<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarter ended June 30, 1996 Commission File Number 0-20648
BOOMTOWN, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 94-3044204
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 399, Verdi, Nevada 89439-0399
(Addressed of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 345-8643
Indicate by check mark 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 (of 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
---- ----
On August 14, 1996, the registrant had outstanding shares of its
common stock, $.01 par value.
<PAGE>
BOOMTOWN, INC.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets, September 30, 1995
and June 30,1996. . . . . . . . . . . . . . . . . . . . . . . . . .3
Consolidated Statements of Operations For the Three and
Nine Months Ended June 30, 1995 and 1996. . . . . . . . . . . . . .4
Consolidated Condensed Statements of Cash Flows For the
Nine Months Ended June 30, 1995 and 1996. . . . . . . . . . . . . .5
Notes to Consolidated Financial Statements. . . . . . . . . . . . .6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . . 18
Item 3. Defaults upon Senior Securities . . . . . . . . . . . . . . . . . 18
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . 18
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . 18
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SCHEDULE OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
BOOMTOWN, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, June 30,
1995 1996
------------ ------------
<S> <C> <C>
ASSETS: (unaudited)
Current assets:
Cash and cash equivalents (including restricted cash of
approximately $2,400,000 at September 30, 1995) $ 20,775,459 $ 21,587,485
Accounts receivable, net 924,135 921,487
Income taxes receivable, net 1,507,900 3,112,389
Inventories 2,715,305 1,596,055
Prepaid expenses 7,025,438 5,706,850
Other current assets 765,465 583,346
------------ ------------
Total current assets 33,713,702 33,507,612
Property, plant and equipment, at cost, net 150,955,320 146,413,148
Goodwill, less accumulated amortization 6,643,522 6,361,485
Investment in lease, net 13,077,084 --
Notes receivable from a related party 27,293,713 8,464,772
Other assets 7,514,789 9,439,329
------------ ------------
Total assets $239,198,130 $204,186,346
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable $3,746,862 $4,107,916
Accrued compensation 2,929,761 4,458,060
Other accrued liabilities 9,740,297 9,747,332
Accrued interest payable 4,959,375 2,033,980
Income taxes payable 506,408 115,999
Long-term debt due within one year (Note 2) 2,948,479 4,794,933
------------ ------------
Total current liabilities 24,831,182 25,258,220
Long-term debt due after one year (net of unamortized discount
of approximately $2,657,000 and $2,502,000 at September 30,
1995 and June 30, 1996, respectively) 106,547,154 104,731,559
Deferred income taxes 1,621,088 2,606,945
Deferred gain on sale leaseback 212,720 124,087
Minority interest 740,849 1,362,770
Commitments and contingencies (Notes 3 and 6)
Stockholders' equity:
Common stock, $.01 par value, 20,000,000 shares
authorized, 9,233,074 and 9,255,915 issued and outstanding,
at September 30,1995 and June 30,1996, respectively,
net of note receivable from stockholder of $221,000 103,452,520 103,593,432
Retained earnings (deficit) 1,792,617 (33,490,667)
------------ ------------
Total stockholders' equity 105,245,137 70,102,765
------------ ------------
Total liabilities and Stockholders' equity $239,198,130 $204,186,346
------------ ------------
------------ ------------
</TABLE>
See accompanying notes.
3
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BOOMTOWN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1995 1996 1995 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Gaming/hotel operations:
Gaming $ 48,681,692 $ 47,980,825 $139,831,881 $139,350,417
Family entertainment center 1,704,907 1,721,889 4,370,190 4,428,318
Food and beverage 4,313,586 4,318,386 11,372,951 12,293,436
Hotel and recreational vehicle park 1,671,035 1,878,753 4,857,709 5,478,989
Truckstop, service station and mini-mart 2,803,941 4,316,465 7,404,902 9,815,480
Other income 770,266 627,370 1,863,551 1,989,750
------------- ------------ ------------ ------------
59,945,427 60,843,688 169,701,184 173,356,390
COSTS AND EXPENSES:
Gaming/hotel operations:
Gaming 17,874,722 18,227,679 54,085,530 54,608,601
Gaming equipment leases 1,666,245 1,647,575 4,138,744 5,040,693
Family entertainment center 842,894 863,960 2,259,944 2,390,459
Food and beverage 4,677,599 5,235,080 12,655,648 14,568,934
Hotel and recreational vehicle park 808,728 760,853 2,316,510 2,211,201
Truckstop, service station and mini-mart 2,518,525 3,957,024 6,618,761 8,869,149
Marketing 4,803,439 5,776,685 14,511,597 16,555,660
General and administrative 19,043,346 17,422,913 54,248,275 52,750,954
Depreciation and amortization 2,499,983 2,836,898 7,635,374 8,135,045
Loss on sale of Blue Diamond -- 36,562,612 -- 36,562,612
Discontinued projects/Future development 5,719,952 760,959 6,054,069 920,496
------------- ------------ ------------ ------------
60,455,433 94,052,238 164,524,452 202,613,804
------------- ------------ ------------ ------------
Income (loss) from operations ( 510,006) ( 33,208,550) 5,176,732 ( 29,257,414)
Interest expense,
net of capitalized interest ( 3,479,435) ( 3,529,084) ( 9,805,938) ( 10,361,738)
Interest income 796,346 789,164 2,272,264 2,341,599
Other income -- 826,990 -- 826,990
Gain (loss) on sale of assets ( 11,136) 169,355 173,020 239,655
------------- ------------ ------------ ------------
Loss before minority interest
in consolidated partnerships
and income taxes ( 3,204,231) ( 34,952,125) ( 2,183,922) ( 36,210,908)
Minority interest in operations
of consolidated partnerships 43,055 253,004 111,999 878,080
------------- ------------ ------------ ------------
Loss before income taxes ( 3,161,176) ( 34,699,121) ( 2,071,923) ( 35,332,828)
Provision (benefit) for income taxes ( 1,311,957) 275,548 ( 859,917) ( 49,544)
------------- ------------ ------------ ------------
Net loss ($ 1,849,219) ($ 34,974,669) ($ 1,212,066) ($ 35,283,284)
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
Net loss per share
of Common Stock ($ .20) ($ 3.78) ($ .13) ($ 3.82)
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
Shares used in calculating net
loss per share of Common Stock 9,228,726 9,251,482 9,226,643 9,243,243
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
</TABLE>
See accompanying notes.
4
<PAGE>
BOOMTOWN, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
1995 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($ 1,212,006) ($ 35,283,284)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Lease expense recorded in exchange
for limited partnership interest 1,500,000 1,500,000
Depreciation and amortization 7,635,374 8,135,045
Loss on sale of Blue Diamond -- 36,562,612
Income taxes receivable ( 1,108,453) ( 1,604,489)
Inventories ( 161,945) 275,464
Prepaid expenses 2,109,293 1,318,588
Accounts payable ( 5,056,202) 377,253
Income taxes payable 11,654 1,096,212
Accrued compensation 1,703,800 1,528,299
Other accrued liabilities 2,035,777 57,262
Accrued interest payable ( 2,975,625) ( 2,925,395)
Deferred income taxes 962,222 1,199,140
Minority interest ( 111,999) ( 878,080)
Other adjustments, net ( 956,318) ( 1,163,287)
------------ ------------
Net cash provided by operating activities 4,375,572 10,195,340
------------ ------------
Cash flows from investing activities:
Proceeds from sale of property and equipment 7,788,973 405,647
Payments for purchases of property and equipment ( 13,362,783) ( 7,168,174)
Payments for pre-opening and future development costs 1,870,749 --
Decrease in construction related payables ( 1,456,238) ( 16,198)
------------ ------------
Net cash used in investing activities ( 5,159,299) ( 6,778,725)
------------ ------------
Cash flows from financing activities:
Proceeds from additions to short-term borrowings 5,000,000 --
Pre-payment of property lease -- ( 2,480,387)
Net proceeds from additions to long-term debt 9,036,044 2,457,154
Principal payments on short-term borrowings ( 5,000,000) --
Principal payments on long-term debt ( 1,685,562) ( 2,581,356)
Distribution to limited partner ( 241,952) --
------------ ------------
Net cash provided by (used in) financing activities 7,108,530 ( 2,604,589)
------------ ------------
Net increase in cash and cash equivalents 6,324,803 812,026
Cash and cash equivalents:
Beginning of period 11,390,554 20,775,459
------------ ------------
End of period $ 17,715,357 $ 21,587,485
------------ ------------
------------ ------------
</TABLE>
See accompanying notes.
5
<PAGE>
BOOMTOWN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
BASIS OF PRESENTATION AND NATURE OF BUSINESS - The accompanying unaudited
consolidated financial statements have been prepared in accordance with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles and should be read in connection with the 1995
Annual Report filed with the Securities and Exchange Commission on the
Registrant's Form 10-K for the fiscal year ended September 30, 1995. The
accounting polices utilized in the preparation of the consolidated financial
information herein are the same as set forth in such annual report except as
modified for interim accounting policies which are within the guidelines
established in Accounting Principles Board Opinion No. 28.
INTERIM FINANCIAL INFORMATION - The Consolidated Balance Sheet at September
30, 1995 has been taken from the audited financial statements at that date. The
interim financial information is unaudited. In the opinion of management, all
adjustments considered necessary for a fair presentation of its financial
position at June 30, 1996, the results of operations for the three and nine
months ended June 30, 1996 and 1995 and the cash flows for the nine months ended
June 30, 1996 and 1995 have been included. The Company's operations are
seasonal and thus operating results for the three and nine months ended June 30,
1996 should not be considered indicative of the results that may be expected for
the fiscal year ending September 30, 1996.
RECLASSIFICATIONS - Certain reclassifications have been made to the 1995
financial statements to conform to the 1996 presentation.
The accompanying consolidated financial statements include the accounts of
the Company and all of its subsidiary companies. All significant intercompany
accounts and transactions have been eliminated.
2. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995 JUNE 30, 1996
------------------ ------------------
<S> <C> <C>
11.5% First Mortgage Notes (net of unamortized
discount of $2.7 million and $2.5 million as
of September 30, 1995 and June 30,1996,
respectively) $100,842 $100,998
13% note payable 4,336 3,519
11.5% notes payable 2,431 1,568
Capital lease obligations 1,126 2,911
12.25% note payable 760 530
--------- ---------
109,495 109,526
Less amounts due within one year 2,948 4,794
--------- ---------
$106,547 $104,732
--------- ---------
--------- ---------
</TABLE>
6
<PAGE>
BOOMTOWN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The Company's 13%, 11.5% and 12.25% notes payable are secured by certain
furniture, fixtures and equipment of the Company's subsidiaries. The notes
mature in January 1999, September 1997 and January 1998, respectively.
The capital lease obligations are secured by equipment and mature between
September 1997 and August 1998.
3. COMMITMENTS AND CONTINGENCIES
On November 24, 1993, Boomtown completed the private placement of $103.5
million of 11.5% First Mortgage Notes due November 2003 (the "Notes") with
detachable warrants to purchase 472,000 shares of the Company's Common Stock at
$21.19 per share. The warrants expire in November 1998. Interest on the Notes
is payable semi-annually. The Notes will be redeemable at the option of the
Company, in whole or in part, on or after November 1, 1998, at a premium to the
face amount ($103.5 million) which decreases on each subsequent anniversary
date, plus accrued interest to the date of redemption. The Notes are secured by
substantially all of the Company's assets.
The Indenture governing the Notes places certain business, financial and
operating restrictions on the Company and its subsidiaries including, among
other things, the incurrence of additional indebtedness, issuance of preferred
equity interests and entering into operating leases; limitations on dividends,
repurchase of capital stock of the Company and redemption's of subordinated
debt; limitations on transactions with affiliates; limitations on mergers,
consolidations and sale of assets; limitations on amending existing partnership
and facility construction agreements; and the use of proceeds from the issuance
of Notes. The Company will solicit consent of the Noteholders in connection
with the proposed merger with Hollywood Park and intends to solicit consent of
the Noteholders in connection with the termination of the Las Vegas lease (See
Note 6.)
In October 1994, the Mississippi Gaming Commission adopted a regulation
which requires, as a condition of license or license renewal, for a gaming
establishment's plan to include various expenditures including parking
facilities and infrastructure facilities amounting to at least 25% of the casino
cost. Although the Company believes it has satisfied this requirement at the
Mississippi property, there can be no assurance the Mississippi Gaming
Commission will not require further development on the casino site including
hotel rooms and additional parking facilities. Additionally, there can be no
assurance that the Company will be successful in completing such a project or
that the Company would be able to obtain a waiver if the Company decides not to
build.
A demand for arbitration has been filed by Eric Skrmetta, a limited
partner, with the American Arbitration Association, alleging that Boomtown
breached the Louisiana Partnership Agreement and its fiduciary duty to limited
partners resulting in a substantial tax liability to Mr. Skrmetta. Boomtown
disputes this claim and is contesting it vigorously.
7
<PAGE>
BOOMTOWN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(unaudited)
4. COMMON STOCK OUTSTANDING AND NET LOSS PER SHARE
Net income per share of Common Stock is computed based on the weighted
average number of shares of Common Stock and dilutive Common Stock
equivalents outstanding during the period. Net loss per share is computed
using the weighted average number of shares of Common Stock outstanding and
common equivalent shares from stock options and warrants are excluded from
the computation because their effect is antidilutive. Fully diluted per
share amounts are the same as primary per share amounts for the periods
presented. (Also see Part II, Item 6, Exhibit 11.1 of this document).
5. SUMMARIZED CONSOLIDATING FINANCIAL INFORMATION
In connection with the First Mortgage Notes issued in November, 1993, the
subsidiaries of the Company (guarantor entities) have guaranteed the Notes.
Summarized consolidating financial information is as follows:
SUMMARIZED CONSOLIDATING FINANCIAL INFORMATION
As of and for the nine months ended June 30, 1996
(in thousands, unaudited)
<TABLE>
<CAPTION>
GUARANTOR ENTITIES
----------------------------------------------
Blue Diamond Boomtown Non-wholly Elimination's &
Boomtown, Inc. Hotel & Casino Hotel & Casino Owned Reclassifications Boomtown, Inc.
(parent co.) Inc. Inc. Subsidiaries Dr (Cr) (consolidated)
(1) (2) (3) (4)
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Current assets $11,701 $11,537 $5,552 $10,158 ($5,440) $33,508
Advances to affiliates 120,616 -- -- -- (120,616) --
Non-current assets 46,575 1,290 59,959 96,951 (34,097) 170,678
-----------------------------------------------------------------------------------------------
$178,892 $12,827 $65,511 $107,109 ($160,153) $204,186
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Current liabilities $7,039 $4,472 $5,663 $13,524 ($5,440) $25,258
Non-current liabilities 101,176 233 5,848 3,272 (1,704) 108,825
Advances from parent -- 45,505 4,986 70,125 (120,616) --
Equity 70,677 (37,383) 49,014 20,188 (32,393) 70,103
-----------------------------------------------------------------------------------------------
$178,892 $12,827 $65,511 $107,109 ($160,153) $204,186
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
Revenues $2,250 $34,480 $47,602 $91,274 ($2,250) $173,356
Income (loss) from operation ($20,443) ($23,521) $1,333 $13,374 $-- ($29,257)
Equity in earnings (loss) of
consolidated subsidiaries ($17,222) $-- $-- $-- $17,222 $--
Net income (loss) ($18,427) ($24,574) $366 $6,474 $878 ($35,283)
Net cash provided by (used in)
operating activities ($3,561) ($4,594) $4,884 $13,466 $-- $10,195
Net cash provided by (used in)
investing activities 1,810 (511) (1,378) (4,885) (1,815) (6,779)
Net cash provided by (used in)
financing activities (119) 5,572 (1,936) (7,936) 1,815 (2,604)
-----------------------------------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents (1,870) 467 1,570 645 -- 812
Cash and cash equivalents:
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
GUARANTOR ENTITIES
----------------------------------------------
Blue Diamond Boomtown Non-wholly Elimination's &
Boomtown, Inc. Hotel & Casino Hotel & Casino Owned Reclassifications Boomtown, Inc.
(parent co.) Inc. Inc. Subsidiaries Dr (Cr) (consolidated)
(1) (2) (3) (4)
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Beginning of year 10,811 2,630 1,334 6,000 -- 20,775
-----------------------------------------------------------------------------------------------
End of period $8,941 $3,097 $2,904 $6,645 $-- $21,587
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
</TABLE>
5. SUMMARIZED CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)
(1) Blue Diamond Hotel & Casino, Inc. is a wholly-owned subsidiary that is
consolidated in the accompanying consolidated financial statements.
(2) Boomtown Hotel & Casino, Inc. is a wholly-owned subsidiary that is
consolidated in the accompanying consolidated financial statements. These
amounts do not include the operations of the Company's wholly-owned subsidiaries
which are general partners of the Company's non-wholly-owned subsidiaries. The
operations of such wholly-owned subsidiaries are insignificant and have been
included in the column "Non-wholly Owned Subsidiaries".
(3) Non-wholly Owned Subsidiaries include Boomtown, Inc.'s subsidiaries in
Mississippi and Louisiana and 100% of the assets, liabilities and equity of the
limited partnerships formed to operate the gaming facilities in those states.
(4) Eliminations consist of Boomtown, Inc.'s (a) investment in the
guarantor entities, (b) advances to the guarantor and non-guarantor subsidiaries
and (c) equity earnings (loss) of consolidated subsidiaries and partnerships.
The advances are subordinated in right of payment to the guarantees of the
Notes.
6. OTHER EVENTS
AMENDMENT OF LEASE AGREEMENT - Upon commencement of operations at Boomtown
Biloxi, the Company entered into an agreement with Hospitality Franchise
Systems, Inc. ("HFS") whereby HFS advanced the Company $11 million in return for
ownership of the Biloxi barge and shell building. Also under this agreement,
HFS was to receive 20% of the adjusted earnings before interest, taxes,
depreciation, and amortization ("EBTIDA") as defined in the related contract.
HFS was also to provide marketing services to Boomtown Biloxi. The assets under
this agreement, as well as the related contractual arrangements, were
subsequently transferred to National Gaming Corporation, Inc., which
subsequently changed its name to National Lodging Corp. ("NGC"). Boomtown
Biloxi leases the assets from NGC under a 25 year lease with a 25 year renewal
option.
In November, 1995, the Company executed an agreement with NGC whereby $2.4
million was returned to NGC in return for a reduction of the EBITDA
distributions from 20% to 16%. Additionally, for $100,000 the Company secured
an option to buy the barge from NGC as well as to buy out the EBITDA
participation at a cost approximating the original investment made by HFS less
the $2.4 million that was paid. The option terminates on March 31, 1997 but is
renewable for an additional two years for $100,000 a year.
PROPOSED MERGER WITH HOLLYWOOD PARK, INC. ("HOLLYWOOD PARK") - On April 23,
1996, the Company entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Hollywood Park relating to the strategic combination of
Hollywood Park and the Company. Pursuant to the Merger Agreement and subject to
the terms and conditions set forth therein, the Company would become a
wholly-owned subsidiary of Hollywood Park (the "Merger"). Pursuant to the
Merger Agreement, at the effective date of the Merger (the "Effective Date"),
each issued and outstanding share of Boomtown Common Stock will be converted
into the right
9
<PAGE>
to receive 0.625 (the "Exchange Ratio"), of a share of Hollywood Park Common
Stock. The Merger is intended to be structured as a tax-free reorganization.
6. OTHER EVENTS (CONTINUED)
As of April 23, 1996, the Company had approximately 11,602,432 shares of
Common Stock outstanding and Hollywood Park had approximately 21,093,957 shares
of Common Stock outstanding (in each case assuming the exercise of all
outstanding options, warrants, rights or conversion privileges relating to
Common Stock). Upon the consummation of the Merger, it is expected that former
Boomtown stockholders will own approximately 25.6% of the outstanding shares of
Hollywood Park Common Stock (assuming the exercise of all outstanding options,
warrants, rights or conversion privileges relating to the Company's Common
Stock).
At the Effective Date, Hollywood Park's Board of Directors will be expanded
from seven (7) to eleven (11) members and will be comprised of seven (7)
directors selected by Hollywood Park (the "Hollywood Park Directors") and four
(4) directors selected by the Company (the Boomtown Directors"). Hollywood Park
will nominate the initial Company Directors (or replacements elected by a
majority of the Boomtown Directors) for re-election at the first three annual
stockholder meetings following the Effective Date. Upon the Effective Date and
for a period of three years thereafter the Executive Committee of Hollywood
Park's Board of Directors will consist of four (4) Hollywood Park Directors and
two (2) Boomtown Directors, including R.D. Hubbard, Chief Executive Officer of
Hollywood Park, Timothy J. Parrott, Chairman of the Board and Chief Executive
Officer of Boomtown, Richard J. Goeglein, a current member of the Board of
Directors of Boomtown and three designees of Hollywood Park. In addition,
Hollywood Park will establish a three (3) person Office of the Chairman
comprised of Hollywood Park's and Boomtown's Chief Executive Officers and
Hollywood Park's President of Sports and Entertainment.
The closing of the Merger is subject to numerous conditions precedent,
including (i) the approval of the stockholders of the Company and Hollywood
Park, (ii) the approval of requisite governmental authorities, including the
necessary gaming authorities in the jurisdictions in which the parties conduct
business, and the expiration or termination of the applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(completed on June 20, 1996), (iii) the availability of sufficient financing of
up to $163.5 million to fund up to $60 million of future gaming projects and to
fund the repurchase of Boomtown's outstanding 11-1/2% First Mortgage Notes (the
"Notes") if put to Boomtown by the holders of the Notes as a consequence of the
Merger and (iv) the consent to the Merger by the holders of a majority of the
outstanding principal amount of the Notes. There can be no assurance that any
or all of these conditions precedent, will be satisfied or that the proposed
merger with Hollywood Park will be consummated.
Certain additional matters relating to the signing of the Merger
Agreement and a complete description of the Merger Agreement are more fully
described in the Company's Form 8-K dated April 23, 1996, including the
Agreement and Plan of Merger file as exhibit 2.1 thereto, and filed with the
Securities and Exchange Commission on May 3, 1996.
LOUISIANA DEVELOPMENTS - In a recent development potentially affecting
Boomtown's Harvey, Louisiana riverboat gaming operations, the State of Louisiana
adopted a statute pursuant to which voter referendums on the continuation of
gaming will be held locally (on a parish-by-
10
<PAGE>
parish basis) where gaming operations are conducted. The vote is scheduled for
November 5, 1996. While Boomtown has no reason at this time to believe that the
voters of Jefferson Parish
6. OTHER EVENTS (CONTINUED)
(where Boomtown's Louisiana riverboat operations are located) will vote against
riverboat gaming, in the event they were to do so, Boomtown would have to
discontinue its riverboat gaming operation in that parish upon the expiration of
its license in June 1999 and this occurrence would cause a material adverse
effect on the Company's results of operations.
TERMINATION OF AGREEMENT WITH SES GAMING, INC. - In April 1996, Boomtown
and related entities (the "Boomtown Group") entered into a termination agreement
with SES Gaming, Inc. and related entities (the "SES Group") terminating that
certain Master Agreement by and between the Boomtown Group and the SES Group
dated February 1, 1994 relating to a proposed gaming project in Lawrenceburg,
Indiana (the "Lawrenceburg Project"). The parties were denied a license for the
Lawrenceburg Project in July 1994. The Termination Agreement provided that,
among other things, (i) the Boomtown Group transferred to the SES Facilities all
of the Boomtown Group's rights, title and interest in and to the Lawrenceburg
Project, (ii) the SES Group waived any rights it might have to Boomtown's
potential project with Hilton Gaming Corporation in Switzerland County, Indiana,
(iii) the SES group agreed not to use the Boomtown name in any way and (iv) the
parties mutually released one another from all claims that might arise out of
the Master Agreement.
TERMINATION OF LAS VEGAS PROPERTY LEASE - On August 12, 1996, Boomtown,
Blue Diamond, Hollywood Park, Roski, IVAC and Majestic Realty entered into
the Blue Diamond Swap Agreement (the "Swap Agreement") pursuant to which the
parties agreed that, upon consummation of the Merger, and contingent upon the
closing of the Merger, Boomtown and Blue Diamond (or any transferee thereof
as set forth in the Swap Agreement) would exchange their entire interest in
the Blue Diamond Resort (the "Resort") (including the IVAC Loans), and
effectively transfer all interest in the Resort to Roski, in exchange for a
$5.0 million unsecured promissory note (the "First Note") and an unsecured
promissory note (the "Second Note") valued at approximately $3.5 million and
assumption by Roski, IVAC or an affiliate of certain liabilities (the
"Swap"). The First Note has an interest rate equal to the prime rate plus
one and one half percent (1.5%) per annum and provides for annual principal
payments of one million dollars ($1,000,000) plus accrued interest and
maturing on the date that is five years after the Exchange Date (as such term
is defined in the Swap Agreement). The Second Note has an interest rate
equal to the prime rate plus one-half percent (5%) per annum and provides for
a payment of all principal plus accrued interest on the date that is three
(3) years after the Exchange Date. Consummation of the Swap is subject to
obtaining all necessary Governmental approvals, including gaming approval.
In exchange for its interest in the Resort, Boomtown will receive notes
payable to Boomtown with an approximate value totaling $8.5 million, an
estimated cash payment of $2.1 million, release from lease obligations under the
resort lease, Roski's assumption of certain liabilities and note obligations
totaling approximately $3.8 million and the ongoing expenses of the Resort.
Additionally, Roski will assume all operating leases including any residual
balances due under such leases. The Swap Agreement requires approvals from
applicable gaming authorities and Boomtown intends to seek the consent of the
holders of a majority of the
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outstanding principal amount on the Notes (see Note 3). The Swap would be
effected immediately following the Company's Merger with Hollywood Park which is
expected to be completed by the end of the 1996 calendar year or during the
first quarter of calendar 1997.
6. OTHER EVENTS (CONTINUED)
In accordance with the terms of the Swap Agreement, with certain exceptions
set forth in the Swap Agreement, the Company will continue to operate the
property until consummation of the Merger. Boomtown and Blue Diamond will be
responsible for the liabilities of the Resort accruing prior to the Swap and
Roski will be responsible for the liabilities of the Resort accruing subsequent
to the Swap. In addition, Roski will resign from Boomtown's Board of Directors,
effective as of the Exchange Date. Subject to certain conditions set forth in
the Swap Agreement, the Swap may be effectuated through any structure agreed
upon by Boomtown and Hollywood Park. If the Swap were not consummated for any
reason, Boomtown would continue to operate the property through the expiration
of the lease term in July 1999, and the IVAC Notes would be required to be
repaid to Boomtown at such time.
On August 12, 1996, Hollywood Park and Roski further entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement") pursuant to which Hollywood
Park will, concurrently with the Swap, purchase the stock in Boomtown held by
Roski ("the Roski Stock") for a purchase price of approximately $3.5 million
paid for by an unsecured promissory note having an interest rate equal to the
prime rate plus one percent (1%) per annum and providing for four equal annual
principal payments plus accrued interest and maturing on the date that is four
years after the Exchange Date. The Stock Purchase Agreement may also be
terminated by Hollywood Park in the event that Boomtown and Hollywood Park, in
accordance with the provisions set forth in the Swap Agreement, elect to utilize
a structure to effect the Swap which would require Roski to retain the Roski
Stock.
12
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
During the quarter and nine month period ended June 30, 1996 revenues
were $60.8 million and $173.4 million respectively, compared to $59.9 million
and $169.7 million in the prior year commensurate period. The improvement in
revenues resulted from higher gaming revenues at the Company's Reno, Nevada and
Biloxi, Mississippi casinos, offset by lower gaming revenues at its Las Vegas,
Nevada and New Orleans, Louisiana gaming properties. Reno revenues grew 4% and
8.1% over the prior year three and nine month periods primarily as a result of
higher traffic volume on Interstate 80, where the casino receives the majority
of its customer volume. Boomtown Biloxi's revenues have improved due to
expansion of the gaming market in the Gulf Coast region combined with higher
marketing and promotional efforts at the Boomtown property. Biloxi revenues
were up 8.2% and 9.2% for the three and nine month periods over the prior year.
Gaming revenues at the Company's Las Vegas property continued to be less than
expected and lower than the prior year resulting from increased competition with
other casino operators for the local customer market in the Las Vegas area. In
New Orleans revenues have been negatively affected by additional cruising of its
riverboat casino as mandated by law.
Non-gaming revenues for the three and nine months ended June 30, 1996
were $12.9 million and $34.0 million respectively, compared to $11.3 million and
$29.9 million recorded during the prior year nine month period. Non-gaming
revenues are generated from the Company's family entertainment centers, food and
beverage sales, cabaret show, hotel room sales, recreational vehicle park and
other entertainment amenities. Increases in non-gaming revenues were recorded
at all four of the Boomtown casinos, with the majority of the consolidated
improvement due from higher fuel sales at the Reno truckstop as well as the
expansion of the cabaret show at the New Orleans casino property.
The consolidated gaming margin was 62% for the third quarter, compared
to 63.3% in the prior year same quarter. Additionally, gaming margin decreased
$1.0 million to 60.8% compared to 61.3% during the prior year nine month period.
The decline is primarily a result of a change in the calculation of gaming taxes
at Boomtown New Orleans resulting in the taxes being reclassified and charged as
a gaming expense in the current year period. During the prior year, the taxes
were calculated based on a flat charge per admission and recorded as general
administrative expenses. Additionally, the Company's consolidated gaming margin
was negatively effected by gaming leases entered into in April 1995 resulting in
higher gaming equipment lease expense during the period. The decline in the
consolidated gaming margin was offset by improvements from Boomtown Biloxi
resulting from the discontinuance of the property's Fun Flight program in
October 1995.
Marketing expenses were $5.8 million and $16.6 million for the three
and nine months ended June 30, 1996, respectively, 20% and 14% higher than $4.8
million and $14.5 million recorded during the prior year. Marketing expenses
consist of costs associated with printed
13
<PAGE>
advertising, outdoor signs, media advertising, promotional events, the Company's
bus tour and Fun Flight programs and other administrative expenses. The
increase in marketing expenses during fiscal 1996 resulted from additional
advertising in Biloxi and Las Vegas in order to promote the Boomtown brand and
compete with the local customer market in those areas. Higher promotional
events and player's club redemption costs at all of the Boomtown casinos also
contributed to the increase.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
General and administrative ("G&A") expenses were $17.4 million for the
three months ended June 30, 1996, an 8% decline from the $19.0 million recorded
during the same prior year period. Additionally, G&A expenses were $52.8
million for the nine months ending June 30, 1996, 2.8% lower than $54.2 million
in the prior nine month period. G&A expenses were less at the Company's Las
Vegas and New Orleans properties offset by higher expenses in Biloxi. The
reduction at Boomtown New Orleans primarily resulted from a reclassification of
gaming taxes from G&A to gaming operating expenses during the current year
period. Lower expenses at Boomtown Las Vegas resulted from a reduction of
overhead costs in most casino departments due to cost control efforts. The
increase in Boomtown Biloxi's G&A expenses was attributable to higher property
rent and building and grounds maintenance associated with the aging of the
building and barge. The Company continues to concentrate on aggressive cost
reduction programs for all of its properties.
During the nine months ended June 30, 1996 the Company incurred
charges of $683,000 related to its pending merger with Hollywood Park, as well
as $237,000 associated with its license application in the state of Indiana as
reflected in "Discontinued Projects/Future Development".
Depreciation and amortization expenses rose 13% and 6.5% to $2.8
million and $8.1 million during the three and nine month period ended June 30,
1996, respectively resulting from property and equipment purchases at the
Boomtown properties. Additionally, the increase is partially attributable to
restructuring certain operating leases to capital leases at the Company's Biloxi
and New Orleans properties, capitalizing the equipment and depreciating the
costs over the remaining estimated useful lives.
During the quarter ended June 30, 1996, the Company took a non-cash
charge of $36.6 million related to an agreement between the Company, the owner
and lessor ("Roski") of the Boomtown Las Vegas property ("Resort") and Hollywood
Park ("Blue Diamond Swap Agreement") which would effectively provide for an
early termination of the existing property lease between Boomtown and IVAC (a
California general partnership owned by Roski). The agreement promises that
upon consummation of the Company's proposed merger with Hollywood Park Boomtown
would transfer its entire interest in the Resort to Roski in exchange of certain
assets and assumption by Roski, IVAC or an affiliate of certain liabilities.
The charge included the write-off of the Company's investment in lease of $12.7
million, a write-down of the related party notes receivable to $8.5 million, the
write-off of the remaining net assets less the liabilities assumed by Roski of
$5.0 million (approximate value at June 30, 1996). The after-tax loss amounted
to $35.7 million, or $3.86 per share. Consummation of the Swap is subject to
obtaining all necessary Governmental approvals, including gaming approval. In
addition the Company intends to solicit the consent of the holders of a majority
amount of the principal amount of the Notes to effect the Swap.
14
<PAGE>
The recorded provision and benefit for income taxes for the three
and nine months ended June 30, 1996, respectively does not necessarily
reflect the anticipated benefit in both periods from the write-off associated
with the Swap Agreement. The write-off of the $12.7 million investment in
lease, is not tax deductible for income tax purposes, however the remaining
income tax benefit arising from the Swap Agreement has been offset by a
valuation allowance because of the uncertainty regarding future realization
of the related deferred tax asset.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
Interest expense for the three and nine months ended June 30, 1996 was
$3.5 million and $10.4 million compared to $3.5 million and $9.8 million
recorded during the prior year period, respectively. Additionally, the Company
recorded interest income of $2.3 million, 3% higher than during the prior year.
Interest income is primarily generated from the IVAC notes receivable, which
will be canceled in connection with the Las Vegas lease termination as described
above. During the three months ended June 30, 1996 the Company also recorded
other income of $827,000 consisting of sales tax recoveries from double taxation
on certain equipment operating leases.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of liquidity at June 30, 1996 was cash
and cash equivalents of approximately $21.6 million, an increase of
approximately $800,000 from September 30, 1995. For the first nine months of
fiscal 1996, the Company generated cash from operating activities of $10.2
million as compared to $4.4 million a year ago. This higher operating cash flow
resulted primarily from the pay down of accounts payable during the prior year
period. The net cash provided from operating activities during the first nine
months of the current fiscal year were derived from a net loss of $31.1 million,
primarily related to the write off of Blue Diamond of $31.6 million, net
increases in accounts payable, accrued liabilities and accrued compensation of
$2.0 million, a decrease in prepaid expenses of $1.3 million, depreciation and
amortization expense of $8.1 million and other uses of $1.7 million.
The Company used net cash of $6.8 million, in investing activities
during the first nine months of fiscal 1996, primarily related to the purchases
of property and equipment, offset by proceeds of $406,000 from the sale of
equipment.
Net cash used in financing activities for the nine months ended June
30, 1996 were $2.6 million, primarily related to the payment to $2.5 million to
the lessor of the Boomtown Biloxi barge. Under the agreement, the Company
returned the $2.4 million to NGC in return for a reduction of the distributions
from 20% to 16% of operating cash flow, as defined. Additionally, for $100,000,
the Company secured an option to buy the barge back from NCG as well as to buy
out the EBITDA participation at a cost approximating the original investment
made by HFS less the $2.4 million that was paid back. The option terminates on
March 31, 1997 but is renewable for an additional two years for $100,000 a year.
At June 30, 1996, the Company's debt was comprised principally of the
$103.5 million principal amount of 11.5% First Mortgage Notes due 2003.
Interest on the notes is payable semiannually in arrears each May 1 and November
1. The Company has five notes payable in
15
<PAGE>
the aggregate amount of $5.6 million. Three of the notes totaling $1.6 million
are secured by equipment, furniture and fixtures, bears interest at 11.5% and
mature in September 1997. The fourth note, with a balance of $3.5 million at
June 30, 1996, is secured by the gaming vessel in Harvey, Louisiana, bears
interest at 13% and matures in January 1999. The fifth note, with a balance of
$530,000 at June 30, 1996, is secured by gaming equipment, bears interest at
12.25% and matures in December 1997. The Company also has six capital lease
obligations for equipment with a balance of $2.9 million at June 30, 1996.
During March 1996, the Company converted an
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
operating lease on certain furniture, fixtures and equipment to a note
obligation whereby the residual balance on the operating lease was funded and
the remaining outstanding balance was converted to a capital lease. As of June
30, 1996 the outstanding balance on the lease was $756,000 and matures in August
1998.
The Company believes that its current available cash and cash
equivalents and anticipated cash flow from operations will be sufficient to fund
the Company's working capital and normal recurring capital expenditures through
the end of calendar 1996. The Company does not believe such sources of
liquidity will be sufficient to fund any of its proposed expansion projects at
its current gaming facilities or in any new gaming jurisdiction. The Company
believes that such expansion of its existing facilities is important for
continued growth. If any of the Company's current proposed expansion projects
were to proceed, the Company anticipates that such financing subject to certain
restrictions set forth in the First Mortgage Notes, would come from one or more
of a number of sources, including cash flow from operations, bank financing,
vendor financing or debt, joint ventures, equity financing or other long-term
debt. Alternatively, in the event the Hollywood Park merger were to be
consummated, the Company believes that additional sources of financing will
become available. However, there can be no assurance that such financing will
be available, or available on terms acceptable to the Company or that any
proposed expansion projects by the Company will ever be completed. Further,
given the rapidly changing national competitive and legal environments related
to gaming, the Company's future operating results are highly conditional and
could fluctuate significantly. Should cash flow from the Company's operations
in all locations be below expectations, the Company may have difficulty in
satisfying capital requirements.
The statements set forth above regarding the Company's estimates of
its liquidity and capital expenditure requirements, the sufficiency of its
resources and , any expectation that the Swap would be consummated are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, and are subject to the safe harbors created thereby. Future
operating results of the Company may be adversely affected as a result of a
number of factors, including without limitation, seasonality (historically, the
Company's operating results have been strongest in the summer months, and
weakest in the winter months), weather conditions (severe winter storms have in
the past had a significant adverse effect on the Company's operating results),
the general level of demand for casino gaming and entertainment facilities,
competition in the gaming industry and uncertainties in general economic,
regulatory and political conditions affecting the gaming industry, difficulties
in integrating the businesses of the Company and
16
<PAGE>
Hollywood Park following the proposed merger and lack of financing following the
proposed merger with Hollywood Park and failure to satisfy any conditions to the
Swap. Any of the above factors, among others, could cause the Company's
operating results to be weaker than expected, and could cause the Company's cash
requirements to differ materially from the Company's current estimates.
FACTOR AFFECTING FUTURE OPERATING RESULTS - In a recent development
potentially affecting Boomtown's Harvey, Louisiana riverboat gaming operations,
the State of Louisiana adopted a statute pursuant to which voter referendums on
the continuation of gaming will be held locally (on
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
a parish-by-parish basis) where gaming operations are conducted. While Boomtown
has no reason at this time to believe that the voters of Jefferson Parish (where
Boomtown's Louisiana riverboat operations are located) will vote against
riverboat gaming, in the event they were to do so, Boomtown would have to
discontinue its riverboat gaming operation in that parish upon the expiration of
its license in June 1999 and this occurrence would cause a material adverse
effect on the Company's results of operations.
17
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Boomtown is named defendant in a class action suit in the United States
District Court in New Jersey in which the plaintiffs have alleged that
numerous companies operating casinos in the United States have conspired to
exclude card counters from their establishments. (HYLAND V. GRIFFIN
INVESTIGATIONS, ET.AL.) A class has not yet been certified in the action.
Motions to dismiss are in the process of being filed by the Company and
other defendants.
A demand for arbitration has been filed by Eric Skrmetta with the American
Arbitration Association, alleging that Boomtown breached Louisiana
Partnership Agreement and its fiduciary duty to limited partners resulting
in a substantial tax liability to Mr. Skrmetta. Boomtown disputes this
claim and is contesting it vigorously.
ITEM 2. CHANGES IN SECURITIES.
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
NONE
ITEM 5. OTHER INFORMATION.
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits enclosed herein are detailed on the Schedule of Exhibits on page
18.
18
<PAGE>
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 thereunder duly authorized.
Boomtown, Inc.
Registrant
Date: August 14, 1996 /s/ Phil Bryan
----------------------------------------------
Phil Bryan, President; Chief Operating Officer
Date: August 14, 1996 /s/ Jon Whipple
----------------------------------------------
Jon Whipple, Corporate Controller; Principal
Accounting and Financial Officer
19
<PAGE>
SCHEDULE OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
3.1(5) Amended and Restated Certificate of Incorporation of Registrant.
3.2(11) Amended and Restated Bylaws of Registrant.
3.3(10) Amended and Restated Articles of Incorporation of Boomtown Hotel
& Casino, Inc.
3.4(10) Revised and Restated Bylaws of Boomtown Hotel & Casino, Inc.
3.5(10) Articles of Incorporation of Blue Diamond Hotel & Casino, Inc.
3.6(10) Bylaws of Blue Diamond Hotel & Casino, Inc.
3.7(10) Articles of Incorporation of Louisiana Gaming Enterprises, Inc.
3.8(10) Articles of Incorporation of Bayview Yacht Club, Inc.
3.9(10) Bylaws of Bayview Yacht Club, Inc.
3.10(11) Articles of Organization of Boomtown Iowa, L.C.
3.11(11) Articles of Incorporation of Boomtown Council Bluffs, Inc.
3.12(11) Bylaws of Boomtown Council Bluffs, Inc.
3.13(11) Articles of Incorporation of Boomtown Indiana, Inc.
3.14(11) Bylaws of Boomtown Indiana, Inc.
3.15(11) Articles of Incorporation of Boomtown Riverboat, Inc.
20
<PAGE>
3.16(11) Articles of Incorporation of Boomtown Missouri, Inc.
3.17(11) Bylaws of Boomtown Missouri, Inc.
4.1(1) Form of Warrant issued to the lead Underwriters of Boomtown,
Inc.'s initial public offering.
4.2(7) Form of Private Placement Note.
4.3(7) Form of Exchange Note.
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
4.4(7) Form of Subsidiary Guaranty.
4.5(7) Form of Addendum to Subsidiary Guaranty.
4.6(9) Registration Rights Agreement dated November 10, 1993, by and
among the Company and the Initial Purchases named herein.
4.7(7) Warrant Agreement dated as of November 10, 1993 between Boomtown,
Inc. and First Trust National Association, including Form of
Warrant Certificate.
10.1(11) Amended and Restated 1990 Stock Option Plan.
10.2(11) 1992 Director's Stock Option Plan.
10.3(5) 1993 Stock Bonus Plan.
10.4(1) Standard Form of Indemnification Agreement between Boomtown,
Inc.and its officers and directors.
10.5(1) Exercise of Option of Purchase and Agreement of Sale of Real
Property dated October 29, 1986 between Boomtown, Inc. and S.
Ross Mortensen and Irene Mortensen (the "Option Exercise
Agreements").
10.6(1) Note dated October 29, 1986 payable to Boomtown, Inc. to S. Ross
Mortensen and Irene Mortensen in the principal amount of $823,000
and accompanying Deed of Trust, issued pursuant to the Option
Exercise Agreement.
10.7(1) Agreement of Sale and Purchase and accompanying Agreement, each
dated November 1, 1982 ( the "Purchase Agreement"), between
Boomtown, Inc. and Chris Garson, Ruth R. Garson, George Garson,
George Garson as
21
<PAGE>
Guardian of the Person and Estate of Agnes M. Garson, and
Beatrice Garson (collectively the "Garsons").
10.8(1) Registration Agreement dated May 6, 1988 between Boomtown, Inc.,
MLIF, Kenneth Rainin and Timothy J. Parrott.
10.9(11) Promissory Note dated September 10, 1992, payable by Timothy J.
Parrott to Boomtown, Inc. in the principal amount of $221,000.
10.10(1) Agreement dated January 1, 1989 between Boomtown, Inc., Nevada
Fun Flight Tours and Val Ruggerio.
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
10.11(1) Memorandum of Understanding dated February 13, 1992 between
Boomtown, Inc. and the Internal Revenue Service.
10.12(1) Termination Agreement and Mutual Release dated April 24,1992
between Registrant, Boomtown, Inc., Frank Gianopolus and Delores
Gianopolus.
10.13(3) Letter of Intent dated as of March 26, 1993 among Boomtown, Inc.,
The Skrmetta Group, Inc. and Skrmetta Machinery Corporation,
relating to the property in Harvey, Louisiana.
10.14(3) Letter of Intent dated as of March 26,1993 among Boomtown, Inc.
and Raphael Skrmetta, relating to the property in Biloxi,
Mississippi.
10.15(11) Amended and Restated Agreement to Lease Real Property in Biloxi,
Mississippi dated September 12,1993 by and between Boomtown, Inc.
and Raphael Skrmetta.
10.16(4) Agreement to Lease Real Property in Harvey, Louisiana by and
between Boomtown, Inc., The Skrmetta Group, Inc. and Skrmetta
Machinery Corporation.
10.17(4) Letter Agreement dated April 16, 1993 among Boomtown, Inc.,
Raphael Skrmetta, The Skrmetta Group, Inc., and Skrmetta
Machinery Corporation.
10.18(4) Loan Agreement dated April 23, 1993 by and between Boomtown,
Inc., First Interstate Bank of Nevada, N.A., First Interstate
Bank of Arizona, N.A. and the Diawa Bank, Limited.
10. (2) Memorandum of Understanding dated March 15, 1993 among Boomtown,
Inc., Industry Hills Visitor Accommodations Center, Blue Diamond
Hotel &
22
<PAGE>
Casino, Inc. ("Blue Diamond"), Majestic Realty Co. ("Majestic"),
and Edward P. Roski, Jr. ("Roski").
10.20(5) Stockholders and Affiliates Agreement dated as of June 30, 1993
by and among Blue Diamond, Edward P. Roski, Sr., Roski, Boomtown,
Inc., IVAC, a California general partnership formerly known as
Industry Hills Visitor Accommodations Center, a California
general partnership ("IVAC") and Majestic.
10.21(11) First Amendment to and Clarification of Stockholders and
Affiliates Agreement dated as of November 10, 1993 between Blue
Diamond, Edward P. Roski, the Roski Community Property Trust, the
Roski Senior Revocable Trust, the Registrant, IVAC and Majestic.
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
10.22(5) Lease dated as of June 30, 1993 between IVAC and Blue Diamond.
10.23(11) Lease Amendment to Lease dated as of November 10, 1993 between
IVAC and Blue Diamond.
10.24(5) Purchase Option Agreement dated as of June 30, 1993 by and among
IVAC, Boomtown, Inc., and Blue Diamond.
10.25(11) Amendment to Purchase Option Agreement; Consent to Assignment
dated as of November 10, 1993 between IVAC, the Registrant and
Blue Diamond.
10.26(5) Development and Pre-Opening Services Agreement dated as of June
30, 1993 between Boomtown, Inc., Blue Diamond and IVAC.
10.27(5) Management Agreement dated as of June 30, 1993 between Boomtown,
Inc. and Blue Diamond.
10.28(5) Affiliate Loan Agreement dated as of June 30, 1993 by and among
IVAC, Majestic and Boomtown, Inc.
10.29(5) Bridge Loan Agreement dated as of June 30, 1993 by and between
IVAC and Boomtown, Inc.
10.30(11) Amendment No. 1 to Bridge Loan Agreement dated as of November 10,
1993 between IVAC and the Registrant.
10.31(5) Trademark License Agreement dated as of June 30, 1993 by and
between Boomtown, Inc. and Blue Diamond.
23
<PAGE>
10.32(5) Boomtown Stockholders Agreement dated as of June 30, 1993 by and
among Boomtown, Inc., IVAC and Roski.
10.33(5) Standard Form Agreement Between Owner and Designer/Builder, Part
1 Agreement Preliminary Design and Budgeting, dated as of May 10,
1993 between IVAC and Commerce Construction Co., Inc. and
Standard Form Agreement Between Owner and Designer/Builder, Part
2 Agreement - Final Design and Construction dated as of May 17,
1993 between IVAC and Commerce Construction Co., Inc. and related
documents.
10.34(11) Subordination Agreement dated as of November 10, 1993 between
Majestic, IVAC and the Registrant.
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
10.35(11) Omnibus Consent Agreement dated as of November 10, 1993 between
Blue Diamond, Edward P. Roski, Sr., Roski, the Roski Community
Property Trust, the Roski Senior Revocable Trust, the Registrant,
IVAC and Majestic.
10.36(6) Indenture dated as of November 1, 1993 by and among the
Registrant, Boomtown Casino, Blue Diamond, Louisiana - I Gaming,
a Louisiana Partnership in Commendam (the "Louisiana
Partnership"), Louisiana Gaming Enterprises, Inc. ("LGE"),
Mississippi - I Gaming, L.P. (the Mississippi Partnership"),
Bayview Yacht Club, Inc. ("Bayview") and First Trust National
Association.
10.37(7) Purchase Agreement dated as of November 3, 1993 among Boomtown,
Inc., Boomtown Casino, Blue Diamond, the Louisiana Partnership,
LGE, the Mississippi Partnership, Bayview, Oppenheimer & Co.,
Inc. and Sutro & Co. Incorporated.
10.38(8) Master Agreement dated as of February 1, 1994 by and between
Boomtown Indiana, Inc., Boomtown Riverboat, Inc., Boomtown, Inc.,
SES Indiana, L.L.C., First SES Indiana, Inc., SES Facilities,
Inc., SES Gaming, Inc. and Sheldon E. Stunkel.
10.39(8) Agreement of Limited Partnership of Boomtown Landing, L.P., and
Indiana Partnership.
10.40(8) Agreement of Limited Partnership of SES Boat, L.P., an Indiana
limited partnership.
10.41(8) Development and Pre-Opening Services Agreement between Boomtown
Indiana, Inc., and SES Boat, L.P.
10.42(8) Management Agreement between Boomtown Indiana, Inc. and SES Boat,
L.P.
24
<PAGE>
10.43(8) Agreement of Limited Partnership of Boomtown Belle II, L.P., and
Indiana limited partnership.
10.44(8) Agreement of Limited Partnership of Single Riverboat, L.P., and
Indiana limited partnership.
10.45(9) Asset Purchase Sale Agreement dated as of April 27, 1994 by and
between HFS Gaming Corp. and Mississippi - I Gaming, L.P.
10.47(9) Marketing Services Agreement dated as of April 27, 1994 by and
among Boomtown, Inc. and HFS Gaming Corp.
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
10.48(10) Stock Acquisition Agreement and Plan of Reorganization dated
June 30, 1994 by and between Boomtown, Inc. and Roski.
10.49(11) Master Agreement dated as of September 19, 1994, as amended
September 19, 1994, by and between Boomtown Council Bluffs, Inc.
("BCB"), the Registrant and Iowa Gaming Associates, Inc. ("IGA").
10.50(11) Operating Agreement dated September 19, 1994 between BCB and IGA.
10.51(11) Management Agreement dated September 19, 1994 between BCB and
IGA.
10.52(11) Development and Pre-Opening Services Agreement dated September
19, 1994 between BCB and Boomtown Iowa, L.C.
10.53(12) Agreement and Plan of Merger and Reorganization dated January 17,
1995, by and among Boomtown, Inc., Tweety Sub., Inc. and National
Gaming Corp.
10.54(12) Guarantee letter dated January 17, 1995 between Hospitality
Franchise Services, Inc., National Gaming Corp. and Boomtown,
Inc.
10.55(13) Letter agreement dated March 31, 1995 between Boomtown, Inc.,
Tweety Sub., Inc., National Gaming Corp., Hospitality Franchise
Systems., Inc. and HFS Gaming Corp.
10.56(14) Promissory Note dated December 1, 1994 by and between Boomtown,
Inc. and First National Bank of Commerce.
10.57(14) Promissory Note dated December 30, 1994 by and between the
Louisiana Partnership and PDS Financial.
25
<PAGE>
10.58(15) Lease Agreement dated as of March 29, 1995 by and between Marquis
Leasing Company, a Louisiana Corporation and Louisiana-I Gaming,
L.P.
10.59(16) Option Agreement dated as of November 6, 1995 by and between
National Gaming Mississippi, Inc. and Mississippi - I Gaming,
L.P.
10.60(16) Marketing Services Agreement Amendment dated as of November 6,
1995 to Marketing Services Agreement dated as of April 27, 1994
by and among oomtown, Inc. and HFS Gaming Corporation.
10.61(16) Lease Amendment dated November 6, 1995 to the Lease Agreement
dated as of April 27, 1994 by and among National Gaming
Mississippi, Inc. and Mississippi - I Gaming, L.P.
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
10.62(16) Articles of Organization Indiana Ventures, LLC
10.63(16) Operations Agreement Indiana Ventures, LLC.
10.64(16) Stock Purchase Agreement for all shares of Pinnacle Gaming
Development Corp. between Switzerland County Development Corp.
(Buyer) and Century Casinos Management, Inc. and Cimarrron
Investment Properties Corp. (Sellers).
10.65(16) Option Agreement to lease real property (Parcel I) in Switzerland
County, ndiana, between Daniel Webster, et al (Landlord) and
Indiana Ventures,LLC (Tenant).
10.66(16) Option Agreement to lease real property (Expansion Parcel) in
Switzerland County, Indiana, between Daniel Webster, et al
(Landlord) and Indiana Ventures, LLC (Tenant).
10.67(17) Agreement and Plan of Merger dated as of April 23, 1996, among
Hollywood Park, Inc., HP Acquisition, Inc. and Boomtown, Inc.
10.68(17) Voting Agreement dated as of April 23, 1996, by and between
Hollywood Park, Inc., a Delaware corporation, and Timothy J.
Parrott, in his capacity as a stockholder of Boomtown, Inc.
10.69(17) Voting Agreement dated as of April 23, 1996, by and between
Boomtown, Inc., a Delaware corporation, and R.D. Hubbard, in his
capacity as a stockholder of Hollywood Park, Inc.
26
<PAGE>
10.70(17) Joint Press Release issued on April 24, 1996 by Hollywood Park,
Inc. and Boomtown, Inc.
10.71(18) Agreement between Boomtown and related entities ("Boomtown
Group") and SES Gaming, Inc. and related entities ("SES Group")
terminating the Master Agreement by and between the Boomtown
Group and the SES Group dated February 1, 1994 relating to the
proposed gaming project in Lawrenceburg, Indiana.
10.72 Agreement between Boomtown, Hollywood Park and Edward P. Roski,
Jr. ("Swap Agreement") effectively terminating the lease of the
Blue Diamond Property and selling virtually all assets and
liabilities effective with the close of Boomtown's merger with
Hollywood Park.
11.1 Computation of per share earnings.
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
(1) Incorporated by reference to the exhibit filed with the Company's
Registration Statement on Form S-1 (File No. 33-51968), effective
October 22, 1992.
(2) Incorporated by reference to the exhibit filed with the Company's
Current Report on Form 8-K, filed with the SEC on March 18, 1993.
(3) Incorporated by reference to the exhibit filed with the Company's
Current Report on Form 8-K, filed with the SEC on April 1, 1993.
(4) Incorporated by reference to the exhibit filed with the Company's
Registration Statement on Form S-1 (File No. 33-61198), effective May
24, 1993.
(5) Incorporated by reference to the exhibit filed with the Company's
Current Report on Form 8-K, filed with the SEC on July 28, 1993.
(6) Incorporated by reference to the exhibit filed with the Company's
Current Report on Form 8-K, filed with the SEC on December 23, 1993.
(7) Incorporated by reference to the exhibit filed with the Company's Form
10-K for the fiscal year ended September 30, 1993.
(8) Incorporated by reference to the exhibit filed with the Company's Form
10-Q for the quarter ended December 31, 1993.
(9) Incorporated by reference to the exhibit filed with the Company's
Registration Statement on Form S-4 (File No. 33-70350), effective
May 6, 1994.
27
<PAGE>
(10) Incorporated by reference to the exhibit filed with the Company's Form
10-Q for the quarter ended June 30, 1994.
(11) Incorporated by reference to the exhibit filed with the Company's Form
10-K for the fiscal year September 30, 1994.
(12) Incorporated by reference to the exhibit filed with the Company's
Current Report on Form 8-K, filed with the SEC on January 25, 1995.
(13) Incorporated by reference to the exhibit filed with the Company's
Current Report on Form 8-K, filed with the SEC on April 14, 1995.
(14) Incorporated by reference to the exhibit filed with the Company's Form
10-Q for the quarter ended March 31, 1995.
(15) Incorporated by reference to the exhibit filed with the Company's Form
10-Q for the quarter June 30, 1995.
SCHEDULE OF EXHIBITS (CONTINUED)
EXHIBIT
NUMBER DESCRIPTION
(16) Incorporated by reference to the exhibit filed with the Company's Form
10-K for the fiscal year September 30, 1995.
(17) Incorporated by reference to the exhibit filed with the Company's
Current Report on Form 8-K, filed with the SEC on April 23, 1996.
(18) Incorporated by reference to the exhibit filed with the Company's Form
10-Q for the quarter ended March 31, 1996.
28
<PAGE>
BOOMTOWN, INC.
EXHIBIT 11.1 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(LOSS) OF THE COMPANY
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1995 1996 1995 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net income (loss) applicable to Common Stock ($1,849,219) ($34,974,699) ($ 1,212,066) ($35,283,284)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average shares outstanding 9,228,726 9,251,482 9,226,643 9,243,243
Net effect of dilutive stock options based
on the treasury stock method using
the average market price -- -- -- --
----------- ----------- ----------- -----------
Total weighted average shares outstanding 9,228,726 9,251,482 9,226,643 9,243,243
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income (loss) per share of Common Stock ($ 0.20) ($ 3.78) ($ 0.13) ($ 3.82)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
28
<PAGE>
BLUE DIAMOND SWAP AGREEMENT
DATED AS OF AUGUST 12, 1996
BY AND AMONG
BOOMTOWN, INC.,
BLUE DIAMOND HOTEL & CASINO, INC.,
HOLLYWOOD PARK, INC.,
EDWARD P. ROSKI, JR.,
IVAC
AND
MAJESTIC REALTY CO.
<PAGE>
TABLE OF CONTENTS
PAGE
----
1. DEFINITIONS AND RULES OF INTERPRETATION...................................2
1.1 Definitions..........................................................2
1.2 Rules of Interpretation..............................................7
2. TRANSFER OF ROSKI NOTES...................................................8
2.1 Transfer of Roski Notes on the Exchange Date.........................8
2.2 Excluded Assets......................................................8
2.3 No Liabilities Assumed; Excluded Liabilities.........................8
3. TRANSFER OF BD INTEREST...................................................8
3.1 Transfer of BD Interest on the Exchange Date.........................8
3.2 Excluded Assets......................................................9
3.3 Liabilities Assumed..................................................9
4. CASH PAYMENT..............................................................9
5. EXCHANGE OF ASSETS........................................................9
5.1 Exchange Date........................................................9
5.2 Cash Payment; Proration.............................................10
5.3 Deliveries by BD Transferor.........................................10
5.4 Deliveries by Roski.................................................11
5.5 Additional Undertakings by Roski....................................12
5.6 Additional Undertakings by Boomtown, Blue Diamond,
Hollywood Park and BD Transferor....................................13
6. REPRESENTATIONS AND WARRANTIES...........................................14
6.1 Representations and Warranties of the Roski Entities................14
6.2 Representations and Warranties of Boomtown, Blue Diamond,
Hollywood Park and BD Transferor....................................16
7. CONDITIONS PRECEDENT.....................................................17
7.1 Conditions to Execution and Delivery of this Agreement by Boomtown..17
7.2 Conditions to Execution and Delivery of this Agreement by Roski.....17
7.3 Conditions to Exchange by BD Transferor.............................17
7.4 Conditions to Exchange by Roski.....................................18
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<PAGE>
8. INDEMNIFICATION..........................................................19
8.1 Indemnification by the Roski Entities...............................19
8.2 Indemnification by Boomtown, Blue Diamond and BD Transferor.........20
8.3 Procedure...........................................................20
9. ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES. .....................21
9.1 Approvals...........................................................21
9.2 Consents, Authorizations and Waivers................................21
9.3 Transfer Taxes......................................................21
9.4 Additional Deliveries; Further Assurances...........................21
9.5 Maintenance of Resort Business......................................22
9.6 Director's Insurance................................................22
10. TERMINATION..............................................................22
10.1 Termination.........................................................22
10.2 Other Merger........................................................22
11. MISCELLANEOUS............................................................23
11.1 Changes, Waivers, etc...............................................23
11.2 Payment of Fees and Expenses........................................23
11.3 Notices.............................................................23
11.4 Entire Agreement....................................................24
11.5 Survival of Representations and Warranties, etc.....................24
11.6 Headings; References to Agreement...................................24
11.7 Choice of Law; Interpretation.......................................24
11.8 Counterparts........................................................24
11.9 Severability........................................................24
11.10 Successors and Assigns.........................................24
11.11 No third Party Beneficiaries...................................24
11.12 Waiver of Jury Trial...........................................25
-ii-
<PAGE>
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A RELEASE
EXHIBIT B ROSKI NOTE
EXHIBIT C TERMINATION AGREEMENT
SCHEDULE 1-A NOTES AND LEASES
SCHEDULE 1-B MAINTENANCE CONTRACTS
SCHEDULE 1-C OUTDOOR SIGNS
SCHEDULE 1-D LICENSE AND PROGRESSIVE SERVICE AGREEMENTS
-iii-
<PAGE>
BLUE DIAMOND SWAP AGREEMENT
This Blue Diamond Swap Agreement (this "Agreement") is made as of the 12th
day of August, 1996 by and among Boomtown, Inc., a Delaware corporation
("Boomtown"), Blue Diamond Hotel & Casino, Inc., a Nevada corporation and a
wholly-owned subsidiary of Boomtown ("Blue Diamond"), Hollywood Park, Inc., a
Delaware corporation ("Hollywood Park"), Edward P. Roski, Jr., an individual
residing in the State of California ("Roski"), IVAC, a California general
partnership of which Roski is a partner ("IVAC") and Majestic Realty Co., a
California corporation ("Majestic").
WHEREAS, IVAC owns certain real property in Las Vegas, Nevada, on which a
resort consisting of a casino, hotel, restaurant, recreational vehicle park and
related facilities (as more fully defined below, the "Resort") is being operated
by Blue Diamond as Boomtown Las Vegas;
WHEREAS, Boomtown has advanced certain funds to IVAC to enable IVAC to
complete development and construction of the Resort, which advances are
evidenced by certain promissory notes issued by IVAC, which notes are governed
by loan agreements and secured by deeds of trust on the Resort site and certain
related property;
WHEREAS, Blue Diamond has entered into a lease with IVAC for the Resort
site, and has purchased and installed certain trade fixtures in the Resort;
WHEREAS, Hollywood Park intends to enter into a strategic combination (the
"Merger") with Boomtown pursuant to an Agreement and Plan of Merger dated as of
April 23, 1996 by and among Hollywood Park, Boomtown and HP Acquisition, Inc., a
Delaware corporation and a wholly-owned subsidiary of Hollywood Park (as amended
and in effect from time to time, the "Merger Agreement");
WHEREAS, subject to consummation of the Merger pursuant to the Merger
Agreement, Boomtown and Blue Diamond intend either (a) to effect any one or
combination of the following transfers of their respective interests in the
Resort (i) a transfer to a subsidiary of Boomtown (an "SPC") created for the
purpose and designated as an "Unrestricted Subsidiary" under the Boomtown
Indenture (as defined below), or (ii) as set forth in Section 3.1, any other
transfer which would achieve the result contemplated by this Agreement or (b) to
retain their respective interests in the Resort, for the purpose of entering
directly into the transactions contemplated by this Agreement;
WHEREAS, it is the intent of the parties hereto that, upon consummation of
the Merger pursuant to the Merger Agreement, subject to the terms and conditions
set forth in this Agreement, the holder of such interests in the Resort,
regardless of whether such holder is then Boomtown, Blue Diamond, Hollywood
Park, any designated Affiliate (as defined below) of Hollywood Park, any SPC or
other designated subsidiary of Boomtown or any combination thereof (any such
holder(s), "BD Transferor") would either exchange such interests in the Resort
for the Roski Notes (as defined below) or effect the same result through a
series of related
<PAGE>
transactions, and, in any such case, Roski would exchange the Roski Notes for
such interests in the Resort (such exchange, however effected, the "Blue Diamond
Swap");
NOW THEREFORE, in consideration of the foregoing premises, and for other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Boomtown, Blue Diamond, Hollywood Park, Roski, IVAC and Majestic
hereby agree as follows:
1. DEFINITIONS AND RULES OF INTERPRETATION
1.1 DEFINITIONS. The following terms shall have the respective
meaning set forth below, or in the Sections of this Agreement respectively
referred to below:
"AFFILIATE" of any person or entity organized as a corporation,
partnership, joint venture, business trust or other non-individual person, shall
mean (i) any person or entity which directly or indirectly owns fifty percent
(50%) or more of the stock, partnership or other beneficial interest of such
person or entity, (ii) any corporation, partnership or other entity of which
fifty percent (50%) or more of the stock, partnership or other beneficial
interest is owned directly or indirectly by such person or entity, and (iii) any
corporation, partnership or entity of which fifty percent (50%) or more of the
stock, partnership or other beneficial interest is owned directly or indirectly
by any person or entity that owns fifty percent (50%) or more of the stock,
partnership or other beneficial interest of such person or entity.
"AFFILIATE LOAN AGREEMENT" shall mean the Affiliate Loan Agreement
dated as of June 30, 1993, by and among IVAC, Majestic and Boomtown.
"AFFILIATE NOTE" shall mean the Affiliate Loan Note dated as of June
30, 1993, made by IVAC in favor of Boomtown.
"AFFILIATE LOAN DEED OF TRUST" shall mean the Deed of Trust and
Assignment of Rents and Security Agreement dated as of June 30, 1993, by and
among IVAC, as trustor, Nevada Title Company, a Nevada corporation, as trustee
and Boomtown and Majestic as tenants in common, as beneficiaries.
"APPROVALS" shall mean all governmental approvals, consents, licenses,
findings of suitability, and permits, including without limitation, any
approvals of Gaming Authorities, as may be required to effect the Blue Diamond
Swap.
"ASSUMED CONTRACTS" shall mean (i) the leases and notes identified on
SCHEDULE 1-A hereto, (ii) the gift shop leases and the sports book agreement
between Boomtown and Leroy's Horse and Sports Place, dated November 30, 1995,
(iii) the agreement for the family amusement center at the Resort, (iv) the
maintenance contracts listed on SCHEDULE 1-B hereto, (v) the outdoor sign
agreements listed on SCHEDULE 1-C hereto, (vi) the license and progressive
service agreements listed on SCHEDULE 1-D hereto and (vii) the agreements for
entertainment at the Resort in effect on the Exchange Date.
-2-
<PAGE>
"BD INTEREST" shall mean all of BD Transferor's right, title and
interest in and to (i) the Affiliate Note, the Bridge Note, the Affiliate Loan
Agreement, the Bridge Loan Agreement, the Purchase Option Agreement, the
Affiliate Loan Deed of Trust, the Bridge Loan Deed of Trust and the Purchase
Option Deed of Trust, (ii) the mortgage liens on, and other rights in, the
Resort site and related properties respectively conveyed in trust under the
Affiliate Loan Deed of Trust, the Bridge Loan Deed of Trust and the Purchase
Option Deed of Trust, (iii) the Blue Diamond Lease, the Assumed Contracts, the
FF&E and the Specified Assets and (iv) security systems, customer lists,
telephone numbers, books and records, user manuals, plans, surveys, liquor and
other licenses and inventories which are located at, or used principally in
connection with, the Resort; PROVIDED, HOWEVER, that the BD Interest shall
include all interests of Boomtown and Blue Diamond in the foregoing as of the
Exchange Date.
"BD TRANSFEROR" shall have the meaning ascribed thereto in the
recitals hereto.
"BLUE DIAMOND" shall have the meaning ascribed to such term in the
recitals hereto.
"BLUE DIAMOND LEASE" shall mean the Lease dated as of June 30, 1993,
as amended by a First Amendment to Lease dated as of November 10, 1993, by and
between IVAC as lessor and Blue Diamond as lessee, pursuant to which IVAC has
agreed to lease to Blue Diamond, and Blue Diamond has agreed to lease from IVAC,
the real property in Las Vegas, Nevada on which the Resort is situated.
"BLUE DIAMOND SWAP" shall have the meaning ascribed thereto in the
recitals hereto.
"BOOMTOWN" shall have the meaning ascribed thereto in the preamble
hereto.
"BOOMTOWN INDENTURE" shall mean the Indenture dated as of November 1,
1993, by and among Boomtown, Blue Diamond, certain of their Affiliates and the
Trustee.
"BRIDGE LOAN AGREEMENT" shall mean the Bridge Loan Agreement dated as
of June 30, 1993, by and between IVAC and Boomtown, as amended by an Amendment
No. 1 to Bridge Loan Agreement dated as of November 10, 1993.
"BRIDGE NOTE" shall mean the Amended and Restated Promissory Note
(Bridge) dated as of June 30, 1993, made by IVAC in favor of Boomtown.
"BRIDGE LOAN DEED OF TRUST" shall mean the Deed of Trust and
Assignment of Rents and Security Agreement dated as of June 30, 1993, by and
among IVAC, as trustor, Nevada Title Company, a Nevada corporation, as trustee
and Boomtown as beneficiary.
"DESIGNATED ROSKI ENTITY" shall mean an entity designated by Roski and
either (i) reasonably acceptable to Boomtown and Hollywood Park or (ii) the
obligations of which hereunder and under the Related Documents, including all
indemnities for which such Roski
-3-
<PAGE>
Entity is liable, shall have been unconditionally guaranteed by Roski pursuant
to the Roski Guaranty.
"EFFECTIVE DATE" shall mean the date of this Agreement.
"EMPLOYEES" shall mean the employees of Boomtown, Blue Diamond or
their Affiliates employed at or in connection with the Resort exclusively and
not employed at other facilities.
"EXCHANGE DATE" shall mean the date on which the conditions precedent
specified in Sections 7.3 and 7.4 hereof have been satisfied or waived.
"FF&E" shall mean all trade fixtures, other fixtures and equipment
located at or used principally in connection with the Resort, including, in any
event, those assets (however characterized) listed on the fixed asset register
of Blue Diamond as of the Effective Date and those assets (however
characterized) leased or purchased under the leases and notes listed on SCHEDULE
1-A; provided, however, that FF&E shall be deemed to include any replacements of
any such assets and any similar assets acquired for use at or principally in
connection with the Resort by Boomtown, Blue Diamond or BD Transferor during the
period from the Effective Date until the Exchange Date and shall be deemed to
exclude any such assets that no longer exist as of the Exchange Date due to
obsolescence or use in the ordinary course of business.
"FIXTURE FILINGS" shall mean the fixture filings with respect to the
Resort listed as of the Exchange Date on SCHEDULE 1 to the Termination
Agreement.
"GAAP" shall mean generally accepted accounting principles as in
effect on the relevant date of determination, consistently applied.
"GAMING AUTHORITY" shall mean the Nevada Gaming Commission, the Nevada
State Gaming Control Board, the Clark County Liquor and Gaming Licensing Board
and any other state, county or other governmental authority having
responsibility for, jurisdiction over, or regulatory authority, oversight or
supervisory responsibilities in respect of, any gaming related business operated
or contemplated to be operated at or in connection with the Resort.
"GAMING LAW" shall mean all applicable provisions (i) the Nevada
Gaming Control Act and the statutes rules, and regulations promulgated
thereunder and (ii) all interpretations, decisions, judgments, orders and
decrees of any Gaming Authority.
"HOLLYWOOD PARK" shall have the meaning ascribed to such term in the
preamble hereto.
"IVAC" shall have the meaning ascribed to such term in the preamble
hereto.
"MAJESTIC" shall have the meaning ascribed to such term in the
preamble hereto.
"MERGER" shall have the meaning ascribed to such term in the recitals
hereto.
-4-
<PAGE>
"MERGER AGREEMENT" shall have the meaning ascribed to such term in the
recitals hereto.
"PERMITTED LIENS" shall mean (a) liens and encumbrances, including
rights of consent to assignment, arising under the Assumed Contracts in
accordance with the terms thereof, (b) restrictions imposed by Gaming Laws and
other applicable governmental authorities and (c) other encumbrances arising in
the ordinary course of business in connection with the operation of the Resort.
"PERISHABLE INVENTORY" shall mean all liquor, beverages, foodstuff and
other consumable or perishable inventory purchased by Blue Diamond or any of its
Affiliates for consumption or use at the Resort, valued at cost on a FIFO basis.
"PURCHASE OPTION AGREEMENT" shall mean the Purchase Option Agreement
dated as of June 30, 1993 by and among IVAC, Boomtown and Blue Diamond.
"PURCHASE OPTION DEED OF TRUST" shall mean the Deed of Trust and
Assignment of Rents and Security Agreement dated as of June 30, 1993, by and
among IVAC, as trustor, Nevada Title Company, a Nevada corporation, as trustee
and Blue Diamond, as beneficiary.
"RELATED AGREEMENTS" shall mean the Termination Agreement, the Roski
Notes, the Roski Guaranty, if applicable, the Release and all of the other
documents, instruments and agreements executed and delivered in connection with
any of the foregoing, and the transactions respectively contemplated hereby and
thereby.
"RELEASE" shall mean the general release by each of (i) the Roski
Entities of BD Transferor, Boomtown, Blue Diamond and their respective
Affiliates of the obligations related to the Resort created by or contained in
the Blue Diamond Lease, the Assumed Contracts, the Specified Liabilities and all
obligations, liabilities and claims relating to the Resort arising or accruing
prior to the date on which Boomtown or Blue Diamond took possession of the
"Premises" (as defined in the Blue Diamond Lease) or arising or accruing on or
after the Exchange Date and (ii) BD Transferor, Boomtown and Blue Diamond of the
Roski Entities of all obligations, liabilities and claims arising under the
Affiliate Note, the Bridge Note, the Affiliate Loan Agreement, the Bridge Loan
Agreement, the Purchase Option Agreement, the Affiliate Loan Deed of Trust, the
Bridge Loan Deed of Trust and the Purchase Option Deed of Trust in substantially
the form of EXHIBIT A hereto.
"RESORT" shall mean the facility located at 3333 Blue Diamond Road,
Las Vegas, Nevada consisting of a casino, hotel, restaurant, recreational
vehicle park and related facilities, and all assets located at, used principally
in connection with, or arising principally from such facilities, including the
FF&E, the Specified Assets, certain rights under the Assumed Contracts, security
systems, customer lists, telephone numbers, books and records, user manuals,
plans, surveys, liquor and other licenses and inventories.
"RETAINED EMPLOYEES" shall have the meaning ascribed thereto in
Section 5.6(a) of this Agreement.
-5-
<PAGE>
"ROSKI" shall have the meaning ascribed to such term in the preamble
hereto.
"ROSKI ENTITIES" shall mean collectively, Roski, IVAC (including
Edward P. Roski, Sr. as a general partner of IVAC) and Majestic.
"ROSKI GUARANTY" shall mean a guaranty by Roski of the obligations of
the Designated Roski Entity hereunder and under the other Related Agreements to
which the Designated Roski Entity is a party, if required by Boomtown and
Hollywood Park, in form and substance satisfactory to Boomtown and Hollywood
Park.
"ROSKI NOTES" shall mean (i) an unsecured promissory note made by the
Designated Roski Entity, in an initial principal amount of five million dollars
($5,000,000) having an interest rate equal to the Prime Rate, as announced by
Bank of America from time to time, plus one and one half percent (1.5%) per
annum and providing for annual principal payments of one million dollars
($1,000,000) plus accrued interest and maturing on the date that is five years
after the Exchange Date, in substantially the form of EXHIBIT B-1 hereto and
(ii) an unsecured promissory note, made by the Designated Roski Entity, in an
initial principal amount of $3,464,287 having an interest rate equal to the
Prime Rate, as announced by Bank of American from time to time, plus one-half
percent (.5%) per annum and providing for a payment of all principal plus
accrued interest on the date that is three (3) years after the Exchange Date, in
substantially the form of Exhibit B-2 hereto.
"ROSKI STOCK" shall mean 714,386 shares of the common stock of
Boomtown held, as of the Effective Date, by Roski, and all shares of the common
stock of Hollywood Park into which such Boomtown common stock had then
converted, or which Roski then had a right to receive in exchange for such
Boomtown common stock.
"ROSKI STOCK PURCHASE AGREEMENT" means an agreement of even date
herewith between Roski and Hollywood Park pursuant to which Roski is selling,
transferring and conveying the Roski Stock to Hollywood Park, and Hollywood Park
is purchasing and acquiring the Roski Stock for the Roski Stock Purchase Price.
"ROSKI STOCK PURCHASE PRICE" shall mean a note to be issued by
Hollywood Park to Roski in the principal amount of $3,464,772 pursuant to the
Roski Purchase Agreement as consideration for the purchase of the Roski Stock.
"SPC" shall have the meaning ascribed to such term in the preamble
hereto.
"SPECIFIED ASSETS" shall mean (i) prepaid deposits with utilities with
respect to the Resort, security deposits and any other prepaid expenses, (ii)
cash in the Resort, whether in machines, gaming tables, change stations, the
gaming control center or at the hotel front desk, the restaurant or the
recreational vehicle park, (iii) Perishable Inventory (iv) applicable property
tax refunds accrued prior to the Exchange Date and not included in the tax
proration contemplated by Section 5.2 and (v) all trade receivables and all
other liquid assets other than markers (i.e., receivables and other uncontingent
payment rights convertible into cash within 90 days after the
-6-
<PAGE>
respective issuance dates thereof), in each case, accruing or arising through
the last day prior to the Exchange Date.
"SPECIFIED LIABILITIES" shall mean (i) trade payables, (ii) players
points (Players Club), (iii) progressive slot winnings liability as shown on
Boomtown's books and records, (iv) caribbean stud liability, (v) advance
deposits, (vi) outstanding tokens and (vii) pre-sold concerts, with respect to
the Resort, in each case, accruing or arising through the last day prior to the
Exchange Date.
"TERMINATION AGREEMENT" shall have the meaning ascribed to such term
in Section 5.3(a) hereof.
"TRUSTEE" shall mean First Trust National Association, as trustee
under the Boomtown Indenture.
1.2 RULES OF INTERPRETATION
(a) A reference to any document or agreement shall, unless
otherwise provided, include such document or agreement as amended, modified or
supplemented from time to time in accordance with its terms and, if applicable,
as permitted by this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any applicable amendment or
modification to such law, or any applicable successor law.
(d) A reference to any person or entity includes its permitted
successors and permitted assignees.
(e) Accounting terms not otherwise defined herein have the
respective meanings assigned to them by GAAP applied on a consistent basis by
the accounting entity to which they refer.
(f) The words "include," "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by GAAP, which
terms are defined in the Uniform Commercial Code as in effect in the State of
Nevada, shall have the respective meanings assigned to them therein.
(h) Reference to a particular "Section" refers to that section
of this Agreement unless otherwise indicated.
(i) The words "herein," "hereof," "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
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2. TRANSFER OF ROSKI NOTES.
2.1 TRANSFER OF ROSKI NOTES ON THE EXCHANGE DATE. Subject to the
terms and conditions of this Agreement, (i) the Designated Roski Entity agrees,
on the Exchange Date, to issue the Roski Notes to BD Transferor and (ii) BD
Transferor agrees, on the Exchange Date, to acquire and accept from Roski the
Roski Notes.
2.2 EXCLUDED ASSETS. No other assets of the Roski Entities, except
those specifically listed in Section 2.1 and the cash payments respectively
contemplated by Sections 3.1 and 5.2, if applicable, shall be transferred or
deemed to be transferred hereby.
2.3 NO LIABILITIES ASSUMED; EXCLUDED LIABILITIES. BD Transferor is
not assuming and shall not be responsible for any liability or obligation of any
Roski Entity, any Specified Liabilities, any obligations under Assumed Contracts
accruing on or after the Exchange Date or any other claims or liabilities with
respect to the Resort arising or accruing on or after the Exchange Date, or any
liability or obligation arising from or relating to any of the following:
(a) any costs or expenses, including, but not limited to, legal
fees, accounting fees, consulting, other finder, broker and financing costs
incurred by Roski or his Affiliates in connection with this Agreement or the
Related Agreements or the consummation of the transactions contemplated hereby
or thereby; or
(b) any taxes owed by any Roski Entity or assessed as a result
of or in connection with the transactions contemplated hereby, including,
without limitation, any income, property, sales, use or withholding taxes.
In no event shall Hollywood Park be deemed to have assumed, or
otherwise become liable for, any liability whatsoever of any Roski Entity
(regardless of whether Hollywood Park is designated as BD Transferor).
3. TRANSFER OF BD INTEREST.
3.1 TRANSFER OF BD INTEREST ON THE EXCHANGE DATE. Subject to the
terms and conditions of this Agreement, BD Transferor agrees, on the Exchange
Date, to transfer, convey, assign and deliver to Roski, or the Designated Roski
Entity, and Roski agrees to acquire, accept and assume (or cause the Designated
Roski Entity to acquire, accept and assume) from the BD Transferor, all right,
title and interest of BD Transferor in and to the BD Interest. The parties
intend that this exchange shall occur by means of a series of contemporaneous
steps as follows: (a) Boomtown and Blue Diamond would transfer the BD Interest
to the SPC, (b) the Designated Roski Entity would convey the Roski Notes and any
cash payments to be made hereunder to the SPC and assume the liabilities
described herein, (c) the SPC would transfer and convey the BD Interest to the
Designated Roski Entity as contemplated herein, subject to the Assumed Contracts
and (d) the SPC would transfer the Roski Notes and any cash payments to be made
hereunder to Boomtown. The parties acknowledge and agree that Boomtown and
Hollywood Park may mutually agree without the consent of Roski, to utilize a
structure other than the foregoing structure, to accomplish the objectives of
the parties set forth herein, provided that such structure
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is economically equivalent to the contemplated structure set forth above. It is
further acknowledged that as part of such alternative structure, Boomtown and
Hollywood Park may require Roski to continue to own and hold the Roski Stock.
3.2 EXCLUDED ASSETS. No other rights, interests or assets of BD
Transferor or any of its Affiliates, except those specifically listed in Section
3.1 and the cash payment contemplated by Section 5.2, if applicable, shall be
transferred or deemed to be transferred hereby.
3.3 LIABILITIES ASSUMED. Upon and after the Exchange Date, the
Designated Roski Entity shall be solely liable for the Specified Liabilities,
accrued liabilities relating to vacation earned but unused under the Blue
Diamond employee benefits policy in effect as of the date hereof associated with
the employees hired by Roski pursuant to Section 5.5(F) and liabilities arising
under the Assumed Contracts and all other costs, expenses, claims, liabilities
and obligations of the Resort, of every kind and nature, in each case, arising
or accruing on or after the Exchange Date. The Designated Roski Entity shall
take such actions to assume the liabilities of the Resort accruing after the
Exchange Date under the Assumed Contracts as may be necessary to substitute the
Designated Roski Entity for BD Transferor or, as applicable, any of its
Affiliates, and/or shall relieve BD Transferor and its Affiliates of all
liability thereunder. Except for the Specified Liabilities, accrued liabilities
relating to vacation earned but unused to the extent described above, amounts
accruing under the Assumed Contracts on or after the Exchange Date and all of
the other costs, expenses, claims, liabilities and obligations arising on or
after the Exchange Date in connection with the Resort, the Designated Roski
Entity will not assume or otherwise become responsible for any liability or
obligation of Boomtown, Blue Diamond, Hollywood Park or any of their respective
Affiliates, or any other claims or liabilities whatsoever, including, any costs
or expenses, including, but not limited to, legal fees, accounting fees,
consulting, other finder, broker and financing costs incurred by Boomtown, Blue
Diamond, Hollywood Park, BD Transferor or any of their Affiliates in connection
with this Agreement or the Related Agreements or the consummation of the
transactions contemplated hereby or thereby.
4. CASH PAYMENT. Subject to the terms and conditions of this Agreement,
each of the parties agrees to make the cash payments respectively contemplated
to be made by such party in Sections 3.1 and 5.2, as applicable.
5. EXCHANGE OF ASSETS.
5.1 EXCHANGE DATE. Subject to a restructuring in accordance with
Section 3.1, on the Exchange Date, (a) BD Transferor shall transfer, convey,
assign and deliver to Roski, and Roski shall acquire, accept and assume from BD
Transferor, the BD Interest and (b) Roski shall deliver to BD Transferor, and BD
Transferor shall acquire and accept from Roski, the Roski Notes. Each party
shall deliver to the other such endorsements, assignments, releases and other
instruments as the other party shall reasonably request or as necessary to vest
in the other party valid and marketable title, free and clear of all liens or
encumbrances (except, with respect to the BD Interest, Permitted Liens) to the
BD Interest, in the case of Roski, and to the Roski Notes, in the case of BD
Transferor.
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5.2 CASH PAYMENT; PRORATION. On the Exchange Date, if the amount of
Specified Assets is greater than the amount of Specified Liabilities as of the
Exchange Date, then Roski shall pay to BD Transferor an amount equal to the
amount of Specified Assets less the amount of Specified Liabilities. On the
Exchange Date, if the amount of Specified Liabilities is greater than the amount
of Specified Assets as of the Exchange Date, then BD Transferor shall pay to
Roski an amount equal to the amount of Specified Liabilities less the amount of
Specified Assets. In addition, all outstanding taxes, rent, utilities and
payments under the Assumed Contracts shall be pro rated as of the Exchange Date,
so that all such amounts accruing prior to the Exchange Date shall be for the
account of Blue Diamond or Boomtown and all such amounts accruing from and after
the Exchange Date shall be for the account of the applicable Roski Entity.
5.3 DELIVERIES BY BD TRANSFEROR. On the Exchange Date, subject to
the terms and conditions hereof, BD Transferor shall deliver to Roski each of
the following:
(a) a termination agreement in substantially the form of EXHIBIT
C hereto (the "Termination Agreement"), duly executed by BD Transferor, Boomtown
and Blue Diamond terminating all of the respective rights and obligations of BD
Transferor and the Roski Entities under the Affiliate Note, the Bridge Note, the
Affiliate Loan Agreement, the Bridge Loan Agreement, the Purchase Option
Agreement, the Affiliate Loan Deed of Trust, the Bridge Loan Deed of Trust, the
Purchase Option Deed of Trust, the Blue Diamond Lease and all or other documents
relating to the Resort and the relationship among Boomtown, Blue Diamond and any
one or more of the Roski Entities, providing, inter alia, for the acceptance by
Roski of BD Transferor's transfer of the BD Interest in a condition which
complies with the terms of the Blue Diamond Lease and this Agreement;
(b) the Affiliate Note, marked canceled;
(c) the Bridge Note, marked canceled;
(d) a discharge of the Affiliate Loan Deed of Trust, in
recordable form;
(e) a discharge of the Bridge Loan Deed of Trust, in recordable
form;
(f) a discharge of the Purchase Option Deed of Trust, in
recordable form;
(g) a quitclaim deed, in recordable form, regarding the Resort
(including BD Transferor's interest under the Blue Diamond Lease and the
Purchase Option Agreement);
(h) a discharge in recordable form of the Construction and
Permanent Deed of Trust, Security Agreement and Fixture Filing with Assignment
of Rents dated as of November 10, 1993, among Blue Diamond, as trustor, Nevada
Title Company, as trustee, and the Trustee, as beneficiary;
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(i) a discharge in recordable form of the Construction and
Permanent Deed of Trust, Security Agreement and Fixture Filing with Assignment
of Rents (Subordinated) dated as of November 10, 1993, among Blue Diamond, as
trustor, Nevada Title Company, as trustee, and Boomtown, as beneficiary;
(j) a termination in recordable form of the Collateral
Assignment of Deed of Trust dated as of November 10, 1993, between Boomtown and
the Trustee;
(k) UCC-3 termination statements, terminating the Fixture
Filings;
(l) the Release, duly executed by BD Transferor, Blue Diamond
and Boomtown;
(m) assignment agreements and any such other documents,
consents, authorizations and waivers as may be reasonably required by Roski,
lessors or other contracting parties, to assign all of BD Transferor's rights
and obligations under the Assumed Contracts;
(n) bills of sale for all personal property owned by BD
Transferor and included in the BD Interest;
(o) vehicle certificates of title and appropriate transfer
documents for all automobiles or other vehicles owned by BD Transferor and
included in the BD Interest;
(p) a list of all Employees employed at the Resort as of the
business day prior to the Exchange Date;
(q) an accounting of all cash on hand and Perishable Inventory
on the premises of the Resort on the business day prior to the Exchange Date;
and
(r) an accounting of Specified Assets and Specified Liabilities.
5.4 DELIVERIES BY ROSKI. On the Exchange Date, subject to the terms
and conditions hereof, Roski shall deliver to BD Transferor each of the
following:
(a) the Termination Agreement, duly executed by Roski and each
other affected Roski Entity;
(b) the Roski Notes;
(c) the Release, duly executed by each affected Roski Entity;
and
(d) assumption agreements and other documents as may be
reasonably required by BD Transferor to cause Roski to assume the obligations of
BD Transferor under the Assumed Contracts.
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5.5 ADDITIONAL UNDERTAKINGS BY ROSKI. In addition to the transfer of
the property listed in Section 2.1 and the deliveries listed in Section 5.4,
each applicable Roski Entity agrees as follows:
(a) Roski shall resign as a director of Boomtown, effective as
of the Exchange Date.
(b) Roski shall take such action as is necessary to cancel the
options on the stock of Boomtown received by Roski in connection with his
service as a director of Boomtown, effective as of the Exchange Date.
(c) From and after the Exchange Date, Roski shall maintain the
confidentiality of any non-public information pertaining to Boomtown, Blue
Diamond, Hollywood Park or BD Transferor acquired by him in his capacity as a
director of Boomtown; PROVIDED, HOWEVER, that Roski shall not be obligated to
maintain the confidentiality of any information which is already in the public
domain through no act of Roski or which is required to be disclosed by court
order or applicable law.
(d) No Roski Entity shall use the name "Boomtown," or any other
trademark, trade name, service mark or similar property of Boomtown or any of
its Affiliates, after the 180th day following the Exchange Date, and no Roski
Entity shall at any time use the name "Hollywood Park" or any other trademark,
tradename, service mark or similar property of Hollywood Park or any of its
Affiliates, except by agreement with Hollywood Park or such Affiliates. So long
as any Roski Entity uses the name "Boomtown", the Roski Entities shall maintain
the condition, service and operations of the Resort in substantial conformity
with those maintained by Blue Diamond and Boomtown prior to the Exchange Date.
The applicable Roski Entities and BD Transferor shall enter into a trademark
license agreement on the Exchange Date, including the protections to Boomtown
set forth in the Trademark License Agreement dated as of June 30, 1993, by and
between Boomtown and Blue Diamond.
(e) After the Exchange Date, the Roski Entities shall allow the
BD Transferor, its Affiliates and designees or appropriate governmental agencies
reasonable access to all books and records kept in connection with the Resort
prior to the Exchange Date, as reasonably requested by the BD Transferor for
legitimate business purposes. The parties will develop and follow a mutually
agreed upon retention policy with respect to the books and records of the
Resort.
(f) Prior to the Exchange Date, the Designated Roski Entity,
shall make offers of employment to substantially all of the Employees; PROVIDED,
HOWEVER, that no Roski Entity shall attempt to solicit, or interfere in any
manner with, the employment of the Retained Employees.
(g) Each Roski Entity agrees, if Boomtown determines that it is
appropriate to solicit the consents to the Blue Diamond Swap from the holders of
the notes issued pursuant to the Boomtown Indenture, to cooperate as reasonably
requested by Boomtown in such consent solicitation and to cooperate reasonably
in any other actions which may be necessary to
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effect the transactions contemplated hereby, regardless of the structure or form
of the Blue Diamond Swap; PROVIDED, that no Roski Entity shall be required to
incur any expense or liability in connection therewith.
(h) Roski or the Designated Roski Entity agrees to give such
notices as may be required by the Worker Adjustment and Retraining Notification
Act.
(i) The Designated Roski Entity, if not a party to this
Agreement, shall become a party to this Agreement.
5.6 ADDITIONAL UNDERTAKINGS BY BOOMTOWN, BLUE DIAMOND, HOLLYWOOD PARK
AND BD TRANSFEROR. In addition to the transfer of the property listed in
Section 5.3, Boomtown, Blue Diamond, Hollywood Park and BD Transferor agree as
follows:
(a) Boomtown, Blue Diamond and the BD Transferor recognize that
the Designated Roski Entity will generally need to retain the services of the
Employees (other than the Retained Employees as defined below) in order to
operate the Resort in a businesslike and efficient manner following the Exchange
Date. Accordingly, Boomtown, Blue Diamond and BD Transferor agree not to
transfer any Employees from the Resort to their other operations after the
Effective Date and agree to terminate, as of the Exchange Date, all Employees.
Notwithstanding the foregoing, Boomtown, Blue Diamond or BD Transferor may
designate, by means of a written notice received by Roski within thirty (30)
days after the Effective Date, up to five (5) Employees as "Retained Employees"
and Boomtown, Blue Diamond and BD Transferor shall have the right to transfer
the Retained Employees from the Resort to their other operations and shall have
no obligation to terminate the Retained Employees. Following the Exchange Date,
none of Boomtown, Blue Diamond or BD Transferor, nor any of their Affiliates,
shall attempt to solicit from the Designated Roski Entity the Employees hired by
the Designated Roski Entity or otherwise interfere in their employment at the
Resort; PROVIDED that this Section 5.6 shall not be construed to restrain
Boomtown, Blue Diamond, BD Transferor or their Affiliates from hiring former
employees of the Designated Roski Entity.
(b) Boomtown, Blue Diamond, Hollywood Park and BD Transferor
shall maintain the confidentiality of any nonpublic information pertaining to
the Resort, including Resort-specific customer lists and other information
relating to patrons of the Resort; PROVIDED, HOWEVER, that Boomtown, Blue
Diamond, Hollywood Park and BD Transferor shall not be obligated to maintain the
confidentiality of any information which is already in the public domain through
no act of Boomtown, Blue Diamond, Hollywood Park or BD Transferor or which is
required to be disclosed by court order or applicable law.
(c) Boomtown, Blue Diamond, and BD Transferor shall not extend
any Assumed Contract by a period of greater than one (1) year, or otherwise
amend any Assumed Contract, without obtaining the consent of Roski, which
consent shall not be unreasonably withheld.
(d) Boomtown, Blue Diamond, and BD Transferor agree to allow
Roski reasonable access to all books and records necessary to verify the amount
of Specified
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Assets and Specified Liabilities as of the Exchange Date, to participate in
taking a joint inventory with Roski of cash in the Resort, FF&E and Perishable
Inventory on the Exchange Date and to assist Roski in making a general
inspection of the Resort on the Exchange Date.
(e) If applicable, BD Transferor shall be designated by Boomtown
and Hollywood Park to facilitate, in Hollywood Park's and Boomtown's judgment,
the consummation of the Blue Diamond Swap. Once designated, if not a party to
this Agreement, Boomtown and Hollywood Park shall cause BD Transferor to become
a party to this Agreement.
(f) Boomtown, Blue Diamond and BD Transferor acknowledge the
need for Roski to obtain the information necessary to effect a smooth transition
of the operations of the Resort and agree to permit designees of the Roski
Entities access at reasonable times during customary business hours onto the
premises of the Resort; PROVIDED that no activities by such designees shall
materially interfere with the operations of the Resort.
(g) Blue Diamond agrees to change its name to a name not
including the words "Blue Diamond" prior to the Exchange Date so as to permit
the use of such a name by Roski.
(h) Boomtown and Hollywood Park shall take appropriate steps to
comply with the Boomtown Indenture so as to effect the transactions contemplated
hereby, by, at Boomtown and Hollywood Park's sole election, any of the following
means: (i) soliciting, commencing no later than 45 days prior to the scheduled
termination date of the Merger Agreement, as the same may be extended from time
to time, the consent of the holders of the notes issued pursuant to the Boomtown
Indenture to the Blue Diamond Swap or (ii) such other means, utilizing such
other transactional structure, as Boomtown and Hollywood Park may devise, in
compliance with the Boomtown Indenture (including without limitation, effecting,
prior to or contemporaneously with the Exchange Date, an asset disposition from
Boomtown and Blue Diamond to Hollywood Park or an Affiliate of Hollywood Park,
in compliance with the asset sale restrictions contained in the Boomtown
Indenture).
(i) Boomtown and Blue Diamond shall cooperate with the Roski
Entities in providing such notice to the employees of Blue Diamond as may be
required by the Worker Adjustment and Retraining Notification Act.
6. REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS AND WARRANTIES OF THE ROSKI ENTITIES. Each Roski
Entity (except Edward P. Roski, Sr. and Roski hereby represents and warrants on
behalf of Edward P. Roski, Sr.) represents and warrants to BD Transferor and its
Affiliates, as of the Effective Date and the Exchange Date (unless a specific
date is referenced below), jointly and severally, as follows:
(a) LEGAL CAPACITY. Roski is an individual with capacity to
contract; he has all requisite power and authority and is entitled to carry on
his business as now being
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conducted, and to own, lease or operate his properties in the places where his
business is now conducted and where his properties are now owned, leased or
operated.
Each other Roski Entity (other than Edward P. Roski, Sr.) is
duly organized and validly existing under the laws of its jurisdiction of
organization. Such Roski Entity has all requisite power and authority to, and
is entitled to, carry on its business as now conducted and to own or lease its
properties as and in the places where such business is now conducted and such
properties are now owned, leased or operated. Such Roski Entity is qualified to
do business in all foreign jurisdictions in which it is required to be so
qualified, except where the failure to be so qualified would not have a material
adverse effect on the business or assets of such Roski Entity.
(b) AUTHORIZATION, ETC. Each Roski Entity has all requisite
power and full legal right to enter into this Agreement and the Related
Agreements to which such Roski Entity is a party and to consummate the
transactions contemplated hereby and thereby. This Agreement and each of the
Related Agreements to which such Roski Entity is a party have been duly executed
and delivered by and constitute the valid and binding obligations of such Roski
Entity, enforceable in accordance with their respective terms, except insofar as
the enforceability thereof may be limited by applicable bankruptcy, insolvency,
receivership, reorganization, moratorium or other laws providing relief to
debtors, or laws or principles of equity generally.
(c) EXECUTION, DELIVERY AND PERFORMANCE. Subject to obtaining
the Approvals, neither execution and delivery nor performance of this Agreement
or any of the Related Agreements to which any Roski Entity is a party by such
Roski Entity will, with or without the giving of notice or the passage of time,
or both, conflict with, result in a default, right to accelerate by any other
party to, require any consent not obtained prior to the Exchange Date with
respect to, or result in the creation of any lien, charge or encumbrance
pursuant to any provisions of any material indenture, bond, note, loan
agreement, guaranty, franchise, mortgage, deed of trust, lease or other
agreement by which such Roski Entity is bound or conflict with, result in a
default, right to accelerate by any other party to, or result in the creation of
any lien, charge or encumbrance pursuant to any law, ordinance, rule or
regulation, or any order, judgment, award or decree to which such Roski Entity
is a party or by which it or any part of the Roski Notes may be bound or
affected.
(d) ROSKI NOTES ETC. The Roski Notes will, on the Exchange
Date, be the valid and binding obligations of the Designated Roski Entity,
enforceable against the Designated Roski Entity in accordance with its terms.
The Roski Guaranty, if required by Boomtown and Hollywood Park, will be the
valid and binding obligation of Roski, enforceable against Roski in accordance
with its terms. No part of the Roski Notes on the Exchange Date will be subject
to any mortgage, deed of trust, pledge, lien, charge, security interest,
encumbrance, restriction, lease, license, easement, shop rights, covenants not
to sue, or adverse claim of any kind or nature, or other encumbrances of any
kind, rights of use or occupancy, or any other rights or privileges, other than
as set forth in the Related Agreements. In addition to the Roski Stock, 5,001
shares of Boomtown common stock held by Roski and the options to acquire
Boomtown common stock held by Roski in his capacity as a Boomtown director, as
of the Effective Date no
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Roski Entity owns any other securities of Boomtown or any of its Affiliates, or
rights (contingent or otherwise) to acquire securities of Boomtown or any of its
Affiliates.
(e) REPRESENTATIONS COMPLETE. There is no fact known to Roski
which could reasonably be expected to affect in a materially adverse manner, the
enforceability of the Roski Notes or the ability of any Roski Entity to carry
out the transactions contemplated by this Agreement and the Related Agreements
or for the Designated Roski Entity to satisfy such Person's obligations under
the Roski Notes.
6.2 REPRESENTATIONS AND WARRANTIES OF BOOMTOWN, BLUE DIAMOND,
HOLLYWOOD PARK AND BD TRANSFEROR. Each of Boomtown, Blue Diamond and BD
Transferor (other than Hollywood Park) jointly and severally represents and
warrants to the Roski Entities, and, with respect to Subsections 6.2(a)-(c),
Hollywood Park severally represents and warrants to the Roski Entities as to
itself, as of the Effective Date and the Exchange Date (unless a specific date
is referenced below), as follows:
(a) ORGANIZATION. Such entity is duly organized and validly
existing under the laws of its jurisdiction of incorporation. Such entity has
all requisite power and authority to, and is entitled to, carry on its business
as now conducted and to own or lease its properties as and in the places where
such business is now conducted and such properties are now owned, leased or
operated. Such entity is qualified to do business in all foreign jurisdictions
in which it is required to be so qualified, except where the failure to be so
qualified would not have a material adverse effect on the business or assets of
such entity.
(b) AUTHORIZATION, ETC. Such entity has all requisite corporate
power and authority to enter into this Agreement and the Related Agreements to
which it is or is to become a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Related Agreements to which it is or is to become a party by such entity
and the consummation by such entity of the transactions contemplated hereby and
thereby have been duly authorized by all requisite action of such entity. This
Agreement has been, and the Related Agreements to which such entity is or is to
become a party have been or will be, duly executed and delivered by and
constitute the valid and binding obligations of such entity, enforceable in
accordance with their respective terms, except insofar as the enforceability
thereof may be limited by applicable bankruptcy, insolvency, receivership,
reorganization, moratorium or other laws providing relief for debtors or
principles of equity generally.
(c) EXECUTION, DELIVERY AND PERFORMANCE. Subject to obtaining
the Approvals and compliance prior to the Exchange Date with the Boomtown
Indenture, neither execution and delivery nor performance of this Agreement by
such entity will, with or without the giving of notice or the passage of time,
or both, conflict with, result in a default, right to accelerate by any other
party to, or result in the creation of any lien, charge or encumbrance pursuant
to any provisions of such person's organizational documents or by-laws or any
material franchise, mortgage, deed of trust, lease, license, agreement or
understanding, or conflict with, result in a default, right to accelerate by any
other party to, or result in the creation of any lien, charge or encumbrance
pursuant to any law, ordinance, rule or regulation, or any order,
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judgment, award or decree to which such entity is a party or by which it may be
bound or affected.
(d) TITLE TO BD INTEREST. BD Transferor will on the Exchange
Date, immediately prior to the transfer to Roski contemplated hereby, have valid
and marketable title to, and unrestrained right to transfer, all of the BD
Interest. No part of the BD Interest will, prior to such transfer on the
Exchange Date, be subject to any mortgage, deed of trust, pledge, lien, charge,
security interest, encumbrance, restriction, lease, license, easement, shop
rights, covenants not to sue, or adverse claim of any kind or nature, or other
encumbrances of any kind, rights of use or occupancy, or any other rights or
privileges other than Permitted Liens. BD Transferor makes no representation or
warranty as to any interest in the Resort owned by any Roski Entity prior to the
Exchange Date or the effect of any encumbrance created by any Roski Entity on
the Resort.
(e) LIABILITIES. Other than the Specified Liabilities and the
liabilities of Blue Diamond and Boomtown arising under the Boomtown Indenture
and the Blue Diamond Lease and certain related documents, the Assumed Contracts
constitute all of the indebtedness and lease obligations of Boomtown, Blue
Diamond, Hollywood Park and BD Transferor incurred in connection with the
Resort.
7. CONDITIONS PRECEDENT.
7.1 CONDITIONS TO EXECUTION AND DELIVERY OF THIS AGREEMENT BY
BOOMTOWN. This Agreement shall not take effect until Boomtown, Blue Diamond and
Hollywood Park shall have received an original or facsimile counterpart of this
Agreement, duly executed and delivered by the appropriate Roski Entities.
7.2 CONDITIONS TO EXECUTION AND DELIVERY OF THIS AGREEMENT BY ROSKI.
This Agreement shall not take effect until each of the Roski Entities (excluding
Edward P. Roski, Sr.) shall have received an original or facsimile counterpart
of this Agreement, duly executed and delivered by Boomtown, Blue Diamond and
Hollywood Park.
7.3 CONDITIONS TO EXCHANGE BY BD TRANSFEROR. The obligation of BD
Transferor to transfer to Roski the BD Interest in exchange for the Roski Notes
is subject to the satisfaction (or waiver by BD Transferor) of the conditions
set forth below:
(a) The representations and warranties made by the Roski
Entities in this Agreement and the Related Agreements shall be true and correct
in all material respects on and as of the Exchange Date with the same effect as
if made on and as of the Exchange Date, except as otherwise contemplated by this
Agreement and the Related Agreements. Each Roski Entity shall have performed
and complied with all agreements, covenants and conditions on the part of such
Roski Entity required to be performed or complied with on or prior to the
Exchange Date in all material respects.
(b) The execution, delivery and performance of this Agreement
and the Related Agreements and the consummation of the transactions contemplated
by this Agreement
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and the Related Agreements shall not violate any law, rule or regulation
applicable to BD Transferor, including without limitation, Gaming Laws, federal
and state securities laws or any order, decree or judgment of any court or
governmental body having competent jurisdiction, and no order shall have been
issued by a court of competent jurisdiction restraining, prohibiting or
rendering unlawful the execution, delivery and performance of this Agreement or
the Related Agreements or the consummation of the transactions contemplated by
this Agreement and the Related Agreements. No default or breach by any Roski
Entity shall have occurred and be continuing in respect of any document,
instrument or agreement comprising a part of the BD Interest, except as would
not be material after giving effect to the transactions contemplated hereby as
of the Exchange Date.
(c) All Approvals necessary to effect the transactions hereunder
and under the Related Agreements shall have been obtained and shall be in full
force and effect. No Gaming Authority shall have indicated to the parties
hereto that in, the opinion of such Gaming Authority, any Approvals required for
the consummation of the transactions contemplated hereby are likely to be
revoked or rejected. No registration with any governmental authority or agency
(except for filing and recording of UCC statements and real estate documents)
which has not been effected shall be necessary to effect the transactions
contemplated hereby.
(d) Roski shall have duly delivered each item listed in Section
5.4.
(e) All of the conditions precedent to the Merger shall have
been satisfied or waived and the Merger shall have been consummated.
(f) The consummation of the transactions contemplated by this
Agreement and the Stock Purchase Agreement shall not, as a result of any changes
in tax law occurring after the Effective Date (including without limitation
statutory, regulatory, administrative or judicial changes) create a material
risk that the contemplated treatment of the Merger as a tax-free reorganization
would be impaired or adversely affected in the view of either Boomtown or
Hollywood Park, based upon advise of its respective tax counsel.
(g) Subject to a restructuring in accordance with Section 3.1,
the transactions contemplated by the Roski Stock Purchase Agreement, including
the sale and transfer of the Roski Stock to Hollywood Park, shall have been
consummated.
7.4 CONDITIONS TO EXCHANGE BY ROSKI. The obligation of Roski to
transfer to BD Transferor the Roski Notes in exchange for the BD Interest
hereunder shall be subject to the satisfaction (or waiver by Roski) of the
conditions set forth below:
(a) The representations and warranties made by Boomtown, Blue
Diamond, Hollywood Park and BD Transferor in this Agreement and the Related
Agreements shall be true and correct in all material respects on and as of the
Exchange Date with the same effect as if made on and as of the Exchange Date,
except as otherwise contemplated by this Agreement and the Related Agreements.
Each of Boomtown, Blue Diamond, Hollywood Park and BD Transferor, as applicable,
shall have performed and complied with all agreements,
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covenants and conditions on the part of such entity required to be performed or
complied with on or prior to the Exchange Date in all material respects.
(b) The execution, delivery and performance of this Agreement
and the Related Agreements and the consummation of the transactions contemplated
by this Agreement and the Related Agreements shall not violate any law, rule or
regulation applicable to the Roski Entities, including, without limitation,
Gaming Laws, federal and state securities laws, or any order, decree or judgment
of any court or governmental body having competent jurisdiction, and no order
shall have been issued by a court of competent jurisdiction restraining,
prohibiting or rendering unlawful the execution, delivery and performance of
this Agreement or the Related Agreements or the consummation of the transactions
contemplated by this Agreement and the Related Agreements. No default or breach
on the part of Boomtown, Blue Diamond, Hollywood Park or BD Transferor shall
have occurred and be continuing in respect of any document, instrument or
agreement comprising a part of the BD Interest, except as would not be material
after giving effect to the transactions contemplated hereby as of the Exchange
Date.
(c) All Approvals necessary to effect the transactions
contemplated hereby and by the Related Agreements and for the Designated Roski
Entity (or its designee) to operate the Resort shall have been obtained. No
Gaming Authority shall have indicated to the parties hereto that the opinion of
such Gaming Authority, any Approvals required for the consummation of the
transactions contemplated hereby are likely to be revoked or rejected. No
registration or filing with any governmental agency or authority (other than UCC
filings and recordings in the real estate records) which has not been effected
shall be necessary to effect the transaction contemplated hereby.
(d) BD Transferor shall have duly delivered each item listed in
Section 5.3 and any other documents of transfer Roski may reasonably request to
effect the transfer of the BD Interest.
8. INDEMNIFICATION.
8.1 INDEMNIFICATION BY THE ROSKI ENTITIES. The Roski Entities party
hereto jointly and severally agree to indemnify and hold harmless Boomtown, Blue
Diamond and BD Transferor and their respective Affiliates, officers, directors,
employees, agents and attorneys against all claims, losses, liabilities,
damages, deficiencies, costs and expenses, including reasonable attorneys' fees
and expenses of investigation incurred by any of them (a) as a result of any
inaccuracy of a representation or breach of any warranty by any Roski Entity
contained herein, in any Related Agreement delivered pursuant hereto or in the
Roski Stock Purchase Agreement by any Roski Entity, or any failure by any Roski
Entity to perform or comply with any covenant of such Roski Entity contained
herein, in any Related Agreement or in the Roski Stock Purchase Agreement or any
other document delivered by any Roski Entity pursuant hereto or thereto,
(b) related to any costs, expenses, claims, liabilities or obligations incurred
in connection with the Resort arising or accruing prior to the "Original Term"
of the Blue Diamond Lease (as defined therein) or arising or accruing on or
after the Exchange Date (including, but not limited to, any costs, expenses,
claims, liabilities or obligations arising in connection with the Assumed
Contracts or Hazardous Substances) or in connection with the Specified
Liabilities as of the
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Exchange Date, other than the consequences of any act or omission by Boomtown,
Blue Diamond or any of their respective Affiliates, officers, directors, agents,
employees or attorneys, (c) related to any guaranties made by Boomtown, Blue
Diamond or any of their Affiliates of any obligations of IVAC or any of its
Affiliates under construction or development financing relating to the Resort or
any bond or similar obligations with Clark County, Nevada, or (d) as a result of
acts or omissions of the Roski Entities, including but not limited to acts or
omissions related to the construction of the Resort.
8.2 INDEMNIFICATION BY BOOMTOWN, BLUE DIAMOND AND BD TRANSFEROR.
Boomtown, Blue Diamond and BD Transferor jointly and severally agree to
indemnify and hold harmless the Roski Entities and their respective Affiliates,
officers, directors, employees, agents and attorneys against all claims, losses,
liabilities, damages, deficiencies, costs and expenses, including reasonable
attorneys' fees and expenses of investigation incurred by any of them (a) as a
result of any inaccuracy of a representation or breach of any warranty by
Boomtown, Blue Diamond or BD Transferor contained herein or in any Related
Agreement delivered pursuant hereto by Boomtown, Blue Diamond or BD Transferor,
or any failure by Boomtown, Blue Diamond or BD Transferor to perform or comply
with any covenant of Boomtown, Blue Diamond or BD Transferor contained herein or
in any Related Agreement, or any such other document delivered by Boomtown, Blue
Diamond or BD Transferor pursuant hereto or thereto and (b) related to any
costs, expenses, claims, liabilities or obligations of the Resort both accruing
during the "Original Term" of the Blue Diamond Lease (as defined therein) and
arising or accruing prior to the Exchange Date (including, but not limited to,
any costs, expenses, claims, liabilities, or obligations arising in connection
with the Assumed Contracts or, except as set forth below, Hazardous Substances)
other than (i) the Specified Liabilities as of the Exchange Date, (ii)
obligations accruing under the Assumed Contracts on or after the Exchange Date
and (iii) the consequences of any act or omission by any of the Roski Entities
or any of their respective Affiliates, officers, directors, employees, agents or
attorneys. Notwithstanding the foregoing, (i) in no event shall the BD
Transferor (other than Blue Diamond and Boomtown) have any liability or
responsibility for any "Hazardous Substances" (as defined in the Blue Diamond
Lease) or any other environmental matters with respect to the Resort, (ii) in no
event shall the liability of Boomtown for any such Hazardous Substances or any
other environmental matters with respect to the Resort exceed the remaining
principal amount of the Note the form of which is attached hereto as Exhibit B-1
as of the date a claim for indemnity is made hereunder, and (iii) the extent of
the liability of Boomtown and Blue Diamond for all Hazardous Substances or other
environmental matters shall be limited to applicable law or to the extent of
liability under Blue Diamond's paragraph 6.2(c) of the Blue Diamond Lease. In
addition, from and after the Exchange Date, Boomtown shall continue at all times
to indemnify Roski with respect to his actions as a director of Boomtown to the
same extent as it is obligated to provide such indemnification immediately prior
to the Exchange Date. In no event shall the provisions of this section 8.2
subject Hollywood Park to any indemnity obligation or other liability,
contingent or otherwise, regardless of whether Hollywood Park is designated as
BD Transferor.
8.3 PROCEDURE. Upon obtaining knowledge of the institution of any
action, proceeding, or other event which could give rise to a claim of indemnity
pursuant to this Section 8, the party seeking indemnification (the "indemnified
party") shall promptly give written notice thereof to the other party (the
"indemnifying party"); PROVIDED, HOWEVER, that the failure to give
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such notice shall not relieve the indemnifying party of its obligations under
this Section 8 unless it is materially prejudiced by such failure. Each party
will cooperate with the other in determining the validity of any such claim or
assertion. If such claim or demand relates to a claim or demand asserted by a
third party, the indemnifying party shall have the right at its expense to
employ counsel satisfactory to the indemnified party to defend such claim or
demand and the indemnified party shall have the right, but not the obligation,
to participate in the defense of any such claim or demand at its expense. Each
party agrees not to settle or compromise any such third party suit, claim or
proceeding without the prior written consent of the other, which consent shall
not be unreasonably withheld. The indemnified party shall make available to the
indemnifying party all records and other materials reasonably required by it in
contesting a claim or demand asserted by a third party against the indemnified
party and shall cooperate in the defense thereof.
9. ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES.
9.1 APPROVALS. The parties agree to use their best efforts and to
cooperate with each other to obtain the Approvals necessary to effect the
transactions hereunder.
9.2 CONSENTS, AUTHORIZATIONS AND WAIVERS. The parties agree to use
their best efforts and to cooperate with each other to obtain, prior to the
Exchange Date, all consents, authorizations or waivers necessary to assign the
Assumed Contracts to the Designated Roski Entity. If the parties are unable to
obtain any consents, authorizations or waivers necessary to assign any of the
Assumed Contracts, the Designated Roski Entity shall indemnify the BD Transferor
against any claims or losses resulting from the failure to obtain such consents,
authorizations or waivers. The parties agree that any failure to so obtain such
consents, authorizations or waivers shall not prevent the parties from, or
relieve the parties from the obligation of, consummating the transactions
contemplated hereunder.
9.3 TRANSFER TAXES. The parties acknowledge and agree that all
transfer, stamp, recording and similar taxes assessed or otherwise payable by
reason of the conveyances contemplated hereby, or in connection with the Blue
Diamond Swap, shall be for the account of the Roski Entities. The parties agree
to cooperate with each other to the extent legally permitted to minimize any
such taxes and charges.
9.4 ADDITIONAL DELIVERIES; FURTHER ASSURANCES. After the Effective
Date, each party to this Agreement shall, at the request of the other, furnish,
execute, and deliver such documents, instruments, certificates, notices or other
further assurances as the requesting party shall reasonably request as necessary
or desirable to effect complete consummation of this Agreement, the Related
Agreements and the transactions contemplated hereby and thereby. After the
Exchange Date, Roski and its Affiliates shall, at the request of BD Transferor,
(a) execute and deliver and file or record, such further instruments of sale,
conveyance, transfer and assignment, and (b) take such other actions as BD
Transferor may reasonably request in order to effectuate the purposes hereof.
After the Exchange Date, BD Transferor and its Affiliates shall, at the request
of Roski, (a) take such further actions as may be reasonably necessary to vest
in the applicable Roski Entity title to the BD Interest, (b) execute and deliver
and file or record, such further instruments of sale, conveyance, transfer and
assignment, and (c) take such other actions,
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as Roski may reasonably request in order effectively to sell, convey, transfer
and assign the BD Interest to Roski and otherwise to effectuate the purposes
hereof.
9.5 MAINTENANCE OF RESORT BUSINESS. During the period from the
Effective Date until the Exchange Date, Boomtown, Blue Diamond and BD Transferor
(but not Hollywood Park, regardless of whether Hollywood Park is designated as
BD Transferor) agree to operate the Resort in all material respects in the
ordinary course of business at not less than the same standards of operation,
maintenance, services and advertising as are in effect as of the Effective Date
and agree to remain in compliance in all material respects with the Blue Diamond
Lease at all times. Without limiting the foregoing, from the Effective Date
until the Exchange Date Boomtown, Blue Diamond and BD Transferor agree not to
transfer from the Resort any material assets thereof.
9.6 DIRECTOR'S INSURANCE. Boomtown shall continue to provide
insurance covering Roski with respect to his actions as a director of Boomtown,
to the extent that such insurance is provided for directors or former directors
of Boomtown, as set forth in the Merger Agreement.
10. TERMINATION.
10.1 TERMINATION. If (a) the Exchange Date has not occurred prior to
or on June 30, 1997, or, if the Merger Agreement is extended, such later date as
may then be the scheduled termination date of the Merger Agreement, or such
later date as may have been agreed to by the parties in writing, or (b) the
Merger Agreement has terminated in accordance with its terms, then this
Agreement and the Related Agreements shall, on such date, automatically and
without further action by either party, terminate and have no further force and
effect. In addition, if any representation or warranty made by any party herein
or in any Related Agreement shall prove to have been false, inaccurate or
misleading in any material respect when made, then the party to whom such
representation or warranty is made may terminate this Agreement and the Related
Agreements by notice to the breaching party any time prior to the Exchange Date.
In the event that this Agreement shall terminate by reason of the material
falsity, inaccuracy or misleading character of any representation or warranty,
the party to whom such representation or warranty is made shall retain, both
before and after such termination, all rights and remedies available under
applicable law.
10.2 OTHER MERGER. Notwithstanding any other provision of this
Agreement, if Boomtown enters into a merger or similar transaction with any
person or entity other than Hollywood Park, the failure of the Merger to be
consummated shall not result in the termination of this Agreement or any of the
Related Agreements except as to Hollywood Park. Boomtown shall cause any such
person or entity with which it plans to enter into a merger or similar
transaction to become a party to this Agreement and the Related Agreements and
to assume the obligations of Hollywood Park hereunder and thereunder. Nothing
in this Agreement shall alter the rights or obligations of Hollywood Park and
Boomtown under the Merger Agreement.
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11. MISCELLANEOUS.
11.1 CHANGES, WAIVERS, ETC. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally, except by a
statement in writing which references this Agreement and is signed by the party
against whom enforcement of the change, waiver, discharge or termination is
sought.
11.2 PAYMENT OF FEES AND EXPENSES. Each of the parties hereto shall
pay its own respective fees and expenses incurred in connection herewith. In
the event of any litigation or other proceeding resulting from a dispute
hereunder, the legal fees, costs and expenses of the prevailing party shall be
paid by the losing party.
11.3 NOTICES. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall be
delivered, or mailed first-class postage prepaid, registered or certified mail,
or delivered via overnight courier;
If to Hollywood Park: Hollywood Park, Inc.
1050 South Prairie Avenue
Inglewood, California 90301
Attention: Michael Finnigan
with copy to: Irell & Manella LLP
1800 Avenue of the Stars
Suite 900
Los Angeles, CA 90067
Attention: Al Segel, Esq.
If to Boomtown or Boomtown, Inc.
Blue Diamond: Interstate 80/Garson Road
Verdi, Nevada 89439
Attention: Timothy J. Parrott
with copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94306
Attention: John V. Roos, Esq.
If to any Roski Entity: Edward P. Roski, Jr.
Majestic Realty Co.
13191 Crossroads Parkway North
6th Floor
City of Industry, California 91746
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with a copy to: Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: David B. Rogers, Esq.
Such notices and other communications shall for all purposes of this Agreement
be treated as being effective or having been given on the date of delivery, if
delivered personally, one (1) day following the date of delivery, if delivered
by overnight courier or, if sent by mail, five (5) days thereafter.
11.4 ENTIRE AGREEMENT. This Agreement and the Related Agreements,
including the schedules and exhibits which are incorporated into and made an
integral part of this Agreement or any of the Related Agreements by reference,
set forth the entire understanding of the parties and supersede all prior
agreements of the parties with respect to the subject matter hereof and thereof.
11.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement.
11.6 HEADINGS; REFERENCES TO AGREEMENT. The headings of the sections
of this Agreement have been inserted for convenience of reference only and do
not constitute a part of this Agreement. References herein to "this Agreement"
shall include all exhibits and schedules hereto.
11.7 CHOICE OF LAW; INTERPRETATION. THIS AGREEMENT SHALL FOR ALL
PURPOSES BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEVADA (WITHOUT REFERENCE TO CONFLICTS OF LAW).
11.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but which shall
together constitute but one and the same instrument. To make proof of this
Agreement, it shall only be necessary to produce one such counterpart.
11.9 SEVERABILITY. To the extent any provision of this Agreement
shall be invalid or unenforceable, it shall be considered deleted from this
Agreement and the remaining provisions of this Agreement shall be unaffected and
shall continue in full force and effect.
11.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither party may assign its
rights or obligations hereunder other than to an Affiliate without the prior
written approval of the other party.
11.11 NO THIRD PARTY BENEFICIARIES. This Agreement is not
intended to confer upon any person or entity other than each party hereto (and
their successors and assigns permitted hereby) any rights or remedies hereunder.
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11.12 WAIVER OF JURY TRIAL. EACH PARTY HERETO KNOWINGLY,
ABSOLUTELY AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS IT MAY OTHERWISE HAVE
HAD TO A TRIAL BY JURY WITH RESPECT TO OR IN CONNECTION WITH THIS AGREEMENT, THE
RELATED DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered as of the date and year first above written.
BOOMTOWN, INC.
By:__________________________________ _____________________________________
EDWARD P. ROSKI, JR.
Title:_______________________________
BLUE DIAMOND HOTEL & CASINO, INC. IVAC
By: EDWARD P. ROSKI, JR.
its General Partner
By:__________________________________
Title:_______________________________ _____________________________________
EDWARD P. ROSKI, JR.
HOLLYWOOD PARK, INC. MAJESTIC REALTY CO.
By:__________________________________ By:__________________________________
Title:_______________________________ Title:_______________________________
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EXHIBIT A
FORM OF
MUTUAL RELEASE
This MUTUAL RELEASE ("Mutual Release") is given and entered into as
of ________, 199 , by and among the following parties: (i) Edward P. Roski,
Jr., IVAC and Majestic Realty Co. (collectively, the "Roski Entities") and (ii)
BD Transferor, Boomtown, Blue Diamond and their respective Affiliates
(collectively, the "Boomtown Entities").
All terms used without definition herein shall have the respective meanings
ascribed to such terms in the Blue Diamond Swap Agreement Dated as of August 12,
1996 (the "Swap Agreement") by and among Boomtown, Inc., Blue Diamond Hotel &
Casino, Inc., Hollywood Park, Inc., Edward P. Roski, Jr., IVAC and Majestic
Realty Co. to which the form of this Mutual Release is an Exhibit.
WHEREAS, IVAC owns certain real property in Las Vegas, Nevada, on which a
resort consisting of a casino, hotel, restaurant and related facilities (as more
fully defined in the Swap Agreement, the "Resort") has been built by Majestic
and is being operated by Blue Diamond;
WHEREAS, Boomtown has advanced certain funds to IVAC to enable IVAC to
complete development and construction of the Resort, which advances are
evidenced by certain promissory notes issued by IVAC, which notes are governed
by loan agreements and secured by deeds of trust on the Resort site and certain
related property;
WHEREAS, Blue Diamond has entered into a lease with IVAC for the Resort
site, and has purchased and installed certain trade fixtures in the Resort;
WHEREAS, Hollywood Park intends to enter into a strategic combination (the
"Merger") with Boomtown pursuant to an Agreement and Plan of Merger dated as of
April 23, 1996 by and among BD Transferor, Boomtown and HP Acquisition Inc., a
Delaware corporation and a wholly-owned subsidiary of Hollywood Park (as amended
and in effect from time to time, the "Merger Agreement");
WHEREAS, subject to consummation of the Merger pursuant to the Merger
Agreement, Boomtown and Blue Diamond might agree to transfer their respective
interests in the Resort to Hollywood Park or one or more Affiliates of Hollywood
Park designated by Hollywood Park, and Hollywood Park or such Affiliate(s) might
acquire and accept such interests;
WHEREAS, it is the intent of the parties hereto that, upon consummation of
the Merger pursuant to the Merger Agreement, subject to the terms and conditions
set forth in the Swap Agreement, the holder of such interests in the Resort,
regardless of whether such holder is then Boomtown, Blue Diamond, Hollywood
Park, any designated Affiliate of Hollywood Park, or any
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combination thereof (any such holder(s), "BD Transferor") would exchange such
interests in the Resort for the Roski Notes or would effect the same result
through a series of related transactions, and, in either case, Roski would
either exchange the Roski Notes Paper for such interests in the Resort (such
exchange, the "Blue Diamond Swap");
NOW, THEREFORE, in accordance with the foregoing recitals, and for good and
valuable consideration receipt of which is hereby acknowledged, the parties
hereto are desirous of putting to rest all disputes and controversies between
them and the other parties hereto arising from, related to, or in any way
connected with any and all obligations, liabilities and claims relating to the
Affiliate Note, the Bridge Note, the Affiliate Loan Agreement, the Bridge Loan
Agreement, the Purchase Option Agreement, the Affiliate Loan Deed of Trust, the
Bridge Loan Deed of Trust, the Purchase Option Deed of Trust, the Blue Diamond
Lease, the Boomtown Stockholders Agreement dated as of June 30, 1996, Boomtown,
Roski and IVAC, and the Stockholders and Affiliates Agreement dated as of June
30, 1993, by and among Blue Diamond, Roski, Edward P. Roski, Sr., Boomtown, IVAC
and Majestic (all such documents, instruments and agreements, collectively, the
"Blue Diamond Documents"). Accordingly, each of the Boomtown Entities and the
Roski Entities hereby agree and covenant as follows:
1. RELEASE BY ROSKI ENTITIES. As of the date hereof, the Roski Entities
forever release, discharge and acquit the Boomtown Entities, and each Boomtown
Entity's present, former or future directors, partners, principals, officers,
employees, agents, trustees, attorneys, parents, subsidiaries, Affiliates,
divisions, representatives, predecessors or successors, partnerships or
corporations, and their respective administrators, successors and assigns, from
any and all claims, demands, rights and causes of action, known or unknown,
suspected or unsuspected, fixed or contingent, including, without limitation,
all legal fees and costs, that they or any of them may have acquired or
hereafter acquire against each or any other of them, based upon, arising from,
or in any way connected with or related to the Specified Assets, the Specified
Liabilities, the BD Interest, the Resort or the Blue Diamond Documents,
including the obligations arising under the Blue Diamond Lease; PROVIDED, that
nothing contained herein shall operate to release any Boomtown Entity from its
obligations under the Swap Agreement and the Related Agreements.
2. RELEASE BY BOOMTOWN ENTITIES. As of the date hereof, the Boomtown
Entities forever release, discharge and acquit each of the Roski Entities, and
each Roski Entity's present, former or future directors, partners, principals,
officers, employees, agents, trustees, attorneys, parents, subsidiaries,
affiliates, divisions, representatives, predecessors or successors, partnerships
or corporations, and their respective administrators, successors and assigns,
from any and all claims, demands, rights and causes of action, known or unknown,
suspected or unsuspected, fixed or contingent, including, without limitation,
all legal fees and costs, that they or any of them may have acquired or
hereafter acquire against each or any other of them, based upon, arising from,
or in any way connected with or related to the Blue Diamond Documents; PROVIDED,
that nothing contained herein shall operate to release any Roski Entity from its
obligations under the Swap Agreement, and the Related Agreements or from
liability arising from or relating to Roski's role as a director of Boomtown.
Such release shall not effect the availability to Roski of any indemnification
or directors' and officers' insurance covering any claims relating to his
activities as a director.
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3. MUTUAL RELEASE AS DEFENSE. Each party to this Mutual Release
understands, acknowledges and agrees that this Mutual Release may be pleaded as
a full and complete defense to, and used as a basis for an injunction against,
any action, suit or other proceeding that may be instituted, prosecuted or
attempted in breach of this Mutual Release.
4. SUCCESSORS AND ASSIGNS. Each party to this Mutual Release
understands, acknowledges and agrees that this Mutual Release shall be binding
on each of them and upon their respective successors, representatives, and
assigns.
5. BENEFICIARIES. Each party to this Mutual Release understands,
acknowledges and agrees that this Mutual Release inures to the benefit of all
other persons described in paragraphs 1 and 2 above.
6. ENTIRE AGREEMENT. Each party to this Mutual Release understands,
acknowledges and agrees that this Mutual Release constitutes the entire
agreement among the parties regarding the release of the matters set forth
herein and that this Mutual Release may not be altered, amended, modified, or
otherwise changed in any respect whatsoever except in writing signed by the
parties hereto.
7. PARTIES REPRESENTED BY COUNSEL, ETC. Each party to this Mutual
Release understands, represents and warrants that it has entered into this
Mutual Release upon the legal advice of its attorneys, that said attorneys have
explained the terms of this Mutual Release, and that each party has read, fully
understands, and voluntarily accepts the terms of this Mutual Release.
8. AUTHORITY. Each signatory to this Mutual Release who signs on behalf
of another hereby warrants that he or she has the authority to sign on behalf of
said person or entity.
9. COUNTERPARTS. This Mutual Release may be executed in one or more
counterparts. All executed counterparts, and each of them, shall be deemed to
be one and the same instrument. Counsel for the parties to this Mutual Release
shall exchange among themselves original signed counterparts.
10. CONSTRUCTION. This Mutual Release or any uncertainty or ambiguity
herein shall be construed as if this Mutual Release was jointly prepared by the
parties hereto.
11. GOVERNING LAW. THIS MUTUAL RELEASE, IN ALL RESPECTS, SHALL BE
INTERPRETED, ENFORCED AND GOVERNED BY AND UNDER THE INTERNAL SUBSTANTIVE LAWS OF
THE STATE OF NEVADA AS THEY EXIST ON THE DATE THAT THIS MUTUAL RELEASE IS FULLY
EXECUTED BY THE PARTIES.
12. NO TRANSFER. Each party to this Mutual Release acknowledges,
represents and warrants that it has not assigned, sold, transferred or otherwise
disposed of any of the claims, demands, rights and causes of action described
in paragraph 1 above except, if applicable, the transfer of the BD Interest to
BD Transferor.
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13. UNKNOWN CLAIMS. With respect to the matters described in paragraphs 1
and 2 above, each party to this Mutual Release acknowledges that it may have
sustained damages, losses, fees, costs or expenses that are presently unknown
and unsuspected, and that such damages, losses, fees, costs, or expenses as may
have been sustained by the party or parties hereto might give rise to additional
damages, losses, fees, costs or expenses in the future. Notwithstanding such
unknown claims, the parties to this Mutual Release acknowledge that each
signatory hereto has been advised by an attorney concerning the effect of the
Mutual Release on any and all unknown and presently unsuspected claims and such
parties wish to expressly release and extinguish any and all disputes and
controversies as described in paragraphs 1 and 2, above, between and among them,
whether now known or unknown, which such parties hereto may have, or claim at
any future time to have against any or all of the parties hereto, based in whole
or in part, upon any act or omission to the date of this Mutual Release, without
regard to present actual knowledge of such acts or omissions. Each party to
this Mutual Release understands, acknowledges and agrees that if any fact now
believed to be true is found hereafter to be other than, or different from, that
which is now believed, each expressly assumes the risk of such difference in
fact and agrees that this Mutual Release shall be, and will remain, effective
notwithstanding any such difference in fact. As to the matters covered by this
Mutual Release, each party does hereby expressly waive and relinquish, to the
fullest extent permitted by law, the provisions, rights, and benefits of any
applicable law, including the common law and any and all other provisions,
rights and benefits of any state or federal law, rule or regulation.
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IN WITNESS WHEREOF, intending to be legally bound, the undersigned have
caused this Mutual Release to be duly executed and delivered, to take effect as
a contract under the laws of the State of Nevada as of the date first
hereinabove written.
BOOMTOWN, INC.
By:_____________________________ _____________________________________
EDWARD P. ROSKI, JR.
Title:__________________________
BLUE DIAMOND HOTEL & CASINO, INC. IVAC
By: EDWARD P. ROSKI, JR.,
By:_____________________________ its General Partner
Title:__________________________ _____________________________________
EDWARD P. ROSKI, JR.
HOLLYWOOD PARK, INC. MAJESTIC REALTY CO.
By:_____________________________ By:_____________________________
Title:__________________________ Title:__________________________
[BD Transferor, if not named above]
By:_____________________________
Title:__________________________
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EXHIBIT B-1
FORM OF PROMISSORY NOTE
$____________ Los Angeles, California
_______ __, 199_
FOR VALUE RECEIVED, [ ] (the "Maker") hereby absolutely and
unconditionally promises to pay to [ ] (the "Holder"), or order, in
accordance with the payment schedule set forth below, in immediately available
funds, the principal amount of ____________________ Dollars ($____________), and
to pay interest on the unpaid principal amount hereof at an annual rate of
interest equal to the rate announced by Bank of America from time to time as its
"reference rate", adjusted on the first business day of the next succeeding
calendar month after any change to such rate is announced, plus one and one half
percent (1.5%), in immediately available funds; payable annually in arrears on
the anniversary of the issuance of this Note PROVIDED, that interest on any
amounts not paid when due hereunder shall accrue at an annual rate which is two
percent (2%) above the rate otherwise payable hereunder; and PROVIDED, FURTHER,
that in no event shall the interest rate of this Note exceed the maximum rate
permitted by applicable law. This Note is issued pursuant to the Blue Diamond
Swap Agreement dated as of August 12, 1996 (the "Swap Agreement") by and among
the Maker, the Holder and certain other parties named therein and constitutes
one of the "Roski Notes" described therein. Capitalized terms defined in the
Swap Agreement, whether directly or indirectly by reference, shall have the
respective meanings herein assigned to such terms in the Swap Agreement.
Principal obligations of the Maker evidenced hereby shall be paid in four
(4) equal installments of $1,000,000 each, on each anniversary of the issuance
date of this Note, and an additional, final payment on the [ ]
anniversary thereof in an amount equal to all obligations of the Maker then
outstanding hereunder.
Upon the occurrence and during the continuance of any of the following
events (each, an "Event of Default"): (i) failure to pay any interest accrued
hereunder within five days following the date such payment was due, or the
failure to pay any principal amount owing by the Maker hereunder when due and
payable, (ii) material falsity of any representations or warranties by the Maker
in the Swap Agreement, (iii) initiation of any bankruptcy, insolvency,
moratorium, receivership or reorganization by or against the Maker, or (iv)
acceleration of any indebtedness in excess of $1,000,000 by other creditors of
the Maker, the entire unpaid principal balance of this Note, all of the unpaid
interest accrued thereon and all other amounts owing in respect thereof may
automatically become, in the case of a default under clauses (iii) or (iv), or
may be declared, in the case of a default under clauses (i) or (ii), to be
immediately due and payable. Thereupon, the Holder may proceed to enforce its
rights and remedies under this Note and applicable law, all of such remedies
being cumulative and not exclusive.
No delay or omission on the part of the Holder or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or any
other right of the Holder or of such
B-1
<PAGE>
holder, nor shall any delay, omission or waiver of any one occasion be deemed a
bar to or waiver of the same or any other right or any other occasion. The
Maker and every endorser and guarantor of this Note regardless of the time,
order or place of signing hereby waives presentment, demand, protest and notice
of every kind, and assents to any extension or postponement of the time for
payment or any other indulgence, to any substitution, exchange or release of
collateral, and to the addition or release of any other party or person or
entity primarily or secondarily liable.
All costs incurred in any litigation arising from this Note shall be borne
by the prevailing party. All other expenses of enforcement of the Holder's
rights hereunder (including reasonable legal and other professional fees) shall
be for the account of the Maker.
THIS NOTE SHALL FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA (WITHOUT REFERENCE TO CONFLICTS
OF LAW).
This Note shall be binding upon the Maker's successors and assigns, and
shall inure to the benefit of the Holder's successors and assigns.
B-2
<PAGE>
IN WITNESS WHEREOF, the Maker has caused this Note to be [duly] executed
[by its duly authorized officer] to take effect as of the date first hereinabove
written.
[Maker]
By: _____________________________
[Title: __________________________]
B-3
<PAGE>
EXHIBIT B-2
FORM OF PROMISSORY NOTE
$____________ Los Angeles, California
_______ __, 199_
FOR VALUE RECEIVED, [ ] (the "Maker") hereby absolutely and
unconditionally promises to pay to [ ] (the "Holder"), or order, in
accordance with the payment schedule set forth below, in immediately available
funds, the principal amount of ____________________ Dollars ($____________), and
to pay interest on the unpaid principal amount hereof at an annual rate of
interest equal to the rate announced by Bank of America from time to time as its
"reference rate", adjusted on the first business day of the next succeeding
calendar month after any change to such rate is announced, plus one half percent
(.5%), in immediately available funds; payable annually in arrears on the
anniversary of the issuance of this Note PROVIDED, that interest on any amounts
not paid when due hereunder shall accrue at an annual rate which is two percent
(2%) above the rate otherwise payable hereunder; and PROVIDED, FURTHER, that in
no event shall the interest rate of this Note exceed the maximum rate permitted
by applicable law. This Note is issued pursuant to the Blue Diamond Swap
Agreement dated as of August 12, 1996 (the "Swap Agreement") by and among the
Maker, the Holder and certain other parties named therein and constitutes one of
the "Roski Notes" described therein. Capitalized terms defined in the Swap
Agreement, whether directly or indirectly by reference, shall have the
respective meanings herein assigned to such terms in the Swap Agreement.
Principal obligations of the Maker evidenced hereby shall be paid in full
on the third anniversary of the issuance date of this Note in an amount equal to
all obligations of the Maker then outstanding hereunder.
Upon the occurrence and during the continuance of any of the following
events (each, an "Event of Default"): (i) failure to pay any interest accrued
hereunder within five days following the date such payment was due, or the
failure to pay any principal amount owing by the Maker hereunder when due and
payable, (ii) material falsity of any representations or warranties by the Maker
in the Swap Agreement, (iii) initiation of any bankruptcy, insolvency,
moratorium, receivership or reorganization by or against the Maker, or (iv)
acceleration of any indebtedness in excess of $1,000,000 by other creditors of
the Maker, the entire unpaid principal balance of this Note, all of the unpaid
interest accrued thereon and all other amounts owing in respect thereof may
automatically become, in the case of a default under clauses (iii) or (iv), or
may be declared, in the case of a default under clauses (i) or (ii), to be
immediately due and payable. Thereupon, the Holder may proceed to enforce its
rights and remedies under this Note and applicable law, all of such remedies
being cumulative and not exclusive.
No delay or omission on the part of the Holder or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or any
other right of the Holder or of such holder, nor shall any delay, omission or
waiver of any one occasion be deemed a bar to or waiver
B-4
<PAGE>
of the same or any other right or any other occasion. The Maker and every
endorser and guarantor of this Note regardless of the time, order or place of
signing hereby waives presentment, demand, protest and notice of every kind, and
assents to any extension or postponement of the time for payment or any other
indulgence, to any substitution, exchange or release of collateral, and to the
addition or release of any other party or person or entity primarily or
secondarily liable.
All costs incurred in any litigation arising from this Note shall be borne
by the prevailing party. All other expenses of enforcement of the Holder's
rights hereunder (including reasonable legal and other professional fees) shall
be for the account of the Maker.
THIS NOTE SHALL FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA (WITHOUT REFERENCE TO CONFLICTS
OF LAW).
This Note shall be binding upon the Maker's successors and assigns, and
shall inure to the benefit of the Holder's successors and assigns.
B-5
<PAGE>
IN WITNESS WHEREOF, the Maker has caused this Note to be [duly] executed
[by its duly authorized officer] to take effect as of the date first hereinabove
written.
[Maker]
By: _____________________________
[Title: __________________________]
B-6
<PAGE>
EXHIBIT C
FORM OF
TERMINATION AGREEMENT
This Termination Agreement (this "Agreement") is made as of this __ day of
____, 199_, by and among Boomtown, Inc., a Delaware corporation ("Boomtown"),
Blue Diamond Hotel & Casino, Inc., a Nevada corporation and a wholly-owned
subsidiary of Boomtown ("Blue Diamond"), Hollywood Park, Inc., a Delaware
corporation ("Hollywood Park") [Blue Diamond Transferor, if not already named
("BD Transferor")], Edward P. Roski, Jr., an individual residing in California
("Roski"), Majestic Realty Co., a California corporation ("Majestic") and IVAC,
a California general partnership of which Roski is a general partner ("IVAC").
WHEREAS, the parties hereto have entered into a Blue Diamond Swap Agreement
dated as of August 12, 1996 (as amended and in effect from time to time, the
"Swap Agreement");
WHEREAS, it is a condition precedent to the consummation of the Blue
Diamond Swap (as defined in the Swap Agreement), that the parties hereto
terminate their respective obligations under the Blue Diamond Documents (as
defined below) on the terms set forth herein;
NOW THEREFORE, in consideration of the foregoing premises, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. DEFINITIONS.
(a) "Blue Diamond Documents" shall mean, collectively, the
Stockholders and Affiliates Agreement dated as of June 30, 1993, the Affiliate
Note, the Bridge Note, the Affiliate Loan Agreement, the Bridge Loan Agreement,
the Purchase Option Agreement, the Affiliate Loan Deed of Trust, the Bridge Loan
Deed of Trust, the Purchase Option Deed of Trust and the Blue Diamond Lease, the
Boomtown Stockholders Agreement dated as of June 30, 1996, Boomtown, Roski and
IVAC, and the Stockholders and Affiliates Agreement dated as of June 30, 1993,
by and among Blue Diamond, Roski Edward P. Roski, Sr., Boomtown, IVAC and
Majestic.
(b) "Note Documents" shall mean (i) the Indenture dated as of
November 1, 1993, by and among Boomtown, Blue Diamond, certain of their
affiliates and First Trust National Association as trustee and (ii) the
documents listed in Sections 5.3(h), (i) and (j) of the Swap Agreement.
(c) Terms defined in the Swap Agreement (whether directly or
indirectly by reference) and used herein without definition shall have the
respective meanings herein assigned to such terms in the Swap Agreement.
C-1
<PAGE>
Section 2. SATISFACTION OR WAIVER OF CONDITIONS PRECEDENT. Each of the
parties hereto acknowledges that the conditions precedent to its obligation to
effect the Blue Diamond Swap have been satisfied or waived. The Designated
Roski Entity hereby accepts the BD Interest in its present condition, and
acknowledges receipt of the Blue Diamond Documents. No liabilities arising
under the Blue Diamond Documents shall survive such termination; PROVIDED, that
the foregoing shall not be construed to relieve the applicable parties of the
Surviving Indemnities or any liabilities arising under the Swap Agreement or the
Related Documents or in connection with the transactions contemplated thereby.
Section 3. TERMINATION OF BLUE DIAMOND DOCUMENTS. Each of the Blue
Diamond Documents shall be automatically terminated as of the date of this
Agreement, without the necessity of further action by any party, and shall have
no further force or effect.
Section 4. RELEASE. Each party hereto is delivering the Release
contemporaneously with this Agreement.
Section 5. RELEASE OF COLLATERAL SECURITY. The Roski Entities
acknowledge receipt, as of the date hereof, of termination statements, releases,
discharges, quitclaim deeds and other appropriate documents and instruments to
terminate of record each of the filings and recordings listed on SCHEDULE 1
hereto. Each of the parties hereto (a) acknowledges that any other party may
record or file the discharges, termination statements, quitclaim deeds and
similar documents delivered to such party pursuant to the Swap Agreement, to
evidence of record the release of the security interests and liens granted
pursuant to the Blue Diamond Documents and the Note Documents, and (b) agrees to
execute and deliver such additional documents and instruments, and take such
other action, as any other party may reasonably request to release of record all
such security interests and liens, all at the expense of the requesting party.
Section 6. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, which shall together constitute but one and the same agreement.
To make proof of this Agreement, it shall only be necessary to produce one such
counterpart.
Section 7. GOVERNING LAW. THIS AGREEMENT SHALL FOR ALL PURPOSES BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA
(WITHOUT REFERENCE TO CONFLICTS OF LAW).
C-2
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused its duly
authorized representative to execute this agreement to take effect under the
laws of the State of Nevada as of the date first hereinabove written.
BOOMTOWN, INC.
By:______________________________ ___________________________
EDWARD P. ROSKI, JR.
Title:___________________________
BLUE DIAMOND HOTEL & CASINO, INC. IVAC
By: EDWARD P. ROSKI, JR.,
By:______________________________ its General Partner
Title:___________________________
___________________________
EDWARD P. ROSKI, JR.
HOLLYWOOD PARK, INC. MAJESTIC REALTY CO.
By:______________________________ By:______________________________
Title:___________________________ Title:___________________________
BD Transferor, if not named above
By:______________________________
Title:___________________________]
C-3
<PAGE>
SCHEDULE 1
Documents Requiring
Releases, Termination Statements,
Discharges or Quitclaim Deeds
C-4
<PAGE>
SCHEDULE 1-A
NOTES AND LEASES
6/15/96 BOOMTOWN - LAS VEGAS
NOTES AND LEASES
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
REFERENCE DESCRIPTION CONTRACT ORIGINAL
TYPE NO. OF ASSETS DATE BALANCE DATE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MAJOR
- --------------------------------------------------------------------------------------------
Capitalized Note 1559 Misc. FF & E 9/7/94 $1,807,684 6/1/96
- --------------------------------------------------------------------------------------------
Capitalized Note** OL 8010 Reader Board Sign 5/6/94 $850,000 6/1/96
- --------------------------------------------------------------------------------------------
Subtotal/Notes: $2,657,684
- --------------------------------------------------------------------------------------------
Operating Lease** 1549 Misc. FF & E 9/7/94 $2,545,296 6/1/96
- --------------------------------------------------------------------------------------------
Operating Lease** 1543 IGT Equipment 8/10/94 $6,182,291 6/15/96
- --------------------------------------------------------------------------------------------
Operating Lease 30952(100) PBX Equipment Jul-94 $245,448 6/1/96
- --------------------------------------------------------------------------------------------
Operating Lease 30952(101) Attendant Console Sep-94 $24,608 6/1/96
- --------------------------------------------------------------------------------------------
Operating Lease 377769m Computer Sep-94 $253,659
Equipment AS400
- --------------------------------------------------------------------------------------------
Operating Lease 1544 Other Gaming 8/10/94 $886,357 6/15/96
Equipment
- --------------------------------------------------------------------------------------------
Subtotal/Leases: $10,137,660
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
OTHER EQUIPMENT
- --------------------------------------------------------------------------------------------
Operating Lease Refrigeration Units 2/7/95
- --------------------------------------------------------------------------------------------
Operating Lease Caribbean Stud
Table
- --------------------------------------------------------------------------------------------
Operating Lease No Peak Device 2/15/94
- --------------------------------------------------------------------------------------------
Operating Lease Shuffling Machines Mar-94
- --------------------------------------------------------------------------------------------
Operating Lease Bulk CO2 tanks 1/18/94
- --------------------------------------------------------------------------------------------
Operating Lease Warehouse Rental 5/1/94
- --------------------------------------------------------------------------------------------
Operating Lease 12621 Copy Machine/ Fax 3/18/96
Machine
- --------------------------------------------------------------------------------------------
Operating Lease 92348351 Stamp Machine Jan-94
- --------------------------------------------------------------------------------------------
Operating Lease Credit Card May-94
Terminal
- --------------------------------------------------------------------------------------------
Subtotal/Other
Equipment: $0.00
- --------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PAYOFF
MONTHLY EXPIRE EFFECTIVE PURCHASE CONTRACT
TYPE PAYMENT DATE DATE OPTION WITH COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
MAJOR
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
$576,791 Transferred 1/95
To Operating Lease #1549 to
Capitalized Note $39,189 9/1/97 11.50% Fully Amortized Miller & Schroeder* Comply With Indenture
- ------------------------------------------------------------------------------------------------------------------------------------
Capitalized Note** $27,219 8/1/97 11.50% Purchase available
FMV at Mutually
Agreed Upon Price Amplicon
- ------------------------------------------------------------------------------------------------------------------------------------
$66,408
- ------------------------------------------------------------------------------------------------------------------------------------
FMV or 25% of
Operating Lease $101,265 9/1/97 16.45% Purchase Price G.E. Capital* $576,791 Added 1/95 From
NTE $780,522 Note #1559
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Lease $194,143 9/1/97 13.41% FMV 20% or
NTE $1,236,450 G.E. Capital*
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Lease $4,399 Jan-99 2.89% FMV Bell South Lease cannot be canceled
by Lessee
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Lease $511 Aug-99 7.80% FMV Bell South Lease cannot be canceled
by Lessee
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Lease $6,025 Feb-99 13.75% 5% of Purchase or IBM Included with Overall
$12,683 Boomtown Corporate Agreement
- ------------------------------------------------------------------------------------------------------------------------------------
FMV or 20% of
Operating Lease $27,835 Sep-97 13.41% Purchase Price G.E. Capital* Bally, Sigma, Universal
Net $177,271 Equipment
- ------------------------------------------------------------------------------------------------------------------------------------
$334,178
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER EQUIPMENT
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Lease $1,482 Monthly Mobile Storage Group Open Purchase Order 50673,
$11.19
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Lease 1,426 May-96 D.P. Stud, Inc. To be cancelled 6/96,
Waiting Gaming Board
Approval to Cancel
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Lease 600 Monthly Tech Art
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Lease 3,766 May-96 Shuffle Master Renegotiating New Weekend
Only Rate
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Lease 230 Apr-99 Pepsi-Cola
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Lease 2,056 Apr-97 Procyon Industrial
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Lease 4,246 Jan-99 Alco Capital Resources
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Lease 81 Monthly Pitney Bowes
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Lease 250 Monthly CMSC Corporation
- ------------------------------------------------------------------------------------------------------------------------------------
$13,806
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
* ORIGINALLY FDS AGREEMENT; INCOME STREAM SOLD TO G.E. CAPITAL; FDS
RETAINED RESIDUALS.
** NOT FULLY AMORTIZED; AMORTIZATION SCHEDULES INCLUDE RESIDUALS AT END
OF CONTRACT.
-27-
<PAGE>
SCHEDULE 1-B
MAINTENANCE CONTRACTS
6/15/96 BOOMTOWN - LAS VEGAS
MONTHLY MAINTENANCE CONTRACTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
DESCRIPTION MONTHLY CONTRACT CONTRACT EXPIRATION
OF ASSETS PAYMENT WITH DATE DATE COMMENTS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Air Conditioning $ 1,175 Carrier Service Plus
- -----------------------------------------------------------------------------------------------------------------------
Krono's Equipment Annual Payment
Maintenance 170 Compu-Cas Systems 1/3/96 N.A. $2,039
- -----------------------------------------------------------------------------------------------------------------------
Cummins-Allison
Jet Sort Machine 2,130 Corp. 12/14/95 Dec-96
- -----------------------------------------------------------------------------------------------------------------------
Dynamic Carpet
Carpet 4,950 Upholstery Cleaners 10/19/95 Oct-96
- -----------------------------------------------------------------------------------------------------------------------
Pest Control 1,500 ECOLAB 1/2/96 Jan-97
- -----------------------------------------------------------------------------------------------------------------------
Annual Payment $950
Employee I.D. ECR Sales & Agreement
Machine 80 Service 5/4/94 Monthly #CONT00452
- -----------------------------------------------------------------------------------------------------------------------
Sign 674 Federal Sign 1/13/94 Jan-99 Contract# M31807
- -----------------------------------------------------------------------------------------------------------------------
Telephone 2,160 GTE 7/1/95 Jul-99 Document#-10439
- -----------------------------------------------------------------------------------------------------------------------
Glory Money
Hard Count Machine 1,361 Systems 1/1/96 Dec-96 Annual Payment $16,334
- -----------------------------------------------------------------------------------------------------------------------
Hotel Information Hotel Annual Payment
Hotel 1,204 Systems 4/13/94 N.A. $14,451
- -----------------------------------------------------------------------------------------------------------------------
Reader Board 5,117 John R. Young 9/30/94 Sep-99 Agreement# 61001
- -----------------------------------------------------------------------------------------------------------------------
Johnson Business
Embosser Machine 208 Machines 8/19/95 Aug-96 Annual Payment $2,495
- -----------------------------------------------------------------------------------------------------------------------
Elevator 1,454 OTIS 5/1/95 May-00
- -----------------------------------------------------------------------------------------------------------------------
254 Simplex 6/1/95 5/31/96 Annual Payment $3,050
Time Recorder 96 Simplex 8/1/95 7/31/96 Annual Payment $1,155
- -----------------------------------------------------------------------------------------------------------------------
Western Fire
Grease Filters As Needed Prevention 5/20/94 May-97 As Needed Basis
- -----------------------------------------------------------------------------------------------------------------------
Equipment Software
(Keno) 875 X Pert X Service 5/31/94 5/31/96
- -----------------------------------------------------------------------------------------------------------------------
Exterior Light
Maintenance 892 Young Electric Sign 9/11/95 Sep-00 Agreement# L00074C
- -----------------------------------------------------------------------------------------------------------------------
Printers 275 Decision One 5/22/96 6/1/97 Pending Signature
- -----------------------------------------------------------------------------------------------------------------------
Casino Management Professional Annual Payment
System 275 Software Services 5/20/95 5/19/96 $3,300
- -----------------------------------------------------------------------------------------------------------------------
TOTAL: $ 24,850
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
-28-
<PAGE>
SCHEDULE 1-C
OUTDOOR SIGNS
BOOMTOWN - LAS VEGAS
OUTDOOR SIGNS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
DESCRIPTION OF MONTHLY CONTRACT CONTRACT EXPIRATION
ASSETS PAYMENT WITH DATE DATE CONTRACT #
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
I-15/South of Sahara $1,830 Seiler 5/22/96 Jun-96 BOOM 96-018
- ---------------------------------------------------------------------------------------------------------------
I-15/Sloan 2,800 Outdoor Media 5/59/96 Nov-96 BOOM 96-102
- ---------------------------------------------------------------------------------------------------------------
I-15/Blue Diamond 2,275 Nevada Outdoor 1/24/96 Nov-97 BOOM 96-004
- ---------------------------------------------------------------------------------------------------------------
Harmon/Industrial 2,800 Nevada Outdoor 1/24/96 May-96 BOTO 96-001
- ---------------------------------------------------------------------------------------------------------------
I-15 Yermo - Ghosttown 2,609 3M 3/1/96 Jan-97 BOOM 96-003
- ---------------------------------------------------------------------------------------------------------------
I-15 Yermo - Minneola 2,009 3M 3/1/96 Jan-97 BOOM 96-006
- ---------------------------------------------------------------------------------------------------------------
I-15/ Sloan 3,439 Seiler 3/20/96 TBD BOOM 96-015
- ---------------------------------------------------------------------------------------------------------------
I-15/ Sloan 3,439 Seiler 3/20/96 TBD BOOM 96-016
- ---------------------------------------------------------------------------------------------------------------
I-15/ Sloan 3,439 Seiler 3/20/96 TBD BOOM 96-017
- ---------------------------------------------------------------------------------------------------------------
Marvin
Taxi Cabs Advertising 2,184 Advertising Co. 1/24/96 6/1/96 BOOM 96-001
- ---------------------------------------------------------------------------------------------------------------
Poster Showing 15,693 Donrey Outdoor 1/24/96 May-96 BOOM 96-010
- ---------------------------------------------------------------------------------------------------------------
Storage Flex &
Extension 50 Donrey Outdoor N.A. Jun-96 N.A.
- ---------------------------------------------------------------------------------------------------------------
I-15/ Lakemead 3,350 Seiler 2/26/96 Mar-98 BOOM 96-012
- ---------------------------------------------------------------------------------------------------------------
I-15/Lakemead 3,350 Seiler 2/26/96 Mar-98 BOOM 96-013
- ---------------------------------------------------------------------------------------------------------------
I-15/Interstate Sign 3,305 Ronco 1/26/96 Feb-99 BOOM 96-011
- ---------------------------------------------------------------------------------------------------------------
Nevada Logo
Mainline Sign 422 Sign Group 6/2/94 Jun-97 N.A.
- ---------------------------------------------------------------------------------------------------------------
I-15/Jean 3,372 Donrey 4/9/96 4/28/97 BOOM 96-014
- ---------------------------------------------------------------------------------------------------------------
MONTHLY TOTAL: $56,366
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
-29-
<PAGE>
SCHEDULE 1-D
LICENSE AND PROGRESSIVE SERVICE AGREEMENTS
6/15/96 BOOMTOWN - LAS VEGAS
LICENSE AND PROGRESSIVE SERVICE AGREEMENT
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
% OF CONTRACT CONTRACT EXPIRATION
DESCRIPTION HANDLE/PULL WITH DATE DATE COMMENTS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
LICENSE AGREEMENTS
- --------------------------------------------------------------------------------------------------------------------
Casino War $200/Month Bet Technology 5/1/96 4/30/97
- --------------------------------------------------------------------------------------------------------------------
$200
Royal Match Table/Month Bet Technology 3/18/96 3/18/97
- --------------------------------------------------------------------------------------------------------------------
PROGRESSIVE AGREEMENTS
- --------------------------------------------------------------------------------------------------------------------
10 Day Written
Cool Millions 5.50% CDS 4/22/96 Indefinite Notice to Cancel
- --------------------------------------------------------------------------------------------------------------------
FAB '50'S 6.50% IGT 10/3/94 Indefinite
- --------------------------------------------------------------------------------------------------------------------
Mega Bucks 6% IGT 2/7/96 Indefinite
- --------------------------------------------------------------------------------------------------------------------
Nevada High
Rollers 3.50% IGT 10/3/94 Indefinite
- --------------------------------------------------------------------------------------------------------------------
Nevada Nickels 7.50% IGT 7/12/94 Indefinite
- --------------------------------------------------------------------------------------------------------------------
Quarter Deluxe 6% IGT 3/17/95 Indefinite
- --------------------------------------------------------------------------------------------------------------------
Quarter Mania 6% IGT 7/12/94 Indefinite
- --------------------------------------------------------------------------------------------------------------------
30 Day Written
Let It Ride $0.79 per game Shuffle Master 1/1/94 Month to Month Notice to Terminate
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
-30-
<PAGE>
BOOMTOWN, INC.
EXHIBIT 11.1 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (LOSS) OF
THE COMPANY
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
1995 1996 1995 1996
-------------------------- --------------------------
<S> <C> <C> <C> <C>
Net income (loss) applicable to Common Stock $(1,849,219) $(30,826,491) $(1,212,066) $(31,135,106)
----------- ------------ ----------- ------------
Weighted average shares outstanding 9,228,726 9,251,482 9,226,643 9,243,243
Net effect of dilutive stock options based
on the treasury stock method using
the average market price -- -- -- --
----------- ------------ ----------- ------------
Total weighted average shares outstanding 9,228,726 9,251,482 9,226,643 9,243,243
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
Net income (loss) per share of Common Stock $ (0.20) $ (3.33) $ (.13) $ (3.37)
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
29
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS FOUND ON
PAGES 3 AND 4 OF THE COMPANY'S FORM 10-Q FOR THE NINE MONTHS ENDED JUNE 30, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND
ACCOMPANYING FOOTNOTES.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 21,587,485
<SECURITIES> 0
<RECEIVABLES> 4,033,876<F1>
<ALLOWANCES> 0
<INVENTORY> 1,596,055
<CURRENT-ASSETS> 33,507,612
<PP&E> 180,706,931
<DEPRECIATION> 34,293,783
<TOTAL-ASSETS> 204,186,346
<CURRENT-LIABILITIES> 25,258,220
<BONDS> 104,731,559<F2>
0
0
<COMMON> 103,593,432
<OTHER-SE> (33,490,667)
<TOTAL-LIABILITY-AND-EQUITY> 204,186,346
<SALES> 171,366,640
<TOTAL-REVENUES> 173,356,390
<CGS> 0
<TOTAL-COSTS> 87,689,037
<OTHER-EXPENSES> 114,925,767
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,020,139<F3>
<INCOME-PRETAX> (35,332,828)
<INCOME-TAX> (49,544)
<INCOME-CONTINUING> (35,283,284)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (35,283,284)
<EPS-PRIMARY> (3.82)
<EPS-DILUTED> (3.82)
<FN>
<F1>RECEIVABLES ARE PRESENTED NET OF ALLOWANCES.
<F2>LONG TERM DEBT DUE AFTER ONE YEAR, NET OF UNAMORTIZED DISCOUNT.
<F3>NET OF INTEREST INCOME.
</FN>
</TABLE>
