26
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30,1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
SECURITIES EXCHANGE ACT OF 1943
For the transition period from _______________________
to ____________________
Commission file number 0-14897
Players International, Inc.
Nevada 95-4175832
(State or other jurisdiction of incorporation or organization)
(I.R.S. employer identification no.)
1300 Atlantic Ave., Suite 800, Atlantic City, NJ 08401
(Address of principal executive offices) (Zip code)
Registrant's telephone number,including area code (609) 449-7777
Former name, former address and former fiscal year, if changed
since last report.
Indicate by check whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each of the registrant's
classes of common stock was 31,913,748 shares at November 13,
1997.
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at September 30, 1997
and March 31, 1997 1
Condensed Consolidated Statements of Operations for the
Three and Six Months Ended September 30, 1997 and 1996 3
Condensed Consolidated Statements of Cash Flows for the Six
Months Ended September 30, 1997 and 1996 4
Notes to Condensed Consolidated Financial Statements 5
Item 2.Management's Discussion and Analysis of Results of
Operations and Financial Condition 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 6. Exhibits and Reports on Form 8-K 16
Signature 17
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS
September 30, March 31,
1997 1997
(Unaudited)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 25,930 $ 20,567
Accounts receivable, net of allowance
for doubtful accounts of$1,163 at
September 30, 1997 and $1,028 at March 2,179 3,123
31, 1997
Notes receivable 1,500 19
Inventories 1,558 1,955
Deferred income tax 1,881 1,881
Income taxes refundable - 27,534
Prepaid expenses and other current 2,748 3,997
assets
Assets held for sale - 8,500
Total current assets 35,796 67,576
PROPERTY AND EQUIPMENT, net of
accumulated depreciation and amortization
of $35,711 at September 30, 1997 and 218,508 210,442
$27,336 at March 31, 1997
DEFERRED INCOME TAX - long-term 4,654 4,654
INTANGIBLES, net of accumulated
amortization of $3,083 at September 30,
1997 and $2,541 at March 31, 1997 35,792 36,271
INVESTMENT IN JOINT VENTURE 99,888 95,401
OTHER ASSETS 5,991 6,945
TOTAL ASSETS $ 400,629 $ 421,289
</TABLE>
<TABLE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except par value)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, 1997 March 31,
(Unaudited) 1997
CURRENT LIABILITIES:
<S> <C> <C>
Current portion of long-term $ 27,891 $ 8,500
debt
Accounts payable 4,002 6,466
Accrued liabilities 28,725 33,969
Other liabilities 4,186
2,921
Total current liabilities 64,804 51,856
OTHER LONG-TERM LIABILITIES 25,937 26,052
LONG-TERM DEBT, net of current 151,574 187,500
portion
STOCKHOLDERS' EQUITY:
Preferred stock, no par value,
Authorized- 10,000,000 shares,
Issued- none - -
Common stock, $.005 par value,
Authorized- 90,000,000 shares,
Issued- 32,585,848 at
September 30, 1997 and 32,563,348 163 163
at March 31, 1997
Additional paid-in capital 132,276 132,256
Treasury stock, at cost;
672,100 shares at September 30,
1997 and March 31, 1997 (7,294) (7,294)
Retained earnings 33,169 30,756
Total stockholders'equity 158,314 155,881
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 400,629 $ 421,289
</TABLE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(Unaudited)
<TABLE>
For the Three Months For the Six Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
REVENUES:
<S> <C> <C> <C> <C>
Casino $ 78,379 $ 67,260 $ 154,166 $ 139,512
Food and beverage 2,773 3,704 6,959 7,409
Hotel 228 1,768 2,023 3,579
Other 1,180 1,676 3,594 3,519
82,560 74,408 166,742 154,019
COSTS AND EXPENSES:
Casino 35,403 30,227 71,891 61,682
Food and beverage 2,229 3,708 6,306 7,453
Hotel 165 802 836 1,629
Other operating expenses 10,547 9,338 22,002 18,903
Selling, general and
administrative 14,671 14,693 29,900 28,721
Corporate administrative
expenses 1,704 2,690 3,294 5,062
Equity in loss of joint 3,110 - 6,433 -
venture
Pre-opening and gaming
development costs - 1,884 - 3,295
Depreciation and amortization 5,331 4,746 9,935 9,382
Restructuring charge - 9,007 - 9,007
73,160 77,095 150,597 145,134
Income (loss) before other
income (expense) and provision
(benefit) for income taxes 9,400 (2,687) 16,145 8,885
OTHER INCOME (EXPENSE):
Interest income 225 55 237 168
Other income, net 1 81 (18) 66
Interest expense (6,139) (3,749) (12,393) (7,613)
(5,913) (3,613) (12,174) (7,379)
Income (loss) before provision
(benefit) for
income taxes 3,487 (6,300) 3,971 1,506
PROVISION (BENEFIT) FOR INCOME
TAXES 1,367 (2,457) 1,558 587
NET INCOME (LOSS) $ 2,120 ($ 3,843) $ 2,413 $ 919
EARNINGS (LOSS) PER COMMON AND
COMMON SHARE EQUIVALENT
Primary $ 0.07 $ (0.13) $ 0.08 $ 0.03
Fully Diluted $ 0.07 $ (0.13) $ 0.08 $ 0.03
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES
Primary 31,911,763 29,494,862 31,912,357 31,090,936
Fully Diluted 31,916,097 29,494,862 31,914,524 31,106,399
</TABLE>
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
For the Six Months
Ended September 30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
[S] [C] [C]
Net income $ 2,413 $ 919
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 9,935 9,382
Joint venture depreciation and 2,610 -
amortization
Loss on disposition of property and 91 -
equipment
Other 258 240
Changes in assets and liabilities:
Accounts and notes receivable (754) 3,266
Inventories, prepaid expenses and other
current assets 1,646 (867)
Income taxes refundable 28,808 -
Other assets 137 580
Accounts payable and accrued liabilities (9,689) (8,200)
Other liabilities 1,150 8,469
Net cash provided by operating activities 36,605 13,789
CASH FLOWS FROM INVESTING ACTIVITIES:
Net purchases of property and equipment (12,916) (21,174)
Proceeds from disposal of property and 8,789 -
equipment
Proceeds from sale of marketable securities - 4,401
Investment in joint venture (6,390) (20,000)
Net cash used in investing activities (10,517) (36,773)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 19,000 21,000
Repayments of long-term debt (39,439) -
Debt issuance cost (266) (8)
Other
(20) (48)
Net cash provided by (used in) financing
activities (20,725) 20,944
NET INCREASE (DECREASE) IN CASH AND CASH 5,363 (2,040)
EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 20,567 18,786
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 25,930 $ 16,746
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Interest paid $ 12,445 $ 10,232
Income taxes paid 9 3,827
Debt incurred to purchase equipment 3,905 -
PLAYERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures normally included
in annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to those rules and
regulations. It is suggested that these condensed consolidated financial
statements be read in conjunction with the financial statements and the notes
thereto included in the Company's Form 10-K for the year ended March 31, 1997.
In the opinion of management, all adjustments (which include normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows of all periods presented have been made.
The results of operations for the six month period ended September 30,
1997, are not necessarily indicative of the operating results for the full year.
Certain reclassifications have been made to the financial statements as
previously presented to conform to current classifications.
Note 2 - Casino Revenues and Promotional Allowances
Casino revenues are the net of gaming wins less losses. Revenues exclude
the retail value of complimentary food and beverage, hotel accommodations and
other items furnished to customers, which totaled approximately $5,440,000 and
$6,717,000, and $12,114,000 and $13,617,000 for the three and six months ended
September 30, 1997 and 1996, respectively.
The estimated cost of providing such complimentary services are included in
casino costs and expenses through inter-department allocations from the
department granting the services as follows (dollars in thousands):
For the Three Months For the Six Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
[S] [C] [C] [C] [C]
Food and beverage $ 4,142 $ 5,342 $ 9,002 $ 11,068
Hotel 70 252 292 526
Admissions and other 205 361 448 655
$ 4,417 $ 5,955 $ 9,742 $ 12,249
Note 3 - Primary and Fully Diluted Shares
Per share amounts have been computed based on the weighted average number
of outstanding shares and common stock equivalents, if dilutive, during each
period. A summary of the number of shares used in computing primary earnings
per share follows:
<TABLE>
For the Three Months For the Six Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
Weighted average number of
<S> <C> <C> <C> <C>
shares outstanding 31,892,715 29,494,862 31,891,982 29,494,862
Dilutive effect of options
and warrants 19,048 - 20,375 1,596,074
Shares used in computing
primary earnings per share 31,911,763 29,494,862 31,912,357 31,090,936
</TABLE>
<TABLE>
For the Three Months For the Six Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
Weighted average number of
<S> <C> <C> <C> <C>
shares outstanding 31,892,715 29,494,862 31,891,982 29,494,862
Dilutive effect of options and
warrants 23,382 - 22,542 1,611,537
Shares used in computing fully
diluted earnings per share 31,916,097 29,494,862 31,914,524 31,106,399
</TABLE>
Note 4 - Long-Term Debt
Long term debt at September 30, 1997 consisted of the
following (dollars in thousands):
Senior notes, interest at 10-7/8%
payable semi-annually on April 15 and
October 15, due 2005 $ 150,000
Note payable under a revised
reducing revolving credit agreement
(the "Revised Credit Facility") 26,000
Note payable, secured by slot
machines, interest at 12% due June 23, 3,465
1999
179,465
Less current portion (27,891)
$ 151,574
According to the terms of the Revised Credit Facility,
amounts available under the credit line were reduced to
$52,500,000 as of September 30, 1997. As of November 13, 1997,
the amount outstanding was $30,000,000. The Company is
negotiating a new three-year, $50,000,000 revolving bank credit
facility which will replace the existing Revised Credit Facility
at a lower interest rate. Final documentation for the new bank
facility is expected to be completed in the third quarter of
fiscal 1998.
Note 5 - Restructuring Charge
During the quarter ended September 30, 1996, the Company
decided to significantly reduce its pursuit of development
opportunities in new or emerging jurisdictions and instead
concentrate on improving its existing operations. This resulted
in the sale of a non-operating riverboat held for future
deployment and a corporate aircraft, the closure of two
development offices and the retirement or termination of 21
senior management and staff. The affected employees included
those specifically responsible for the Company's developmental
activities and others necessitated to effect the Company's
revised business plan. The one-time charge of $9,007,000
consists principally of the net loss on the disposal of assets
held for or used in development activities and the cost of
employee severance arrangements.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
Comparison of Operating Results for the Three-Month Periods Ended
September 30, 1997 and 1996
The Company owns and operates riverboat gaming and
entertainment facilities. These include one riverboat casino in
Metropolis, Illinois (the "Metropolis Facility"), two riverboat
casinos in Lake Charles, Louisiana (the "Lake Charles Facility")
and two contiguous, permanently moored, dockside riverboat
casinos in Maryland Heights, Missouri (the "Maryland Heights
Facility"). The Company operated a land-based casino resort in
Mesquite, Nevada (the "Mesquite Facility") until June 30, 1997.
The Company also owns and operates a thoroughbred racetrack in
Paducah, Kentucky. The Company's fiscal year ends on March 31st.
References to the second quarter of 1998 or 1997, mean the three
month periods ended September 30, 1997 and September 30, 1996,
respectively.
Results of Operations
Financial Highlights
% Increase/
Three months ended September 30 1997 1996 Decrease
(Dollars in thousands, except per share amounts)
Casino Revenues
[S] [C] [C] [C]
Metropolis $ 21,032 $ 20,385 3.2
Lake Charles 39,922 41,407 (3.6)
Maryland Heights 17,425 - -
Mesquite - 5,468 -
$ 78,379 $ 67,260 16.5
Total Revenues
Metropolis $ 21,916 $ 21,263 3.1
Lake Charles 41,810 43,547 (4.0)
Maryland Heights 18,638 - -
Mesquite - 9,269 -
Other 196 329 (40.4)
$ 82,560 $ 74,408 11.0
Operating Income (Loss)
Metropolis $ 6,211 $ 6,115 1.6
Lake Charles 7,238 7,052 2.6
Maryland Heights (a) (1,749) - -
Mesquite - (1,755) -
Corporate, development, pre-
opening and other (2,300) (5,092) 54.8
Restructuring charge - (9,007) -
$ 9,400 $ (2,687) 449.8
Depreciation and
amortization (b) $6,632 $4,746 39.7
Interest expense 6,139 3,749 63.8
Net income, excluding
restructuring charge 2,120 1,651 28.4
Net income (loss) 2,120 (3,843) 155.2
Net income per share,
excluding restructuring charge $0.07 $0.05 40.0
Net income (loss) per share $0.07 $(0.13) 153.8
% Increase/
Three months ended September 30 1997 1996 (Decrease)
Operating Margin (operating
income/total revenues)
Metropolis 28.3% 28.8% (0.5) pts
Lake Charles 17.3% 16.2% 1.1 pts
Maryland Heights (9.4)% - -
Mesquite - (18.9)% -
Company-wide, excluding
restructuring charge 11.4% 8.5% 2.9 pts
Company-wide, including
restructuring charge 11.4% (3.6)% 15.0 pts
a. Amount includes the Company's 50% share of both the Maryland
Heights Joint Venture operating losses and the Maryland
Heights Joint Venture depreciation and amortization. In the
second quarter of 1998, the total loss from investment in the
Maryland Heights Joint Venture was approximately $3.1 million.
b. Second quarter of 1998 amount includes Maryland Heights Joint
Venture depreciation and amortization of $1.3 million.
The 16.5% and 11.0% net increases in casino and total
revenues, respectively, in the second quarter of 1998 as compared
to the second quarter of 1997, resulted from the opening, on
March 11, 1997, of the Company's Maryland Heights Facility.
Revenues from this new facility more than offset year to year
decreases in revenues at the Company's Lake Charles Facility and
the absence of any revenues from Mesquite after the sale of the
facility on June 30, 1997. In July of 1996, the number of
riverboats in the Lake Charles market increased from three to
four. As a result of the additional competitive capacity, casino
revenues and total revenues at the Lake Charles Facility declined
by 3.6% and 4.0%, respectively, as compared to the second quarter
of the prior year. The Mesquite Facility was sold on June 30,
1997, and therefore does not appear in the Company's second
quarter 1998 financial results.
The Company's operating income, excluding restructuring
charge, increased 48.7% during the second quarter of 1998 as
compared to the second quarter of 1997. The increase was due to
slightly better results at both the Metropolis Facility and the
Lake Charles Facility for the second quarter of 1998 as compared
to the prior year second quarter, a significant reduction in
corporate, development, pre-opening and other expenses between
the comparable periods, and the absence of an operating loss at
Mesquite in the second quarter of 1998.
Corporate, development, pre-opening and other expenses,
decreased by 54.8% as a result of the opening of Maryland Heights
on March 11, 1997, the cessation of development activities, and
the restructuring of corporate staff during the second half of
fiscal 1997.
Depreciation and amortization expense increased 39.7% in the
second quarter of 1998 as compared to the second quarter of 1997
due to depreciation from Maryland Heights and the Maryland
Heights Joint Venture which was partially offset by the absence
of Mesquite depreciation in the second quarter of 1998.
The restructuring charge reflected in the second quarter of
1997 followed the Company's decision to significantly reduce its
pursuit of development opportunities in new or emerging
jurisdictions and instead concentrate on improving its existing
operations. This resulted in the sale of the Players I riverboat
which was previously held for future deployment and a corporate
aircraft, the closure of two development offices and the
retirement or termination of 21 senior management and staff. The
affected employees included those specifically responsible for
the Company's developmental activities and others affected by the
Company's revised business plan. The one-time charge consists
principally of the net loss on the disposal of assets held or
used in development activities and the cost of employee severance
arrangements.
Other Factors Affecting Net Income
Interest expense increased 63.8% in the second quarter of
1998 as compared to the second quarter of 1997 due to additional
borrowings to complete the Maryland Heights Facility, an increase
in the Company's average borrowing rate, and a $1.5 million
decrease in the amount of capitalized interest. The interest
rate increase resulted from amendments to the Company's bank
credit agreement (the "Credit Agreement") in December of 1996.
Comparison of Operating Results for the Six-Month Periods Ended
September 30, 1997 and 1996
References to the first half of 1998 or 1997, mean the six
month periods ended September 30, 1997 and September 30, 1996,
respectively.
Results of Operations
Financial Highlights
% Increase/
Six months ended September 30 1997 1996 (Decrease)
(Dollars in thousands, except per share amounts)
Casino Revenues
[S] [C] [C] [C]
Metropolis $ 39,757 $ 39,536 0.6
Lake Charles 77,259 88,755 (13.0)
Maryland Heights 32,712 - -
Mesquite 4,438 11,221 n.m.
$154,166 $139,512 10.5
Total Revenues
Metropolis $ 41,420 $ 41,187 0.6
Lake Charles 80,988 93,375 (13.3)
Maryland Heights 35,220 - -
Mesquite 8,700 18,810 n.m.
Other 414 647 (36.0)
$166,742 $154,019 8.3
Operating Income (Loss)
Metropolis $ 10,928 $ 11,850 (7.8)
Lake Charles 14,091 18,484 (23.8)
Maryland Heights (a) (3,432) - -
Mesquite (690) (3,100) n.m.
Corporate, development, pre-
opening and other (4,752) (9,342) 49.1
Restructuring charge - (9,007) -
$ 16,145 $ 8,885 81.7
Depreciation and $ 12,545 $ 9,382 33.7
amortization (b)
Interest expense 12,393 7,613 62.8
Net income, excluding
restructuring charge 2,413 6,413 (62.4)
Net income 2,413 919 162.6
Net income per share, excl.
restructuring charge $ 0.08 $ 0.21 (61.9)
Net income per share $ 0.08 $ 0.03 166.7
% Increase/
Six months ended September 30 1997 1996 (Decrease)
Operating Margin (operating
income/total revenue)
[S] [C] [C] [C]
Metropolis 26.4% 28.8% (2.4) pts
Lake Charles 17.4% 19.8% (2.4) pts
Maryland Heights (9.7)% - -
Mesquite (7.9)% (16.5)% n.m.
Company-wide, excluding
restructuring charge 9.7% 11.6% (1.9) pts
Company-wide, including
restructuring charge 9.7% 5.8% (3.9) pts
a. Amount includes the Company's 50% share of both the Maryland
Heights Joint Venture operating losses and the Maryland Heights
Joint Venture depreciation and amortization. In the first half
of 1998, the total loss from investment in the Maryland Heights
Joint Venture was approximately $6.4 million.
b. First half of 1998 amount includes Maryland Heights Joint
Venture depreciation and amortization of $2.6 million.
n.m. - not meaningful
The 10.5% and 8.3% net increases in casino and total
revenues, respectively, in the first half of 1998 as compared to
the first half of 1997, resulted from the opening, on March 11,
1997, of the Company's Maryland Heights Facility. Revenues from
this new facility more than offset year to year decreases in
revenues at the Company's Lake Charles Facility and the absence
of any revenues from Mesquite after the sale of the facility on
June 30, 1997. In July of 1996, the number of riverboats in the
Lake Charles market increased from three to four. As a result of
the additional competitive capacity, casino revenues and total
revenues at the Lake Charles Facility declined by 13.0% and
13.3%, respectively, as compared to the first half of the prior
year. The Mesquite Facility was sold on June 30, 1997, and
therefore does not appear in the Company's second quarter 1998
financial results.
The Company's operating income, excluding restructuring
charge, decreased 9.8% during the first half of 1998 as compared
to the first half of 1997. This decrease was due to decreases of
7.8% at the Metropolis facility and 23.8% at the Lake Charles
facility. The Lake Charles decrease was the result of
competition in the Lake Charles market during the first fiscal
quarter of 1998 that was not present in the first fiscal quarter
of 1997.
Corporate, development, pre-opening and other expenses,
decreased by 49.1% as a result of the opening of Maryland Heights
on March 11, 1997, the cessation of development activities, and
the restructuring of corporate staff during the second half of
fiscal 1997.
Depreciation and amortization expense increased 33.7% in the
first half of 1998 as compared to the first half of 1997 due to
the depreciation from Maryland Heights and the Maryland Heights
Joint Venture which was partially offset by the absence of
Mesquite depreciation in the first half of 1998.
Other Factors Affecting Net Income
Interest expense increased 62.8% in the first half of 1998
as compared to the first half of 1997 due to additional
borrowings to complete the Maryland Heights Facility, an increase
in the Company's average borrowing rate, and a $2.7 million
decrease in the amount of capitalized interest. The interest
rate increase resulted from amendments to the Company's Credit
Agreement in December of 1996.
Capital Resources and Liquidity
During the six months ended September 30, 1997, cash
generated by operations, cash from the sale of Mesquite and the
associated tax refund, net bank borrowings, and equipment
financing were the sources of funds for investments in Maryland
Heights, the construction of the new food and entertainment
complex in Metropolis, and the paydown on the balance of the
Credit Agreement from $53 million on June 30, 1997, to $26
million on September 30, 1997. In July of 1997, the Company
received approximately $7 million in cash from the completion of
the sale of the Mesquite Facility and $23.8 million from a
Federal income tax refund for the fiscal year ended March 31,
1997.
Construction of the Maryland Heights Facility at a total
cost of $141 million was completed in the first quarter of fiscal
1998. The new Metropolis food and entertainment complex is due
to open in December of 1997 with total construction expenditures
in fiscal 1998 of approximately $6 million. Total cost for the
new facility, including amounts expended in fiscal 1997 is
expected to be approximately $9 million.
Total credit available under the Company's existing Credit
Agreement decreased from $60.0 million to $52.5 million on
October 1, 1997. Under the existing Credit Agreement, this
availability was due to decrease by an additional $7.5 million
each quarter through March of 1998 and the Credit Agreement was
due to expire on June 30, 1998. In September of 1997, the
Company received a commitment letter for a new, three-year, $50
million revolving bank credit facility (the "New Bank Facility"),
which will replace the existing bank line at a lower interest
rate. Final documentation for the New Bank Facility is expected
to be completed in the third quarter of fiscal 1998.
During the second quarter of 1998, the Company signed a
contract for the purchase of the Lake Charles Holiday Inn which
adjoins the Lake Charles facility. The contract is subject to
contingencies and due diligence which has not yet been completed.
Under the contract, the purchase price is approximately $20
million which the Company expects to fund by expanding the New
Bank Facility from $50 to $70 million.
The Company believes that expected cash flow from operations
will be sufficient to meet debt service and working capital
requirements.
Forward Looking Information
Certain information included in this Quarterly Report on
Form 10-Q contains, and other materials filed or to be filed by
the Company with the Securities and Exchange Commission (as well
as information included in oral statements or other written
statements made or to be made by the Company) contain or will
contain or include, forward-looking statements within the meaning
of Section 21E of the Securities and Exchange Act of 1934, as
amended, and Section 27A of the Securities Act of 1933, as
amended. Such forward-looking statements address, among other
things, the effects of competition, plans for projects currently
under development, plans for future expansion and property
enhancements, business development activities, capital
expenditure programs and requirements, financing sources and the
effects of regulation (including gaming licensure and regulation,
state and local regulation, and tax regulation). Such forward-
looking information is based upon management's current plans or
expectations and is subject to a number of uncertainties and
risks that could significantly affect current plans, anticipated
actions, and the Company's future financial condition and
results. As a consequence, current plans, anticipated actions,
and future financial condition and results may differ from those
expressed in any forward-looking statements made by or on behalf
of the Company. These uncertainties and risks include, but are
not limited to, those relating to conducting operations in an
increasingly competitive environment, conducting operations at a
newly or recently developed site or in a jurisdiction for which
gaming has recently been permitted, changes in state and local
gaming laws and regulations, development and construction
activities, leverage and debt service requirements (including
sensitivity to fluctuation in interest rates), general economic
conditions, changes in federal and state tax laws, action taken
under applications for licenses (including renewals) and
approvals under applicable laws and regulations (including gaming
laws and regulations), and the legalization of gaming in certain
jurisdictions.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Poulos, Ahern and Schreier Litigation
The Company, certain suppliers and distributors of video
poker and electronic slot machines and over forty other casino
operators have been named as defendants in a class action suit
filed April 26, 1994 in the United States District Court, Middle
District of Florida, by William Ahern and William H. Poulos. The
plaintiffs allege common law fraud and deceit, mail fraud, wire
fraud and Racketeer Influenced and Corrupt Organizations Act
violations in the marketing and operation of video poker games
and electronic slot machines. The suit seeks unspecified damages
and recovery of attorney's fees and costs. On December 9, 1994,
an Order was entered by the District Court in Florida
transferring the consolidated action to the United States
District Court for the District of Nevada. The defendants filed
various motions seeking dismissal of the action.
On or about October 27, 1995 the Company was served with a
purported class action captioned Schreier, et al. v. Players
International, et al. In the United States District Court for the
District of Nevada which is essentially identical to the Poulos
and Ahern litigation, except for certain variations in the
definition of the purported class. The matter has also been
consolidated with the Poulos and Ahern litigation.
On April 17, 1996, the Court dismissed plaintiffs' Complaint
without prejudice for failure to plead their claims with
specificity and dismissed defendants' remaining substantive
motions as moot. The Court permitted plaintiffs to file and
Amended Complaint. The matter is currently in the discovery
stage, after which substantive motions for dismissal will be
filed by the defendants. The Company believes that the
plaintiffs claims are wholly without merit and does not expect
that the lawsuit will have a material adverse effect on the
Company's financial position or results of operations.
J.A. Miller, et al. V. Showboat Star Partnership, et al.
Showboat Star Partnership, a subsidiary of the Company, was
served with a petition captioned J.A. Miller, et al. v. Showboat
Star Partnership, et al. on or about February 27, 1997, Docket
No. 10-14544, in the 38th Judicial District Court, Parish of
Cameron, State of Louisiana. The plaintiffs, a group of oyster
fishermen, allege in the petition that on or about February 2,
1997, the Star Riverboat discharged raw sewerage and other
hazardous and toxic substances from the bilge of the vessel in to
Lake Charles. Plaintiffs further allege that since 1994 the Star
Riverboat and the Players Lake Charles Riverboat have discharged
raw sewage and other hazardous and toxic substances into Lake
Charles which is part of the Calcasieu Estuary. Plaintiffs claim
that alleged acts of the Company have resulted in great damage to
natural oyster beds forty-three (43) miles down river in Cameron
Parish, resulting in oysters situated thereon to become dangerous
and unfit for human consumption and or/preventing the oyster
fishermen from harvesting said oysters. The oyster fishermen are
claiming both compensatory and punitive damages. The matter is
in the early stages of litigation. The Company has filed several
motions in response to the petition including motions to dismiss
the action. The Company has also requested certain discovery in
connection with the motions. The Company intends to vigorously
defend this action.
W. Todd Akin, et al. v. Missouri Gaming Commission
The matter of W. Todd Akin et al. v. Missouri Gaming
Commission was filed in the Circuit Court of Cole County in the
fall of 1996. While none of the Missouri licensees or applicants
was named in the suit, Players MH, L.P., a subsidiary of the
Company and Harrah's Maryland Heights Corporation, both 50%
partners in the Riverside Joint Venture, and the Missouri
Riverboat Gaming Association, together with the City of Maryland
Heights, have intervened in order to protect their respective
interests. The suit seeks a judicial declaration that the
Missouri Riverboat Gaming Act is unconstitutional because it
permits facilities (such as the Company/Harrah's facility in
Maryland Heights) to be located upon artificial basins fed by the
Missouri River. The statute was found constitutional and the
suit was dismissed in its entirety on the merits by the trial
court in December, 1996. That dismissal was appealed directly to
the Missouri Supreme Court by the Plaintiffs in January, 1997.
Briefs have been filed. The Missouri Supreme Court heard
argument on the appeal on October 22, 1997. A decision from the
Supreme Court is expected in December, 1997 or January, 1998.
Item 4. Submission of Matters to a Vote of Security Holders
On October 16, 1997, the annual meeting of the Registrant's
Stockholders was held and current directors were elected. The
directors for fiscal year 1998 are Alan R. Buggy, Lawrence
Cohen, Edward Fishman, Marshall S. Geller, Howard A. Goldberg,
John Groom, Charles M. Masson, Vincent J. Naimoli, Lee Seidler
and Earl E. Webb. On the record date fixed for the annual
meeting, stockholders holding 32,563,312 shares of the
Registrant's Common Stock were entitled to vote. Present at the
meeting in person or by proxy were stockholders holding
29,652,951 shares of Common Stock.
Item 6. Exhibits and Reports on Form 8-K
Exhibits Filed with this Form 10-Q
Exhibit No. Exhibit Description
2.0 Plan of Acquisition
27.0 Financial Data Schedule
Reports on Form 8-K Filed During Quarter
None.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
PLAYERS INTERNATIONAL, INC.
Date: November 13, 1997 By: /s/ Peter J. Aranow
Peter J. Aranow,
Executive Vice President,
Chief Financial Officer
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This schedule contains summary financial information extracted from SEC Form 10Q
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<PERIOD-END> SEP-30-1997
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<RECEIVABLES> 4842
<ALLOWANCES> 1163
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0
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<COMMON> 163
<OTHER-SE> 158151
<TOTAL-LIABILITY-AND-EQUITY> 400629
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<TOTAL-REVENUES> 166742
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<EX-2>
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of September 30, 1997, between
LAKESHORE HOTELS, LTD., a Louisiana limited partnership in
commendam ("Seller"), and PLAYERS INTERNATIONAL, INC., a Nevada
corporation, its designees or assignees ("Purchaser").
R E C I T A L S
A. Seller owns and operates or causes to be operated on
its behalf a hotel and related facilities and amenities in Lake
Charles, Calcasieu Parish, Louisiana commonly known as the
"Holiday Inn Lake Charles" (the "Hotel"). The business of Seller
as described in the preceding sentence is referred to herein as
the "Business."
B. Seller desires to sell to Purchaser substantially all
of Seller's assets, and Purchaser desires to purchase said
assets, all on the terms and subject to the conditions contained
in this Agreement.
A G R E E M E N T S
Therefore, for good and valuable consideration, the receipt
and sufficiency of which are hereby mutually acknowledged, the
parties agree as follows:
ARTICLE I
Purchase and Sale of Assets
1.1 Agreement to Purchase and Sell. On the terms and
subject to the conditions contained in this Agreement, Purchaser
agrees to purchase from Seller, and Seller agrees to sell to
Purchaser, all of the assets, properties, rights and business as
a going concern, of whatever kind or nature and wherever situated
and located and whether reflected on Seller's books and records
or previously written-off or otherwise not shown on Seller's
books and records, of Seller (other than the items set forth in
Section 1.3 (the "Excluded Assets")). All of said assets,
properties, rights and business (other than the Excluded Assets)
are collectively referred to in this Agreement as the "Purchased
Assets."
1.2 Enumeration of Purchased Assets. The Purchased Assets
include, without limitation, the following items:
(a) all inventory, including, without limitation, raw
materials, work in process, finished goods, service parts
and supplies, as well as food and beverage stocks, gift shop
inventory and other merchandise held for sale or use in the
operation of the Business (collectively, the "Inventory");
(b) all furniture, furnishings, fixtures, systems,
equipment (including office equipment), machinery,
appliances, parts, computer hardware, tools, signs, motor
vehicles, utensils, tableware, china, glassware, silverware,
linens, uniforms, works of art, disposables, materials,
supplies and all other tangible personal property (other
than the Inventory), together with any and all warranties
thereon (collectively, the "Equipment");
(c) that certain real property described in Schedule
1.2(c) hereof and all appurtenances, easements and other
rights with respect thereto and buildings and other
improvements thereon or relating thereto (the "Real
Estate");
(d) all leasehold interests in personal property
leased to Seller, to the extent (and only to the extent) the
subject lease has been reviewed and accepted in writing by
Purchaser, in its sole discretion, prior to Closing (as
herein defined) (the "Leased Personalty");
(e) all claims and rights (and benefits arising
therefrom) with or against all persons whomsoever,
including, without limitation, all rights against
manufacturers, distributors and/or suppliers under
warranties covering any of the Purchased Assets and all
licenses, permits and approvals relating to the Business
and/or any of the Purchased Assets (the "Permits") and
Environmental Permits (as herein defined), to the extent
they are legally transferable by Seller;
(f) all intellectual property rights, including,
without limitation, patents and applications therefor,
know-how, unpatented inventions, trade secrets, secret
formulas, business and marketing plans, copyrights and
applications therefor, trademarks and applications therefor,
service marks and applications therefor, trade names and
applications therefor, trade dress, and names and slogans
used by Seller (including, without limitation, the names
"Holiday Inn Lake Charles," "Charley's," "Bayou Cafe,"
"Levee Bar" and "Riverboat Magic"), and all goodwill
associated with such intellectual property rights;
(g) all contracts, leases and concession agreements,
license agreements, distribution agreements, maintenance or
other service agreements, supply agreements, computer
software agreements and technical service agreements, to the
extent (and only to the extent) copies of the same have been
reviewed and accepted in writing by Purchaser, in its sole
discretion, prior to Closing;
(h) all customer lists, customer records and
information;
(i) all Seller's right, title and interest in and to
any intangible personal property owned by Seller and used in
the ownership or operation of the Business or any of the
assets and properties described in this Section 1.2, except
for those items specifically excepted or excluded therefrom;
(j) all computer software, including all documentation
and source codes with respect to such software, and licenses
and leases of software to the extent (and only to the
extent) such software license agreements and/or leases have
been reviewed and accepted in writing by Purchaser, in its
sole discretion, prior to Closing;
(k) all sales and promotional materials, catalogues
and advertising literature;
(l) all telephone numbers of Seller;
(m) all books and records, in whatever medium Seller
uses, including, without limitation, blueprints, surveys,
drawings and other technical papers, and other records,
ledgers, and books of original entry, and all insurance
records and OSHA and EPA files, relating to the Business or
any of the assets described herein;
(n) All conference, convention and banquet room
advance reservations, bookings, contracts and deposits, and
guest room reservations and deposits (the foregoing adjusted
as provided in Section 3.7(f) hereof);
(o) All leases, concessions and other agreements with
tenants or operators for occupancy of any portion of the
Real Estate, to the extent (and only to the extent) that
such leases or agreements have been reviewed and accepted in
writing by Purchaser, in its sole discretion, prior to
Closing; and
(p) All other properties and assets of Seller used or
usable in the operation of the Business, except for those
Excluded Assets described in Section 1.3 hereof.
Purchaser's election to accept any of the leases, contracts,
licenses, agreements or other items described in subsections (d),
(g), (j) or (o) hereof shall be made, if at all, by written
notice to Seller before the end of the Inspection Period (as
herein defined); provided that Purchaser must have received a
copy or (if copies are not available) detailed written
description thereof at least thirty (30) days prior to such date.
Purchaser shall not assume nor be deemed to have assumed any
liability or obligation with respect to any such item not
affirmatively accepted as provided above. If any of the
Purchased Assets are subject to an agreement, lease or contract
not disclosed to Purchaser either by delivery of a copy or
detailed description, as listed in Section 4.3(k) of the
Disclosure Schedule attached hereto, then Purchaser shall take
such Purchased Asset(s) free and clear of the subject
agreement(s), and Seller hereby indemnifies and agrees to hold
Purchaser harmless from loss, cost, claim or expense under, as a
result of, or in connection with the existence of, such
undisclosed lease(s), contract(s) or agreement(s). The foregoing
indemnity is in addition to and not in lieu of Seller's indemnity
obligation under Section 8.2 hereof, but shall nonetheless be
governed by the provisions of Sections 8.1, 8.4, 8.5 and 8.6
hereof.
1.3 Excluded Assets. Notwithstanding Sections 1.1 and 1.2,
the Purchased Assets shall not include the following assets of
Seller (the "Excluded Assets"):
(a) all cash on hand and in banks, cash equivalents,
and investments;
(b) claims (and benefits to the extent they arise
therefrom) and rights against third parties to the extent
such claims and litigation are not in any way related to the
Purchased Assets or the Assumed Liabilities (as herein
defined), and claims (and benefits to the extent they arise
therefrom) that relate to Excluded Liabilities (as herein
defined);
(c) Seller's organizational documents, income tax
returns, checkbooks and canceled checks;
(d) all leases, contracts, agreements and/or
obligations not accepted by Purchaser as contemplated under
Sections 1.2(d), (g), (j) and (o) hereof;
(e) all guest ledger receivables, trade accounts
receivable, notes receivable, negotiable instruments and
chattel paper (collectively, the "Accounts Receivable");
(f) all insurance policies of Seller, and any rights
to premium refunds due with respect to such policies, in
each case unless otherwise specifically agreed in writing by
Seller and Purchaser; and
(g) the assets, if any, described on Schedule 1.3(g).
1.4 Quality of Title.
(a) Good and marketable title to all of the Purchased
Assets shall be sold to Purchaser free and clear of any liens,
encumbrances or security interests for money owed, and free and
clear of any other title claims, encumbrances, rights,
restrictions, contract rights or interests whatsoever, except for
those title matters specified in Schedule 1.4(a), attached hereto
and by this reference made a part hereof ("Permitted
Exceptions").
(b) With respect to the Real Estate, title shall be
good and marketable and insurable at regular rates with no
exceptions other than Permitted Exceptions by Purchaser's title
insuror, on the current ALTA Owner's Title Policy. Title to all
personal property comprising the Purchased Assets shall be free
and clear of liens, restrictions and encumbrances other than
Permitted Exceptions.
(c) Seller shall take all reasonable steps to convey
to Purchaser at Closing the quality of title required hereunder,
including without limitation, use of the net proceeds of Closing
to satisfy outstanding liens, interests or encumbrances, or to
secure the termination of other title defects. Provided such
title defects are so satisfied and discharged at Closing, the
existence thereof immediately before Closing shall not constitute
a title defect sufficient to entitle Purchaser to avoid Closing.
Purchaser shall provide a copy of its title survey to Seller
promptly after receipt thereof. If Seller reasonably believes
that Purchaser's title survey is inaccurate, it may, by written
notice to Seller within seven (7) days after receipt of such
title survey from Purchaser, require Purchaser's surveyor to
verify Purchaser's title survey.
(d) If on the date of Closing the Real Estate or any
portion shall have been affected by a municipal or other
assessment or assessments, which have been assessed prior to the
date of Closing, or of which the first installment is then a
charge or lien, or has been paid, then for all purposes of this
Agreement all unpaid installments of any such assessment,
including those payable after Closing, shall be deemed to be due
and payable and shall constitute liens upon the Real Estate as of
Closing, and Seller shall pay, or provide for payment of, all
such assessments and installments thereof, whether due and
payable prior to or after the date of Closing. Seller shall, if
necessary, employ the proceeds of Closing to satisfy any such
assessment(s).
(e) Title to the Purchased Assets shall be conveyed
from Seller to Purchaser at Closing by general warranty deed for
the Real Estate, general warranty bill of sale for any Purchased
Assets which are tangible personal property and by general
warranty assignment for any Purchased Assets which are
intangibles, in each case in proper form for recording, if
appropriate, and duly executed and acknowledged by Seller. If
Purchaser causes a survey to be made, the description in such
deed shall be based upon the survey. Actual possession of the
Purchased Assets shall be delivered to Purchaser on the date of
Closing, subject only to the rights of occupancy of transient
guests holding advance reservations and tenants pursuant to
written leases disclosed to and approved by Purchaser as provided
herein.
(f) Without limiting the generality or effect of the
other provisions of this Section 1.4, Seller agrees specifically
to obtain and deliver to Purchaser prior to Closing a valid
release and termination of all rights of Jackpot Novelty, Inc.
under all agreements between that entity and Seller or its
Affiliate(s), including without limitation, that certain Coin
Operated Machine and Space Lease dated January 22, 1992.
1.5 Right to Market. Purchaser acknowledges that, between
the date hereof and the end of the Inspection Period (as
hereinafter defined), Hodges Ward Elliott, Inc. ("Seller's
Agent") will continue for Seller's benefit to market the Business
and the Purchased Assets for sale to third parties. Unless
Purchaser elects to terminate this Agreement during the
Inspection Period (as hereinafter defined) as provided in Section
5.5 hereof, such right to market the Business and/or any of the
Purchased Assets shall automatically terminate upon the
expiration of the Inspection Period and be of no force or effect.
Purchaser may, as a result of such marketing efforts, receive
offers to purchase the Purchased Assets. However,
notwithstanding the marketing right described in this Section
1.5, Seller shall have no right whatsoever, whether directly or
through its agents or Affiliates (as herein defined), to
negotiate such offers, or to enter into any agreement, contract,
letter of intent or other arrangement for the sale of Seller's
Business and/or any of the Purchased Assets, unless and until
Purchaser terminates this Agreement or this Agreement is
terminated as a result of Purchaser's default hereunder.
1.6 Affiliate Lease; Related Party Contracts. Seller
currently leases certain of the Equipment and other assets from
Ted W. Price, Jr., Ted W. Price, Sr., Robert W. Price, Sr. and
Robert W. Price, Jr. , individuals who are also the sole general
partners of the Seller (the "Individuals"), pursuant to a certain
Furniture, Fixtures and Equipment Lease dated as of October 1,
1990 (the "Affiliate Lease"). At or prior to Closing hereunder,
Seller and the Individuals shall cause the Affiliate Lease to be
terminated, and all of the Equipment and other assets now subject
to the Affiliate Lease to be conveyed to Seller, such that Seller
can deliver to Purchaser good and marketable title thereto at
Closing, as contemplated under this Agreement. The Individuals
covenant, represent and warrant to Purchaser that the terms of
such termination and conveyance shall not prohibit or impair
Seller's ability to perform its obligations hereunder. The
Individuals will cause any other contracts, leases or other
agreements between Seller and its Affiliates to be terminated at
or prior to Closing, such that Purchaser shall have no liability
or obligation thereunder. The Individuals have joined in the
execution of this Agreement to evidence their agreements
hereunder.
ARTICLE II
Assumption of Liabilities
2.1 Agreement to Assume. At the Closing, Purchaser shall
assume and agree to discharge and perform when due, and indemnify
and defend Seller against loss or liability for, those
liabilities of Seller (and only those liabilities of Seller) that
are enumerated in Section 2.2 (the "Assumed Liabilities"). All
claims against and liabilities and obligations of Seller not
specifically assumed by Purchaser pursuant to Section 2.2,
including, without limitation, the liabilities enumerated in
Section 2.3, are collectively referred to herein as "Excluded
Liabilities." Seller shall promptly pay and discharge when due,
and indemnify and defend Purchaser against, all of the Excluded
Liabilities.
2.2 Description of Assumed Liabilities. The Assumed
Liabilities shall consist of the following, and only the
following, liabilities of Seller:
(a) liabilities of Seller under any written
purchase order; sales order; lease; service, supply or other
agreement or commitment of any kind by which Seller is bound
on the Closing Date (as herein defined), which was made
prior to Closing in the ordinary course of business and
which Purchaser has reviewed and accepted in accordance with
the provisions of Sections 1.2(d), (g), (j) and (o) hereof,
in each case only to the extent such liabilities accrue and
relate to performance after the Closing Date;
(b) liabilities of Seller under any Permits or
Environmental Permits with respect to the Business or any of
the Purchased Assets, which were issued to Seller in the
ordinary course of business prior to the Closing Date and
which are assigned or transferred to Purchaser pursuant to
the provisions hereof, to the extent such liabilities relate
to performance after the Closing Date; and
(c) liabilities and obligations of Seller under or
with respect to any marketing and groups sales arrangements,
and guest rooms, banquet, conference or convention
reservations, bookings, contracts or similar commitments
incurred or made in the ordinary course of Seller's business
and existing as of the Closing Date, to the extent the same
relate to performance or guests' presence at the Hotel after
the Closing Date.
2.3 Excluded Liabilities. Without implication that
Purchaser is assuming any liability not expressly excluded by
this Section 2.3 and without implication that any of the
following would constitute Assumed Liabilities but for the
provisions of this Section 2.3, the following claims against and
liabilities of Seller are excluded and shall not be assumed or
discharged by Purchaser:
(a) trade or other accounts payable as of the
Closing Date, of any type or nature (the "Accounts
Payable");
(b) any liabilities for legal, accounting, audit
and investment banking fees, brokerage commissions, and any
other expenses incurred by Seller in connection with the
negotiation and preparation of this Agreement and the sale
of the Purchased Assets to Purchaser;
(c) any liabilities of Seller for Federal, state
or local taxes;
(d) any liability for or related to indebtedness
of Seller to banks, financial institutions, securities-
holders or other persons or entities (or their agents,
trustees, or representatives) with respect to borrowed
money;
(e) any liabilities of Seller to the extent that
their existence or magnitude constitutes or results in a
breach of a representation, warranty or covenant made by
Seller to Purchaser herein, or makes the information
contained in any Schedule attached hereto, materially
incorrect;
(f) any liabilities of Seller under those leases,
contracts, insurance policies, sales orders, purchase
orders, service or supply agreements, commitments or other
obligations, which are not accepted by and assigned to
Purchaser in accordance with the provisions of Sections
1.2(d), (g), (j) and (o) of this Agreement;
(g) any liabilities of Seller under collective
bargaining agreements pertaining to employees of Seller; any
liabilities of Seller to pay severance benefits to employees
of Seller whose employment is terminated prior to the
Closing Date or in connection with the sale of the Purchased
Assets pursuant to the provisions hereof; or any liability
under ERISA (as herein defined) or any Federal or state
civil rights or similar law, resulting from the termination
of employment of employees;
(h) liabilities for returns, refunds or
allowances arising out of or with respect to customer
complaints or disputes which accrued (i.e., were based on
goods or services provided) prior to the Closing Date,
whether required by a governmental body or otherwise;
(i) any claims against or liabilities of Seller
for injury to or death of persons or damage to or
destruction of property (including, without limitation, any
worker's compensation claim) regardless of when said claim
or liability is asserted, including, without limitation, any
claim or liability for consequential or punitive damages in
connection with the foregoing;
(j) any liabilities under or for contributions to
any employee benefit plans, including multi-employer pension
plans (each as defined in the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) or under any
other employee welfare or benefit plans to which Seller
contributes on behalf of any employees, or with respect to
any health, medical, dental, or disability benefits for any
of Seller's employees;
(k) any liabilities (whether asserted before or
after Closing) for or arising in connection with any
misfeasance or malfeasance of Seller or its agents in the
conduct of the Business, or any breach of a representation,
warranty, or covenant, or for any claim for indemnification,
contained in any Permit or contract, agreement, lease or
commitment referred to in Section 2.2 hereof to the extent
that such liability, breach or claim arose out of or by
virtue of Seller's performance or nonperformance thereunder
on or prior to the Closing Date, it being understood that,
as between Seller and Purchaser, this paragraph (k) shall
apply notwithstanding any provisions which may be contained
in any form of consent to the assignment of any such
contract or document, or any novation agreement, which, by
its terms, imposes such liabilities upon Purchaser and which
assignment or novation agreement is accepted by Purchaser
notwithstanding the presence of such a provision, and that
Seller's failure to discharge any such liability shall
entitle Purchaser to indemnification in accordance with the
provisions of Article VIII hereof;
(l) any liabilities of Seller incurred in
connection with the transfer of the Purchased Assets
hereunder, including without limitation, and Federal, state
or local income, transfer or other tax;
(m) any liabilities under any employment
contracts with any of Seller's employees, or for salaries,
wages, bonuses, vacation pay, incentive compensation,
severance pay or other compensation which are otherwise owed
to employees of Seller, accrued prior to the Closing Date;
(n) any liabilities arising out of or in
connection with any violation by Seller of a statute or
governmental rule, regulation or directive;
(o) any liability of Seller under or in connection
with any litigation to which Seller is or may hereafter
become a party;
(p) any liabilities to any of Seller's
Affiliates, including without limitation, any management
agreement(s) with respect to the Business or any portion
thereof; and
(q) without limitation by the specific
enumeration of the foregoing, any liabilities not expressly
assumed by Purchaser pursuant to the provisions of Section
2.2.
2.4 No Expansion of Third Party Rights. The assumption
by Purchaser of the Assumed Liabilities shall not expand the
rights or remedies of any third party against Purchaser or Seller
as compared to the rights and remedies which such third party
would have had against Seller had Purchaser not assumed the
Assumed Liabilities. Without limiting the generality of the
preceding sentence, the assumption by Purchaser of the Assumed
Liabilities shall not create any third party beneficiary rights.
Purchaser does not assume any liability which may arise or be
created in favor of any third party, by virtue of Seller's
execution, delivery and/or performance of this Agreement.
2.5 No Liability Before Closing. Although certain of the
Assumed Liabilities may have been created prior to Closing,
Purchaser is not assuming any liability whatsoever that accrued
or relates to periods prior to Closing hereunder. Specifically
(but without limiting the foregoing), with respect to contracts,
leases, agreements or other obligations accepted by and assigned
to Purchaser under Sections 1.2(d), (g), (j) and (o) hereof,
Purchaser shall assume only such liability thereunder as accrues
or relates to periods after Closing hereunder. All liabilities
accrued or relating to periods prior to Closing hereunder shall
constitute Excluded Liabilities. Where needed, appropriate
adjustments and apportionments shall be made under Section 3.7
hereof to effectuate the foregoing.
ARTICLE III
Purchase Price, Manner of Payment and Closing
3.1 Purchase Price.
(a) The purchase price to be paid by Purchaser to
Seller for the Purchased Assets (the "Purchase Price") shall be
$18,500,000, plus or minus prorations and adjustments as provided
herein. Purchaser shall also be liable for the Assumed
Liabilities, and for certain "Holiday Inn Costs," as hereinafter
defined.
(b) At 11:00 p.m. on the day before the Closing
(whether or not a business day), Purchaser and Seller shall
jointly conduct a physical inventory count of Seller's
Consumables On-Hand (as herein defined). The Consumables On-Hand
so counted shall be valued, on an item-by-item basis, at the
lower of the actual cost thereof (using the average cost method)
or market value thereof, as of the date of such count. The
aggregate total value so computed shall be referred to herein as
the "Inventory Value". "Consumables On-Hand" shall mean Seller's
entire inventory of unopened food and beverage stocks, and other
items which are perishable, are consumed or are customarily
disposed of after single use; provided, however, that opened
perishables, obsolete inventories, and inventories which are
unsalable or unusable in the ordinary course of business shall be
valued at net realizable value. At Closing, Purchaser shall pay
to Seller, in addition to the Purchase Price, an amount equal to
the Inventory Value.
3.2 Time and Place of Closing. The transaction
contemplated by this Agreement shall be consummated (the
"Closing") at 10:00 a.m. at the offices of Stockwell, Sievert,
Shaddock & Viccellio, One Lakeside Plaza, 4th Floor, Lake
Charles, Louisiana 70601 on December 2, 1997 or on such other
date, or at such other time or place, as shall be mutually agreed
upon by Seller and Purchaser. Notwithstanding the foregoing, if
either party is unable, despite such party's good faith efforts,
to complete Closing by such date and time, then such party may
extend the date for Closing to December 17, 1997, upon written
notice to the other party hereunder, on or prior to the original
date for Closing. The foregoing extension right is available
only with respect to the originally scheduled Closing, and any
further extension of the date for Closing may only be made upon
the mutual agreement of the parties. The date (or extended date,
if applicable) on which the Closing occurs in accordance with the
preceding sentences, is referred to in this Agreement as the
"Closing Date." The Closing shall be deemed to be effective as
of 12:01 a.m. on the Closing Date at Lake Charles, Louisiana.
3.3 Manner of Payment of the Purchase Price.
(a) At the Closing, Purchaser shall assume the Assumed
Liabilities and shall pay the Purchase Price and the
Inventory Value to Seller, by wire transfer to such account
as Seller shall designate by written notice delivered to
Purchaser not later than three (3) business days prior to
the Closing Date.
(b) Purchaser has previously deposited with Stockwell,
Sievert, Shaddock & Viccellio, LLP, as Agent for Chicago
Title Insurance Company (the "Escrow Holder"), to be held in
an interest-bearing account: (i) the sum of $500,000 (the
"Primary Deposit"); and (ii) the sum of $50,000 (the
"Additional Deposit;" the Primary Deposit and the Additional
Deposit are sometimes referred to collectively hereinafter
as the "Deposit Monies"). The Deposit Monies shall be held
in escrow pending Closing hereunder. The Primary Deposit
shall be refunded to Purchaser, with interest thereon, at
Purchaser's request at any time during the Inspection Period
(as hereinafter defined) in connection with Purchaser's
termination of this Agreement under Section 5.5 hereof, upon
notice by Purchaser to the Escrow Holder given in
Purchaser's sole and absolute discretion. After expiration
of the Inspection Period, the Primary Deposit shall only be
refunded to Purchaser on default by Seller hereunder or
failure of any of the conditions to Purchaser's obligations
under Section 6.2 hereof by the date specified therefor.
The Additional Deposit shall only be refunded to Purchaser
(x) on default by Seller, or (y) if the condition on
Purchaser's obligations regarding Purchaser's ability to
obtain financing is not satisfied as provided under Section
6.2(h) hereof, or (z) if the condition regarding Holiday Inn
franchise matters under Section 6.2(i) hereof is not
satisfied. All of the Deposit Monies, plus interest
thereon, shall also be returned to Purchaser if this
Agreement is terminated because of a casualty under Section
6.3(a) hereof, or a taking under Section 6.4 hereof.
(c) Subject to refund in the case of Seller's default
hereunder or failure of conditions on Purchaser's
obligations as provided in subsection (b) hereof, after
expiration of the Inspection Period, the Deposit Monies
shall become non-refundable and shall serve as Seller's
liquidated damages under Section 9.2 hereof, in the event of
Purchaser's default.
(d) At the Closing, Purchaser shall receive a credit
against the Purchase Price in an amount equal to the amount
of the Deposit Monies, plus interest accrued thereon.
(e) Escrow Holder shall deposit the Deposit Monies in
a federally-insured account (subject to the coverage
limitations on such federal insurance). Seller and
Purchaser agree that Escrow Holder is acting as a
stakeholder only for the convenience and at the request of
Purchaser and Seller, and Escrow Holder shall be responsible
only for the safekeeping and proper disposition of the
Deposit Monies in accordance with the terms of this
Agreement. In taking any action hereunder, Escrow Holder
shall be entitled to rely upon any written notice, paper, or
other document from Seller or Purchaser, and Escrow Holder
shall not be required to seek or obtain verification of the
authenticity or proper authorization of such written notice,
paper, or other document. In no event shall Escrow Holder
be liable for any act performed or omitted to be performed
by it hereunder in the absence of gross negligence or
willful misconduct. In the event of a controversy between
Seller and Purchaser as to the disposition of the Escrow
Monies, Escrow Holder shall be entitled to deliver the
Escrow Monies to the clerk of a court of competent
jurisdiction in an interpleader action, whereupon Escrow
Holder shall be relieved of any further duties or
obligations regarding the Escrow Monies. Seller and
Purchaser agree to indemnify, defend and hold Escrow Holder
harmless from and against any loss, cost or expense arising
out of or related to the Escrow Monies not resulting from
Escrow Holder's gross negligence or willful misconduct.
Seller acknowledges and agrees that Escrow Holder is and has
been counsel to Purchaser in connection with the preparation
of this Agreement and otherwise. Seller and Purchaser
hereby agree that to the extent that Escrow Holder's serving
as the holder of the Deposit Monies may create a conflict of
interest or an appearance of a conflict of interest, any
such conflict of interest is hereby waived. Seller also
acknowledges and agrees that Escrow Holder serving as escrow
holder shall in no manner whatsoever disqualify or be cause
for disqualification of Escrow Holder with respect to the
current or future representation of Purchaser arising out of
or involving any matter or issue relating to the Deposit
Monies or this Agreement or otherwise; it being hereby
understood and agreed that Purchaser will continue to be
represented by Escrow Holder in connection with the
foregoing matters.
3.4 Closing Deliveries. At the Closing, the parties shall
execute and deliver such bills of sale, assignments, documents of
title, assumption agreements, closing certificates, searches,
title insurance policies and other documents as are reasonably
required in order to effectuate the consummation of the
transaction contemplated hereby. All documents to be delivered
by a party shall be in form and substance reasonably satisfactory
to the other party.
3.5 Allocation of Purchase Price. The Purchase Price shall
be allocated among the Purchased Assets by Purchaser, in the
manner required by Section 1060 of the Internal Revenue Code of
1986, as amended, and in a manner approved by Seller, which
approval shall not be unreasonably withheld. Purchaser shall
submit its proposed allocation to Seller on or before
November 17, 1997.
3.6 Franchise Matters.
(a) The Hotel is operated under a franchise license
agreement dated April 14, 1993 (the "Existing Agreement")
between Seller and Holiday Inns Franchising, Inc. ("Holiday
Inns"). Seller and Purchaser each hereby agrees to use its
commercially reasonable good faith efforts to cause a new
Holiday Inn franchise license agreement to be awarded to
Purchaser for its operation of the Business, on terms
acceptable to Purchaser, in its sole discretion (a "New
License Agreement"). The parties acknowledge and understand
that one of the conditions to obtaining a New License
Agreement is an agreement with Holiday Inns for a program of
physical improvements to the Real Estate or the other assets
used in the Business, as determined by Holiday Inns after
its inspection of the Purchased Assets and as designated by
Holiday Inns as a "Product Improvement Plan" (hereinafter,
"PIP"). Purchaser agrees that it shall be solely
responsible for all costs of determining and implementing
such PIP as determined by Holiday Inns, and for all other
costs associated with the obtaining of a New License
Agreement, including up-front fees, inspection costs,
franchise fees, costs of termination of the Existing
Agreement (and the associated release of Seller from
liability thereunder) (collectively, the "Holiday Inn
Costs"). Notwithstanding the foregoing, Purchaser's total
liability for all Holiday Inn Costs shall not exceed, in the
aggregate, the sum of One Million Five Hundred Thousand
Dollars ($1,500,000.00). If such aggregate total of the
actual or reasonably anticipated Holiday Inn Costs exceeds
or is reasonably expected by Purchaser to exceed
$1,500,000.00, then Purchaser may, in its sole discretion,
elect to terminate this Agreement by written notice to
Seller prior to Closing, in which event all Deposit Monies,
together with any interest thereon, shall be immediately
returned to Purchaser, and thereupon neither party shall
have any obligation to the other hereunder.
(b) Purchaser hereby acknowledges that the Existing
Agreement is not, by its terms, assignable to Purchaser.
Purchaser acknowledges further that the Existing Agreement
provides for a termination fee of approximately
$1,800,000.00 in the event the Existing Agreement is
terminated without the awarding of a New License Agreement
with respect to the Business (the "Termination Fee"). If
Purchaser elects to complete Closing hereunder, but does not
pursue the New License Agreement, Purchaser shall be solely
responsible for the Termination Fee. The parties agree that
Purchaser's obligation to pay the Termination Fee if it
completes Closing hereunder but elects not to pursue a New
License Agreement, shall not be taken into consideration in
calculating the total Holiday Inn Costs under subsection (a)
hereof, or Purchaser's costs of making Closing hereunder.
Purchaser shall not be liable for payment of the Termination
Fee if Purchaser does not complete Closing hereunder,
unless: (i) Closing does not occur because of Purchaser's
default hereunder; (ii) Seller has not defaulted hereunder;
and (iii) the Termination Fee becomes payable
(notwithstanding that Seller continues to own and operate
the Business) because of an act of Purchaser.
(c) Purchaser shall have the right, in its sole
discretion, to contest such Termination Fee, or the amount
thereof, so long as Purchaser posts as security for the
ultimate payment thereof, to the extent necessary, for the
benefit of Seller (and any other parties obligated under the
Existing Agreement), cash or a letter of credit reasonably
acceptable to Seller in an amount equal to the amount of the
Termination Fee. So long as such security is provided,
Seller shall cooperate with and not oppose Purchaser in the
prosecution of any such contest.
(d) Seller will cooperate with Purchaser and assist
Purchaser as reasonably requested, in Purchaser's dealings
with Holiday Inns as contemplated herein.
3.7 Adjustments and Prorations. The benefits and burdens
of ownership and operation of the Business and the Purchased
Assets shall transfer from Seller to Purchaser as of the Closing
Date, such that, except as otherwise expressly set forth in this
Agreement, Seller shall be liable for all costs and obligations
relating to periods prior to Closing, and Purchaser shall only be
liable for costs and obligations relating to periods after
Closing. To accomplish such transfer, the following matters and
items shall be apportioned between the parties hereto or, where
appropriate, credited in total to a particular party, as of 12:01
am, CST on the Closing Date (the "Cut-off Time") as provided
below:
(a) Prior Night's Room Revenue; Deposits. Each party
shall receive a credit equal to one-half of the amount of
transient guest room rentals for the full night which begins
on the day immediately preceding the Closing Date. Subject
to the terms hereof, Purchaser will honor, for its account,
the terms and rates of all pre-closing reservations made in
the ordinary course of business and confirmed by Seller for
dates on or after the Closing Date. Any pre-Closing down
payments or advance payments made to Seller on confirmed
guest room, banquet, conference or convention reservations
for dates on or after the Closing Date will be credited to
Purchaser at the Closing. Any post-Closing down payments
made to Seller on confirmed guest room, banquet, conference
or convention reservations for dates on or after the Closing
Date will be forwarded to Purchaser upon receipt.
(b) Taxes and Assessments. All real property and
other ad valorem taxes, special or general assessments,
personal property taxes, hotel room or bed taxes, water and
sewer rents, rates and charges, vault charges, canopy permit
fees, municipal permit fees and other municipal charges,
shall be prorated as of the Cut-off Time. Any special
assessments with respect to the Purchased Assets or Business
existing at the Cut-off Time shall be paid by Seller and
any special assessments thereafter arising shall be paid by
Purchaser. All business license, occupation, sales, use,
withholding or similar tax, or any other taxes of any kind
relating to the Business or Purchased Assets and
attributable to the period prior to the Cut-off Time shall
be paid by Seller, and all such taxes attributable to the
period after the Cut-off Time shall be paid by Purchaser.
(c) Utility Contracts. Telephone and telex contracts
and contracts for the supply of heat, steam, electric power,
gas, lighting and any other utility service shall be
prorated as of the Cut-off Time, with Seller receiving a
credit for each deposit, if any, made by Seller as security
under any such public service contracts if the same is
transferable and provided such deposit remains on deposit
for the benefit of Purchaser. Where possible, cut-off
readings will be secured for all utilities on the Closing
Date.
(d) Contracts and Space Leases. Any amounts prepaid
or payable under any contracts, agreements, leases of
Equipment, other leases and occupancy agreements, and other
obligations that Purchaser elects in its sole discretion to
accept, all as provided under Sections 1.2 (d), (g), (j) and
(o) hereof, shall be apportioned between the parties as of
the Cut-off Time. All security deposits under such accepted
leases or agreements shall be transferred to Purchaser and
all obligations with respect to such security deposits shall
be assumed by Purchaser.
(e) License Fees. Fees paid or payable for or under
any existing Permits shall be apportioned between the
parties as of the Cut-off Time.
(f) Employees; Employment Contracts. Seller shall be
responsible for, and shall pay when due, all compensation of
its employees, whether or not hired by Purchaser, through
the Cut-off Time. Purchaser shall have no obligation or
liability for pre-Closing compensation of, or other
employment-related obligations to, Seller's employees.
Purchaser assumes no obligations of Seller with respect to
any employee benefits, including without limitation accrued
vacation time, severance pay, personal time, unemployment
and/or disability premiums or payments, and state, parish or
federal withholdings, all of which shall be the
responsibility of Seller only. Seller shall indemnify,
defend and hold Purchaser harmless from the foregoing
liabiities and obligations. Except as set forth in Section
10.10, below, Purchaser assumes no obligation to hire or to
employ after Closing, any of Seller's employees.
(g) Other. Such other items as are provided for in
this Agreement or as are normally prorated and adjusted in
the sale of a hotel, including, without limitation, all
deposits and prepaid items which inure to the benefit of the
Purchaser.
(h) Leased Personalty. The Purchase Price was
determined on the assumption that all Equipment is owned by
Seller, free and clear of liens and other interests, and
that no Leased Personalty exists. Therefore, to the extent
any of the Purchased Assets are Leased Personalty, and to
the extent Purchaser elects to accept the subject lease
under Section 1.2(d) hereof, Purchaser shall receive a
credit reflecting the present value of the remaining lease
payment liability for each such item of Leased Personalty
accepted by Purchaser hereunder.
(i) Cash. All cash on hand and in registers as of the
Cut-off Time shall be and remain the property of Seller, and
Seller shall receive a credit for same at Closing.
3.8 Payment. Any net credit due to Seller as a result of
the adjustments and prorations under Section 3.7 shall be paid to
Seller in cash at the time of Closing. Any net credit due to
Purchaser as a result of the adjustments and prorations under
Section 3.7 shall be credited against the Purchase Price at the
time of Closing.
3.9 Receivables and Payables. Purchaser is not purchasing
any of the receivables of Seller, nor assuming any of its
payables. Seller shall be solely responsible for the collection
of all its accounts receivable, and timely payment of all its
accounts payable. Therefore no adjustment or proration of same
will be made. If Purchaser shall receive any payment made on any
such accounts receivable, it shall promptly remit such payment to
Seller.
3.10 Indeterminate Items. Items of revenue or expense which
are not susceptible of calculation, allocation and/or proration
at the Cut-off Time, shall be calculated, allocated and/or
prorated as follows. Within five (5) days following the Closing
Date, Seller and Purchaser shall undertake in good faith to
mutually agree upon and execute and deliver to each other a
statement setting forth the determination of the items to be
prorated and accounted for hereunder, and the net amount due, if
any, to either Purchaser or Seller, as the case may be, shall be
paid within five (5) business days following the receipt of such
statement. If, with respect to the Closing, Purchaser and Seller
are unable within said five (5) day period to agree upon the
appropriate proration of or payment due for an item of revenue
or expense or other item pursuant to this paragraph, then Seller
and Purchaser shall employ a nationally recognized accounting
firm as may be mutually selected by Seller and Purchaser, as
independent certified public accountants ("Accountant"), to
determine the amount of the proration or payment consistent with
the provisions of this Agreement. The Accountant shall make such
determination as promptly as possible and in no event later than
thirty (30) days following such engagement. The amount of the
proration or payment as of the Cut-off Time as determined by the
Accountant shall be final and binding upon Seller and Purchaser,
each of whom hereby consents to the procedure herein set forth
and waives any rights they may have or conflicting provisions of
applicable law. Seller and Purchaser shall each pay one-half
(1/2) of the Accountant's fees and expenses for making such
determination.
3.11 Withheld Funds. Seller acknowledges and agrees
that, at the Closing, there shall be withheld from the proceeds
of sale otherwise payable to Seller at the Closing the sum of
$85,000.00, as required under the provisions of Section 47:308 of
the Louisiana Revised Statutes, and any equivalent parish
requirements. To the extent any such funds are withheld at
Closing, Purchaser and Seller shall open an escrow account with
Escrow Holder, and Purchaser shall deposit such funds into
Escrow, to be held by Escrow Holder until such time as Seller
furnishes Escrow Holder the receipts or clearance certificates
provided for in said statutes (or parish requirements) that the
applicable obligations have been paid or discharged or that funds
out of the Purchase Price sufficient for such purpose are held by
Escrow Holder. If Seller does not produce such receipts,
certificates or evidence within 120 days after Closing, or by
such earlier date on which any lien or other claim therefor is
asserted against Purchaser or the Purchased Assets (or any
portion thereof), Escrow Holder may pay such sums to the
appropriate authority as may be required to eliminate Purchaser's
liability under such statutes, or any encumbrance on any of the
Purchased Assets for payment thereof. Seller shall supply such
records and tax returns as may be reasonably necessary for Escrow
Holder to establish the amount of such required escrows. The
foregoing escrow agreement shall be in addition to, and not in
lieu of, Seller's indemnification obligations under Section 8.2
of this Agreement.
ARTICLE IV
Representations and Warranties
4.1 General Statement. The parties make the
representations and warranties to each other which are set forth
in this Article IV, each of which shall be correct and complete
as of the date hereof and as of the Closing Date. All such
representations and warranties and all representations and
warranties which are set forth elsewhere in this Agreement and in
any financial statement, exhibit or document delivered by a party
hereto to the other party pursuant to this Agreement shall
survive the Closing (and none shall merge into any instrument of
conveyance), regardless of any investigation or lack of
investigation by any of the parties to this Agreement. No
specific representation or warranty shall limit the generality or
applicability of a more general representation or warranty. All
representations and warranties of Seller are made subject to the
exceptions which are noted in the schedule delivered by Seller to
Purchaser concurrently herewith and identified by the parties as
the "Disclosure Schedule." All exceptions noted in the
Disclosure Schedule shall be numbered to correspond to the
applicable paragraph of Section 4.3 to which such exception
refers.
4.2 Purchaser's Representations and Warranties.
Purchaser represents and warrants to Seller that, to the best of
Purchaser's knowledge:
(a) Purchaser is a corporation duly organized,
validly existing and in good standing, under the laws of the
State of Nevada.
(b) Purchaser has full corporate power and
authority to enter into and perform under (x) this Agreement
and (y) all documents and instruments to be executed by
Purchaser pursuant to this Agreement (collectively,
"Purchaser's Ancillary Documents"). This Agreement has
been, and Purchaser's Ancillary Documents will be, duly
executed and delivered by duly authorized officers of
Purchaser. This Agreement constitutes a valid and legally
binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms (except to the extent
that enforcement may be affected by laws relating to
bankruptcy, reorganization, insolvency and creditors' rights
and by the availability of injunctive relief, specific
performance and other equitable remedies).
(c) Except for approvals of gaming authorities
having jurisdiction, and approval by Purchaser's Board of
Directors, primary bank lenders and holders of Purchaser's
debt securities (or the trustee for such holders), or as
otherwise contemplated under Section 6.2 hereof, no consent,
authorization, order or approval of, or filing or
registration with, any governmental authority or other
person is required for the execution and delivery by
Purchaser of this Agreement and Purchaser's Ancillary
Agreements, and the consummation by Purchaser of the
transactions contemplated by this Agreement and Purchaser's
Ancillary Agreements.
(d) Subject to the filings and/or consents noted
in subsection (c), above, neither the execution and delivery
of this Agreement and Purchaser's Ancillary Documents by
Purchaser, nor the consummation by Purchaser of the
transactions herein contemplated, will conflict with or
result in a breach of any of the terms, conditions or
provisions of Purchaser's Articles of Incorporation or
By-laws, or of any statute or administrative regulation, or
of any order, writ, injunction, judgment or decree of any
court or governmental authority or of any arbitration award.
(e) Subject to the filings and/or consents noted
in subsection (c), above, Purchaser is not a party to any
unexpired, undischarged or unsatisfied written or oral
contract, agreement, indenture, mortgage, debenture, note or
other instrument under the terms of which performance by
Purchaser according to the terms of this Agreement will be a
default, or whereby timely performance by Purchaser
according to the terms of this Agreement may be prohibited,
prevented or delayed.
(f) Neither Purchaser, nor any of its Affiliates
has dealt with any person or entity who is or may be
entitled to a broker's commission, finder's fee, investment
banker's fee or similar payment for arranging the
transaction contemplated hereby or introducing the parties
to each other. As used herein, an "Affiliate" is any person
or entity which controls a party to this Agreement, which
that party controls, or which is under common control with
that party. In the case of Seller, an Affiliate shall
include Ted W. Price, Sr., Ted W. Price, Jr., Robert W.
Price, Sr., Robert W. Price, Jr., and any of their wives or
children, and Hotel Management and Development, Inc..
"Control" means the power, direct or indirect, to direct or
cause the direction of the management and policies of a
person or entity through voting securities, contract or
otherwise.
(g) Except as contemplated under Section 6.2 hereof,
there is no law, rule, regulation or ordinance of any
governmental body or agency prohibiting Purchaser's
execution, delivery and performance of the transactions
contemplated by this Agreement.
(h) Subject to the conditions described under
Section 6.2 hereof (including without limitation, the
financing contingency in Section 6.2(h) and the contingency
for consent of existing lenders and any trustee for the
holders of debt securities under Section 6.2(g)), as to
which Purchaser makes no representation or warranty,
Purchaser is financially capable of acquiring the Purchased
Assets pursuant to the provisions of this Agreement.
4.3 Seller's Representations and Warranties. Seller
represents and warrants to Purchaser that, to the best of
Seller's knowledge and except as set forth in the Disclosure
Schedule:
(a) Seller is a limited partnership in commendam,
duly organized, validly existing and in good standing, under
the laws of the State of Louisiana. Seller has all
necessary power and authority to conduct the Business as the
Business is now being conducted.
(b) Except as set forth in the Disclosure
Schedule, Seller holds good and marketable title to the
Purchased Assets, free and clear of all mortgages, options,
liens, charges, easements, agreements, claims, rights,
restrictions or other encumbrances of any kind or nature
other than the Permitted Exceptions, and all items of
Equipment, Inventory and other personal property have been
fully paid for, to the extent that normal business practice
permits, except those items identified on the Disclosure
Schedule which are subject to installment payments or leases
and with respect to which there are no installments due
which are delinquent.
(c) Seller has full partnership power and
authority to enter into and perform under (x) this Agreement
and (y) all documents and instruments to be executed by
Seller pursuant to this Agreement (collectively, "Seller's
Ancillary Documents"). This Agreement has been, and
Seller's Ancillary Documents will be, duly authorized by all
necessary partnership action(s), and duly executed and
delivered by general partners of Seller so authorized. This
Agreement constitutes a valid and legally binding obligation
of Seller, enforceable against Seller in accordance with its
terms (except to the extent that enforcement may be affected
by laws relating to bankruptcy, reorganization, insolvency
and creditors' rights and by the availability of injunctive
relief, specific performance and other equitable remedies).
Except as contemplated under Section 6.1 hereof, there is no
law, rule, regulation or ordinance of any governmental body
or agency prohibiting Seller's execution, delivery and
performance of the transactions contemplated by this
Agreement. The sale transaction contemplated by this
Agreement is being made in connection with the winding-up of
Seller as contemplated under Section 13.02(f) of Seller's
Articles of Partnership In Commendam dated as of May 1,
1980.
(d) No consent, authorization, order or approval
of, or filing or registration with, any governmental
authority or other person is required for Seller's
execution and delivery of this Agreement and Seller's
Ancillary Documents and the consummation by Seller of the
transactions contemplated by this Agreement and Seller's
Ancillary Documents.
(e) Neither the execution and delivery of this
Agreement and Seller's Ancillary Documents by Seller, nor
the consummation by Seller of the transactions herein
contemplated, will conflict with or result in a breach of
any of the terms, conditions or provisions of Seller's
Articles of Partnership In Commendam or other organizational
documents, or of any statute or administrative regulation,
or of any order, writ, injunction, judgment or decree of any
court or any governmental authority or of any arbitration
award.
(f) Seller's books, accounts and records are, and
have been, maintained in Seller's usual, regular and
ordinary manner, in accordance with prudent business
practices and generally accepted accounting practices, and
all material transactions to which Seller is or has been a
party are properly reflected therein.
(g) Complete and accurate copies of the audited
balance sheets, statements of income and retained earnings,
statements of cash flows, and notes to financial statements
(together with any supplementary information thereto) of
Seller, all as of and for the years ended December 31, 1993,
1994, 1995, and 1996, respectively, as audited by Seller's
certified public accountants are contained in the Disclosure
Schedule. All such financial statements are referred to
herein collectively as the "Financial Statements." The
Financial Statements present accurately and completely the
financial position of Seller as of the respective dates
thereof, and the results of operations and cash flows of
Seller for the respective periods covered by said
statements, in accordance with GAAP, consistently applied.
The Disclosure Schedule contains complete and correct copies
of all attorneys' responses to audit inquiry letters and all
management letters from the Accountants with respect to
Seller's last four (4) fiscal years.
(h) Complete and accurate copies of the unaudited
balance sheet, statement of income and retained earnings and
statement of cash flows of Seller as of and for the seven
(7)-month period ended July 31, 1997, are contained in the
Disclosure Schedule. Such financial statements are herein
referred to as the "Interim Financial Statements." The
Interim Financial Statements present accurately and
completely the financial position of Seller as of the date
thereof, and the results of operations of Seller for the
period covered by said statements, in accordance with GAAP,
consistently applied.
(i) (i) The Disclosure Schedule lists all existing
Permits and such list is complete and correct in all
material respects; (ii) such Permits constitute all of the
Permits currently necessary for the ownership and operation
of the Business, including but not limited to, the food and
beverage licenses required to sell and serve food and
liquor; (iii) no default has occurred in the due observance
or performance of any requirements or condition of any
Permit which has not been heretofore corrected; and (iv) no
occupant under a lease or concession agreement has received
any notice from any source to the effect that there is
lacking any Permit needed in connection with the operation
of the Business or any restaurant, bar, gift shop or other
operation connected therewith.
(j) Seller has not suffered or been threatened
with any material adverse change in the business,
operations, assets, liabilities, financial condition or
prospects of the Business, including, without limiting the
generality of the foregoing, the existence or threat of any
labor dispute, or any material adverse change in, or loss
of, any relationship between Seller and any of its
customers, suppliers or key employees.
(k) The Disclosure Schedule correctly and completed
lists and describes all material contracts, leases, and
agreements to which Seller is a party and which relate to
the conduct of the Business, including, without limitation:
employment and employment-related agreements; covenants not
to compete; loan agreements, notes, and security agreements
(other than notes, loan agreements and related security
documents that are being satisfied at or prior to Closing);
sales representative, distribution, franchise, advertising
and similar agreements; concession or occupancy agreements;
leases and subleases of realty or personalty; guest room,
banquet, conference and convention contracts or bookings;
license agreements; purchase orders and purchase contracts
and sales orders and sales contracts. All contracts, leases
and other arrangements or instruments referred to in this
paragraph 4.3(k), and all other contracts or instruments to
which Seller is a party, are in full force and binding upon
the parties thereto. No default by Seller has occurred
thereunder and, to the best of Seller's knowledge, no
default by the other contracting parties has occurred
thereunder. No event, occurrence or condition exists which,
with the lapse of time, the giving of notice, or both, or
the happening of any further event or condition, would
become a default by Seller thereunder. Seller has given (or
will give, during the Inspection Period) to Purchaser true
and correct copies of all such agreements or leases, or a
detailed description thereof, all as described in Section
4.3(k) of the Disclosure Schedule. Seller shall indemnify
Purchaser as required under Section 1.2 hereof, against
loss, cost or liability under any contract, lease or
agreement not disclosed to Producer as required in this
Section 4.3(k).
(l) Seller is not a party to, or bound by, any
unexpired, undischarged or unsatisfied written or oral
contract, agreement, indenture, mortgage, debenture, note or
other instrument under the terms of which performance by
Seller according to the terms of this Agreement will be a
default or an event of acceleration, or whereby timely
performance by Seller according to the terms of this
Agreement may be prohibited, prevented or delayed. If any
such agreement exists, Seller shall terminate such agreement
(other than those expressly assumed by Purchaser) at or
prior to Closing.
(m) Except as disclosed on the Disclosure Schedule,
there are no commissions or referral fees relating to the
Business currently outstanding, nor will there be any such
commissions or referral fees outstanding, on or after the
Closing Date.
(n) With respect to employees of Seller:
(i) there is no pending or
threatened unfair labor practice charges or
employee grievance charges;
(ii) there is no request for union
representation, labor strike, dispute, slowdown or
stoppage actually pending or, to the best of
Seller's knowledge, threatened against or directly
affecting Seller;
(iii) no grievance or arbitration
proceeding arising out of or under collective
bargaining agreements is pending and no claims
therefor exist;
(iv) the employment of each of the
Seller's employees is terminable at will without
cost to the Seller except for payments required
under Seller's employee benefit plans, employee
welfare plans and similar plans and payment of
accrued salaries or wages and vacation pay (for
which Purchaser shall have no liability as
provided in Section 2.3, above). No employee or
former employee has any right to be rehired by the
Seller prior to the Seller's hiring a person not
previously employed by the Seller.
(v) The Disclosure Schedule
contains a true and complete list of all employees
who are employed by the Seller as of the date
hereof, and said list correctly reflects their
salaries, wages, other compensation (other than
benefits under the employee welfare, benefit and
similar plans), dates of employment and positions.
(vi) As of the date of this
Agreement, Seller has 136 full-time active
employees in the operation of the Business, and 31
part-time employees.
(vii) Seller has no retirement,
pension, profit sharing, employee welfare or
employee benefit plans for any of its employees.
(o) Except as set forth on the Disclosure
Schedule, there is no litigation or proceeding, in law or in
equity, and there are no proceedings or governmental
investigations before any commission or other administrative
authority, pending, or, to the best of Seller's knowledge,
threatened, against Seller or its Affiliates, or with
respect to the consummation of the transaction contemplated
hereby, or the use of the Purchased Assets (whether used by
Purchaser after the Closing or by Seller prior thereto), or
which would restrict or interfere with Seller's ability to
perform its obligations hereunder.
(p) There are no material claims pending or, to
the best of Seller's knowledge, anticipated or threatened
against Seller with respect to the quality of or absence of
or defects in Seller's products or services.
(q) Seller is not a party to, or bound by, any
decree, order, judgment or arbitration award (or agreement
entered into in any administrative, judicial or arbitration
proceeding with any governmental authority) with respect to
its properties, assets, personnel or business activities.
(r) Seller is not in violation of, or delinquent
in respect to, any decree, order or arbitration award or
law, statute, or regulation of, or agreement with, or Permit
from, any Federal, state or local governmental authority (or
to which any of the Purchased Assets, any of Seller's
personnel, or the Business are subject or to which it,
itself, is subject), including, without limitation, laws,
statutes and regulations relating to equal employment
opportunities, fair employment practices, unfair labor
practices, terms of employment, occupational health and
safety, wages and hours and discrimination, and zoning
ordinances and building codes. Copies of all notices of
violation of any of the foregoing which Seller has received
within the past three years are attached to the Disclosure
Schedule.
(s) Seller, the Purchased Assets and the
Business are in compliance with all Environmental Laws (as
herein defined) and any Environmental Permits (as herein
defined). A copy of any notice, citation, inquiry or
complaint which Seller has received in the past three years
of any alleged violation of any Environmental Law or
Environmental Permit is attached to the Disclosure Schedule.
Seller possesses all Environmental Permits which are
required for the operation of the Business, and is in
compliance with the provisions of all such Environmental
Permits. Copies of all Environmental Permits issued to
Seller are attached to the Disclosure Schedule. As used in
this Agreement, "Environmental Laws" means all federal,
state and local statutes, regulations, ordinances, rules,
regulations and policies, all court orders and decrees and
arbitration awards, and the common law, which pertain to
hazardous substances or materials, environmental matters or
contamination of any type whatsoever; and "Environmental
Permits" means licenses, permits, registrations,
governmental approvals, agreements and consents which are
required under or are issued pursuant to Environmental Laws.
(t) The Real Estate is identified and legally
described in Schedule 1.2(c) hereto. Seller holds fee simple
title to the Real Estate, subject only to the Permitted
Exceptions, none of which makes title to the Real Estate
unmarketable and none of which are violated by Seller or will
interfere with Purchaser's use thereof.
(u) Intentionally Omitted.
(v) There are no pending, or, to the knowledge of
Seller, threatened, condemnation proceedings or condemnation
actions against the Real Estate or any of the rights-of-way
located adjacent thereto.
(w) The Real Estate is currently zoned for its
present use and does not rely on parking or other facilities
or land not located on the Real Estate to satisfy any legal
requirements.
(x) Intentionally Omitted.
(y) The Hotel's mechanical, electrical, plumbing and
environmental systems are in good operating condition and
repair. None of the general partners of Seller has any
actual knowledge of any latent defects in or on the Real
Estate.
(z) Seller has not taken any actions which were
calculated to dissuade any present employees,
representatives or agents of Seller from becoming associated
with Purchaser.
(aa) The representations and warranties of Seller in
this Agreement do not omit to state a material fact
necessary in order to make the representations, warranties
or statements contained herein not misleading.
(bb) The copies of all documents furnished by Seller
to Purchaser pursuant to the terms of this Agreement are
complete and accurate. The Disclosure Schedule contains
complete and accurate copies of all documents referred to
therein. The information contained in the Disclosure
Schedule is complete and accurate.
(cc) Except for Seller's Agent, whose compensation is
the responsibility of Seller only, neither Seller, nor any
of its Affiliates, has dealt with any person or entity who
is or may be entitled to a broker's commission, finder's
fee, investment banker's fee or similar payment for
arranging the transaction contemplated hereby or introducing
the parties to each other.
(dd) No governmental assessment for sewer, sidewalk,
water, paving, electrical, power or other improvements is
pending or threatened.
(ee) All utility equipment and facilities required
for the operation and use of the Real Estate and Equipment
are located solely on the Real Estate and all agreements for
providing utilities are with direct providers.
(ff) (i) No materials designated as hazardous or
toxic under any Environmental Laws have been located on the
Real Estate, except for small amounts used in the ordinary
course of the Business (and then only in compliance with all
Environmental Laws) or have been released into the
environment, or discharged, placed or disposed of at, on or
under the Real Estate; (ii) no underground storage tanks
have been located on the Real Estate; (iii) the Real Estate
has never been used as a dump for waste material; and (iv)
the Real Estate and its prior uses comply with, and at all
times have complied with, any applicable Environmental Laws.
The parties acknowledge that hydraulic fluid, absent
specifically hazardous or toxic ingredients such as PCBs
(hereinafter defined), shall not by itself constitute a
hazardous or toxic material.
(gg) Seller has received no written notice that the
Real Estate, when used for the purposes and in the manner
presently used, violates or fails to comply with the
provisions of the Americans with Disabilities Act of 1990,
42 U.S.C. 12101 et seq. (the "ADA") and all other legal
requirements governing the use of the Property by persons
with disabilities.
(hh) None of Seller's officers, directors, employees
or partners, or members of their families (or any entity in
which any of them has a material financial interest,
directly or indirectly), owns any assets which are used in
the Business, except for assets being transferred by the
Individuals to Purchaser in accordance with the provisions
of Section 1.6 hereof. Except for the Affiliate Lease, and
the management agreements between Seller and Hotel
Management and Development, Inc., none of the contracts,
leases or agreements shown in the Disclosure Schedule is
between Seller and an Affiliate of Seller.
4.4 Limitation on Warranties. THE PURCHASED ASSETS ARE
BEING SOLD "AS IS," "WHERE IS" AND IN THEIR PRESENT CONDITION,
AND EXCEPT AS EXPRESSLY SET FORTH IN SECTION 4.3 OR ELSEWHERE IN
THIS AGREEMENT, SELLER MAKES (AND HAS MADE) NO WARRANTY OF ANY
KIND WHATSOEVER, INCLUDING, WITHOUT LIMITATION, ANY
REPRESENTATION AS TO PHYSICAL CONDITION OR VALUE OF ANY OF THE
PURCHASED ASSETS, FITNESS FOR A PARTICULAR PURPOSE, EXISTENCE OF
HIDDEN OR LATENT DEFECTS OR THE FUTURE PROFITABILITY OR FUTURE
EARNINGS PERFORMANCE OF THE BUSINESS. Purchaser waives its right
to redhibition for an existing latent defect under Art. 2520 of
the La. Civil Code, but does not waive any right to recission as
a general remedy under this Agreement for a breach, default or
failure of warranty of Seller, as otherwise permitted under the
laws of the State of Louisiana. The foregoing limitations may be
incorporated into any deed or other conveyance delivered by
Seller pursuant to Section 7.3 hereof, provided the same shall
not limit or impair the warranties of title included or required
to be included thereunder.
ARTICLE V
Conduct Prior to the Closing
5.1 General. Seller and Purchaser shall have the rights
and obligations with respect to the period between the date
hereof and the Closing Date which are set forth in the remainder
of this Article V.
5.2 Seller's Obligations. The following are Seller's
obligations:
(a) Seller shall give to Purchaser's officers,
employees, attorneys, consultants, accountants, inspectors
and lenders reasonable access during normal business hours
to all of the assets, properties, books, contracts,
documents, records and personnel of Seller and shall furnish
to Purchaser such information as Purchaser may at any time
and from time to time reasonably request.
(b) Seller shall use its best efforts and make every
good faith attempt (and Purchaser shall cooperate with
Seller) to obtain all consents to the assignment of, or
alternate arrangements satisfactory to Purchaser with
respect to, any contract, lease, agreement, purchase order,
sales order, or other instrument accepted by Purchaser, or
any Permit or Environmental Permit, which consents may be
required for such assignment to be effective (collectively,
the "Consents").
(c) Seller shall use its best efforts to preserve its
business and the goodwill of its customers, suppliers and
others having business relations with Seller and to retain
its business organization intact, including keeping
available the services of its present employees,
representatives and agents, and shall maintain all of its
properties in their current operating condition and repair,
ordinary wear and tear excepted.
(d) Seller shall conduct the Business in the usual and
ordinary course and carry on all of its operations
(including, without limitation, the purchase and sale of
Inventory, the collection of Accounts Receivable and the
payment of Accounts Payable and other obligations) in
accordance with past practices. Without limiting the
foregoing, Seller shall allow its inventories of Consumables
On-Hand to be depleted to such levels as Purchaser may
reasonably request, provided the requested depletion does
not unreasonably interfere with Seller's operation of the
Business, in Seller's reasonable determination.
(e) Without the prior written consent of Purchaser,
and without limiting the generality of any other provision
of this Agreement, Seller shall not:
(i) Intentionally Omitted.
(ii) incur, assume or guarantee any long-term or
short-term indebtedness that would prohibit or prevent
Seller's performance of its obligations hereunder;
(iii) directly or indirectly, enter into or
assume any contract, agreement, obligation, lease, license
or commitment other than in the usual and ordinary course of
business in accordance with past practices;
(iv) adopt or amend any employee welfare or
benefit plan;
(v) sell, transfer or otherwise dispose of any
material asset or property except in the usual and ordinary
course of business and except for cash applied in payment of
Seller's liabilities in the usual and ordinary course of
business;
(vi) amend, terminate or give notice of
termination with respect to any existing contract or
agreement to which Seller is a party, or waive any material
rights;
(vii) directly or indirectly, enter into any
transaction (including, without limitation, the purchase,
sale, lease or exchange of any property or the rendering of
services) with any Affiliate of Seller that would prohibit
or prevent Seller's performance of its obligations
hereunder;
(viii) Intentionally Omitted.
(ix) terminate the employment, except for cause,
of any of its full time active employees (Seller shall give
Purchaser prompt written notice of any such terminations for
cause).
(f) Seller shall assist and cooperate with Purchaser
in the transfer of all Permits and Environmental Permits
necessary for the operation of the Business by Purchaser.
(g) Seller shall, at its own cost and expense, make
all filings, deliver all notices, pay all fees and otherwise
comply with the provisions of any applicable bulk transfer
or similar law regarding Seller's sale of the Purchased
Assets.
(h) Seller shall complete any planned capital
expenditures between now and Closing as they are currently
scheduled.
(i) Seller shall, at its own cost and expense prior to
Closing, complete any clean-up or remediation as contemplated
under Section 5.8 hereof.
5.3 Purchaser's Obligations. Subject to Purchaser's
termination rights under Section 5.5 hereof, Purchaser shall use
its good faith efforts to secure financing as contemplated under
Section 6.2(h) hereof, agreements with Holiday Inns as
contemplated under Section 6.2(i) hereof, as well as the consents
and approvals of its primary lenders and of any trustee for the
holders of its debt securities as contemplated under Section
6.2(g) hereof, and of any gaming regulatory authorities having
jurisdiction as contemplated under Section 6.2(e) hereof. In its
efforts to obtain mortgage financing as aforesaid, Purchaser may,
in its sole discretion, at any time prior to Closing, substitute
the lender so long as such substitution is not reasonably
expected to impair Purchaser's ability to make Closing hereunder.
5.4 Joint Obligations. The following shall apply with
equal force to Seller and Purchaser:
(a) Seller and Purchaser shall use their respective
good faith efforts to take, or cause to be taken, all action
and to do, or cause to be done, all things necessary, proper
or advisable to consummate the transactions contemplated
hereby as soon as practicable.
(b) Each of Seller and Purchaser shall cooperate with
the efforts of the other in obtaining any Consents or any
other approvals contemplated hereunder.
(c) Each party shall promptly give the other party
written notice of the existence or occurrence of any
condition which would make any representation or warranty
herein contained of either party untrue or which might
reasonably be expected to prevent the consummation of the
transactions contemplated hereby; but failure in good faith
to provide such notice shall not itself constitute a default
of such party, nor excuse nonperformance of the other party,
hereunder. The party whose representation would be untrue,
or whose performance hereunder may be prevented or impaired,
as a result of such existence or occurrence, shall have an
additional period of ten (10) business days to correct such
condition, and if necessary Closing shall be extended to
accommodate such cure period.
(d) No party shall intentionally perform any act
which, if performed, or omit to perform any act which, if
omitted to be performed, would prevent or excuse the
performance of this Agreement by any party hereto or which
would result in any representation or warranty herein
contained of said party being untrue in any material respect
as if originally made on and as of the Closing Date.
(e) [Intentionally Omitted]
5.5 Due Diligence Inspection.
(a) Purchaser shall continue to be entitled to conduct
its due diligence inspection with respect to the Business
and its assets, from August 21, 1997 until 11:59 p.m. CST on
October 6, 1997 (the "Inspection Period").
(b) Seller has, and shall continue to promptly provide
to Purchaser, access to Seller's assets and Seller's books
and records with respect to the Business and/or Seller's
assets, on reasonable advance request of Purchaser. In
addition, Seller shall promptly supply to Purchaser and its
officers, directors, consultants, agents, inspectors,
lenders and professionals, those documents, materials and
information listed in Exhibit I to the Letter of Intent
dated August 21, 1997 between Seller and Purchaser, and any
other documentation or information reasonably requested by
Purchaser. Seller shall cooperate fully with Purchaser or
its officers, directors, consultants, agents, inspectors,
lenders and professionals, in the course of Purchaser's due
diligence review. Purchaser shall use its good faith
efforts to conduct its due diligence review so as not to
interfere unreasonably with the operation of the Business.
(c) At any time prior to the expiration of the
Inspection Period as aforesaid, Purchaser may, if it is not
fully satisfied with any result(s) of its diligence review,
in its sole and absolute discretion, terminate this
Agreement by written notice to Seller. If Purchaser
terminates this Agreement prior to the expiration of the
Inspection Period, then, without the necessity of further
documentation, this Agreement shall be deemed terminated,
the Primary Deposit and all interest thereon shall be
returned to Purchaser as provided in Section 3.3(b) hereof,
and thereupon neither party shall have any further
obligation or liability to the other hereunder. The
Additional Deposit shall only be refunded as provided in
Section 3.3(b) hereof.
(d) The parties hereto acknowledge that Purchaser has
incurred substantial costs in connection with the
negotiation and execution of this Agreement, will incur
additional substantial costs in conducting its due diligence
review hereunder, and would not have entered into this
Agreement without the availability of the Inspection Period.
Therefore, the parties agree that adequate consideration
exists to support the obligations of the parties hereunder,
even before expiration of the Inspection Period.
(e) Subject to Seller's performance under the terms of
this Agreement, and to satisfaction of all of the conditions
to Purchaser's obligations as set forth in Section 6.2
hereof, the Deposit Monies shall become non-refundable at
the expiration of the Inspection Period, and shall serve as
Seller's liquidated damages hereunder in the event of
Purchaser's default, all as contemplated under Section 9.2
hereof.
5.6 Inventory of Purchased Assets. Within ten (10) days
after the complete execution of this Agreement,
representatives of Seller and Purchaser shall jointly
conduct a physical inventory of the personal property
included in the Purchased Assets (other than Consumables On-
Hand), to the extent and with the detail determined by
Purchaser, in its sole discretion (the "Personalty
Inventory"). To the extent items were counted as part of
the Personalty Inventory, then at Closing, Seller shall be
obligated to convey to Purchaser such Purchased Assets
substantially as described in the Personalty Inventory
report. If at Closing items described in the Personalty
Inventory report are missing or so damaged as to be
unusable, Purchaser shall receive a credit at Closing for
the market value thereof, to the extent the aggregate market
value of such missing and/or damaged items exceeds
$7,500.00.
5.7 Contact with Employees. Purchaser's contacts with
Seller's employees in connection with this transaction shall
be limited to such contact(s) as may be: (i) reasonably
necessary in connection with Purchaser's due diligence
review under Section 5.5 hereof; or (ii) permitted as
contemplated under Section 10.10 hereof.
5.8 Environmental Matter. The Phase I Environmental Site
Assessment prepared for Purchaser in connection with this
transaction notes the fact that hydraulic fluid is stored
near the elevator facilities of the Hotel, and that such
hydraulic fluid may have been spilled or leaked. Such Site
Assessment also raises the possibility that such hydraulic
fluids may contain hazardous substances known as "PCBs", and
suggests sampling and testing of same. Seller has, at its
sole cost and expense, had certain of such hydraulic fluids
sampled, and a laboratory analysis thereof conductedby the
Meyers Group and Core Laboratories. No reports have yet
been issued by such consultants. The environmental
consultants of both Seller and Purchaser shall consult with
each other promptly after the execution hereof, and
determine which other areas and substances, if any, the
Purchaser's environmental consultant requires to be sampled
and analyzed, as noted in the aforesaid Phase I
Environmental Site Assessment. Based on such consultation,
Seller's environmental consultant shall conduct further
sampling and analysis of such other areas and substances, if
any. Seller shall obtain and deliver to Purchaser the
written reports of such consultants, as to all areas and
substances specified by Purchaser's environmental consultant
as aforesaid, certified to both Purchaser and Seller, within
twenty-one (21) days after the date of this Agreement. Each
such consultant shall acknowledge in writing that Purchaser
shall rely on, and is entitled to rely on, the aforesaid
reports in completing the transactions described herein. If
such sampling/testing discloses the presence of PCBs or
other hazardous substances, Seller shall, at its sole cost
and expense prior to Closing, have the same remediated in
accordance with all applicable state and federal
Environmental Laws. Such remediation shall be performed,
and certified to both Seller and Purchaser, by an
environmental contractor mutually acceptable to Seller and
Purchaser, in their reasonable discretion. Notwithstanding
the foregoing, if the cost of such remediation exceeds or is
reasonably expected (based on written quotations from
contractor(s) mutually acceptable to Seller and Purchaser)
to cost Seller more than $100,000, Seller may terminate this
Agreement by written notice to Purchaser, at which point all
Deposit Monies shall be returned to Purchaser, with
interest, and neither party shall have any further rights or
obligations hereunder.
ARTICLE VI
Conditions to Closing
6.1 Conditions to Seller's Obligations. The obligation of
Seller to consummate the transactions contemplated hereby is
subject to the fulfillment of all of the following conditions on
or prior to the Closing Date, upon the non-fulfillment of any of
which this Agreement may, at Seller's option, be terminated
pursuant to and with the effect set forth in Article IX:
(a) Each and every representation and warranty made by
Purchaser shall have been true and correct when made and
shall be true and correct in all material respects as if
originally made on and as of the Closing Date.
(b) All obligations of Purchaser to be performed
hereunder through, and including on, the Closing Date
(including, without limitation, all obligations which
Purchaser would be required to perform at the Closing if the
transaction contemplated hereby were consummated) shall have
been performed.
6.2 Conditions to Purchaser's Obligations. The obligation
of Purchaser to consummate the transaction contemplated hereby is
subject to the fulfillment of all of the following conditions on
or prior to the Closing Date, upon the non-fulfillment of any of
which this Agreement may, at Purchaser's option, be terminated
pursuant to and with the effect set forth in Article IX:
(a) Each and every representation and warranty made by
Seller shall have been true and correct when made and shall
be true and correct in all material respects as if
originally made on and as of the Closing Date.
(b) All obligations of Seller to be performed
hereunder through, and including on, the Closing Date
(including, without limitation, all obligations which Seller
would be required to perform at the Closing if the
transaction contemplated hereby were consummated) shall have
been performed.
(c) All of the Consents shall have been obtained.
(d) No suit, proceeding or investigation shall have
been commenced or threatened by any governmental authority
or private person(s), against any party (including without
limitation Seller and any of its affiliates, or any
partners, shareholders, officers or members of any of them),
on any grounds, the intent or likely effect of which
(exclusively or among other things) is to restrain, enjoin
or hinder, delay or to seek material damages on account of,
the consummation of the transaction contemplated hereby, or
to challenge any of the terms or provisions of this
Agreement, or arising out of this Agreement or the
transactions contemplated hereby.
(e) On or prior to November 17, 1997, Purchaser shall
have received all required consents, licenses and approvals
of the transactions contemplated hereunder (including
without limitation, Purchaser's financing thereof, and any
changes to existing financing to permit same) from the
gaming and other regulatory authorities having jurisdiction.
(f) Intentionally Omitted.
(g) On or prior to November 17, 1997, Purchaser shall
have received the prior written approval of Wells Fargo
Bank, N.A. and the Trustee for the holders of Purchaser's
debt securities to the transactions contemplated hereby
(including without limitation, Purchaser's financing
thereof, and any changes to existing financing to permit
same), all in form and substance satisfactory to Purchaser,
in its sole discretion.
(h) On or prior to November 17, 1997, Purchaser shall
have obtained mortgage financing for the transactions
contemplated hereby, on terms acceptable to Purchaser, in
its sole discretion, in the amount of at least seventy
percent (70%) of the aggregate total of the Purchase Price,
Holiday Inn Costs, Purchaser's costs of making Closing
hereunder and Purchaser's other expenses under the Letter of
Intent and this Agreement.
(i) On or prior to November 17, 1997, Purchaser shall
have entered into a New License Agreement and all related
agreements, or agreed with Holiday Inns upon the terms
thereof, in either case on terms acceptable to Purchaser, in
its sole discretion, as provided under Section 3.6 hereof
and Purchaser shall not have terminated this Agreement based
on the aggregate total amount of the Holiday Inn Costs, as
provided under Section 3.6 hereof.
(j) On or before October 16, 1997, Purchaser's Board
of Directors shall have approved this Agreement and the
transactions contemplated hereby.
(k) Prior to Closing, Purchaser shall not have
terminated this Agreement: (A) during the Inspection
Period, as provided under Section 5.5 hereof; or (B) by
virtue of a casualty, as provided under Section 6.3 hereof;
or (C) by virtue of a taking, as provided under Section 6.4
hereof.
If, despite Purchaser's good faith efforts, either of the
conditions set forth in subsections (g) or (i) hereof has not
been satisfied by November 17, 1997, the Purchaser may, at its
option, extend the date for satisfaction thereof, as described
above, to December 2, 1997, by written notice to Seller. If
Purchaser so elects to extend such date for either or both of
such conditions, then the Closing Date shall automatically be
extended to December 17, 1997 for all purposes hereunder.
6.3 Casualties. Risk of loss with respect to the
Purchased Assets shall remain with Seller until the Closing, and
thereafter with Purchaser. Therefore, the parties agree as
follows:
(a) If any damage to any of the Purchased Assets shall
occur prior to the Closing Date by reason of fire,
windstorm, earthquake, hail, explosion or other casualty,
and if, in Purchaser's reasonable judgment, the aggregate
cost of repairing such damage will equal or exceed Five
Hundred Thousand Dollars ($500,000.00), Purchaser may elect
to (i) terminate this Agreement by giving written notice to
Seller in which event the Deposit Monies and interest
thereon will be returned to Purchaser, and thereupon neither
party shall have any further obligations or liability
whatsoever to the other hereunder or (ii) receive an
assignment of all of Seller's rights to any insurance
proceeds (including business interruption proceeds) relating
to such damage (and a credit against the Purchase Price for
any such proceeds received by Seller) and acquire the
Purchased Assets without any adjustment in the Purchase
Price in connection therewith provided that, in such latter
event, Seller shall pay to Purchaser the amount of any
deductible under applicable insurance policies and uninsured
claims.
(b) If, in Purchaser's reasonable judgment, the cost
of repairing such damage will not exceed Five Hundred
Thousand Dollars ($500,000.00), the transactions
contemplated hereby shall close without any adjustment in
the Purchase Price in connection therewith, Purchaser shall
receive an assignment of all of Seller's rights to any
insurance proceeds (including business interruption
proceeds) (and a credit against the Purchase Price for any
such proceeds received by Seller), and Seller shall pay to
Purchaser the amount of any deductible under applicable
insurance policies and uninsured claims.
(c) If Purchaser does not terminate this Agreement as
provided in subparagraph (a) hereof, then any insurance
proceeds covering business interruption losses shall be
apportioned between Seller and Purchaser to the Closing
Date.
6.4 Takings. Risk of loss with respect to the Purchased
Assets shall remain with Seller until the Closing, and thereafter
with Purchaser. Therefore, the parties agree that in the event
of the actual or threatened taking (either temporary or
permanent) in any condemnation proceedings by exercise of right
of eminent domain, of all or any part of the Real Estate, between
the date hereof and the Closing Date, and if, in Purchaser's
reasonable judgment, such taking will result in the inability to
conduct the operations of the Business substantially in
accordance with the present standards, Purchaser may elect to:
(i) terminate this Agreement by giving written notice to Seller,
in which event the Deposit Monies and interest thereon will be
returned to Purchaser, and thereupon neither party shall have any
further obligations or liability whatsoever to the other
hereunder or (ii) receive an assignment of all of Seller's rights
to any condemnation award relating to such taking and acquire the
Purchased Assets without any adjustment in the Purchase Price in
connection therewith.
ARTICLE VII
Closing
7.1 Form of Documents. At the Closing, the parties shall
deliver the documents, and shall perform the acts, which are set
forth in this Article VII. All documents which Seller shall
deliver shall be in form and substance reasonably satisfactory to
Purchaser and Purchaser's counsel. All documents which Purchaser
shall deliver shall be in form and substance reasonably
satisfactory to Seller and Seller's counsel.
7.2 Purchaser's Deliveries. Subject to the fulfillment or
waiver of the conditions set forth in Sections 6.2, Purchaser
shall execute and/or deliver to Seller all of the following:
(i) Payment of the Purchase Price as required under
Section 3.3(a) hereof.
(ii) An assumption agreement, duly executed by
Purchaser, under which Purchaser assumes those Assumed
Liabilities described in Section 2.2 hereof.
(iii) An incumbency and specimen signature
certificate with respect to the officers of Purchaser
executing this Agreement and Purchaser's Ancillary Documents
on behalf of Purchaser.
(iv) A certified copy of resolutions of Purchaser's
Board of Directors, authorizing the execution, delivery and
performance of this Agreement and Purchaser's Ancillary
Documents
(v) A closing certificate executed by an executive
officer of Purchaser (or any other officer of Purchaser
specifically authorized to do so), on behalf of Purchaser,
pursuant to which Purchaser represents and warrants to
Seller that Purchaser's representations and warranties to
Seller are true and correct as of the Closing Date as if
then originally made (or, if any such representation or
warranty is untrue in any respect, specifying the respect in
which the same is untrue), that all covenants required by
the terms hereof to be performed by Purchaser on or before
the Closing Date, to the extent not waived by Purchaser in
writing, have been so performed (or, if any such covenant
has not been performed, indicating that such covenant has
not been performed), and that all documents to be executed
and delivered by Purchaser at the Closing have been executed
by duly authorized officers of Purchaser.
(vi) Such other documents from Purchaser as may
reasonably be required in order to effectuate the
transactions contemplated (i) hereby and (ii) by the
Purchaser's Ancillary Documents.
7.3 Seller's Deliveries. Subject to the fulfillment or
waiver of the conditions set forth in Section 6.1, Seller shall
execute (where applicable in recordable form) and/or deliver or
cause to be executed and/or delivered to Purchaser all of the
following:
(i) A general warranty deed (subject only to Permitted
Exceptions), an affidavit of title, a certificate in
compliance with the Foreign Investment in Real Property Tax
Act ("FIRPTA") certifying that Seller is not a person or
entity subject to withholding under FIRPTA, an ALTA
statement and all other documents required by Purchaser's
title insurance company with respect to the Real Estate, in
each case executed by Seller, together with any necessary
transfer declarations.
(ii) A general warranty bill of sale, executed by
Seller, conveying all of the Inventory, Equipment and other
tangible personal property included in the Purchased Assets
to Purchaser, free and clear of all liens, claims,
encumbrances and security interests other than Permitted
Exceptions and containing the warranties of title set forth
in this Agreement.
(iii) An assignment to Purchaser, executed by
Seller, of all of the Purchased Assets (other than the
Inventory, Equipment, and the Real Estate), along with the
original instruments (if any) representing, evidencing or
constituting such Purchased Assets, free and clear of all
liens, claims, encumbrances and security interests other
than Permitted Exceptions and containing the warranties of
title set forth in this Agreement. If necessary in the
opinion of Purchaser's counsel, Seller shall also execute
and deliver (in recordable form where required) separate
assignments of any of the Purchased Assets, and where
applicable, in the form required by the applicable
governmental agencies, insurance companies, customers,
lessors, and other parties with whom the assignments must be
filed.
(iv) Certificates of title or origin (or like
documents) with respect to all vehicles included in the
Purchased Assets and other Equipment, and any other items of
Purchased Assets for which a certificate of title or origin
is required in order for title thereto to be transferred to
Purchaser.
(v) Physical possession of the tangible items
comprising the Purchased Assets, and of any certificates or
documents representing intangible items of Purchased Assets.
(vi) An incumbency and specimen signature certificate
with respect to the general partner's officers of Seller
executing this Agreement and Seller's Ancillary Documents on
behalf of Seller.
(vii) A closing certificate duly executed by the
general partners of Seller (or any one of them specifically
authorized in writing by partnership action to do so), on
behalf of Seller, pursuant to which Seller represents and
warrants to Purchaser that Seller's representations and
warranties to Purchaser are true and correct as of the
Closing Date as if then originally made (or, if any such
representation or warranty is untrue in any respect,
specifying the respect in which the same is untrue), that
all covenants required by the terms hereof to be performed
by Seller on or before the Closing Date, have been so
performed (or, if any such covenant has not been so
performed, indicating that such covenant has not been
performed), and that all documents to be executed and
delivered by Seller at the Closing have been executed by
duly authorized officers of Seller.
(viii) A pay-off letter, accompanied by wire
transfer instructions from each secured lender of Seller and
written instructions from Seller directing Purchaser to
transfer funds, out of the Purchase Price, to each such
secured lender of Seller as necessary to pay off Seller's
indebtedness to each such lender.
(ix) Releases of all liens and other encumbrances and
security interests held by any lender of Seller in any of
the Purchased Assets, including, without limitation, UCC-3
termination statements.
(x) To the extent obtained, all necessary consents for
the assignment of contracts, leases, purchase orders, sales
orders, Permits and Environmental Permits which are to be
assigned to Purchaser or alternate arrangements with respect
thereto, all as reasonably acceptable to Purchaser.
(xi) Such other documents as may reasonably be required
in order to effectuate the provisions of Section 1.6 hereof.
(xii) Such other documents as may reasonably be
required from Seller in order to effectuate the transactions
contemplated (i) hereby and (ii) by the Seller's Ancillary
Documents.
7.4 No Merger. None of the covenants, representations,
warranties and agreements of Purchaser and Seller, as the case
may be, contained in this Agreement shall merge with any deed or
conveyance, and such covenants, representations, warranties and
agreements shall survive the Closing and shall continue in full
force and effect until such time, if any, as provided in such
covenant or agreement or otherwise limited by law.
ARTICLE VIII
Indemnification
8.1 General. From and after the Closing, the parties shall
indemnify each other as provided in this Article VIII. For the
purposes of this Article VIII, each party shall be deemed to have
remade all of its representations and warranties contained in
this Agreement at the Closing with the same effect as if
originally made at the Closing. As used in this Agreement, the
term "Damages" shall mean all liabilities, demands, claims,
actions or causes of action, regulatory, legislative or judicial
proceedings or investigations, assessments, levies, losses,
fines, penalties, damages, costs and expenses, including, without
limitation, reasonable attorneys', accountants', investigators',
and experts' fees and expenses, sustained or incurred in
connection with the defense or investigation of any such claim.
As used in this Agreement, the term "Indemnified Party" shall
mean a party hereto who is entitled to indemnification from the
other party hereto pursuant to this Article VIII; "Indemnifying
Party" shall mean a party hereto who is required to provide
indemnification under this Article VIII to the other party
hereto; and "Third Party Claims" shall mean any claims for
Damages asserted or threatened by a party other than the parties
hereto, their successors and permitted assigns, against any
Indemnified Party or to which an Indemnified Party is subject.
8.2 Indemnification Obligations of Seller. Seller shall
defend, indemnify, save and keep harmless Purchaser and its
successors and permitted assigns against and from all Damages
sustained or incurred by any of them resulting from or arising
out of or by virtue of:
(a) any inaccuracy in or breach of any representation
and warranty made by Seller in this Agreement or in any
closing document delivered to Purchaser in connection with
this Agreement;
(b) any breach by Seller of, or failure by Seller to
comply with, any of its covenants or obligations under this
Agreement (including, without limitation, its obligations
under this Article VIII);
(c) the failure to discharge when due (whether before
or after Closing) any liability or obligation of Seller
other than the Assumed Liabilities, or any claim against
Purchaser or the Purchased Assets with respect to any such
liability or obligation or alleged liability or obligation;
(d) any claims by parties other than Purchaser to the
extent caused by acts or omissions of Seller on or prior to
the Closing Date, including, without limitation, claims for
Damages which arise or arose out of Seller's operation of
the Business or by virtue of Seller's ownership of the
Purchased Assets on or prior to the Closing Date;
(e) any employee pension benefit plan (as defined by
Section 3(2) of ERISA) or any employee welfare benefit plan
(as defined in Section 3(1) of ERISA) which Seller or an
ERISA Affiliate has at any time maintained or administered
or to which Seller or any ERISA Affiliate has at any time
contributed (including, without limitation, any liability
for health continuation requirements under Code
Section 4980B or Part 6 of Subtitle B of Title I of ERISA
and any liability arising pursuant to Title IV of ERISA for
plan termination, withdrawal or partial withdrawal from any
multi-employer plan, or any lien to enforce any Title IV
liability);
(f) any benefits accrued pursuant to any employee
retirement plan, employee welfare plan or employee benefit
plan at or prior to the Closing Date other than benefits
payable under insurance policies constituting Purchased
Assets;
(g) any action or failure to act, in whole or in part,
at or prior to the Closing Date with respect to any employee
retirement plan, employee welfare plan or employee benefit
plan; or
(h) failure to deliver to Purchaser the quality of title
required under this Agreement.
8.3 Purchaser's Indemnification Covenants. Purchaser shall
defend, indemnify, save and keep harmless Seller and its
successors and permitted assigns against and from all Damages
sustained or incurred by any of them resulting from or arising
out of or by virtue of:
(a) any inaccuracy in or breach of any representation
and warranty made by Purchaser in this Agreement or in any
closing document delivered to Seller in connection with this
Agreement;
(b) any breach by Purchaser of, or failure by
Purchaser to comply with, any of its covenants or
obligations under this Agreement (including, without
limitation, its obligations under this Article VIII);
(c) Purchaser's failure to pay, discharge and perform
any of the Assumed Liabilities; or
(d) any claims by parties other than Seller to the
extent caused by the acts or omissions of Purchaser after
the Closing Date and not constituting an Excluded Liability,
including, without limitation, claims for Damages which
arise out of Purchaser's operation of the Business after the
Closing Date.
8.4 Cooperation. Subject to the provisions of Section 8.5,
the Indemnifying Party shall have the right, at its own expense,
to participate in the defense of any Third Party Claim, and if
said right is exercised, the parties shall cooperate in the
investigation and defense of said Third Party Claim.
8.5 Third Party Claims. Forthwith following the receipt of
notice of a Third Party Claim, the party receiving the notice of
the Third Party Claim shall (i) notify the other party of its
existence setting forth with reasonable specificity the facts and
circumstances of which such party has received notice and (ii) if
the party giving such notice is an Indemnified Party, specifying
the basis hereunder upon which the Indemnified Party's claim for
indemnification is asserted. The Indemnified Party may, upon
reasonable notice, tender the defense of a Third Party Claim to
the Indemnifying Party. If:
(a) the defense of a Third Party Claim is so tendered
and such tender is accepted without qualification by the
Indemnifying Party; or
(b) within thirty (30) days after the date on which
written notice of a Third Party Claim has been given
pursuant to this Section 8.5, the Indemnifying Party shall
acknowledge with qualification its indemnification
obligations as provided in this Article VIII in writing to
the Indemnified Party, but shall commit to providing
defense;
then, except as hereinafter provided, the Indemnified Party shall
not have the right to defend or settle such Third Party Claim.
The Indemnified Party shall have the right to be represented by
counsel at its own expense in any such contest, defense,
litigation or settlement conducted by the Indemnifying Party
provided that the Indemnified Party shall be entitled to
reimbursement therefor if the Indemnifying Party shall lose its
right to contest, defend, litigate and settle the Third Party
Claim as herein provided. The Indemnifying Party shall lose its
right to defend and settle the Third Party Claim if it shall fail
to diligently contest the Third Party Claim. So long as the
Indemnifying Party has not lost its right and/or obligation to
defend and settle as herein provided, the Indemnifying Party
shall have the exclusive right to contest, defend and litigate
the Third Party Claim and shall have the exclusive right, in its
discretion exercised in good faith, and upon the advice of
counsel, to settle any such matter, either before or after the
initiation of litigation, at such time and upon such terms as it
deems fair and reasonable, provided that at least ten (10) days
prior to any such settlement, written notice of its intention to
settle shall be given to the Indemnified Party. All expenses
(including without limitation attorneys' fees) incurred by the
Indemnifying Party in connection with the foregoing shall be paid
by the Indemnifying Party. Notwithstanding the foregoing, in
connection with any settlement negotiated by an Indemnifying
Party, no Indemnified Party shall be required by an Indemnifying
Party to (x) enter into any settlement that does not include as
an unconditional term thereof the delivery by the claimant or
plaintiff to the Indemnified Party of a release from all
liability in respect of such claim or litigation, (y) enter into
any settlement that attributes by its terms liability to the
Indemnified Party or (z) consent to the entry of any judgment
that does not include as a term thereof a full dismissal of the
litigation or proceeding with prejudice. No failure by an
Indemnifying Party to acknowledge in writing its indemnification
obligations under this Article VIII shall relieve it of such
obligations to the extent they exist. If an Indemnified Party is
entitled to indemnification against a Third Party Claim, and the
Indemnifying Party fails to accept the defense of a Third Party
Claim tendered pursuant to this Section 8.5, or if, in accordance
with the foregoing, the Indemnifying Party shall lose its right
to contest, defend, litigate and settle such a Third Party Claim,
the Indemnified Party shall have the right, without prejudice to
its right of indemnification hereunder, in its discretion
exercised in good faith and upon the advice of counsel, to
contest, defend and litigate such Third Party Claim, and may
settle such Third Party Claim, either before or after the
initiation of litigation, at such time and upon such terms as the
Indemnified Party deems fair and reasonable, provided that at
least ten (10) days prior to any such settlement, written notice
of its intention to settle is given to the Indemnifying Party.
If, pursuant to this Section 8.5, the Indemnified Party so
defends or settles a Third Party Claim, for which it is entitled
to indemnification hereunder, as hereinabove provided, the
Indemnified Party shall be reimbursed by the Indemnifying Party
for the reasonable attorneys' fees and other expenses of
defending the Third Party claim which is incurred from time to
time, forthwith following the presentation to the Indemnifying
Party of itemized bills for said attorneys' fees and other
expenses.
8.6 Expiration. The liability of the parties to indemnify
each other under this Article VIII shall terminate and expire
thirty (30) months after the Closing Date, except for liability
with respect to claims for indemnity submitted prior to the end
of such 30-month period, as to which liability of the parties
hereunder shall survive and continue without limit until final
resolution thereof.
ARTICLE IX
Effect of Termination/Proceeding
9.1 Right to Terminate. This Agreement and the transaction
contemplated hereby may be terminated at any time prior to the
Closing by prompt notice given in accordance with Section 11.3:
(a) by the mutual written consent of Purchaser and
Seller; or
(b) by either of such parties if the Closing shall not
have occurred at or before 11:59 p.m. on the Closing Date;
provided, however, that the right to terminate this
Agreement under this Section 9.1(b) shall not be available
to any party whose failure to fulfill any material
obligation under this Agreement has been the cause of or
resulted in the failure of the Closing to occur on or prior
to the aforesaid date.
9.2 Remedies. In the event of a breach of this Agreement,
the non-breaching party shall not be limited to the remedy of
termination of this Agreement, but shall be entitled to pursue
all available legal and equitable rights and remedies, and shall
be entitled to recover all of its reasonable costs and expenses
incurred in pursuing them (including, without limitation,
reasonable attorneys' fees); provided, however, that the parties
agree that Seller's remedies for Purchaser's default hereunder
would be difficult, if not impossible, to determine. Therefore,
Seller's damages on Purchaser's default shall in all events be
limited to Seller's retention of the Deposit Monies, which are
agreed to be Seller's liquidated damages hereunder.
9.3 Injunctive Relief. Seller specifically recognizes that
any breach of the provisions of this Agreement will cause
irreparable injury to Purchaser and that actual damages may be
difficult to ascertain, and in any event, may be inadequate.
Accordingly (and without limiting the availability of legal or
equitable, including injunctive, remedies under any other
provisions of this Agreement), Seller agrees that in the event of
any such breach, Purchaser shall be entitled to equitable relief,
including the specific performance of Seller's obligations
hereunder, and such other legal and equitable remedies that may
be available.
ARTICLE X
Post Closing and Business Matters
10.1 Safes and Safe Deposit Boxes. Immediately after the
Closing, Seller shall send written notice to guests or tenants or
other persons who have valuables or other items in Seller's safe
deposit boxes, advising of the sale of the Business to Purchaser
and requesting immediate removal of the contents thereof or the
removal thereof and concurrent re-deposit of such contents
pursuant to new safe deposit agreements with Purchaser. Seller,
at its own expense, shall have a representative present when the
boxes are opened, in the presence of a representative of
Purchaser. Purchaser shall not be liable or responsible for any
items claimed to have been in such boxes unless such items are so
removed and re-deposited, and Seller agrees to indemnify and hold
harmless Purchaser and its Indemnitees from and against such
Liabilities.
10.2 Inspection of Records. Seller and Purchaser shall each
retain and make their respective books and records (including
work papers in the possession of their respective accountants)
available for inspection by the other party, or by its duly
accredited representatives, for reasonable business purposes at
all reasonable times during normal business hours, for a five
year period after the Closing Date, with respect to all
transactions occurring prior to and those relating to the
Closing, the historical financial condition, assets, liabilities,
results of operations and cash flows of Seller. As used in this
Section 10.2, the right of inspection includes the right to make
extracts or copies. The representatives of a party inspecting
the records of the other party shall be reasonably satisfactory
to the other party.
10.3 Certain Assignments. Any other provision of this
Agreement to the contrary notwithstanding, this Agreement shall
not constitute an agreement to transfer or assign, or a transfer
or assignment of, any claim, contract, lease, Permit,
Environmental Permit, commitment, sales order or purchase order,
or any benefit arising thereunder or resulting therefrom, if an
attempt at transfer or assignment thereof without the consent
required or necessary for such assignment, would constitute a
breach thereof or in any way adversely affect the rights of
Purchaser or Seller thereunder. If such a consent or agreement
to transfer or assign is not obtained for any reason, Purchaser
and Seller shall cooperate in any arrangement Purchaser may
reasonably request to provide for Purchaser the benefits under
such claim, contract, lease, Permit, Environmental Permit,
commitment or order.
10.4 Employees. Purchaser shall not be obligated to offer
employment to any employee of Seller, but Purchaser shall have
the right to employ employees of Seller as of the Closing Date,
on terms and conditions established by Purchaser in its sole
discretion. For a period of one year commencing on the Closing
Date, Seller shall not take any actions which are calculated to
persuade any salaried, technical or professional employees,
representatives or agents of Purchaser to terminate their
association with Purchaser.
10.5 Sales and Transfer Taxes and Fees. Seller shall pay
when due from assets other than the Purchased Assets, all
recording fees for documents necessary to clear title as required
hereunder, personal property title application fees, real
property transfer taxes and fees and all other taxes and fees on
transfer of the Purchased Assets arising by virtue of the sale of
the Purchased Assets to Purchaser, regardless of whether the
liability for said taxes or fees is imposed by law upon Seller or
upon Purchaser. Purchaser shall be responsible for any sales tax
due as a result of the sale of the Purchased Assets hereunder.
Seller shall nevertheless remain solely liable for all sales,
income and other taxes incurred in the operation of the Business
through the Cut-Off Time.
10.6 Further Assurances. The parties shall execute such
further documents, and perform such further acts, as may be
necessary to transfer and convey the Purchased Assets to
Purchaser, on the terms herein contained, and to otherwise comply
with the terms of this Agreement and consummate the transactions
contemplated hereby.
10.7 Regulatory Matters. Several of Purchaser's affiliates
("Players Entities") are licensed by and otherwise subject to the
authority of various casino and gaming regulatory agencies
including, but without limitation, gaming regulators in Illinois,
Kentucky, Louisiana, Missouri, Nevada and New Jersey ("Gaming
Regulators"). Purchaser has adopted a regulatory compliance
policy, and Seller, for itself and its successors and permitted
assigns, agrees to provide Purchaser with such documentation,
information and assurances regarding Seller and its general
partners as may be necessary in order for Purchaser to comply
with Purchaser's regulatory compliance policy and with the
request of any Gaming Regulators. The foregoing shall be a
material obligation of Seller hereunder.
10.8 Brokerage Matters. Seller agrees that at the
Closing it shall pay to Seller's Agent a commission with respect
to the transaction contemplated hereby. Each of the parties
hereto represents and warrants to the other that, except as
provided in the immediately preceding sentence, neither such
party nor any officer, director or agent of such party has
entered into any agreement for the payment of any brokerage or
finder's fees, commissions, compensation or expenses to any
person, firm or corporation in connection with the transactions
contemplated by this Agreement, and each agrees to indemnify and
hold and save the other or others harmless from any such fees,
commissions, compensation or expenses (including reasonable
attorneys' fees and other expenses incurred in connection with
any such claim which may be due or asserted by reason of any such
agreement or purported agreement by the indemnifying party).
10.9 Costs of Parties.
(a) Purchaser shall be responsible for the cost of
Purchaser's title abstract, its commitment for title
insurance and ALTA owner's title policy (provided that
Seller shall promptly provide to Purchaser a copy of any
previous title work on the Real Estate), the cost of any
survey or environmental site assessment of the Real Estate,
if any, and all recording fees and charges for the
conveyance instruments contemplated under Article VII
hereof. Purchaser shall be responsible for all direct costs
of its due diligence review under Section 5.5 hereof.
(b) Seller shall be solely responsible, at its own
cost, for compliance with any applicable bulk transfer or
similar law, with ERISA and any other employee welfare or
protection laws, as well as any other employment laws.
(c) Each party shall pay its own legal, accounting and
consulting fees relating to this transaction as contemplated
by Section 11.4 hereof.
10.10 Employees.
(a) Seller hereby represents and warrants that Seller
has 136 full-time active employees as of the date of this
Agreement. Seller covenants and agrees that it will not
terminate employment of any such full-time active employees
between the date hereof and the Closing Date, except in the
ordinary course of the Business, for cause. Purchaser
acknowledges that some of Seller's employees may also quit
their employment between the date of this Agreement and the
Closing Date. Seller agrees to use its good faith efforts
to retain its employees at the Hotel. Seller acknowledges
that Purchaser shall have no liability or obligation
relating to Seller's employer-employee relationship with the
employees of the Business, and Seller agrees to take all
appropriate and legally necessary actions in connection
therewith.
(b) Except as specifically provided under this Section
10.10, Purchaser shall have no obligation or liability to
hire or employ, from and after the Closing Date, any
employees of Seller. All compensation, obligations,
liabilities and claims (including under the Fair Labor
Standards Act or the WARN Act (as herein defined)) due to or
claimed by an employee of Seller, arising or accruing prior
to or by virtue of Closing (whether under an employment
contract or otherwise; and including severance or other
obligations), shall be the responsibility of Seller.
Purchaser shall not be responsible for any such liability or
obligations, and Seller agrees to indemnify and hold
Purchaser and its Affiliates harmless from and against same.
The foregoing indemnity shall include, without limitation,
all required tax withholdings and contributions to or
premiums for any other insurance or benefit programs or
plans, to the extent arising or accruing prior to Closing.
(c) Purchaser shall have the right, as part of its due
diligence review under Section 5.5 hereof, to review all of
Seller's employment records and personnel files. From and
after November 17, 1997 (or December 2, 1997 if Purchaser
elects to extend the date for satisfaction of the conditions
in Section 6.2(g) and for 6.2(i) hereof) (the "Contact
Date"), Purchaser shall also have the right to conduct a
"jobs fair" at the Hotel, and to meet with and interview all
of Seller's employees. Purchaser shall not contact Seller's
employees in connection with this transaction prior to the
Contact Date, except in connection with (and as necessary to
perform) Purchaser's due diligence review under Section 5.5
hereof.
(d) After the Contact Date but at least three (3)
business days before the Closing Date, Purchaser shall
identify to Seller those employees to whom it does not
intend to offer employment at the Business. Such employees
are referred to herein as "Non-hired Employees". All other
employees are referred to herein as "Rehired Employees".
(e) Purchaser agrees, based upon Seller's
representation, warranty and covenant set forth in
subsection (a) hereof, that the number of Non-hired
Employees shall not exceed one-third of the total number of
Seller's full-time active employees immediately prior to the
Closing Date. Such representation, warranty and covenant of
Seller are material obligations of Seller hereunder, and
Purchaser has relied thereon in entering into this
Agreement, specifically including, without limitation, this
Section 10.10 hereof. Purchaser shall, from and after the
closing Date, offer employment to the Rehired Employees at
such pay and on such other terms not materially less
favorable to such Rehired Employees than those provided by
Seller immediately prior to Closing. The covenants of
Purchaser in this subsection (e) are material obligations of
Purchaser hereunder and Seller has relied thereon in
entering into this Agreement, specifically including,
without limitation, this Section 10.10 hereof.
(f) In reliance on Seller's representation, warranty
and covenant set forth in subsection (a) hereof, Purchaser
shall be responsible for any liability under the Workers
Adjustment and Retraining Notification Act, 29 U.S.C. 2100
et seq (the "WARN Act") that may be caused by terminations
by Purchaser of Rehired Employees from and after the Closing
Date, and Purchaser shall indemnify and hold Seller harmless
from and against any liability under the WARN Act arising as
a result thereof.
10.11 Other Matters. Unless otherwise agreed by Seller
and Purchaser, Seller shall be solely responsible for all
severance benefits, incentive pay and vacation pay, if any, for
all employees, and shall provide all employees with severance
benefits, and the vacation pay they may have earned, the pro
rata part of the vacation pay they would have earned upon the
anniversary date of their employment, if any, as of Closing.
10.12 Names and Marks. From and after Closing, Seller
shall not use any of the names, marks or other intellectual
property described in Section 1.2(f) hereof.
ARTICLE XI
Miscellaneous
11.1 Confidentiality. Purchaser and Seller hereby agree to
maintain the confidentiality, other than to their (or their
Affiliate's) officers, employees, advisors, agents, and
consultants or as required by law, rule or regulation, of (a) all
information that is exchanged that is not public information, (b)
the fact that this Agreement has been entered into and the terms
and conditions of this Agreement, and (c) the results of the
inspections and tests that are done at the Hotel in connection
with Purchaser's due diligence. "Public information" shall mean
information that was in the public domain or independently
received from a third party with the right to disclose such
information, information that was previously known to a party
before entering into this Agreement, or information that is
required to be disclosed by law.
11.2 Publicity. Except as otherwise required by law, press
releases concerning this transaction shall be made only with the
prior agreement of the Seller and Purchaser, and no such press
releases or other publicity shall state the amount of the
Purchase Price. Purchaser agrees not to discuss the transaction
contemplated by this Agreement with Seller's employees before the
Contact Date unless Seller coordinates such discussion.
11.3 Notices. All notices required or permitted to be given
hereunder shall be in writing and may be delivered by hand, by
facsimile, by nationally recognized private courier, or by United
States mail. Notices delivered by mail shall be deemed given
three (3) business days after being deposited in the United
States mail, postage prepaid, registered or certified mail.
Notices delivered by hand or by nationally recognized private
carrier shall be deemed given on the first business day following
receipt; notices delivered by facsimile shall be deemed given on
the day of receipt; provided, however, that a notice delivered by
facsimile shall only be effective if such notice is also
delivered by hand, or deposited in the United States mail,
postage prepaid, registered or certified mail, on or before two
(2) business days after its delivery by facsimile. All notices
shall be addressed as follows:
If to Seller
Addressed to
Lakeshore Hotels, Ltd.
505 N. Lakeshore Drive
Lake Charles, LA 70601
Attention: Ted W. Price, Jr.
Telecopier: 318-491-9938
with a copy to
John R. Pohorelsky, Esq.
Scofield, Gerard, Veron, Singletary & Pohorelsky
P.O. Drawer 3028
Lake Charles, LA 70602
Telecopier: 318-436-0306
If to Purchaser
Addressed to
Players International, Inc.
1300 Atlantic Avenue
Suite 800
Atlantic City, NJ 08401
Attention: Patrick Madamba, Jr., Vice President &
General Counsel
Telecopier: 609-449-7765
with a copy to
Daniel S. Ojserkis, Esq.
Horn, Goldberg, Gorny, Plackter, Weiss & Perskie,
P.A.
1300 Atlantic Ave., Suite 500
Atlantic City, NJ 08401
Telecopier: 609-348-6834
with another copy to
Charles D. Viccellio, Esquire
Stockwell, Sievert, Viccellio, Clements & Shaddock
L.L.P.
One Lakeside Plaza, 4th Floor
Lake Charles, Louisiana 70601
Telecopier: 318-493-7210
and/or to such other respective addresses and/or addressees as
may be designated by notice given in accordance with the
provisions of this Section 11.3. Counsel for either party may
give notice as provided for hereunder on behalf of such party.
11.4 Expenses. Each party hereto shall bear all fees and
expenses incurred by such party in connection with, relating to
or arising out of the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
hereby, including, without limitation, attorneys', accountants'
and other professional fees and expenses.
11.5 Entire Agreement. This Agreement and the instruments
to be delivered by the parties pursuant to the provisions hereof
constitute the entire agreement between the parties. Each
exhibit, and the Disclosure Schedule, shall be considered
incorporated into this Agreement. Any amendments, or alternative
or supplementary provisions to this Agreement, must be made in
writing and duly executed by an authorized representative or
agent of each of the parties hereto.
11.6 Survival; Non-Waiver. All representations and
warranties shall survive the Closing regardless of any
investigation or lack of investigation by any of the parties
hereto. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or
conditions of this Agreement, to exercise any right or privilege
in this Agreement conferred, or the waiver by said party of any
breach of any of the terms, covenants or conditions of this
Agreement, shall not be construed as a subsequent waiver of any
such terms, covenants, conditions, right or privileges, but the
same shall continue and remain in full force and effect as if no
such forbearance or waiver had occurred. No waiver shall be
effective unless it is in writing and signed by an authorized
representative of the waiving party.
11.7 Applicable Law. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation,
construction, effect and in all other respects by the internal
laws of the State of Louisiana applicable to contracts made in
that State.
11.8 Binding Effect; Benefit; Relationship. This Agreement
shall inure to the benefit of and be binding upon the parties
hereto, and their successors and permitted assigns. Nothing in
this Agreement, express or implied, is intended to confer on any
person other than the parties hereto, and their respective
successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
The relationship of Seller and Purchaser is strictly that of
vendor and vendee, and nothing in this Agreement, express or
implied, shall be deemed or construed to make Seller and
Purchaser partners, joint venturers, or principal and agent in
the conduct of their respective businesses.
11.9 Assignability. This Agreement shall not be assignable
by either party without the prior written consent of the other
party, except that at or prior to the Closing Purchaser may
assign its rights and delegate its duties under this Agreement to
one or more Affiliate entities and may assign its rights under
this Agreement to its lenders for collateral security purposes,
and after the Closing Purchaser may assign its rights and
delegate its duties under this Agreement to any third party.
11.10 Amendments. This Agreement shall not be modified or
amended except pursuant to an instrument in writing executed and
delivered on behalf of each of the parties hereto.
11.11 Headings. The headings contained in this Agreement
are for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement.
11.12 Construction. This Agreement shall not be
construed more strictly against one party than against the other,
merely by virtue of the fact that it may have been prepared
primarily by counsel for one of the parties, it being recognized
that both Purchaser and Seller have contributed substantially and
materially to the preparation of this Agreement.
11.13 Letter of Intent. By their execution of this
Asset Purchase Agreement, Seller and Purchaser hereby waive and
release each other from any default or claim of default they may
have against the other under the Letter of Intent between Seller
and Purchaser dated August 21, 1997, as amended.
SELLER:
THUS DONE AND SIGNED in the presence of the undersigned
attesting witnesses and me, Notary Public at Lake Charles,
Louisiana on this 30th day of September, 1997.
WITNESSES: LAKESHORE HOTELS, LTD., a
Louisiana
partnership in commendam
By:
Name:
Title:
_
NOTARY PUBLIC
PURCHASER:
THUS DONE AND SIGNED in the presence of the undersigned
attesting witnesses and me, Notary Public at Lake Charles,
Louisiana on this 30th day of September, 1997.
WITNESSES: PLAYERS INTERNATIONAL, INC., a
Nevada corporation
By: /s/ Patrick Madamba, Jr.
Name: Patrick Madamba, Jr.
Title: Vice President
NOTARY PUBLIC
JOINDER
The undersigned hereby join in the execution of this
Agreement, simultaneously with Seller, to evidence their
agreement to be bound by the provisions of Section 1.6 hereof:
THUS DONE AND SIGNED in the presence of the undersigned
attesting witnesses and me, Notary Public at Lake Charles,
Louisiana on this 30th day of September, 1997.
WITNESS (as to all signatures)
/s/ Ted W. Price, Sr.
Ted W. Price, Sr.
WITNESS (as to all signatures
/s/ Ted W. Price, Jr.
Ted W. Price, Jr.
/s/ Robert W. Price, Sr.
Robert W. Price, Sr.
/s/ Robert W. Price, Jr.
Robert W. Price, Jr.
Notary Public
SCHEDULE 1.2(c)
Description of Real Estate
That certain tract or parcel of land situated in Section 31,
Township 9 South, Range 8 West, Calcasieu Parish, Louisiana and
being more particularly described as follows to wit;
For a point of commencement, begin at the Southeast corner of
Block 30 of Thomas Bilbo and Ann Lawrence subdivision in the City
of Lake Charles, Louisiana;
Thence West along the North right-of-way line of Lawrence Street
and along the West prolongation of the North right-of-way line of
Lawrence Street 450.0 feet to a point in the West right-of-way
line of U.S. Highway No. 90-business route and/or the West right-
of-way line of Orange Street (abandoned) projected South;
Thence West 60.0 feet along the agreement boundary line between
the State of Louisiana and the J.A. Bel Estate;
Thence North 57 50' 00" west 451.25 feet along the said agreement
line to the point of beginning of the tract herein described:
Thence North 31 56' 05" East 250.94 feet (Call - North 32 10' 00"
East 249.49 feet) to a point 10 feet West of the West line of
block 34 of Thomas Bilbo and Ann Lawrence subdivision;
Thence North 00 10' 55" West 148.03 feet (Call - due North 148.03
feet);
Thence North 89 49' 05" East 80.0 feet (Call - due East 80.0
feet);
Thence North 00 10' 55" West 96.6 feet (Call - North 96.6 feet)
more or less, to a point on the South right-of-way line; of U.S.
Highway No. 90-business route;
Thence Westerly on the said right-of-way line along the arc of a
curve having a radius of 355.0 feet (the chord of which bears
North 76 54' 55" West and measures 47.68 feet), (the chord of
which has a call of North 76 44' 00" West), a distance of 47.72
feet;
Thence North 83 45' 55" West 98.46 feet (Call - North 83 35' 00"
West 98.46 feet) along said South right-of-way line;
Thence North 80 34' 29" West 556.94 feet (Call - North 80 35' 00"
West 560.4 feet) along said South right-of-way line;
Thence South 06 13' 00" West 337.08 feet (Call - South 06 10' 00"
West 337.00 feet) to the agreement boundary line between the
State of Louisiana and the J.A. Bel Estate;
Thence South 80 14' 37" East 201.0 feet (Call - South 80 35' 00"
East 200.00 feet) along said agreement line;
Thence South 57 50' 00" East 378.25 feet along said agreement
line to the point of commencement.
Containing 5.80 acres, more or less.
SCHEDULE 1.3(g)
Other Excluded Assets
NONE.
SCHEDULE 1.4(a)
Permitted Exceptions
1. The effects of a Boundary Agreement between Earl K. Long,
Governor of the State of Louisiana, et al and John Albert
Bel, et al. filed July 26, 1951, recorded in Conveyance Book
498, Page 276.
2. Servitude from Lakeshore Hotels, Ltd. to Gulf States
Utilities Company dated September 10, 1981, recorded in
Conveyance Book 1643, Page 605.
3. Right of Way from Lake Charles Hilton to South Central Bell
Telephone Company dated October 27, 1981, recorded in
Conveyance Book 1656, Page 138.
4. Servitude from Lakeshore Hotels, Ltd. to the City of Lake
Charles dated August 2, 1996, recorded in Conveyance Book
2571, Page 372.
5. Ad valorem property taxes for the current tax year, to the
extent not yet due and payable.
6. Such encrouchments as may be reflected on Purchaser's title
survey for the Real Estate, so long as the same do not
interfere with Purchaser's intended use or occupancy of the
Real Estate.
DISCLOSURE SCHEDULE
Attached to and Made Part of Asset Purchase Agreement
between Lakeshore Hotels, Ltd., as Seller, and Players Internati
onal, Inc.,
its assignee or designee, as Purchaser
4.3(b) Title Exceptions (other than Permitted Liens)
- NONE -
Equipment Leases & Installment Payment Agreements
-NONE, except as disclosed in Schedule of
Contracts attached hereto (referenced under
Section 4.3(k) hereof)
4.3(g) Financial Statements of Seller (delivered
separately)
- Audited Financial Report of Lakeshore
Hotels, Ltd. for 1996 and 1995 prepared by
McElroy, Quirk and Birch
- Audited Financial Report of Lakeshore
Hotels, Ltd. for 1995 and 1994 prepared by
McElroy, Quirk and Birch
- Audited Financial Report of Lakeshore
Hotels, Ltd. for 1994 and 1993 prepared by
McElroy, Quirk and Birch
- Audited Financial Report of Lakeshore
Hotels, Ltd. for 1993 and 1992 prepared by
McElroy, Quirk and Birch
4.3(h) Interim Financial Statements
- Seller-prepared Profit and Loss Statement for
1/1/97 through 7/31/97
4.3(i) Permits
1. State Dept. of Revenue and Taxation, Office of
Alcoholic Beverage Control Permit to Sell Alcoholic
Beverages; expires November 30, 1997; Serial No.
226928, Permit No. 10000052 (Issued to: Hotel
Management & Development, Inc.; Holiday Inn Lake
Charles)
2. City of Lake Charles Permit to Sell Alcoholic
Beverages; expires 12/31/97; No. 2881, Account No. 4426
Class A Retail Dealer Liquor (Issued to: Hotel
Management & Development, Inc.; Holiday Inn Lake
Charles)
3. City of Lake Charles Permit to Sell Alcoholic
Beverages; expires 12/31/97; No. 2869 Account No. 4226
Class A Retail Dealer Beer (Issued to: Hotel Management
& Development, Inc.; Holiday Inn Lake Charles)
4. State Department of Health and Hospitals, Office
of Public Health Permit to Operate Any Permanent
Bar/Lounge; expires 6/30/98; Permit No. 10-1522,
Class 7, Operations Type 226 (Issued to: Lakeshore
Hotels, Ltd. - Riverboat Magic) (Last Inspection Report
7/25/97)
5. State Department of Health and Hospitals, Office
of Public Health Permit to Operate Any Permanent Food
Service Establishment; expires 6/30/98; Permit No.
10-1522, Class 7, Operations Type 225 (Issued to
Lakeshore Hotels, Ltd. - Riverboat Magic) (Last
Inspection Report 7/25/97)
6. City of Lake Charles Occupational License Tax -
proof of payment for Restaurant; Lic. Tax No. 2413
(Issued to: Hotel Management & Development, Inc.;
Holiday Inn-Lake Charles)
7. City of Lake Charles Occupational License Tax -
proof of payment for Motel; Lic. Tax No. 2789 (Issued
to: Hotel Management & Development, Inc.; Holiday
Inn-Lake Charles)
8. U.S. Army Corps of Engineers Permit; dated
March 13, 1996 (Issued to: Lakeshore Hotels, Ltd.)
4.3(k) Contracts, Leases, and Agreements
(Schedule attached hereto)
4.3(m) Commissions or Referral Fees
-10% Travel Agent Commissions paid to Holiday
Hospitality
-Credit Card Commissions:
American Express 2.8%
Diners Club 2.8%
Visa 1.5%
MasterCard 1.6%
Discover 1.7%
4.3(n) Employees
(List and Payscale attached hereto)
4.3(o) Litigation, Proceedings, GovernmentalInvestigations
1. Katherine T. Hoffman et al. v. Hotel
Management & Development, Inc, Ted W. Price, Sr.,
Ted W. Price, Jr., Robert W. Price, Sr., and
Robert W. Price, Jr., Case No. 87-52127
2. Rose Perkins - SETTLED BUT INSUROR IN
RECEIVERSHIP
3. Ida Antoine - IN LITIGATION
4. Rose Gallien - IN LITIGATION
5. Additional General Liability, Workers
Compensation and other Claims as Shown on the
Attached Schedules.
4.3(r) Notices of Violation
- NONE -
4.3(s) Notices of Violation (Environmental)
- NONE -
Environmental Permits
- NONE -
SCHEDULE OF
CONTRACTS, LEASES, AGREEMENTS
1. (a) Franchise License Agreement dated
4/14/92 for Holiday Inns franchise
(b) General Data Agreement dated
4/30/92 for Holidex 2000 Reservation System
Each will terminate and be replaced
in connection with execution of New License
Agreement by Purchaser and Holiday Inns.
2. Furniture, Fixtures, and Equipment Lease -
effective 10/1/90 between Seller and the
Individuals _
Will terminate prior to Closing as
provided under Section 1.6 hereof.
3. Westinghouse Elevator Co. Hydraulic Elevator
Preventive Maintenance Agreement
Terminable on at least 90 days'
written notice prior to 12/1 of each year
Assignable on consent of
Westinghouse after notice
4. Auto-Chlor System Equipment Agreement
(laundry)
Dated 2/9/96
Lease of 3 pieces of equipment and
agreement for provision of cleaning services
Month to month
Terminable on at least 30 days'
written notice and must return equipment
Assignable on prior written consent
of Auto-Chlor
5. Auto-Chlor System Equipment Agreement
(housekeeping)
Dated 2/9/96
Lease of 1 piece of equipment,
agreement for provision of cleaning agents
Month to month
Terminable on at least 30 days'
written notice and must return equipment
Assignable on prior written consent
of Auto-Chlor
6. Auto-Chlor System Dishwashing Machine Lease
Agreement
Dated 2/30(?)/97
Terminable on at least 60 days'
written notice prior to anniversary date.
Valid termination if notice can be given by
12/31/97
Assignability not addressed
7. Coin Operated Machine and Space Lease dated
1/22/92 between Jackpot Novelty, Inc. and Hotel
Management & Development, Inc.
TERMINATED 11/8/96: month-to-month
only
To be fully terminated and release
obtained prior to Closing
8. (a) Management Agreement dated _______ with
Hotel Management & Development, Inc.
(b) Agreement dated 8/18/93 between Lakeshore
Hotels ("LSH") and Hotel Management and Development
("HMD")
Contracts with Affiliate of Seller
Each to be fully terminated and
release obtained prior to Closing
9. Cellular One Mobile Telephone Agreement
REVERSE SIDE NOT PROVIDED
Billing activation date 6/29/94 -
monthly billing
Terminable if cancelled thirty (30)
days before "contract renewal date" or
automatically renews for one (1) year
$200 cancellation fee if not
cancelled properly
10. Waste Management of Lake Charles Service
Agreement dated 6/1/92
Terminable on at least sixty (60)
days prior written notice to 6/5/98
If not terminated properly,
liquidated damages payable (max: monthly fee
x 6)
Trash bin must be returned
Assignability not addressed
11. Communications Services, Inc. - Bulk Rate
Agreement dated 2/1/97 (Cable TV)
Cable TV for hotel
Liquidated damages
References "Access Agreement" but
we do not have this
Not signed by Communication
Services
Terminable only with cause -
expires 1/1/99
Assignability not addressed
12. Communications Services, Inc. Service
Agreement dated May 5, 1997 (Background Music)
Expires after 36 mos.
Terminable with at least ninety
(90) days prior written notice to expiration
date - will automatically renew if no notice
Assignability not addressed
Must return equipment
13. Satellite Programming License (HBO, Showtime)
with World Cinema, Inc.
Not terminable - appears to expire
three (3) years after first day of Exhibition
of programming (Unknown)
Assignable with written consent of
World Cinema
14. Plant Lease dated 6/30/96 with Kuntry's
Interior Landscaping
Terminable on 30 days written
notice, but may have 1-year minimum
Assignable on notice to and consent
of Kuntry's
15. Tel-Comm Communications Consultants, Inc.
(Telephone Traffic Aggregator; Contract dated
8/7/96)
36-month intial term
No termination or assignment rights
16. XETA Corp. (Call accounting
equipment/software; Contract dated 2/20/97)
1 year term
No assignment or termination rights
NO COPIES PROVIDED OF THE FOLLOWING:
17. Standard Coffee (Coffee urns; No written
agreement exists)
18. Southwest Bar Needs, Inc. (Orange juice
machine; No written agreement exists)
19. Waffles of Louisiana, Inc. (Waffle irons; No
written agreement exists)
20. Eco-Lab (Pest Control; Terminable on 30 days
written notice)
21. Travel Agent Commissions (10% commissions
paid to Holiday Hospitality)
22. Mercury Cellular (Pagers; No written
agreement exists)
23. Techtronics (Service Agreement for 5 copy
machines; terminable on 90 days prior written
notice)
24. CK & Associates (Engineering/Environmental
Consultants for Grease Trap; No written agreement
exists)
25. Brian Ezell Services (Telephone Maintenance
Services; No written agreement exists)
26. Bell South, Inc. (Pay phones on premises; No
written agreement exists)
27. General Vending & Sales, Inc. (7 vending
machines; No written agreement exists)
28. Lake Charles Coca-Cola Bottling, Inc. (9
soft-drink machines; No written agreement exists)
