,
Buyer will, and will cause its Affiliates to, make all filings with governmental
bodies and other regulatory authorities necessary in connection with the
Transactions and it will cause the shareholders, officers and directors of Buyer
and its Affiliates and any other persons required to file to make any required
filings (collectively, such shareholders, officers, directors and other persons
are referred to as "Licensed Persons"). In any event, Buyer and any Affiliate of
Buyer which proposes to hold a gaming license shall, within 30 days from the
date of this Agreement, file or cause to be filed all necessary applications
under the Mississippi Gaming Laws and under the laws and regulations of any
other jurisdiction in which PNG conducts gaming, racing, pari-mutuel or similar
activities for itself and its shareholders, officers, directors and other
personnel in order to obtain the necessary approvals under the Mississippi
Gaming Laws and the laws and regulations of such other jurisdictions in order to
consummate the Transactions. In any event, Buyer shall cause any and all of the
Licensed Persons required to make filings to file within 45 days of the date of
this Agreement all necessary applications for findings of suitability or other
required approvals in order to obtain the necessary approvals under the
Mississippi Gaming Laws and the laws and regulations of such other jurisdictions
in order for Buyer to consummate the Transactions. Buyer use all reasonable
efforts to obtain all permits, approvals, authorizations and consents of all
third parties, required for Buyer to consummate the Transactions, including the
filings pursuant to the Mississippi Gaming Laws. Buyer shall cause all Licensed
Persons to cooperate with the Mississippi Gaming Commission, to provide such
additional information as may be requested by the Mississippi Gaming Commission
or its agents and to make themselves available for interviews by the Mississippi
Gaming Commission or its agents if requested. Buyer, on behalf of itself, any of
its Affiliates and the Licensed Persons, shall allow Seller and its counsel to
make inquiry of the Mississippi Gaming Commission as to the status of Buyer's
licensing and approval process and, upon Seller's request, shall provide
documentation to that effect to the Mississippi Gaming Commission in order to
permit Seller and its counsel to make such inquiry. Without limiting the
foregoing, Buyer will notify Seller promptly of the receipt of comments or
requests from governmental bodies or other regulatory authorities relating to
such permits, approvals, authorizations and consents, and, on a regular basis,
keep Seller apprised of the status of the approval process with such
governmental bodies and other regulatory authorities. Buyer shall promptly
advise Seller upon receiving any communication from any governmental body or
other regulatory authority whose consent or approval is required for
consummation of the Transactions which causes Buyer to believe that there is a
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reasonable likelihood that any such consent or approval will not be obtained or
that the receipt of any such approval will be materially delayed. To the extent
the Mississippi Gaming Commission, acting through its agents, requires different
or additional financing commitments for financing of the Transactions and the
transactions contemplated by the Other Asset Purchase Agreement than the
financing contemplated as of the date of this Agreement to be provided by Lehman
Brothers, Buyer shall use commercially reasonable efforts to obtain such
commitments reasonably promptly, but no later than the date required by the
Mississippi Gaming Commission or its agents, and if it fails to do so and such
failure continues for thirty (30) days after the date required by the
Mississippi Gaming Commission or its agents (but in no event later than the
Outside Date specified in Section 3.1) or if Buyer fails to obtain such
financing commitments within such time frame notwithstanding the use of
commercially reasonable efforts, then in either case Seller shall have the right
to terminate this Agreement and be entitled to retain the Deposit.
7.4. Key Management Employees. Prior to the execution of this Agreement, Buyer
has provided by letter to Seller dated the date hereof a list of the Company's
key management employees ("Key Management Employees") with whom Buyer would like
to enter into employment agreements to take effect on the Closing. Buyer may,
not later than thirty (30) days following the date of this Agreement, terminate
this Agreement based on its failure to enter into employment agreements with the
Key Management Employees, provided Buyer has used its best efforts to do so. If
Buyer does not timely give written notice of its decision to terminate this
Agreement pursuant to this Section 7.4, then Buyer shall be deemed to have
waived this condition to Closing and to have waived any right to terminate this
Agreement by reason of such failure.
7.5. Access to Books and Records. Except as otherwise provided herein, Buyer
shall maintain for at least five (5) years all original books, records, files,
documents, papers and agreements pertaining to the Purchased Assets, the Assumed
Liabilities or otherwise to the Business before the Closing. After the Closing,
Buyer shall provide Seller and its representatives, during ordinary business
hours and upon reasonable notice from Seller, with reasonable access to such
original documents. If, at any time, Buyer proposes to dispose of any of such
original documents, Buyer shall first provide Seller with 60 days written notice
of such proposal and shall offer to deliver the original documents it wishes to
dispose of to Seller at the expense of Seller. At the end of such 60 day period,
Buyer may, without liability to Seller, dispose of any such original documents
which Seller has not informed Buyer in writing that it desires to recover. Buyer
acknowledges that Seller may make copies of such books, records, files,
documents, papers and agreements for its own records.
7.6. Cooperation in Third-Party Litigation. After the Closing, Buyer shall
provide such cooperation as Seller or its counsel may reasonably request in
connection with (a) any proceedings for which Buyer is entitled to
indemnification from Seller under Section 9.2.1 hereof; and (b) the Excluded
Liabilities. Such cooperation shall include, but not be limited to: (i) making
available at the reasonable request of Seller or its counsel and permitting
Seller and its counsel, to make and retain copies of, any and all documents in
the possession of or otherwise available to Buyer; (ii) making available upon
the reasonable request of Seller or its counsel, employees and other persons
within the control of or available to Buyer to consult with and assist Seller
and its counsel and to prepare for and testify in connection with any
proceedings, including depositions, trials and arbitration proceedings; and
(iii) making available at the reasonable request of Seller or its counsel such
49
other resources as may be within the control of or available to Buyer. Seller
shall reimburse Buyer for Buyer's reasonable, documented out-of-pocket expenses
incurred (including such items as travel costs, but not including any employee
salaries or overhead) in connection with fulfilling its obligations under this
Section 7.6.
7.7. [Intentionally omitted.]
7.8. Financing. Buyer will, and will cause its Affiliates to, use commercially
reasonable efforts to enter into definitive agreements providing for the
financing of Buyer's acquisition of the Purchased Assets hereunder and the
transactions contemplated by the Other Asset Purchase Agreement and to obtain on
the Closing Date the financing contemplated by such definitive financing
agreements. Buyer shall periodically report to Seller on the status of such
financing efforts and shall promptly notify Seller of material developments
relating thereto. If Lehman Brothers or another financing source notifies a
representative of Buyer that it has terminated its commitment or is no longer
willing to finance the Transactions and the transactions contemplated by the
Other Asset Purchase Agreement on terms and conditions that Buyer reasonably
believes will satisfy the requirements of a Governmental Agency, then Buyer
shall so notify Seller and unless Buyer provides Seller with a commitment from
another financing source reasonably comparable to Lehman Brothers' or such other
financing source's commitment, or if such commitment was not satisfactory for
the requirements of any Governmental Agency, reasonably satisfactory for such
requirements, within thirty (30) days after Buyer receives such notice from
Lehman Brothers or such other financing source (but in no even later than the
Outside Date specified in Section 3.1), Seller shall have the right to terminate
this Agreement and be entitled to retain the Deposit.
7.9. Registration Statement. [Intentionally omitted.]
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7.10.
Computer System Cut-Over. Notwithstanding the inclusion in the
Purchased Assets of certain computer hardware, software, and networking
capabilities used by the Seller in connection with the Business (the "Computer
System"), the Buyer acknowledges and agrees that for a period of up to six (6)
months following the Closing Date (the "Cut-Over Period"), the Seller shall be
entitled to continue to use the Computer System as provided in this Section.
Following the date hereof, Buyer and Seller shall cooperate with each other in
using commercially reasonable efforts to develop a "firewall" between Seller's
and Buyer's systems and data to be implemented as of the Closing Date for use
during the Cut-Over Period. During the Cut-Over Period, the Buyer shall permit
the Seller, at the Seller's request, to gain access to the Computer System both
through visits to the casino location during reasonable business hours and
remotely at such reasonable times as shall not materially disrupt the Buyer's
business operations. The Seller shall be permitted to operate the Computer
System and to input and derive data therefrom to support the Seller's other
commercial enterprises and to provide services to the Seller's customers while
the Seller is procuring new computer hardware, software, and networking
capabilities and transferring to this new computer system all of the Seller's
data resident on the Computer System. The Buyer shall abide by its obligations
set forth in the final sentence of the final paragraph in Section 2.1 hereof
with respect to all of the Seller's data stored on the Computer System and all
other Seller information that the Buyer receives in connection with the Computer
System. If in the course of using the Computer System as permitted under this
Section the Seller comes to possess or gain access to any Buyer information
(including, but not limited to, information comprising or incorporated in any of
the Purchased Assets), the Seller shall (a) treat any such information as the
confidential information of Buyer, (b) promptly notify Buyer that Seller
possesses or has access to such information or property, and (c) cooperate fully
with Buyer to return to Buyer or destroy such property promptly, as Buyer may
direct at its option.
7.11. Solicitation of Employees. For a period of two (2) years from the Closing
Date, Buyer shall not solicit the employment of any of the employees of HPI or
any of its subsidiaries so long as they are employed at such properties, except
as expressly permitted pursuant to Section 11 herein; provided, however, that
the foregoing shall not prohibit Buyer (a) from engaging in any general
advertising or other indirect method of soliciting new employees which is not
intended to circumvent the foregoing provision or (b) from hiring any such
employees who apply to Buyer for employment on an unsolicited basis.
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8.
CONDITIONS PRECEDENT.
8.1. Conditions Precedent to Obligations of Buyer. The obligations of Buyer
under this Agreement are subject, at the option of Buyer, to the satisfaction or
waiver of each of the following conditions on or prior to the Closing Date:
8.1.1. Title to Real Property. Buyer shall have obtained the unconditional
commitment of the Title Company to issue its standard form of policy of title
insurance (the "Title Policy") in favor of Buyer insuring Buyer as the fee owner
of the Owned Real Property and as the lessee under the Leases, in the amount of
the portion of the Purchase Price allocated to the Real Property subject to no
exceptions except: (a) the exceptions approved or deemed approved by Buyer
pursuant to Section 7.2; (b) property taxes for the current fiscal year not yet
due and payable; (c) such other exceptions as may have been approved in writing
by Buyer or imposed upon the Real Property by Buyer, with reinsurance and direct
access agreements as required by Buyer.
8.1.2. HSR Act. All waiting periods under the HSR Act shall have expired or
terminated.
8.1.3. Accuracy of Representations and Warranties. The representations and
warranties of Seller contained in this Agreement or in any certificate delivered
to Buyer pursuant hereto shall be true and correct on and as of the Closing Date
as though made at and as of that date (except where such representation and
warranty is made as of a date specifically set forth therein and except for
Section 4.19.9 (Casualty Loss) as to which the subject matter thereof shall be
governed by Section 12.14 herein), except where the failure to be true and
correct relates to matters which could not reasonably be expected to have a
Material Adverse Effect (except for those specific representations and
warranties (or portions thereof) qualified as to a Material Adverse Effect,
which shall be true and correct), and Seller shall have delivered to Buyer a
certificate to that effect;
8.1.4. Compliance with Covenants. Seller shall in all material respects have
performed and complied with all terms, agreements, covenants and conditions of
this Agreement to be performed or complied with by it at the Closing Date, and
Seller shall have delivered to Buyer a certificate to that effect;
8.1.5. Opinion of Counsel for Seller. Buyer shall have received the favorable
opinion of counsel to Seller, dated the Closing
Date, as provided in Section 3.5;
8.1.6. Legal Actions or Proceedings. No legal action or proceeding shall have
been instituted or threatened in writing by any governmental agency seeking to
restrain, prohibit, invalidate or otherwise affect the consummation of the
Transactions;
8.1.7. Consents and Permits Obtained. Each party hereto shall have obtained all
material consents and approvals required to be obtained from (a) any
Governmental Authority (including licenses and approvals from the Mississippi
Gaming Commission) and (b) the other parties to those Material Contracts set
forth on Schedule 8.1.7, except where the failure to obtain such consents or
approvals is a result of a breach by Buyer and except where the failure to
obtain any such consent or approval could not reasonably be expected,
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individually or in the aggregate with other such failures, to have a Material
Adverse Effect; provided, however, this condition shall not be deemed satisfied
if any approval or consent from the Mississippi Gaming Commission is conditioned
upon a requirement that Buyer construct hotel rooms on or near the premises of
the Business or make capital expenditures totaling ten percent (10%) or more of
the Purchase Price (determined without regard to any adjustments to the Purchase
Price) (the conditions described in this proviso shall be referred to as the
"Specified Conditions");
8.1.8. Key Management Employees. Buyer shall have entered into employment
contracts with the Key Management Employees pursuant to Section 7.4 (provided
that this condition shall be waived or deemed waived by Buyer in the
circumstances described in Section 7.4).
8.1.9. Other Transaction Documents. Seller shall have executed and delivered
original counterparts of each Transaction Document
(other than this Agreement) to which it is a party; and
8.1.10. Simultaneous Closing of Other Asset Purchase Agreement. The consummation
of the transactions contemplated by the Other Asset Purchase Agreement shall
occur simultaneously with the Closing.
8.1.11. Financing. Buyer and the "Buyer" under the Other Asset Purchase
Agreement shall have obtained financing for the Transactions and the
transactions contemplated by the Other Asset Purchase Agreement having terms
satisfactory to Buyer in an amount at least equal to $311,400,000 in the
aggregate.
8.2. Conditions Precedent to Obligations of Seller. The obligations of Seller
under this Agreement are subject, at the option of Seller, to the satisfaction
or waiver of each of the following conditions at or prior to the Closing Date:
8.2.1. HSR Act. All waiting periods under the HSR Act shall have expired or
terminated.
8.2.2. Accuracy of Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement or in any certificate delivered
to Seller pursuant hereto shall be true and correct in all material respects on
and as of the Closing Date as though made at and as of that date (except where
such representation and warranty is made as of a date specifically set forth
therein), and Buyer shall have delivered to Seller a certificate to that effect;
8.2.3. Compliance with Covenants. Buyer shall in all material respects have
performed and complied with all terms, agreements, covenants and conditions of
this Agreement to be performed or complied with by it at the Closing Date, and
Buyer shall have delivered to Seller a certificate to that effect;
8.2.4. Legal Actions or Proceedings. No legal action or proceeding shall have
been instituted or threatened in writing by any governmental agency seeking to
restrain, prohibit, invalidate or otherwise affect the consummation of the
Transactions;
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8.2.5. Opinion of Counsel for Buyer. Seller shall have received the favorable
opinion of counsel to Buyer, dated the Closing Date,
as provided in Section 3.5;
8.2.6. Consents Obtained. Each party hereto shall have obtained all material
consents and approvals required to be obtained from (a) any Governmental
Authority, and (b) the other parties to those Material Contracts set forth on
Schedule 8.1.7;
8.2.7. Purchase Price. Buyer shall have delivered the Purchase Price in
accordance with Section 3.3;
8.2.8. Other Transaction Documents. Buyer shall have executed and delivered
original counterparts of each Transaction Document to
which it is a party;
8.2.9. Releases. Seller shall have obtained any consents required under (i) the
Bank of America Loan Agreement, including, without limitation, the release of
any liens on the Purchased Assets, and (ii) the Leases, including, without
limitation the release of Company and any guarantor of Company from any
liability accruing under the Leases from and after the Closing Date; and
8.2.10. Simultaneous Closing of Other Asset Purchase Agreement. The consummation
of the transactions contemplated by the Other Asset Purchase Agreement shall
occur simultaneously with the Closing.
9. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS.
9.1. Survival of Representations. The representations and warranties set forth
in Sections 4.1, 4.2, 4.3, 4.33, 5.1, 5.2 and 5.3 shall survive indefinitely.
All other representations or warranties contained herein shall survive until
three (3) years from the Closing Date and shall then expire. Upon the expiration
of a representation or warranty pursuant to this Section 9.1, unless written
notice of a claim based on such representation or warranty specifying in
reasonable detail the facts on which the claim is based shall have been
delivered to the Indemnifying Party prior to the expiration of such
representation or warranty, such representation or warranty shall be deemed to
be of no further force or effect, as if never made, and no action may be brought
based on the same, whether for breach of contract, tort or under any other legal
theory.
9.2. Agreements to Indemnify.
9.2.1. Seller Indemnity. Subject to the terms and conditions of this Section 9,
Seller hereby agrees to indemnify, defend and hold Buyer harmless from and
against all Losses incurred by Buyer and Buyer's employees, directors, officers,
shareholders and agents resulting from (a) a breach of any representation,
warranty or covenant of Seller
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made in this Agreement, (b) any liabilities or obligations of Seller other than
the Assumed Liabilities, (c) any action, suit or proceeding with respect to the
Business pending or overtly threatened against Seller or Company to the extent
arising from or based on facts occurring before the Closing Date or (d)
non-monetary liens capable of removal by payment and objected to by Buyer in
accordance with Section 7.2, other than those caused by Buyer or its agents.
9.2.2. Buyer Indemnity. Subject to the terms and conditions of this Section 9,
Buyer hereby agrees to indemnify, defend and hold Seller harmless from and
against all Losses incurred by Seller and Seller's employees, directors,
officers, shareholders and agents resulting from (a) a breach of any
representation, warranty or covenant of Buyer made in this Agreement, (b) the
failure of Buyer to pay, perform and discharge when due the Assumed Liabilities,
or (c) the conduct of the Business after the Closing or (d) any and all actions,
suits and proceedings commenced or any other claims or demands asserted against
Buyer, Seller or the Company after the Closing Date with respect to the Business
except for those actions, suits and proceedings which are the responsibility of
Seller under Section 9.2.1(c).
9.2.3. Indemnification Threshold and Limit. No claim for indemnification under
9.2.1 and 9.2.2 hereof or Sections 9.2.1 and 9.2.2 of the Other Asset Purchase
Agreement will be made by either party hereunder or by the parties to the Other
Asset Purchase Agreement unless the aggregate of all Losses incurred by any such
party (with the Losses of Seller under this Agreement and the Losses of "Seller"
under the Other Asset Purchase Agreement being aggregated for this purpose)
otherwise indemnified against hereunder exceeds $1,000,000 and only to the
extent of any such Losses in excess of $1,000,000; provided, however that the
amount of claims Buyer is obligated to bear under Section 9.2.1(d) hereof and
Section 9.2.1(d) of the Other Asset Purchase Agreement by reason of the
foregoing clause shall in no event exceed, in the aggregate, $200,000.
Notwithstanding any other provisions of this Agreement or the Other Asset
Purchase Agreement, the obligations of Seller and the "Seller" under the Other
Asset Purchase Agreement under the indemnity provisions set forth in Section
9.2.1(a) hereof and Section 9.2.1(a) of the Other Asset Purchase Agreement,
shall in no event exceed, in the aggregate, $8,000,000.
9.2.4. Subrogation. If the Indemnifying Party makes any payment under this
Section 9 in respect of any Losses, the Indemnifying Party shall be subrogated,
to the extent of such payment, to the rights of the Indemnified Party against
any insurer or third party with respect to such Losses; provided, however, that
the Indemnifying Party shall not have any rights of subrogation with respect to
the other party hereto or any of its Affiliates or any of its or its Affiliates'
officers, directors, agents or employees.
9.3. Conditions of Indemnification. The respective obligations and liabilities
of the Indemnifying Party to the Indemnified Party under Section 9.2 shall be
subject to the following terms and conditions:
9.3.1. Notice. Within 15 days after receipt of notice of commencement of any
action or the assertion of any claim by a third party (but in any event at least
ten days preceding the date on which an answer or other pleading must be served
in order to prevent a judgment by default in favor of the party asserting the
claim), the Indemnified Party shall give the Indemnifying Party written notice
thereof together with a copy of such claim, process or other legal pleading, and
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the Indemnifying Party shall have the right to undertake the defense thereof by
representatives of its own choosing that are reasonably satisfactory to the
Indemnified Party. Notwithstanding the Indemnifying Party's undertaking of such
defense, the Indemnified Party shall have the right to engage its own counsel,
at its own expense, and participate in the defense of the claim; provided,
however, that the Indemnifying Party shall retain the right in its sole and
absolute discretion to make all decisions with respect to the defense,
settlement or compromise of such claim, provided that the Indemnifying Party
remains liable for any payments due under any such settlement or compromise.
9.3.2. Failure to Assume Defense. If the Indemnifying Party, by the fifteenth
day after receipt of notice of any such claim (or, if earlier, by the fifth day
preceding the day on which an answer or other pleading must be served in order
to prevent judgment by default in favor of the person asserting such claim),
does not elect to defend against such claim, the Indemnified Party will (upon
further notice to the Indemnifying Party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for the account
and risk of the Indemnifying Party; provided, however, that the Indemnified
Party shall not settle or compromise such claim without the Indemnifying Party's
consent, which consent shall not be unreasonably withheld; and provided further
that, the Indemnifying Party shall have the right to assume the defense of such
claim with counsel of its own choosing at any time prior to settlement,
compromise or final determination thereof.
9.3.3. Claim Adverse to Indemnifying Party. Notwithstanding anything to the
contrary in this Section 9.3, if there is a reasonable probability that a claim
may materially adversely affect the Indemnifying Party other than as a result of
money damages or other money payments, the Indemnifying Party shall have the
right, at its own cost and expense, to compromise or settle such claim, but the
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party, settle or compromise any claim or consent to the entry of any
judgment which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party a release from all
liability in respect of such claim.
9.3.4. Cooperation. In connection with any such indemnification, the
Indemnified Party will cooperate in all reasonable requests
of the Indemnifying Party.
9.4. Remedies Exclusive. The remedies provided in this Section 9 shall be the
exclusive remedy for monetary damages (whether at law or in equity). None of
either party's officers, employees, agents, stockholders, consultants,
investment bankers, legal advisers or representatives shall have any personal
liability or obligation to the other party in connection with the Transactions
contemplated by this Agreement or in respect of any statement, representation,
warranty or assurance of any kind made by such party, its representatives or any
other person.
9.5. Damages. Notwithstanding anything to the contrary elsewhere in this
Agreement or any other Transaction Document, no party (or its Affiliates) shall,
in any event, be liable to the other party (or its Affiliates) for any
consequential damages, including, but not limited to, loss of revenue or income,
cost of capital, or loss of business reputation or opportunity relating to the
breach or alleged breach of this Agreement. Each party agrees that it will not
seek punitive damages as to any matter under, relating to or arising out of the
Transactions.
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10. TERMINATION.
This Agreement may be terminated at any time on or prior to the Closing
Date:
10.1. Injunction. By either party if any court of competent jurisdiction in the
United States shall have issued an order (other than a temporary restraining
order), decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Transactions and such order, decree, ruling or other
action shall have become final and non-appealable.
10.2. Mutual Agreement. By mutual written agreement of the parties.
10.3. Termination Date. By either party if the Closing shall not have occurred
by the Outside Date as provided in Section 3.1 hereof (provided that the right
to terminate this Agreement pursuant to this Section 10.3 shall not be available
to any party who has materially breached any representation, warranty or
covenant of this Agreement).
10.4. Material Breach. By either Buyer or Seller, if there has been a breach on
the part of the other party of its representations or warranties set forth
herein (so long as, in the case of representations and warranties of Seller,
such breach relates to matters that could reasonably be expected to have a
Material Adverse Effect) or a material breach on the part of the other party of
its covenants set forth herein; provided, however, that if such breach is
susceptible to cure the breaching party shall have twenty (20) business days
after receipt of written notice from the other party of its intention to
terminate this Agreement pursuant to this Section 10.4 in which to cure such
breach or, if such cure cannot be effected within such 20 business day period,
then the breaching party shall commence pursuing a cure within such period and
the other party shall not have the right to terminate this Agreement as long as
the breaching party is diligently pursuing a cure.
10.5. Uncured Asset Loss. By either Seller or Buyer, pursuant to Section
12.14 hereof.
10.6. Failure to Enter Into Employment Agreements with Key Management Employees.
By Buyer, pursuant to Section 7.4 hereof provided that such termination right be
exercised, if at all, within the time frame described in such Section.
10.7. Rejection or Withdrawal of Buyer's Application for Gaming Approval;
Failure to Secure Replacement Financing. By Seller, (a) if the Mississippi
Gaming Commission rejects Buyer's application for approval of the Transactions
or the transactions contemplated by the Other Asset Purchase Agreement or if
Buyer withdraws such application or (b) under the circumstances entitling Seller
to terminate this Agreement under Sections 7.3 and 7.8 hereof.
10.8. Conditions No Longer Capable of Satisfaction. By either party if any of
the conditions to such party's obligation to consummate the Transaction
specified in Section 8 have not been met or waived by such party and as such
condition is no longer capable of satisfaction.
10.9. Effects of Termination. If this Agreement is terminated pursuant to this
Section 10, all obligations of the parties hereunder (except for this Section 10
and Sections 6.2 (last two sentences), 7.1.1 (last sentence), 7.1.2, 9.5, 11.1,
11.8, 12.2, 12.6, 12.8, 12.9, 12.10 and 12.11) shall terminate without liability
57
of any party to any other party; provided, however, that no termination shall
relieve any party from any liability arising from or relating to a willful
breach prior to termination or willful failure to perform its obligations
hereunder.
11. OTHER COVENANTS.
11.1. Announcements. Each party agrees not to make, nor cause to be made, any
news releases or other public announcements pertaining to the Transactions
without first consulting the other party and attempting to formulate a mutually
satisfactory arrangement for such disclosure, and in any case will make an
announcement thereafter without the consent of the other only to the extent it
believes in good faith that disclosure is required by applicable law or by
obligations pursuant to any rules of or listing agreement with any national
securities exchange or the Nasdaq National Market System. The commencement of
litigation relating to this Agreement or any proceedings in connection therewith
shall not be deemed a violation of this Section 11.1.
11.2. Employment Matters.
11.2.1. Offers of Employment. Buyer agrees that it will offer employment to all
active Employees, and all Employees on approved leaves of absence of 90 days or
less, currently working exclusively for the Business on the Closing Date. Each
such Employee shall be offered such employment at a minimum of his or her basic
annual salary (including any stay bonuses and other bonuses) in effect on the
date of this Agreement. Buyer shall treat each Hired Employee's service with
Seller or the Company prior to the Closing in the same manner as such service
has been recognized by Seller or the Company for purposes of determining
seniority rights and with respect to accrued but unused vacation and/or sick
pay, except where recognition of such service would result in duplication of
benefits provided. In addition, for a period of one (1) year after the Closing
Date, each Employee that continues to be employed by Buyer shall be eligible to
receive benefits under Employee Benefits Plans sponsored or maintained by Buyer
or its Affiliates, or to which Buyer or its Affiliates contribute (and for the
costs of which Seller shall not be responsible), which, in the aggregate, are
substantially similar to the benefits for which such Employee was eligible
immediately before the Closing Date under the Employee Benefit Plans maintained
or sponsored by Seller or its Affiliates, or to which Seller or its Affiliates
contributed. Each Employee's period of service and compensation history with
Seller or its Affiliates shall be counted strictly for purposes of determining
eligibility for, and the amount and vesting of, benefits under each Employee
Benefit Plan maintained or sponsored by Buyer or its Affiliates, or to which
Buyer or its Affiliates contribute. Each Employee shall be covered as of his
date of hire under such Employee Benefit Plan maintained or sponsored by Buyer
or its Affiliates, or to which Buyer or its Affiliates contribute, providing
health care benefits (whether or not through insurance) without regard to any
waiting period or any condition or exclusion based on any pre-existing
conditions, medical history, claims experience, evidence of insurability, or
genetic factors, and shall receive full credit for any co-payments or deductible
payments, or account balances under any cafeteria or flexible spending plan made
before the Closing Date to the extent Seller transfers the amount of such
account balances under such cafeteria or flexible spending plan to Buyer or
Buyer's Employee Benefit Plans. As of the Closing Date, or as soon as
practicable thereafter, Seller shall make all required contributions to the HPI
401(k) Investment Plan and all other Employee Benefit Plans sponsored or
maintained by Seller for all periods before the Closing Date. Upon the request
of Seller made within one (1) year after the Closing Date, Buyer shall cause a
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defined contribution plan qualified under Section 401(a) of the Internal Revenue
Code and maintained or sponsored by Buyer or its Affiliates to accept from the
HPI 401(k) Investment Plan a plan-to-plan transfer under Section 414(l) of the
Internal Revenue Code of the assets allocated to the accounts of Employees and
of the liabilities attributable thereto.
11.2.2. Personnel Records. After the date hereof but prior to the Closing Date,
Buyer and Seller shall issue a joint letter notifying all Employees that Buyer
is purchasing the Business and intends to make offers of employment to all
Employees. The letter shall indicate that all Employees interested in being
eligible to receive an employment offer from Buyer should consent to the release
of its personnel file to Buyer prior to Closing. Prior to Closing, Seller shall
transfer to Buyer personnel records of each Employee who has consented to the
transfer of such records. Notwithstanding the foregoing, Buyer shall not have
access to personnel records of Seller or the Company relating to individual
performance or evaluation records, medical histories or other information which
in Seller's or the Company's reasonably good faith opinion is prohibited by law.
Buyer shall have no obligation under this Agreement to make an offer of
employment to any Employee who does not consent to the release of its personnel
file to Buyer prior to Closing. Prior to the Closing Date, Seller shall transfer
to Buyer compensation and service history of each Hired Employee.
11.2.3. Payment of Accrued Wages, Bonus and Expenses. Seller or the Company
shall pay all accrued but unpaid wages and earned but unused vacation, in each
case as of the Closing Date, to any Employee that does not accept Buyer's offer
of employment. To the extent any Hired Employee has accrued but unpaid wages,
accrued bonuses or earned but unused vacation as of the Closing Date, Seller or
the Company shall either (i) pay to such Hired Employee such amounts as such
Hired Employee is entitled to receive as of the Closing Date, or (ii) pay to
Buyer (in the form of a reduction in the Cash Portion of the Purchase Price
pursuant to Section 3.3.2.2 hereof) the collective amount of such accrued but
unpaid wages, accrued bonuses and earned but unused vacation (together with any
Social Security taxes, FICA, and payroll expenses in respect of wages accrued
prior to the Closing Date), which amount Buyer shall pay to such Hired Employees
in such amounts and at such times as such amounts are due to such Hired
Employees. Buyer shall be responsible for Social Security taxes, FICA, and
payroll expenses in respect of wages accrued prior to the Closing paid to Buyer
by Seller (or credited against the Cash Portion of the Purchase Price).
11.3. Cooperation. Each party hereto agrees, both before and after the Closing,
to execute any and all further documents and writings and to perform such other
reasonable actions which may be or become necessary or expedient to effectuate
and carry out the Transactions (which shall not include any obligation to make
payments). In connection with filings to governmental bodies and other
regulatory agencies required to consummate the Transactions, Buyer and Seller
agree, upon reasonable request from the other, to furnish promptly all
information in its possession relating to such filings and not otherwise
available to the requesting party.
11.4. Excluded Assets. If, after the Closing Date, Excluded Assets, including,
but not limited to, proprietary information of Seller, shall remain on the Real
Property, then Buyer shall take reasonable efforts to deliver such Excluded
Assets to Seller at the expense of Seller and, so long as such information shall
remain on the Real Property, Buyer shall exercise the same reasonable degree of
care with respect thereto as it does with respect to its own property.
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11.5. Tax Cooperation. After the Closing, the parties shall, and shall cause
their respective Affiliates to, cooperate with each other in the preparation of
all tax returns and shall provide, or cause to be provided, to such other party
any records and other information reasonably requested by such party in
connection therewith as well as access to, and the cooperation of, the auditors
of such other party and its Affiliates. After the Closing, the parties shall,
and shall cause their respective Affiliates to, cooperate with the other party
in connection with any tax investigation, tax audit or other tax proceeding
relating to the Business, including Buyer making its employees available to
testify on the behalf of Seller or the Company in connection with any such
investigation, audit or other proceeding. Any information obtained pursuant to
this Section relating to taxes shall be kept confidential by the other party.
11.6. Exchange Cooperation. Buyer acknowledges that Seller may transfer the Real
Property and/or the casino buildings to Buyer as part of a tax-deferred exchange
by Seller pursuant to Section 1031 of the Internal Revenue Code, and that Seller
has the right to restructure all or a part of the within transaction as provided
in Internal Revenue Code ss. 1031 as a concurrent or delayed (non-simultaneous)
tax deferred exchange for the benefit of Seller. Buyer agrees to cooperate, and
if requested by Seller, to accommodate Seller in any such exchange, provided
that (i) such cooperation and/or accommodation shall be at no further cost or
liability to Buyer and Seller hereby indemnifies Buyer in connection therewith;
and (ii) the restructuring of the within transaction shall not prevent nor delay
the Closing beyond the Closing Date. Seller, in electing to structure the sale
as an exchange, shall have the right to substitute another entity or person, who
will be Seller's accommodator in Seller's place and stead. Buyer and Seller
acknowledge and agree that such substitution will not relieve the herein named
Seller of any liability or obligation hereunder, and Buyer shall have the right
to look solely to said herein named Seller with respect to the obligations of
Seller under this Agreement.
11.7. Disclosure of Certain Matters. Seller on the one hand, and Buyer on the
other hand, shall give Seller and Buyer, respectively, prompt notice of any
material event or development that occurs that (a) had it existed or been known
on the date hereof would have been required to be disclosed by such party under
this Agreement, (b) would cause any of the representations and warranties of
such party contained herein to be materially inaccurate or otherwise materially
misleading, except as contemplated by the terms hereof or (c) gives any such
party any reason to believe that any of the conditions set forth in Section 8
will not be satisfied prior to the Outside Date specified in Section 3.1 hereof.
11.8. Confidentiality. If the Transactions are not consummated, each party shall
treat all information obtained in its investigation of another party or any
Affiliate thereof, and not otherwise known to them or already in the public
domain, as confidential and shall return to such other party or Affiliate all
copies made by it or its representatives of confidential information provided by
such other party or Affiliate.
11.9. Best Efforts. Each party will use its best efforts (excluding the
institution of litigation) to cause all conditions to its obligations hereunder
to be timely satisfied and to perform and fulfill all obligations on its part to
be performed and fulfilled under this Agreement to the end that the Transactions
shall be effected substantially in accordance with the terms of this Agreement
as soon as reasonably practicable. In addition, each party will use reasonable
efforts to ensure that its representations and warranties remain true and
correct in all respects as of the Closing Date.
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12. MISCELLANEOUS.
12.1. Bulk Transfer Laws. Buyer hereby waives compliance by Seller with any
applicable bulk transfer laws, including, without limitation, the bulk transfer
provisions of the Uniform Commercial Code of any state, or any similar statute,
with respect to the transaction contemplated by this Agreement; provided,
however, that the Seller hereby indemnifies the Buyer against any Losses that
Buyer may incur that it would not have incurred if the Seller had complied with
any such bulk sales law.
12.2. Expenses. Whether or not the Transactions are consummated, neither of the
parties hereto shall have any obligation to pay any of the fees and expenses of
the other party incident to the negotiation, preparation and execution of the
Transaction Documents, or the closing of the Transactions, including, but not
limited to, the fees and expenses of legal counsel, accountants, investment
bankers, consultants and other experts; provided, however, that Buyer will
contribute on the Closing Date up to 50% of Jay Osman's fee in connection with
the Transactions, up to a maximum contribution of $100,000.
12.3. Waivers. Either party may, by written notice to the other party, (a)
extend the time for the performance of any of the obligations or other actions
of the other party under this Agreement; (b) waive any inaccuracies in the
representations or warranties of the other party contained in this Agreement or
in any certificates delivered pursuant to this Agreement; (c) waive compliance
with any of the conditions or covenants of the other contained in this
Agreement; or (d) waive performance of any of the obligations of the other under
this Agreement. With regard to any power, remedy or right provided herein or
otherwise available to any party hereunder, (i) no waiver or extension of time
will be effective unless expressly contained in a writing signed by the waiving
party, and (ii) no alteration, modification or impairment will be implied by
reason of any previous waiver, extension of time, or delay or omission in
exercise of rights or other indulgence.
12.4. Amendments, Supplements. This Agreement may be amended or supplemented
at any time by the mutual written consent of the
parties.
12.5. Entire Agreement. This Agreement, the documents incorporated by reference
and the Transaction Documents, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral and written, between the parties hereto with
respect to the subject matter hereof. No representation, warranty, promise,
inducement or statement of intention has been made by either party that is not
embodied in this Agreement or the Transaction Documents and neither party shall
be bound by, or be liable for, any alleged representation, warranty, promise,
inducement or statement of intention not embodied herein or therein.
12.6. Binding Effect, Benefits. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective permitted successors and
assigns. Notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective permitted successors
and assigns, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
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12.7. Assignability. Neither this Agreement nor any of the parties' rights
hereunder shall be assignable by either party without the prior written consent
of the other party, which consent shall be within such party's sole discretion.
12.8. Notices. All notices under this Agreement shall be in writing and shall be
delivered by personal service or telegram, telecopy or certified mail (if such
service is not available, then by first class mail), postage prepaid, or
overnight courier to such address as may be designated from time to time by the
relevant party, and which will initially be as set forth below. All notices
shall be deemed given when received. No objection may be made to the manner of
delivery of any notice actually received in writing by an authorized agent of a
party. Notices shall be addressed as follows or to such other address as the
party to whom the same is directed will have specified in conformity with the
foregoing:
(a) If to Buyer:
c/o Penn National Gaming, Inc.
825 Berkshire Boulevard
Wyomissing, PA 19610
Attn: Joseph A. Lashinger, Jr., Esq.
Tel: 610-373-2400
Fax: 610-373-4966
With duplicate notice to:
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA
Tel: 215-963-5000
Fax: 215-963-5299
Attn: Stephen M. Goodman, Esq.
(b) If to Seller:
Hollywood Park, Inc.
4400 MacArthur Boulevard, Suite 380
Newport Beach, CA 92660
Attention: G. Michael Finnigan
Loren Ostrow
Tel: (949) 752-4840
Fax: (949) 752-4844
With duplicate notice to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067-4276
Attn: Sandra G. Kanengiser, Esq.
Tel: (310) 277-1010
Fax: (310) 203-7199
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12.9. Governing Law; Jurisdiction. This Agreement has been negotiated and
entered into in the Commonwealth of Pennsylvania, and all questions with respect
to the Agreement and the rights and liabilities of the parties will be governed
by the laws of that state, regardless of the choice of laws provisions of
Pennsylvania or any other jurisdiction. Any and all disputes between the parties
which may arise pursuant to this Agreement will be heard, exclusively in the
federal district court for the Eastern District of Pennsylvania or state courts
of the Commonwealth of Pennsylvania.
12.10. Attorneys' Fees. As to any litigation or arbitration (including any
proceedings in a bankruptcy court) between the parties hereto or their
representatives concerning any provision of this Agreement or the rights and
duties of any person or entity hereunder, solely as between the parties hereto
or their successors, each party shall bear its own attorneys' fees and expenses.
12.11. Equitable Remedies. Seller and Buyer acknowledge that the remedy at law
for any breach, or threatened breach, of their respective covenants to
consummate the Transactions will be inadequate and, accordingly, each covenants
and agrees that, with respect to any such breach or threatened breach, the other
will, in addition to any other rights or remedies that it may have and
regardless of whether such other rights or remedies have been previously
exercised, be entitled to such injunctive relief as may be available from any
appropriate court referred to in Section 12.9, but to no other equitable relief.
Notwithstanding the foregoing sentence, any monetary damages which are all or a
portion of any equitable relief granted hereunder shall be subject to the
limitations set forth in Section 9.
12.12. Representations and Warranties. Notwithstanding anything in this
Agreement to the contrary, the disclosure of any information on any schedule to
this Agreement shall be deemed to constitute the disclosure of such information
on all other schedules to this Agreement applicable to such information.
12.13. Rules of Construction.
12.13.1. Headings. The section headings in this Agreement are inserted only as a
matter of convenience, and in no way define, limit, or extend or interpret the
scope of this Agreement or of any particular section.
12.13.2. Tense and Case. Throughout this Agreement, as the context may require,
references to any word used in one tense or case shall include all other
appropriate tenses or cases.
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12.13.3. Severability. The validity, legality or enforceability of the remainder
of this Agreement will not be affected even if one or more of the provisions of
this Agreement will be held to be invalid, illegal or unenforceable in any
respect.
12.13.4. Knowledge. Whenever a representation or warranty is stated to be based
on the knowledge of Seller, such phrase refers to whether any of the following
representatives of Seller has actual knowledge (without any duty to investigate
or inquire) of the matters involved: G. Michael Finnigan, Paul Alanis, Bruce
Hinckley, Robert Callaway, Marlin Torguson, Cliff Kortman, Donna Negrotto, Ken
Shultz, Wayne Yarborough and Todd Raziano.
12.13.5. Agreement Negotiated. The parties hereto are sophisticated and have
been represented by lawyers throughout the Transactions who have carefully
negotiated the provisions hereof. As a consequence, the parties do not believe
the presumption of California Civil Code Section 1654 and similar laws or rules
relating to the interpretation of contracts against the drafter of any
particular clause should be applied in this case and therefore waive its
effects.
12.14. Risk of Loss. The risk of any loss, damage, impairment, confiscation or
condemnation of the Purchased Assets, or any part thereof (an "Asset Loss"),
shall be upon the Seller at all times prior to the Closing. In the event of any
such Asset Loss, the proceeds of, or any claim for any loss payable under,
Seller's insurance policies, or any judgment or award with respect thereto shall
be payable to Seller, as the case may be. Thereafter, and subject to the next
sentence, Seller shall either (i) repair, replace (with comparable used
equipment) or restore any Purchased Asset as soon as possible after the Asset
Loss or (ii) if insurance proceeds are sufficient to repair, replace or restore
the Purchased Asset, pay such proceeds to Buyer (it being understood that the
cost for comparable used replacement equipment ("Replacement Cost") shall be
"sufficient"). If Seller fails to either repair, replace or restore any
Purchased Asset or pay over the Replacement Cost for any Asset Loss and the
amount of any uncured Asset Loss exceeds $3,000,000, Buyer may terminate this
Agreement without any liability on the part of either Buyer or Seller, except as
otherwise provided herein.
12.15. Counterparts. This Agreement may be executed either originally or by
facsimile in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, this Asset Purchase Agreement has been duly
executed and delivered by the duly authorized signatories of the parties hereto
as of the date first above written.
"BUYER"
BSL, INC.,
a Mississippi corporation
By: /s/ Joseph A. Lashinger, Jr.
Its: Vice-President/General Counsel
"SELLER"
CASINO MAGIC CORP.,
a Minnesota corporation
By: G. Michael Finnigan
Its: Authorized Signatory
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EXHIBIT A
Bill of Sale
This BILL OF SALE ("Bill of Sale") is made this ____ day of
___________, 1999 by and among Casino Magic Corp., a Minnesota corporation
("Seller"), and BSL, Inc., a Mississippi corporation ("Buyer").
RECITALS
A. Buyer and Seller entered into that certain Asset Purchase Agreement,
dated as of December __, 1999 (the "Agreement"), which provides, on the terms
and conditions set forth therein, for the sale by Seller and purchase by Buyer
of certain assets of Seller as set forth in the Agreement. Capitalized terms
used herein without definition shall have the meanings ascribed to them in the
Agreement.
B. The assets being sold by Seller and purchased by Buyer include, but
are not limited to, Seller's tangible and intangible personal property (the
"Purchased Assets") as set forth in the Agreement.
C. Buyer desires to obtain all right, title and interest in and to any
and all of the Purchased Assets.
D. This Bill of Sale is being executed and delivered in order to effect
the sale of the Purchased Assets to Buyer, as provided in the Agreement.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Seller agrees as follows:
1. Assignment. Seller hereby sells, grants, conveys, bargains,
transfers, assigns and delivers to Buyer, and to Buyer's successors and assigns,
all of Seller's right, title and interest, legal and equitable, throughout the
world, in and to the Purchased Assets, to have and to hold the same forever.
This is a transfer and conveyance by Seller to Buyer of good and marketable
title to the Purchased Assets, free and clear of all encumbrances except as
provided in the Agreement or on the Schedules thereto. Subject to the conditions
and limitations contained in the Agreement, Seller hereby covenants and agrees
to warrant and defend title to the Purchased Assets against any and all claims
whatsoever to the extent represented and warranted to in the Agreement.
2. Assumption. Buyer, in consideration of the assignment, hereby
assumes and undertakes to discharge, as appropriate in accordance with their
terms, all of the Assumed Liabilities except as otherwise set forth in the
Agreement. Except as provided for in this Paragraph 2, Buyer is not hereby
assuming, and the Buyer shall not assume or otherwise be obligated to pay,
perform, satisfy or discharge, any liabilities or obligations of Seller or the
Business.
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3. Further Assurances. Seller agrees that it will, at Buyer's request
at any time and from time to time after the date hereof and without further
consideration, do, execute, acknowledge and deliver or will cause to be done,
executed, acknowledged and delivered all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney and other instruments and assurances
as may be considered by Buyer, its successors and assigns, to be necessary or
proper to better effect the sale, conveyance, transfer, assignment, assurance,
confirmation and delivery of ownership of the Purchased Assets to Buyer, or to
aid and assist in collecting and reducing to the possession of Buyer, any and
all Purchased Assets.
4. Amendment or Termination; Successors and Assigns. This Bill of Sale
may not be amended or terminated except by a written instrument duly signed by
each of the parties hereto. This Bill of Sale shall inure to the benefit of, and
be binding upon, each of the parties hereto and their respective successors and
assigns.
5. No Third Parties. Nothing in this Bill of Sale, expressed or
implied, is intended or shall be construed to confer upon or give to any person,
firm or corporation other than Buyer and Seller, their successors and assigns,
any remedy or claim under or by reason of this instrument or any term, covenant
or condition hereof, and all of the terms, covenants, conditions, promises and
agreements contained in this instrument shall be for the sole and exclusive
benefit of the Buyer and Seller, their successors and assigns.
6. Construction. This Bill of Sale, being further documentation of a
portion of the conveyances, transfers and assignments provided for in and by the
Agreement, neither supersedes, amends, or modifies any of the terms or
provisions of the Agreement nor does it expand upon or limit the rights,
obligations or warranties of the parties under the Agreement. In the event of a
conflict or ambiguity between the provisions of this Bill of Sale and the
Agreement, the provisions of the Agreement will be controlling.
7. Governing Law. The rights and obligations of the parties under this
Bill of Sale will be construed under and governed by the internal laws of the
Commonwealth of Pennsylvania (regardless of its or any other jurisdiction's
conflict-of-law provisions).
8. Counterparts. This Bill of Sale may be executed in one or more
counterparts and by facsimile, each of which shall be deemed an original and all
of which taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Bill of Sale as of
the date first written above.
CASINO MAGIC CORP., BSL, INC.,
a Minnesota corporation a Mississippi corporation
By: _________________________ By: ______________________________
------------------------- ------------------------------
Its: _________________________ Its: ______________________________
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EXHIBIT B
Intentionally Omitted
69
EXHIBIT C
License Agreement
This LICENSE AGREEMENT ("Agreement") is made and entered into this ____
day of ________, 2000, by and between CASINO MAGIC CORP., a Minnesota
corporation ("Licensor"), and BSL, INC., a Mississippi corporation ("Licensee"),
with reference to the following facts:
A. Pursuant to that certain Asset Purchase Agreement between Licensor and
Licensee, dated as of _____________ ____, 2000 (the "Asset Purchase Agreement"),
Licensor has agreed to sell to Licensee certain real and personal property,
tangible and intangible, used by Licensor in the operation of the Casino Magic
casino located at 711 Casino Magic Drive, Bay St. Louis, Mississippi 39520 (the
"Casino").
In connection with such sale, Licensee desires to obtain and Licensor wishes to
grant to Licensee a nonexclusive license to use the Marks (as defined herein)
and certain Additional Marks (as defined herein) at the Casino Location in
connection with Casino Operations (as defined herein) with all Ancillary Goods
and Services (as defined herein).
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises set forth herein, the parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms, whether in
singular or plural form, shall have the following meanings. Any capitalized
terms used in this Agreement, but not defined in this Section 0, shall have the
meanings ascribed to them elsewhere in this Agreement or in the Asset Purchase
Agreement, as applicable. "Additional Marks" means any common-law or other
mark(s) (whether or not registered in any manner), if any, used by Licensor in
the business operations of the Casino at the Casino Location.
1.1 "Ancillary Goods and Services" shall mean all goods and services
related to the Casino Operations or the enhancement or promotion thereof,
including, without limitation, the provision of guest services to Casino patrons
and potential patrons and all merchandising efforts, such as the sale of branded
clothing, jewelry, playing cards, dice, drinking glasses, toys and souvenirs,
provided that such merchandise is either (a) offered for sale only at the Casino
Location, or (b) provided for free or at a substantial discount in connection
with the promotion of the business of the Casino.
1.2 "Casino Location" means the Casino's location at 711 Casino Magic
Drive, Bay St. Louis, Mississippi 39520, or such other address as may later be
assigned to the parcel of real property located at the foregoing address as of
the Closing Date.
1.3 "Casino Operations" shall mean the ownership and operation of the
Casino, including, without limitation, the marketing, sale, distribution and
provision of all of the goods and services customarily attendant to the
operation of a full-service Mississippi casino. For the avoidance of doubt,
"Casino Operations" include, among other things, casino and gaming services, as
well as hotel, restaurant, bar, nightclub, cashier and gift shop services if
offered at the Casino.
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1.4 "Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and operating policies
of an entity through direct or indirect ownership in the aggregate of more than
fifty percent (50%) of the voting and/or equity securities of such entity.
1.5 "Marks" shall means the marks identified on Attachment A.
1.6 "Offensive Proceedings" shall have the meaning ascribed to it in
Section 0.
2. Grant of Licenses.
2.1 Casino Operations. Subject to the terms and conditions set forth in
this Agreement, Licensor hereby grants to Licensee a nonexclusive, royalty-free,
perpetual license to use each of the Marks and the Additional Marks solely as
immediately followed by, or separated solely by a hyphen from, the location
name, "Bay St. Louis," in connection with Casino Operations at the Casino
Location. Notwithstanding any provision to the contrary contained in this
Agreement, Licensee shall have the right to use the logos associated with the
Marks and/or the Additional Marks that are set forth on Schedule A, as such
logos currently are being used in the Casino Operations, and, at Licensee's
request, Licensor shall provide Licensee with camera-ready copies of each such
logo.
2..2 Ancillary Uses. Subject to the terms and conditions set forth in
this Agreement, Licensor hereby grants to Licensee a nonexclusive, royalty-free,
perpetual license to use the Marks and the Additional Marks upon and in
connection with Ancillary Goods and Services offered for sale or otherwise
provided in connection with the Casino Location.
2.3 Right to Sublicense. Licensee may sublicense the rights granted
herein to third parties in connection with the ordinary course of Casino
Operations, providing Ancillary Goods and Services, or advertising, marketing,
merchandising and promoting the business of the Casino, including, by way of
example, but not of limitation, the right to use the Marks and the Additional
Marks in the manufacture of merchandise to be sold at the Casino.
Notwithstanding any provision to the contrary set forth in this Agreement, (i)
all sublicenses granted under this Agreement by Licensee shall be granted in an
enforceable written agreement, of which Licensor is a third-party beneficiary,
that contains terms and conditions at least as restrictive as all of the terms
and conditions set forth in this Agreement, and (ii) promptly following the
execution of any such sublicense, Licensee shall notify Licensor and provide
Licensor with a copy of the same.
2.4 Domain Name. Subject to the terms and conditions set forth in this
Agreement, Licensor hereby grants to Licensee a royalty-free, perpetual license
to use the Mark "CASINO MAGIC" in the uniform resource locators (or "URLs")
"www.casinomagicbaystlouis.com" "www.casinomagic-baystlouis.com,"
"www.casinomagicbaystlouis.net," "www.casinomagic-baystlouis.net,"
"www.casinomagicbaystlouis.org," and "www.casinomagic-baystlouis.org," or such
other URL as Licensor may approve in writing prior to its use. Notwithstanding
any provision to the contrary set forth in this Agreement, Licensor shall retain
any and all rights to use the Mark "CASINO MAGIC" in connection with any URL
other than those set forth in the previous sentence.
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2.5 Existing Obligations. Notwithstanding anything to the contrary in
this Section 2 or elsewhere in this Agreement, all rights granted to Licensee in
this Agreement shall be subject to the terms and conditions of any and all
existing licenses and other obligations related to the Marks and the Additional
Marks as of the Closing Date. Such existing licenses and obligations include,
but are not limited to, those listed and attached hereto as Attachment B.
3. Rights Retained. Subject to the other terms and conditions of this Agreement,
as between Licensor and Licensee, Licensor is, except at the Casino Site, and
except as immediately followed by, or separated solely by a hyphen from, the
location name, "Bay St. Louis," free to use and license the Marks and the
Additional Marks in its sole discretion, and Licensee shall not use, or permit
any sublicensee to use, either the Marks or the Additional Marks other than in
accordance with this Agreement.
4. Licensee's Acknowledgments; Reservation of Rights. Licensee acknowledges and
agrees that (i) the Marks, the Additional Marks and all goodwill associated
therewith are and shall remain the sole property of Licensor, (ii) nothing in
this Agreement shall convey to Licensee any right of ownership in the Marks or
the Additional Marks, (iii) Licensee shall not in any manner take any action,
and shall ensure that none of its permitted sublicensees take any action, that
disparages or would impair the value of, or goodwill associated with, the Marks
or the Additional Marks, and (iv) all rights not expressly granted to Licensee
are reserved to Licensor. Licensee acknowledges and agrees that all use of the
Marks and the Additional Marks by Licensee shall inure to the benefit of
Licensor.
5. Quality Control.
5.1 Quality Standard. The parties acknowledge and agree that it is
necessary for Licensor to maintain uniform standards governing the quality of
goods and services offered under its trademarks. Accordingly, Licensee agrees
that the goods and services it offers under the Marks and the Additional Marks
shall have a standard quality equivalent to the quality of comparable goods and
services offered by Licensor as of the Closing Date, subject to reasonable
variations resulting from business, legal and technical requirements.
5.2 Inspection. Licensee shall, upon Licensor's reasonable request, and
upon prior written notice of no fewer than ten (10) days, (i) make available for
Licensor's inspection samples of all goods, marketing materials, packaging and
any other materials bearing the Marks and/or the Additional Marks pursuant to
the licenses granted herein, and (ii) permit Licensor to inspect Licensee's
operation at mutually convenient times.
5.3 Rejection. If at any time any of the goods or services sold,
provided or marketed under the Marks and/or the Additional Marks do not meet the
quality standard set forth in Section 5.1, as determined by Licensor in its
reasonable discretion, Licensor shall have the right to require Licensee to
discontinue the use of the Marks or the Additional Marks, as applicable, in
connection with the sale or provision of such good(s) or service(s) upon written
notice, unless modifications satisfactory to Licensor are made within thirty
(30) days after Licensor's written notice of disapproval.
5.4 Compliance with Laws. Licensee shall comply with all applicable
laws and regulations and obtain all appropriate government approvals pertaining
72
to the sale, distribution and advertising of the goods and services under the
Marks and/or the Additional Marks.
13. Infringement Proceedings. If Licensee becomes aware of any unauthorized use
of the Marks or the Additional Marks by any third party, Licensee shall promptly
notify Licensor. Licensor initially shall have the sole right and discretion to
bring proceedings alleging infringement of the Marks or the Additional Marks, as
applicable, passing off, trademark dilution, unfair competition and other claims
related to the Marks or the Additional Marks against such third parties
("Offensive Proceedings") and to defend proceedings brought or threatened
against Licensor or Licensee based on use of the Marks or the Additional Marks.
Licensee shall, at Licensee's expense, take such steps as Licensor may
reasonably request to assist Licensor in protecting Licensor's rights in the
Marks or the Additional Marks, as applicable, and, at Licensor's request, shall
pay one half (1/2) of the costs of such Offensive Proceedings. All money damages
recovered from any such Offensive Proceeding shall be used, first, to cover all
actual and direct expenses incurred by each party in connection with the
Offensive Proceeding and, then, divided between Licensor and Licensee, on a pro
rata basis, in accordance with Licensor's and Licensee's respective monetary
contributions to conducting such Offensive Proceeding. In the event that
Licensor notifies Licensee that Licensor elects not to prosecute an Offensive
Proceeding, Licensee may, subject to Licensor's approval, bring such proceeding,
with all expenses incurred in connection therewith to be borne by Licensee,
provided that Licensor shall, at Licensor's expense, take such steps as Licensee
may reasonably request to assist Licensee in protecting Licensee's rights in the
Marks or the Additional Marks. All money damages recovered from any such
Offensive Proceeding conducted by Licensee shall be used, first, to cover all
actual and direct expenses incurred by each party in connection with the
Offensive Proceeding; all remaining money damages recovered from any such
Offensive Proceeding conducted by Licensee shall be for Licensee's account and
retained by Licensee.
7. Cooperation. Licensee agrees to provide Licensor with such reasonable
assistance as Licensor may require in the procurement of any protection of
Licensor's rights in and to the Marks and the Additional Marks. Licensee shall
cause to appear on all written materials on or in connection with which the
Marks or the Additional Marks are used such proprietary notices as Licensor may
reasonably request.
8. Termination.
8.1 If Licensee breaches this Agreement, Licensor shall have the right
to terminate this Agreement upon thirty (30) days' written notice, provided that
Licensee fails to cure such breach during such thirty (30) day period.
8.2 This Agreement shall automatically terminate without notice of any
type if: (i) Licensee files a petition in bankruptcy, is adjudicated a bankrupt,
a petition in bankruptcy is filed against Licensee, or Licensee becomes
insolvent, (ii) Licensee makes an assignment for the benefit of its creditors or
an arrangement pursuant to any bankruptcy law, or (iii) Licensee discontinues
all of its business to which this Agreement relates or a receiver is appointed
for it or its business. In the event this Agreement is so terminated, Licensee,
its receivers, representatives, trustees, agents, administrators, successors, or
assigns shall have no right to sell, exploit, or in any way deal with or in the
Marks or the Additional Marks.
73
8.3 Termination of this Agreement under the provisions of this Section
8 shall be without prejudice to any rights that Licensor may otherwise have
against Licensee
8.4 Upon termination of this Agreement, Licensee agrees (i) to
discontinue all use of the Marks, the Additional Marks, and any mark confusingly
similar thereto, (ii) to cooperate with Licensor or its appointed agent, at
Licensor's request, to apply to the appropriate authorities to cancel
recordation of this Agreement with all applicable governmental authorities,
(iii) to destroy or sell off all printed and other materials bearing the Marks
and the Additional Marks, and (iv) to cooperate generally with Licensor to
ensure that all rights in the Marks, the Additional Marks and the goodwill
connected therewith shall remain the property of Licensor.
9. Abandonment and Conveyance. If at any time Licensor determines, in its sole
discretion, to cease all use of the Marks and/or the Additional Marks and the
component terms thereof by any entity owned by or affiliated with Licensor
(including parent entities, subsidiaries and entities under common control) and
for any purpose whatsoever ("Abandonment"), Licensor shall inform Licensee in
writing of such Abandonment of the Marks and/or the Additional Marks. For a
period of two (2) years from the date of Licensor's written notice to Licensee
of Licensor's Abandonment of the Marks and/or the Additional Marks, Licensee
shall have the right to acquire from Licensor all of Licensor's right, title and
interest in and to the Marks and/or the Additional Marks, by assignment and
otherwise, for the sum of one dollar ($1.00).
10. Representation and Warranty. Licensor represents and warrants that: (i) to
the knowledge of Licensor, the registrations and applications for registration
of the Marks and the registrations and applications for registration of the
Additional Marks, if any, are valid, subsisting and enforceable, and all
necessary maintenance and renewal fees in connection with them have been filed
with the United States Patent and Trademark Office for the purpose of
maintaining the registrations and applications for registrations of such Marks
and (provided that any registrations and applications for registration have been
made) such Additional Marks; (ii) to the knowledge of Licensor, Licensor owns or
has the lawful right to use, and has the right to license the Marks and
Additional Marks free and clear of all liens and encumbrances; (iii) no material
claim by any third person contesting the validity, enforceability, use or
ownership of any of the Marks or Additional Marks has been made, currently is
outstanding or is threatened; and (iii) Licensor has not received any notices of
any material infringement or misappropriation by, or conflict with, any third
person with respect to any of the Marks or Additional Marks (including any
demand or request that it license any rights from any third party).
74
11. Miscellaneous
11.1 Indemnification. Licensee hereby indemnifies and agrees to defend
and hold harmless forever Licensor and its agents, representatives, successors
and assigns from and against any and all claims, demands, losses, costs,
expenses and liabilities of any kind (including reasonable attorneys' fees)
arising out of Licensee's exercise of the rights granted by Licensor hereunder.
Licensor hereby indemnifies and agrees to defend and hold harmless forever
Licensee and its agents, representatives, successors and assigns from and
against any and all claims, demands, losses, costs, expenses and liabilities of
any kind (including reasonable attorneys' fees) arising out of the breach of
this Agreement by Licensor.
11.2 No Joint Venture. Nothing contained herein shall be construed to
place the parties in the relationship of partners or joint venturers or
principal and agent or employer and employee, and no party shall have the power
to obligate or bind the other party in any manner whatsoever.
11.3 Remedies. Licensee recognizes the unique and special nature and
value of the Marks and the Additional Marks and agrees that any use of the Marks
or the Additional Marks contrary to the terms of this Agreement would result in
damage to Licensor that is, in whole or in part, intangible, but that
nonetheless is real and is incapable of complete remedy by an award of monetary
damages. Accordingly, any such use of the Marks or the Additional Marks contrary
to the terms of this Agreement shall give Licensor the right to equitable relief
by way of temporary and permanent injunction, without the posting of any bond,
and such other and further relief at law or equity as any arbitrator or court of
competent jurisdiction may deem just and proper, in addition to any and all
other remedies provided for herein.
11.4 Waivers. Either party may, by written notice to the other party,
(i) extend the time for the performance of any of the obligations or other
actions of the other party under this Agreement, (ii) waive compliance with any
of the conditions or covenants of the other contained in this Agreement, or
(iii) waive performance of any of the obligations of the other under this
Agreement. With regard to any power, remedy or right provided herein or
otherwise available to any party hereunder, (i) no waiver or extension of time
shall be effective unless expressly contained in a writing signed by the waiving
party, and (ii) no alteration, modification, or impairment shall be implied by
reason of any previous waiver, extension of time, or delay or omission in
exercise of rights or other indulgence.
11.5 Amendments, Supplements. This Agreement may be amended or
supplemented at any time by the mutual written consent of
the parties.
11.6 Incorporation by Reference. Attachment A and Attachment B attached
to this Agreement are hereby incorporated by reference into this Agreement and
made a part hereof.
11.7 Entire Agreement. This Agreement and the documents incorporated by
reference constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral and written, between the parties hereto with respect to the
75
subject matter of this Agreement. No representation, warranty, promise,
inducement or statement of intention has been made by either party that is not
embodied in this Agreement or such other documents, and neither party shall be
bound by, or be liable for, any alleged representation, warranty, promise,
inducement or statement of intention not embodied herein or therein.
11.8 Binding Effect, Benefits. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective permitted
successors, sublicensees and assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto and their
respective permitted successors, sublicensees and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
11.9 Assignability. Licensor may freely assign this Agreement. Licensee
may not assign this Agreement or its rights hereunder without the prior written
consent of Licensor, which consent Licensor may grant or deny in its sole
discretion, except that Licensee may, without the consent of Licensor, assign
this Agreement (i) to any entity that Controls, is Controlled by, or is under
common Control with Licensee, or (ii) in the event of a sale or other transfer
of all or substantially all the relevant assets or equity (whether by sale of
assets or stock or by merger or other reorganization) of Licensee.
11.10 Notices. All notices under this Agreement shall be in writing and
shall be delivered by personal service or telegram, telecopy, certified mail (if
such service is not available, then by first class mail), postage prepaid, or
overnight courier to such address as may be designated from time to time by the
relevant party, and which will initially be as set forth below. All notices
shall be deemed given when received. No objection may be made to the manner of
delivery of any notice actually received in writing by an authorized agent of a
party. Notices shall be addressed as follows or to such other address as the
party to whom the same is directed will have specified in conformity with the
foregoing:
If to Licensor:
G. Michael Finnigan
Loren Ostrow
4400 MacArthur Park Blvd., Suite 380
Newport Beach, CA 92660
Telephone: (949) 752-4840
Facsimile: (949) 752-4844
With a duplicate notice to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067-4276
Attention: Sandra G. Kanengiser, Esq.
Telephone: (310) 277-1010
Facsimile: (310) 203-7199
76
If to Licensee:
BSL, Inc.
825 Berkshire Boulevard
Wyomissing, PA 19610
Attention: Joseph A. Lashinger, Jr., Esq.
Telephone: 610-373-2400
Facsimile: 610-373-4966
With a duplicate notice to:
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA
Tel: 215-963-5000
Fax: 215-963-5299
Attn: Stephen M. Goodman, Esq.
11.11 Governing Law; Jurisdiction. This Agreement has been negotiated
and entered into in the State of California, and all questions with respect to
the Agreement and the rights and liabilities of the parties hereunder will be
governed by the laws of that state, regardless of the choice of laws provisions
of California or any other jurisdiction. Any and all disputes between the
parties that may arise pursuant to this Agreement will be heard and determined
before an appropriate federal or state court located in Los Angeles, California.
The parties hereto acknowledge that such courts have the jurisdiction to
interpret and enforce the provisions of this Agreement and the parties waive any
and all objections that they may have as to jurisdiction or venue in any of the
above courts.
11.12 Costs and Attorneys' Fees. In any dispute between the parties
concerning any provision of this Agreement or the rights and duties of any
person under it, the party prevailing in any such dispute will be entitled, in
addition to such other relief as may be granted, to the reasonable attorneys'
fees and court and arbitration costs incurred by reason of such arbitration or
litigation of such dispute. For purposes of this Section 11.12, the prevailing
party is the party that most closely obtains the relief it sought, whether or
not the suit or other legal proceeding is settled or carried out to its
conclusion.
11.13 Rules of Construction.
11.13.1 Headings. The section headings in this Agreement are inserted
only as a matter of convenience, and in no way define, limit, extend or
interpret the scope of this Agreement or of any particular section.
11.13.2 Tense and Case. Throughout this Agreement, as the context may
require, references to any word used in one tense or case shall include all
other appropriate tenses or cases.
11.13.3 Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable (other than provisions going to the essence of this
77
Agreement), the remainder of this Agreement, or the application of such term or
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each such term and
provision of this Agreement shall be valid and be enforced to the fullest extent
permitted by law.
11.13.4 Agreement Negotiated. The parties hereto are sophisticated and
have been represented by lawyers who have carefully negotiated the provisions of
this Agreement. As a consequence, the parties do not believe the presumption of
California Civil Code Section 1654 and similar laws or rules relating to the
interpretation of contracts against the drafter of any particular clause should
be applied in this case and therefore waive its effects.
11.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.15 Survival. The rights and obligations contained in the following
Sections shall survive termination or expiration of this Agreement for any
reason: Sections 4, 8.4, 11.1 and such provisions of Section 1 and this Section
11 hereof as are necessary to give meaning and effect to the foregoing.
12. Limitation on Licensor's Participation. Notwithstanding any other provision
in this Agreement, Licensor shall not have the right to in any way participate,
and shall not in any way participate, in the operation or ownership of
Licensee's gambling establishment or operation. Pursuant to this Section 12,
Licensor shall expressly state, in any document which transfers, assigns or
conveys any of its rights, title or interest to this Agreement, that no assignee
or transferee shall have the right to participate, or shall participate, in the
ownership or operation of Licensee's gambling establishment or operation.
78
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized signatories of the parties hereto as of the date first
above written.
LICENSOR: CASINO MAGIC, CORP.
By:__________________________
Its:
LICENSEE: BSL, INC.
By: _________________________
Its:
79
ATTACHMENT A
Marks
I. Registered Service Marks Owned by Casino Magic Corp. and Used in
Connection with the Operation of Casino Magic - Bay St. Louis
A. Service Mark (U.S.): CASINO MAGIC
1. U.S. Patent and Trademark Office Reg. No.: 1,782,242
2. Date of Registration: July 13, 1993
3. Services: Entertainment services in the nature of casinos.
B. Service Mark (U.S.): A CUT ABOVE
1. U.S. Patent and Trademark Office Reg. No.: 1,840,960
2. Date of Registration: June 21, 1994
3. Services: Entertainment services in the nature of casinos.
C. Service Mark (U.S.): CASINO MAGIC GETAWAYS
1. U.S. Patent and Trademark Office Reg. No.: 1,978,158
2. Date of Registration: June 4, 1996
3. Services: Public air charter services.
D. Service Mark (U.S.): MAGIC MONEY
1. U.S. Patent and Trademark Office Reg. No.: 2,117,148
2. Date of Registration: December 2, 1997
3. Services: Entertainment services in the nature of
casino services for members through which members accrue
purchase points redeemable for prizes.
Note: This mark was opposed and went through a full
proceeding at the Trademark Trial and Appeal Board.
E. Service Mark (U.S.): THE BRIDGES
1. U.S. Patent and Trademark Office Reg. No.: 2,121,569
2. Date of Registration: December 16, 1997
3. Services: Providing golf club services and facilities.
F. Service Mark (U.S.): THE AMAZING RANDOLPH'S
80
1. U.S. Patent and Trademark office Reg. No.: 2,140,898
2. Registered: March 3, 1998
3. Services: Restaurant services.
G. Service Mark (U.S.): ABRACADABRA'S
1. U.S. Patent and Trademark Office Reg. No.: 2,140,834
2. Registered: March 3, 1998
3. Services: Restaurant services.
H. Service Mark (U.S.): NOTIONS AND POTIONS
1. U.S. Patent and Trademark Office Reg. No.: 2,258,752
2. Registered: July 16, 1999
3. Services: Gift shop services.
II. Common Law Marks
Non-Registered Marks: Casino Magic Corp. also uses and claims common law rights
to several other service marks which are not the subject of any federal
registrations or applications. These marks include, but are not limited to, the
mark CAMP MAGIC for services in the nature of recreational and day-care services
undertaken at casinos.
III. Logos
(Attached)
81
EXHIBIT D
Intentionally Omitted
82
Exhibit E
Form of Opinion of Seller's Counsel
1. The Seller is a corporation validly existing and in good standing under the
laws of the State of Minnesota and has all requisite corporate power and
authority to carry on its business as now conducted. The Seller is duly
qualified to transact business in the State of Mississippi.
2. HPI is a corporation validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and
authority to carry on its business as now conducted.
3. The execution, delivery and performance by the Seller of the Purchase
Agreement, the License Agreement and any other agreements executed and
delivered by the Seller pursuant to the Purchase Agreement (collectively,
the "Transaction Documents") and the consummation by the Seller of the
transactions contemplated thereby (the "Transactions") are within the
Seller's corporate powers and have been duly authorized by all necessary
action on the part of the Seller. The execution, delivery and performance
by HPI of the HPI Guaranty are within HPI's corporate powers and have been
duly authorized by all necessary action on the part of HPI. The Purchase
Agreement and the other Transaction Documents to which the Seller is a
party and the HPI Guaranty have been duly and validly executed by the
Seller and HPI, respectively.
4. Based on and subject to the analysis and qualifications set forth in Schedule
I hereto, in any action or proceeding arising ---------- out of or relating to
the HPI Guaranty or any Transaction Document which provides that it is to be
governed by the laws of the Commonwealth of Pennsylvania (collectively, the
"Pennsylvania Documents") in any court of the State of California or in any
federal court sitting in California, such court should recognize and give effect
to the governing law provision of such Pennsylvania Document wherein the parties
thereto agree (to the extent set forth in such Pennsylvania Document) that such
Pennsylvania Document shall be governed by the laws of the Commonwealth of
Pennsylvania. However, if a court were to hold that the Transaction Documents
and HPI Guaranty are governed by the laws of the State of California, each of
the Transaction Documents (other than the Warranty Deed, the Assignment of
Leases and the noncompetition provision of the Purchase Agreement, as to which
such counsel need not express any opinion) and the HPI Guaranty would be, under
the laws of the State of California, the legal, valid and binding obligation of
the Seller or HPI, as the case may be, enforceable against the Seller or HPI, as
applicable, in accordance with its terms, except as may be limited by the effect
of bankruptcy, insolvency, reorganization, moratorium and other laws and court
decisions or other legal or equitable principles relating to, limiting or
affecting the enforcement of creditors' rights generally including, without
limitation, preferences and fraudulent conveyances and distributions by a
corporation to its stockholders, and subject to the discretion of any court of
competent jurisdiction in awarding equitable remedies (regardless of whether
considered in a proceeding in equity or at law), including, but not limited to,
specific performance or injunctive relief.
5. The acquisition by Buyer from Seller of the Purchased Assets and the
assumption by Buyer of the Assumed Liabilities pursuant to the Purchase
Agreement (i) do not contravene the provisions of the certificate of
incorporation or bylaws of the Seller; and (ii) will not result in a breach
or violation of or default, termination, forfeiture or lien under (or upon
the failure to give notice or the lapse of time or both, result in a breach
or violation of or default, termination, forfeiture or lien under) either
(a) HPI's Indenture governing its 9.5% Senior Subordinated Notes due 2007
or the Indenture governing its 9.25% Senior Subordinated Notes due 2007, or
(b) HPI's Amended and Restated Reducing Revolving Loan Agreement with Bank
of America National Trust and Savings Association and the other bank
lenders thereto.
83
Such counsel need not express any opinion as to any laws other than the
laws of the State of California, and, to the extent applicable, the laws of the
United States of America and the General Corporation Law of the State of
Delaware. Such counsel may note that each of certain Transaction Documents,
including the Purchase Agreement, and the HPI Guaranty provides that it is to be
governed by the laws of the Commonwealth of Pennsylvania and may state its
understanding that Buyer is relying on the advice of its own counsel with
respect to all matters of Pennsylvania law. Matters of Minnesota corporate law
will be covered in an opinion of counsel by Minnesota counsel.
[Customary exceptions and limitations to be included.]
84
SCHEDULE I
(Choice of Law Analysis)
With respect to the provisions contained in certain of the Transaction
Documents, including the Purchase Agreement, and the HPI Guaranty (collectively,
the "Pennsylvania Documents") that such Pennsylvania Documents shall be governed
by the law of the Commonwealth of Pennsylvania, such counsel may note that the
validity of a choice of law provision in a contract is a question of fact under
California law and the validity of such contractual choice of law will be
determined, in part, by the facts found by the court before which the validity
of such clause is litigated. Mencor Enterprises, Inc. v. Hets Equities Corp.,
190 Cal. App. 3d 432 (1987). The California Supreme Court has held that
California follows Section 187 of the Restatement (Second), Conflict of Laws,
which "reflects a strong policy favoring enforcement" of contractual
choice-of-law provisions. Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459
(1992). A number of California court decisions have held that where
sophisticated parties to a contract have designated the laws of a specified
state to govern a transaction, a California court will uphold such choice of law
except where a fundamental policy of the State of California, the laws of which
would govern absent the choice-of-law clause, is violated or where the state
whose law is chosen has no substantial relationship with the transaction. See
Nedlloyd, supra; Bos Material Handling, Inc. v. Crown Control Corp., 137 Cal.
App. 3d 99 (1982); Gamer v. Dupont Glore Forgan, Inc., 65 Cal. App. 3d 280
(1976); Frame v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., 20 Cal. App. 3d
668 (1971); Ury v. Jewelers Acceptance Corp., 227 Cal. App. 2d 11 (1967). But
see, Ashland Chemical Company v. Provence, 129 Cal. App. 3d 790 (1982). In such
counsel's view, the factors which should be considered by a California court
which correctly applies the applicable California principles in determining the
validity of the choice-of-law provisions in the Pennsylvania Documents include
the domiciles of the Buyer and Seller, the degree of sophistication of the Buyer
and Seller and their respective counsel and the venues of the negotiations
relating to the Pennsylvania Documents. Based on the facts within such counsel's
knowledge and the policy expressed in Nedlloyd, supra, while the outcome of a
judicial determination on the issue is inherently uncertain for the reasons set
forth above, in such counsel's opinion a California court to which the issue is
properly presented and which correctly applies the applicable California
principles should conclude that the express choice of Pennsylvania law as the
governing law for the Pennsylvania Documents is enforceable as a matter of
California choice-of-law rules. Such counsel may note, however, that even if a
California court were to uphold the Pennsylvania choice of law for the
Pennsylvania Documents, the court may not apply Pennsylvania law in construing
or enforcing a particular provision of a Transaction Document, if to do so would
violate a fundamental policy of the State of California. Such counsel need not
express any opinion as to whether the enforcement of any particular provision of
any of the Transaction Documents would violate a fundamental policy of the State
of California. Such counsel is of the opinion that if a provision in the
Transaction Documents were enforceable under both California and Pennsylvania
law, a California court would enforce the provision.
85
EXHIBIT F
FORM OF OPINION OF BUYER'S COUNSEL
1. The Buyer is a corporation validly existing and in good standing under
the laws of the State of Mississippi and has all requisite corporate
power and authority to carry on its business as now conducted.
2. The PNG is a corporation validly subsisting and in good standing under
the laws of the Commonwealth of Pennsylvania and has all requisite
corporate power and authority to carry on its business as now
conducted.
3. The execution, delivery and performance by the Buyer of the Purchase
Agreement, the License Agreement and any other agreements executed and
delivered by the Buyer pursuant to the Purchase Agreement
(collectively, the "Transaction Documents") and the consummation by the
Buyer of the transactions contemplated thereby (the "Transactions") are
within the Buyer's corporate powers and have been duly authorized by
all necessary action on the part of the Buyer. The execution, delivery
and performance by PNG of the PNG Guaranty are within PNG=s corporate
powers and have been duly authorized by all necessary corporate action
on the part of PNG. The Purchase Agreement and the other Transaction
Documents to which the Buyer is a party and the PNG Guaranty have been
duly and validly executed by the Buyer and PNG, respectively.
4. In any action or proceeding arising out of or relating to the PNG Guaranty or
any of Transaction Document that provides that it is to be governed by the laws
of the Commonwealth of Pennsylvania (collectively, the APennsylvania Documents@)
in any court of the Commonwealth of Pennsylvania or in any federal court sitting
in Pennsylvania, such court should recognize and give effect to the governing
law provision of such Pennsylvania Document wherein the parties thereto agree
(to the extent set forth in such Pennsylvania Document) that such Pennsylvania
Document shall be governed by the laws of the Commonwealth of Pennsylvania.
Under such laws, each of the Transaction Documents (other than the Warranty Deed
and Assignment of Leases, as to which we express no opinion) and the PNG
Guaranty constitutes the legal, valid and binding obligation of the Buyer or
PNG, as the case may be, enforceable against the Buyer or PNG, as applicable, in
accordance with its terms, except as may be limited by the effect of bankruptcy,
insolvency, reorganization, moratorium and other laws and court decisions or
other legal or equitable principles relating to, limiting or affecting the
enforcement of creditors= rights generally including, without limitation,
preferences and fraudulent conveyances and distributions by a corporation to its
stockholders, and subject to the discretion of any court of competent
jurisdiction in awarding equitable remedies (regardless of whether considered in
a proceeding in equity or at law), including, but not limited to, specific
performance or injunctive relief.
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5. The acquisition by Buyer from Seller of the Purchased Assets and the
assumption by Buyer of the Assumed Liabilities pursuant to the Purchase
Agreement do not, except as set forth in the Purchase Agreement: (i)
contravene the provisions of the certificate of incorporation or bylaws
of the Buyer or (ii) result in a breach or violation of or default,
termination, forfeiture or lien under [material indentures or credit
facilities].
This opinion is limited to the laws of the Commonwealth of Pennsylvania and, to
the extent applicable, the laws of the United States of America.
[Customary exceptions and limitations to be included].
87
Exhibit G
First American Title Company of Los Angeles
520 NORTH CENTRAL AVENUE GLENDALE, CALIFORNIA 91203 (818) 242-6800
ESCROW INSTRUCTIONS
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ESCROW SUMMARY
First American Title Company
520 North Central Avenue, 5th Floor
Glendale, CA 91203
(818) 242-5800
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INITIAL DEPOSIT $0.00
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BALANCE CASH REQUIRED $
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ENCUMBRANCE OF RECORD
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NEW FIRST TRUST DEED
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Escrow Officer, Carolyn Marcial
Escrow No. CAROLYN
Date: December 7, 1999
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TOTAL CONSIDERATION $0.00
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FIRST AMERICAN TITLE COMPANY CONDUCT ESCROW BUSINESS UNDER CERTIFICATE
OF AUTHORITY NO. 151 ISSUED BY THE STATE OF CALIFORNIA
DEPARTMENT OF INSURANCE.
This escrow has been opened and pursuant to that certain Purchase and Sale
Agreement and Escrow Instructions, herein after referred to as the AAgreement@,
dated as of *****, entered into between ***** as Buyer and *****, as Seller, a
copy of which is attached hereto and made a part hereof. First American Title
Company is hereby requested to act as Escrow Agent for the parties in accordance
with the terms and conditions contained in the Agreement. All parties are aware
that Escrow Agent agrees to be bound by said AAgreement@ in the performance of
its duties as Escrow Holder; provided, however, Escrow Holder shall have no
obligations, liability or responsibility under any modification and/or
amendment, unless and until the same has been accepted by Escrow Holder in
writing, (and approved by Buyer and Seller herein) and provided; THIS ACCEPTANCE
OF ANY AGENCY AS ESCROW HOLDER IS FURTHER CONDITIONED UPON THE FOLLOWING:
1. The parties hereto are aware that Escrow Holder shall only be concerned with
those provisions and terms of said Agreement insofar as same pertains to Escrow
Holder regarding financing, escrow, allocation of costs, title and vesting,
prorations, and property taxes, together with any further instructions necessary
to complete the transaction described in said Agreement.
GENERAL PROVISIONS:
The General Provisions of First American Title Company, are attached hereto and
made a part hereof. To the extent that the AAgreement@ contains any provision
inconsistent with or contrary to these escrow instructions or escrow holder=s
general provisions, the provisions of the Agreement shall prevail. Furthermore,
it is hereby understood and agreed that these instructions shall be signed in
counterpart, and together, once received by Escrow Holder from Buyer and Seller
herein, shall be considered the complete Escrow Instructions for this
transaction.
FUNDS HELD AGREEMENT
88
If the funds remain in escrow on the date which is 90 days after close of escrow
(or in the event escrow has not closed, 90 days after the estimated closing date
set forth in these instructions) then a monthly funds held fee of $25.00 shall
accrue for each month or fraction of a month thereafter that the funds, or any
portion thereof, remain in escrow. Escrow is authorized to deduct the monthly
funds held fee directly from the funds held on a monthly, or other periodic
basis (i.e., quarterly, semi-annually, etc.). By initiating below, the parties
acknowledge and agree to pay these sums to compensate you for your
administration, monitoring, accounting, reminders and other notifications and
processing of the funds so held in accordance with this funds so held in
accordance with this funds held fee agreement.
89
Buyer=s Signature:
Mailing Address:
Forwarding Address:
Seller=s Signature:
Mailing Address:
Forwarding Address:
90
ESCROW GENERAL PROVISIONS
1. Deposit of Funds & Disbursements
All funds shall be deposited in general escrow accounts in a federally insured
financial institution (including those affiliated with Escrow Holder). All
disbursements shall be made by Escrow Holder's check or by wire transfer unless
otherwise instructed in writing.
2. Disclosure of Possible Benefits to Escrow Holder
The parties acknowledge that as a result of Escrow Holder maintaining its
general escrow accounts with the depositories, Escrow Holder may receive certain
financial benefits such as an array of bank services, accommodations, loans or
other business transactions from the depositories ("collateral benefits"). All
collateral benefits shall accrue to the sole benefit of Escrow Holder and Escrow
Holder shall have no obligation to account to the parties to this escrow for the
value of any such collateral benefits.
3. Prorations & Adjustments
The term "close of escrow" means the date on which documents are recorded. All
prorations and/or adjustments shall be made to the close of escrow based on a
30-day month, unless otherwise instructed in writing.
4. Recordation of Documents
Escrow Holder is authorized to record documents delivered through this escrow
which are necessary or proper for the issuance of the requested title insurance
policy(ies).
5. Authorization to Furnish Copies
Escrow Holder may furnish copies of any and all documents to the lender(s), real
estate broker(s), attorney(s) and/or accountant(s) involved in this transaction
upon their request.
6. Personal Property Taxes
No examination, UCC search, insurance as to personal property and/or the payment
of personal property taxes is required unless otherwise instructed in writing.
7. Cancellation of Escrow
Any party desiring to cancel this escrow shall deliver written notice of
cancellation to Escrow Holder. Within a reasonable time after receipt of such
notice, Escrow Holder shall send by regular mail to the address on the escrow
instructions, one copy of said notice to the other party(ies). Unless written
objection to cancellation is delivered to Escrow Holder by a party within 10
days after date of mailing, Escrow Holder is authorized at its option to comply
with the notice and terminate the escrow. If a written objection is received by
Escrow Holder, Escrow Holder is authorized at its option to hold all funds and
documents in escrow (subject to the funds held fee) and to take no other action
until otherwise directed by either the parties' mutual written instructions or a
final order of a court of competent jurisdiction. If no action is taken on this
escrow within 6 months after the closing date specified in the escrow
instructions, Escrow Holder's obligations shall, at its option, terminate. Upon
termination of this escrow, the parties shall pay all fees, charges and
reimbursements due to Escrow Holder and all documents and funds held in escrow
shall be returned to the parties depositing same.
8. Conflicting Instructions & Disputes
If Escrow Holder becomes aware of any conflicting demands or claims concerning
this escrow, Escrow Holder shall have the right to discontinue all further acts
on Escrow Holder's part until the conflict is resolved to Escrow Holder's
satisfaction. Escrow Holder has the right at its option to file an action in
interpleader requiring the parties to litigate their claims/rights. If such an
action is filed, the parties jointly and severally agree (a) to pay Escrow
Holder's cancellation charges, costs (including the funds held fees) and
reasonable attorney's fees, and (b) that Escrow Holder is fully released and
discharged from all further obligations under the escrow. If an action is
brought involving this escrow and/or Escrow Holder, the parties agree to
indemnify and hold the Escrow Holder harmless against liabilities, damages and
costs incurred by Escrow Holder (including reasonable attorney's fees and costs)
except to the extent that such liabilities, damages and costs were caused by the
gross negligence or willful misconduct of Escrow Holder.
9. Usury
Escrow Holder is not to be concerned with usury as to any loans or encumbrances
in this escrow and is hereby released of any responsibility and/or liability
therefor.
10. Amendments to Escrow Instructions
Any amendment to the escrow instructions must be in writing, executed by all
parties and accepted by Escrow Holder. Escrow Holder may, at its sole option,
elect to accept and act upon oral instructions from the parties. If requested by
Escrow Holder the parties covenant to confirm said instructions in writing as
soon as practicable. The escrow instructions as may be amended shall constitute
the entire escrow agreement between the Escrow Holder and the parties hereto
with respect to the subject matter of the escrow and shall supersede all prior
agreements with respect thereto.
11. Supplemental Real Property Taxes
Supplemental taxes may be assessed as a result of a change in ownership or
completion of construction. Adjustments due either party based on a supplemental
tax bill will be made by the parties outside of escrow and Escrow Holder is
released of any liability in connection with same.
12. Change of Ownership Forms
Buyer will provide a completed Preliminary Change of Ownership Report form
("PCOR"). If Buyer fails to provide the PCOR, Escrow shall close escrow and
charge Buyer any additional fee incurred for recording the documents without the
PCOR. Escrow Holder is released from any liability in connection with same.
13. Insurance Policies
In all matters relating to insurance, Escrow Holder may assume that each policy
is in force and that the necessary premium has been paid. Escrow Holder is not
91
responsible for obtaining fire , hazard or liability insurance, unless Escrow
Holder has received specific written instructions to obtain such insurance prior
to close of escrow for the parties or their respective lenders.
14. Facsimile Instructions
The parties agree to accept and instruct the Escrow Holder to rely upon
facsimile transmitted documents as if they had original signatures. Within 72
hours of transmission, the party transmitting documents by facsimile shall
deliver the originals of such documents to Escrow Holder. Escrow Holder may
withhold documents and/or funds due to the party until such originals are
delivered.
Documents to be recorded MUST contain original signatures.
15. Execution in Counterpart
The escrow instructions and any amendments may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute the same instruction.
16. Tax Reporting, Withholding & Disclosure
The parties are advised to seek independent advice concerning the tax
consequences of this transaction, including but not limited to, their
withholding, reporting and disclosure obligations. Escrow Holder does not
provide tax or legal advice and the parties agree to hold Escrow Holder harmless
from any loss or damage that the parties may incur as a result of their failure
to comply with federal and/or state tax laws. WITHHOLDING OBLIGATIONS ARE THE
EXCLUSIVE OBLIGATIONS OF THE PARTIES. ESCROW HOLDER IS NOT RESPONSIBLE TO
PERFORM THESE OBLIGATIONS UNLESS ESCROW HOLDER AGREES IN WRITING.
17. Taxpayer Identification Number Reporting
Federal law requires Escrow Holder to report Seller's social security number
and/or tax identification number, forwarding address, and the gross sales price
to the Internal Revenue Service ("IRS"). Escrow can not be closed nor any
documents recorded until the information is provided and Seller certifies its
accuracy to Escrow Holder.
18. State & Federal Withholding & Reporting
A buyer may be required to withhold and deliver to the Franchise Tax Board an
amount equal to 3.33% of the sales price of a California real property interest
by either: 1) a seller who is an individual with either a last known street
address outside of California or when the seller's disbursement instruction
direct the proceeds to be sent to a financial intermediary of the seller; OR 2)
a corporate seller which has no permanent place of business in California. The
buyer may become subject to a penalty in an amount equal to the greater of 10%
of the amount required or $500. However, the buyer is not required to withhold
any amount and will not be subject to penalty for failure to withhold if: a) the
sales price of the California real property interest does not exceed $100,000;
b) the seller executes a written certificate, under the penalty of perjury,
certifying that the seller is a resident of California, or if a corporation, has
a permanent place of business in California; OR c) the seller, who is an
individual, executes a written certificate, under the penalty of perjury, that
the California real property being conveyed is the seller's principal residence.
The California Franchise Tax Board may grant reduced withholding or waivers. To
obtain additional information regarding California withholding, contact the
Franchise Tax Board, Withhold at Source Unit, P.O. Box 651, Sacramento, CA
95812-0651 (619/845-4900). Certain federal reporting and withholding
requirements exist for real estate transactions where the seller (transferor) is
a non-resident alien, a non-domestic corporation or partnership, a domestic
corporation or partnership controlled by non-residents or non-resident
corporations or partnerships.
19. Taxpayer Identification Disclosure
Parties to a residential real estate transaction involving seller-provided
financing are required to furnish, disclose, and include taxpayer identification
numbers in their tax returns. Escrow Holder is not obligated to transmit the
taxpayer identification numbers to the IRS or to the parties. Escrow Holder is
authorized to release any party's taxpayer identification numbers to any other
party upon receipt of written request. The parties hereto waive all rights of
confidentiality regarding their respective taxpayer identification numbers and
agree to hold Escrow Holder harmless against any fees, costs, or judgments
incurred and/or awarded because of the release of taxpayer identification
numbers.
92
CONDUCTS ESCROW BUSINESS UNDER CERTIFICATE OF AUTHORITY ISSUED BY
THE STATE OF CALIFORNIA DEPARTMENT OF INSURANCE.
93
EXHIBIT 99.3
GUARANTY
THIS GUARANTY ("Guaranty") is made and entered into as of December 9,
1999, by Penn National Gaming, Inc., a Pennsylvania corporation ("Guarantor"),
with reference to the following facts:
A. Casino Magic Corp., a Minnesota corporation ("Seller") and BSL,
Inc., a Mississippi corporation ("Buyer"), entered into that certain Asset
Purchase Agreement dated December 9, 1999 (the "Asset Purchase Agreement"),
which provides, on the terms and conditions set forth therein, for the sale by
Seller and purchase by Buyer of the Assets of Seller as set forth in the
Agreement. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Asset Purchase Agreement.
B. Buyer is a wholly owned subsidiary of Guarantor and Guarantor is the
parent of Buyer.
C. As a material inducement for Seller to enter into the Asset Purchase
Agreement, Guarantor agreed to guarantee any and all of Buyer's obligations and
liabilities of any kind that may arise out of, or in connection with, the Asset
Purchase Agreement, and any amendments, modifications and replacements thereof,
including, without limitation, the obligation of Buyer to indemnify Seller and
any other obligations or liabilities arising out of the breach of any
representation, warranty or covenant of Buyer or Company thereunder (these
obligations are collectively defined as "Obligations" and singularly as an
"Obligation").
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Guarantor hereby agrees as follows:
1. Guarantor hereby unconditionally and irrevocably guarantees to
Seller the full, faithful and complete payment and performance by Buyer, when
due, of the Obligations, all in strict accordance with the terms and provisions
of the Asset Purchase Agreement, and all as if Guarantor were the primary
obligor with respect to the Obligations. This Guaranty is an absolute and
unconditional guaranty of payment and not of collectability.
2. Seller need not inquire into the power of Buyer or the authority of
its officers, directors or agents acting or purporting to act in its behalf with
regard to the Asset Purchase Agreement, and any Obligation incurred in reliance
upon the professed exercise of said power or authority is within the scope of
this Guaranty. Guarantor acknowledges and represents to Seller that Guarantor
has thoroughly reviewed and is familiar with the terms and conditions of the
Asset Purchase Agreement, and that Guarantor will derive a substantial benefit
from the consummation of the Asset Purchase Agreement.
3. Seller may waive any defaults or may fail to assert any rights or
grant any other indulgence or concession with respect to all or any part of the
Obligations, and Guarantor shall remain bound under this Guaranty
notwithstanding any of the foregoing. No single or partial exercise by Seller of
any right, remedy or power hereunder shall preclude any other or future exercise
of any other right, remedy or power.
94
4. The liability of Guarantor under this Guaranty shall be
unconditional irrespective of (i) any lack of enforceability of any of the
Obligations, (ii) any change of the time, manner or place of payment, or any
other term, or any settlement or compromise, of any of the Obligations, or any
partial or total release or discharge of Buyer with respect thereto; (iii)
whether recovery from Buyer or any other guarantor or person liable for any
Obligation is or hereafter becomes barred by any statute of limitations, or for
any other reason; (iv) any law, regulation or order of any jurisdiction
affecting any term of any of the Obligations or Seller's rights with respect
thereto, and (v) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Buyer or Guarantor with regard to the
Obligations. Guarantor waives promptness, diligence, presentment, demand and
notices with respect to any of the Obligations and the guaranty obligations
under this Guaranty. The guaranty obligations of Guarantor under this Guaranty
are direct and primary obligations and Guarantor hereby waives any requirement
that Seller resort to or exhaust any right to take any action against Buyer or
any collateral security. This is a continuing Guaranty and shall remain in full
force and effect, and Seller's rights shall not be exhausted, until such time as
all of the Obligations have been performed or paid, provided, that this Guaranty
shall automatically be reinstated for the entire amount owing and all
performances guaranteed hereunder in the event that Seller is required by law or
court order to repay to Buyer any amount previously received by Seller as a
result of Buyer 's insolvency, bankruptcy or reorganization or by application of
any bankruptcy laws or other laws, including, without limitation, laws for the
benefit of creditors.
5. Guarantor hereby authorizes and consents to Seller at any time and
from time to time, without notice or further consent of Guarantor, doing the
following and Guarantor agrees that the liability of Guarantor shall not be
released or affected by:
(a) The taking or accepting, or the failure by Seller to take or accept,
any collateral or other guarantee for the Obligations;
(b) The modification, amendment, extension, renewal or replacement of the Asset
Purchase Agreement;
(c) Any complete or partial release, substitution, subordination,
impairment, loss, compromise or other modification of any
other guarantee at any time existing in connection with the
Obligations;
(d) The complete or partial release or substitution of Buyer or any other
guarantors on the Obligation;
(e) Any renewal, extension, modification, replacement,
acceleration, consolidation, adjustment, indulgence,
forbearance, waiver or compromise of the payment of any part
or all of the Obligations, or any liability of any other
guarantor or any other party or any other guarantee therefor,
or the performance of any covenant contained in the Asset
Purchase Agreement;
(f) Any neglect, delay, omission, failure or refusal of Seller to
take or prosecute any action for the collection of the
95
Obligations or any part thereof, or for the enforcement of
any provision of the Asset Purchase Agreement, or any action
in connection with any guarantee of the Obligations;
(g) Acceptance of any partial and/or late payments on the Obligations;
(h) Application of payments by, or recoveries from, Buyer or any
guarantor, in such manner and in such order of priority as
Seller deems proper, whether or not such obligation to which
the payment or recovery is applied is due at the time of such
application; and
(i) Seller's exercising any and all rights and remedies available
to Seller by law, at equity or by agreement, even if the
exercise thereof may affect, modify or eliminate Guarantor's
rights of subrogation or reimbursement against Buyer or any
other party.
6. Guarantor agrees to execute, acknowledge and deliver to Seller such
other and further instruments, and take such other actions, as may be reasonably
required by Seller to implement the intent and purpose hereof.
7. This Guaranty shall be governed and construed in accordance with the
laws of the Commonwealth of Pennsylvania, without giving effect to the conflicts
of law principles thereof. The rights of Seller hereunder and at law are
cumulative, and not exclusive to each other, and may be exercised by Seller from
time to time. In case any one or more of the provisions contained herein should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired.
8. Guarantor agrees to pay to Seller, on demand, all attorneys' fees
and costs and other expenses (including, without limitation, all fees and costs
of litigation, including appeals, experts and other items) incurred by Seller in
collecting or compromising any Obligation or enforcing (or attempting to do any
or all of the foregoing) this Guaranty against the Guarantor.
9. Guarantor hereby irrevocably submits to the jurisdiction of any
Pennsylvania State or Federal Court sitting in Pennsylvania in any action or
proceeding arising out of or relating to this Guaranty, and Guarantor hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such Pennsylvania State or Federal Court. Guarantor
hereby irrevocably waives to the fullest extent Guarantor may effectively do so,
(i) the defenses of an inconvenient forum or improper venue to the maintenance
of such action or proceeding, and (ii) any claim that Guarantor is not
personally subject to the jurisdiction of any such courts. Guarantor agrees that
final, non-appealable judgment in any such action brought in any such court
shall be conclusive and binding upon Guarantor and may be enforced by Seller in
the courts of any state, in any federal court, and in any other courts, whether
foreign or domestic, having jurisdiction over Guarantor or any of its property
or assets, and Guarantor agrees not to assert any defense, counterclaim or right
of set-off in any action brought by Seller to enforce such judgment.
10. Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment in any other manner provided by law.
96
11. To the extent that Guarantor has or hereafter may acquire any
diplomatic or sovereign immunity, or any immunity from jurisdiction of any court
or from any legal process (whether through service or execution, execution or
otherwise) with respect to Guarantor or Guarantor's property or assets,
Guarantor hereby waives, and agrees not to assert any claims of, such immunity
with respect of its obligations under this Guaranty. Guarantor acknowledges that
the making of waivers in this Guaranty, and Seller's reliance on the
enforceability thereof, is a material inducement to Seller to enter into the
Purchase Agreement. Guarantor agrees to execute, deliver and file all such
further instruments as may be reasonably necessary under the laws of the
Commonwealth of Pennsylvania, in order to make effective the consent by
Guarantor to jurisdiction of the state courts of Pennsylvania and the federal
courts sitting in Pennsylvania.
12. If the incurring of any debt by Buyer or the payment of any money
or transfer of property to Seller by or on behalf of Buyer , Guarantor, or any
other party should for any reason subsequently be determined to be "voidable" or
"avoidable" in whole or in part within the meaning of any state or federal law
(collectively "Voidable Transfers"), including without limitation, fraudulent
conveyances or preferential transfers under the United States Bankruptcy Code or
any other federal or state law, and Seller is required to repay or restore to
Buyer any voidable transfers or the amount or any portion thereof, or upon the
advice of Seller's counsel is advised to do so, then, as to such amount or
property repaid or restored, including all reasonable costs, expenses and
attorney's fees of Seller related thereto, the liability of Guarantor shall
automatically be revived, reinstated and restored and shall exist as though the
voidable transfers had never been made.
13. No modification of this Guaranty shall be effective unless placed
in writing and executed by the parties hereto. This Guaranty shall bind and
inure to the benefit of Seller and assigns, and Guarantor, and no other person
or entity shall have any rights or obligations hereunder.
14. The obligations of Guarantor hereunder are independent of the
obligations of Buyer and, in the event of any default in or failure to perform
of the Obligations, a separate action or actions may be brought and prosecuted
against Guarantor whether or not Buyer is joined therein or a separate action or
actions are brought against Buyer , and regardless of the right to pursue any
other remedy in Seller's power.
97
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
and year first above written.
"Guarantor"
PENN NATIONAL GAMING, INC.,
a Pennsylvania corporation
By: /s/Robert S. Ippolito_________
Its: Secretary/Treasurer___________
98
EXHIBIT 99.4
GUARANTY
THIS GUARANTY ("Guaranty") is made and entered into as of December 9,
1999 by Hollywood Park, Inc., a Delaware corporation ("Guarantor"), with
reference to the following facts:
A. BSL, Inc., a Mississippi corporation ("Buyer") and Casino Magic
Corp., a Minnesota corporation ("Seller"), entered into that certain Asset
Purchase Agreement dated December 9, 1999 (the "Asset Purchase Agreement"),
which provides, on the terms and conditions set forth therein, for the sale by
Seller and purchase by Buyer of the Assets of Seller as set forth in the
Agreement. Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Asset Purchase Agreement.
B. Seller is a wholly owned subsidiary of Guarantor and Guarantor is
the parent of Seller.
C. As a material inducement for Buyer to enter into the Asset Purchase
Agreement, Guarantor agreed to guarantee any and all of Seller's obligations and
liabilities of any kind that may arise out of, or in connection with, the Asset
Purchase Agreement, and any amendments, modifications and replacements thereof,
including, without limitation, the obligation of Seller to indemnify Buyer and
any other obligations or liabilities arising out of the breach of any
representation, warranty or covenant of Seller or Company thereunder (these
obligations are collectively defined as "Obligations" and singularly as an
"Obligation").
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Guarantor hereby agrees as follows:
1. Guarantor hereby unconditionally and irrevocably guarantees to Buyer
the full, faithful and complete payment and performance by Seller, when due, of
the Obligations, all in strict accordance with the terms and provisions of the
Asset Purchase Agreement, and all as if Guarantor were the primary obligor with
respect to the Obligations. This Guaranty is an absolute and unconditional
guaranty of payment and not of collectability.
2. Buyer need not inquire into the power of Seller or the authority of
its officers, directors or agents acting or purporting to act in its behalf with
regard to the Asset Purchase Agreement, and any Obligation incurred in reliance
upon the professed exercise of said power or authority is within the scope of
this Guaranty. Guarantor acknowledges and represents to Buyer that Guarantor has
thoroughly reviewed and is familiar with the terms and conditions of the Asset
Purchase Agreement, and that Guarantor will derive a substantial benefit from
the consummation of the Asset Purchase Agreement.
3. Buyer may waive any defaults or may fail to assert any rights or
grant any other indulgence or concession with respect to all or any part of the
Obligations, and Guarantor shall remain bound under this Guaranty
notwithstanding any of the foregoing. No single or partial exercise by Buyer of
any right, remedy or power hereunder shall preclude any other or future exercise
of any other right, remedy or power.
99
4. The liability of Guarantor under this Guaranty shall be
unconditional irrespective of (i) any lack of enforceability of any of the
Obligations, (ii) any change of the time, manner or place of payment, or any
other term, or any settlement or compromise, of any of the Obligations, or any
partial or total release or discharge of Seller with respect thereto; (iii)
whether recovery from Seller or any other guarantor or person liable for any
Obligation is or hereafter becomes barred by any statute of limitations, or for
any other reason; (iv) any law, regulation or order of any jurisdiction
affecting any term of any of the Obligations or Buyer's rights with respect
thereto, and (v) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Seller or Guarantor with regard to the
Obligations. Guarantor waives promptness, diligence, presentment, demand and
notices with respect to any of the Obligations and the guaranty obligations
under this Guaranty. The guaranty obligations of Guarantor under this Guaranty
are direct and primary obligations and Guarantor hereby waives any requirement
that Buyer resort to or exhaust any right to take any action against Seller or
any collateral security. This is a continuing Guaranty and shall remain in full
force and effect, and Buyer's rights shall not be exhausted, until such time as
all of the Obligations have been performed or paid, provided, that this Guaranty
shall automatically be reinstated for the entire amount owing and all
performances guaranteed hereunder in the event that Buyer is required by law or
court order to repay to Seller any amount previously received by Buyer as a
result of Seller 's insolvency, bankruptcy or reorganization or by application
of any bankruptcy laws or other laws, including, without limitation, laws for
the benefit of creditors.
5. Guarantor hereby authorizes and consents to Buyer at any time and
from time to time, without notice or further consent of Guarantor, doing the
following and Guarantor agrees that the liability of Guarantor shall not be
released or affected by:
(j) The taking or accepting, or the failure by Buyer to take or accept, any
collateral or other guarantee for the Obligations;
(k) The modification, amendment, extension, renewal or replacement of the Asset
Purchase Agreement;
(l) Any complete or partial release, substitution, subordination,
impairment, loss, compromise or other modification of any
other guarantee at any time existing in connection with the
Obligations;
(m) The complete or partial release or substitution of Seller or any other
guarantors on the Obligation;
(n) Any renewal, extension, modification, replacement,
acceleration, consolidation, adjustment, indulgence,
forbearance, waiver or compromise of the payment of any part
or all of the Obligations, or any liability of any other
guarantor or any other party or any other guarantee therefor,
or the performance of any covenant contained in the Asset
Purchase Agreement;
(o) Any neglect, delay, omission, failure or refusal of Buyer to
take or prosecute any action for the collection of the
Obligations or any part thereof, or for the enforcement of
any provision of the Asset Purchase Agreement, or any action
in connection with any guarantee of the Obligations;
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(p) Acceptance of any partial and/or late payments on the Obligations;
(q) Application of payments by, or recoveries from, Seller or any
guarantor, in such manner and in such order of priority as
Buyer deems proper, whether or not such obligation to which
the payment or recovery is applied is due at the time of such
application; and
(r) Buyer's exercising any and all rights and remedies available
to Buyer by law, at equity or by agreement, even if the
exercise thereof may affect, modify or eliminate Guarantor's
rights of subrogation or reimbursement against Seller or any
other party.
6. Guarantor agrees to execute, acknowledge and deliver to Buyer such
other and further instruments, and take such other actions, as may be reasonably
required by Buyer to implement the intent and purpose hereof.
7. This Guaranty shall be governed and construed in accordance with the
laws of the Commonwealth of Pennsylvania, without giving effect to the conflicts
of law principles thereof. The rights of Buyer hereunder and at law are
cumulative, and not exclusive to each other, and may be exercised by Buyer from
time to time. In case any one or more of the provisions contained herein should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired.
8. Guarantor agrees to pay to Buyer, on demand, all attorneys' fees and
costs and other expenses (including, without limitation, all fees and costs of
litigation, including appeals, experts and other items) incurred by Buyer in
collecting or compromising any Obligation or enforcing (or attempting to do any
or all of the foregoing) this Guaranty against the Guarantor.
9. Guarantor hereby irrevocably submits to the jurisdiction of any
Pennsylvania State or Federal Court sitting in Pennsylvania in any action or
proceeding arising out of or relating to this Guaranty, and Guarantor hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such Pennsylvania State or Federal Court. Guarantor
hereby irrevocably waives to the fullest extent Guarantor may effectively do so,
(i) the defenses of an inconvenient forum or improper venue to the maintenance
of such action or proceeding, and (ii) any claim that Guarantor is not
personally subject to the jurisdiction of any such courts. Guarantor agrees that
final, non-appealable judgment in any such action brought in any such court
shall be conclusive and binding upon Guarantor and may be enforced by Buyer in
the courts of any state, in any federal court, and in any other courts, whether
foreign or domestic, having jurisdiction over Guarantor or any of its property
or assets, and Guarantor agrees not to assert any defense, counterclaim or right
of set-off in any action brought by Buyer to enforce such judgment.
10. Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment in any other manner provided by law.
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11. To the extent that Guarantor has or hereafter may acquire any
diplomatic or sovereign immunity, or any immunity from jurisdiction of any court
or from any legal process (whether through service or execution, execution or
otherwise) with respect to Guarantor or Guarantor's property or assets,
Guarantor hereby waives, and agrees not to assert any claims of, such immunity
with respect of its obligations under this Guaranty. Guarantor acknowledges that
the making of waivers in this Guaranty, and Buyer's reliance on the
enforceability thereof, is a material inducement to Buyer to enter into the
Purchase Agreement. Guarantor agrees to execute, deliver and file all such
further instruments as may be reasonably necessary under the laws of the
Commonwealth of Pennsylvania, in order to make effective the consent by
Guarantor to jurisdiction of the state courts of Pennsylvania and the federal
courts sitting in Pennsylvania.
12. If the incurring of any debt by Seller or the payment of any money
or transfer of property to Buyer by or on behalf of Seller, Guarantor, or any
other party should for any reason subsequently be determined to be "voidable" or
"avoidable" in whole or in part within the meaning of any state or federal law
(collectively "Voidable Transfers"), including without limitation, fraudulent
conveyances or preferential transfers under the United States Bankruptcy Code or
any other federal or state law, and Buyer is required to repay or restore to
Seller any voidable transfers or the amount or any portion thereof, or upon the
advice of Buyer's counsel is advised to do so, then, as to such amount or
property repaid or restored, including all reasonable costs, expenses and
attorney's fees of Buyer related thereto, the liability of Guarantor shall
automatically be revived, reinstated and restored and shall exist as though the
voidable transfers had never been made.
13. No modification of this Guaranty shall be effective unless placed
in writing and executed by the parties hereto. This Guaranty shall bind and
inure to the benefit of Buyer and assigns, and Guarantor, and no other person or
entity shall have any rights or obligations hereunder.
14. The obligations of Guarantor hereunder are independent of the
obligations of Seller and, in the event of any default in or failure to perform
of the Obligations, a separate action or actions may be brought and prosecuted
against Guarantor whether or not Seller is joined therein or a separate action
or actions are brought against Seller, and regardless of the right to pursue any
other remedy in Buyer's power.
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
and year first above written.
"Guarantor"
Hollywood Park, Inc.
By: _/s/G. Michael Finnigan__
G. Michael Finnigan,
Authorized Signatory
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EXHIBIT 99.5
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement (this "First Amendment")
is made and entered into as of this 17th day of December, 1999, between Casino
Magic Corp., a Minnesota corporation ("Seller"), and BSL, Inc., a Mississippi
corporation ("Buyer").
A. Seller and Buyer entered into that certain Asset Purchase Agreement
dated as of December 9, 1999 ("Asset Purchase Agreement"), with respect to
certain assets used by Seller in the operation of the Casino Magic-Bay St. Louis
Casino in Bay St. Louis, Mississippi and more particularly described in the
Asset Purchase Agreement.
B. Seller and Buyer desire to amend the Asset Purchase Agreement as set
forth below.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Seller and Buyer agree as follows:
1. Defined Terms. Capitalized terms used herein, but not defined herein,
shall have the meanings ascribed to such terms in the Asset Purchase Agreement.
2. Exhibit B. Exhibit B of the Asset Purchase Agreement is hereby
redesignated as Schedule 1 to the Asset Purchase Agreement.
3. Relationship to Asset Purchase Agreement. This First Amendment
supercedes any inconsistent provisions contained in the Asset Purchase
Agreement. Except as amended hereby, the Asset Purchase Agreement is in full
force and effect.
4. Counterparts. This First Amendment may be executed in counterparts,
which, when taken together shall be one and the same instrument.
IN WITNESS WHEREOF, this First Amendment has been executed as of the date
first above written.
SELLER BUYER
CASINO MAGIC CORP., BSL, INC.,
a Minnesota corporation a Mississippi corporation
By: /s/ Loren S. Ostrow_________________ By: /s/ Joseph A. Lashinger, Jr.
Its: Secretary________________________ Its: Secretary_______________
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- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
Between
BTN, INC., a Mississippi corporation,
and
BOOMTOWN INC., a Delaware corporation
Dated as of December 9, 1999
- --------------------------------------------------------------------------------
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This ASSET PURCHASE AGREEMENT (together with the exhibits and schedules
hereto, the "Agreement") is entered into as of December 9, 1999 by and between
BTN, INC., a Mississippi corporation ("Buyer") and, BOOMTOWN, INC., a Delaware
corporation ("Seller") with reference to the following facts:
RECITALS
A. Seller, a wholly-owned subsidiary of Hollywood Park, Inc. ("HPI"),
is the owner (through one or more subsidiaries, including the Company) of
certain assets more particularly described in this Agreement, including both
real and personal property, tangible and intangible, used by it in the operation
of the Boomtown Biloxi Casino in Biloxi, Mississippi (the "Business").
B. is a wholly-owned subsidiary of Penn National Gaming, Inc. ("PNG").
C. Seller desires to sell, and Buyer desires to purchase those assets,
as more particularly described in this Agreement and assume certain of the
liabilities as more particularly described in this Agreement, on the terms and
conditions set forth herein.
D. Concurrently with the execution and delivery of this Agreement, HPI
and PNG have executed and delivered the HPI Guaranty and the PNG Guaranty (as
such terms are defined below), respectively.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the parties agree as follows:
14. DEFINITIONS. The following terms shall have the following meanings
when used in this Agreement:
"Accounts Receivable" shall have the meaning set forth in Section 2.1.4.
"Affiliate" shall have the meaning defined in Rule 12b-2 of Securities
Exchange Act of 1934, as amended.
"Asset Loss" shall have the meaning set forth in Section 12.14.
"Assigned Contracts" shall have the meaning set forth in Section 2.1.8.
"Assignment of Leases" shall have the meaning set forth in Section 3.5.
"Assumed Liabilities" shall have the meaning set forth in Section 3.3.3.
"Bank of America Loan Agreement" shall have the meaning set forth in
Section 4.3.
"Bill of Sale and Assignment and Assumption Agreement" shall mean a
Bill of Sale and Assignment and Assumption Agreement substantially in the form
of Exhibit A hereto, pursuant to which Buyer shall assume and agree to pay,
perform and discharge when due the Assumed Liabilities.
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"Budget" shall have the meaning set forth in Section 6.1.11.
"Business" shall have the meaning set forth in the recitals.
"Business Intellectual Property" shall have the meaning set forth in
Section 4.12.
"Caribbean Stud Liability" shall have the meaning set forth in Section
3.3.3.
"Cash Portion of the Purchase Price" shall have the meaning set forth
in Section 3.3.1.
"Closing" and "Closing Date" shall have the respective meanings set
forth in Section 3.1.
"Closing Balance Sheet" shall have the meaning set forth in Section
3.3.2.3.
"Commission" shall mean the Securities and Exchange Commission.
"Company" shall mean the subsidiary of Seller which currently owns the
Purchased Assets and operates the Business.
"Company Level Financial Statements" shall mean the unaudited financial
statements of the Company consisting of summary balance sheets as of September
30, 1999 and December 31, 1998 and summary income statements showing actual
results for the nine month periods ended September 30, 1999 and September 30,
1998 attached hereto as Exhibit B.
"Contract" shall mean any contract, agreement, license, sales order,
purchase order or other legally binding commitment, whether written or oral, by
which Company or any of the Purchased Assets are bound, or to which Seller is a
party or by which it is bound in either case relating primarily to the operation
of the Business.
"Deposit" shall have the meaning set forth in Section 7.1.
"Disclosure Schedule" means the schedules delivered to Buyer by or on
behalf of the Seller, containing all lists, descriptions, exceptions and other
information and materials as included therein in connection with the
representations and warranties made by Seller in this Agreement.
"Employee Benefit Plan" shall have the meaning set forth in Section
4.28.
"Employees" shall have the meaning set forth in Section 4.27.
"Environmental Claim" shall mean any action, administrative action,
arbitration, complaint, demand or proceeding made or commenced by any
Governmental Authority or third party alleging liability under or pursuant to
Environmental Laws.
"Environmental Laws" shall mean all laws, statutes, regulations, rules,
ordinances, by-laws, orders or determinations of any governmental or judicial
authority at the federal, state or local level, in effect as of the date of this
Agreement, which regulate or relate to the protection or clean-up of the
environment, the use, treatment, storage, transportation, generation,
manufacture, processing, distribution, handling or disposal of, or emission,
107
discharge or other release or threatened release of hazardous substances or
otherwise dangerous substances, wastes, pollution or materials (whether gas,
liquid or solid), the preservation or protection of waterways, groundwater,
drinking water, air, wildlife, plants or other natural resources, or the health
and safety of persons or property, including, without limitation, protection of
the health and safety of employees, other than laws, statutes, regulations,
rules, ordinances, by-laws, orders or determinations pertaining to land use
planning, zoning matters, and development entitlements.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall have the meaning set forth in Section 4.28.
"Escrow" shall have the meaning set forth in Section 3.6.
"Escrow Agreement" shall have the meaning set forth in Section 3.6.
"Escrow Holder" shall have the meaning set forth in Section 3.6.
"Excluded Assets" shall have the meaning set forth in Section 2.2.
"Excluded Liabilities" shall have the meaning set forth in Section 3.4.
"Existing Liens" shall have the meaning set forth in Section 4.20.
"Final Month End" shall have the meaning set forth in Section 6.1.11.
"Gift Certificate Liability" shall have the meaning set forth in
Section 3.3.3.
"Governmental Approval" shall mean any Consent of, with or to any
Governmental Authority.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including without limitation, any government authority, agency,
department, board, commission or instrumentality of the United States, any State
of the United States or any political subdivision thereof, including without
limitation, the Mississippi Gaming Commission.
"Hazardous Substances" means any toxic, carcinogenic or hazardous
gaseous, liquid or solid material or waste that may or could pose a hazard to
the environment or human health or safety including (a) any "hazardous
substances" as defined by the federal Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss.ss. 9601 et seq., (b) any
"extremely hazardous substance," "hazardous chemical," or "toxic chemical" as
those terms are defined by the federal Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. ss.ss. 11001 et seq., (c) any "hazardous waste," as
defined under the federal Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act, 42 U.S.C. ss.ss. 6901 et seq., (d) any
"pollutant," as defined under the federal Water Pollution Control Act, 33 U.S.C.
ss.ss. 1251 et seq., as any of such laws in clauses (a) through (d) as amended,
and (e) any regulated substance or waste under any Laws or court orders that
108
have been enacted, promulgated or issued by any federal, state or local
governmental authorities concerning protection of the environment.
"Hired Employees" shall have the meaning set forth in Section 3.3.3.
"HPI" shall mean Hollywood Park, Inc., a Delaware corporation.
"HPI Guaranty" shall mean a guaranty by HPI of Seller's obligations
under this Agreement pursuant to a Guaranty dated as of the date hereof.
"HPI SEC Reports" shall have the meaning set forth in Section 4.6.
"HSR Act" shall have the meaning set forth in Section 4.4.
"Indemnified Party" shall mean, with respect to any Losses, the party
seeking indemnity hereunder.
"Indemnifying Party" shall mean, with respect to any Losses, the party
from whom indemnity is being sought hereunder.
"Intellectual Property" shall have the meaning set forth in Section
2.2.12.
"Internal Revenue Code" shall have the meaning set forth in Section
4.17.
"Inventory" shall have the meaning set forth in Section 2.1.5.
"Key Management Employees" shall have the meaning set forth in Section
7.4.
"Law" means any statute, law, ordinance, regulation, order or rule of
any Federal, state, local, foreign or other governmental agency or body or of
any other type of regulatory body, including those covering environmental,
energy, safety, health, transportation, bribery, recordkeeping, zoning,
antidiscrimination, antitrust, wage and hour, and price and wage control
matters.
"Leased Real Property" shall have the meaning set forth in Section
2.1.1.
"Leases" shall have the meaning set forth in Section 2.1.1.
"Liability" shall mean any direct or indirect liability, indebtedness,
obligation, expense, claim, loss, damage, deficiency, guaranty or endorsement of
or by any Person, absolute or contingent, accrued or unaccrued, due or to become
due, liquidated or unliquidated.
"Lien" shall mean any lien, mortgage, pledge, hypothecation, security
interest, or encumbrance of any nature whatsoever.
"License Agreement" shall mean an agreement pursuant to which Seller
shall license to Buyer certain of the Company trademarks, trade names, logos and
marks until the date that is the later of (i) three (3) years after the Closing
Date or (ii) two (2) years after HPI abandons all uses of the Casino Magic name
and provide Buyer with an option to purchase such trademarks, trade names, logos
109
and marks for one dollar ($1.00) in the event Seller abandons them in
substantially the form of Exhibit C hereto.
"Licensed Persons" shall have the meaning set forth in Section 7.3.
"Liquidated Damages" shall have the meaning set forth in Section 7.1.2.
"Losses" shall mean any and all costs and expenses (including, but not
limited to, reasonable professionals' fees), damages, actions, suits,
proceedings, claims, demands, assessments, judgments and losses actually
incurred by the Indemnified Party, net of any insurance proceeds, in either case
to which the Indemnified Party is entitled by virtue of such costs, expenses,
actions, suits, proceedings, claims, demands, assessments, judgments, damages
and losses.
"Material Adverse Effect" shall mean a material adverse effect on the
financial condition, business or properties or assets of the Business or on the
Purchased Assets in each case taken as a whole.
"Mississippi Gaming Laws" shall have the meaning set forth in Section
4.4.
"Notes Payable and Long-Term Debt" shall have the meaning set forth in
Section 3.3.3.
"Occupancy Agreements" shall have the meaning set forth in Section 4.16.
"Other Asset Purchase Agreement" shall have the meaning set forth in
Section 3.1.
"Outside Date" shall have the meaning set forth in Section 3.1.
"Owned Real Property" shall have the meaning set forth in Section 2.1.1.
"Permitted Liens" shall have the meaning set forth in Section 7.2(b).
"Person" shall mean any natural person, firm, partnership, association,
corporation, company, trust, business trust, or other entity.
"PNG Guaranty" shall mean a guaranty by PNG of Buyer's obligations
under this Agreement pursuant to a Guaranty dated as of the date hereof.
"Preliminary Title Report" shall have the meaning set forth in Section
7.2.
"Prepaid Items and Deposits" shall have the meaning set forth in
Section 2.1.6.
"Purchased Assets" shall have the meaning set forth in Section 2.1.
"Purchase Price" shall have the meaning set forth in Section 3.3.1.
"Real Property" shall have the meaning set forth in Section 2.1.
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"Release" means any release, spill, emission, leaching, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, or leaching into
the indoor or outdoor environment, or into or out of any property.
"Remainder Parcels" shall have the meaning set forth in Section 2.2.8.
"Replacement Cost" shall have the meaning set forth in Section 12.14.
"Representatives" shall have the meaning set forth in Section 6.3.
"September 30, 1999 Company Balance Sheet" shall mean the unaudited
summary balance sheet of the Company as of September 30, 1999, included as part
of the Company Level Financial Statements.
"September 30, 1999 Company Income Statement" shall mean the unaudited
summary income statement of the Company for the nine months ended September 30,
1999, included as part of the Company Level Financial Statements.
"Specified Conditions" shall have the meaning set forth in Section
8.1.6.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Taxes" means all taxes, duties, charges, fees, levies or other
assessments imposed by any taxing authority including income, gross receipts,
value-added, excise, withholding, personal property, real estate, sale, use, ad
valorem, license, lease, service, severance, stamp, transfer, payroll,
employment, customs, duties, alternative, add-on minimum, estimated and
franchise taxes (including any interest, penalties or additions attributable to
or imposed on or with respect to any such assessment).
"Tip Pool Liability" shall have the meaning set forth in Section 3.3.3.
"Title Company" shall have the meaning set forth in Section 7.2.
"Title Policy" shall have the meaning set forth in Section 8.1.1.
"Transactions" shall mean the transactions contemplated by the
Transaction Documents.
"Transaction Documents" shall mean this Agreement, the Bill of Sale and
Assignment and Assumption Agreement, the License Agreement, Warranty Deed, HPI
Guaranty, the PNG Guaranty and such other documents as the parties shall
mutually agree are necessary to complete the Transactions.
"Unredeemed Chip Liability" shall have the meaning set forth in Section
3.3.3.
"Unredeemed Fun Center Premiums" shall have the meaning set forth in
Section 3.3.3.
"Warranty Deed" shall have the meaning set forth in Section 3.5.
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15. TRANSFER OF PURCHASED ASSETS.
15.1. Transfer of Purchased Assets. Subject to the terms and conditions of this
Agreement, on the Closing Date, Seller will sell, convey, transfer, assign and
deliver to Buyer, and Buyer will purchase from Seller, all right, title and
interest of the Seller in and to the properties, assets and rights of every
nature, kind and description, tangible and intangible (including goodwill),
whether real, personal or mixed, wherever situated, whether accrued, contingent
or otherwise and whether now existing or hereinafter acquired (other than the
Excluded Assets) primarily related to or used primarily in connection with the
Business as the same may exist on the Closing Date (the "Purchased Assets"),
including without limitation all those items in the following categories that
conform to the definition of the term "Purchased Assets":
15.1.1. Real Property.
(a) That certain real property owned by the Company in the City of
Biloxi, County of Harrison, State of Mississippi, described on
Schedule 2.1.1.(a), including the land, improvements thereon
and all rights, privileges and easements which are appurtenant
to such real property (the "Owned Real Property").
(b) All of the Company's leasehold interests in those certain
leases ("Leases") described on Schedule 2.1.1(b) (the "Leased
Real Property").
The Owned Real Property and the Leased Real Property is collectively
referred to herein as the "Real Property."
15.1.2. Personal Property.
(a) All tangible personal property, including, but not limited to,
machinery and equipment, gaming equipment (including without
limitation, gaming tables, casino chips and slot machines),
furniture, supplies, inventory and trade fixtures owned by the
Seller and used in the Business that is reflected on the
September 30, 1999 Company Balance Sheet or otherwise located
on the Real Property on the Closing Date and used in the
Business. All material items having an original cost of at
least $100,000 as of September 30, 1999, are described on
Schedule 2.1.2(a); and
(b) The leasehold interests created by all leases of tangible
personal property, including, but not limited to, machinery
and equipment, gaming equipment (including without limitation,
gaming tables and slot machines), furniture and tools, used in
the Business, including those personal property leases listed
on Schedule 2.1.2(b).
15.1.3. Casino Cash. All of the cash (and coin) in the Business' gaming devices,
cages and change banks (after giving effect to the contra accounts for gaming
chips and tokens purchased) at the premises of the Business, including the
restaurants, as determined as of 12 a.m. on the Closing Date (collectively, the
"Casino Cash").
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15.1.4. Accounts Receivable. All accounts receivable (including employee
advances) and notes receivable, including "markers," relating exclusively to the
Business (excluding intercompany receivables) in existence on the Closing Date
(the "Accounts Receivable"). For informational purposes, the Accounts Receivable
that were in existence as of September 30, 1999 are reflected on the September
30, 1999 Company Balance Sheet.
15.1.5. Inventory. All tangible goods held for future sale or use solely in the
Business and all inventories of supplies utilized solely in conducting the
Business, including, without limitation, beverages, foodstuff and other
consumable or perishable items and merchandise intended for sale or resale or
for use in connection with such sale or resale, including, without limitation,
(i) food and beverages, (ii) raw and uncooked food and other salable
merchandise, (iii) merchandise for sale in the gift shop and (iv) inventory of
the casino, and restaurant products used in the Business (collectively,
"Inventory"), on the Closing Date. For informational purposes, the Inventory on
hand as of September 30, 1999 is reflected on the September 30, 1999 Company
Balance Sheet.
15.1.6. Prepaid Items and Deposits. All prepaid items and deposits paid by
Seller or the Company (excluding prepaid insurance, prepaid property taxes and
any items specifically excluded in Section 2.2 herein) primarily in connection
with the operation of the Business in existence on the Closing Date including,
without limitation, prepaid rent, prepaid supplies (collectively, "Prepaid Items
and Deposits"). For informational purposes, the Prepaid Items and Deposits as of
September 30, 1999 are reflected on the September 30, 1999 Company Balance
Sheet.
15.1.7. Books and Records. All books and records (other than personnel records
relating to or containing performance reviews and similar evaluations unless the
transfer is consented to by such personnel) in any form or medium and all files,
documents, papers, customer lists, owned computer software programs, intangible
personal property relating to the operation of Business' barge such as hull
drawings and vessel logs (to the extent such items are in Seller's or the
Company's possession), architectural plans, drawings and specifications,
advertising and promotional materials and purchasing records pertaining
primarily to the Purchased Assets, the Assumed Liabilities or otherwise to the
Business, subject to the Seller retaining copies or originals of the same, if
and as it so chooses;
15.1.8. Assigned Contracts. The rights of Seller or the Company under all
Contracts relating primarily to the Business, including but not limited to (i)
the Contracts listed on any of the schedules or exhibits hereto (including all
Material Contracts (including the Leases) listed in Section 4.22 of the
Disclosure Schedule), (ii) all licenses transferable by Seller or the Company
relating to the Intellectual Property owned by unaffiliated third parties, (iii)
with respect to the Business, all unfilled orders outstanding as of the Closing
Date for the purchase of raw materials, goods or services by Seller or the
Company and all unfilled orders outstanding as of the Closing Date for the sale
of goods or services by Seller or the Company, and (iv) those entered into in
the ordinary course of business of the Business through the Closing Date, except
for any Contract that requires the consent to assignment of a party thereto and
for which such consent has not been obtained pursuant to Section 6.4 prior to
the Closing (the "Assigned Contracts"). Schedule 2.1.8 lists the monthly
contractual and lease (personal and real property) payments;
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15.1.9. Permits and Licenses. All transferable government business licenses,
permits, approvals, entitlements and equivalent
documents, including, without limitation, with respect to the Real Property;
15.1.10. Vehicles. All vehicles used primarily in the Business as of the Closing
Date. For information purposes only, such Vehicles are reflected on the
September 30, 1999 Company Balance Sheet and supporting schedules thereto.
15.1.11. Governmental Approvals. To the extent their transfer is permitted by
law, all Governmental Approvals, including all
applications therefor;
15.1.12. Other Rights. All guarantees, warranties, indemnities and similar
rights in favor of the Seller or the Company with respect
to any Purchased Asset; and
15.1.13. Other Assets. Excluding the Excluded Assets, any other assets of the
Company that are material to the operation of the
Business.
Subject to the terms and conditions hereof, at the Closing, the Purchased Assets
shall be transferred or otherwise conveyed to the Buyer free and clear of all
Liens excepting only Assumed Liabilities, Permitted Liens and such matters
described in Section 7.2.
The Purchased Assets shall include all assets described above that are acquired
by Seller or the Company for use in connection with the Business between the
date hereof and the Closing Date (except to the extent such assets would
constitute Excluded Assets), but shall exclude assets of the type described
above that are disposed of, sold or consumed after the date hereof in the
ordinary course of business. If, for any reason, any Excluded Assets are
physically transferred to Buyer, or Buyer otherwise gains access to any such
Seller property as a result of the transactions contemplated herein, no
assignment or license of such property to Buyer shall be implied and, as between
Buyer and Seller, all ownership interests and other rights of any kind in such
property shall remain with Seller. If Buyer to its actual knowledge does come to
possess or gain access to any Seller information or property other than the
Purchased Assets, Buyer shall (a) treat any such information as the confidential
information of Seller, (b) promptly notify Seller that Buyer possesses or has
access to such information or property, and (c) cooperate fully with Seller to
return to Seller or destroy such property promptly, as Seller may direct at its
option. Specifically, but without limitation, any information stored on the
computers transferred to Buyer hereunder, but not primarily related or material
to the Business shall, as between Buyer and Seller, remain the sole and
exclusive property of Seller.
15.2. Assets Not Transferred. Notwithstanding anything to the contrary contained
herein, the following assets and properties of Seller are specifically excluded
from the Purchased Assets and shall be retained by it (the "Excluded Assets"):
15.2.1. Cash and Cash Equivalents. Other than the Casino Cash, all working
capital, cash on hand and cash equivalents of Seller and its subsidiaries
(whether or not relating to the Business), including, but not limited to, bank
accounts, temporary cash investments, payroll accounts and petty cash banks;
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15.2.2. Other Accounts Receivable. Other than the Accounts Receivable referred
to in Section 2.1.4, all accounts receivable, notes receivable and other
receivables (including receivables from third parties and Governmental
Authorities) of Seller and its subsidiaries;
15.2.3. Refund Claims. Rights to or claims for refunds of taxes and other
governmental charges to the extent attributable to any time or periods ending on
or prior to the Closing Date and the benefit of net operating loss
carry-forwards or other credits of Seller and its subsidiaries, whether or not
attributable to the Business;
15.2.4. Third Party Claims. Claims or rights against third parties, except those
arising with respect to events or breaches occurring after the Closing Date
under the Assigned Contracts; provided, however, that any rights of
indemnification, contribution or reimbursement that may exist under the Assigned
Contracts in respect of liabilities or obligations retained by the Seller and
its subsidiaries hereunder shall be Excluded Assets. In furtherance of the
foregoing, Buyer agrees to cooperate with Seller and, at Seller's direction and
at Seller's expense, shall pursue any such claims or rights on behalf of Seller
and shall pay over any amounts so collected to Seller so that Seller enjoys the
full benefits of such claims or rights;
15.2.5. Insurance. Subject to Section 12.14, all insurance policies and rights
and receivables thereunder, including but not
limited to rights to any cancellation value as of the Closing Date;
15.2.6. Unrelated Information. Proprietary business information, records and
policies that relate generally to Seller, or any Affiliate, and are not used
primarily in the Business, including, but not limited to, management procedures
and guidelines, proprietary financial reporting formats, accounting procedures,
personnel records relating to or containing performance reviews or similar
evaluations, instructions, organization manuals and strategic plans;
15.2.7. Names. The names listed in Schedule 2.2.7 and all variants thereof;
15.2.8. Other Real Property. All real property and all rights appurtenant
thereto, and real property improvements, owned or leased by Seller and its
subsidiaries other than the Real Property (the "Remainder Parcels");
15.2.9. Unrelated and Corporate Assets. All other assets of Seller and its
subsidiaries not specifically included in the Purchased Assets to be sold
hereunder, including, but not limited to (i) assets used or held for use other
than primarily in connection with the Business, and (ii) Seller's corporate
charter, taxpayer and other identification numbers, seals, minute books and
stock transfer books and Seller's ownership of stock in its various
subsidiaries;
15.2.10. Certain Contracts. The rights of Seller and its subsidiaries under any
Contract regarding any (i) non-transferable licenses for computer software and
other Intellectual Property and (ii) any Contract that requires the consent to
assignment of a party thereto and for which such consent has not been obtained
pursuant to Section 6.4 prior to the Closing; 15.2.11. Non-transferable Permits
and Licenses. All non-transferable government business licenses, permits and
equivalent documents;
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15.2.12. Intellectual Property. Other than as licensed under the License
Agreement, all (i) trademark and service mark registrations and applications
(whether or not relating to the Business) owned by Seller and its subsidiaries ,
(ii) trademark, service mark and trade name license agreements to which Seller
or any of its subsidiaries is a party, except as used specifically in the
operation of the Business as listed on Schedule 2.2.12 and as licensed,
sublicensed, transferred or assigned, as the case may be, by Seller to Buyer,
(iii) trade secrets (including customer lists and customer databases), except as
used specifically in the operation of the Business, (iv) copyrights, patents,
licenses, know-how and other proprietary intellectual property rights as are
necessary in connection with businesses of Seller and its subsidiaries, except
as used specifically in the operation of the Business, and (v) computer software
owned by Seller and its subsidiaries, except as used specifically in the
operation of the Business ("Intellectual Property"); and
15.2.13. Prepaid Items and Deposits. Other than the Prepaid Items and Deposits
described in Section 2.1.6, all prepaid items and deposits paid by Seller and
its subsidiaries including without limitation, prepaid insurance and prepaid
property taxes.
16. CLOSING, ESCROW, PURCHASE PRICE, ASSUMPTION OF LIABILITIES.
16.1. Closing. The consummation of the purchase and sale of the Purchased Assets
(the "Closing") shall occur on the date which is three (3) business days after
all contingencies and conditions set forth in Sections 8 and 12.14 are satisfied
or waived, and both parties shall use commercially reasonable efforts to cause
the Closing to occur no later than thirty (30) days after the date on which
Buyer receives the approval from the Mississippi Gaming Commission for the
Transactions and the transactions contemplated by the Other Asset Purchase
Agreement; provided, however, in no event shall the Closing take place later
than August 9, 2000, unless extended by the mutual written consent of Buyer and
Seller (the "Outside Date"). The Closing shall occur simultaneously with the
consummation of the purchase and sale of assets pursuant to that Asset Purchase
Agreement of even date herewith by and between Buyer and Seller relating to the
assets and business known as Casino Magic-Bay St. Louis (the "Other Asset
Purchase Agreement"). The date upon which the Closing shall occur is sometimes
referred to in this Agreement as the "Closing Date." Closing of the purchase and
sale of the Real Property shall occur through Escrow upon recordation of the
Warranty Deed and Assignment of Leases and in the customary manner for the
consummation of real estate transactions in Harrison County. The Closing of the
purchase and sale of all other Purchased Assets shall take place at the offices
of Irell & Manella LLP, 1800 Avenue of the Stars, Suite 900, Los Angeles,
California 90067, on the Closing Date.
16.2. Simultaneous Delivery; Conditions Concurrent. All documents and other
items to be delivered at the Closing and in connection with the consummation of
the transactions contemplated by the Other Asset Purchase Agreement shall be
deemed to have been delivered simultaneously, and no delivery shall be effective
until all such items have been delivered.
16.3. Purchase Price and Assumption of Liabilities.
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16.3.1. Purchase Price. The purchase price (the "Purchase Price") for the
Purchased Assets hereunder shall be: (a) $75,000,000 in cash (the "Cash Portion
of the Purchase Price"), subject to adjustment under Section 3.3.2 hereof. In
addition, Buyer shall assume the Assumed Liabilities pursuant to Section 3.3.3.
Concurrently with the execution of this Agreement, Buyer shall deliver to Seller
the Deposit as described in Section 7.1.
16.3.2. Adjustments to the Cash Portion of the Purchase Price. The Cash Portion
of the Purchase Price shall be adjusted in accordance with the following
procedures:
16.3.2.1 Additions to Cash Portion of the Purchase Price. The Cash Portion of
the Purchase Price shall be increased by the following:
(a) Casino Cash. The amount of Casino Cash as of the Closing,
(b) Accounts Receivable. The Accounts Receivable, valued by subtracting
therefrom the associated allowance for doubtful
accounts,
(c) Inventory. The Inventory, adjusted for any associated reserve for overstock
and obsolete items,
(d) Prepaid Items and Deposits. The Prepaid Items and Deposits, and
(e) Certain Expenditures. The amount of out-of-pocket expenditures made or
incurred by Seller or the Company in purchasing any portion of the real property
subject to a Lease, provided that Buyer reasonably approves and reasonably
consents to the purchase and any related expenditures in writing, provided,
however, that, notwithstanding any other provision of this Agreement, neither
Seller nor the Company shall be obligated to make or incur any such
expenditures.
16.3.2.2 Subtractions from the Cash Portion of the Purchase Price. The Cash
Portion of the Purchase Price shall be decreased by the amount of each of the
Assumed Liabilities described in Section 3.3.3, except for the Assumed
Liabilities described in Sections 3.3.3(a), (b) and (n).
16.3.2.3 Closing Balance Sheet. Prior to the Closing Date, Seller shall prepare
and deliver to Buyer a calculation of the Cash Portion of the Purchase Price
based on a balance sheet of the relevant items (the "Closing Balance Sheet")
dated as of the last day of the month immediately preceding the month in which
the Closing occurs. The Closing Balance Sheet shall be prepared in accordance
with generally accepted accounting principles consistently applied and shall
reflect Seller's good faith and fair estimate of the specific data as of the
date indicated. The Closing Balance Sheet shall be used to make the payment of
the Cash Portion of the Purchase Price on the Closing Date. If requested by
Buyer, Seller shall also deliver the supporting schedules for such calculation
showing, in reasonable detail, each item of Purchased Assets that increases the
Cash Portion of the Purchase Price and each item of Assumed Liability that
reduces the Cash Portion of the Purchase Price (the "Supporting Schedules").
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16.3.2.4 Post-Closing Adjustment. Promptly after the Closing Date, Seller will
prepare and, within 30 days of the Closing Date, deliver to Buyer a calculation
of the Cash Portion of the Purchase Price based on a balance sheet of the
relevant items as of the Closing Date (the "Final Balance Sheet"), together with
Supporting Schedules thereto. The Final Balance Sheet shall be prepared in
accordance with generally accepted accounting principles consistently applied
and as though the parties had not consummated the transactions contemplated by
this Agreement. Following the Closing, either (i) Seller shall pay Buyer an
amount equal to the decrease, if any, between the Cash Portion of the Purchase
Price as reflected on the Final Balance Sheet or the Adjusted Final Balance
Sheet, as the case may be, as compared with the Cash Portion of the Purchase
Price as reflected on the Closing Balance Sheet or (ii) Buyer shall pay Seller
an amount equal to the increase, if any, between the Cash Portion of the
Purchase Price as reflected on the Final Balance Sheet or the Adjusted Final
Balance Sheet, as the case may be (the payment referred to in clause (i) or (ii)
above shall be referred to as the "Post-Closing Adjustment") as compared with
the Cash Portion of the Purchase Price as reflected on the Closing Balance
Sheet. Such payments shall be made by wire transfer or certified or bank
cashier's check within ten (10) business days of adoption of the Final Balance
Sheet or the notice from the Accounting Firm of the Adjusted Final Balance
Sheet, as the case may be. No payment shall be made by either party if the Cash
Portion of the Purchase Price as reflected on the Closing Balance Sheet is equal
to the Cash Portion of the Purchase Price as reflected on the Final Balance
Sheet or the Adjusted Final Balance Sheet, as the case may be.
16.3.2.4.1 Buyer's Adoption of Seller's Final Balance Sheet. If within fifteen
(15) business days following receipt of the Final Balance Sheet Buyer has not
given Seller notice of its objection to the Final Balance Sheet, specifying in
reasonable detail the nature and extent of the objection, then the Final Balance
Sheet shall be used in computing the Post-Closing Adjustment. If Buyer gives
notice of objection, then the issues in dispute will be submitted for resolution
to a "Big Five" Accounting firm mutually acceptable to Buyer and Seller
("Accounting Firm"). If the issues in dispute are submitted to the Accounting
Firm for resolution, each party will furnish to the Accounting Firm such
workpapers and other documents and information relating to the disputed issues
as the Accounting Firm may request and are available to that party (or its
independent public accountants), and will be afforded the opportunity to present
to the Accounting Firm any material relating to the determination and to discuss
the determination with the Accounting Firm. The Accounting Firm shall make the
final determination of the Final Balance Sheet (the "Adjusted Final Balance
Sheet") and such determination will be binding and conclusive on the parties,
and Seller and Buyer will each bear fifty percent (50%) of the fees of the
Accounting Firm for such determination.
16.3.2.5 Consistent Accounting Principles. In preparing the Closing Balance
Sheet, the Final Balance Sheet and the Adjusted Final Balance Sheet, the parties
shall apply accounting principles on a consistent basis.
16.3.2.6 [Intentionally Omitted]
16.3.3. Assumed Liabilities. On the terms and subject to the conditions set
forth in this Agreement, at the Closing, Buyer shall assume and become
responsible for all of the following liabilities and obligations of Seller or
the Company arising out of the Business as presently or previously conducted,
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whether absolute, contingent, accrued or otherwise, other than the Excluded
Liabilities (collectively, the "Assumed Liabilities"):
(a) Assigned Contracts. Any and all liabilities, obligations and commitments
arising out of or relating to events or occurrences or the performance
after the Closing under the Assigned Contracts;
(b) Post-Closing Operations. All liabilities and obligations arising out of
events or transactions after the Closing in connection with the operation
of the Business by Buyer;
(c) All Trade Payables. Any and all trade payables relating to the
Business or the Purchased Assets as of the Closing (other than
accrued wages and unused vacation relating to the employees of
the Business) (the "Trade Payables");
(d) All Notes Payable and Long-Term Debt. Any and all current and
long-term notes payable and long-term debt, including all
accrued interest thereon, as of the Closing (excluding
intercompany notes payable and intercompany debt) relating to
the Business or the Purchased Assets (the "Notes Payable and
Long-Term Debt"). For information purposes, the Notes Payable
and Long-Term Debt as of September 30, 1999 are described on
Schedule 3.3.3(d);
(e) Unredeemed Chip Liability. Any and all unredeemed gaming chips
and tokens in circulation, whether relating to the operation
of the Business before, at or after the Closing (the
"Unredeemed Chip Liability"), which are presented by patrons
of the Business for payment within the applicable time periods
for legal redemption. For purposes of the adjustment to the
Purchase Price pursuant to Section 3.3.2.2, the Unredeemed
Chip Liability shall be discounted to reflect a reasonable
assumption of gaming chips and tokens which are not expected
to be redeemed and which discount shall be computed in
accordance with the methodology described in Schedule
3.3.3(e);
(f) Player Club Obligations and Promotions. Any and all
obligations with respect to outstanding player club points and
other promotions utilized in the Business, including any
awards given to patrons under a player rating system (the
"Player Club Obligations"). For purposes of the adjustment to
the Purchase Price pursuant to Section 3.3.2.2, the Player
Club Obligations shall be discounted to reflect a reasonable
assumption of the Player Club Obligations that are not
expected to be redeemed and which discount shall be computed
in accordance with the methodology described in Schedule
3.3.3(f);
(g) Progressive Slot Liability. The progressive liability for the slot machines
of the Business (the "Progressive Slot Liability");
(h) Caribbean Stud Liability. The liability for Caribbean stud games of the
Business (the "Caribbean Stud Liability");
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(i) Unredeemed Fun Center Premiums. Any and all obligations with
respect to unredeemed premiums associated with the Business'
"Fun Center" arcade (the "Unredeemed Fun Center Premiums").
For purposes of the adjustment to the Purchase Price pursuant
to Section 3.3.2.2, the Unredeemed Fun Center Premiums shall
be discounted to reflect a reasonable assumption of the
Unredeemed Fun Center Premiums that are not expected to be
redeemed and which discount shall be computed in accordance
with the methodology described in Schedule 3.3.3(i);
(j) Tip Pool Liability. The amount of tips collected by the
Company or the Seller for the benefit of the Hired Employees
(as defined below) as of the Closing (the "Tip Pool
Liability");
(k) Gift Certificate Liability. Any and all obligations with
respect to unredeemed gift certificates issued in connection
with the Business as of the Closing (collectively, the "Gift
Certificate Liability");
(l) Advance Reservations by Customers and Commitments to Tour
Operators. Any and all payments made to Seller or the Company
in prepayment of services, including without limitation,
commitments to tour operators entered into by the Seller or
the Company in the ordinary course of business that are
outstanding at the Closing;
(m) Accrued Wages, Bonuses and Vacation. To the extent not paid
directly by Seller or the Company to employees of the Company
who accept Buyer's offer of employment as provided in Section
11.2.1 ("Hired Employees"), accrued liabilities relating to
accrued but unpaid wages and accrued bonuses and earned but
unused vacation under the Company's employee benefits policy
in effect as of the date hereof associated with the Hired
Employees, provided that Seller or the Company has exercised
its option under Section 11.2.3 to pay such wages, bonuses and
vacation pay to Buyer in the form of a reduction in the Cash
Portion of the Purchase Price; and
(n) Specific Undertakings. Any and all liabilities, obligations
and commitments specifically undertaken by Buyer pursuant to
any other provision of this Agreement.
16.4. Non-Assumption of Certain Liabilities. Buyer is not assuming, and shall
not be deemed to have assumed any liabilities, obligations or commitments of
Seller or the Company, whether contingent or non-contingent, liquidated or
unliquidated, asserted or unasserted, other than the Assumed Liabilities (the
"Excluded Liabilities"), all of which shall remain the liabilities, obligations
and commitments of Seller. The Excluded Liabilities shall include, but shall not
be limited to, the following:
16.4.1. Tax Liabilities. Liabilities for Taxes relating to the operation of
the Business through the Closing;
16.4.2. Indemnification Obligations. Seller's obligations to indemnify Buyer
as provided in Section 9;
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16.4.3. Litigation. Except as otherwise provided in Section 9, all liabilities
with respect to litigation, actions, proceedings or arbitrations pending on the
Closing Date and those that are asserted after the Closing Date to the extent
that they relate to or arise from events that occurred prior to the Closing,
including, but not limited to, all Liabilities arising from those items
disclosed on Section 4.24 of the Disclosure Schedule;
16.4.4. Workers' Compensation Claims. All liabilities for workers' compensation
claims brought by Seller's or its subsidiaries' employees and which exclusively
relate to or which arise exclusively from events which occurred prior to the
Closing other than relating to any obligation to rehire any such employee after
the Closing Date;
16.4.5. Employee Claims. All liabilities arising from events, acts, omissions or
occurrences occurring before the Closing Date from claims (other than workers'
compensation claims), including any severance obligations related to the
consummation of the Transactions, brought by Seller's or its subsidiaries'
employees or other present or former employees of the Seller or its
subsidiaries;
16.4.6. Liabilities Relating to the Excluded Assets. All liabilities or
obligations arising prior to, on or after the Closing Date
with respect to or in connection with the Excluded Assets;
16.4.7. Employee Benefit Plan Liabilities. Liabilities relating to any
employment or labor claim or any claim relating to an Employee Benefit Plan or
any employment discrimination charge, sexual harassment claim or any ERISA based
claim for periods prior to the Closing Date; 16.4.8. Liabilities for Violations
of Law. Liabilities relating to the violation of any Law by Seller or Company;
16.4.9. Claims Arising Under Contracts or Permits Not Assumed. Liabilities
from claims arising under any Contract or Permit not
assumed by the Buyer hereunder;
16.4.10. Claims Under Contracts or Permits Relating to Pre-Closing Events.
Liabilities for claims arising under any Contract or Permit to the extent such
claim is based on acts or omissions of any Person which occurred prior to the
Closing;
16.4.11. Unknown Liabilities Relating to Pre-Closing Events. Liabilities of
Seller or Company unknown to the Seller at the Closing
to the extent they relate to events occurring prior to the Closing;
16.4.12. Liabilities for Money Borrowed Prior to Closing Date. Other than the
Notes Payable and Long-Term Debt assumed pursuant to Section 3.3.3(d),
liabilities for indebtedness for money borrowed by Seller or Company prior to
the Closing Date;
16.4.13. Environmental Liabilities. Any Liability of Seller or the Company for
Environmental Claims arising from or related to the
circumstances existing on or before the Closing Date; and
16.4.14. Other Liabilities. Any other Liability of Seller or the Company,
regardless of when made or asserted, that is not specifically assumed hereunder.
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16.5. Deliveries at Closing. Seller and Buyer shall each deliver to the other
(or, through Escrow, in the case of the Real Property) such instruments and
funds as are necessary to consummate the purchase and sale of the Purchased
Assets, including the following:
(a) Seller shall deliver to Buyer:
1. A duly executed and acknowledged warranty deed with
covenants of warranty and other good and sufficient
instruments and documents of conveyance and transfer
(including without limitation all documents that may
be required for recording purposes), in form and
substance reasonably satisfactory to Buyer and its
counsel, as shall be necessary to convey, transfer
and assign to, and vest in, Buyer all of Seller's
good valid and marketable title, right, and interest
in and to the Owned Real Property ("Warranty Deed").
2. A duly executed and acknowledged assignment of leases
("Assignment of Leases") sufficient to assign to
Buyer good and valid leasehold interests in and to
all of the Leased Real Property.
3. The Bill of Sale and Assignment and Assumption Agreement, duly executed by
Seller.
4. The License Agreement, duly executed by Seller.
5. An affidavit directed to Buyer giving Seller's
taxpayer identification number and confirming that
Seller is not a "foreign person," which affidavit
shall be sufficient to relieve Buyer of any
withholding obligation under Section 1445 of the
Internal Revenue Code (provided, however, that if
Seller fails to deliver such affidavit, Buyer's
remedy shall be to withhold from the Purchase Price
in accordance with law).
6. Keys, access cards and other items necessary to obtain access to and within
the Business premises.
7. If required pursuant to Section 6.1.11 herein, cash
or immediately available funds equal to the shortfall
in capital expenditure spending by Seller or the
Company.
8. The officers' certificate and other items contemplated by Section 8.1.
9. Copies of any and all governmental and other third
party consents, waivers or approvals obtained by the
Seller or Company with respect to the transfer of the
Purchased Assets or the consummation of the
Transactions.
10. Copies, certified by the Secretary of the Seller and
the Company, of corporate resolutions authorizing the
execution and delivery of this Agreement and all
instruments and agreements to be executed and
delivered by the Seller and the Company in connection
herewith, and the consummation of the Transactions.
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11. A certificate of good standing with respect to the Seller (dated within
five (5) business days of the Closing Date), issued
by the Secretary of State of Delaware.
12. The legal opinion of counsel to Seller in the form attached hereto as
Exhibit E.
13. All such other instruments of assignment, transfer or
conveyance as shall, in the reasonable opinion of the
Buyer and its counsel, be necessary or desirable to
transfer to the Buyer the Purchased Assets, in
accordance with this Agreement and where necessary or
desirable in recordable form.
14. Such other instruments and documents as may be
reasonably required for Seller to perform its
obligations hereunder or as may be reasonably
required by Escrow Holder or the Title Company.
(b) Buyer shall deliver to Seller:
1. The Cash Portion of the Purchase Price less the Deposit, in cash or
immediately available funds.
2. If required pursuant to Section 6.1.11 herein, cash
or immediately available funds equal to the excess
capital expenditure spending by Seller or the
Company.
3. The Bill of Sale and Assignment and Assumption Agreement, duly executed by
Buyer.
4. The Assignment of Leases, duly executed and acknowledged by Buyer.
5. The License Agreement, duly executed by Buyer.
6. The officers' certificate and other items contemplated by Section 8.2.
7. Copies, certified by the Secretary of the Buyer, of
corporate resolutions authorizing the execution and
delivery of this Agreement and all instruments and
agreements to be executed and delivered by the Buyer
in connection herewith, and the consummation of the
Transactions.
8. A certificate of good standing with respect to the Buyer (dated within
five (5) business days of the Closing Date), issued
by the Secretary of State of Mississippi.
9. Copies of any and all governmental and other third
party consents, waivers or approvals obtained by the
Buyer with respect to the transfer of the Purchased
Assets or the consummation of the Transactions.
10. The legal opinion of counsel to Buyer in the form attached hereto as Exhibit
F.
11. Buyer's share of the costs set forth in Section 3.9.
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12. Buyer's share of the expenses set forth in Section 12.2.
13. All such other instruments of assumption and other
third party consents, waiver or approvals obtained by
the Buyer at or prior to the Closing Date pursuant to
this Agreement or otherwise reasonably required in
connection herewith.
14. Such other instruments and documents as may be
reasonably required for Buyer to perform its
obligations hereunder or as may be reasonably
required by Escrow Holder or the Title Company.
16.6. Opening of Escrow. Within ten (10) days after mutual execution of this
Agreement, the parties shall open an escrow (the "Escrow") with First American
Title Insurance Company ("Escrow Holder") by delivering a copy of this Agreement
to Escrow Holder. Buyer, Seller and Escrow Holder will enter into an escrow
agreement (the "Escrow Agreement") substantially in the form of Exhibit G
attached hereto. In the event of any inconsistency between this Agreement, the
Escrow Agreement and any additional escrow instructions executed by the parties,
this Agreement shall be controlling.
16.7. The Escrow Holder. The duties of the Escrow Holder shall be as follows:
(a) to retain and safely keep all funds,
documents and instruments deposited with it;
(b) to confirm that all conditions to the Closing
specified in Section 8 have been met;
(c) upon the Closing, to deliver to the parties
entitled thereto all funds, documents and instruments to be
delivered through Escrow;
(d) upon the Closing, to cause the recordation in the
Office of the County Recorder of Harrison County of the
Warranty Deed, the Assignment of Leases and all other
documents to be recorded hereunder;
(e) to comply with the terms of this Agreement, the
Escrow Agreement and any additional instructions jointly
executed by Buyer and Seller.
16.8. Tax Allocation. Buyer and Seller shall mutually agree upon the allocation
of the Purchase Price to broad categories constituting components of the
Purchased Assets for purposes of Internal Revenue Service Form 8594. In the
absence of agreement prior to the Closing Date, the allocation of the Purchase
Price shall be determined by appraisal to be performed by a "Big Five"
accounting firm mutually acceptable to Buyer and Seller. The costs of the
appraisal shall be borne equally by Buyer and Seller. Each party will report
timely the purchase and sale of the Purchased Assets in accordance with the
agreed upon allocation among such broad categories for all federal, state, local
and other tax purposes. Buyer shall also furnish Seller with a form of reseller
certificate that complies with the requirements of applicable state taxation
laws.
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16.9. Costs and Prorations.
16.9.1. Costs. Costs of the Closing and Escrow shall be allocated as follows:
Seller shall pay:
(a) one-half of the costs of preparing and recording the Warranty Deed, the
Assignment of Leases and all other documents to be
recorded at the Closing,
(b) all state and local documentary transfer, stamp or similar
taxes imposed in connection with the transfer of the Real
Property,
(c) all trustee's and other fees in connection with any deeds of trust which
shall be reconveyed at Closing,
(d) one-half of the fee of the Escrow Holder and the costs of the Escrow;
and
(e) the cost of preparing the Preliminary Title Report.
(f) the standard coverage portion of the premium for the Title Policy.
Buyer shall pay:
(a) one-half of the costs of preparing and
recording the Warranty Deed, the Assignment of Leases and
all other documents to be recorded at the Closing,
(b) all state and local sales, use or similar taxes
imposed in connection with the transfer of the personal
property included in the Purchased Assets,
(c) the cost of preparation and recordation of its
mortgage, deed of trust, or other applicable financing
instruments, if any,
(d) one-half of the fee of the Escrow Holder and
the costs of Escrow, and
(e) the extended coverage portion of the premium for
the Title Policy and all endorsements thereto specified by
Buyer.
All other costs, if any, shall be apportioned in the customary manner
for real estate transactions in Harrison County.
16.9.2. Prorations. At Closing, the parties shall prorate as of the Closing
Date, the following with respect to the Business and
the Purchased Assets:
(a) Taxes: Real estate taxes, assessments, personal property taxes
and rent tax, if any, on all or any portion of the Purchased
Assets, based on the regular and supplemental tax bills for
the calendar year in which the Closing occurs. In the event
that the actual property taxes payable in respect of the
Purchased Assets are not ascertainable as of the Closing Date,
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then the parties will prorate such taxes on the basis of the
latest available tax bill and will make such post-Closing
adjustment as may be necessary when the actual taxes are
determined. All taxes and assessments relating to periods
prior to and through the Closing shall be paid by Seller and
Buyer shall be responsible for all taxes and assessments
relating to periods after the Closing.
(b) Utilities: All utilities including gas, water, sewer,
electricity, telephone and other utilities supplied to the
Real Property shall be prorated as of the Closing Date. Seller
shall pay, prior to the Closing Date, all such amounts for
which a bill has been received or for which payments are
otherwise due prior to the Closing Date, and Buyer shall be
credited, and Seller shall be debited, with an amount equal to
all utility charges for the period from the date such bills
were issued or such payments were due until the Closing Date.
All meters shall be read as of the Closing Date.
(c) Assigned Contracts. Amounts payable under Assigned Contracts
shall be prorated on an accrual basis. Seller shall pay when
due all amounts for which a bill has been received prior to
the Closing Date. For bills received after the Closing Date,
Seller agrees to pay its prorated share when due or to
promptly reimburse Buyer if paid by Buyer.
17. REPRESENTATIONS AND WARRANTIES OF SELLER.
As an inducement for Buyer to enter into this Agreement, Seller
represents and warrants to Buyer that except as set forth on any Disclosure
Schedule, each of the following statements is true and correct as of the date
hereof:
17.1. Organization, Corporate Power, and Authority. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to do business as a foreign corporation in the
jurisdictions in which it conducts its business, except where the failure so to
qualify would not reasonably be expected to have a material adverse effect on
Seller's ability to perform its obligations under the Transaction Documents.
Company is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Mississippi. Seller or the Company, as
the case may be, has all requisite partnership power and authority to own,
operate and lease the Purchased Assets, to conduct the Business, to execute and
deliver the Transaction Documents to which it is a party and to perform its
respective obligations thereunder.
17.2. Authorization of Agreements. The execution, delivery and performance by
Seller of the Transaction Documents to which it is a party, and the consummation
by it of the Transactions, have been duly authorized by all necessary corporate
action by the Seller. This Agreement has been, and each other Transaction
Document to which Seller is a party will be at the Closing, duly executed and
delivered by Seller, and constitute, or will, when delivered, constitute, the
legal, valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium, and other similar laws and equitable
principles relating to or limiting creditors' rights generally.
17.3. Effect of Agreement. The execution, delivery and performance by Seller of
the Transaction Documents, and the consummation by it of the Transactions, will
not violate the Certificate of Incorporation or By-laws of Seller or (assuming
compliance with the matters referenced in Section 4.4 hereof) any law,
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regulation, order, judgment, award or decree of any Governmental Authority or
any indenture, Contract or other material instrument to which it is a party, or
by which Seller, the Business or the Purchased Assets are bound, or result in a
breach of or constitute (with due notice or lapse of time or both) a default
under, any such indenture, agreement or other instrument, or result in the
creation or imposition of any lien, charge, security interest or encumbrance of
any nature whatsoever upon any of the Purchased Assets, except to the extent
that (a) the effect of any such violation, breach or default is not reasonably
likely to have a Material Adverse Effect, (b) consents may be required under
that certain Amended and Restated Reducing Revolving Loan Agreement, dated as of
October 14, 1998, by and among HPI on the one hand and Bank of America National
Trust and Savings Association as Administrative Agent and the other Banks who
are parties thereto on the other hand (the "Bank of America Loan Agreement"),
and (c) consents may be required for assignment of certain of the Leases and
Contracts, which consents with respect to the Material Contracts (as defined
below) are listed on Section 4.22 of the Disclosure Schedule.
17.4. Governmental Approvals. Except as set forth in Section 4.4 of the
Disclosure Schedule and except for filings pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and except for
compliance with the applicable requirements of the Mississippi Gaming Control
Act and the regulations of the Mississippi Gaming Commission (collectively, the
"Mississippi Gaming Laws"), no approval, authorization, consent or order or
action of or filing with any court, administrative agency or other Governmental
Authority is required to be obtained by Seller for the execution and delivery by
Seller of the Transaction Documents or the consummation by it of the
Transactions.
17.5. Condition of Real Property. Neither Seller nor the Company has received
notice from any governmental body requiring Seller or the Company to make any
repairs or changes to the Real Property, except for written notices with which
Seller or the Company has fully complied.
17.6. HPI SEC Reports; Financial Statements.
17.6.1. HPI SEC Reports. Seller has made available to Buyer true and complete
copies of each effective registration statement, report, proxy statement or
information statement prepared and filed with Commission by the HPI since
December 31, 1997, including (i) the HPI's Annual Reports on Form 10-K for the
years ended December 31, 1997 and December 31, 1998, (ii) the HPI's Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 31, 1999, June 30,
1999, and September 30, 1999, (iii) HPI's Proxy Statements for its 1998 and 1999
annual meetings of stockholders, and (iv) HPI's Registration Statements on Form
S-4 dated February 6, 1998 and March 26, 1999 (collectively, including any such
reports and documents filed subsequent to the date hereof, the "HPI SEC
Reports"), as filed with the Commission. As of their respective dates, the HPI
SEC Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading with respect to the Business or the Purchased Assets in
relation to HPI and its subsidiaries taken as a whole. The audited consolidated
financial statements and unaudited interim financial statements of HPI included
in the HPI SEC Reports have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the financial position of
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HPI as at the dates thereof and the results of its operations and changes in
financial position for the periods then ended, subject, in the case of the
unaudited interim financial statements, to normal year-end audit adjustments and
any other adjustments described therein.
17.6.2. Company Level Financial Statements. Complete and correct copies of the
Company Level Financial Statements are attached as Exhibit B. The Company Level
Financial Statements are consistent in all material respects with the books and
records of Seller, and there have not been any material transactions that have
not been recorded in the accounting records underlying such Company Level
Financial Statements that are required to be reflected thereon under generally
accepted accounting principles. The Company Level Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis, and fairly present in all material respects the financial
position of the Company as at the dates thereof and the results of operations
for the periods then ended, except for (a) the absence of notes to such
financial statements, (b) normal year-end adjustments and consolidating entries
necessary in presenting such balance sheets and income statements on a
consolidated basis with HPI and its other subsidiaries and any other adjustments
described therein, and (c) the accrual for income taxes payable as of the dates
and for the periods shown (which are not reflected in the Company Level
Financial Statements). The September 30, 1999 Company Balance Sheet does not
include any assets that are not intended to constitute part of the Business or
the Purchased Assets after giving effect to the Transactions (other than the
Excluded Assets). The September 30, 1999 Company Income Statement does not
reflect any operations that are not intended to constitute part of the Business
or the Purchased Assets after giving effect to the Transactions, and the
September 30, 1999 Company Income Statement reflects all expenses that
historically have been incurred by the Business (other than the Excluded
Liabilities) that are required to be reflected thereon under generally accepted
accounting principles.
17.7. Compliance with Regulations and Court Orders. The Seller is not in
violation of any court order or material regulation applicable to the Business
or to the Purchased Assets, and the Purchased Assets have not been used or
operated by the Seller or any other person or entity in violation of any court
order or any such material regulation, in either case where such violations
could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
17.8. Third-Party Options. There are no existing Contracts with, or rights
in, any third party to acquire any of the Purchased
Assets or any interest therein.
17.9. Transactions with Affiliates. Except as disclosed in the HPI SEC Reports
or Section 4.9 of the Disclosure Schedule, none of the directors or officers of
the Seller, directly or indirectly, (a) owns or has an ownership interest in any
of the Purchased Assets having a value of $60,000 or more or in any property
having a value of $60,000 or more that is the subject of any Contract relating
to the Business or (b) has business arrangements or relationships of any kind
with the Seller involving $60,000 or more in the current fiscal year. Except as
disclosed in the HPI SEC Reports or Section 4.9 of the Disclosure Schedule, all
such Contracts, arrangements and relationships have been on substantially the
same terms and conditions as similar transactions between the Seller and
non-affiliated parties and are properly recorded on due books and records of the
Seller.
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17.10. Accounts Receivable. The Seller has delivered to the Buyer a list and the
aging of the Accounts Receivable. All Accounts Receivable (a) are valid and
genuine, (b) arise out of bona fide sales and deliveries of goods, performance
of services or other transactions in connection with the Business, and (c) are
not subject to material defenses, setoffs or counterclaims to Seller's knowledge
other than normal returns and allowances.
17.11. Personal Property. Schedule 2.1.2(a) sets forth all items of tangible
personal property owned by Seller and used in the Business that is reflected on
the September 30, 1999 Company Balance Sheet having an original cost of at least
$100,000 as of September 30, 1999.
17.12. Patents, Copyrights and Trademarks. The Seller or the Company has
obtained registration of, holds licenses to, or has filed applications to
register the patents, copyrights, trademarks and service marks relating
primarily to the Business (collectively, the "Business Intellectual Property")
listed in Section 4.12 of the Disclosure Schedule. To the knowledge of the
Seller, the Business Intellectual Property does not infringe upon any patents,
registered copyrights, trademarks, service marks or applications that are owned
or claimed by any third party, except in cases in which such infringement would
not reasonably be expected to result in a Material Adverse Effect. To the
knowledge of the Seller, all patents, registered copyrights, trademarks or
service marks that are not listed in Section 4.12 of the Disclosure Schedule and
that are used in the Business as formerly and presently conducted are not
material or are embodied in or related to third-party products and technology
that the Seller or the Company has lawfully purchased or licensed. To the
knowledge of the Seller, the Seller or the Company (i) lawfully owns or
possesses the right to use all proprietary information used in the conduct of
the Business, and (ii) is not required to pay any royalty, license fee or
similar type of compensation in connection with the conduct of the Business as a
whole.
17.13. Overtime, Back Wage, Vacation, Discrimination and Occupational Safety
Claims. There are no claims pending or, to the knowledge of the Seller,
threatened against the Seller (whether under federal or state law, under any
employment agreement or otherwise) asserted by any present or former employee of
the Seller or any governmental agency, including, but not limited to, claims for
or on account of (a) wages, salary, severance or overtime pay, (b) vacation pay
or pay in lieu of vacation time off, or (c) any violation of any Regulation
relating to minimum wages or maximum hours of work. Except as disclosed in
Section 4.24 of the Disclosure Schedule, there are no claims pending against
Seller by any person (including any governmental agency) or, to the knowledge of
the Seller, threatened under or arising out of, and the Seller is not subject to
any judgment, order or inquiry relating to, any regulation relating to
discrimination, occupational safety in employment or employment practices.
17.14. Undisclosed Liabilities. Except as set forth in Section 4.14 of the
Disclosure Schedule, to the knowledge of Seller, as of the date of the September
30, 1999 Company Balance Sheet the Purchased Assets were not subject to any
material Liability which would constitute an Assumed Liability that has not been
adequately reflected, reserved against or given effect to in the September 30,
1999 Company Balance Sheet that is required to be reflected on the September 30,
1999 Financial Statements in accordance with generally accepted accounting
principles. To the knowledge of the Seller, as of the Closing Date the Purchased
Assets will not be subject to any material Liability which would constitute an
Assumed Liability that will not have been adequately reflected, reserved against
or given effect to in the Closing Balance Sheet or in the Final Balance Sheet
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that is required to be reflected on the September 30, 1999 Financial Statements
in accordance with generally accepted accounting principles.
17.15. Full Disclosure. There are no materially misleading statements in any of
the representations and warranties made by the Seller in this Agreement, in any
Schedule, or in any of the certificates or instruments delivered by the Seller
pursuant hereto, and the Seller has not omitted any fact necessary to make such
representations and warranties not materially misleading.
17.16. Occupancy Agreements. Except for the agreements set forth in Section 4.16
of the Disclosure Schedule, (the "Occupancy Agreements") there are no material
leases or other agreements relating to the possession, occupancy, rights of
first refusal or options to purchase or lease of any portion of the Owned Real
Property.
17.17. "Foreign Person" Status. Seller is not a "foreign person" within the
meaning of ss.1445 of the Internal Revenue Code of 1986,
as amended (the "Internal Revenue Code").
17.18. Eminent Domain; Zoning. Except as disclosed in Section 4.18 of the
Disclosure Schedule, to Seller's knowledge, there are no actions, litigation or
proceedings pending, contemplated or threatened to take all or any portion of
the Real Property, or any interest therein, by eminent domain or to modify the
zoning of, the Real Property.
17.19. Absence of Certain Changes or Events. Except as disclosed in Section 4.19
of the Disclosure Schedule, the HPI SEC Reports filed and publicly available
prior to the date hereof or as disclosed on the September 30, 1999 Company
Balance Sheet, or as contemplated hereunder, since December 31, 1998, neither
Seller nor the Company has with respect to the Business or the Purchased Assets:
17.19.1. Material Obligations. Incurred any obligation or liability (fixed or,
to Seller's knowledge, contingent) material to the Business or the Purchased
Assets which would constitute an Assumed Liability, except normal trade or
business obligations and liabilities incurred in the ordinary course of business
and obligations and liabilities in connection with the Transactions;
17.19.2. Additional Liens. Mortgaged, pledged or subjected to any material
lien, security interest or other encumbrance any of the
Purchased Assets, (other than Existing Liens);
17.19.3. Disposition of Purchased Assets. Transferred, leased or otherwise
disposed of any material portion of the Purchased Assets, except those
acquired, disposed of, sold or consumed in the ordinary course of business;
17.19.4. Compromise of Debts or Claims. Canceled or compromised any material
debt or claim relating primarily to the Business, except in the ordinary
course of business;
17.19.5. Waiver of Material Rights. Waived or released in writing any rights of
material value to the Business or the Purchased Assets;
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17.19.6. Rights in Licenses, Trademarks, Patents. Transferred or granted any
material rights under any material Intellectual Property relating primarily to
the Business (other than licenses granted by Seller or the Company in the
ordinary course of business);
17.19.7. Employee Compensation. Made or granted any material wage or salary
increase applicable generally to any group or classification of employees
working exclusively for the Business (other than in connection with Seller's or
the Company's general salary plan), entered into any written employment contract
with any officer or employee of Seller or the Company working exclusively for
the Business or made any material loan to, or entered into any material
transaction of any other nature with, any officer or employee of Seller or the
Company working exclusively for the Business;
17.19.8. Material Contracts. Entered into any Material Contract, except for (i)
Contracts listed in Section 4.22 of the Disclosure Schedule, (ii) the
Transaction Documents, and (iii) sales or purchases in the ordinary course
of business; or
17.19.9. Casualty Loss. Experienced any material damage, destruction or loss
(whether or not covered by insurance) to the Purchased Assets in excess of
$300,000; or
17.19.10. Material Adverse Change. Experienced any adverse change in the
financial condition, business, properties or assets of the Business or the
Purchased Assets that would reasonably be likely to result in a Material Adverse
Effect other than any such adverse change which results from economic conditions
which generally affect the industry in which the Seller operates or from
economic conditions generally.
17.20. Title to Purchased Assets, Absence of Liens and Encumbrances. Company has
good and valid title to all of the Purchased Assets (except for leased Purchased
Assets), in each case free and clear of all Liens, other than the liens
described in clauses (a)-(g) (collectively, "Existing Liens"): (a) liens for
taxes not yet due, (b) liens arising under the Bank of America Loan Agreement,
(c) imperfections in title, if any, not material in amount and which,
individually or in the aggregate, do not materially interfere with the conduct
of the Business, or the use of the Purchased Assets, (d) liens in the ordinary
course of business consistent with past practice, (e) the matters set forth
Section 4.20 of the Disclosure Schedule, (f) matters disclosed by the
Preliminary Title Report and any supplements thereto or otherwise of record, and
(g) matters which would be disclosed by a physical inspection or a current
survey of the Real Property. At the time of Closing, Seller will have good and
valid title to all of the Purchased Assets (except for leased Purchased Assets),
in each case free and clear of all Liens other than the liens described in
clauses (a), (c), (e), (f) and (g). Seller or the Company has, in all material
respects, the valid right to use, and enjoys peaceful and undisturbed possession
of, all personal property leased by it in the conduct of the Business. Except
for vehicles and equipment leased to the Seller under leases disclosed in
Section 4.20 of the Disclosure Schedule, as of the Closing no person other than
the Seller will own any material vehicles, equipment or other tangible assets or
properties necessary in or used primarily in the operation of the Business.
17.21. Sufficiency and Condition of Purchased Assets. The Purchased Assets,
taken as a whole, constitute all the material properties and assets relating to
or used or held for use in connection with the Business during the past 12
months (except for assets or rights sold, disposed of or consumed in the
ordinary course of business and the Excluded Assets). Except for the Excluded
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Assets, there are no material assets or properties used primarily in the
operation of the Business that, as of the Closing, will be owned by a Person
other than the Seller that will not be licensed or leased to the Buyer under
valid, current license arrangements or leases. All vehicles, equipment and other
tangible assets and properties, taken as a whole and not individually, whether
owned or leased, that are part of the Purchased Assets, are in good operating
condition (ordinary wear and tear excepted), are usable in the ordinary course
of business consistent with past practice, are free from any defects known to
Seller, and, to Seller's knowledge, conform to all applicable regulations
relating to their use and operations, except where the failure to be in good
operating condition, free from defects known to Seller, usable in the ordinary
course of business or in conformance with such regulations would not reasonably
be expected to have a Material Adverse Effect.
17.22. Material Contracts and Assigned Contracts. Section 4.22 of the Disclosure
Schedule sets forth each Contract (collectively, the "Material Contracts") that
meets all of the following criteria: (a) that obligates Seller or the Company to
pay an amount of $100,000 or more for any one Contract or series of related
Contracts, and (b) by which any or all the Purchased Assets are bound or to
which the Seller or the Company is a party and by which it is bound. Except as
indicated on Section 4.22 of the Disclosure Schedule, Seller has made available
to Buyer true and complete copies of all written Material Contracts, together
with all amendments thereto, and accurate descriptions of all oral Material
Contracts, listed, or required to be listed, on Section 4.22 of the Disclosure
Schedule. Except as set forth in Section 4.22 of the Disclosure Schedule, to
Seller's knowledge, (a) neither Seller, the Company nor the other parties
thereto is in material breach of any such Material Contract, (b) each Material
Contract is valid and enforceable in accordance with its terms for the periods
stated therein, and (c) there is not under any such Material Contract any
existing material default (including, but not limited to, any payment default)
or event of material default or event that, with notice or lapse of time or
both, would constitute such a material default. Seller or the Company has paid
or accrued for, or will pay or accrue for prior to the Closing, all amounts due
and owing prior to the Closing under the Assigned Contracts requiring the
payment of a specific sum(s) of money on a specific date(s) or as the result of
a specific occurrence(s). In addition, Seller or the Company has received all
amounts due and owing it from the other parties to the Assigned Contracts
requiring the payment of a specific sum(s) of money on a specific date(s) or as
the result of a specific occurrence(s) (except to the extent such amounts are
reflected as Accounts Receivable). All of the Assigned Contracts other than the
Material Contracts were entered into in the ordinary course of business.
17.23. Leases. Seller has made available to Buyer true and complete copies of
all of the Leases, together with all amendments thereto. Except as set forth in
Section 4.23 of the Disclosure Schedule, the Leases related to the Real Property
are in full force and effect and have not been modified, amended or supplemented
in any way, are valid and enforceable in accordance with its terms for the
periods stated therein. No material default (including, but not limited to, any
payment default) or event of material default or event under any such Lease
that, with notice or lapse of time or both, would constitute such a material
default. Seller or the Company has paid or accrued for, or will pay or accrue
for prior to the Closing, all amounts due and owing prior to the Closing under
the Leases requiring the payment of a specific sum(s) of money on a specific
date(s) or as the result of a specific occurrence(s).
17.24. Litigation. Except as disclosed in the HPI SEC Reports or as disclosed in
Section 4.24 of the Disclosure Schedule, there is no legal, administrative,
arbitral or other proceeding, claim, action, or governmental or regulatory
investigation of any nature pending or, to the knowledge of Seller, threatened
against or affecting the Purchased Assets which, either alone or in the
aggregate, could reasonably be likely to have a Material Adverse Effect.
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17.25. Commissions. Neither Seller nor any of its directors, officers, employees
or agents have employed or incurred any liability to, any broker, finder or
agent for any brokerage fees, finder's fees, commissions or other amounts with
respect to the Transactions.
17.26. Labor and Employment Matters. Except as set forth in Section 4.26 of the
Disclosure Schedule, insofar as it relates to the Purchased Assets or the
Business (a) there is no unfair labor practice charge or complaint against
Seller or the Company pending, or, to Seller's knowledge, threatened in writing
against Seller or the Company; (b) there is no labor strike, dispute, slowdown
or stoppage pending or, to Seller's knowledge, threatened in writing against or
materially affecting Seller or the Company; (c) there is no representation claim
or petition pending before the National Labor Relations Board; (d) there are no
collective bargaining agreements applicable to the employees of Seller or the
Company and no such agreements are currently being negotiated, nor to Seller's
knowledge has there been any organizational activity taking place with respect
to the Business; and (e) during the past five (5) years with respect to the
Business, neither Seller nor Company has conducted a lockout of any of its
employees, nor has Seller or Company been subject to, or, to the knowledge of
the Seller, threatened in writing with, any strike, slowdown, picketing or work
stoppage by any union or other group of employees, any secondary boycott with
respect to the products or services of the Business, or any other material labor
trouble or other material occurrence, event or condition of a similar character.
The Seller is in compliance with all regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours,
except where the failure to be in such compliance would not reasonably be
expected to have a Material Adverse Effect. There has been no "mass layoff" or
"plant closing" as defined by the Worker Adjustment and Retraining Notification
Act ("WARN") with respect to the Business within the 60 days prior to the date
of this Agreement.
17.27. Severance Obligations. The consummation of the Transactions will not
entitle any current or former employee who is or was employed by Seller or the
Company exclusively in connection with the operation of the Business (the
"Employees") to severance payment, provided that Buyer offers employment to each
of the Employees under terms substantially identical to the terms under which
such employee is currently employed.
17.28. Employee Benefit Plans. Except as set forth in Section 4.28 of the
Disclosure Schedule, there are no liens against the Purchased Assets under
Section 412(n) of the Internal Revenue Code or Sections 302(f) or 4068 of ERISA.
Neither Seller nor any corporation, trade, business or other entity under common
control with Seller, within the meaning of Sections 414(b), (c), (m) or (o) of
the Internal Revenue Code, or under Section 4001 of ERISA (an "ERISA Affiliate")
is or was obligated (a) to contribute to any plan subject to Title IV of ERISA
other than a multiemployer plan within the meaning of Section 3(37) of ERISA, or
(b) to any multiemployer plan within the meaning of Section 3(37) of ERISA for
any material amount of delinquent contributions thereto or for any amount on
account of any withdrawal liability. As of the Closing, Buyer will have no
obligation to contribute to, or any liability in respect of, (i) any employee
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benefit plan within the meaning of Section 3(3) of ERISA, or (ii) any other
benefit arrangement, obligation, or practice, whether or not legally
enforceable, to provide benefits, other than salary, as compensation for
services rendered, to one or more present or former employees, directors,
agents, or independent contractors, including, without limitation, any similar
employment, severance or other arrangement or policy (whether written or oral)
providing for insurance coverage (including self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, fringe benefits, or retirement benefits, or for profit sharing,
deferred compensation, bonuses, stock options, stock appreciation or other forms
of incentive compensation or post-retirement insurance, compensation or
benefits, executive compensation/severance policies or agreements, sick leave,
vacation pay, any plans subject to Section 125 of the Internal Revenue Code
("Employee Benefit Plan"), sponsored or maintained by Seller or any ERISA
Affiliate, or to which Seller or any ERISA Affiliate was obligated to
contribute. The Seller and its ERISA Affiliates will not, in connection with the
transactions contemplated by this Agreement, cease to provide any group health
plan coverage to their employees in a manner which would cause Buyer to be
deemed a successor employer of such Seller or its ERISA Affiliates within the
meaning of Proposed Treasury Regulations Section 54.4980B-9 Q&A8(c). There are
no pending or threatened claims by or on behalf of any Employee with respect to
any Employee Benefit Plan, other than those made in the ordinary operation of
such plans. No Employee Benefit Plan is presently under audit or examination
(nor has notice been received of a potential audit or examination) by the IRS,
the Department of Labor, or any other governmental entity, and no matters are
pending with respect to any Employee Benefit Plan under the CAP or VCR programs
set forth in Revenue Procedure 98-22. Section 4.28 of the Disclosure Schedule
lists all Employee Benefit Plans sponsored, maintained or contributed to by
Seller for the benefit of Employees working for the Business. Seller shall
deliver to Buyer any amendments, summary plan descriptions, other descriptions,
plan documents or other related documents for all Employee Benefit Plans
sponsored, maintained or contributed to by Seller immediately before the Closing
Date for the benefit of Employees working for the Business, which shall give
Buyer sufficient information about the terms and provisions of such Employee
Benefit Plans to enable Buyer to satisfy its obligations under Section 11.2.1 of
this Agreement. In the event that Seller requests pursuant to Section 11.2.1
that Buyer cause a defined contribution plan qualified under Section 401(a) of
the Internal Revenue Code and maintained or sponsored by Buyer or its Affiliates
to accept assets from the Hollywood Park, Inc. 401(k) Investment Plan (the
"Seller 401(k) Plan"), Seller shall make the following representations regarding
the Seller 401(k) Plan: (i) the Seller 401(k) Plan has received a favorable
determination letter from the Internal Revenue Service which has not been
revoked, and Seller has no knowledge of any facts which could cause the
revocation of such determination letter, (ii) the Seller 401(k) Plan has been
maintained, operated, and administered substantially in accordance with its
terms and with the requirements of the Internal Revenue Code and ERISA, and
(iii) all required contributions to the Seller 401(k) Plan have been timely
made.
17.29. Operation of the Business. Except as described on Section 4.29 of the
Disclosure Schedule, (a) in all material respects, the Business has been
conducted only through the Seller or the Company and not through any other
divisions or any direct or indirect subsidiary or Affiliate of the Seller, and
(b) no material part of the Business has been operated by any Person other than
the Seller or the Company. No Person other than the Seller or Company owns or
possesses any material assets or properties that have been used in the Business,
other than Persons who have granted to the Seller leasehold interests in or
valid licenses to use other assets or properties used in the Business pursuant
to Contracts; all Material Contracts with respect thereto are listed on Section
4.22 of the Disclosure Schedule.
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17.30. Environmental Matters. Except as disclosed in Section 4.30 of the
Disclosure Schedule:
17.30.1. Seller holds and is in material compliance with all permits,
certificates, licenses and governmental approvals, consents and authorizations
required under applicable Environmental Laws for Seller to own and operate the
Business ("Environmental Permits");
17.30.2. To Seller's knowledge, Seller and all real property owned, operated or
leased by Seller are in material compliance with applicable Environmental Laws;
17.30.3. To Seller's knowledge, neither the Business nor Seller has been
notified by any Governmental Authority or third party (i) of any pending or
threatened Environmental Claim against the Business or Seller in connection with
the Business or (ii) that either the Business or Seller in connection with the
Business may be a potential responsible party for environmental contamination or
any Release of Hazardous Substances;
17.30.4. Neither the Business nor Seller in connection with the Business has
entered into or agreed to any consent decree or order with respect to or
affecting the Purchased Assets relating to compliance with any Environmental Law
or to investigation or cleanup of Hazardous Substances under any Environmental
Law;
17.30.5. To Seller's knowledge, no Releases of Hazardous Substances have
occurred at, from, in, on, to or under any property currently or formerly owned,
operated or leased by the Business or Seller in connection with the Business or
any predecessor of the Business or Seller in connection with the Business, and
no Hazardous Substances are present in, on or about or are migrating to or from
any such property that could reasonably be expected to give rise to an
Environmental Claim by a Governmental Authority or third party against the
Business or Seller;
17.30.6. To Seller's knowledge, neither of the Business nor Seller in connection
with the Business nor any predecessor thereof, have transported or arranged for
the treatment, storage, handling, disposal or transportation of any material
amount of any Hazardous Substance to any location that could reasonably be
expected to result in an Environmental Claim against the Business or Seller;
17.30.7. To Seller's knowledge, there is no amount of asbestos, ureaformaldehyde
material, polychlorinated biphenyl containing equipment or lead paint containing
materials in, at or on any property owned, leased or operated by the Business or
the Seller in connection with the Business;
17.30.8. There are no environmental investigations, studies, audits or tests in
the possession of any Seller with respect to any property currently or formerly
owned, leased or operated by either Seller in connection with the Business
thereof which have not been delivered to Buyer prior to execution of this
Agreement; and
17.30.9. To Seller's knowledge, there are no aboveground or underground storage
tanks located on, in or under any properties currently or formerly owned,
operated or leased by the Business or Seller in connection with the Business or
any predecessor of the Business or Seller in connection with the Business.
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17.31. Guaranties. There are no guaranties, letters of credit or performance
bonds with respect to any obligations or liabilities of the Business which would
be Assumed Liabilities.
17.32. Licenses and Compliance. The Company and each of its directors, officers
and gaming managers possess all licenses (including gaming licenses issued by
the Mississippi Gaming Commission), permits, authorizations, approvals, findings
of suitability, franchise and orders ("Company Permits") of any governmental or
regulatory authority which are necessary for the Company to engage in the
business of owning and operating the casino facilities and the businesses and
operations owned and operated by the Company, each of which is in full force and
effect in all material respects, except such permits, licenses, variances,
exemptions, orders and approvals which the failure to hold, individually or in
the aggregate, is not having and could not reasonably be expected to have a
Material Adverse Effect. The Company is in compliance with the terms of the
Company Permits and all other Federal, state, local or foreign statutes, rules,
regulations, findings of suitability, license, registration or other
authorization, including any condition or limitation thereon (including any
Federal, foreign or state laws relating to currency transactions), except
failures to so comply which, individually or in the aggregate, are not having
and could not reasonably be expected to have a Material Adverse Effect. No event
has occurred which permits, or upon the giving of notice or passage of time or
both would permit, revocation, non-renewal, modification, suspension or
termination of any Company Permit that currently is in effect the loss of which
either individually or in the aggregate would reasonably be expected to have a
Material Adverse Effect. The Company and each of its respective directors,
officers and gaming managers are in compliance with the terms of the Company
Permits, except for such failures to comply, which singly or in the aggregate,
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. No investigation or review by any governmental entity
with respect to the Company is pending or, to the best knowledge of the Seller,
threatened, nor has any governmental entity indicated an intention to conduct
the same, other than those the outcome of which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. Except
as disclosed in this Section 4.32, to the best knowledge of the Seller, neither
the Company nor any director, officer of gaming manager of the Company has
received any written claim, demand, notice, complaint, court order or
administrative order from any governmental entity in the past three years,
asserting that a license of it or them, as applicable, issued by the Mississippi
Gaming Commission, should be revoked or suspended. The Seller knows of no facts,
which, if known to the regulators under the Mississippi Gaming Laws, could
reasonably be expected to result in the revocation or suspension of a license of
the Company, or of any officer, directors or gaming manager, under any
Mississippi Gaming Laws or would be reasonably expected to disqualify the
Company from licensing by the Mississippi Gaming Commission. The Company has not
suffered a suspension or revocation of any material license held under the
Mississippi Gaming Laws.
17.33. Taxes. Seller (i) has filed or will file in true and correct form all Tax
Returns required to be filed by it, and (ii) has timely paid or has made
appropriate provision for on its or the HPI's balance sheet (in accordance with
generally accepted accounting principles) all material taxes whether or not
shown to be due on or with respect to such tax returns or claimed to be due from
it by any governmental authority with respect to any liability for taxes, except
in the case of clauses (i) or (ii) for failures which would not reasonably be
expected to result in a Material Adverse Effect. There are no Liens with respect
to taxes upon any of the Purchased Assets, except for current taxes not yet due.
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17.34. Year 2000. Except as disclosed in the HPI SEC Reports, Seller has taken
all actions reasonable and appropriate to confirm that there will be no Material
Adverse Effect to the Business or the Business' electronic systems or material
interruptions in the Business by reason of the advent of the year 2000;
provided, however, that no representation or warranty is being made with the
respect to Business' third party systems suppliers.
17.35. Leased Employees. Seller does not employ and has not employed any "leased
employees" as defined in Section 414(n) of the Internal Revenue Code in
connection with the Business.
17.36. Affirmative Action Programs. Seller has not and does not presently
participate in, and is not required to participate in by
any Law, any affirmative action programs.
17.37. Utilities. To Seller's knowledge, all material water, sewer, gas,
electric, telephone and all other utilities for the present use and operation of
the Business are installed to the property lines thereof, are all connected and
operating, are adequate to service such property as presently configured and to
permit present usage of such property.
17.38. Real Property. Schedule 2.1.1.(a) lists all of the real property
owned by Company.
18. REPRESENTATIONS AND WARRANTIES OF BUYER.
As an inducement for Seller to enter into this Agreement, Buyer
represents and warrants to Seller that each of the following statements is true
and correct as of the date hereof:
18.1. Organization, Corporate Power and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Mississippi and is duly qualified to do business as a foreign corporation in the
jurisdictions in which Buyer conducts its business, except where the failure so
to qualify will not have a material adverse effect on Buyer's ability to perform
its obligations under the Transaction Documents. Buyer has all requisite
corporate power and authority to acquire, own, lease and operate the Purchased
Assets, to conduct the Business and to execute and deliver the Transaction
Documents to which it is a party and to perform its obligations thereunder.
18.2. Authorization of Agreement. The execution, delivery and performance by
Buyer of the Transaction Documents to which it is a party, and the consummation
by it of the Transactions, have been duly authorized by all necessary corporate
action by Buyer. This Agreement has been, and each other Transaction Document to
which Buyer is a party will be at the Closing, duly executed and delivered by
Buyer and constitute, or will, when delivered, constitute, the legal, valid and
binding obligations of Buyer, enforceable against Buyer in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally.
18.3. Effect of Agreement. The execution, delivery and performance by Buyer of
the Transaction Documents to which it is a party, and the consummation by it of
the Transactions, will not violate the Certificate of Incorporation or By-laws
of Buyer or (assuming compliance with the matters referenced in Section 5.4
hereof) any law, regulation, order, judgment, award or decree of any
Governmental Authority or any material indenture, material agreement or other
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material instrument to which Buyer is a party, or by which Buyer or its
properties or assets are bound, or conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under, any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge, security interest or encumbrance of any nature
whatsoever upon any of the properties or assets of Buyer, except to the extent
the effect of any such violation, breach or default will not be materially
adverse to Buyer's ability to fulfill its obligations under the Transaction
Documents to which it is a party.
18.4. Approvals. Except as set forth in Schedule 5.4 and except for filings
pursuant to the HSR Act and under the Mississippi Gaming Laws, no approval,
authorization, consent or order or action of or filing with any court,
administrative agency or other Governmental Authority is required to be obtained
by Buyer for the execution and delivery by Buyer of the Transaction Documents to
which it is a party or the consummation by it of the Transactions. Except as set
forth on Schedule 5.4, Buyer has received all required consents from its
lender(s) and any other parties necessary for Buyer to execute this Agreement
and consummate the Transactions.
18.5. Commissions. Except as set forth on Schedule 5.5, neither Buyer nor any of
its directors, officers, employees or agents have employed, or incurred any
liability to, any broker, finder or agent for any brokerage fees, finder's fees,
commissions or other amounts with respect to the Transactions.
18.6. Financing. PNG has delivered to Seller a true and complete copy of a
letter from Lehman Brothers dated November 24, 1999 stating that Lehman Brothers
is "highly confident" of its ability to arrange for at least $311,400,000 of
financing to be used to fund the Cash Portion of the Purchase Price for the
Transactions and the transactions contemplated by the Other Asset Purchase
Agreement. There have been no changes or amendments to such Lehman Brothers
letter. The information PNG has prepared and supplied to Lehman Brothers for
purposes of issuing such letter is, in all material respects, true and correct,
and neither PNG nor Buyer has any reason to believe that the conditions to
funding identified in the Lehman Brothers' letter will not be satisfied by the
Closing Date.
18.7. Investigation of the Purchased Assets. Except as expressly provided in
Sections 4.20 and 4.21 hereof, Buyer is purchasing the Purchased Assets without
any warranties, representations or guaranties, either express or implied, from
or on behalf of Seller, including, but in no way limited to, any warranty of
condition, merchantability, habitability or fitness for a particular use or
purpose, marketability, prospects for future development or compliance with law,
and Buyer hereby expressly waives any such implied warranties or representations
relating to the Purchased Assets or any matter affecting the Purchased Assets.
Buyer has heretofore undertaken and will as of the Closing Date have made all
such inquiries and investigations regarding the Purchased Assets and all matters
relating thereto as Buyer deems necessary or appropriate under the
circumstances, and that based upon the same, Buyer will be relying thereon and
on the representations, warranties and other provisions set forth herein and in
the Transaction Documents. All material prepared by third parties and delivered
to Buyer by Seller, its agents, or any other person acting for or on behalf of
Seller, whether in the form of maps, surveys, reports, studies, and all other
review matters have been furnished by Seller to Buyer solely as a courtesy, and
neither Seller nor its agents has verified the accuracy of such information or
the qualifications of the persons preparing such information.
18.8. Licensing. Neither PNG nor Buyer knows of no facts, which, if known to the
regulators under the Mississippi Gaming Laws, could reasonably be expected to
disqualify either of them, any of their subsidiaries or any of the Licensed
Persons from licensing under the Mississippi Gaming Laws or which would prevent
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or materially delay the grant of licenses or approvals under the Mississippi
Gaming Laws necessary for Buyer to consummate the Transactions. Neither PNG nor
Buyer knows of any reason why either of them, any of their subsidiaries, or any
of the Licensed Persons would be denied a gaming license or approval necessary
under the Mississippi Gaming Laws to consummate the Transactions or of any
reason why such licensing or approval would be materially delayed.
19. COVENANTS OF SELLER.
19.1. Conduct of Business. During the period from the date hereof to the Closing
Date, unless Buyer consents otherwise in writing (which consent shall not be
unreasonably withheld), Seller shall, and shall cause Company to,:
19.1.1. Ordinary Course. Conduct the Business only in the ordinary course,
except as contemplated by this Agreement;
19.1.2. Preservation of Goodwill. Use reasonable commercial efforts to
preserve the goodwill of those of its suppliers, customers
and distributors having business relations with the Business;
19.1.3. Maintain Insurance. Maintain any insurance coverage existing as of
the date hereof against loss or damage to the Purchased
Assets;
19.1.4. Sale of Purchased Assets. Not transfer or encumber any of the
Purchased Assets except for any transfer or encumbrance in
the ordinary course of business;
19.1.5. Maintenance of Purchased Assets. Use reasonable commercial efforts to
maintain the Purchased Assets, in the aggregate, in a condition comparable to
their current condition, reasonable wear, tear and depreciation excepted, and
except for Purchased Assets disposed of, sold or consumed in the ordinary course
of business;
19.1.6. Assigned Contracts. Not materially amend any Assigned Contract or be in
default under any Material Contract (other than to the extent that the execution
of this Agreement and the consummation of the Transactions may or may be alleged
to constitute a default under any Material Contract);
19.1.7. Leases. Not materially amend any Lease or be in default under any Lease
(other than to the extent that the execution of this Agreement and the
consummation of the Transactions may or may not be alleged to constitute a
default under any Lease);
19.1.8. Charter and Bylaws. Not materially amend its Certificate of
Incorporation or bylaws in a manner that would have an adverse effect on
the Transactions;
19.1.9. Employment Contracts. Except for agreeing to any "stay bonuses" or
special severance agreements, not materially increase the compensation or other
remuneration of any of the Company's current officers or key Employees without
Buyer's written approval, which approval shall not be unreasonably withheld.
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19.1.10. Material Contracts. Not to enter into, renew, extend, adjust or modify
any Contract (excluding standing purchase orders for food and beverage items
ordered in the ordinary course of business) that would obligate the Company or
Seller to pay over the term of the contract more than $100,000, if made in the
ordinary course of business, or $200,000, if not made in the ordinary course of
business.
19.1.11. Capital Expenditures. Continue with its capital expenditures based upon
the Company's Capital Expenditure Budget for Fiscal Year 2000 which is attached
hereto as Schedule 6.1.11 ("Budget") through the month end ending on or prior to
the Closing Date (the "Final Month End") equal to the capital expenditures
called for by the Budget prorated on a monthly basis, with the failure to do
being governed solely by the next sentence. In the event that by the Closing
Date Seller or the Company has not made capital expenditures equal to capital
expenditures called for by the Budget on a monthly prorated basis through the
Final Month End, at the Closing Seller shall pay to Buyer the amount of the
shortfall in capital expenditure spending. Conversely, in the event that by the
Closing Date Seller or the Company has made capital expenditures in excess of
the capital expenditures called for by the Budget on a monthly prorated basis
through the Final Month End, at the Closing Buyer shall pay to Seller the amount
of such excess in capital expenditure spending.
19.1.12. [Intentionally Omitted]
19.1.13. Transfer of Employees. Not transfer any current Employee of the
Business to HPI or any of its subsidiaries.
19.2. Access. Seller will (a) during ordinary business hours and upon reasonable
notice from Buyer, permit Buyer and its authorized representatives to have
access to all Purchased Assets, including without limitation books, records,
offices and other facilities and properties of the Business, in order to make
such inspections, tests, and investigations as Buyer shall deem appropriate, (b)
furnish, as soon as reasonably practicable, to Buyer or its authorized
representatives such financial and operating data and other information in
Seller's possession with respect to the Purchased Assets as Buyer may from time
to time reasonably request, (c) make available copies of all insurance policies
covering the Purchased Assets and the Assumed Liabilities, (d) make available to
the Buyer a copy of each material report, schedule or other document (to the
extent accessible to Seller without undue effort) filed or received by the
Seller since November, 1996 with respect to the Purchased Assets with any
Governmental Authority having jurisdiction over the Purchased Assets and (e)
otherwise reasonably cooperate in the examination or audit of the Business by
Buyer; provided, however, that (i) any such inspection shall be conducted in
such a manner as to not interfere unreasonably with the operation of the
Purchased Assets, (ii) neither the Seller nor the Company shall be required to
take any action that would constitute a waiver of the attorney-client privilege,
(iii) neither the Seller nor the Company need supply the Buyer with any
information that the Seller is legally prohibited from supplying and (iv) with
respect to customer data, Buyer's employees may only review customer data
information at the premises of the Business and in the presence of
representatives of Seller and Buyer shall not make copies of such information.
Without Seller's prior written consent, Buyer shall not be entitled or permitted
(i) to perform or cause to be performed any invasive actions or any drilling, or
(ii) to initiate any inquiry or request (including any inquiry or request
relating to any zoning variance, zoning change or conditional use permit)
directed at any governmental official with respect to the Real Property;
provided, however, that nothing in this clause shall be deemed to prevent Buyer
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from inspecting or reviewing any or all records of any federal, state, or local
governmental authority. Buyer shall immediately repair any and all damage
resulting from the acts or omissions of Buyer or Buyer's agents, employees,
contractors, representatives or subcontractors relating to the whole or any part
of the Real Property. Buyer shall indemnify, defend and hold Seller harmless
from and against any and all claims and liens arising out of the respective
activities of Buyer and its authorized representatives in and about the Real
Property prior to the Closing or earlier termination of this Agreement.
19.3. No Solicitation. Except as provided in this Section, Seller shall not, and
Seller shall cause its Affiliates and the respective officers, directors,
employees, investment bankers, attorneys, accountants and other representatives
and agents (collectively, "Representatives") of Seller and its Affiliates not
to, directly or indirectly, initiate, solicit, encourage or participate in
negotiations or discussions relating to, or provide any information to any
person concerning, or take any action to facilitate the making of, any offer or
proposal which constitutes or is reasonably likely to lead to any proposal
(other than any proposal by Buyer or its Affiliates) regarding any sale, lease,
exchange, transfer or other disposition of all or a substantial portion of the
Business or the Purchased Assets, or any inquiry with respect thereto, or agree
to approve or recommend any such proposal.
19.4. Consents. As promptly as practicable after the date hereof, Seller shall
make all required filings with governmental bodies and other regulatory
authorities, and use all reasonable efforts to obtain all permits, approvals,
authorizations and consents of all third parties, required for Seller to
consummate the Transactions. Seller and Buyer shall use reasonable efforts to
obtain such consents to the assignment of the Contracts as may be required.
Notwithstanding anything herein to the contrary, the parties hereto acknowledge
and agree that at the Closing, Seller will not assign to Buyer any Contract that
by its terms requires, prior to such assignment, the consent of any other
contracting party thereto unless such consent has been obtained prior to the
Closing Date. With respect to each such Contract not assigned on the Closing
Date, after the Closing Date, Seller shall continue to deal with the other
contracting party(ies) to such Contract as the prime contracting party, and
Buyer and Seller shall use reasonable efforts to obtain the consent of all
required parties to the assignment of such Contract. Such Contract shall be
promptly assigned by Seller to Buyer after receipt of such consent after the
Closing Date, and thereafter shall be deemed to be an Assigned Contract for all
purposes hereunder. Notwithstanding the absence of any such consent, Buyer shall
be entitled to the benefits of such Contract accruing after the Closing Date to
the extent that Seller may provide Buyer with such benefits without violating
the terms of such contract; Buyer agrees to perform at its sole expense all of
the obligations of Seller to be performed under such Contract after the Closing
Date.
19.5. Transfer of Purchased Assets to Seller. Prior to the Closing, Seller shall
take all action necessary to transfer the Purchased Assets from its subsidiaries
(by merger or otherwise) or to otherwise cause such entities to take such action
as may be necessary so that the sale of the Purchased Assets contemplated hereby
shall be completed on the Closing Date. In furtherance thereof, the Seller shall
execute and deliver such additional instruments of conveyance and transfer as
the Buyer may reasonably require, in order to more effectively vest in it, and
put it in possession of, the Purchased Assets.
19.6. Supplement to Disclosures. Between the date hereof and the Closing Date,
Seller shall promptly disclose to the Buyer in writing any material information
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set forth in the Disclosure Schedules that is no longer complete, true or
applicable and any material information of the nature of that set forth in the
Disclosure Schedules that arises after the date hereof and that would have been
required to be included in the Disclosure Schedules if such information had been
obtained on the date of delivery thereof. For purposes of determining the
accuracy of the representations and warranties contained in Section 4 and the
fulfillment of conditions precedent set forth in Section 8.1.3, the Disclosure
Schedules shall be deemed to include only that information contained therein on
the date of this Agreement and as the same may be amended or supplemented with
Buyer's consent; provided, however, that the disclosure by Seller to Buyer after
the date hereof and prior to the Closing of such material information that
arises after the date hereof (in the instance where Buyer does not consent to an
amendment or supplement to the Disclosure Schedules) shall not be deemed a
breach of any provision of this Agreement, but instead shall only relate to
whether the conditions to Closing under Section 8.1.3 have been satisfied.
19.7. Solicitation of Employees. For a period of two (2) years from the Closing
Date, neither HPI nor any of its subsidiaries shall solicit the employment of
any of the employees at the Business so long as they are employed by the
Business; provided, however, that the foregoing shall not prohibit HPI or any of
its subsidiaries (a) from engaging in any general advertising or other indirect
method of soliciting prospective new employees which is not intended to
circumvent the foregoing provision or (b) from hiring any such employees who
apply to HPI or any of its subsidiaries for employment on an unsolicited basis.
19.8. Non-Competition. Except for projects described on Schedule 6.8, for a
period of five (5) years from the date hereof, neither HPI or any of its
subsidiaries will operate a gaming operation, other than any currently existing
gaming operation (as such operations may be expanded from time to time), within
one hundred miles of the Business; provided, however, that the term "currently
existing gaming operation" shall include gaming operations owned or operated by
third parties. It is the desire and intent of the parties to this Agreement that
this Section 6.8 be enforced to the fullest extent permissible under the law and
public policies of each jurisdiction in which enforcement is sought. If this
Section 6.8 is determined to be illegal or unenforceable in any jurisdiction -
because it extends for too long a time, because its geographic scope is too
great, because the business it covers is too broad or for any other reason or
reasons - there shall be deemed to be made those changes, and only those
changes, necessary so that it is valid and enforceable in such jurisdiction or
jurisdictions.
19.9. Environmental Permits. Seller shall use commercially reasonable efforts to
cooperate with Buyer in the transfer from Seller to Buyer of all Environmental
Permits.
19.10. Non-Solicitation of Unique Customers. For purposes of this Section 6.10,
the term "Active Customers" means customers of the Business who in the twelve
months prior to the Closing Date have either (i) registered points in the player
point system of the Business or (ii) had their gaming play at the Business'
table games tracked by the Business. For purposes of this Section 6.10, the term
"Unique Customers" means customers who, as of the date hereof, are listed on the
customer lists for the Business and who are not, as of the date hereof, listed
on the customer lists of any other operating property of HPI or its subsidiaries
(other than the customer list of the "Business" being purchased by Buyer under
the Other Asset Purchase Agreement). From and after the date hereof until the
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second anniversary of the Closing Date, neither HPI nor any of its subsidiaries
(other than Business or the "Business" being purchased by Buyer under the Other
Asset Purchase Agreement) shall intentionally engage in any direct or targeted
solicitation of any of the Unique Customers; provided, however, that the
foregoing shall not prohibit HPI or any of its subsidiaries from engaging in any
general advertising or other indirect method of soliciting customers which does
not target any Unique Customers or which is otherwise not intended to circumvent
the foregoing provision. On the Closing Date, Seller shall furnish to Buyer a
list of the Active Customers who are also Unique Customers.
19.11. Monetary Liens. Seller shall remove all monetary liens encumbering the
Purchased Assets, including liens arising under the Bank of America Loan
Agreement, unless caused by or created by Buyer or any agent of Buyer prior to
Closing.
19.12. Additional Financial Statements. Seller shall provide such cooperation as
Buyer may reasonably request in connection with the preparation of audited
financial statements of the Business which may be necessary for Buyer's Form 8-K
relating to the Transactions, provided, however, that Buyer and Seller shall
each be responsible for paying one-half the fees and costs of Arthur Andersen
LLP or any other independent public accountants that assist Buyer in preparing
and/or auditing such financial statements.
19.13. Note Payable. Prior to Closing Seller shall pay off the note payable to
Cendant Corporation and Buyer shall be entitled to no reduction in Purchase
Price for such note to the extent that Seller pay it off.
20. COVENANTS OF BUYER.
20.1. Deposit.
20.1.1. Deposit. Concurrently with Buyer's execution of this Agreement, Buyer
shall deliver to Escrow Holder the sum of Two Million Dollars ($2,000,000), in
cash or immediately available funds (the "Deposit"). The Deposit plus accrued
interest thereon shall be credited against the Purchase Price at the Closing. In
the event that the Closing does not occur for any reason prior to termination of
this Agreement, the Deposit plus accrued interest thereon shall be refundable to
Buyer, except where Closing does not occur as a result of (i) Buyer's failure to
obtain the financing contemplated by Section 8.1.11 herein, (ii) a material
breach by Buyer of any of its representations or warranties under this
Agreement, (iii) a material breach by Buyer of any of its covenants under this
Agreement, or (iv) the failure of the Mississippi Gaming Commission to grant to
Buyer, its Affiliates and Licensed Persons all approvals and licenses necessary
for Buyer to consummate the Transactions for any reason (provided that, if such
failure to grant such approvals and licenses is either (a) solely as a result of
the Mississippi Gaming Commission's imposition of Specified Conditions on Buyer,
or (b) solely as a result of the Mississippi Gaming Commission's failure to take
any action with respect to Buyer's application for such approvals and licenses
necessary to consummate the Transactions (provided that Buyer is using its
reasonable efforts to diligently pursue all such approvals and licenses has not
withdrawn its application to the Mississippi Gaming Commission or taken any
action which would otherwise preclude or prevent the Mississippi Gaming
Commission from taking such action with respect to Buyer's application), then
this clause (iv) shall not entitle Seller to retain the Deposit plus accrued
interest thereon), in which instances the Deposit plus accrued interest thereon
shall be released by the Escrow Holder to Seller immediately upon Seller's
written demand.
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20.1.2.
LIQUIDATED DAMAGES. IF THE CLOSING DOES NOT OCCUR UNDER THE
CONDITIONS DESCRIBED UNDER CLAUSE (I), (II) OR (IV), BUT NOT CLAUSE (III), OF
SECTION 7.1.1 OF THIS AGREEMENT, BUYER AND SELLER AGREE THAT IT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX ACTUAL DAMAGES, AND THAT THE DEPOSIT
PAID BY BUYER PLUS ACCRUED INTEREST THEREON ("LIQUIDATED DAMAGES") IS A
REASONABLE ESTIMATE OF SELLER'S DAMAGES IN SUCH EVENT. RECEIPT OF SAID
LIQUIDATED DAMAGES SHALL BE SELLER'S SOLE AND EXCLUSIVE REMEDY IN THE EVENT
CLOSING DOES NOT OCCUR AS AFORESAID. SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE
READ AND UNDERSTAND THE PROVISIONS OF THIS PARAGRAPH AND BY THEIR INITIALS
IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS. IN NO EVENT SHALL SELLER'S
ACCEPTANCE OF THE LIQUIDATED DAMAGES BE A LIMIT OF ANY KIND ON BUYER'S INDEMNITY
AND DEFENSE OBLIGATIONS IN THIS AGREEMENT.
Seller's Initials: Buyer's Initials:
Boomtown, Inc. BTN, Inc.
By:__G. Michael Finnigan By:__/s/Joseph Lashinger__
Its: Authorized Signatory Its:_Vice President/General Counsel
20.2. Title Matters.
(a) Within three (3) days following mutual execution of this Agreement, Buyer
shall request First American Title Insurance Company (the "Title Company"), to
prepare a preliminary title report with respect to the Real Property setting
forth the legal description of the Real Property and containing such exceptions
as the Title Company would specify in a standard coverage form of owner's policy
of title insurance with respect to the Owned Real Property and a standard
coverage form of leasehold policy of title insurance with respect to the Leased
Real Property and to deliver said preliminary title report to Buyer and Seller
and, in addition, to deliver to Buyer and Seller legible copies of all documents
of record or in its possession identified as exceptions in said preliminary
title report (such preliminary title report and legible copies of documents are
hereinafter collectively referred to as the "Preliminary Title Report").
(b) Buyer may, not later than twenty (20) days following the date of its receipt
of the Preliminary Title Report (and also not later than twenty (20) days
following the date of Buyer's receipt of any supplemental Preliminary Title
Report modifying the legal description of the Real Property or containing
exceptions not contained on the original Preliminary Title Report and not caused
by Buyer, together with legible copies of all documents identified as additional
exceptions), give written notice to Seller disapproving any items specified or
identified in said Preliminary Title Report or supplemental Preliminary Title
Report which, if not removed, would have a Material Adverse Effect on the
operation of the Business, as conducted by Seller or the Company. If Buyer does
not timely give notice of disapproval as aforesaid, then Buyer shall be deemed
to have approved all items on the Preliminary Title Report and any supplemental
Preliminary Title Report, as the case may be. Exceptions approved or deemed
approved by Buyer pursuant to this Section 7.2 shall be referred to collectively
as the "Permitted Exceptions".
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(c) If Buyer shall timely give notice of disapproval as aforesaid,
then Seller, at Seller's expense, may elect to attempt to
remove any exception to title to which Buyer objects. If
Seller is unable or unwilling to remove any such exception,
Seller shall not be in default hereunder as a result hereof,
and Buyer's sole remedy shall be to terminate this Agreement
by written notice delivered to Seller and Escrow Holder within
ten (10) business days after Seller has notified Buyer in
writing of Seller's inability or unwillingness to remove such
exception. In the event that Buyer terminates the Agreement
pursuant to this subsection, the Deposit along with accrued
interest shall be refunded upon written notice to Seller and
Escrow Holder of Buyer's election to terminate the Agreement.
20.3. Permits and Consents. As promptly as practicable after the date hereof,
but in any event no later than the deadlines described in the next two
sentences, Buyer will, and will cause its Affiliates to, make all filings with
governmental bodies and other regulatory authorities necessary in connection
with the Transactions and it will cause the shareholders, officers and directors
of Buyer and its Affiliates and any other persons required to file to make any
required filings (collectively, such shareholders, officers, directors and other
persons are referred to as "Licensed Persons"). In any event, Buyer and any
Affiliate of Buyer which proposes to hold a gaming license shall, within 30 days
from the date of this Agreement, file or cause to be filed all necessary
applications under the Mississippi Gaming Laws and under the laws and
regulations of any other jurisdiction in which PNG conducts gaming, racing,
pari-mutuel or similar activities for itself and its shareholders, officers,
directors and other personnel in order to obtain the necessary approvals under
the Mississippi Gaming Laws and the laws and regulations of such other
jurisdictions in order to consummate the Transactions. In any event, Buyer shall
cause any and all of the Licensed Persons required to make filings to file
within 45 days of the date of this Agreement all necessary applications for
findings of suitability or other required approvals in order to obtain the
necessary approvals under the Mississippi Gaming Laws and the laws and
regulations of such other jurisdictions in order for Buyer to consummate the
Transactions. Buyer use all reasonable efforts to obtain all permits, approvals,
authorizations and consents of all third parties, required for Buyer to
consummate the Transactions, including the filings pursuant to the Mississippi
Gaming Laws. Buyer shall cause all Licensed Persons to cooperate with the
Mississippi Gaming Commission, to provide such additional information as may be
requested by the Mississippi Gaming Commission or its agents and to make
themselves available for interviews by the Mississippi Gaming Commission or its
agents if requested. Buyer, on behalf of itself, any of its Affiliates and the
Licensed Persons, shall allow Seller and its counsel to make inquiry of the
Mississippi Gaming Commission as to the status of Buyer's licensing and approval
process and, upon Seller's request, shall provide documentation to that effect
to the Mississippi Gaming Commission in order to permit Seller and its counsel
to make such inquiry. Without limiting the foregoing, Buyer will notify Seller
promptly of the receipt of comments or requests from governmental bodies or
other regulatory authorities relating to such permits, approvals, authorizations
and consents, and, on a regular basis, keep Seller apprised of the status of the
approval process with such governmental bodies and other regulatory authorities.
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Buyer shall promptly advise Seller upon receiving any communication from any
governmental body or other regulatory authority whose consent or approval is
required for consummation of the Transactions which causes Buyer to believe that
there is a reasonable likelihood that any such consent or approval will not be
obtained or that the receipt of any such approval will be materially delayed. To
the extent the Mississippi Gaming Commission, acting through its agents,
requires different or additional financing commitments for financing of the
Transactions and the transactions contemplated by the Other Asset Purchase
Agreement than the financing contemplated as of the date of this Agreement to be
provided by Lehman Brothers, Buyer shall use commercially reasonable efforts to
obtain such commitments reasonably promptly, but no later than the date required
by the Mississippi Gaming Commission or its agents, and if it fails to do so and
such failure continues for thirty (30) days after the date required by the
Mississippi Gaming Commission or its agents (but in no event later than the
Outside Date specified in Section 3.1) or if Buyer fails to obtain such
financing commitments within such time frame notwithstanding the use of
commercially reasonable efforts, then in either case Seller shall have the right
to terminate this Agreement and be entitled to retain the Deposit.
20.4. Key Management Employees. Prior to the execution of this Agreement, Buyer
has provided by letter to Seller dated the date hereof a list of the Company's
key management employees ("Key Management Employees") with whom Buyer would like
to enter into employment agreements to take effect on the Closing. Buyer may,
not later than thirty (30) days following the date of this Agreement, terminate
this Agreement based on its failure to enter into employment agreements with the
Key Management Employees, provided Buyer has used its best efforts to do so. If
Buyer does not timely give written notice of its decision to terminate this
Agreement pursuant to this Section 7.4, then Buyer shall be deemed to have
waived this condition to Closing and to have waived any right to terminate this
Agreement by reason of such failure.
20.5. Access to Books and Records. Except as otherwise provided herein, Buyer
shall maintain for at least five (5) years all original books, records, files,
documents, papers and agreements pertaining to the Purchased Assets, the Assumed
Liabilities or otherwise to the Business before the Closing. After the Closing,
Buyer shall provide Seller and its representatives, during ordinary business
hours and upon reasonable notice from Seller, with reasonable access to such
original documents. If, at any time, Buyer proposes to dispose of any of such
original documents, Buyer shall first provide Seller with 60 days written notice
of such proposal and shall offer to deliver the original documents it wishes to
dispose of to Seller at the expense of Seller. At the end of such 60 day period,
Buyer may, without liability to Seller, dispose of any such original documents
which Seller has not informed Buyer in writing that it desires to recover. Buyer
acknowledges that Seller may make copies of such books, records, files,
documents, papers and agreements for its own records.
20.6. Cooperation in Third-Party Litigation. After the Closing, Buyer shall
provide such cooperation as Seller or its counsel may reasonably request in
connection with (a) any proceedings for which Buyer is entitled to
indemnification from Seller under Section 9.2.1 hereof; and (b) the Excluded
Liabilities. Such cooperation shall include, but not be limited to: (i) making
available at the reasonable request of Seller or its counsel and permitting
Seller and its counsel, to make and retain copies of, any and all documents in
the possession of or otherwise available to Buyer; (ii) making available upon
the reasonable request of Seller or its counsel, employees and other persons
within the control of or available to Buyer to consult with and assist Seller
and its counsel and to prepare for and testify in connection with any
proceedings, including depositions, trials and arbitration proceedings; and
(iii) making available at the reasonable request of Seller or its counsel such
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other resources as may be within the control of or available to Buyer. Seller
shall reimburse Buyer for Buyer's reasonable, documented out-of-pocket expenses
incurred (including such items as travel costs, but not including any employee
salaries or overhead) in connection with fulfilling its obligations under this
Section 7.6.
20.7. Use of Boomtown Biloxi Name. Buyer shall cease all uses of the "Boomtown
Biloxi" name and all variants thereof, including any symbols and marks related
thereto, and replace "Boomtown Biloxi" with a name selected by Buyer on or
before the termination of the term of the License Agreement.
20.8. Financing. Buyer will, and will cause its Affiliates to, use commercially
reasonable efforts to enter into definitive agreements providing for the
financing of Buyer's acquisition of the Purchased Assets hereunder and the
transactions contemplated by the Other Asset Purchase Agreement and to obtain on
the Closing Date the financing contemplated by such definitive financing
agreements. Buyer shall periodically report to Seller on the status of such
financing efforts and shall promptly notify Seller of material developments
relating thereto. If Lehman Brothers or another financing source notifies a
representative of Buyer that it has terminated its commitment or is no longer
willing to finance the Transactions and the transactions contemplated by the
Other Asset Purchase Agreement on terms and conditions that Buyer reasonably
believes will satisfy the requirements of a Governmental Agency, then Buyer
shall so notify Seller and unless Buyer provides Seller with a commitment from
another financing source reasonably comparable to Lehman Brothers' or such other
financing source's commitment, or if such commitment was not satisfactory for
the requirements of any Governmental Agency, reasonably satisfactory for such
requirements, within thirty (30) days after Buyer receives such notice from
Lehman Brothers or such other financing source (but in no even later than the
Outside Date specified in Section 3.1), Seller shall have the right to terminate
this Agreement and be entitled to retain the Deposit.
20.9. [Intentionally Omitted]
20.10. [Intentionally Omitted]
20.11. Solicitation of Employees. For a period of two (2) years from the Closing
Date, Buyer shall not solicit the employment of any of the employees of HPI or
any of its subsidiaries so long as they are employed at such properties, except
as expressly permitted pursuant to Section 11 herein; provided, however, that
the foregoing shall not prohibit Buyer (a) from engaging in any general
advertising or other indirect method of soliciting new employees which is not
intended to circumvent the foregoing provision or (b) from hiring any such
employees who apply to Buyer for employment on an unsolicited basis.
21. CONDITIONS PRECEDENT.
21.1. Conditions Precedent to Obligations of Buyer. The obligations of Buyer
under this Agreement are subject, at the option of Buyer, to the satisfaction or
waiver of each of the following conditions on or prior to the Closing Date:
21.1.1. Title to Real Property. Buyer shall have obtained the unconditional
commitment of the Title Company to issue its standard form of policy of title
insurance (the "Title Policy") in favor of Buyer insuring Buyer as the fee owner
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of the Owned Real Property and as the lessee under the Leases, in the amount of
the portion of the Purchase Price allocated to the Real Property subject to no
exceptions except: (a) the exceptions approved or deemed approved by Buyer
pursuant to Section 7.2; (b) property taxes for the current fiscal year not yet
due and payable; (c) such other exceptions as may have been approved in writing
by Buyer or imposed upon the Real Property by Buyer, with reinsurance and direct
access agreements as required by Buyer.
21.1.2. HSR Act. All waiting periods under the HSR Act shall have expired or
terminated.
21.1.3. Accuracy of Representations and Warranties. The representations and
warranties of Seller contained in this Agreement or in any certificate delivered
to Buyer pursuant hereto shall be true and correct on and as of the Closing Date
as though made at and as of that date (except where such representation and
warranty is made as of a date specifically set forth therein and except for
Section 4.19.9 (Casualty Loss) as to which the subject matter thereof shall be
governed by Section 12.14 herein), except where the failure to be true and
correct relates to matters which could not reasonably be expected to have a
Material Adverse Effect (except for those specific representations and
warranties (or portions thereof) qualified as to a Material Adverse Effect,
which shall be true and correct), and Seller shall have delivered to Buyer a
certificate to that effect;
21.1.4. Compliance with Covenants. Seller shall in all material respects have
performed and complied with all terms, agreements, covenants and conditions of
this Agreement to be performed or complied with by it at the Closing Date, and
Seller shall have delivered to Buyer a certificate to that effect;
21.1.5. Opinion of Counsel for Seller. Buyer shall have received the favorable
opinion of counsel to Seller, dated the Closing
Date, as provided in Section 3.5;
21.1.6. Legal Actions or Proceedings. No legal action or proceeding shall have
been instituted or threatened in writing by any governmental agency seeking to
restrain, prohibit, invalidate or otherwise affect the consummation of the
Transactions;
21.1.7. Consents and Permits Obtained. Each party hereto shall have obtained all
material consents and approvals required to be obtained from (a) any
Governmental Authority (including licenses and approvals from the Mississippi
Gaming Commission) and (b) the other parties to those Material Contracts set
forth on Schedule 8.1.7, except where the failure to obtain such consents or
approvals is a result of a breach by Buyer and except where the failure to
obtain any such consent or approval could not reasonably be expected,
individually or in the aggregate with other such failures, to have a Material
Adverse Effect; provided, however, this condition shall not be deemed satisfied
if any approval or consent from the Mississippi Gaming Commission is conditioned
upon a requirement that Buyer construct hotel rooms on or near the premises of
the Business or make capital expenditures totaling ten percent (10%) or more of
the Purchase Price (determined without regard to any adjustments to the Purchase
Price) (the conditions described in this proviso shall be referred to as the
"Specified Conditions");
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21.1.8. Key Management Employees. Buyer shall have entered into employment
contracts with the Key Management Employees pursuant to Section 7.4 (provided
that this condition shall be waived or deemed waived by Buyer in the
circumstances described in Section 7.4).
21.1.9. Other Transaction Documents. Seller shall have executed and delivered
original counterparts of each Transaction Document
(other than this Agreement) to which it is a party; and
21.1.10. Simultaneous Closing of Other Asset Purchase Agreement. The
consummation of the transactions contemplated by the Other Asset Purchase
Agreement shall occur simultaneously with the Closing.
21.1.11. Financing. Buyer and the "Buyer" under the Other Asset Purchase
Agreement shall have obtained financing for the Transactions and the
transactions contemplated by the Other Asset Purchase Agreement having terms
satisfactory to Buyer in an amount at least equal to $311,400,000 in the
aggregate.
21.2. Conditions Precedent to Obligations of Seller. The obligations of Seller
under this Agreement are subject, at the option of Seller, to the satisfaction
or waiver of each of the following conditions at or prior to the Closing Date:
21.2.1. HSR Act. All waiting periods under the HSR Act shall have expired or
terminated.
21.2.2. Accuracy of Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement or in any certificate delivered
to Seller pursuant hereto shall be true and correct in all material respects on
and as of the Closing Date as though made at and as of that date (except where
such representation and warranty is made as of a date specifically set forth
therein), and Buyer shall have delivered to Seller a certificate to that effect;
21.2.3. Compliance with Covenants. Buyer shall in all material respects have
performed and complied with all terms, agreements, covenants and conditions of
this Agreement to be performed or complied with by it at the Closing Date, and
Buyer shall have delivered to Seller a certificate to that effect;
21.2.4. Legal Actions or Proceedings. No legal action or proceeding shall have
been instituted or threatened in writing by any governmental agency seeking to
restrain, prohibit, invalidate or otherwise affect the consummation of the
Transactions;
21.2.5. Opinion of Counsel for Buyer. Seller shall have received the favorable
opinion of counsel to Buyer, dated the Closing Date,
as provided in Section 3.5;
21.2.6. Consents Obtained. Each party hereto shall have obtained all material
consents and approvals required to be obtained from (a) any Governmental
Authority, and (b) the other parties to those Material Contracts set forth on
Schedule 8.1.7;
21.2.7. Purchase Price. Buyer shall have delivered the Purchase Price in
accordance with Section 3.3;
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21.2.8. Other Transaction Documents. Buyer shall have executed and delivered
original counterparts of each Transaction Document to
which it is a party;
21.2.9. Releases. Seller shall have obtained any consents required under (i) the
Bank of America Loan Agreement, including, without limitation, the release of
any liens on the Purchased Assets, and (ii) the Leases, including, without
limitation the release of Company and any guarantor of Company from any
liability accruing under the Leases from and after the Closing Date; and
21.2.10. Simultaneous Closing of Other Asset Purchase Agreement. The
consummation of the transactions contemplated by the Other Asset Purchase
Agreement shall occur simultaneously with the Closing.
22. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS.
22.1. Survival of Representations. The representations and warranties set forth
in Sections 4.1, 4.2, 4.3, 4.33, 5.1, 5.2 and 5.3 shall survive indefinitely.
All other representations or warranties contained herein shall survive until
three (3) years from the Closing Date and shall then expire. Upon the expiration
of a representation or warranty pursuant to this Section 9.1, unless written
notice of a claim based on such representation or warranty specifying in
reasonable detail the facts on which the claim is based shall have been
delivered to the Indemnifying Party prior to the expiration of such
representation or warranty, such representation or warranty shall be deemed to
be of no further force or effect, as if never made, and no action may be brought
based on the same, whether for breach of contract, tort or under any other legal
theory.
22.2. Agreements to Indemnify.
22.2.1. Seller Indemnity. Subject to the terms and conditions of this Section 9,
Seller hereby agrees to indemnify, defend and hold Buyer harmless from and
against all Losses incurred by Buyer and Buyer's employees, directors, officers,
shareholders and agents resulting from (a) a breach of any representation,
warranty or covenant of Seller made in this Agreement, (b) any liabilities or
obligations of Seller other than the Assumed Liabilities, (c) any action, suit
or proceeding with respect to the Business pending or overtly threatened against
Seller or Company to the extent arising from or based on facts occurring before
the Closing Date or (d) non-monetary liens capable of removal by payment and
objected to by Buyer in accordance with Section 7.2, other than those caused by
Buyer or its agents.
22.2.2. Buyer Indemnity. Subject to the terms and conditions of this Section 9,
Buyer hereby agrees to indemnify, defend and hold Seller harmless from and
against all Losses incurred by Seller and Seller's employees, directors,
officers, shareholders and agents resulting from (a) a breach of any
representation, warranty or covenant of Buyer made in this Agreement, (b) the
failure of Buyer to pay, perform and discharge when due the Assumed Liabilities,
or (c) the conduct of the Business after the Closing or (d) any and all actions,
suits and proceedings commenced or any other claims or demands asserted against
Buyer, Seller or the Company after the Closing Date with respect to the Business
except for those actions, suits and proceedings which are the responsibility of
Seller under Section 9.2.1(c).
22.2.3. Indemnification Threshold and Limit. No claim for indemnification under
9.2.1 and 9.2.2 hereof or Sections 9.2.1 and 9.2.2 of the Other Asset Purchase
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Agreement will be made by either party hereunder or by the parties to the Other
Asset Purchase Agreement unless the aggregate of all Losses incurred by any such
party (with the Losses of Seller under this Agreement and the Losses of "Seller"
under the Other Asset Purchase Agreement being aggregated for this purpose)
otherwise indemnified against hereunder exceeds $1,000,000 and only to the
extent of any such Losses in excess of $1,000,000; provided, however that the
amount of claims Buyer is obligated to bear under Section 9.2.1(d) hereof and
Section 9.2.1(d) of the Other Asset Purchase Agreement by reason of the
foregoing clause shall in no event exceed, in the aggregate, $200,000.
Notwithstanding any other provisions of this Agreement or the Other Asset
Purchase Agreement, the obligations of Seller and the "Seller" under the Other
Asset Purchase Agreement under the indemnity provisions set forth in Section
9.2.1(a) hereof and Section 9.2.1(a) of the Other Asset Purchase Agreement,
shall in no event exceed, in the aggregate, $8,000,000.
22.2.4. Subrogation. If the Indemnifying Party makes any payment under this
Section 9 in respect of any Losses, the Indemnifying Party shall be subrogated,
to the extent of such payment, to the rights of the Indemnified Party against
any insurer or third party with respect to such Losses; provided, however, that
the Indemnifying Party shall not have any rights of subrogation with respect to
the other party hereto or any of its Affiliates or any of its or its Affiliates'
officers, directors, agents or employees.
22.3. Conditions of Indemnification. The respective obligations and liabilities
of the Indemnifying Party to the Indemnified Party under Section 9.2 shall be
subject to the following terms and conditions:
22.3.1. Notice. Within 15 days after receipt of notice of commencement of any
action or the assertion of any claim by a third party (but in any event at least
ten days preceding the date on which an answer or other pleading must be served
in order to prevent a judgment by default in favor of the party asserting the
claim), the Indemnified Party shall give the Indemnifying Party written notice
thereof together with a copy of such claim, process or other legal pleading, and
the Indemnifying Party shall have the right to undertake the defense thereof by
representatives of its own choosing that are reasonably satisfactory to the
Indemnified Party. Notwithstanding the Indemnifying Party's undertaking of such
defense, the Indemnified Party shall have the right to engage its own counsel,
at its own expense, and participate in the defense of the claim; provided,
however, that the Indemnifying Party shall retain the right in its sole and
absolute discretion to make all decisions with respect to the defense,
settlement or compromise of such claim, provided that the Indemnifying Party
remains liable for any payments due under any such settlement or compromise.
22.3.2. Failure to Assume Defense. If the Indemnifying Party, by the fifteenth
day after receipt of notice of any such claim (or, if earlier, by the fifth day
preceding the day on which an answer or other pleading must be served in order
to prevent judgment by default in favor of the person asserting such claim),
does not elect to defend against such claim, the Indemnified Party will (upon
further notice to the Indemnifying Party) have the right to undertake the
defense, compromise or settlement of such claim on behalf of and for the account
and risk of the Indemnifying Party; provided, however, that the Indemnified
Party shall not settle or compromise such claim without the Indemnifying Party's
consent, which consent shall not be unreasonably withheld; and provided further
that, the Indemnifying Party shall have the right to assume the defense of such
152
claim with counsel of its own choosing at any time prior to settlement,
compromise or final determination thereof.
22.3.3. Claim Adverse to Indemnifying Party. Notwithstanding anything to the
contrary in this Section 9.3, if there is a reasonable probability that a claim
may materially adversely affect the Indemnifying Party other than as a result of
money damages or other money payments, the Indemnifying Party shall have the
right, at its own cost and expense, to compromise or settle such claim, but the
Indemnifying Party shall not, without the prior written consent of the
Indemnified Party, settle or compromise any claim or consent to the entry of any
judgment which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party a release from all
liability in respect of such claim.
22.3.4. Cooperation. In connection with any such indemnification, the
Indemnified Party will cooperate in all reasonable requests
of the Indemnifying Party.
22.4. Remedies Exclusive. The remedies provided in this Section 9 shall be the
exclusive remedy for monetary damages (whether at law or in equity). None of
either party's officers, employees, agents, stockholders, consultants,
investment bankers, legal advisers or representatives shall have any personal
liability or obligation to the other party in connection with the Transactions
contemplated by this Agreement or in respect of any statement, representation,
warranty or assurance of any kind made by such party, its representatives or any
other person.
22.5. Damages. Notwithstanding anything to the contrary elsewhere in this
Agreement or any other Transaction Document, no party (or its Affiliates) shall,
in any event, be liable to the other party (or its Affiliates) for any
consequential damages, including, but not limited to, loss of revenue or income,
cost of capital, or loss of business reputation or opportunity relating to the
breach or alleged breach of this Agreement. Each party agrees that it will not
seek punitive damages as to any matter under, relating to or arising out of the
Transactions.
23. TERMINATION.
This Agreement may be terminated at any time on or prior to the Closing
Date:
23.1. Injunction. By either party if any court of competent jurisdiction in the
United States shall have issued an order (other than a temporary restraining
order), decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Transactions and such order, decree, ruling or other
action shall have become final and non-appealable.
23.2. Mutual Agreement. By mutual written agreement of the parties.
23.3. Termination Date. By either party if the Closing shall not have occurred
by the Outside Date as provided in Section 3.1 hereof (provided that the right
to terminate this Agreement pursuant to this Section 10.3 shall not be available
to any party who has materially breached any representation, warranty or
covenant of this Agreement).
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23.4. Material Breach. By either Buyer or Seller, if there has been a breach on
the part of the other party of its representations or warranties set forth
herein (so long as, in the case of representations and warranties of Seller,
such breach relates to matters that could reasonably be expected to have a
Material Adverse Effect) or a material breach on the part of the other party of
its covenants set forth herein; provided, however, that if such breach is
susceptible to cure the breaching party shall have twenty (20) business days
after receipt of written notice from the other party of its intention to
terminate this Agreement pursuant to this Section 10.4 in which to cure such
breach or, if such cure cannot be effected within such 20 business day period,
then the breaching party shall commence pursuing a cure within such period and
the other party shall not have the right to terminate this Agreement as long as
the breaching party is diligently pursuing a cure.
23.5. Uncured Asset Loss. By either Seller or Buyer, pursuant to Section
12.14 hereof.
23.6. Failure to Enter Into Employment Agreements with Key Management Employees.
By Buyer, pursuant to Section 7.4 hereof provided that such termination right be
exercised, if at all, within the time frame described in such Section.
23.7. Rejection or Withdrawal of Buyer's Application for Gaming Approval;
Failure to Secure Replacement Financing. By Seller, (a) if the Mississippi
Gaming Commission rejects Buyer's application for approval of the Transactions
or the transactions contemplated by the Other Asset Purchase Agreement or if
Buyer withdraws such application or (b) under the circumstances entitling Seller
to terminate this Agreement under Sections 7.3 and 7.8 hereof.
23.8. Conditions No Longer Capable of Satisfaction. By either party if any of
the conditions to such party's obligation to consummate the Transaction
specified in Section 8 have not been met or waived by such party and as such
condition is no longer capable of satisfaction.
23.9. Effects of Termination. If this Agreement is terminated pursuant to this
Section 10, all obligations of the parties hereunder (except for this Section 10
and Sections 6.2 (last two sentences), 7.1.1 (last sentence), 7.1.2, 9.5, 11.1,
11.8, 12.2, 12.6, 12.8, 12.9, 12.10 and 12.11) shall terminate without liability
of any party to any other party; provided, however, that no termination shall
relieve any party from any liability arising from or relating to a willful
breach prior to termination or willful failure to perform its obligations
hereunder.
24. OTHER COVENANTS.
24.1. Announcements. Each party agrees not to make, nor cause to be made, any
news releases or other public announcements pertaining to the Transactions
without first consulting the other party and attempting to formulate a mutually
satisfactory arrangement for such disclosure, and in any case will make an
announcement thereafter without the consent of the other only to the extent it
believes in good faith that disclosure is required by applicable law or by
obligations pursuant to any rules of or listing agreement with any national
securities exchange or the Nasdaq National Market System. The commencement of
litigation relating to this Agreement or any proceedings in connection therewith
shall not be deemed a violation of this Section 11.1.
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24.2. Employment Matters.
24.2.1. Offers of Employment. Buyer agrees that it will offer employment to all
active Employees, and all Employees on approved leaves of absence of 90 days or
less, currently working exclusively for the Business on the Closing Date. Each
such Employee shall be offered such employment at a minimum of his or her basic
annual salary (including any stay bonuses and other bonuses) in effect on the
date of this Agreement. Buyer shall treat each Hired Employee's service with
Seller or the Company prior to the Closing in the same manner as such service
has been recognized by Seller or the Company for purposes of determining
seniority rights and with respect to accrued but unused vacation and/or sick
pay, except where recognition of such service would result in duplication of
benefits provided. In addition, for a period of one (1) year after the Closing
Date, each Employee that continues to be employed by Buyer shall be eligible to
receive benefits under Employee Benefits Plans sponsored or maintained by Buyer
or its Affiliates, or to which Buyer or its Affiliates contribute (and for the
costs of which Seller shall not be responsible), which, in the aggregate, are
substantially similar to the benefits for which such Employee was eligible
immediately before the Closing Date under the Employee Benefit Plans maintained
or sponsored by Seller or its Affiliates, or to which Seller or its Affiliates
contributed. Each Employee's period of service and compensation history with
Seller or its Affiliates shall be counted strictly for purposes of determining
eligibility for, and the amount and vesting of, benefits under each Employee
Benefit Plan maintained or sponsored by Buyer or its Affiliates, or to which
Buyer or its Affiliates contribute. Each Employee shall be covered as of his
date of hire under such Employee Benefit Plan maintained or sponsored by Buyer
or its Affiliates, or to which Buyer or its Affiliates contribute, providing
health care benefits (whether or not through insurance) without regard to any
waiting period or any condition or exclusion based on any pre-existing
conditions, medical history, claims experience, evidence of insurability, or
genetic factors, and shall receive full credit for any co-payments or deductible
payments, or account balances under any cafeteria or flexible spending plan made
before the Closing Date to the extent Seller transfers the amount of such
account balances under such cafeteria or flexible spending plan to Buyer or
Buyer's Employee Benefit Plans. As of the Closing Date, or as soon as
practicable thereafter, Seller shall make all required contributions to the HPI
401(k) Investment Plan and all other Employee Benefit Plans sponsored or
maintained by Seller for all periods before the Closing Date. Upon the request
of Seller made within one (1) year after the Closing Date, Buyer shall cause a
defined contribution plan qualified under Section 401(a) of the Internal Revenue
Code and maintained or sponsored by Buyer or its Affiliates to accept from the
HPI 401(k) Investment Plan a plan-to-plan transfer under Section 414(l) of the
Internal Revenue Code of the assets allocated to the accounts of Employees and
of the liabilities attributable thereto.
24.2.2. Personnel Records. After the date hereof but prior to the Closing Date,
Buyer and Seller shall issue a joint letter notifying all Employees that Buyer
is purchasing the Business and intends to make offers of employment to all
Employees. The letter shall indicate that all Employees interested in being
eligible to receive an employment offer from Buyer should consent to the release
of its personnel file to Buyer prior to Closing. Prior to Closing, Seller shall
transfer to Buyer personnel records of each Employee who has consented to the
transfer of such records. Notwithstanding the foregoing, Buyer shall not have
access to personnel records of Seller or the Company relating to individual
performance or evaluation records, medical histories or other information which
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in Seller's or the Company's reasonably good faith opinion is prohibited by law.
Buyer shall have no obligation under this Agreement to make an offer of
employment to any Employee who does not consent to the release of its personnel
file to Buyer prior to Closing. Prior to the Closing Date, Seller shall transfer
to Buyer compensation and service history of each Hired Employee.
24.2.3. Payment of Accrued Wages, Bonus and Expenses. Seller or the Company
shall pay all accrued but unpaid wages and earned but unused vacation, in each
case as of the Closing Date, to any Employee that does not accept Buyer's offer
of employment. To the extent any Hired Employee has accrued but unpaid wages,
accrued bonuses or earned but unused vacation as of the Closing Date, Seller or
the Company shall either (i) pay to such Hired Employee such amounts as such
Hired Employee is entitled to receive as of the Closing Date, or (ii) pay to
Buyer (in the form of a reduction in the Cash Portion of the Purchase Price
pursuant to Section 3.3.2.2 hereof) the collective amount of such accrued but
unpaid wages, accrued bonuses and earned but unused vacation (together with any
Social Security taxes, FICA, and payroll expenses in respect of wages accrued
prior to the Closing Date), which amount Buyer shall pay to such Hired Employees
in such amounts and at such times as such amounts are due to such Hired
Employees. Buyer shall be responsible for Social Security taxes, FICA, and
payroll expenses in respect of wages accrued prior to the Closing paid to Buyer
by Seller (or credited against the Cash Portion of the Purchase Price).
24.3. Cooperation. Each party hereto agrees, both before and after the Closing,
to execute any and all further documents and writings and to perform such other
reasonable actions which may be or become necessary or expedient to effectuate
and carry out the Transactions (which shall not include any obligation to make
payments). In connection with filings to governmental bodies and other
regulatory agencies required to consummate the Transactions, Buyer and Seller
agree, upon reasonable request from the other, to furnish promptly all
information in its possession relating to such filings and not otherwise
available to the requesting party.
24.4. Excluded Assets. If, after the Closing Date, Excluded Assets, including,
but not limited to, proprietary information of Seller, shall remain on the Real
Property, then Buyer shall take reasonable efforts to deliver such Excluded
Assets to Seller at the expense of Seller and, so long as such information shall
remain on the Real Property, Buyer shall exercise the same reasonable degree of
care with respect thereto as it does with respect to its own property.
24.5. Tax Cooperation. After the Closing, the parties shall, and shall cause
their respective Affiliates to, cooperate with each other in the preparation of
all tax returns and shall provide, or cause to be provided, to such other party
any records and other information reasonably requested by such party in
connection therewith as well as access to, and the cooperation of, the auditors
of such other party and its Affiliates. After the Closing, the parties shall,
and shall cause their respective Affiliates to, cooperate with the other party
in connection with any tax investigation, tax audit or other tax proceeding
relating to the Business, including Buyer making its employees available to
testify on the behalf of Seller or the Company in connection with any such
investigation, audit or other proceeding. Any information obtained pursuant to
this Section relating to taxes shall be kept confidential by the other party.
24.6. Exchange Cooperation. Buyer acknowledges that Seller may transfer the Real
Property and/or the casino buildings to Buyer as part of a tax-deferred exchange
by Seller pursuant to Section 1031 of the Internal Revenue Code, and that Seller
has the right to restructure all or a part of the within transaction as provided
in Internal Revenue Code ss. 1031 as a concurrent or delayed (non-simultaneous)
tax deferred exchange for the benefit of Seller. Buyer agrees to cooperate, and
if requested by Seller, to accommodate Seller in any such exchange, provided
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that (i) such cooperation and/or accommodation shall be at no further cost or
liability to Buyer and Seller hereby indemnifies Buyer in connection therewith;
and (ii) the restructuring of the within transaction shall not prevent nor delay
the Closing beyond the Closing Date. Seller, in electing to structure the sale
as an exchange, shall have the right to substitute another entity or person, who
will be Seller's accommodator in Seller's place and stead. Buyer and Seller
acknowledge and agree that such substitution will not relieve the herein named
Seller of any liability or obligation hereunder, and Buyer shall have the right
to look solely to said herein named Seller with respect to the obligations of
Seller under this Agreement.
24.7. Disclosure of Certain Matters. Seller on the one hand, and Buyer on the
other hand, shall give Seller and Buyer, respectively, prompt notice of any
material event or development that occurs that (a) had it existed or been known
on the date hereof would have been required to be disclosed by such party under
this Agreement, (b) would cause any of the representations and warranties of
such party contained herein to be materially inaccurate or otherwise materially
misleading, except as contemplated by the terms hereof or (c) gives any such
party any reason to believe that any of the conditions set forth in Section 8
will not be satisfied prior to the Outside Date specified in Section 3.1 hereof.
24.8. Confidentiality. If the Transactions are not consummated, each party shall
treat all information obtained in its investigation of another party or any
Affiliate thereof, and not otherwise known to them or already in the public
domain, as confidential and shall return to such other party or Affiliate all
copies made by it or its representatives of confidential information provided by
such other party or Affiliate.
24.9. Best Efforts. Each party will use its best efforts (excluding the
institution of litigation) to cause all conditions to its obligations hereunder
to be timely satisfied and to perform and fulfill all obligations on its part to
be performed and fulfilled under this Agreement to the end that the Transactions
shall be effected substantially in accordance with the terms of this Agreement
as soon as reasonably practicable. In addition, each party will use reasonable
efforts to ensure that its representations and warranties remain true and
correct in all respects as of the Closing Date.
25. MISCELLANEOUS.
25.1. Bulk Transfer Laws. Buyer hereby waives compliance by Seller with any
applicable bulk transfer laws, including, without limitation, the bulk transfer
provisions of the Uniform Commercial Code of any state, or any similar statute,
with respect to the transaction contemplated by this Agreement; provided,
however, that the Seller hereby indemnifies the Buyer against any Losses that
Buyer may incur that it would not have incurred if the Seller had complied with
any such bulk sales law.
25.2. Expenses. Whether or not the Transactions are consummated, neither of the
parties hereto shall have any obligation to pay any of the fees and expenses of
the other party incident to the negotiation, preparation and execution of the
Transaction Documents, or the closing of the Transactions, including, but not
limited to, the fees and expenses of legal counsel, accountants, investment
bankers, consultants and other experts.
25.3. Waivers. Either party may, by written notice to the other party, (a)
extend the time for the performance of any of the obligations or other actions
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of the other party under this Agreement; (b) waive any inaccuracies in the
representations or warranties of the other party contained in this Agreement or
in any certificates delivered pursuant to this Agreement; (c) waive compliance
with any of the conditions or covenants of the other contained in this
Agreement; or (d) waive performance of any of the obligations of the other under
this Agreement. With regard to any power, remedy or right provided herein or
otherwise available to any party hereunder, (i) no waiver or extension of time
will be effective unless expressly contained in a writing signed by the waiving
party, and (ii) no alteration, modification or impairment will be implied by
reason of any previous waiver, extension of time, or delay or omission in
exercise of rights or other indulgence.
25.4. Amendments, Supplements. This Agreement may be amended or supplemented
at any time by the mutual written consent of the
parties.
25.5. Entire Agreement. This Agreement, the documents incorporated by reference
and the Transaction Documents, constitute the entire agreement between the
parties hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral and written, between the parties hereto with
respect to the subject matter hereof. No representation, warranty, promise,
inducement or statement of intention has been made by either party that is not
embodied in this Agreement or the Transaction Documents and neither party shall
be bound by, or be liable for, any alleged representation, warranty, promise,
inducement or statement of intention not embodied herein or therein.
25.6. Binding Effect, Benefits. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective permitted successors and
assigns. Notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective permitted successors
and assigns, any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
25.7. Assignability. Neither this Agreement nor any of the parties' rights
hereunder shall be assignable by either party without the prior written consent
of the other party, which consent shall be within such party's sole discretion.
25.8. Notices. All notices under this Agreement shall be in writing and shall be
delivered by personal service or telegram, telecopy or certified mail (if such
service is not available, then by first class mail), postage prepaid, or
overnight courier to such address as may be designated from time to time by the
relevant party, and which will initially be as set forth below. All notices
shall be deemed given when received. No objection may be made to the manner of
delivery of any notice actually received in writing by an authorized agent of a
party. Notices shall be addressed as follows or to such other address as the
party to whom the same is directed will have specified in conformity with the
foregoing:
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(a) If to Buyer:
c/o Penn National Gaming, Inc.
825 Berkshire Boulevard
Wyomissing, PA 19610
Attn: Joseph A. Lashinger, Jr., Esq.
Tel: 610-373-2400
Fax: 610-373-4966
With duplicate notice to:
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA
Tel: 215-963-5000
Fax: 215-963-5299
Attn: Stephen M. Goodman, Esq.
(b) If to Seller:
Hollywood Park, Inc.
4400 MacArthur Boulevard, Suite 380
Newport Beach, CA 92660
Attention: G. Michael Finnigan
Loren Ostrow
Tel: (949) 752-4840
Fax: (949) 752-4844
With duplicate notice to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067-4276
Attn: Sandra G. Kanengiser, Esq.
Tel: (310) 277-1010
Fax: (310) 203-7199
25.9. Governing Law; Jurisdiction. This Agreement has been negotiated and
entered into in the Commonwealth of Pennsylvania, and all questions with respect
to the Agreement and the rights and liabilities of the parties will be governed
by the laws of that state, regardless of the choice of laws provisions of
Pennsylvania or any other jurisdiction. Any and all disputes between the parties
which may arise pursuant to this Agreement will be heard, exclusively in the
federal district court for the Eastern District of Pennsylvania or state courts
of the Commonwealth of Pennsylvania.
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25.10. Attorneys' Fees. As to any litigation or arbitration (including any
proceedings in a bankruptcy court) between the parties hereto or their
representatives concerning any provision of this Agreement or the rights and
duties of any person or entity hereunder, solely as between the parties hereto
or their successors, each party shall bear its own attorneys' fees and expenses.
25.11. Equitable Remedies. Seller and Buyer acknowledge that the remedy at law
for any breach, or threatened breach, of their respective covenants to
consummate the Transactions will be inadequate and, accordingly, each covenants
and agrees that, with respect to any such breach or threatened breach, the other
will, in addition to any other rights or remedies that it may have and
regardless of whether such other rights or remedies have been previously
exercised, be entitled to such injunctive relief as may be available from any
appropriate court referred to in Section 12.9, but to no other equitable relief.
Notwithstanding the foregoing sentence, any monetary damages which are all or a
portion of any equitable relief granted hereunder shall be subject to the
limitations set forth in Section 9.
25.12. Representations and Warranties. Notwithstanding anything in this
Agreement to the contrary, the disclosure of any information on any schedule to
this Agreement shall be deemed to constitute the disclosure of such information
on all other schedules to this Agreement applicable to such information.
25.13. Rules of Construction.
25.13.1. Headings. The section headings in this Agreement are inserted only as a
matter of convenience, and in no way define, limit, or extend or interpret the
scope of this Agreement or of any particular section.
25.13.2. Tense and Case. Throughout this Agreement, as the context may require,
references to any word used in one tense or case shall include all other
appropriate tenses or cases.
25.13.3. Severability. The validity, legality or enforceability of the remainder
of this Agreement will not be affected even if one or more of the provisions of
this Agreement will be held to be invalid, illegal or unenforceable in any
respect.
25.13.4. Knowledge. Whenever a representation or warranty is stated to be based
on the knowledge of Seller, such phrase refers to whether any of the following
representatives of Seller has actual knowledge (without any duty to investigate
or inquire) of the matters involved: G. Michael Finnigan, Paul Alanis, Bruce
Hinckley, Robert Callaway, Marlin Torguson, Cliff Kortman, Donna Negrotto, Ken
Shultz, Joe Billihimer and Himbert Sinopili.
25.13.5. Agreement Negotiated. The parties hereto are sophisticated and have
been represented by lawyers throughout the Transactions who have carefully
negotiated the provisions hereof. As a consequence, the parties do not believe
the presumption of California Civil Code Section 1654 and similar laws or rules
relating to the interpretation of contracts against the drafter of any
particular clause should be applied in this case and therefore waive its
effects.
25.14. Risk of Loss. The risk of any loss, damage, impairment, confiscation or
condemnation of the Purchased Assets, or any part thereof (an "Asset Loss"),
shall be upon the Seller at all times prior to the Closing. In the event of any
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such Asset Loss, the proceeds of, or any claim for any loss payable under,
Seller's insurance policies, or any judgment or award with respect thereto shall
be payable to Seller, as the case may be. Thereafter, and subject to the next
sentence, Seller shall either (i) repair, replace (with comparable used
equipment) or restore any Purchased Asset as soon as possible after the Asset
Loss or (ii) if insurance proceeds are sufficient to repair, replace or restore
the Purchased Asset, pay such proceeds to Buyer (it being understood that the
cost for comparable used replacement equipment ("Replacement Cost") shall be
"sufficient"). If Seller fails to either repair, replace or restore any
Purchased Asset or pay over the Replacement Cost for any Asset Loss and the
amount of any uncured Asset Loss exceeds $2,000,000, Buyer may terminate this
Agreement without any liability on the part of either Buyer or Seller, except as
otherwise provided herein.
25.15. Counterparts. This Agreement may be executed, either originally or by
facsimile, in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, this Asset Purchase Agreement has been duly
executed and delivered by the duly authorized signatories of the parties hereto
as of the date first above written.
"BUYER"
BTN, INC.,
a Mississippi corporation
By: /s/ Joseph A. Lashinger, Jr.
Its:Vice President/General Counsel
"SELLER"
BOOMTOWN, INC.,
a Delaware corporation
By:__/s/Michael Finnigan
G. Michael Finnigan
Authorized Signatory
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EXHIBIT A
Bill of Sale
This BILL OF SALE ("Bill of Sale") is made this ____ day of
___________, 1999 by and among Boomtown, Inc., a Delaware corporation
("Seller"), and BTN, Inc., a Mississippi corporation ("Buyer").
RECITALS
A. Buyer and Seller entered into that certain Asset Purchase Agreement,
dated as of December __, 1999 (the "Agreement"), which provides, on the terms
and conditions set forth therein, for the sale by Seller and purchase by Buyer
of certain assets of Seller as set forth in the Agreement. Capitalized terms
used herein without definition shall have the meanings ascribed to them in the
Agreement.
B. The assets being sold by Seller and purchased by Buyer include, but
are not limited to, Seller's tangible and intangible personal property (the
"Purchased Assets") as set forth in the Agreement.
C. Buyer desires to obtain all right, title and interest in and to any
and all of the Purchased Assets.
D. This Bill of Sale is being executed and delivered in order to effect
the sale of the Purchased Assets to Buyer, as provided in the Agreement.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Seller agrees as follows:
1. Assignment. Seller hereby sells, grants, conveys, bargains,
transfers, assigns and delivers to Buyer, and to Buyer's successors and assigns,
all of Seller's right, title and interest, legal and equitable, throughout the
world, in and to the Purchased Assets, to have and to hold the same forever.
This is a transfer and conveyance by Seller to Buyer of good and marketable
title to the Purchased Assets, free and clear of all encumbrances except as
provided in the Agreement or on the Schedules thereto. Subject to the conditions
and limitations contained in the Agreement, Seller hereby covenants and agrees
to warrant and defend title to the Purchased Assets against any and all claims
whatsoever to the extent represented and warranted to in the Agreement.
2. Assumption. Buyer, in consideration of the assignment, hereby
assumes and undertakes to discharge, as appropriate in accordance with their
terms, all of the Assumed Liabilities except as otherwise set forth in the
Agreement. Except as provided for in this Paragraph 2, Buyer is not hereby
assuming, and the Buyer shall not assume or otherwise be obligated to pay,
perform, satisfy or discharge, any liabilities or obligations of Seller or the
Business.
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3. Further Assurances. Seller agrees that it will, at Buyer's request
at any time and from time to time after the date hereof and without further
consideration, do, execute, acknowledge and deliver or will cause to be done,
executed, acknowledged and delivered all such further acts, deeds, assignments,
transfers, conveyances, powers of attorney and other instruments and assurances
as may be considered by Buyer, its successors and assigns, to be necessary or
proper to better effect the sale, conveyance, transfer, assignment, assurance,
confirmation and delivery of ownership of the Purchased Assets to Buyer, or to
aid and assist in collecting and reducing to the possession of Buyer, any and
all Purchased Assets.
4. Amendment or Termination; Successors and Assigns. This Bill of Sale
may not be amended or terminated except by a written instrument duly signed by
each of the parties hereto. This Bill of Sale shall inure to the benefit of, and
be binding upon, each of the parties hereto and their respective successors and
assigns.
5. No Third Parties. Nothing in this Bill of Sale, expressed or
implied, is intended or shall be construed to confer upon or give to any person,
firm or corporation other than Buyer and Seller, their successors and assigns,
any remedy or claim under or by reason of this instrument or any term, covenant
or condition hereof, and all of the terms, covenants, conditions, promises and
agreements contained in this instrument shall be for the sole and exclusive
benefit of the Buyer and Seller, their successors and assigns.
6. Construction. This Bill of Sale, being further documentation of a
portion of the conveyances, transfers and assignments provided for in and by the
Agreement, neither supersedes, amends, or modifies any of the terms or
provisions of the Agreement nor does it expand upon or limit the rights,
obligations or warranties of the parties under the Agreement. In the event of a
conflict or ambiguity between the provisions of this Bill of Sale and the
Agreement, the provisions of the Agreement will be controlling.
7. Governing Law. The rights and obligations of the parties under this
Bill of Sale will be construed under and governed by the internal laws of the
Commonwealth of Pennsylvania (regardless of its or any other jurisdiction's
conflict-of-law provisions).
8. Counterparts. This Bill of Sale may be executed in one or more
counterparts and by facsimile, each of which shall be deemed an original and all
of which taken together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Bill of Sale as of
the date first written above.
BOOMTOWN, INC., BTN, INC.,
a Delaware corporation a Mississippi corporation
By: _________________________ By: ______________________________
------------------------- ------------------------------
Its: _________________________ Its: ______________________________
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EXHIBIT B
Intentionally Omitted
165
EXHIBIT C
License Agreement
This LICENSE AGREEMENT ("Agreement") is made and entered into this ____
day of ________, 2000, by and between BOOMTOWN, INC., a Delaware corporation
("Licensor"), and BTN, INC., a Mississippi corporation ("Licensee"), with
reference to the following facts:
B. Pursuant to that certain Asset Purchase Agreement between Licensor and
Licensee, dated as of _____________ ____, 2000 (the "Asset Purchase Agreement"),
Licensor has agreed to sell to Licensee certain real and personal property,
tangible and intangible, used by Licensor in the operation of the Boomtown
Biloxi casino located at 676 Bayview Ave., Biloxi, Mississippi 39530 (the
"Casino").
C. In connection with such sale, Licensee desires to obtain and Licensor wishes
to grant to Licensee a nonexclusive license to use the Marks (as defined herein)
and certain Additional Marks (as defined herein) at the Casino Location in
connection with Casino Operations (as defined herein) with all Ancillary Goods
and Services (as defined herein).
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises set forth herein, the parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms, whether in
singular or plural form, shall have the following meanings. Any capitalized
terms used in this Agreement, but not defined in this Section 0, shall have the
meanings ascribed to them elsewhere in this Agreement or in the Asset Purchase
Agreement, as applicable.
1.1 "Additional Marks" means any common-law or other mark(s) (whether
or not registered in any manner), if any, used by Licensor in the business
operations of the Casino at the Casino Location.
1.2 "Ancillary Goods and Services" shall mean all goods and services
related to the Casino Operations or the enhancement or promotion thereof,
including, without limitation, the provision of guest services to Casino patrons
and potential patrons and all merchandising efforts, such as the sale of branded
clothing, jewelry, playing cards, dice, drinking glasses, toys and souvenirs,
provided that such merchandise is either (a) offered for sale only at the Casino
Location, or (b) provided for free or at a substantial discount in connection
with the promotion of the business of the Casino.
1.3 "Casino Location" means the Casino's location at 676 Bayview
Avenue, Biloxi, Mississippi 39530, or such other address as may later be
assigned to the parcel of real property located at the foregoing address as of
the Closing Date.
1.4 "Casino Magic Mark" means the mark identified on Attachment C.
1.5 "Casino Operations" shall mean the ownership and operation of the
Casino, including, without limitation, the marketing, sale, distribution and
provision of all of the goods and services customarily attendant to the
operation of a full-service Mississippi casino. For the avoidance of doubt,
"Casino Operations" include, among other things, casino and gaming services, as
well as hotel, restaurant, bar, nightclub, cashier and gift shop services if
offered at the Casino.
1.6 "Marks" shall mean the marks identified on Attachment A.
1.7 "Offensive Proceedings" shall have the meaning ascribed to it
in Section 0.
2. Grant of Licenses.
2.1 Casino Operations. Subject to the terms and conditions set forth in
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this Agreement, Licensor hereby grants to Licensee for the duration of the Term
a nonexclusive, royalty-free license to use the Marks and the Additional Marks
solely as immediately followed by, or separated solely by a hyphen from, the
location name, Biloxi, in connection with Casino Operations at the Casino
Location. Notwithstanding any provision to the contrary contained in this
Agreement, Licensee shall have the right to use the logos associated with the
Marks and/or the Additional Marks that are set forth on Schedule A, as such
logos currently are being used in the Casino Operations, and, at Licensee's
request, Licensor shall provide Licensee with camera-ready copies of each such
logo.
2.2 Ancillary Uses. Subject to the terms and conditions set forth in
this Agreement, Licensor hereby grants to Licensee for the duration of the Term
a nonexclusive, royalty-free license to use the Marks and the Additional Marks
upon and in connection with Ancillary Goods and Services offered for sale or
otherwise provided in connection with the Casino Location.
2.3 Right to Sublicense. Licensee may sublicense the rights granted
herein to third parties in connection with the ordinary course of Casino
Operations, providing Ancillary Goods and Services, or advertising, marketing,
merchandising and promoting the business of the Casino, including, by way of
example, but not of limitation, the right to use the Marks and the Additional
Marks in the manufacture of merchandise to be sold at the Casino.
Notwithstanding any provision to the contrary set forth in this Agreement, (i)
all sublicenses granted under this Agreement by Licensee shall be granted in an
enforceable written agreement, of which Licensor is a third-party beneficiary,
that contains terms and conditions at least as restrictive as all of the terms
and conditions set forth in this Agreement, and (ii) promptly following the
execution of any such sublicense, Licensee shall notify Licensor and provide
Licensor with a copy of the same.
2.4 Domain Name. For the Term and subject to the terms and conditions
set forth in this Agreement, Licensor hereby grants to Licensee a royalty-free
license to use the Mark "BOOMTOWN" solely in the uniform resource locators (or
"URLs") "www.boomtownbiloxi.com," "www.boomtown-biloxi.com,"
www.boomtownbiloxi.net, www.boomtown-biloxi.net, www.boomtownbiloxi.org, and
www.boomtown-biloxi.org or such other URL as Licensor may approve in writing
prior to its use. Licensor further agrees to license to Licensee during the Term
Licensor's registered domain name, "www.boomtownbiloxi.com." Notwithstanding any
provision to the contrary set forth in this Agreement, Licensor shall retain any
and all rights to use the Mark "BOOMTOWN" in connection with any URL other than
that set forth in the previous sentence.
2.5 Existing Obligations. Notwithstanding anything to the contrary in
this Section 2 or elsewhere in this Agreement, all rights granted to Licensee in
this Agreement shall be subject to the terms and conditions of any and all
existing licenses and other obligations related to the Marks and the Additional
Marks as of the Closing Date. Such existing licenses and obligations include,
but are not limited to, those listed and attached hereto as Attachment B. 3.
Rights Retained. Subject to the other terms and conditions of this Agreement, as
between Licensor and Licensee, Licensor is, except at the Casino Site, and
except as immediately followed by, or separated solely by a hyphen from, the
location name, "Biloxi," free to use and license the Marks and the Additional
Marks in its sole discretion, and Licensee shall not use, or permit any
sublicensee to use, either the Marks or the Additional Marks other than in
accordance with this Agreement. 4. Licensee's Acknowledgments; Reservation of
Rights. Licensee acknowledges and agrees that (i) the Marks, the Additional
Marks and all goodwill associated therewith are and shall remain the sole
property of Licensor, (ii) nothing in this Agreement shall convey to Licensee
any right of ownership in the Marks or the Additional Marks, (iii) Licensee
shall not in any manner take any action, and shall ensure that none of its
permitted sublicensees take any action, that disparages or would impair the
167
value of, or goodwill associated with, the Marks or the Additional Marks, and
(iv) all rights not expressly granted to Licensee are reserved to Licensor.
Licensee acknowledges and agrees that all use of the Marks and the Additional
Marks by Licensee shall inure to the benefit of Licensor. 5. Quality Control.
5.1 Quality Standard. The parties acknowledge and agree that it is
necessary for Licensor to maintain uniform standards governing the quality of
goods and services offered under its trademarks. Accordingly, Licensee agrees
that the goods and services it offers under the Marks and the Additional Marks
shall have a standard quality equivalent to the quality of comparable goods and
services offered by Licensor as of the Closing Date, subject to reasonable
variations resulting from business, legal and technical requirements.
5.2 Inspection. Licensee shall, upon Licensor's reasonable request, and
upon prior written notice of no fewer than ten (10) days, (i) make available for
Licensor's inspection samples of all goods, marketing materials, packaging and
any other materials bearing the Marks and/or the Additional Marks pursuant to
the licenses granted herein, and (ii) permit Licensor to inspect Licensee's
operation at mutually convenient times.
5.3 Rejection. If at any time any of the goods or services sold,
provided or marketed under the Marks and/or the Additional Marks do not meet the
quality standard set forth in Section 0, as determined by Licensor in its
reasonable discretion, Licensor shall have the right to require Licensee to
discontinue the use of the Marks or the Additional Marks, as applicable, in
connection with the sale or provision of such good(s) or service(s) upon written
notice, unless modifications satisfactory to Licensor are made within thirty
(30) days after Licensor's written notice of disapproval.
5.4 Compliance with Laws. Licensee shall comply with all applicable
laws and regulations and obtain all appropriate government approvals pertaining
to the sale, distribution and advertising of the goods and services under the
Marks and/or the Additional Marks. 6. Infringement Proceedings. If Licensee
becomes aware of any unauthorized use of the Marks or the Additional Marks by
any third party, Licensee shall promptly notify Licensor. Licensor initially
shall, at Licensor's expense, have the sole right and discretion to bring
proceedings alleging infringement of the Marks or the Additional Marks, as
applicable, passing off, trademark dilution, unfair competition and other claims
related to the Marks or the Additional Marks against such third parties
("Offensive Proceedings") and to defend proceedings brought or threatened
against Licensor or Licensee based on use of the Marks or the Additional Marks.
All money damages recovered by Licensor in such Offensive Proceedings shall be
for Licensor's account and retained by Licensor. Licensee shall, at Licensor's
expense, take such steps as Licensor may reasonably request to assist Licensor
in protecting Licensor's rights in the Marks or the Additional Marks, as
applicable. In the event that Licensor notifies Licensee that Licensor elects
not to prosecute an Offensive Proceeding, Licensee may, subject to Licensor's
approval, bring such proceeding, with all expenses incurred in connection
therewith to be borne by Licensee. All money damages recovered by Licensee in
such an Offensive Proceeding shall be for Licensee's account and retained by
Licensee. 7. Cooperation. Licensee agrees to provide Licensor with such
reasonable assistance as Licensor may require in the procurement of any
protection of Licensor's rights in and to the Marks and the Additional Marks.
Licensee shall cause to appear on all written materials on or in connection with
which the Marks or the Additional Marks are used such proprietary notices as
Licensor may reasonably request. 8. Term. This Agreement shall commence on the
date of this Agreement and continue in force and effect until the later to
168
expire of (i) three (3) years following the date hereof, or (ii) two (2) years
following the date on which Licensor notifies Licensee in writing of Licensor's
decision (in Licensor's sole discretion) to cease all use of the Casino Magic
Mark by any entity owned by Parent (the "Term"). 9. Termination.
9.1 If Licensee breaches this Agreement, Licensor shall have the right
to terminate this Agreement upon thirty (30) days' written notice, provided that
Licensee fails to cure such breach during such thirty (30) day period.
9.2 This Agreement shall automatically terminate without notice of any
type if: (i) Licensee files a petition in bankruptcy, is adjudicated a bankrupt,
a petition in bankruptcy is filed against Licensee, or Licensee becomes
insolvent, (ii) Licensee makes an assignment for the benefit of its creditors or
an arrangement pursuant to any bankruptcy law, or (iii) Licensee discontinues
all of its business to which this Agreement relates or a receiver is appointed
for it or its business. In the event this Agreement is so terminated, Licensee,
its receivers, representatives, trustees, agents, administrators, successors, or
assigns shall have no right to sell, exploit, or in any way deal with or in the
Marks or the Additional Marks.
9.3 Termination of this Agreement under the provisions of this Section
9 shall be without prejudice to any rights that Licensor may otherwise have
against Licensee.
9.4 Upon termination of this Agreement, Licensee agrees (i) to
discontinue all use of the Marks, the Additional Marks, and any mark confusingly
similar thereto, (ii) to cooperate with Licensor or its appointed agent, at
Licensor's request, to apply to the appropriate authorities to cancel
recordation of this Agreement with all applicable governmental authorities,
(iii) to destroy or sell off all printed and other materials bearing the Marks
and the Additional Marks, and (iv) to cooperate generally with Licensor to
ensure that all rights in the Marks, the Additional Marks and the goodwill
connected therewith shall remain the property of Licensor. 10. Abandonment and
Conveyance. If at any time Licensor determines, in its sole discretion, to cease
all use of the Marks and/or the Additional Marks and the component terms thereof
by any entity owned by or affiliated with Licensor (including parent entities,
subsidiaries and entities under common control) and for any purpose whatsoever
("Abandonment"), Licensor shall inform Licensee in writing of such Abandonment
of the Marks and/or the Additional Marks. For a period of two (2) years from the
date of Licensor's written notice to Licensee of Licensor's Abandonment of the
Marks and/or the Additional Marks, Licensee shall have the right to acquire from
Licensor all of Licensor's right, title and interest in and to the Marks and/or
the Additional Marks, by assignment and otherwise, for the sum of one dollar
($1.00). 11. Representation and Warranty. Licensor represents and warrants that:
(i) to the knowledge of Licensor, the registrations and applications for
registration of the Marks and the registrations and applications for
registration of the Additional Marks, if any, are valid, subsisting and
enforceable, and all necessary maintenance and renewal fees in connection with
them have been filed with the United States Patent and Trademark Office for the
purpose of maintaining the registrations and applications for registrations of
such Marks and (provided that any registrations and applications for
registration have been made) such Additional Marks; (ii) to the knowledge of
Licensor, Licensor owns or has the lawful right to use, and has the right to
license the Marks and Additional Marks free and clear of all liens and
encumbrances; (iii) no material claim by any third person contesting the
validity, enforceability, use or ownership of any of the Marks or Additional
Marks has been made, currently is outstanding or is threatened; and (iii)
Licensor has not received any notices of any material infringement or
misappropriation by, or conflict with, any third person with respect to any of
the Marks or Additional Marks (including any demand or request that it license
any rights from any third party).
169
12. Miscellaneous
12.1 Indemnification. Licensee hereby indemnifies and agrees to defend
and hold harmless forever Licensor and its agents, representatives, successors
and assigns from and against any and all claims, demands, losses, costs,
expenses and liabilities of any kind (including reasonable attorneys' fees)
arising out of Licensee's exercise of the rights granted by Licensor hereunder.
Licensor hereby indemnifies and agrees to defend and hold harmless forever
Licensee and its agents, representatives, successors and assigns from and
against any and all claims, demands, losses, costs, expenses and liabilities of
any kind (including reasonable attorneys' fees) arising out of the breach of
this Agreement by Licensor.
12.2 No Joint Venture. Nothing contained herein shall be construed to
place the parties in the relationship of partners or joint venturers or
principal and agent or employer and employee, and no party shall have the power
to obligate or bind the other party in any manner whatsoever.
12.3 Remedies. Licensee recognizes the unique and special nature and
value of the Marks and the Additional Marks and agrees that any use of the Marks
or the Additional Marks contrary to the terms of this Agreement would result in
damage to Licensor that is, in whole or in part, intangible, but that
nonetheless is real and is incapable of complete remedy by an award of monetary
damages. Accordingly, any such use of the Marks or the Additional Marks contrary
to the terms of this Agreement shall give Licensor the right to equitable relief
by way of temporary and permanent injunction, without the posting of any bond,
and such other and further relief at law or equity as any arbitrator or court of
competent jurisdiction may deem just and proper, in addition to any and all
other remedies provided for herein.
12.4 Waivers. Either party may, by written notice to the other party,
(i) extend the time for the performance of any of the obligations or other
actions of the other party under this Agreement, (ii) waive compliance with any
of the conditions or covenants of the other contained in this Agreement, or
(iii) waive performance of any of the obligations of the other under this
Agreement. With regard to any power, remedy or right provided herein or
otherwise available to any party hereunder, (i) no waiver or extension of time
shall be effective unless expressly contained in a writing signed by the waiving
party, and (ii) no alteration, modification, or impairment shall be implied by
reason of any previous waiver, extension of time, or delay or omission in
exercise of rights or other indulgence.
12.5 Amendments, Supplements. This Agreement may be amended or
supplemented at any time by the mutual written consent of
the parties.
12.6 Incorporation by Reference. Attachment A, Attachment B and
Attachment C attached to this Agreement are hereby incorporated by reference
into this Agreement and made a part hereof.
12.7 Entire Agreement. This Agreement and the documents incorporated by
reference constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter of this Agreement. No representation, warranty, promise,
inducement or statement of intention has been made by either party that is not
embodied in this Agreement or such other documents, and neither party shall be
bound by, or be liable for, any alleged representation, warranty, promise,
inducement or statement of intention not embodied herein or therein.
12.8 Binding Effect, Benefits. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective permitted
successors, sublicensees and assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto and their
respective permitted successors, sublicensees and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
170
12.9 Assignability. Licensor may freely assign this Agreement. Licensee
may not assign this Agreement or its rights hereunder without the prior written
consent of Licensor, which consent Licensor may grant or deny in its sole
discretion, except that Licensee may, without the consent of Licensor, assign
this Agreement (i) to any entity that Controls, is Controlled by, or is under
common Control with Licensee, or (ii) in the event of a sale or other transfer
of all or substantially all the relevant assets or equity (whether by sale of
assets or stock or by merger or other reorganization) of Licensee.
12.10 Notices. All notices under this Agreement shall be in writing and
shall be delivered by personal service or telegram, telecopy, certified mail (if
such service is not available, then by first class mail), postage prepaid, or
overnight courier to such address as may be designated from time to time by the
relevant party, and which will initially be as set forth below. All notices
shall be deemed given when received. No objection may be made to the manner of
delivery of any notice actually received in writing by an authorized agent of a
party. Notices shall be addressed as follows or to such other address as the
party to whom the same is directed will have specified in conformity with the
foregoing:
If to Licensor:
G. Michael Finnigan
Loren Ostrow
4400 MacArthur Park Blvd., Suite 380
Newport Beach, CA 92660
Telephone: (949) 752-4840
Facsimile: (949) 752-4844
With a duplicate notice to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067-4276
Attention: Sandra G. Kanengiser, Esq.
Telephone: (310) 277-1010
Facsimile: (310) 203-7199
If to Licensee:
BTN, Inc.
825 Berkshire Boulevard
Wyomissing, PA 19610
Attention: Joseph A. Lashinger, Jr., Esq.
Telephone: 610-373-2400
Facsimile: 610-373-4966
With a duplicate notice to:
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA
Tel: 215-963-5000
171
Fax: 215-963-5299
Attn: Stephen M. Goodman, Esq.
12.11 Governing Law; Jurisdiction. This Agreement has been negotiated
and entered into in the State of California, and all questions with respect to
the Agreement and the rights and liabilities of the parties hereunder will be
governed by the laws of that state, regardless of the choice of laws provisions
of California or any other jurisdiction. Any and all disputes between the
parties that may arise pursuant to this Agreement will be heard and determined
before an appropriate federal or state court located in Los Angeles, California.
The parties hereto acknowledge that such courts have the jurisdiction to
interpret and enforce the provisions of this Agreement and the parties waive any
and all objections that they may have as to jurisdiction or venue in any of the
above courts.
12.12 Costs and Attorneys' Fees. In any dispute between the parties
concerning any provision of this Agreement or the rights and duties of any
person under it, the party prevailing in any such dispute will be entitled, in
addition to such other relief as may be granted, to the reasonable attorneys'
fees and court and arbitration costs incurred by reason of such arbitration or
litigation of such dispute. For purposes of this Section 11.12, the prevailing
party is the party that most closely obtains the relief it sought, whether or
not the suit or other legal proceeding is settled or carried out to its
conclusion.
12.13 Rules of Construction.
12.13.1 Headings. The section headings in this Agreement are
inserted only as a matter of convenience, and in no way define, limit, extend or
interpret the scope of this Agreement or of any particular section.
12.13.2 Tense and Case. Throughout this Agreement, as the
context may require, references to any word used in one tense or case shall
include all other appropriate tenses or cases.
12.13.3 Severability. If any term or provision of this
Agreement or the application thereof to any person or circumstances shall, to
any extent, be invalid or unenforceable (other than provisions going to the
essence of this Agreement), the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each such term and provision of this Agreement shall be valid and be enforced to
the fullest extent permitted by law.
12.13.4 Agreement Negotiated. The parties hereto are
sophisticated and have been represented by lawyers who have carefully negotiated
the provisions of this Agreement. As a consequence, the parties do not believe
the presumption of California Civil Code Section 1654 and similar laws or rules
relating to the interpretation of contracts against the drafter of any
particular clause should be applied in this case and therefore waive its
effects.
12.14 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.15 Survival. The rights and obligations contained in the following
Sections shall survive termination or expiration of this Agreement for any
reason: Sections 4, 9.4, 12.1 and such provisions of Sections 1 and this Section
12 as are necessary to give meaning and effect to the foregoing. 13. Limitation
on Licensor's Participation. Notwithstanding any other provision in this
Agreement, Licensor shall not have the right to in any way participate, and
shall not in any way participate, in the operation or ownership of Licensee's
gambling establishment or operation. Pursuant to this Section 12, Licensor shall
expressly state, in any document which transfers, assigns or conveys any of its
rights, title or interest to this Agreement, that no assignee or transferee
shall have the right to participate, or shall participate, in the ownership or
operation of Licensee's gambling establishment or operation.
172
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized signatories of the parties hereto as of the date first
above written.
LICENSOR: BOOMTOWN, INC.
By: __________________________
Its:
LICENSEE: BTN, INC.
By:
__________________________Its:
173
ATTACHMENT A
Marks
I. Registered Marks Owned by Boomtown, Inc. and Used in Connection With
the Operation of Boomtown - Biloxi
I. Service Mark (U.S.): BOOMTOWN
4. U.S. Patent and
5. Trademark Office Reg. No.: 1,866,988
6. Date of Registration: December 13, 1994
7. Services: Entertainment services in the nature of casinos.
J. Service Mark (U.S.): STAGECOACH (Design Only)
1. U.S. Patent and Trademark Office Serial No.: 74/470,561
2. Date of Application: December 13, 1993
II. Logos
(Attached)
174
ATTACHMENT B
Existing Licenses and Other Obligations Regarding the Marks
None.
175
ATTACHMENT C
Casino Magic Mark
Service Mark (U.S.): CASINO MAGIC
1. U.S. Patent and Trademark Office Reg. No.: 1,782,242
2. Date of Registration: July 13, 1993
3. Services: Entertainment services in the nature of casinos.
176
EXHIBIT D
Intentionally Omitted
177
Exhibit E
Form of Opinion of Seller's Counsel
1. The Seller is a corporation validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as now conducted. The Seller is duly
qualified to transact business in the State of Mississippi.
2. HPI is a corporation validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and
authority to carry on its business as now conducted.
3. The execution, delivery and performance by the Seller of the Purchase
Agreement, the License Agreement and any other agreements executed and
delivered by the Seller pursuant to the Purchase Agreement (collectively,
the "Transaction Documents") and the consummation by the Seller of the
transactions contemplated thereby (the "Transactions") are within the
Seller's corporate powers and have been duly authorized by all necessary
action on the part of the Seller. The execution, delivery and performance
by HPI of the HPI Guaranty are within HPI's corporate powers and have been
duly authorized by all necessary action on the part of HPI. The Purchase
Agreement and the other Transaction Documents to which the Seller is a
party and the HPI Guaranty have been duly and validly executed by the
Seller and HPI, respectively.
4. Based on and subject to the analysis and qualifications set forth in Schedule
I hereto, in any action or proceeding arising ---------- out of or relating to
the HPI Guaranty or any Transaction Document which provides that it is to be
governed by the laws of the Commonwealth of Pennsylvania (collectively, the
"Pennsylvania Documents") in any court of the State of California or in any
federal court sitting in California, such court should recognize and give effect
to the governing law provision of such Pennsylvania Document wherein the parties
thereto agree (to the extent set forth in such Pennsylvania Document) that such
Pennsylvania Document shall be governed by the laws of the Commonwealth of
Pennsylvania. However, if a court were to hold that the Transaction Documents
and HPI Guaranty are governed by the laws of the State of California, each of
the Transaction Documents (other than the Warranty Deed, the Assignment of
Leases and the noncompetition provision of the Purchase Agreement, as to which
such counsel need not express any opinion) and the HPI Guaranty would be, under
the laws of the State of California, the legal, valid and binding obligation of
the Seller or HPI, as the case may be, enforceable against the Seller or HPI, as
applicable, in accordance with its terms, except as may be limited by the effect
of bankruptcy, insolvency, reorganization, moratorium and other laws and court
decisions or other legal or equitable principles relating to, limiting or
affecting the enforcement of creditors' rights generally including, without
limitation, preferences and fraudulent conveyances and distributions by a
corporation to its stockholders, and subject to the discretion of any court of
competent jurisdiction in awarding equitable remedies (regardless of whether
considered in a proceeding in equity or at law), including, but not limited to,
specific performance or injunctive relief.
5. The acquisition by Buyer from Seller of the Purchased Assets and the
assumption by Buyer of the Assumed Liabilities pursuant to the Purchase
Agreement (i) do not contravene the provisions of the certificate of
incorporation or bylaws of the Seller; and (ii) will not result in a breach
178
or violation of or default, termination, forfeiture or lien under (or upon
the failure to give notice or the lapse of time or both, result in a breach
or violation of or default, termination, forfeiture or lien under) either
(a) HPI's Indenture governing its 9.5% Senior Subordinated Notes due 2007
or the Indenture governing its 9.25% Senior Subordinated Notes due 2007, or
(b) HPI's Amended and Restated Reducing Revolving Loan Agreement with Bank
of America National Trust and Savings Association and the other bank
lenders thereto.
Such counsel need not express any opinion as to any laws other than the
laws of the State of California, and, to the extent applicable, the laws of the
United States of America and the General Corporation Law of the State of
Delaware. Such counsel may note that each of certain Transaction Documents,
including the Purchase Agreement, and the HPI Guaranty provides that it is to be
governed by the laws of the Commonwealth of Pennsylvania and may state its
understanding that Buyer is relying on the advice of its own counsel with
respect to all matters of Pennsylvania law.
[Customary exceptions and limitations to be included.]
179
SCHEDULE I
(Choice of Law Analysis)
With respect to the provisions contained in certain of the Transaction
Documents, including the Purchase Agreement, and the HPI Guaranty (collectively,
the "Pennsylvania Documents") that such Pennsylvania Documents shall be governed
by the law of the Commonwealth of Pennsylvania, such counsel may note that the
validity of a choice of law provision in a contract is a question of fact under
California law and the validity of such contractual choice of law will be
determined, in part, by the facts found by the court before which the validity
of such clause is litigated. Mencor Enterprises, Inc. v. Hets Equities Corp.,
190 Cal. App. 3d 432 (1987). The California Supreme Court has held that
California follows Section 187 of the Restatement (Second), Conflict of Laws,
which "reflects a strong policy favoring enforcement" of contractual
choice-of-law provisions. Nedlloyd Lines B.V. v. Superior Court, 3 Cal. 4th 459
(1992). A number of California court decisions have held that where
sophisticated parties to a contract have designated the laws of a specified
state to govern a transaction, a California court will uphold such choice of law
except where a fundamental policy of the State of California, the laws of which
would govern absent the choice-of-law clause, is violated or where the state
whose law is chosen has no substantial relationship with the transaction. See
Nedlloyd, supra; Bos Material Handling, Inc. v. Crown Control Corp., 137 Cal.
App. 3d 99 (1982); Gamer v. Dupont Glore Forgan, Inc., 65 Cal. App. 3d 280
(1976); Frame v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., 20 Cal. App. 3d
668 (1971); Ury v. Jewelers Acceptance Corp., 227 Cal. App. 2d 11 (1967). But
see, Ashland Chemical Company v. Provence, 129 Cal. App. 3d 790 (1982). In such
counsel's view, the factors which should be considered by a California court
which correctly applies the applicable California principles in determining the
validity of the choice-of-law provisions in the Pennsylvania Documents include
the domiciles of the Buyer and Seller, the degree of sophistication of the Buyer
and Seller and their respective counsel and the venues of the negotiations
relating to the Pennsylvania Documents. Based on the facts within such counsel's
knowledge and the policy expressed in Nedlloyd, supra, while the outcome of a
judicial determination on the issue is inherently uncertain for the reasons set
forth above, in such counsel's opinion a California court to which the issue is
properly presented and which correctly applies the applicable California
principles should conclude that the express choice of Pennsylvania law as the
governing law for the Pennsylvania Documents is enforceable as a matter of
California choice-of-law rules. Such counsel may note, however, that even if a
California court were to uphold the Pennsylvania choice of law for the
Pennsylvania Documents, the court may not apply Pennsylvania law in construing
or enforcing a particular provision of a Transaction Document, if to do so would
violate a fundamental policy of the State of California. Such counsel need not
express any opinion as to whether the enforcement of any particular provision of
any of the Transaction Documents would violate a fundamental policy of the State
of California. Such counsel is of the opinion that if a provision in the
Transaction Documents were enforceable under both California and Pennsylvania
law, a California court would enforce the provision.
180
EXHIBIT F
FORM OF OPINION OF BUYER'S COUNSEL
1. The Buyer is a corporation validly existing and in good standing under
the laws of the State of Mississippi and has all requisite corporate
power and authority to carry on its business as now conducted.
2. The PNG is a corporation validly subsisting and in good standing under
the laws of the Commonwealth of Pennsylvania and has all requisite
corporate power and authority to carry on its business as now
conducted.
3. The execution, delivery and performance by the Buyer of the Purchase
Agreement, the License Agreement and any other agreements executed and
delivered by the Buyer pursuant to the Purchase Agreement
(collectively, the "Transaction Documents") and the consummation by the
Buyer of the transactions contemplated thereby (the "Transactions") are
within the Buyer's corporate powers and have been duly authorized by
all necessary action on the part of the Buyer. The execution, delivery
and performance by PNG of the PNG Guaranty are within PNG=s corporate
powers and have been duly authorized by all necessary corporate action
on the part of PNG. The Purchase Agreement and the other Transaction
Documents to which the Buyer is a party and the PNG Guaranty have been
duly and validly executed by the Buyer and PNG, respectively.
4. In any action or proceeding arising out of or relating to the PNG Guaranty
or any of Transaction Document that provides that it is to be governed by
the laws of the Commonwealth of Pennsylvania (collectively, the
APennsylvania Documents@) in any court of the Commonwealth of Pennsylvania
or in any federal court sitting in Pennsylvania, such court should
recognize and give effect to the governing law provision of such
Pennsylvania Document wherein the parties thereto agree (to the extent set
forth in such Pennsylvania Document) that such Pennsylvania Document shall
be governed by the laws of the Commonwealth of Pennsylvania. Under such
laws, each of the Transaction Documents (other than the Warranty Deed and
Assignment of Leases, as to which we express no opinion) and the PNG
Guaranty constitutes the legal, valid and binding obligation of the Buyer
or PNG, as the case may be, enforceable against the Buyer or PNG, as
applicable, in accordance with its terms, except as may be limited by the
effect of bankruptcy, insolvency, reorganization, moratorium and other laws
and court decisions or other legal or equitable principles relating to,
limiting or affecting the enforcement of creditors= rights generally
including, without limitation, preferences and fraudulent conveyances and
distributions by a corporation to its stockholders, and subject to the
discretion of any court of competent jurisdiction in awarding equitable
remedies (regardless of whether considered in a proceeding in equity or at
law), including, but not limited to, specific performance or injunctive
relief.
181
5. The acquisition by Buyer from Seller of the Purchased Assets and the
assumption by Buyer of the Assumed Liabilities pursuant to the Purchase
Agreement do not, except as set forth in the Purchase Agreement: (i)
contravene the provisions of the certificate of incorporation or bylaws
of the Buyer or (ii) result in a breach or violation of or default,
termination, forfeiture or lien under [material indentures or credit
facilities].
This opinion is limited to the laws of the Commonwealth of Pennsylvania and, to
the extent applicable, the laws of the United States of America.
[Customary exceptions and limitations to be included].
182
Exhibit G
First American Title Company of Los Angeles
520 NORTH CENTRAL AVENUE GLENDALE, CALIFORNIA 91203 (818) 242-6800
ESCROW INSTRUCTIONS
---------------------------------------------------------------
ESCROW SUMMARY
First American Title Company
520 North Central Avenue, 5th Floor
Glendale, CA 91203
(818) 242-5800
---------------------------------------------------------------
----------------------------------------------- ---------------
INITIAL DEPOSIT $0.00
----------------------------------------------- ---------------
----------------------------------------------- ---------------
BALANCE CASH REQUIRED $
----------------------------------------------- ---------------
----------------------------------------------- ---------------
ENCUMBRANCE OF RECORD
----------------------------------------------- ---------------
----------------------------------------------- ---------------
NEW FIRST TRUST DEED
----------------------------------------------- ---------------
----------------------------------------------- ---------------
Escrow Officer, Carolyn Marcial
Escrow No. CAROLYN
Date: December 7, 1999
----------------------------------------------- ---------------
----------------------------------------------- ---------------
----------------------------------------------- ---------------
----------------------------------------------- ---------------
----------------------------------------------- ---------------
----------------------------------------------- ---------------
TOTAL CONSIDERATION $0.00
----------------------------------------------- ---------------
FIRST AMERICAN TITLE COMPANY CONDUCT ESCROW BUSINESS UNDER CERTIFICATE OF
AUTHORITY NO. 151 ISSUED BY THE STATE OF CALIFORNIA DEPARTMENT OF INSURANCE.
This escrow has been opened and pursuant to that certain Purchase and Sale
Agreement and Escrow Instructions, herein after referred to as the AAgreement@,
dated as of *****, entered into between ***** as Buyer and *****, as Seller, a
copy of which is attached hereto and made a part hereof. First American Title
Company is hereby requested to act as Escrow Agent for the parties in accordance
with the terms and conditions contained in the Agreement. All parties are aware
that Escrow Agent agrees to be bound by said AAgreement@ in the performance of
its duties as Escrow Holder; provided, however, Escrow Holder shall have no
obligations, liability or responsibility under any modification and/or
amendment, unless and until the same has been accepted by Escrow Holder in
writing, (and approved by Buyer and Seller herein) and provided; THIS ACCEPTANCE
OF ANY AGENCY AS ESCROW HOLDER IS FURTHER CONDITIONED UPON THE FOLLOWING: 1. The
parties hereto are aware that Escrow Holder shall only be concerned with those
provisions and terms of said Agreement insofar as same pertains to Escrow Holder
regarding financing, escrow, allocation of costs, title and vesting, prorations,
and property taxes, together with any further instructions necessary to complete
the transaction described in said Agreement. GENERAL PROVISIONS: The General
Provisions of First American Title Company, are attached hereto and made a part
hereof. To the extent that the AAgreement@ contains any provision inconsistent
with or contrary to these escrow instructions or escrow holder=s general
provisions, the provisions of the Agreement shall prevail. Furthermore, it is
hereby understood and agreed that these instructions shall be signed in
counterpart, and together, once received by Escrow Holder from Buyer and Seller
herein, shall be considered the complete Escrow Instructions for this
transaction. FUNDS HELD AGREEMENT If the funds remain in escrow on the date
which is 90 days after close of escrow (or in the event escrow has not closed,
90 days after the estimated closing date set forth in these instructions) then a
monthly funds held fee of $25.00 shall accrue for each month or fraction of a
month thereafter that the funds, or any portion thereof, remain in escrow.
Escrow is authorized to deduct the monthly funds held fee directly from the
funds held on a monthly, or other periodic basis (i.e., quarterly,
semi-annually, etc.). By initiating below, the parties acknowledge and agree to
pay these sums to compensate you for your administration, monitoring,
accounting, reminders and other notifications and processing of the funds so
held in accordance with this funds so held in accordance with this funds held
fee agreement.
Buyer's Signature:
183
Mailing Address:
Forwarding Address:
Seller=s Signature:
Mailing Address:
Forwarding Address:
184
ESCROW GENERAL PROVISIONS
1. Deposit of Funds & Disbursements
All funds shall be deposited in general escrow accounts in a federally insured
financial institution (including those affiliated with Escrow Holder). All
disbursements shall be made by Escrow Holder's check or by wire transfer unless
otherwise instructed in writing.
2. Disclosure of Possible Benefits to Escrow Holder
The parties acknowledge that as a result of Escrow Holder maintaining its
general escrow accounts with the depositories, Escrow Holder may receive certain
financial benefits such as an array of bank services, accommodations, loans or
other business transactions from the depositories ("collateral benefits"). All
collateral benefits shall accrue to the sole benefit of Escrow Holder and Escrow
Holder shall have no obligation to account to the parties to this escrow for the
value of any such collateral benefits.
3. Prorations & Adjustments
The term "close of escrow" means the date on which documents are recorded. All
prorations and/or adjustments shall be made to the close of escrow based on a
30-day month, unless otherwise instructed in writing.
4. Recordation of Documents
Escrow Holder is authorized to record documents delivered through this escrow
which are necessary or proper for the issuance of the requested title insurance
policy(ies).
5. Authorization to Furnish Copies
Escrow Holder may furnish copies of any and all documents to the lender(s), real
estate broker(s), attorney(s) and/or accountant(s) involved in this transaction
upon their request.
6. Personal Property Taxes
No examination, UCC search, insurance as to personal property and/or the payment
of personal property taxes is required unless otherwise instructed in writing.
7. Cancellation of Escrow
Any party desiring to cancel this escrow shall deliver written notice of
cancellation to Escrow Holder. Within a reasonable time after receipt of such
notice, Escrow Holder shall send by regular mail to the address on the escrow
instructions, one copy of said notice to the other party(ies). Unless written
objection to cancellation is delivered to Escrow Holder by a party within 10
days after date of mailing, Escrow Holder is authorized at its option to comply
with the notice and terminate the escrow. If a written objection is received by
Escrow Holder, Escrow Holder is authorized at its option to hold all funds and
documents in escrow (subject to the funds held fee) and to take no other action
until otherwise directed by either the parties' mutual written instructions or a
final order of a court of competent jurisdiction. If no action is taken on this
escrow within 6 months after the closing date specified in the escrow
instructions, Escrow Holder's obligations shall, at its option, terminate. Upon
termination of this escrow, the parties shall pay all fees, charges and
reimbursements due to Escrow Holder and all documents and funds held in escrow
shall be returned to the parties depositing same.
8. Conflicting Instructions & Disputes
If Escrow Holder becomes aware of any conflicting demands or claims concerning
this escrow, Escrow Holder shall have the right to discontinue all further acts
on Escrow Holder's part until the conflict is resolved to Escrow Holder's
satisfaction. Escrow Holder has the right at its option to file an action in
interpleader requiring the parties to litigate their claims/rights. If such an
action is filed, the parties jointly and severally agree (a) to pay Escrow
Holder's cancellation charges, costs (including the funds held fees) and
reasonable attorney's fees, and (b) that Escrow Holder is fully released and
discharged from all further obligations under the escrow. If an action is
brought involving this escrow and/or Escrow Holder, the parties agree to
indemnify and hold the Escrow Holder harmless against liabilities, damages and
costs incurred by Escrow Holder (including reasonable attorney's fees and costs)
except to the extent that such liabilities, damages and costs were caused by the
gross negligence or willful misconduct of Escrow Holder.
9. Usury
Escrow Holder is not to be concerned with usury as to any loans or encumbrances
in this escrow and is hereby released of any responsibility and/or liability
therefor.
10. Amendments to Escrow Instructions
Any amendment to the escrow instructions must be in writing, executed by all
parties and accepted by Escrow Holder. Escrow Holder may, at its sole option,
elect to accept and act upon oral instructions from the parties. If requested by
Escrow Holder the parties covenant to confirm said instructions in writing as
soon as practicable. The escrow instructions as may be amended shall constitute
the entire escrow agreement between the Escrow Holder and the parties hereto
with respect to the subject matter of the escrow and shall supersede all prior
agreements with respect thereto.
11. Supplemental Real Property Taxes
Supplemental taxes may be assessed as a result of a change in ownership or
completion of construction. Adjustments due either party based on a supplemental
tax bill will be made by the parties outside of escrow and Escrow Holder is
released of any liability in connection with same.
12. Change of Ownership Forms
Buyer will provide a completed Preliminary Change of Ownership Report form
("PCOR"). If Buyer fails to provide the PCOR, Escrow shall close escrow and
charge Buyer any additional fee incurred for recording the documents without the
PCOR. Escrow Holder is released from any liability in connection with same.
13. Insurance Policies
In all matters relating to insurance, Escrow Holder may assume that each policy
is in force and that the necessary premium has been paid. Escrow Holder is not
responsible for obtaining fire , hazard or liability insurance, unless Escrow
Holder has received specific written instructions to obtain such insurance prior
to close of escrow for the parties or their respective lenders.
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14. Facsimile Instructions
The parties agree to accept and instruct the Escrow Holder to rely upon
facsimile transmitted documents as if they had original signatures. Within 72
hours of transmission, the party transmitting documents by facsimile shall
deliver the originals of such documents to Escrow Holder. Escrow Holder may
withhold documents and/or funds due to the party until such originals are
delivered.
Documents to be recorded MUST contain original signatures.
15. Execution in Counterpart
The escrow instructions and any amendments may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute the same instruction.
16. Tax Reporting, Withholding & Disclosure
The parties are advised to seek independent advice concerning the tax
consequences of this transaction, including but not limited to, their
withholding, reporting and disclosure obligations. Escrow Holder does not
provide tax or legal advice and the parties agree to hold Escrow Holder harmless
from any loss or damage that the parties may incur as a result of their failure
to comply with federal and/or state tax laws. WITHHOLDING OBLIGATIONS ARE THE
EXCLUSIVE OBLIGATIONS OF THE PARTIES. ESCROW HOLDER IS NOT RESPONSIBLE TO
PERFORM THESE OBLIGATIONS UNLESS ESCROW HOLDER AGREES IN WRITING.
17. Taxpayer Identification Number Reporting
Federal law requires Escrow Holder to report Seller's social security number
and/or tax identification number, forwarding address, and the gross sales price
to the Internal Revenue Service ("IRS"). Escrow can not be closed nor any
documents recorded until the information is provided and Seller certifies its
accuracy to Escrow Holder.
18. State & Federal Withholding & Reporting
A buyer may be required to withhold and deliver to the Franchise Tax Board an
amount equal to 3.33% of the sales price of a California real property interest
by either: 1) a seller who is an individual with either a last known street
address outside of California or when the seller's disbursement instruction
direct the proceeds to be sent to a financial intermediary of the seller; OR 2)
a corporate seller which has no permanent place of business in California. The
buyer may become subject to a penalty in an amount equal to the greater of 10%
of the amount required or $500. However, the buyer is not required to withhold
any amount and will not be subject to penalty for failure to withhold if: a) the
sales price of the California real property interest does not exceed $100,000;
b) the seller executes a written certificate, under the penalty of perjury,
certifying that the seller is a resident of California, or if a corporation, has
a permanent place of business in California; OR c) the seller, who is an
individual, executes a written certificate, under the penalty of perjury, that
the California real property being conveyed is the seller's principal residence.
The California Franchise Tax Board may grant reduced withholding or waivers. To
obtain additional information regarding California withholding, contact the
Franchise Tax Board, Withhold at Source Unit, P.O. Box 651, Sacramento, CA
95812-0651 (619/845-4900). Certain federal reporting and withholding
requirements exist for real estate transactions where the seller (transferor) is
a non-resident alien, a non-domestic corporation or partnership, a domestic
corporation or partnership controlled by non-residents or non-resident
corporations or partnerships.
19. Taxpayer Identification Disclosure
Parties to a residential real estate transaction involving seller-provided
financing are required to furnish, disclose, and include taxpayer identification
numbers in their tax returns. Escrow Holder is not obligated to transmit the
taxpayer identification numbers to the IRS or to the parties. Escrow Holder is
authorized to release any party's taxpayer identification numbers to any other
party upon receipt of written request. The parties hereto waive all rights of
confidentiality regarding their respective taxpayer identification numbers and
agree to hold Escrow Holder harmless against any fees, costs, or judgments
incurred and/or awarded because of the release of taxpayer identification
numbers.
186
CONDUCTS ESCROW BUSINESS UNDER CERTIFICATE OF AUTHORITY ISSUED BY
THE STATE OF CALIFORNIA DEPARTMENT OF INSURANCE.
187
EXHIBIT 99.7
GUARANTY
THIS GUARANTY ("Guaranty") is made and entered into as of December 9,
1999, by Penn National Gaming, Inc., a Pennsylvania corporation ("Guarantor"),
with reference to the following facts:
A. Boomtown, Inc., a Delaware corporation ("Seller") and BTN, Inc., a
Mississippi corporation ("Buyer"), entered into that certain Asset Purchase
Agreement dated December 9, 1999 (the "Asset Purchase Agreement"), which
provides, on the terms and conditions set forth therein, for the sale by Seller
and purchase by Buyer of the Assets of Seller as set forth in the Agreement.
Capitalized terms used herein without definition shall have the meanings
ascribed to them in the Asset Purchase Agreement.
B. Buyer is a wholly owned subsidiary of Guarantor and Guarantor is the
parent of Buyer.
C. As a material inducement for Seller to enter into the Asset Purchase
Agreement, Guarantor agreed to guarantee any and all of Buyer's obligations and
liabilities of any kind that may arise out of, or in connection with, the Asset
Purchase Agreement, and any amendments, modifications and replacements thereof,
including, without limitation, the obligation of Buyer to indemnify Seller and
any other obligations or liabilities arising out of the breach of any
representation, warranty or covenant of Buyer or Company thereunder (these
obligations are collectively defined as "Obligations" and singularly as an
"Obligation").
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Guarantor hereby agrees as follows:
1. Guarantor hereby unconditionally and irrevocably guarantees to
Seller the full, faithful and complete payment and performance by Buyer, when
due, of the Obligations, all in strict accordance with the terms and provisions
of the Asset Purchase Agreement, and all as if Guarantor were the primary
obligor with respect to the Obligations. This Guaranty is an absolute and
unconditional guaranty of payment and not of collectability.
2. Seller need not inquire into the power of Buyer or the authority of
its officers, directors or agents acting or purporting to act in its behalf with
regard to the Asset Purchase Agreement, and any Obligation incurred in reliance
upon the professed exercise of said power or authority is within the scope of
this Guaranty. Guarantor acknowledges and represents to Seller that Guarantor
has thoroughly reviewed and is familiar with the terms and conditions of the
Asset Purchase Agreement, and that Guarantor will derive a substantial benefit
from the consummation of the Asset Purchase Agreement.
3. Seller may waive any defaults or may fail to assert any rights or
grant any other indulgence or concession with respect to all or any part of the
Obligations, and Guarantor shall remain bound under this Guaranty
notwithstanding any of the foregoing. No single or partial exercise by Seller of
any right, remedy or power hereunder shall preclude any other or future exercise
of any other right, remedy or power.
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4. The liability of Guarantor under this Guaranty shall be
unconditional irrespective of (i) any lack of enforceability of any of the
Obligations, (ii) any change of the time, manner or place of payment, or any
other term, or any settlement or compromise, of any of the Obligations, or any
partial or total release or discharge of Buyer with respect thereto; (iii)
whether recovery from Buyer or any other guarantor or person liable for any
Obligation is or hereafter becomes barred by any statute of limitations, or for
any other reason; (iv) any law, regulation or order of any jurisdiction
affecting any term of any of the Obligations or Seller's rights with respect
thereto, and (v) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Buyer or Guarantor with regard to the
Obligations. Guarantor waives promptness, diligence, presentment, demand and
notices with respect to any of the Obligations and the guaranty obligations
under this Guaranty. The guaranty obligations of Guarantor under this Guaranty
are direct and primary obligations and Guarantor hereby waives any requirement
that Seller resort to or exhaust any right to take any action against Buyer or
any collateral security. This is a continuing Guaranty and shall remain in full
force and effect, and Seller's rights shall not be exhausted, until such time as
all of the Obligations have been performed or paid, provided, that this Guaranty
shall automatically be reinstated for the entire amount owing and all
performances guaranteed hereunder in the event that Seller is required by law or
court order to repay to Buyer any amount previously received by Seller as a
result of Buyer 's insolvency, bankruptcy or reorganization or by application of
any bankruptcy laws or other laws, including, without limitation, laws for the
benefit of creditors.
5. Guarantor hereby authorizes and consents to Seller at any time and
from time to time, without notice or further consent of Guarantor, doing the
following and Guarantor agrees that the liability of Guarantor shall not be
released or affected by:
(s) The taking or accepting, or the failure by Seller to take or accept,
any collateral or other guarantee for the Obligations;
(t) The modification, amendment, extension, renewal or replacement of the Asset
Purchase Agreement;
(u) Any complete or partial release, substitution, subordination,
impairment, loss, compromise or other modification of any
other guarantee at any time existing in connection with the
Obligations;
(v) The complete or partial release or substitution of Buyer or any other
guarantors on the Obligation;
(w) Any renewal, extension, modification, replacement,
acceleration, consolidation, adjustment, indulgence,
forbearance, waiver or compromise of the payment of any part
or all of the Obligations, or any liability of any other
guarantor or any other party or any other guarantee therefor,
or the performance of any covenant contained in the Asset
Purchase Agreement;
(x) Any neglect, delay, omission, failure or refusal of Seller to
take or prosecute any action for the collection of the
189
Obligations or any part thereof, or for the enforcement of
any provision of the Asset Purchase Agreement, or any action
in connection with any guarantee of the Obligations;
(y) Acceptance of any partial and/or late payments on the Obligations;
(z) Application of payments by, or recoveries from, Buyer or any
guarantor, in such manner and in such order of priority as
Seller deems proper, whether or not such obligation to which
the payment or recovery is applied is due at the time of such
application; and
(aa) Seller's exercising any and all rights and remedies available
to Seller by law, at equity or by agreement, even if the
exercise thereof may affect, modify or eliminate Guarantor's
rights of subrogation or reimbursement against Buyer or any
other party.
6. Guarantor agrees to execute, acknowledge and deliver to Seller such
other and further instruments, and take such other actions, as may be reasonably
required by Seller to implement the intent and purpose hereof.
7. This Guaranty shall be governed and construed in accordance with the
laws of the Commonwealth of Pennsylvania, without giving effect to the conflicts
of law principles thereof. The rights of Seller hereunder and at law are
cumulative, and not exclusive to each other, and may be exercised by Seller from
time to time. In case any one or more of the provisions contained herein should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired.
8. Guarantor agrees to pay to Seller, on demand, all attorneys' fees
and costs and other expenses (including, without limitation, all fees and costs
of litigation, including appeals, experts and other items) incurred by Seller in
collecting or compromising any Obligation or enforcing (or attempting to do any
or all of the foregoing) this Guaranty against the Guarantor.
9. Guarantor hereby irrevocably submits to the jurisdiction of any
Pennsylvania State or Federal Court sitting in Pennsylvania in any action or
proceeding arising out of or relating to this Guaranty, and Guarantor hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such Pennsylvania State or Federal Court. Guarantor
hereby irrevocably waives to the fullest extent Guarantor may effectively do so,
(i) the defenses of an inconvenient forum or improper venue to the maintenance
of such action or proceeding, and (ii) any claim that Guarantor is not
personally subject to the jurisdiction of any such courts. Guarantor agrees that
final, non-appealable judgment in any such action brought in any such court
shall be conclusive and binding upon Guarantor and may be enforced by Seller in
the courts of any state, in any federal court, and in any other courts, whether
foreign or domestic, having jurisdiction over Guarantor or any of its property
or assets, and Guarantor agrees not to assert any defense, counterclaim or right
of set-off in any action brought by Seller to enforce such judgment.
10. Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment in any other manner provided by law.
190
11. To the extent that Guarantor has or hereafter may acquire any
diplomatic or sovereign immunity, or any immunity from jurisdiction of any court
or from any legal process (whether through service or execution, execution or
otherwise) with respect to Guarantor or Guarantor's property or assets,
Guarantor hereby waives, and agrees not to assert any claims of, such immunity
with respect of its obligations under this Guaranty. Guarantor acknowledges that
the making of waivers in this Guaranty, and Seller's reliance on the
enforceability thereof, is a material inducement to Seller to enter into the
Purchase Agreement. Guarantor agrees to execute, deliver and file all such
further instruments as may be reasonably necessary under the laws of the
Commonwealth of Pennsylvania, in order to make effective the consent by
Guarantor to jurisdiction of the state courts of Pennsylvania and the federal
courts sitting in Pennsylvania.
12. If the incurring of any debt by Buyer or the payment of any money
or transfer of property to Seller by or on behalf of Buyer , Guarantor, or any
other party should for any reason subsequently be determined to be "voidable" or
"avoidable" in whole or in part within the meaning of any state or federal law
(collectively "Voidable Transfers"), including without limitation, fraudulent
conveyances or preferential transfers under the United States Bankruptcy Code or
any other federal or state law, and Seller is required to repay or restore to
Buyer any voidable transfers or the amount or any portion thereof, or upon the
advice of Seller's counsel is advised to do so, then, as to such amount or
property repaid or restored, including all reasonable costs, expenses and
attorney's fees of Seller related thereto, the liability of Guarantor shall
automatically be revived, reinstated and restored and shall exist as though the
voidable transfers had never been made.
13. No modification of this Guaranty shall be effective unless placed
in writing and executed by the parties hereto. This Guaranty shall bind and
inure to the benefit of Seller and assigns, and Guarantor, and no other person
or entity shall have any rights or obligations hereunder.
14. The obligations of Guarantor hereunder are independent of the
obligations of Buyer and, in the event of any default in or failure to perform
of the Obligations, a separate action or actions may be brought and prosecuted
against Guarantor whether or not Buyer is joined therein or a separate action or
actions are brought against Buyer , and regardless of the right to pursue any
other remedy in Seller's power.
191
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
and year first above written.
"Guarantor"
PENN NATIONAL GAMING, INC.,
a Pennsylvania corporation
By: __/s/Robert S. Ippolito_______
Its: _Secretary/Treasurer__________
192
EXHIBIT 99.8
GUARANTY
THIS GUARANTY ("Guaranty") is made and entered into as of December 9,
1999 by Hollywood Park, Inc., a Delaware corporation ("Guarantor"), with
reference to the following facts:
A. BTN, Inc , a Mississippi corporation ("Buyer") and Boomtown, Inc. a
Delaware corporation ("Seller"), entered into that certain Asset Purchase
Agreement dated December 9, 1999 (the "Asset Purchase Agreement"), which
provides, on the terms and conditions set forth therein, for the sale by Seller
and purchase by Buyer of the Assets of Seller as set forth in the Agreement.
Capitalized terms used herein without definition shall have the meanings
ascribed to them in the Asset Purchase Agreement.
B. Seller is a wholly owned subsidiary of Guarantor and Guarantor is
the parent of Seller.
C. As a material inducement for Buyer to enter into the Asset Purchase
Agreement, Guarantor agreed to guarantee any and all of Seller's obligations and
liabilities of any kind that may arise out of, or in connection with, the Asset
Purchase Agreement, and any amendments, modifications and replacements thereof,
including, without limitation, the obligation of Seller to indemnify Buyer and
any other obligations or liabilities arising out of the breach of any
representation, warranty or covenant of Seller or Company thereunder (these
obligations are collectively defined as "Obligations" and singularly as an
"Obligation").
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Guarantor hereby agrees as follows:
1. Guarantor hereby unconditionally and irrevocably guarantees to Buyer
the full, faithful and complete payment and performance by Seller, when due, of
the Obligations, all in strict accordance with the terms and provisions of the
Asset Purchase Agreement, and all as if Guarantor were the primary obligor with
respect to the Obligations. This Guaranty is an absolute and unconditional
guaranty of payment and not of collectability.
2. Buyer need not inquire into the power of Seller or the authority of
its officers, directors or agents acting or purporting to act in its behalf with
regard to the Asset Purchase Agreement, and any Obligation incurred in reliance
upon the professed exercise of said power or authority is within the scope of
this Guaranty. Guarantor acknowledges and represents to Buyer that Guarantor has
thoroughly reviewed and is familiar with the terms and conditions of the Asset
Purchase Agreement, and that Guarantor will derive a substantial benefit from
the consummation of the Asset Purchase Agreement.
3. Buyer may waive any defaults or may fail to assert any rights or
grant any other indulgence or concession with respect to all or any part of the
Obligations, and Guarantor shall remain bound under this Guaranty
notwithstanding any of the foregoing. No single or partial exercise by Buyer of
any right, remedy or power hereunder shall preclude any other or future exercise
of any other right, remedy or power.
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4. The liability of Guarantor under this Guaranty shall be
unconditional irrespective of (i) any lack of enforceability of any of the
Obligations, (ii) any change of the time, manner or place of payment, or any
other term, or any settlement or compromise, of any of the Obligations, or any
partial or total release or discharge of Seller with respect thereto; (iii)
whether recovery from Seller or any other guarantor or person liable for any
Obligation is or hereafter becomes barred by any statute of limitations, or for
any other reason; (iv) any law, regulation or order of any jurisdiction
affecting any term of any of the Obligations or Buyer's rights with respect
thereto, and (v) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Seller or Guarantor with regard to the
Obligations. Guarantor waives promptness, diligence, presentment, demand and
notices with respect to any of the Obligations and the guaranty obligations
under this Guaranty. The guaranty obligations of Guarantor under this Guaranty
are direct and primary obligations and Guarantor hereby waives any requirement
that Buyer resort to or exhaust any right to take any action against Seller or
any collateral security. This is a continuing Guaranty and shall remain in full
force and effect, and Buyer's rights shall not be exhausted, until such time as
all of the Obligations have been performed or paid, provided, that this Guaranty
shall automatically be reinstated for the entire amount owing and all
performances guaranteed hereunder in the event that Buyer is required by law or
court order to repay to Seller any amount previously received by Buyer as a
result of Seller 's insolvency, bankruptcy or reorganization or by application
of any bankruptcy laws or other laws, including, without limitation, laws for
the benefit of creditors.
5. Guarantor hereby authorizes and consents to Buyer at any time and
from time to time, without notice or further consent of Guarantor, doing the
following and Guarantor agrees that the liability of Guarantor shall not be
released or affected by:
(bb) The taking or accepting, or the failure by Buyer to take or accept,
any collateral or other guarantee for the Obligations;
(cc) The modification, amendment, extension, renewal or replacement of the
Asset Purchase Agreement;
(dd) Any complete or partial release, substitution, subordination,
impairment, loss, compromise or other modification of any
other guarantee at any time existing in connection with the
Obligations;
(ee) The complete or partial release or substitution of Seller or any other
guarantors on the Obligation;
(ff) Any renewal, extension, modification, replacement,
acceleration, consolidation, adjustment, indulgence,
forbearance, waiver or compromise of the payment of any part
or all of the Obligations, or any liability of any other
guarantor or any other party or any other guarantee therefor,
or the performance of any covenant contained in the Asset
Purchase Agreement;
(gg) Any neglect, delay, omission, failure or refusal of Buyer to
take or prosecute any action for the collection of the
194
Obligations or any part thereof, or for the enforcement of
any provision of the Asset Purchase Agreement, or any action
in connection with any guarantee of the Obligations;
(hh) Acceptance of any partial and/or late payments on the Obligations;
(ii) Application of payments by, or recoveries from, Seller or any
guarantor, in such manner and in such order of priority as
Buyer deems proper, whether or not such obligation to which
the payment or recovery is applied is due at the time of such
application; and
(jj) Buyer's exercising any and all rights and remedies available
to Buyer by law, at equity or by agreement, even if the
exercise thereof may affect, modify or eliminate Guarantor's
rights of subrogation or reimbursement against Seller or any
other party.
6. Guarantor agrees to execute, acknowledge and deliver to Buyer such
other and further instruments, and take such other actions, as may be reasonably
required by Buyer to implement the intent and purpose hereof.
7. This Guaranty shall be governed and construed in accordance with the
laws of the Commonwealth of Pennsylvania, without giving effect to the conflicts
of law principles thereof. The rights of Buyer hereunder and at law are
cumulative, and not exclusive to each other, and may be exercised by Buyer from
time to time. In case any one or more of the provisions contained herein should
be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired.
8. Guarantor agrees to pay to Buyer, on demand, all attorneys' fees and
costs and other expenses (including, without limitation, all fees and costs of
litigation, including appeals, experts and other items) incurred by Buyer in
collecting or compromising any Obligation or enforcing (or attempting to do any
or all of the foregoing) this Guaranty against the Guarantor.
9. Guarantor hereby irrevocably submits to the jurisdiction of any
Pennsylvania State or Federal Court sitting in Pennsylvania in any action or
proceeding arising out of or relating to this Guaranty, and Guarantor hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such Pennsylvania State or Federal Court. Guarantor
hereby irrevocably waives to the fullest extent Guarantor may effectively do so,
(i) the defenses of an inconvenient forum or improper venue to the maintenance
of such action or proceeding, and (ii) any claim that Guarantor is not
personally subject to the jurisdiction of any such courts. Guarantor agrees that
final, non-appealable judgment in any such action brought in any such court
shall be conclusive and binding upon Guarantor and may be enforced by Buyer in
the courts of any state, in any federal court, and in any other courts, whether
foreign or domestic, having jurisdiction over Guarantor or any of its property
or assets, and Guarantor agrees not to assert any defense, counterclaim or right
of set-off in any action brought by Buyer to enforce such judgment.
10. Guarantor agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment in any other manner provided by law.
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11. To the extent that Guarantor has or hereafter may acquire any
diplomatic or sovereign immunity, or any immunity from jurisdiction of any court
or from any legal process (whether through service or execution, execution or
otherwise) with respect to Guarantor or Guarantor's property or assets,
Guarantor hereby waives, and agrees not to assert any claims of, such immunity
with respect of its obligations under this Guaranty. Guarantor acknowledges that
the making of waivers in this Guaranty, and Buyer's reliance on the
enforceability thereof, is a material inducement to Buyer to enter into the
Purchase Agreement. Guarantor agrees to execute, deliver and file all such
further instruments as may be reasonably necessary under the laws of the
Commonwealth of Pennsylvania, in order to make effective the consent by
Guarantor to jurisdiction of the state courts of Pennsylvania and the federal
courts sitting in Pennsylvania.
12. If the incurring of any debt by Seller or the payment of any money
or transfer of property to Buyer by or on behalf of Seller, Guarantor, or any
other party should for any reason subsequently be determined to be "voidable" or
"avoidable" in whole or in part within the meaning of any state or federal law
(collectively "Voidable Transfers"), including without limitation, fraudulent
conveyances or preferential transfers under the United States Bankruptcy Code or
any other federal or state law, and Buyer is required to repay or restore to
Seller any voidable transfers or the amount or any portion thereof, or upon the
advice of Buyer's counsel is advised to do so, then, as to such amount or
property repaid or restored, including all reasonable costs, expenses and
attorney's fees of Buyer related thereto, the liability of Guarantor shall
automatically be revived, reinstated and restored and shall exist as though the
voidable transfers had never been made.
13. No modification of this Guaranty shall be effective unless placed
in writing and executed by the parties hereto. This Guaranty shall bind and
inure to the benefit of Buyer and assigns, and Guarantor, and no other person or
entity shall have any rights or obligations hereunder.
14. The obligations of Guarantor hereunder are independent of the
obligations of Seller and, in the event of any default in or failure to perform
of the Obligations, a separate action or actions may be brought and prosecuted
against Guarantor whether or not Seller is joined therein or a separate action
or actions are brought against Seller, and regardless of the right to pursue any
other remedy in Buyer's power.
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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
and year first above written.
"Guarantor"
Hollywood Park, Inc.
By: _____/s/Michael Finnigan_____
G. Michael Finnigan,
Authorized Signatory
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EXHIBIT 99.9
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This First Amendment to Asset Purchase Agreement (this "First Amendment")
is made and entered into as of this 17th day of December, 1999, between Boomtown
Inc., a Delaware corporation ("Seller"), and BTN, Inc., a Mississippi
corporation ("Buyer").
A. Seller and Buyer entered into that certain Asset Purchase Agreement
dated as of December 9, 1999 ("Asset Purchase Agreement"), with respect to
certain assets used by Seller in the operation of the Boomtown Biloxi Casino in
Biloxi, Mississippi and more particularly described in the Asset Purchase
Agreement.
B. Seller and Buyer desire to amend the Asset Purchase Agreement as
set forth below.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows:
1. Defined Terms. Capitalized terms used herein, but not defined herein,
shall have the meanings ascribed to such terms in the Asset Purchase Agreement.
2. Exhibit B. Exhibit B of the Asset Purchase Agreement is hereby
redesignated as Schedule 1 to the Asset Purchase Agreement.
3. Relationship to Asset Purchase Agreement. This First Amendment
supercedes any inconsistent provisions contained in the Asset Purchase
Agreement. Except as amended hereby, the Asset Purchase Agreement is in full
force and effect.
4. Counterparts. This First Amendment may be executed in counterparts,
which, when taken together shall be one and the same instrument.
IN WITNESS WHEREOF, this First Amendment has been executed as of the date
first above written.
SELLER BUYER
BOOMTOWN INC., BTN, INC.,
a Delaware corporation a Mississippi corporation
By: /s/ Loren S. Ostrow________________ By: /s/ Joseph A. Lashinger, Jr.
Its: Secretary________________________ Its: Vice President/General Counsel
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