<PAGE>
ASSET PURCHASE AGREEMENT
dated as of
June 12, 2000
by and among
STATION CASINOS, INC.,
a Nevada corporation
("PURCHASER")
SANTA FE HOTEL INC.,
a Nevada corporation
("SELLER")
and
SANTA FE GAMING CORPORATION,
a Nevada corporation
("PARENT")
with respect to
the assets of
SANTA FE HOTEL INC.
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.
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Page
No .
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ARTICLE I SALE OF ASSETS AND CLOSING..........................................................1
1.01. Assets......................................................................1
1.02. Liabilities.................................................................5
1.03. Net Current Assets; Purchase Price Adjustment...............................6
1.04. Purchase Price; Allocation..................................................9
1.05. Closing; Escrow.............................................................9
1.06. Intentionally Omitted......................................................10
1.07. Prorations.................................................................10
1.08. Further Assurances; Post-Closing Cooperation...............................11
1.09. Third-Party Consents.......................................................12
1.10. Insurance Proceeds.........................................................12
1.11. Redemption of Gaming Chips and Tokens......................................13
1.12. Collection of Accounts Receivable..........................................13
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER...............................13
2.01. Organization of Seller and Parent..........................................13
2.02. Authority..................................................................13
2.03. No Conflicts...............................................................14
2.04. Governmental Approvals and Filings.........................................14
2.05. Books and Records..........................................................15
2.06. Financial Statements.......................................................15
2.07. Absence of Changes.........................................................15
2.08. No Undisclosed Liabilities.................................................17
2.09. Taxes......................................................................17
2.10. Legal Proceedings..........................................................17
2.11. Compliance With Laws and Orders............................................18
2.12. Benefit Plans; ERISA.......................................................18
2.13. Real Property..............................................................19
2.14. Tangible Personal Property.................................................21
2.15. Intellectual Property Rights...............................................21
2.16. Contracts..................................................................22
2.17. Licenses...................................................................23
2.18. Insurance..................................................................24
2.19. Affiliate Transactions.....................................................24
2.20. Employees; Labor Relations.................................................24
2.21. Environmental Matters......................................................25
2.22. Inventory..................................................................26
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2.23. Vehicles...................................................................26
2.24. No Guarantees..............................................................26
2.25. Entire Business............................................................26
2.26. Solvency; Sufficient Capital...............................................27
2.27. Brokers....................................................................27
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER......................................27
3.01. Organization...............................................................27
3.02. Authority..................................................................28
3.03. No Conflicts...............................................................28
3.04. Governmental Approvals and Filings.........................................28
3.05. Legal Proceedings..........................................................28
3.06. Brokers....................................................................28
ARTICLE IV COVENANTS OF PARENT AND SELLER....................................................29
4.01. Regulatory and Other Approvals.............................................29
4.02. HSR Filings................................................................29
4.03. Investigation by Purchaser.................................................29
4.04. No Solicitations...........................................................30
4.05. Conduct of Business........................................................30
4.06. Financial Statements and Reports; Filings..................................30
4.07. Employee Matters...........................................................31
4.08. Certain Restrictions.......................................................31
4.09. Delivery of Books and Records, etc.; Removal of Property...................32
4.10. Noncompetition.............................................................32
4.11. Notice and Cure............................................................34
4.12. Fulfillment of Conditions..................................................34
4.13. Baggage....................................................................34
4.14. Safe Deposits..............................................................34
4.15. Valet Parking..............................................................35
4.16. Estoppel Certificates......................................................35
4.17. Computer Equipment.........................................................35
ARTICLE V COVENANTS OF PURCHASER.............................................................35
5.01. Regulatory and Other Approvals.............................................35
5.02. HSR Filings................................................................36
5.03. Notice and Cure............................................................36
5.04. Fulfillment of Conditions..................................................36
ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER............................................36
6.01. Representations and Warranties.............................................36
6.02. Performance................................................................37
6.03. Officers' Certificates.....................................................37
6.04. Orders and Laws............................................................37
6.05. Regulatory Consents and Approvals..........................................37
6.06. Third Party Consents.......................................................38
6.07. Opinion of Counsel.........................................................38
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6.08. Personal Property Leases...................................................38
6.09. Deliveries.................................................................38
6.10. Absence of Changes.........................................................38
6.11. Proceedings................................................................39
ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLER..............................................39
7.01. Representations and Warranties.............................................39
7.02. Performance................................................................39
7.03. Officers' Certificates.....................................................39
7.04. Orders and Laws............................................................39
7.05. Regulatory Consents and Approvals..........................................39
7.06. Third Party Consents.......................................................40
7.07. Deliveries.................................................................40
7.08. Proceedings................................................................40
ARTICLE VIII TAX MATTERS AND POST-CLOSING TAXES..............................................40
8.01. Taxes......................................................................40
8.02. Intentionally Omitted......................................................40
8.03. Pre-Closing Taxes..........................................................40
8.04. Tax Indemnification........................................................40
8.05. Tax Cooperation............................................................41
8.06. Notification of Proceedings; Control.......................................41
ARTICLE IX TITLE INSURANCE...................................................................41
9.01. Title Policies and Exceptions..............................................41
ARTICLE X SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS..................43
10.01. Survival of Representations, Warranties, Covenants and Agreements........43
ARTICLE XI INDEMNIFICATION...................................................................43
11.01. Indemnification..........................................................43
11.02. Method of Asserting Claims...............................................44
ARTICLE XII TERMINATION......................................................................47
12.01. Termination..............................................................47
12.02. Effect of Termination....................................................48
ARTICLE XIII DEFINITIONS.....................................................................49
13.01. Definitions..............................................................49
ARTICLE XIV MISCELLANEOUS....................................................................59
14.01. Notices..................................................................59
14.02. Bulk Sales Act...........................................................60
14.03. Entire Agreement.........................................................60
14.04. Expenses.................................................................60
14.05. Public Announcements.....................................................60
14.06. Confidentiality..........................................................60
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14.07. Waiver; Remedies; Attorneys Fees.........................................61
14.08. Amendment................................................................61
14.09. No Third Party Beneficiary...............................................62
14.10. No Assignment; Binding Effect............................................62
14.11. Headings.................................................................62
14.12. Consent to Jurisdiction; Venue...........................................62
14.13. Invalid Provisions.......................................................62
14.14. Governing Law............................................................62
14.15. Counterparts.............................................................63
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EXHIBITS
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Exhibit A General Assignment and Bill of Sale
Exhibit B Assumption Agreement
Exhibit C Officer's Certificate of Seller
Exhibit D Secretary's Certificate of Seller
Exhibit E Officer's Certificate of Parent
Exhibit F Secretary's Certificate of Parent
Exhibit G Officer's Certificate of Purchaser
Exhibit H Secretary's Certificate of Purchaser
Exhibit I [Intentionally Omitted]
Exhibit J [Intentionally Omitted]
Exhibit K Affidavit of Nonforeign Status
Exhibit L Option Agreement
Exhibit M Title Report
Exhibit N Shareholders Agreement
Exhibit O Escrow Agreement
</TABLE>
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SCHEDULES
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Schedule 1.01(a)(i) Real Property
Schedule 1.01(a)(ii)(A) Real Property Leases (Lessor/Sublessor)
Schedule 1.01(a)(ii)(B) Real Property Leases (Lessee/Sublessee)
Schedule 1.01(a)(iii) Tangible Personal Property
Schedule 1.01(a)(iv) Business Contracts
Schedule 1.01(a)(v) Intangible Personal Property
Schedule 1.01(a)(vi) Business Licenses
Schedule 1.01(a)(vii) Vehicles
Schedule 1.01(b)(xii) Personal Effects
Schedule 1.01(b)(xiii) Certain Gaming Devices
Schedule 1.01(b)(xiv) Certain Computer Equipment
Schedule 1.01(b)(xv) Utility Deposits
Schedule 1.02(b) Retained Liabilities
Schedule 1.03(a)(ii)(A) Prepaid Expenses
Schedule 1.03(a)(ii)(B) Excluded Prepaid Expenses
Schedule 1.03(b)(iii) Security Deposits
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Schedule 2.03 Consents (Seller)
Schedule 2.04 Governmental Approvals and Filings (Seller)
Schedule 2.05 Books and Records
Schedule 2.06 Financial Statements
Schedule 2.07 Changes in Condition
Schedule 2.08 Undisclosed Liabilities
Schedule 2.09(a) Tax Return Filings
Schedule 2.09(b) Tax Liens
Schedule 2.09(c) Withholding Taxes
Schedule 2.09(d) Changes in Accounting
Schedule 2.10(a) Legal Proceedings
Schedule 2.10(b) Expected Legal Proceedings
Schedule 2.10(c) Orders
Schedule 2.11 Noncompliance With Laws and Orders
Schedule 2.12(a) Employee Benefit Plans
Schedule 2.13(b) Title to Real Property
Schedule 2.13(c) Lease Defaults
Schedule 2.13(e) Tenant Rights
Schedule 2.13(f) Condition of Improvements
Schedule 2.13(g) Violations of Law
Schedule 2.13(h) Improvement Contracts
Schedule 2.13(m) Insurance Claims
Schedule 2.14 Tangible Personal Property Liens
Schedule 2.15 Intellectual Property Rights
Schedule 2.16(a) Contracts
Schedule 2.16(b) Breaches of Contracts
Schedule 2.16(c) Contract Termination Rights
Schedule 2.17 Licenses
Schedule 2.18 Insurance
Schedule 2.19 Affiliate Transactions
Schedule 2.20 Employee Matters
Schedule 2.21 Environmental Matters
Schedule 2.23 Vehicles
Schedule 3.03 Conflicts
Schedule 3.04 Governmental Approvals and Filings (Purchaser)
Schedule 6.06 Third Party Consents (Purchaser Condition)
Schedule 6.08(i) Personal Property Leases (to be paid off by Seller)
Schedule 6.08(ii) Personal Property Leases (assigned to Purchaser)
Schedule 7.06 Third Party Consents (Seller Condition)
</TABLE>
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<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of June 12, 2000 is
made and entered into by and among STATION CASINOS, INC., a Nevada corporation
("PURCHASER"), SANTA FE HOTEL INC., a Nevada corporation ("SELLER"), and SANTA
FE GAMING CORPORATION, a Nevada corporation ("PARENT"). Capitalized terms not
otherwise defined herein have the meanings set forth in SECTION 13.01.
WHEREAS, Seller is engaged in the business of owning and
operating the Santa Fe Hotel & Casino, located at 4949 North Rancho Drive, Las
Vegas, Nevada, as well as various other related assets (collectively, the
"BUSINESS"); and
WHEREAS, Seller is a wholly-owned subsidiary of Parent; and
WHEREAS, Seller desires to sell, transfer and assign to
Purchaser, and Purchaser desires to purchase and acquire from Seller, certain of
the assets of Seller relating to the operation of the Business, and in
connection therewith, Purchaser has agreed to assume certain of the liabilities
of Seller relating to the Business, all on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE OF ASSETS AND CLOSING
1.01. ASSETS.
(a) ASSETS TRANSFERRED. On the terms and subject to the
conditions set forth in this Agreement, Seller will, and Parent will cause
Seller to, sell, transfer, convey, assign and deliver to Purchaser, and
Purchaser will purchase and pay for, at the Closing, all of Seller's right,
title and interest in, to and under all of the Assets and Properties of Seller
used or held for use in connection with the Business, free and clear of all
Liens and encumbrances, except as otherwise provided in SECTION 1.01(b), as the
same shall exist on the Closing Date (collectively with any proceeds and awards
referred to in SECTION 1.10, the "ASSETS"), including, without limitation, the
following:
(i) REAL PROPERTY. The real property described
in SECTION 1.01(a)(i) OF THE DISCLOSURE SCHEDULE, and all of the rights
arising out of the ownership thereof or appurtenant thereto (including,
without limitation, any and all easements relating thereto) (the "REAL
PROPERTY"), together with all buildings, structures, facilities,
fixtures and other improvements thereto (the "IMPROVEMENTS");
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(ii) REAL PROPERTY LEASES. Subject to SECTION
1.09, (A) the leases and subleases of real property described in
SECTION 1.01(a)(ii)(A) OF THE DISCLOSURE SCHEDULE as to which Seller is
the lessor or sublessor and (B) the leases and subleases of real
property described in SECTION 1.01(a)(ii)(B) OF THE DISCLOSURE SCHEDULE
as to which Seller is the lessee or sublessee, together with any
options to purchase the underlying property and leasehold improvements
thereon, and in each case all other rights, subleases, licenses,
permits, deposits and profits appurtenant to or related to such leases
and subleases (the leases and subleases described in subclauses (A) and
(B), the "REAL PROPERTY LEASES");
(iii) TANGIBLE PERSONAL PROPERTY. All furniture,
fixtures, equipment, supplies, parts, machinery and other tangible
personal property (including, without limitation, any and all tangible
"gaming devices" (as defined in NRS 463.0155), gaming device parts
inventory and other related gaming equipment and supplies used in
connection with the operation of the casino, including, without
limitation, slot machines, gaming tables, cards, dice (but excluding
gaming chips and tokens) and tangible "associated equipment" (as
defined in NRS 463.0136))(other than Inventory and Vehicles) used or
held for use in the conduct of the Business at the locations at which
the Business is conducted, or otherwise used or held for use by Seller
in the conduct of the Business (including, without limitation, the
items listed in SECTION 1.01(a)(iii) OF THE DISCLOSURE SCHEDULE),
including any of the foregoing purchased subject to any conditional
sales or title retention agreement in favor of any other Person (the
"TANGIBLE PERSONAL PROPERTY");
(iv) BUSINESS CONTRACTS. Subject to SECTION 1.09,
all Contracts (other than the Real Property Leases, the Personal
Property Leases) listed in SECTION 1.01(a)(iv) OF THE DISCLOSURE
SCHEDULE to which Seller is a party and which are utilized in the
conduct of the Business, including, without limitation, Contracts
relating to suppliers and purchase orders and marketing arrangements,
but excluding any and all collective bargaining agreements, contracts
for employment and independent contractor agreements (the "BUSINESS
CONTRACTS");
(v) INTANGIBLE PERSONAL PROPERTY. All
Intellectual Property used or held for use and necessary to conduct the
Business as it is presently conducted (including, without limitation,
intangible "gaming devices" (as defined in NRS 463.0155), player
tracking systems, "cashless wagering systems" (as defined in NRS
463.014) and intangible "associated equipment" (as defined in NRS
463.0136)), and all goodwill associated therewith, and all rights,
privileges, claims, causes of action and options relating or pertaining
to the Intellectual Property, the Business or the Assets, including,
without limitation, the name "Santa Fe Hotel & Casino" and any
derivative names and related marks (provided that Seller and Parent
shall have the right, but not the obligation, to continue to utilize
their respective corporate names for a period of nine (9) months so
long as such names or any derivation thereof are not used by Seller or
Parent directly in the operation of any hotel/resort or gaming
business), designs, and logos, together with all of Seller's right,
title and interest in, to and under the items listed in SECTION
1.01(a)(v) OF THE DISCLOSURE SCHEDULE (the "INTANGIBLE PERSONAL
PROPERTY");
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(vi) LICENSES. To the extent their transfer to
Purchaser is permitted under applicable Laws, and subject to SECTION
1.09, all Licenses (including applications therefor) utilized in and
necessary to conduct and promote the Business as it is presently
conducted, including, without limitation, the Licenses listed in
SECTION 1.01(a)(vi) OF THE DISCLOSURE SCHEDULE (the "BUSINESS
Licenses");
(vii) VEHICLES. Subject to SECTION 1.01(b)(xii)
and, if applicable, SECTION 1.09, all motor vehicles owned or leased by
Seller and used or held for use in the conduct of the Business,
including but not limited to the vehicles listed in SECTION
1.01(a)(vii) OF THE DISCLOSURE SCHEDULE (the "VEHICLES");
(viii) ADVANCE RESERVATIONS AND DEPOSITS. All
advance reservations, bookings and room deposits applicable to any
period following the Closing, and originals of casino credit files with
respect to the casino operations, and any telephone numbers used
exclusively in connection with the Business (the "ADVANCE RESERVATIONS
AND DEPOSITS");
(ix) CUSTOMER LISTS. All customer lists and
databases relating to the Business (the "CUSTOMER LISTS");
(x) BOOKS AND RECORDS. All Books and Records
used or held for use in the conduct of the Business or otherwise
relating to the Assets in all mediums of expression (including, without
limitation, such books and records required by the Nevada Gaming
Authorities to be maintained at the casino), other than the Excluded
Books and Records (the "BUSINESS BOOKS AND RECORDS"). Purchaser shall
cooperate and afford Seller, its counsel and its accountants, during
normal business hours, reasonable access to the Business Books and
Records after the Closing Date; and
(xi) OTHER ASSETS AND PROPERTIES. All other
Assets and Properties (but in no event any Liabilities other than the
Assumed Liabilities) of Seller used or held for use in connection with
the Business except as otherwise provided in SECTION 1.01(b) (the
"OTHER ASSETS").
To the extent any of the Business Books and Records are items
susceptible to duplication and are either (x) used or reasonably expected to be
used in connection with any of Seller's, Parent's or any of their Affiliates'
businesses other than the Business or (y) are required by Law to be retained by
Seller, Parent or any of their Affiliates, Seller may deliver photostatic copies
or other reproductions from which, in the case of Business Books and Records
referred to in clause (x), information solely concerning Seller's, Parent's or
any of their Affiliates' businesses other than the Business has been deleted.
(b) EXCLUDED ASSETS. Notwithstanding anything in this
Agreement to the contrary, the following Assets and Properties of Seller (the
"EXCLUDED ASSETS") shall be excluded from and shall not constitute Assets:
(i) INSURANCE. Subject to SECTION 1.10, life
insurance policies of officers and other employees of Seller and all
other insurance policies relating to the operation of the Business;
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(ii) EMPLOYEE BENEFIT PLANS. All assets owned or
held by any Benefit Plans;
(iii) TAX REFUNDS. All refunds or credits, if any,
of Taxes due to or from Seller;
(iv) EXCLUDED BOOKS AND RECORDS. The minute
books, stock transfer books and corporate seal of Seller and any other
Books and Records relating solely to the Excluded Assets or the
Retained Liabilities, except for such Books and Records required by the
Nevada Gaming Authorities to be maintained at the Business (the
"EXCLUDED BOOKS AND RECORDS");
(v) LITIGATION CLAIMS. Any rights (including
indemnification) and claims and recoveries under litigation of Seller
against third parties arising out of or relating to events prior to the
Closing Date;
(vi) EXCLUDED OBLIGATIONS. The rights of Seller
in, to and under all Contracts of any nature, the obligations of Seller
under which are not expressly assumed by Purchaser pursuant to SECTION
1.02(b) and SECTION 1.03(b);
(vii) EXCLUDED PREPAID EXPENSES. The prepaid
expenses relating to the Business listed in SECTION 1.03(a)(ii)(b) OF
THE DISCLOSURE SCHEDULE (the "EXCLUDED PREPAID EXPENSES");
(viii) GAMING CHIPS AND TOKENS. Subject to SECTION
1.11, all of Seller's gaming chips and tokens (including all (i) slot
machine tokens not currently in circulation, and (ii) "reserve" chips,
if any, not currently in circulation), except that at Purchaser's
written election made no later than the earlier of the Closing or the
date that is three (3) months following the date of this Agreement,
such chips and tokens may be acquired by Purchaser at the Closing
without further consideration other than Purchaser's assumption of
Seller's liability with respect to chips or tokens in circulation;
(ix) CASH. Cash (including checks received prior
to the close of business on the Closing Date, whether or not deposited
or cleared prior to the close of business on the Closing Date),
commercial paper, certificates of deposit and other bank deposits,
treasury bills and other cash equivalents, other than Casino Cash;
(x) RECEIVABLES. Accounts, notes and other
receivables (including casino markers);
(xi) OPTION PROPERTY. The Option Property;
(xii) PERSONAL EFFECTS. The personal effects, the
Ford Explorer motor vehicle, and the executive office furniture and
equipment described in SECTION 1.01(b)(xii) OF THE DISCLOSURE SCHEDULE;
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(xiii) CERTAIN GAMING DEVICES. The gaming devices
not currently in use in the operation of the Business, which are
described in SECTION 1.01(b)(xiii) OF THE DISCLOSURE SCHEDULE;
(xiv) CERTAIN COMPUTER EQUIPMENT. The computer
hardware, software and other computer-related equipment described in
SECTION 1.01(b)(xiv) OF THE DISCLOSURE SCHEDULE (the "COMPUTER
EQUIPMENT");
(xv) UTILITY DEPOSITS. All deposits held for the
benefit of Seller by any utility company, more specifically described
in SECTION 1.01(b)(xv) OF THE DISCLOSURE SCHEDULE; and
(xvi) Seller's rights under this Agreement and the
Operative Agreements.
1.02. LIABILITIES.
(a) ASSUMED LIABILITIES. In connection with the sale,
transfer, conveyance, assignment and delivery of the Assets pursuant to this
Agreement, on the terms and subject to the conditions set forth in this
Agreement, at the Closing, Purchaser will assume and agree to pay, perform and
discharge when due the following obligations of Seller arising in connection
with the operation of the Business, as the same shall exist on or after the
Closing Date (collectively with the Current Liabilities described in SECTION
1.03, the "ASSUMED LIABILITIES"), and no others:
(i) REAL PROPERTY LEASE OBLIGATIONS. All
obligations of Seller under the Real Property Leases arising and to be
performed on or after the Closing Date, and excluding any such
obligations arising or to be performed prior to the Closing Date;
(ii) OBLIGATIONS UNDER CONTRACTS AND LICENSES.
All obligations of Seller under the Business Contracts and Business
Licenses arising and to be performed on or after the Closing Date, but
excluding any such obligations arising or to be performed prior to the
Closing Date; and
(iii) RESERVATIONS. All obligations of Seller with
respect to hotel room and entertainment reservations (including ice
skating rink, bowling and banquet reservations) at the Property.
(b) RETAINED LIABILITIES. Except for the Assumed
Liabilities, Purchaser shall not assume by virtue of this Agreement or the
transactions contemplated hereby, and shall have no liability for, any
Liabilities of Seller (including, without limitation, all Players Club
Liabilities relating to members of Seller's "slot club" who shall not have
earned any additional credits in such slot club after the date which is six
months prior to the Closing Date, or any other liabilities related to the
Business) of any kind, character or description whatsoever, including those
Liabilities listed in SECTION 1.02(b) OF THE DISCLOSURE SCHEDULE (the "RETAINED
LIABILITIES") and all Liabilities and obligations under collective bargaining
agreements, whether oral or written, to which Seller is a party; any decision or
order of the NLRB, any judicial decision or order enforcing a decision or order
of the NLRB or any decision or order of an NLRB Administrative Law Judge,
whether or not any such decision or order specifies a remedy, and regardless of
what
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type of remedy ordered, including but not limited to provisional, injunctive, or
final remedies of any kind; any agreement in settlement of any unfair labor
practice charge or employee grievance, whether formal or informal, and whether
with or without the approval of an NLRB Administrative Law Judge, NLRB General
Counsel, any NLRB Regional Director or other NLRB representative or agent, the
NLRB, or a court of law, and regardless of the charging party's participation or
non-participation; any NLRB advisory opinion or declaratory order, including,
but not limited to, opinions or orders pertaining to jurisdictional issues; any
subpoena issued to Seller by or with the authorization of an NLRB Regional
Director, NLRB Administrative Law Judge, the NLRB, or a court of law. The
Retained Liabilities, including, without limitation, those set forth above,
apply specifically but not exclusively to the following NLRB case numbers:
28-CA-12228; 28-CA-12677; 28-CA-11679; 28-CA-11707; 28-CA-11719; 28-CA-11772;
28-CA-11826; 28-CA-11874; 28-CA-11992; 28-CA-11995; 28-CA-12021; 28-CA-12097;
28-CA-13321; 28-CA-13367-2; 28-CA-13727; 28-CA-14032; 28-CA-14122; 28-CA-14304;
28-CA-14375; 28-CA-14489; 28-CA-14758; 28-CA-14820; 28-CA-15074; 28-CA-15074-2;
28-CA-15235; 28-CA-15743-2; 28-CA-15743-3; 28-CA-16255; 28-CA-16313;
28-CA-16313-2; 28-CA-16313-3; and 28-CA-16440. Seller shall, and Parent shall
cause Seller to, discharge in a timely manner or shall make adequate provision
for all of the Retained Liabilities, provided that Seller shall have the ability
to contest, in good faith, any such claim of liability asserted in respect
thereof by any Person other than Purchaser and its Affiliates.
1.03. NET CURRENT ASSETS; PURCHASE PRICE ADJUSTMENT.
(a) CURRENT ASSETS. On the terms and subject to the
conditions set forth in this Agreement, Seller will, and Parent will cause
Seller to, sell, transfer, convey, assign and deliver to Purchaser, and
Purchaser will pay for, at the Closing, all of Seller's right, title and
interest in, to and under the following current assets used or held for use in
connection with the Business, as the same shall exist on the Closing Date (the
"CURRENT ASSETS," together with the Assets as defined in SECTION 1.01, the
"TRANSFERRED ASSETS"):
(i) INVENTORY. All inventories of office,
restaurant, bar, ice skating rink, bowling, hotel, casino and other
supplies (including all foods and alcoholic and non-alcoholic
beverages), parts, packaging materials and other accessories related
thereto which are held at, or are in transit from or to, the locations
at which the Business is conducted, in each case, which are used or
held for use by Seller in the conduct of the Business, including any of
the foregoing purchased subject to any conditional sales or title
retention agreement in favor of any other Person, together with all
rights of Seller against suppliers of such inventories (the
"INVENTORY");
(ii) PREPAID EXPENSES. All prepaid expenses
relating to the Business which are assignable by Seller, including,
without limitation, the items listed in SECTION 1.03(a)(ii)(A) OF THE
DISCLOSURE SCHEDULE, but excluding any Excluded Prepaid Expenses listed
in SECTION 1.03(a)(ii)(B) OF THE DISCLOSURE SCHEDULE (the "PREPAID
EXPENSES");
(iii) SECURITY DEPOSITS. All security deposits
deposited by or on behalf of Seller as lessee or sublessee under the
Real Property Leases (the "TENANT SECURITY DEPOSITS"); and
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(iv) CASINO CASH. All cage cash, slot hopper and
drop box cash located at the Business, together with any other cash
belonging to Seller located at the Business, as of the Transfer Time
(the "CASINO CASH").
(b) CURRENT LIABILITIES. In connection with the sale,
transfer, conveyance, assignment and delivery of the Current Assets pursuant to
this Agreement, on the terms and subject to the conditions set forth in this
Agreement, at the Closing, Purchaser will assume and agree to pay, perform and
discharge when due the following obligations of Seller arising in connection
with the operation of the Business, as the same shall exist on the Closing Date
(the "CURRENT LIABILITIES"), and no others:
(i) ACCOUNTS PAYABLE. All obligations of Seller
with respect to accounts payable reflected or reserved against in the
Closing Balance Sheet (the "ACCOUNTS PAYABLE");
(ii) ACCRUED EXPENSES. All obligations of Seller
with respect to accrued expenses reflected or reserved against in the
Closing Balance Sheet, including, without limitation, Players Club
Liabilities but only insofar as such liabilities relate to members of
Seller's Player's Club who shall have earned credits in such Players
Club after the date which is six months prior to the Closing Date, and
progressive jackpots (less the reset amounts), in each case set forth
on Closing Balance Sheet and schedules delivered therewith (the
"ACCRUED EXPENSES"); and
(iii) SECURITY DEPOSITS. All security deposits
listed in SECTION 1.03(b)(iii) OF THE DISCLOSURE SCHEDULE deposited by
or on behalf of lessees or sublessees under any leases or subleases
under which Seller is lessor or sublessor ("LESSOR SECURITY DEPOSITS").
(c) PRE-CLOSING PURCHASE PRICE ADJUSTMENT.
(i) It is the intention of the parties hereto
that Current Assets shall equal Current Liabilities as of the Closing
Date.
(ii) On or before the fifth (5th) Business Day
preceding the Closing Date, Seller shall, and Parent shall cause Seller
to, prepare and deliver to Purchaser an interim balance sheet ("INTERIM
BALANCE SHEET") of Seller as of the close of business on the final day
of the calendar month immediately preceding the calendar month during
which the Closing Date occurs; provided that if the Closing Date occurs
within the first five (5) days of a calendar month, the Interim Balance
Sheet shall be as of the close of business on the final day of the
second calendar month immediately preceding the calendar month during
which the Closing Date occurs. Such Interim Balance Sheet shall be
accompanied by (A) a calculation of the difference between (a) the sum
of (i) Inventory, (ii) Prepaid Expenses (iii) Tenant Security Deposits
and (iv) Casino Cash minus (b) the sum of (i) Accounts Payable, (ii)
Accrued Expenses and (iii) Lessor Security Deposits, each as reflected
on the Interim Balance Sheet (the "NET CURRENT ASSETS"), and (B) a
certificate of an officer of Seller to the effect that such calculation
was prepared in accordance with the terms of this Agreement and that
such Interim
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Balance Sheet presents fairly, in accordance with GAAP and the
accounting practices of Seller applied on a consistent basis, the
financial condition of Seller as of the close of business on the final
day of the calendar month preceding the calendar month during which the
Closing Date occurs.
(iii) In the event that there is a Deficiency with
respect to the Net Current Assets calculated in accordance with clause
(c)(i) above, the Purchase Price shall be reduced (on an interim basis
until the final adjustment to the Purchase Price is effected pursuant
to SECTION 1.03(d) below) in an amount equal to 125% of such
Deficiency.
(iv) In the event that there is a Surplus with
respect to the Net Current Assets calculated in accordance with clause
(c)(i) above, the Purchase Price shall be increased (on an interim
basis until the final adjustment to the Purchase Price is effected
pursuant to SECTION 1.03(d) below) in an amount equal to the Surplus.
(d) POST-CLOSING PURCHASE PRICE ADJUSTMENT.
(i) As promptly as practicable after the Closing
Date, but in no event more than sixty (60) days after the Closing Date
(such date on which the Closing Balance Sheet is delivered, the
"CLOSING FINANCIAL STATEMENTS DELIVERY DATE"), Purchaser will prepare
and deliver to Seller a balance sheet of Seller as of the close of
business on the day immediately preceding the Closing Date (the
"CLOSING BALANCE SHEET"). The Closing Balance Sheet shall be
accompanied by a certificate of an officer of Purchaser to the effect
that the Closing Balance Sheet presents fairly, in accordance with GAAP
and the accounting practices of Seller applied on a consistent basis,
the financial condition of Seller as of the close of business on the
day immediately preceding the Closing Date.
(ii) In the event that there is a Deficiency with
respect to the Net Current Assets, Seller shall pay, and Parent shall
cause Seller to pay, to Purchaser, as an adjustment to the Purchase
Price (as the same may have been adjusted at Closing pursuant to
SECTION 1.03(c)), an aggregate amount equal to the Deficiency, less any
amount that the Purchase Price has been previously reduced or plus any
amount that the Purchase Price has been previously increased, in each
case pursuant to subsection (c) above. If the Purchase Price was
previously reduced pursuant to subsection (c) above, and such reduction
exceeded the amount of the Deficiency, then Purchaser shall pay the
amount of such excess to Seller. Any payments required to be made by
Parent, Seller or Purchaser pursuant to this SECTION 1.03(d)(ii) shall
be made within ten (10) days of the Closing Financial Statements
Delivery Date by wire transfer of immediately available funds to an
account designated by the party who is to receive such payments.
(iii) In the event that there is a Surplus with
respect to the Net Current Assets, Purchaser shall pay to Seller, as an
adjustment to the Purchase Price (as the same may have been adjusted at
Closing pursuant to SECTION 1.03(c)), an amount equal to the Surplus
less any amount that the Purchase Price has been previously increased
or plus any amount that the Purchase Price has been previously
decreased, in each case pursuant to subsection (c) above. Any payments
required to be made by Purchaser pursuant to this SECTION 1.03(d)(iii)
shall be made within ten (10) days of the Closing Financial
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Statements Delivery Date by wire transfer of immediately available
funds to an account designated by the party who is to receive such
payments.
(e) Parent and Seller acknowledge and agree that there
may be withheld from funds payable to Seller at the Closing such amounts as
shall be necessary to comply with the provisions of NRS 360.525, 612.695, and
616B.269, or to satisfy requirements to which the Real Property or a portion
thereof may be subject pursuant to NRS 244.335. To the extent any such funds are
withheld from Seller by Purchaser, Purchaser shall deposit such funds into the
Escrow Account to be held by the Escrow Agent until such time as Seller
furnishes the Escrow Agent with receipts or certificates provided for in said
statutes certifying that the applicable obligations have been paid or discharged
or that funds out of the Purchase Price sufficient for such purpose are held by
the Escrow Agent. If Seller does not produce such receipts, certificates or
evidence within the time periods provided for in said statutes, or if any lien
or other claim therefor is asserted against Purchaser or the Real Property (or
any portion thereof) the Escrow Agent may pay such sums as may be required by
such statutes to the appropriate authority.
1.04. PURCHASE PRICE; ALLOCATION.
(a) PURCHASE PRICE. Subject to adjustment as set forth in
SECTION 1.03 above and SECTION 6.08 below, the aggregate purchase price for the
Transferred Assets, the Option and the covenant of Seller contained in SECTION
4.10 is $205,000,000 (the "PURCHASE PRICE"). The Purchase Price shall be payable
in immediately available United States funds at the Closing in the manner
provided in SECTION 1.05. $500,000 of the Purchase Price is allocable to, and
deemed to be in consideration of, the covenant of Seller contained in SECTION
4.10. $500,000 of the Purchase Price is allocable to, and deemed to be in
consideration of, the Option. The remainder of the Purchase Price is allocable
to, and deemed to be in consideration of, the Transferred Assets.
(b) ALLOCATION OF PURCHASE PRICE. Purchaser and Seller
shall negotiate in good faith prior to the Closing Date and determine the
allocation of the consideration paid by Purchaser for the Transferred Assets.
Each party hereto agrees (i) that any such allocation shall be consistent with
paragraph (a) above and the requirements of Section 1060 of the Code and the
regulations thereunder, (ii) to complete jointly and to file separately Form
8594 with its Federal Income Tax Return consistent with such allocation for the
tax year in which the Closing Date occurs, and (iii) that no party will take a
position on any income, transfer or gains Tax Return, before any Governmental or
Regulatory Authority charged with the collection of any such Tax or in any
judicial proceeding, that is in any manner inconsistent with the terms of any
such allocation without the consent of the other party.
1.05. CLOSING; ESCROW. The Closing will take place at the
offices of Purchaser, or at such other place as Purchaser and Seller mutually
agree, at 9:00 A.M. local time, on the Closing Date and shall be deemed to occur
at 11:59 p.m., Las Vegas time, on the Closing Date (the "TRANSFER TIME"). At the
Closing, Purchaser will deliver the Purchase Price (less the sum of (A) the
outstanding principal amount of the Loan and (B) all accrued and unpaid interest
on the Loan) by wire transfer of immediately available funds to Stewart Title of
Nevada, 3800 Howard Hughes Parkway, Suite 1400, Las Vegas, Nevada 89109,
Attention: Linda Jones, as escrow agent (the "ESCROW AGENT"), $1,500,000 of
which shall be held in escrow for a period of no
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longer than one year pursuant to the terms and conditions of the Escrow
Agreement, and the remainder of which shall be distributed to the creditors of
Seller and to Seller in the manner more fully described in a closing settlement
statement to be prepared and approved by Seller and Purchaser. Simultaneously,
(a) Seller will, and Parent will cause Seller to, assign and transfer to
Purchaser all of its right, title and interest in and to the Transferred Assets
(free and clear of all Liens, other than Permitted Liens) by delivery of (i) a
General Assignment and Bill of Sale substantially in the form of EXHIBIT A
hereto (the "GENERAL ASSIGNMENT"), duly executed by Seller, (ii) a grant,
bargain and sale deed in proper statutory form for recording and otherwise in
form and substance reasonably satisfactory to Purchaser conveying title to the
Real Property and (iii) such other good and sufficient instruments of
conveyance, assignment and transfer, in form and substance reasonably acceptable
to Purchaser's counsel, as shall be effective to vest in Purchaser good title to
the Transferred Assets (the General Assignment and the other instruments
referred to in clauses (ii) and (iii) being collectively referred to herein as
the "ASSIGNMENT INSTRUMENTS"), and (b) Purchaser will assume from Seller the due
payment, performance and discharge of the Assumed Liabilities by delivery of (i)
an Assumption Agreement substantially in the form of EXHIBIT B hereto (the
"ASSUMPTION AGREEMENT"), duly executed by Purchaser, and (ii) such other good
and sufficient instruments of assumption, in form and substance reasonably
acceptable to Seller's counsel, as shall be effective to cause Purchaser to
assume the Assumed Liabilities as and to the extent provided in SECTION 1.02(a)
(the Assumption Agreement and such other instruments referred to in clause (ii)
being collectively referred to herein as the "ASSUMPTION INSTRUMENTS"). At the
Closing, there shall also be delivered to Seller and Purchaser the opinions,
certificates and other contracts, documents and instruments required to be
delivered under ARTICLES VI and VII.
1.06. INTENTIONALLY OMITTED.
1.07. PRORATIONS. The following prorations relating to the
Transferred Assets and the ownership and operation of the Business will be made
as of the Closing Date, with Seller liable to the extent such items relate to
any time period prior to the Closing Date and Purchaser liable to the extent
such items relate to periods beginning with and subsequent to the Closing Date:
(a) Real estate taxes on or with respect to the
Transferred Assets.
(b) Rents, additional rents, taxes and other items
payable by Seller under the Real Property Leases.
(c) The amount of rents, additional rents, taxes and
charges for sewer, water, telephone, electricity and other utilities relating to
the Real Property and the real property subject to the Real Property Leases.
(d) Prorate Closing Date hotel room revenue equally
between Seller and Purchaser.
(e) All other items normally or customarily adjusted in
connection with similar transactions.
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Except as otherwise agreed by the parties, the net amount of all such prorations
will be settled and paid on the Closing Date. If the Closing shall occur before
a real estate tax rate is fixed, the apportionment of taxes shall be based upon
the tax rate for the preceding year applied to the latest assessed valuation.
1.08. FURTHER ASSURANCES; POST-CLOSING COOPERATION.
(a) At any time or from time to time after the Closing,
at Purchaser's request and without further consideration, Seller shall, and
Parent shall cause Seller, to execute and deliver to Purchaser such other
instruments of sale, transfer, conveyance, assignment and confirmation, provide
such materials and information and take such other actions as Purchaser may
reasonably deem necessary or desirable in order more effectively to transfer,
convey and assign to Purchaser, and to confirm Purchaser's title to, all of the
Transferred Assets, and, to the full extent permitted by Law, to put Purchaser
in actual possession and operating control of the Business and the Transferred
Assets and to assist Purchaser in exercising all rights with respect thereto,
and otherwise to cause Seller to fulfill its obligations under this Agreement
and the Operative Agreements.
(b) Effective on the Closing Date, Seller hereby
constitutes and appoints Purchaser the true and lawful attorney of Seller, with
full power of substitution, in the name of Seller or Purchaser, but on behalf of
and for the benefit of Purchaser: (i) to demand and receive from time to time
any and all the Transferred Assets and to make endorsements and give receipts
and releases for and in respect of the same and any part thereof; (ii) to
institute, prosecute, compromise and settle any and all Actions or Proceedings
that Purchaser may deem proper in order to collect, assert or enforce any claim,
right or title of any kind in or to the Transferred Assets; (iii) to defend or
compromise any or all Actions or Proceedings in respect of any of the
Transferred Assets; and (iv) to do all such acts and things in relation to the
matters set forth in the preceding clauses (i) through (iii) as Purchaser shall
deem desirable. Seller hereby acknowledges that the appointment hereby made and
the powers hereby granted are coupled with an interest and are not and shall not
be revocable by it in any manner or for any reason. Seller shall, and Parent
shall cause Seller to, deliver to Purchaser at Closing an acknowledged power of
attorney to the foregoing effect executed by Seller. Purchaser shall indemnify
and hold harmless Seller from any and all Losses caused by or arising out of any
breach of Law by Purchaser in its exercise of such power of attorney.
(c) Following the Closing, each party will afford the
other party, its counsel and its accountants, during normal business hours,
reasonable access to the books, records and other data relating to the Business
in its possession with respect to periods prior to the Closing and the right to
make copies and extracts therefrom, to the extent that such access may be
reasonably required by the requesting party in connection with (i) the
preparation of Tax Returns, (ii) the determination or enforcement of rights and
obligations under this Agreement, (iii) compliance with the requirements of any
Governmental or Regulatory Authority, (iv) the determination or enforcement of
the rights and obligations of any party to this Agreement or any of the
Operative Agreements or (v) in connection with any actual or threatened Action
or Proceeding. Further each party agrees for a period extending six (6) years
after the Closing Date not to destroy or otherwise dispose of any such books,
records and other data unless such party shall first offer in writing to
surrender such books, records and other data to the other party and
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such other party shall not agree in writing to take possession thereof during
the ten (10) day period after such offer is made.
(d) If, in order properly to prepare its Tax Returns,
other documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations hereunder,
it is necessary that a party be furnished with additional information, documents
or records relating to the Business not referred to in paragraph (c) above, and
such information, documents or records are in the possession or control of the
other party, such other party shall use its best efforts to furnish or make
available such information, documents or records (or copies thereof) at the
recipient's request, cost and expense. Any information obtained by Seller in
accordance with this paragraph shall be held confidential by Seller in
accordance with SECTION 14.06.
(e) Notwithstanding anything to the contrary contained in
this Section, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in accordance
with paragraphs (c) or (d) of this Section shall be subject to applicable rules
relating to discovery.
1.09. THIRD-PARTY CONSENTS. To the extent that any Real
Property Lease, Personal Property Lease, Business Contract or Business License
is not assignable without the consent of another party, this Agreement shall not
constitute an assignment or an attempted assignment thereof if such assignment
or attempted assignment would constitute a breach thereof or a default
thereunder. Parent and Seller, on the one hand, and Purchaser, on the other
hand, shall use commercially reasonable efforts to obtain the consent of such
other party to the assignment of any such Real Property Lease, Personal Property
Lease, Business Contract or Business License to Purchaser in all cases in which
such consent is or may be required for such assignment. If any such consent
shall not be obtained, Parent and Seller shall cooperate with Purchaser in any
reasonable arrangement designed to provide for Purchaser the benefits intended
to be assigned to Purchaser under the relevant Real Property Lease, Personal
Property Lease, Business Contract or Business License, including enforcement at
the cost and for the account of Purchaser of any and all rights of Seller
against the other party thereto arising out of the breach or cancellation
thereof by such other party or otherwise. If and to the extent that such
arrangement cannot be made, Purchaser shall have no obligation pursuant to
SECTION 1.02 or otherwise with respect to any such Real Property Lease, Personal
Property Lease, Business Contract or Business License. The provisions of this
SECTION 1.09 shall not affect the right of Purchaser not to consummate the
transactions contemplated by this Agreement if the condition to its obligations
hereunder contained in SECTION 6.06 has not been fulfilled.
1.10. INSURANCE PROCEEDS. If any of the Transferred Assets
are destroyed or damaged or taken in condemnation, the insurance proceeds or
condemnation award or claim for insurance proceeds or condemnation award with
respect thereto shall be an Asset. At the Closing, Seller shall, and Parent
shall cause Seller to, pay or credit to Purchaser any such insurance proceeds or
condemnation awards received by it on or prior to the Closing and shall assign
to or assert for the benefit of Purchaser all of its rights against any
insurance companies, Governmental or Regulatory Authorities and others with
respect to such damage, destruction or condemnation. As and to the extent that
there is available insurance under policies maintained by Seller and its
Affiliates, predecessors and successors in respect of any Assumed Liability,
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except for any such insurance proceeds with respect to which the insured is
directly or indirectly self-insured or has agreed to indemnify the insurer,
Parent and Seller shall cause such insurance to be applied toward the payment of
such Assumed Liability. The provisions of this SECTION 1.10 shall not affect the
right of Purchaser not to consummate the transactions contemplated by this
Agreement if the condition to its obligations hereunder contained in SECTION
6.10 has not been fulfilled.
1.11. REDEMPTION OF GAMING CHIPS AND TOKENS. In the event
that Purchaser does not elect to acquire Seller's chips and tokens pursuant to
SECTION 1.01(b)(viii), Purchaser shall (i) redeem as Seller's agent, but without
any liability therefor, any gaming chips, tokens, racebook, sportsbook and keno
tickets (from any series in use as of or prior to the Transfer Time) of Seller
relating to the use and operation of the Business, which are presented by
patrons of the Business or Purchaser within the applicable Nevada statutory time
periods for such redemptions, (ii) be reimbursed by Seller for redeeming
Seller's gaming chips, tokens, racebook, sportsbook and keno tickets, to the
extent redeemed by Purchaser during such statutory periods, and (iii) be
reimbursed as often as weekly by Seller, upon delivery to Seller of Seller's
gaming chips, tokens, racebook, sportsbook and keno tickets. In such event,
Parent and Seller agree to make arrangements for additional redemption of its
gaming chips, tokens, racebook, sportsbook and keno tickets as required by
Nevada law.
1.12. COLLECTION OF ACCOUNTS RECEIVABLE. For a period of
ninety (90) days following the Closing Date, Purchaser shall use commercially
reasonable efforts in the ordinary course of business to collect all accounts
receivable of the Business and promptly remit the proceeds to Seller. Upon the
expiration of such ninety (90) day period, Purchaser shall thereafter be under
no obligation to use such efforts to collect such accounts receivable; PROVIDED,
HOWEVER, that any such accounts receivable actually collected thereafter by
Purchaser shall be promptly remitted to Seller.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER
Parent and Seller hereby jointly and severally represent and
warrant to Purchaser:
2.01. ORGANIZATION OF SELLER AND PARENT.
(a) Seller is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Nevada, and has
full corporate power and authority to conduct the Business as and to the extent
now conducted and to own, use or lease the Transferred Assets. Seller has no
subsidiaries other than Sahara Parkville, Inc., a Missouri corporation.
(b) Parent is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Nevada, and has
full corporate power and authority to conduct its business as and to the extent
now conducted and to own the capital stock of Seller.
2.02. AUTHORITY. Each of Parent and Seller have full
corporate power and authority to execute and deliver this Agreement and the
Operative Agreements to which they are
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a party, to perform their obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby, including, without limitation,
to sell and transfer (pursuant to this Agreement) the Transferred Assets. The
execution and delivery by Parent and Seller of this Agreement and the Operative
Agreements to which they are a party, and the performance by Parent and Seller
of their obligations hereunder and thereunder, have been duly and validly
authorized by the Board of Directors and Shareholders of Seller and the Board of
Directors of Parent, no other corporate action on the part of Parent or Seller
or the stockholders or either Parent or Seller being necessary. This Agreement
has been duly and validly executed and delivered by Parent and Seller and
constitutes, and upon the execution and delivery by Parent and Seller of the
Operative Agreements to which they are a party, such Operative Agreements will
constitute, legal, valid and binding obligations of Parent and Seller
enforceable against Parent and Seller in accordance with their terms.
2.03. NO CONFLICTS. The execution and delivery by Parent
and Seller of this Agreement do not, and the execution and delivery by Parent
and Seller of the Operative Agreements to which each is a party, the performance
by Parent and Seller of their obligations under this Agreement and such
Operative Agreements and the consummation of the transactions contemplated
hereby and thereby will not:
(a) conflict with or result in a violation or breach of
any of the terms, conditions or provisions of the articles of incorporation or
by-laws (or other comparable corporate charter documents) of either Parent or
Seller;
(b) subject to obtaining the consents, approvals and
actions, making the filings and giving the notices disclosed in SECTION 2.04 OF
THE DISCLOSURE SCHEDULE, conflict with or result in a violation or breach of any
term or provision of any Law or Order applicable to Parent, Seller, or any other
Affiliates of Parent, or any of the Assets and Properties of Seller, Parent or
any other Affiliates of Parent; or
(c) except as disclosed in SECTION 2.03 OF THE DISCLOSURE
SCHEDULE, (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require Parent, Seller or any other Affiliates of Parent to obtain any
consent, approval or action of, make any filing with or give any notice to any
Person as a result or under the terms of, or (iv) result in the creation or
imposition of any Lien upon Parent, Seller or any other Affiliates of Parent, or
any of the Assets and Properties of Seller, Parent or any other Affiliates of
Parent under, any Contract or License to which Seller, Parent or any other
Affiliates of Parent, is a party or by which any of the Assets and Properties of
Seller, Parent or any other Affiliates of Parent are bound.
2.04. GOVERNMENTAL APPROVALS AND FILINGS. Except as
disclosed in SECTION 2.04 OF THE DISCLOSURE SCHEDULE, no consent, approval or
action of, filing with or notice to any Governmental or Regulatory Authority on
the part of Parent or Seller is required in connection with the execution,
delivery and performance of this Agreement or any of the Operative Agreements to
which it is a party or the consummation of the transactions contemplated hereby
or thereby.
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2.05. BOOKS AND RECORDS. Except as disclosed in SECTION
2.05 OF THE DISCLOSURE SCHEDULE, none of the Business Books and Records is
recorded, stored, maintained, operated or otherwise wholly or partly dependent
upon or held by any means (including any electronic, mechanical or photographic
process, whether computerized or not) which (including all means of access
thereto and therefrom) are not under the direct control of one or more
Employees.
2.06. FINANCIAL STATEMENTS. Prior to the execution of this
Agreement, Seller has delivered to Purchaser true and complete copies of the
following financial statements:
(a) the audited consolidated balance sheets of the Parent
as of September 30, 1999, 1998 and 1997, and the related audited consolidated
statement of operations for each of the fiscal years then ended, together with a
true and correct copy of the report on such audited information by Deloitte &
Touche LLP, and all letters from such accountants with respect to the results of
such audits, along with all unaudited consolidating statements supporting the
aforementioned audited financial statements; and
(b) the unaudited balance sheets of Seller as of March
31, 2000 and 1999, and the related unaudited statement of operations for the
portion of the fiscal year then ended.
Except as set forth in the notes thereto, the accompanying accountants' reports
(if any), or as disclosed in SECTION 2.06 OF THE DISCLOSURE SCHEDULE, all such
financial statements (i) were prepared in accordance with GAAP, (ii) fairly
present the financial condition and results of operations of the Parent or
Seller, as the case may be, as of the respective dates thereof and for the
respective periods covered thereby, and (iii) were compiled from books and
records of Parent and Seller regularly maintained by management and used to
prepare the financial statements of Parent or Seller, as the case may be, in
accordance with the principles stated therein. Seller has maintained the
Business Books and Records in a manner sufficient to permit the preparation of
financial statements in accordance with GAAP.
2.07. ABSENCE OF CHANGES. Except for the execution and
delivery of this Agreement and the transactions to take place pursuant hereto on
or prior to the Closing Date, to the Knowledge of Seller, since the Annual
Financial Statement Date there has not been any material adverse change, or any
event or development which, individually or together with other such events,
could reasonably be expected to result in a material adverse change, in the
Condition of the Business. Without limiting the foregoing, except as disclosed
in SECTION 2.07 OF THE DISCLOSURE SCHEDULE, there has not occurred, between the
Annual Financial Statement Date and the date hereof, any of the following:
(i) (x) any increase in the salary, wages or
other compensation of any Employee whose annual salary is, or after
giving effect to such change would be, $50,000 or more; (y) any
establishment or modification of (A) targets, goals, pools or similar
provisions in respect of any fiscal year under any Benefit Plan or any
employment-related Contract or other compensation arrangement with or
for Employees or (B) salary ranges, increase guidelines or similar
provisions in respect of any Benefit Plan or any employment-related
Contract or other compensation arrangement with or for Employees; or
(z) any adoption, entering into or becoming bound by any Benefit Plan,
employment-related Contract or collective bargaining agreement, or
amendment, modification or
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termination (partial or complete) of any Benefit Plan,
employment-related Contract or collective bargaining agreement, except
to the extent required by applicable Law and, in the event compliance
with legal requirements presented options, only to the extent the
option which Seller reasonably believed to be the least costly was
chosen;
(ii) incurrences by Seller of Indebtedness with
respect to the conduct of the Business in an aggregate principal amount
exceeding $1,000,000 (net of any amounts discharged during such period
and excluding any refinancing of existing Indebtedness);
(iii) any physical damage, destruction or other
casualty loss (whether or not covered by insurance) affecting any of
the plant, real or personal property or equipment of Seller used or
held for use in the conduct of the Business in an aggregate amount
exceeding $100,000;
(iv) any material change in (A) any pricing,
investment, accounting, financial reporting, inventory, credit,
allowance or Tax practice or policy of the Business or (B) any method
of calculating any bad debt, contingency or other reserve of the
Business for accounting, financial reporting or Tax purposes;
(v) (A) any disposition of any Assets and
Properties used or held for use in the conduct of the Business, other
than Inventory in the ordinary course of business consistent with past
practice and other dispositions not exceeding in either case $1,000,000
in the aggregate; or (B) any creation or incurrence of a Lien, other
than a Permitted Lien, on any Assets and Properties used or held in the
conduct of the Business;
(vi) any entering into, amendment, modification,
termination (partial or complete) or granting of a waiver under or
giving any consent with respect to (A) any Contract which is required
(or had it been in effect on the date hereof would have been required)
to be disclosed in the Disclosure Schedule pursuant to SECTION 2.16(a)
or (B) any License disclosed in SECTION 1.01(a)(vi) OF THE DISCLOSURE
SCHEDULE;
(vii) capital expenditures or commitments for
additions to property, plant or equipment used or held for use in the
conduct of the Business constituting capital assets in an aggregate
amount exceeding $2,000,000;
(viii) any transactions (other than distributions
of cash from operations by Seller to Parent) with any officer, director
or Affiliate of Seller in an aggregate amount exceeding $50,000 (A)
outside the ordinary course of business consistent with past practice
or (B) other than on an arm's-length basis;
(ix) any entering into of a Contract to do or
engage in any of the foregoing after the date hereof; or
(x) any other material transaction involving or
material development affecting the Business or the Transferred Assets
outside the ordinary course of business consistent with past practice.
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2.08. NO UNDISCLOSED LIABILITIES. Except as reflected or
reserved against in the balance sheet included in the Seller Consolidating
Statements, the notes to the Annual Financial Statements or the accountant's
report delivered with respect to the Annual Financial Statements or as disclosed
in SECTION 2.08 OF THE DISCLOSURE SCHEDULE or any other Section of the
Disclosure Schedule, there are no Liabilities against, relating to or affecting
the Business or any of the Transferred Assets, other than Liabilities (i)
incurred in the ordinary course of business consistent with past practice or
(ii) which, individually or in the aggregate, are not material to the Condition
of the Business.
2.09. TAXES.
(a) TAX RETURN FILINGS. Except as disclosed in SECTION
2.09(a) OF THE DISCLOSURE Schedule, Seller has filed all Tax Returns (or the Tax
Returns have been filed on its behalf) required to be filed by applicable law
prior to the date of the Disclosure Schedules. All Tax Returns were (and, as to
Tax Returns not filed as of the date hereof, will be) true, complete and correct
and filed on a timely basis. Seller (i) has paid all Taxes that are due, or
claimed or asserted by any taxing authority to be due, from Seller for the
periods covered by the Tax Returns or (ii) has duly and fully provided reserves
adequate to pay all Taxes.
(b) TAX LIENS. Except as disclosed in SECTION 2.09(b) OF
THE DISCLOSURE SCHEDULE, there are no Tax liens upon the assets of Seller except
liens for Taxes not yet due.
(c) WITHHOLDING TAXES. Except as disclosed in SECTION
2.09(c) OF THE DISCLOSURE SCHEDULE, Seller has complied (and until the Closing
Date will comply) with all applicable laws, rules, and regulations relating to
the payment and withholding of Taxes (including withholding and reporting
requirements under Code Sections 1441 through 1464, 3401 through 3406, 6041 and
6049 and similar provisions under any other laws) and have, within the time and
in the manner prescribed by law, withheld from employee wages and paid over to
the proper governmental authorities all required amounts.
(d) NO CHANGES IN METHOD OF ACCOUNTING. Except as
disclosed in SECTION 2.09(d) OF THE DISCLOSURE SCHEDULE, Seller is not required
to include in income any adjustment pursuant to Code Section 481(a) by reason of
a voluntary change in accounting method initiated by Seller, and the Internal
Revenue Service has not proposed an adjustment or change in accounting method.
2.10. LEGAL PROCEEDINGS. (a) Except as disclosed in SECTION
2.10(a) OF THE DISCLOSURE SCHEDULE, there are no Actions or Proceedings pending
or, to the Knowledge of Seller, threatened against (excluding Actions or
Proceedings that have been threatened by Carl Icahn or David Lesser or any of
their respective Affiliates), relating to or affecting Seller or Parent with
respect to the Business or any of its Assets and Properties which (i) could
reasonably be expected to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or any of the Operative
Agreements or otherwise result in a material diminution of the benefits
contemplated by this Agreement or any of the Operative Agreements to Purchaser,
or (ii) if determined adversely to Seller, could reasonably be expected to
result in (x) any injunction or other equitable relief that would interfere in
any material respect with the Business or (y) Losses
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by Seller, individually or in the aggregate with Losses in respect of other such
Actions or Proceedings, exceeding $250,000;
(b) Except as disclosed in SECTION 2.10(b) OF THE
DISCLOSURE SCHEDULE, there are no facts or circumstances Known to Seller that
could reasonably be expected to give rise to any Action or Proceeding that would
be required to be disclosed pursuant to clause (a) above; and
(c) Except as disclosed in SECTION 2.10(c) OF THE
DISCLOSURE SCHEDULE, there are no Orders outstanding against Parent or Seller
with respect to the Business.
2.11. COMPLIANCE WITH LAWS AND ORDERS. Except as disclosed
in SECTION 2.11 OF THE DISCLOSURE SCHEDULE, Seller is not, nor has it at any
time within the last three (3) years been, nor has it received any notice that
it is or has at any time within the last three (3) years been, in violation of
or in default under, in any material respect, any Law or Order applicable to the
Business or the Transferred Assets.
2.12. BENEFIT PLANS; ERISA. Seller (but not Parent) makes
the following representations and warranties for the benefit of Purchaser:
(a) SECTION 2.12(a) OF THE DISCLOSURE SCHEDULE contains a
true and complete list of each "employee benefit plan" (within the meaning of
section 3(3) of the ERISA of 1974, as amended, including, without limitation,
multiemployer plans within the meaning of ERISA section 3(37)), stock purchase,
stock option, severance, employment, change-in-control, fringe benefit,
collective bargaining, bonus, incentive, deferred compensation and all other
employee benefit plans, agreements, programs, policies or other arrangements,
whether or not subject to ERISA (including any funding mechanism therefor now in
effect or required in the future as a result of the transaction contemplated by
this Agreement or otherwise), whether formal or informal, oral or written,
legally binding or not, under which any employee or former employee of Seller
has any present or future right to benefits or under which Seller has any
present or future liability. All such plans, agreements, programs, policies and
arrangements shall be collectively referred to as the "COMPANY PLANS".
(b) (i) Each Company Plan has been established and
administered in accordance with its terms, and in compliance with the applicable
provisions of ERISA, the Code and other applicable laws, rules and regulations;
(ii) each Company Plan which is intended to be qualified within the meaning of
Code section 401(a) is so qualified and has received a favorable determination
letter as to its qualification, and nothing has occurred, whether by action or
failure to act, that could reasonably be expected to cause the loss of such
qualification; (iii) no Company Plan and no plan sponsored, maintained or
contributed by any member of Seller's "CONTROLLED GROUP" (defined as any
organization which is a member of a controlled group of organizations within the
meaning of Code sections 414(b), (c), (m) or (o)), is subject to Section 302 of
ERISA, Section 412 of the Code or Title IV of ERISA and neither the Company nor
any member of its Controlled Group has ever sponsored, maintained or contributed
to any plan subject to Section 302 of ERISA, Section 412 of the Code or Title IV
of ERISA; and (iv) no Company Plan is a
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Multiemployer Plan (as defined in Section 3(37) of ERISA) and no member of
Seller's Controlled Group contributes to or has contributed to a Multiemployer
Plan.
(c) With respect to any Company Plan, (i) no actions,
suits or claims (other than routine claims for benefits in the ordinary course)
are pending or, to the Knowledge of Seller, threatened, and (ii) no facts or
circumstances exist that could give rise to any such actions, suits or claims.
No Company Plan exists that could result in the payment to any
present or former employee of Seller of any money or other property or
accelerate or provide any other rights or benefits to any present or former
employee of Seller as a result of the transaction contemplated by this
Agreement.
2.13. REAL PROPERTY.
(a) SECTION 1.01(a)(i) OF THE DISCLOSURE SCHEDULE
contains a true and correct list of each parcel of real property owned by Seller
and used or held for use in connection with the Business, and SECTION
1.01(a)(ii) OF THE DISCLOSURE SCHEDULE contains a true and correct list of each
parcel of real property leased by Seller (as lessor or lessee) and used or held
for use in connection with the Business.
(b) Except as disclosed in SECTION 2.13(b) OF THE
DISCLOSURE SCHEDULE, Seller has good and marketable fee simple title to the Real
Property and the Option Property, free and clear of all Liens other than
Permitted Liens. Except for the Real Property or the Option Property subject to
Real Property Leases described in SECTION 1.01(a)(ii)(A) OF THE DISCLOSURE
SCHEDULE, Seller is in possession of the Real Property and the Option Property.
Seller has adequate rights of ingress and egress with respect to the Real
Property and the Option Property. To the Knowledge of Seller, none of the Real
Property, the Option Property or the Improvements, or the use thereof,
contravenes or violates any building, administrative, occupational safety and
health or other applicable Law in any material respect (whether or not permitted
on the basis of prior nonconforming use, waiver or variance).
(c) Each Real Property Lease is a legal, valid and
binding agreement, enforceable in accordance with its terms, of Seller and of
each other Person that is a party thereto, and except as disclosed in SECTION
2.13(c) OF THE DISCLOSURE SCHEDULE, there is no, nor has Seller received any
notice of any, default (or any condition or event which, after notice or lapse
of time or both, would constitute a default) by Seller nor by any other Person
thereunder. Seller does not owe any brokerage commissions with respect to any
such leased space.
(d) Seller has delivered to Purchaser prior to the
execution of this Agreement true and complete copies of (i) all deeds, leases,
mortgages, deeds of trust, certificates of occupancy, title insurance policies,
title reports, surveys and similar documents, and all amendments thereof, with
respect to the Real Property and the Option Property, and (ii) all Real Property
Leases (including any amendments and renewal letters) and, to the extent
reasonably available, all other documents referred to in clause (i) of this
paragraph (d) with respect to the real property subject to the Real Property
Leases described in SECTION 1.01(a)(ii)(B) OF THE DISCLOSURE SCHEDULE.
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(e) Except as disclosed in SECTION 2.13(e) OF THE
DISCLOSURE SCHEDULE, no tenant or other party in possession of any of the real
properties subject to the Real Property Leases described in SECTION
1.01(a)(ii)(A) OF THE DISCLOSURE SCHEDULE has any right to purchase, or holds
any right of first refusal to purchase, such properties.
(f) Except as disclosed in SECTION 2.13(f) OF THE
DISCLOSURE SCHEDULE, to the Knowledge of Seller, the Improvements are in good
operating condition and in a state of good maintenance and repair, ordinary wear
and tear excepted, are adequate and suitable for the purposes for which they are
presently being used and, to the Knowledge of Seller, there are no condemnation
or appropriation, environmental, zoning or other land use regulation proceedings
pending or threatened against any of the Real Property, the Option Property or
the Improvements, which would detrimentally affect the value of the Real
Property, the Option Property or the Improvements or the use and operation of
the Real Property and the Improvements as a casino, nor are there any
assessments affecting the Real Property, the Option Property or the
Improvements.
(g) Except as disclosed in SECTION 2.13(g) OF THE
DISCLOSURE SCHEDULE, to the Knowledge of Seller, none of the Real Property, the
Option Property or the Improvements, or the use and operation thereof,
contravenes or violates any building, zoning, subdivision, land use,
administrative, occupational safety and health, environmental or other
applicable Law in any material respect (whether or not permitted on the basis of
prior nonconforming use, waiver or variance). Seller has received no notice from
any Governmental or Regulatory Authority advising Seller of (i) a violation of
any such Laws (whether now existing or which will exist with the passage of
time) or (ii) any action which must be taken to avoid a violation thereof.
(h) Except as disclosed in SECTION 2.13(h) OF THE
DISCLOSURE SCHEDULE, to the Knowledge of Seller, there are no outstanding
contracts made by Seller for the construction or repair of any improvements to
the Real Property or the Option Property which have not been fully paid for.
(i) To the Knowledge of Seller, there are no material
physical defects in the Real Property or the Option Property.
(j) To the Knowledge of Seller, the Survey, plans and
specifications, warranties, and all other contracts or documents required to be
delivered to Purchaser pursuant to this Agreement, are true, correct and
complete copies, and are in full force and effect, without default by any party
and without any right of setoff, except as disclosed in writing at the time of
such delivery.
(k) All water, sewer, gas, electric, telephone, and
drainage facilities and all other utilities required by law for Purchaser's use
and operation of the Real Property as a casino are installed, or may be
installed without additional consent of any third party, across public property
or valid easements to the boundary lines of the Real Property.
(l) The Real Property is zoned "C-2" and is subject to a
special use permit from the City of Las Vegas to operate the Real Property as a
hotel/casino with all of the amenities necessary for the operation of the
Business. Seller has obtained all licenses, permits,
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easements, and rights-of-way, including a use permit, required from all
governmental authorities having jurisdiction over the Real Property or from
private parties for the use and operation of the Real Property as a hotel/casino
with all of the amenities necessary for the operation of the Business, and to
assure vehicular and pedestrian ingress to and egress from the Real Property.
(m) To the Knowledge of Seller, Seller has not received
any notice from any insurance carrier of any defects or inadequacies in the Real
Property, or in any portion thereof, which would adversely affect the
insurability thereof or the cost of such insurance. Except as disclosed in
SECTION 2.13(m) OF THE DISCLOSURE SCHEDULE, there are no pending insurance
claims.
(n) Seller is not a "foreign person" within the meaning
of SECTION 1445(f)(3) of the Code, and Seller will furnish to Purchaser, and
Parent will cause Seller to furnish to Purchaser, prior to the Closing, an
affidavit in the form attached hereto as EXHIBIT K.
2.14. TANGIBLE PERSONAL PROPERTY. As of the date hereof,
Seller is in possession of and has good title to, or has valid leasehold
interests in or valid rights under Contract to use, all the Tangible Personal
Property, which includes all tangible personal property of Seller reflected on
the balance sheet included in the unaudited consolidating financial statements
of Seller delivered to Purchaser pursuant to SECTION 2.06 hereof and used in the
preparation of the Annual Financial Statements of Parent (the "SELLER
CONSOLIDATING STATEMENTS") and tangible personal property acquired since the
Annual Financial Statement Date other than tangible personal property disposed
of since such date in the ordinary course of business consistent with past
practice. As of the Closing Date, Seller shall be in possession of and has good
and valid fee title to all such Tangible Personal Property. All the Tangible
Personal Property is free and clear of all Liens, other than Permitted Liens and
Liens disclosed in SECTION 2.14 OF THE DISCLOSURE SCHEDULE, and is in good
working order and condition, ordinary wear and tear excepted, and its use
complies in all material respects with all applicable Laws.
2.15. INTELLECTUAL PROPERTY RIGHTS. Seller and/or Parent
has interests in or uses only the Intellectual Property disclosed in SECTION
1.01(a)(v) OF THE DISCLOSURE SCHEDULE in connection with the conduct of the
Business, each of which either Seller or Parent either has all right, title and
interest in or a valid and binding right under Contract to use, excluding any
such Intellectual Property used by Seller in the operation of the Business under
third party license agreements. Parent does not own any Intellectual Property
reasonably necessary to the operation of the Business. Seller owns all rights to
the trade name "Santa Fe Hotel & Casino". No other Intellectual Property is used
or necessary in the conduct of the Business. Except as disclosed in SECTION 2.15
OF THE DISCLOSURE SCHEDULE, (i) Seller has the exclusive right to use the
Intellectual Property disclosed in SECTION 1.01(a)(v) OF THE DISCLOSURE
SCHEDULE, (ii) all registrations with and applications to Governmental or
Regulatory Authorities in respect of such Intellectual Property are valid and in
full force and effect and are not subject to the payment of any Taxes or
maintenance fees or the taking of any other actions by Seller to maintain their
validity or effectiveness, (iii) there are no restrictions on the direct or
indirect transfer of any Contract, or any interest therein, held by Seller in
respect of such Intellectual Property, (iv) Seller has delivered to Purchaser
prior to the execution of this Agreement documentation with respect to any
invention, process, design,
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computer program or other know-how or trade secret included in such Intellectual
Property, which documentation is accurate in all material respects and
reasonably sufficient in detail and content to identify and explain such
invention, process, design, computer program or other know-how or trade secret
and to facilitate its full and proper use without reliance on the special
knowledge or memory of any Person, (v) Seller has taken reasonable security
measures to protect the secrecy, confidentiality and value of its trade secrets
in respect of the Business, (vi) Seller is not, nor has it received any notice
that it is, in default (or with the giving of notice or lapse of time or both,
would be in default) under any Contract to use such Intellectual Property and
(vii) to the Knowledge of Seller, no such Intellectual Property is being
infringed by any other Person. Seller has not received notice that Seller is
infringing any Intellectual Property of any other Person in connection with the
conduct of the Business, no claim is pending or, to the Knowledge of Seller, has
been made to such effect that has not been resolved and, to the Knowledge of
Seller, Seller is not infringing any Intellectual Property of any other Person
in connection with the conduct of the Business. To the extent any of the
Intellectual Property disclosed in SECTION 1.01(a)(v) OF THE DISCLOSURE SCHEDULE
is owned by Parent, Parent hereby covenants and agrees to transfer or contribute
to Seller all such Intellectual Property owned by Parent prior to the Closing.
2.16. CONTRACTS.
(a) SECTION 2.16(a) OF THE DISCLOSURE SCHEDULE (with
paragraph references corresponding to those set forth below) contains a true and
complete list of each of the following Contracts or other arrangements (true and
complete copies or, if none, reasonably complete and accurate written
descriptions of which, together with all amendments and supplements thereto and
all waivers of any terms thereof, have been delivered to Purchaser prior to the
execution of this Agreement) to which Seller is a party or by which any of the
Transferred Assets is bound:
(i) (A) all Contracts (excluding Benefit Plans)
providing for a commitment of employment or consultation services for a
specified or unspecified term to, or otherwise relating to employment
or the termination of employment of, any Employee, the name, position
and rate of compensation of each Employee party to such a Contract and
the expiration date of each such Contract; and (B) any written or
unwritten representations, commitments, promises, communications or
courses of conduct (excluding Benefit Plans and any such Contracts
referred to in clause (A)) involving an obligation of Seller to make
payments in any year, other than with respect to salary or incentive
compensation payments in the ordinary course of business, to any
Employee exceeding $25,000 or any group of Employees exceeding $100,000
in the aggregate;
(ii) all Contracts with any Person containing any
provision or covenant prohibiting or limiting the ability of Seller to
engage in any business activity or compete with any Person in
connection with the Business or , except as provided in SECTION 4.10,
prohibiting or limiting the ability of any Person to compete with
Seller in connection with the Business;
(iii) all partnership, joint venture,
shareholders' or other similar Contracts with any Person in connection
with the Business;
(iv) all Contracts with distributors, dealers,
manufacturer's representatives, sales agencies or franchises with whom
Seller deals in connection with the Business;
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(v) all Contracts relating to the future
disposition or acquisition of any Transferred Assets, other than
dispositions or acquisitions of Inventory in the ordinary course of
business consistent with past practice;
(vi) all collective bargaining or similar labor
Contracts covering any Employee; and
(vii) all other Contracts (other than Benefit
Plans, the Real Property Leases and insurance policies listed in
SECTION 2.18 OF THE DISCLOSURE SCHEDULE) with respect to the Business
that (A) involve the payment or potential payment, pursuant to the
terms of any such Contract, by or to Seller of more than $100,000
annually and (B) cannot be terminated within thirty (30) days after
giving notice of termination without resulting in any material cost or
penalty to Seller.
(b) Each Contract required to be disclosed in SECTION
2.16(a) OF THE DISCLOSURE SCHEDULE is in full force and effect and constitutes a
legal, valid and binding agreement, enforceable in accordance with its terms, of
each party thereto; and except as disclosed in SECTION 2.16(b) OF THE DISCLOSURE
SCHEDULE neither Seller nor, to the Knowledge of Seller, any other party to such
Contract is, or has received notice that it is, in violation or breach of or
default under any such Contract (or with notice or lapse of time or both, would
be in violation or breach of or default under any such Contract) in any material
respect.
(c) Except as disclosed in SECTION 2.16(c) OF THE
DISCLOSURE SCHEDULE, the execution, delivery and performance by Seller of this
Agreement and the Operative Agreements to which it is a party, and the
consummation of the transactions contemplated hereby and thereby, will not (A)
result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (B) result in or give to any
Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (C) result in the creation or
imposition of any Lien upon Seller or any of its Assets and Properties under,
any Business Contract.
2.17. LICENSES. SECTION 1.01(a)(vi) OF THE DISCLOSURE
SCHEDULE contains a true and complete list of all material Licenses used or held
for use in the Business (and all pending applications for any such Licenses),
setting forth the grantor, the grantee, the function and the expiration and
renewal date of each. Prior to the execution of this Agreement, Seller has
delivered to Purchaser true and complete copies of all such Licenses. Except as
disclosed in SECTION 2.17 OF THE DISCLOSURE SCHEDULE:
(i) Seller owns or validly holds in its name all
Licenses that are material, individually or in the aggregate, to the
Business;
(ii) each Business License is valid, binding and
in full force and effect;
(iii) Seller is not, nor has it received any
notice that it is, in default (or with the giving of notice or lapse of
time or both, would be in default) under any Business License; and
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(iv) the execution, delivery and performance by
Seller of this Agreement and the Operative Agreements to which it is a
party, and the consummation of the transactions contemplated hereby and
thereby, will not (A) result in or give to any Person any right of
termination, cancellation, acceleration or modification in or with
respect to, (B) result in or give to any Person any additional rights
or entitlement to increased, additional, accelerated or guaranteed
payments under, or (C) result in the creation or imposition of any Lien
upon Seller or any of its Assets and Properties under, any Business
License.
2.18. INSURANCE. SECTION 2.18 OF THE DISCLOSURE SCHEDULE
contains a true and complete list (including the names and addresses of the
insurers, the names of the Persons to whom such Policies have been issued, the
expiration dates thereof, the annual premiums and payment terms thereof, whether
it is a "claims made" or an "occurrence" policy and a brief description of the
interests insured thereby) of all liability, property, workers' compensation and
other insurance policies currently in effect that insure the Business, the
Employees or the Transferred Assets. Each such insurance policy is valid and
binding and in full force and effect, no premiums due thereunder have not been
paid and Seller has not received any notice of cancellation or termination in
respect of any such policy or is in default thereunder. Such insurance policies
are placed with financially sound and reputable insurers and, in light of the
nature of the Business and the Transferred Assets, are in amounts and have
coverages that are reasonable and customary for Persons engaged in such business
and having such Assets and Properties. Neither Seller nor the Person to whom
such policy has been issued has received notice that any insurer under any
policy referred to in this Section is denying liability with respect to a claim
thereunder or defending under a reservation of rights clause.
2.19. AFFILIATE TRANSACTIONS. Except as disclosed in
SECTION 2.19 OF THE DISCLOSURE Schedule, (i) no officer, director or Affiliate
of Parent or Seller provides or causes to be provided any assets, services or
facilities used or held for use in connection with the Business, and (ii) the
Business does not provide or cause to be provided any assets, services or
facilities to any such officer, director or Affiliate. Except as disclosed in
SECTION 2.19 OF THE DISCLOSURE SCHEDULE, each of the transactions listed in
SECTION 2.19 OF THE DISCLOSURE SCHEDULE is engaged in on an arm's-length basis.
2.20. EMPLOYEES; LABOR RELATIONS. (a) Except as disclosed
in SECTION 2.20 OF THE DISCLOSURE SCHEDULE, (i) no Employee is presently a
member of a collective bargaining unit, and (ii) to the Knowledge of Seller, no
unfair labor practice charge or sex, age, race or other discrimination claim has
been brought during the last five (5) years against Seller with respect to the
conduct of the Business before the NLRB, the EEOC or any other Governmental or
Regulatory Authority, and Seller has not received any notice of any kind
regarding any such unfair labor practice charge or discrimination claim. Since
December 31, 1996, there has been no work stoppage, strike or other concerted
action by employees of Seller engaged in the Business. During that period,
Seller has complied in all material respects with all applicable Laws relating
to the employment of labor, including, without limitation, those relating to
wages, hours and collective bargaining.
(b) Except as disclosed in SECTION 2.20 OF THE
DISCLOSURE SCHEDULE, Seller has filed and/or submitted all documents required of
it as an employer, including, without
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limitation, those required by the NLRA, Title VII, the NERA and federal and/or
state laws regulating the payment of wages and workplace safety. Seller (i) has
paid all wages and other employment-related obligations that are due or (ii) has
duly and fully provided reserves adequate to pay all wages and other employment
related obligations.
(c) Except as disclosed in SECTION 2.20 OF THE
DISCLOSURE SCHEDULE, Seller has not executed any outstanding waivers or
comparable consents regarding the application of the statute of limitations for
any labor and employment-related obligation (and no extensions have been
executed on its behalf).
(d) Except as disclosed in SECTION 2.20 OF THE
DISCLOSURE SCHEDULE, no audits, investigative or other administrative
proceedings or court proceedings are presently pending or, to the Knowledge of
Seller, threatened, with regard to any obligation of Seller as an employer.
(e) Except as disclosed in SECTION 2.20 OF THE
DISCLOSURE SCHEDULE, Seller has not received any written decision, ruling and/or
order from a government agency and/or its representative or a court (and to the
Knowledge of Seller, no such decision, ruling and/or order has been threatened)
related in any way to Seller's obligations as an employer.
(f) Seller has made available (or in the case of
documents received and/or submitted after the Closing Date, will make available)
to Purchaser complete and accurate copies of all collective bargaining
agreements, other agreements and material correspondence relating to or
regarding in any way the relationship between Seller and the union(s)
representing bargaining unit(s) of the Employees.
2.21. ENVIRONMENTAL MATTERS. Seller has obtained all
Licenses which are required under applicable Environmental Laws in connection
with the conduct of the Business or the construction, ownership or operation of
the Transferred Assets. Each of such Licenses is in full force and effect and is
held in the name of Seller. Seller has conducted the Business in compliance in
all material respects with the terms and conditions of all such Licenses and
with any applicable Environmental Law. In addition, except as set forth in that
certain Phase I Environmental Site Assessment dated May 8, 2000 prepared by
Western Technologies, Inc., as Project No. 4180JL160, or as disclosed in SECTION
2.21 OF THE DISCLOSURE SCHEDULE (with paragraph references corresponding to
those set forth below)to the Knowledge of Seller and in all material respects:
(a) No Order has been issued, no Environmental Claim has
been filed, no single penalty in an amount over $50,000 or, multiple penalties
in the aggregate in an amount over $150,000, has been assessed, and no
investigation or review is pending or, to the Knowledge of Seller, threatened by
any Governmental or Regulatory Authority with respect to any alleged failure by
Seller to possess or comply with any License required under applicable
Environmental Laws in connection with the conduct of the Business or with
respect to any generation, treatment, storage, recycling, transportation,
discharge, disposal or Release of any Hazardous Material in connection with the
Business, and to the Knowledge of Seller there are no facts or circumstances in
existence which could reasonably be expected to form the basis for any such
Order, Environmental Claim, penalty or investigation.
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(b) Seller does not own, operate or lease a treatment,
storage or disposal facility on any of the Real Property or the Option Property
requiring a permit under the Resource Conservation and Recovery Act, as amended,
or under any other comparable state or local Law; and, without limiting the
foregoing, (i) no polychlorinated biphenyl is or has been present, (ii) no
asbestos or asbestos-containing material is or has been present, (iii) there are
no underground storage tanks or surface impoundments for Hazardous Materials,
active or abandoned, and (iv) no Hazardous Material has been Released in a
quantity reportable under, or in violation of, any Environmental Law or
otherwise Released, in the cases of clauses (i) through (iv), at, on or under
any such site or facility during any period that Seller owned, operated or
leased such property.
(c) Seller has not transported or arranged for the
transportation of any Hazardous Material in connection with the operation of the
Business to any location that is (i) listed on the NPL under CERCLA, (ii) listed
for possible inclusion on the NPL by the Environmental Protection Agency in
CERCLIS or on any similar state or local list or (iii) the subject of
enforcement actions by federal, state or local Governmental or Regulatory
Authorities that may lead to Environmental Claims against Seller or the
Business.
(d) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by, or that are in
the possession of, Seller in relation to any site or facility now or previously
owned, operated or leased by Seller on any of the Real Property which have not
been delivered to Purchaser prior to the execution of this Agreement.
2.22. INVENTORY. All the Inventory consists of a quality
and quantity usable and salable in the ordinary course of business consistent
with past practice, subject to normal and customary allowances in the industry
for spoilage, damage and outdated items. All items included in the Inventory are
the property of Seller, free and clear of any Lien other than Permitted Liens,
have not been pledged as collateral, are not held by Seller on consignment from
others and conform in all material respects to all standards applicable to such
inventory or its use or sale imposed by Governmental or Regulatory Authorities.
2.23. VEHICLES. To the Knowledge of Seller, SECTION
1.01(a)(vii) OF THE DISCLOSURE SCHEDULE contains a true and complete list of all
motor vehicles owned or leased by Seller or Parent and used or held for use in
the conduct of the Business. Except as disclosed in SECTION 2.24 OF THE
DISCLOSURE SCHEDULE, to the Knowledge of Seller, Seller has good and valid title
to, or has valid leasehold interests in or valid rights under Contract to use,
each Vehicle, free and clear of all Liens other than Permitted Liens.
2.24. NO GUARANTEES. With the exception of guarantees by
Parent of certain Indebtedness of Seller, none of the Liabilities of the
Business or of Seller incurred in connection with the conduct of the Business in
an amount over $200,000 is guaranteed by or subject to a similar contingent
obligation of any other Person, nor has Seller guaranteed or become subject to a
similar contingent obligation in respect of the Liabilities of any customer,
supplier or other Person to whom Seller sells goods or provides services in the
conduct of the Business or with whom Seller otherwise has significant business
relationships in the conduct of the Business.
2.25. ENTIRE BUSINESS. The sale of the Transferred Assets
by Seller to Purchaser pursuant to this Agreement will effectively convey to
Purchaser the entire Business and all of the
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tangible and intangible property used by Seller (whether owned, leased or held
under license by Seller, by any of Seller's Affiliates or by others) in
connection with the conduct of the Business as heretofore conducted by Seller
(except for the Excluded Assets and subject to SECTION 1.09), including, without
limitation, all tangible Transferred Assets and Properties of Seller reflected
in the Seller Consolidating Statements and all Transferred Assets and Properties
acquired since the Annual Financial Statement Date in the conduct of the
Business, other than the Excluded Assets and Transferred Assets and Properties
disposed of since such date, consistent with SECTION 2.06. Except as disclosed
in SECTION 2.26 OF THE DISCLOSURE SCHEDULE, there are no shared facilities or
services which are used in connection with any business or other operations of
Seller or any of Seller's Affiliates other than the Business.
2.26. SOLVENCY; SUFFICIENT CAPITAL.
(a) After giving effect to the transactions contemplated
by this Agreement and the payment of fees and expenses in connection therewith:
(i) the fair saleable value of all of the assets
(including goodwill) of Seller, taken as a whole, will be greater than
the total amount of liabilities, including contingent, subordinated,
absolute, fixed, matured or unmatured and liquidated or unliquidated
liabilities, of Seller, taken as a whole; and
(ii) the projected cash flow from operating
activities of Seller is sufficient to pay the probable liability of
Seller on its existing debts as such debts become due and payable.
(b) Seller currently pays its debts and other
liabilities, contingent obligations and other commitments as they become due and
payable in the normal course of business. Seller is not engaged, and is not
about to engage, in business or transactions for which it has unreasonably small
capital.
2.27. BROKERS. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by Parent and
Seller directly with Purchaser without the intervention of any Person on behalf
of Parent or Seller in such manner as to give rise to any valid claim by any
Person against Purchaser for a finder's fee, brokerage commission or similar
payment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
3.01. ORGANIZATION. Purchaser is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Nevada. Purchaser has full corporate power and authority to enter into this
Agreement and the Operative Agreements to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.
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3.02. AUTHORITY. The execution and delivery by Purchaser of
this Agreement and the Operative Agreements to which it is a party, and the
performance by Purchaser of its obligations hereunder and thereunder, have been
duly and validly authorized by the Board of Directors of Purchaser, no other
corporate action on the part of Purchaser or its stockholders being necessary.
This Agreement has been duly and validly executed and delivered by Purchaser and
constitutes, and upon the execution and delivery by Purchaser of the Operative
Agreements to which it is a party, such Operative Agreements will constitute,
legal, valid and binding obligations of Purchaser enforceable against Purchaser
in accordance with their terms.
3.03. NO CONFLICTS. The execution and delivery by Purchaser
of this Agreement do not, and the execution and delivery by Purchaser of the
Operative Agreements to which it is a party, the performance by Purchaser of its
obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of
any of the terms, conditions or provisions of the articles of incorporation or
by-laws (or other comparable corporate charter document) of Purchaser;
(b) subject to obtaining the consents, approvals and
actions, making the filings and giving the notices disclosed in SECTION 3.04 OF
THE DISCLOSURE SCHEDULE, conflict with or result in a violation or breach of any
term or provision of any Law or Order applicable to Purchaser, its Affiliates or
any of their respective Assets and Properties; or
(c) except as disclosed in SECTION 3.03 OF THE DISCLOSURE
SCHEDULE, (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require Purchaser or any of its Affiliates to obtain any consent, approval
or action of, make any filing with or give any notice to any Person as a result
or under the terms of, or (iv) result in the creation or imposition of any Lien
upon Purchaser, its Affiliates or any of their respective Assets or Properties
under, any Contract or License to which Purchaser or any of its Affiliates is a
party or by which any of their respective Assets and Properties is bound.
3.04. GOVERNMENTAL APPROVALS AND FILINGS. Except as
disclosed in SECTION 3.04 OF THE DISCLOSURE SCHEDULE, no consent, approval or
action of, filing with or notice to any Governmental or Regulatory Authority on
the part of Purchaser is required in connection with the execution, delivery and
performance of this Agreement or the Operative Agreements to which it is a party
or the consummation of the transactions contemplated hereby or thereby.
3.05. LEGAL PROCEEDINGS. There are no Actions or
Proceedings pending or, to the Knowledge of Purchaser, threatened against,
relating to or affecting Purchaser or any of its Assets and Properties which
could reasonably be expected to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or any of the Operative
Agreements.
3.06. BROKERS. Except for Wasserstein Perella & Co., whose
fees, commissions and expenses are the sole responsibility of Purchaser and/or
its Affiliates, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by Purchaser
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or its Affiliates directly with Seller without the intervention of any Person on
behalf of Purchaser or its Affiliates in such manner as to give rise to any
valid claim by any Person against Seller for a finder's fee, brokerage
commission or similar payment.
ARTICLE IV
COVENANTS OF PARENT AND SELLER
Parent and Seller jointly and severally covenant and agree
with Purchaser that, at all times from and after the date hereof until the
Closing and, with respect to any covenant or agreement by its terms to be
performed in whole or in part after the Closing, for the period specified
therein or, if no period is specified therein, indefinitely, Parent and Seller
will comply with all covenants and provisions of this ARTICLE IV, except to the
extent Purchaser may otherwise consent in writing.
4.01. REGULATORY AND OTHER APPROVALS. Parent and Seller
will, as promptly as practicable, (a) take all commercially reasonable steps
necessary or desirable to obtain all consents, approvals or actions of, make all
filings with and give all notices to Governmental or Regulatory Authorities or
any other Person required of Seller to consummate the transactions contemplated
hereby and by the Operative Agreements, including, without limitation, those
described in SECTIONS 2.03 AND 2.04 OF THE DISCLOSURE SCHEDULE, (b) provide such
other information and communications to such Governmental or Regulatory
Authorities or other Persons as Purchaser or such Governmental or Regulatory
Authorities or other Persons may reasonably request in connection therewith and
(c) cooperate with Purchaser in connection with the performance of its
obligations under SECTIONS 5.01 and 5.02. Parent and Seller will provide prompt
notification to Purchaser when any such consent, approval, action, filing or
notice referred to in clause (a) above is obtained, taken, made or given, as
applicable, and will advise Purchaser of any communications (and, unless
precluded by Law, provide copies of any such communications that are in writing)
with any Governmental or Regulatory Authority or other Person regarding any of
the transactions contemplated by this Agreement or any of the Operative
Agreements.
4.02. HSR FILINGS. In addition to and not in limitation of
Parent's and Seller's covenants contained in SECTION 4.01, Parent and Seller
will (a) take promptly all actions necessary to make the filings required of
Seller or its Affiliates under the HSR Act, (b) comply at the earliest
practicable date with any request for additional information received by Seller
or its Affiliates from the Federal Trade Commission or the Antitrust Division of
the Department of Justice pursuant to the HSR Act and (c) cooperate with
Purchaser in connection with Purchaser's filing under the HSR Act and in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated by this Agreement commenced by either the Federal
Trade Commission or the Antitrust Division of the Department of Justice or state
attorneys general.
4.03. INVESTIGATION BY PURCHASER. Parent and Seller will
(a) provide Purchaser and any Person who is considering providing financing to
Purchaser to finance all or any portion of the Purchase Price and their
respective officers, directors, employees, agents, counsel,
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accountants, financial advisors, consultants and other representatives
(collectively, "REPRESENTATIVES") with full access, upon reasonable prior notice
and during normal business hours, to the Employees and such other officers,
employees and agents of Seller who have any responsibility for the conduct of
the Business, to Seller's accountants and to the Transferred Assets, and (b)
furnish Purchaser and such other Persons with all such information and data
(including, without limitation, copies of Business Contracts, Business Licenses,
Benefit Plans and other Business Books and Records) concerning the Business, the
Transferred Assets and the Assumed Liabilities as Purchaser or any of such other
Persons reasonably may request in connection with such investigation.
4.04. NO SOLICITATIONS. Neither Parent nor Seller will
take, nor will it permit any Affiliate thereof (or authorize or permit any
investment banker, financial advisor, attorney, accountant or other Person
retained by or acting for or on behalf of Parent or Seller or any such
Affiliate) to take, directly or indirectly, any action to solicit, encourage,
receive, negotiate, assist or otherwise facilitate (including by furnishing
confidential information with respect to the Business or permitting access to
the Assets and Properties and Books and Records of Seller) any offer or inquiry
from any Person concerning the direct or indirect acquisition of the Assets or
the Business by any Person other than Purchaser or its Affiliates. If Parent,
Seller or any such Affiliate (or any such Person acting for or on their behalf)
receives from any Person any offer, inquiry or informational request referred to
above, Parent and Seller will promptly advise such Person, by written notice, of
the terms of this SECTION 4.04 and will promptly, orally and in writing, advise
Purchaser of such offer, inquiry or request and deliver a copy of such offer,
inquiry or request to Purchaser.
4.05. CONDUCT OF BUSINESS. Seller will operate, and Parent
will cause Seller to operate, the Business only in the ordinary course and
consistent with past practice.
4.06. FINANCIAL STATEMENTS AND REPORTS; FILINGS.
(a) As promptly as practicable and in any event no later
than ten (10) days after the end of each calendar month ending after the date
hereof and before the Closing Date, or ninety (90) days after the end of each
fiscal year ending after the date hereof and before the Closing Date, as the
case may be, Seller will deliver, and Parent will cause Seller to deliver, to
Purchaser true and complete copies of the unaudited balance sheet, and the
related unaudited statement of operations, of Seller, as of and for the fiscal
year then ended or as of and for the calendar month and the portion of the
fiscal year then ended, as the case may be, together with the notes, if any,
relating thereto, which financial statements shall be prepared on a basis
consistent with the Seller Consolidating Statements. As promptly as practicable
and in any event no later than 90 days after the end of each fiscal year ending
after the date hereof and before the Closing Date, Parent shall also deliver to
Purchaser true and complete copies of the audited consolidated balance sheets of
Parent and the related audited consolidated statement of operations for each of
the fiscal years then ended, together with a true and correct copy of the report
on such audited information by Deloitte & Touche LLP, and all letters from such
accountants with respect to the results of such audits, along with all unaudited
consolidating statements supporting the aforementioned audited financial
statements. In addition, Seller shall, and Parent shall cause Seller to, make
Representatives of Seller's management reasonably available upon request of
Purchaser to discuss Seller's operation of the Business.
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(b) As promptly as practicable, Seller will deliver, and
Parent will cause Seller to deliver, to Purchaser true and complete copies of
such other financial statements, reports and analyses relating to the Business
as may be prepared or received by Seller, or as Purchaser may otherwise
reasonably request. Purchaser shall reimburse Seller for actual out-of-pocket
costs incurred for fees and expenses of outside professionals in the preparation
of such items as are requested by Purchaser.
(c) As promptly as practicable, Seller will deliver, and
Parent will cause Seller to deliver, copies of all License applications and
other filings made by Seller in connection with the operation of the Business
after the date hereof and before the Closing Date with any Governmental or
Regulatory Authority (other than routine, recurring filings made in the ordinary
course of business consistent with past practice).
4.07. EMPLOYEE MATTERS.
(a) Seller will administer, and Parent will cause Seller
to administer, each Benefit Plan, or cause the same to be so administered, in
all material respects in accordance with the applicable provisions of the Code,
ERISA and all other applicable Laws. Seller will promptly notify, and Parent
will cause Seller to promptly notify, Purchaser in writing of each receipt by
Seller (and furnish Purchaser with copies) of any notice of investigation or
administrative proceeding by the IRS, Department of Labor, PBGC or other Person
involving any Benefit Plan.
(b) Seller shall, and Parent shall cause Seller to, fully
comply with all Laws governing and/or regulating the termination of the
employment relationship and satisfy all obligations as an employer, including,
without limitation, those imposed by WARN, ERISA, COBRA, IRCA, OSHA, Title VII,
the NLRA and any state or federal law and/or regulation regulating wages, hours
and/or working conditions of current and/or former employees, including, without
limitation, applicants, retirees and those who in the future could be classified
as such. Seller shall, and Parent shall cause Seller to, deliver all appropriate
notices required under WARN no later than ten (10) days after the date of this
Agreement (or such other date as Purchaser shall approve in its sole and
absolute discretion).
4.08. CERTAIN RESTRICTIONS. Except as required by
applicable Laws, Seller will refrain from, and Parent will cause Seller to
refrain from:
(a) disposing of any Assets and Properties used or held
for use in the conduct of the Business, other than Inventory in the ordinary
course of business consistent with past practice and other dispositions not
exceeding $100,000 in the aggregate, or creating or incurring any Lien, other
than a Permitted Lien, on any Assets and Properties used or held for use in the
conduct of the Business;
(b) entering into, amending, modifying, terminating
(partially or completely), granting any waiver under or giving any consent with
respect to any Business Contract or any material Business License without
Purchaser's prior written consent, which consent shall not be unreasonably
withheld or delayed;
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(c) violating, breaching or defaulting under in any
material respect, or taking or failing to take any action that (with or without
notice or lapse of time or both) would constitute a material violation or breach
of, or default under, any term or provision of any Business Contract or any
Business License;
(d) incurring, purchasing, canceling, prepaying or
otherwise providing for a complete or partial discharge in advance of a
scheduled payment date with respect to, or waiving any right of Seller under,
any Liability of or owing to Seller in connection with the Business, other than
in the ordinary course of business consistent with past practice;
(e) engaging with any Person in any Business Combination;
(f) engaging in any transaction with respect to the
Business with any officer, director or Affiliate of Seller, either outside the
ordinary course of business consistent with past practice or other than on an
arm's-length basis;
(g) making capital expenditures or commitments for
additions to property, plant or equipment constituting capital assets on behalf
of the Business in an aggregate amount exceeding $2,000,000 except upon receipt
of the written consent of Purchaser; or
(h) entering into any Contract to do or engage in any of
the foregoing.
4.09. DELIVERY OF BOOKS AND RECORDS, ETC.; REMOVAL OF
PROPERTY.
(a) On the Closing Date, Seller will deliver or make
available, and Parent will cause Seller to deliver or make available, to
Purchaser at the location at which the Business is conducted all of the Business
Books and Records and such other Transferred Assets as are in Seller's
possession at other locations, and if at any time after the Closing Seller
discovers in its possession or under its control any other Business Books and
Records or other Transferred Assets, it will forthwith deliver such Business
Books and Records or other Transferred Assets to Purchaser. Purchaser shall
cooperate and afford Seller, its counsel and its accountants, during normal
business hours, reasonable access to the Business Books and Records
(b) Within sixty (60) days after the Closing Date, Seller
shall remove, and Parent shall cause Seller to remove, all Assets and Properties
not being sold to Purchaser hereunder from the Real Property and Improvements.
Such removal shall be at the sole cost and risk of Seller, including risk of
loss and damage to such Assets and Properties. Purchaser shall have no liability
to Seller with respect to such removal and transportation. Parent and Seller
shall be responsible for all repairs to the Real Property and Improvements due
to damage caused by Seller and its employees and agents in connection with the
removal of Seller's Assets and Properties.
4.10. NONCOMPETITION.
(a) Parent, Seller, Paul W. Lowden, David G. Lowden and
Christopher W. Lowden will, for a period of three (3) years from the Closing
Date, refrain from, either alone or in conjunction with any other Person, or
directly or indirectly through any of their present or future Affiliates:
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(i) causing or attempting to cause (A) any
client, customer or supplier of the Business to terminate or materially
reduce its business with Purchaser or any of its Affiliates (PROVIDED
that Seller shall be entitled to engage in general, non-directed
advertising so long as such advertising is one of general circulation
and is not prepared or circulated utilizing the Customer Lists of the
Business or any other confidential or secret information relating to
the Business); or (B) any officer, Employee or consultant of Purchaser
or any of its Affiliates engaged in the Business to resign or sever a
relationship with Purchaser or any of its Affiliates;
(ii) disclosing (unless compelled by judicial or
administrative process) or using any confidential or secret information
relating to the Business or any client, customer or supplier of the
Business; or
(iii) directly or indirectly, engaging, or
participating in, or having any interest as a shareholder, partner,
joint venturer, proprietor, employee, officer, director, agent,
security holder, creditor or consultant, or in any other capacity
(other than through the ownership of 5% or less of any class of
securities registered under the Securities Exchange Act of 1934, as
amended), or having any other direct or indirect financial interest in
or in connection with, the business or operations of any business,
firm, person, partnership, corporation, enterprise or concern, which
owns or operates a hotel/casino within (A) the area commonly known as
the "Summerlin" planned community development as it exists on the date
of this Agreement, and (B) a five (5) mile radius of the location of
the Business (with the exception of (I) the Las Vegas Strip (which is
defined as that area bounded by Paradise Road and straight extensions
thereof on the East, Charleston Boulevard on the North, I-15 on the
West, and Sunset Road on the South) and (II) Downtown Las Vegas (which
is defined as that area bounded by Eastern Avenue and straight
extensions thereof on the East, I-515 (U.S. Highway 93/95) on the
North, I-15 on the West, and Charleston Boulevard on the South)).
(b) The parties hereto recognize that the Laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in this
Section. It is the intention of the parties that the provisions of this Section
be enforced to the fullest extent permissible under the Laws and policies of
each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such Laws or policies) of
any provisions of this Section shall not render unenforceable, or impair, the
remainder of the provisions of this Section. Accordingly, if any provision of
this Section shall be determined to be invalid or unenforceable, such invalidity
or unenforceability shall be deemed to apply only with respect to the operation
of such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction. If any of the
covenants contained in this SECTION 4.10, or any part thereof, is held to be
unenforceable because of the duration of such provisions or the area covered
thereby, Seller and Parent agree that the court making such determination shall
have the power to reduce the duration and the area or both of any such provision
and, in its reduced form, said provision shall then be enforceable. The parties
hereto intend to and hereby confer jurisdiction to enforce the covenants
contained in this SECTION 4.10 upon the courts of any Nevada within the
geographical scope of such covenants.
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(c) The parties hereto acknowledge and agree that any
remedy at Law for any breach of the provisions of this SECTION 4.10 would be
inadequate, and Parent and Seller hereby consent to the granting by any court of
an injunction or other equitable relief, without the necessity of actual
monetary loss being proved, in order that the breach or threatened breach of
such provisions may be effectively restrained. Parent and Seller acknowledge and
agree that the scope and duration of the provisions of this SECTION 4.10 are
reasonable in all respects.
(d) The provisions of this SECTION 4.10 are intended to
supplement and not supercede or contradict in any manner the terms, conditions,
covenants and agreements contained in that certain Non-Competition Agreement
dated as of November 15, 1999, as amended, by and among Seller, Parent,
Purchaser and the various other parties thereto (the "NON-COMPETITION
AGREEMENT"). To the extent that any provision contained in this SECTION 4.10
conflicts with any provision contained in the Non-Competition Agreement in such
a manner as to directly contradict the terms and conditions contained in the
Non-Competition Agreement, the terms of the Non-Competition Agreement shall
control.
4.11. NOTICE AND CURE. Seller will notify, and Parent shall
cause Seller to notify, Purchaser in writing (where appropriate, through updates
to the Disclosure Schedule) of, and contemporaneously will provide Purchaser
with true and complete copies of any and all information or documents relating
to, and will use all commercially reasonable efforts to cure before the Closing,
any event, transaction or circumstance, as soon as practicable after it becomes
Known to Seller, occurring after the date of this Agreement that causes any
covenant or agreement of Seller under this Agreement to be breached or that
renders untrue any representation or warranty of Seller contained in this
Agreement as if the same were made on or as of the date of such event,
transaction or circumstance. No notice given pursuant to this Section shall have
any effect on the representations, warranties, covenants or agreements contained
in this Agreement for purposes of determining satisfaction of any condition
contained herein or shall in any way limit Purchaser's right to seek indemnity
under ARTICLE XI.
4.12. FULFILLMENT OF CONDITIONS. Parent and Seller will
execute and deliver, and Parent will cause Seller to execute and deliver, at the
Closing each Operative Agreement that Parent or Seller is required hereby to
execute and deliver as a condition to the Closing, will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each other condition to the obligations of Purchaser contained in
this Agreement and will not take or fail to take any action that could
reasonably be expected to result in the nonfulfillment of any such condition.
4.13. BAGGAGE. At the Transfer Time, an authorized
representative of Seller shall perform, and Parent shall cause Seller to
perform, the following functions for all baggage, trunks and other property that
was checked and placed in the care of Seller at the Property: (i) seal all
pieces of baggage with tape: (ii) prepare an inventory ("INVENTORIED BAGGAGE")
of such items indicating the check number applicable thereto; and (iii) deliver
the Inventoried Baggage to an authorized representative of Purchaser and secure
a receipt for the Inventoried Baggage. Thereafter, Purchaser shall be
responsible for such Inventoried Baggage.
4.14. SAFE DEPOSITS. On or before the Transfer Time, Seller
shall remove, and Parent shall cause Seller to remove, all items stored by
Seller, Parent or any of their respective
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Affiliates in safe deposit boxes located at the Property, and all such safe
deposit boxes shall be made available for Purchaser's use thereafter. Safe
deposit boxes in use by customers at the Property at the Transfer Time will be
sealed in a reasonable manner mutually agreeable to Purchaser and Seller. At the
Transfer Time, Purchaser and Seller shall designate in writing their initial
safe deposit representatives. Representatives of both Seller and Purchaser are
to be present when a seal is broken. Seller will make a representative available
within one (1) hour after Purchaser notifies Seller that the representative is
required. Purchaser shall have no responsibility for loss or theft from a safe
deposit box whose seal was broken in the presence of Seller's representative.
All safe deposit keys, combinations and records shall be delivered at the
Transfer Time to Purchaser.
4.15. VALET PARKING. At the Transfer Time, an authorized
representative of Seller shall perform, and Parent shall cause Seller to
perform, the following functions for all motor vehicles that were checked and
placed in the care of Seller at the Property: (i) mark all motor vehicles with a
sticker or tape; (ii) prepare an inventory of such vehicles ("INVENTORIED
VEHICLES") indicating the check number applicable thereto; and (iii) transfer
control of the Inventoried Vehicles to an authorized representative of Purchaser
and secure a receipt for the Inventoried Vehicles. Thereafter, Purchaser shall
be responsible for the Inventoried Vehicles.
4.16. ESTOPPEL CERTIFICATES. Seller shall, and Parent shall
cause Seller to, use commercially reasonable efforts to deliver to Purchaser
customary tenant estoppel certificates signed by all tenants under Real Property
Leases.
4.17. COMPUTER EQUIPMENT. For a period of thirty (30) days
following the Closing, Seller shall, and Parent shall cause Seller to, permit
Purchaser to use, and assist Purchaser in the use of, any and all Computer
Equipment necessary or appropriate to the operation of the Business pending
Purchaser's transition to Purchaser's own computer systems.
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller that, at all times
from and after the date hereof until the Closing, Purchaser will comply with all
covenants and provisions of this ARTICLE V, except to the extent Seller may
otherwise consent in writing.
5.01. REGULATORY AND OTHER APPROVALS. Purchaser will, as
promptly as practicable, (a) take all commercially reasonable steps necessary or
desirable to obtain all consents, approvals or actions of, make all filings with
and give all notices to Governmental or Regulatory Authorities or any other
Person required of Purchaser to consummate the transactions contemplated hereby
and by the Operative Agreements, including, without limitation, those described
in SECTIONS 3.03 AND 3.04 OF THE DISCLOSURE SCHEDULE, (b) provide such other
information and communications to such Governmental or Regulatory Authorities or
other Persons as Seller or such Governmental or Regulatory Authorities or other
Persons may reasonably request in connection therewith and (c) cooperate with
Seller in connection with the performance of its obligations under SECTIONS 4.01
and 4.02. Purchaser will provide prompt
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notification to Seller when any such consent, approval, action, filing or notice
referred to in clause (a) above is obtained, taken, made or given, as
applicable.
5.02. HSR FILINGS. In addition to and without limiting
Purchaser's covenants contained in SECTION 5.01, Purchaser will (i) take
promptly all actions necessary to make the filings required of Purchaser or its
Affiliates under the HSR Act, (ii) comply at the earliest practicable date with
any request for additional information received by Purchaser or its Affiliates
from the Federal Trade Commission or the Antitrust Division of the Department of
Justice pursuant to the HSR Act, (iii) cooperate with Seller in connection with
Seller's filing under the HSR Act and in connection with resolving any
investigation or other regulatory inquiry concerning the transactions
contemplated by this Agreement commenced by either the Federal Trade Commission
or the Antitrust Division of the Department of Justice or state attorneys
general, and (iv) pay any and all filing fees due and payable in connection
therewith.
5.03. NOTICE AND CURE. Purchaser will notify Seller in
writing of, and contemporaneously will provide Seller with true and complete
copies of any and all information or documents relating to, and will use all
commercially reasonable efforts to cure before the Closing, any event,
transaction or circumstance, as soon as practicable after it becomes known to
Purchaser, occurring after the date of this Agreement that causes any covenant
or agreement of Purchaser under this Agreement to be breached or that renders
untrue any representation or warranty of Purchaser contained in this Agreement
as if the same were made on or as of the date of such event, transaction or
circumstance. No notice given pursuant to this Section shall have any effect on
the representations, warranties, covenants or agreements contained in this
Agreement for purposes of determining satisfaction of any condition contained
herein or shall in any way limit Seller's right to seek indemnity under ARTICLE
XI.
5.04. FULFILLMENT OF CONDITIONS. Purchaser will execute and
deliver at the Closing each Operative Agreement that Purchaser is hereby
required to execute and deliver as a condition to the Closing, will take all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy each other condition to the obligations of Seller
contained in this Agreement and will not take or fail to take any action that
could reasonably be expected to result in the nonfulfillment of any such
condition.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the
Transferred Assets and to assume and to pay, perform and discharge the Assumed
Liabilities are subject to the fulfillment, at or before the Closing, of each of
the following conditions (all or any of which may be waived in whole or in part
by Purchaser in its sole discretion):
6.01. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by Parent and Seller in this Agreement
(other than those made as of a specified date earlier than the Closing Date)
shall be true and correct in all material respects on and as of the Closing Date
as though such representation or warranty was made on and as of the Closing
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Date, and any representation or warranty made as of a specified date earlier
than the Closing Date shall have been true and correct in all material respects
on and as of such earlier date.
6.02. PERFORMANCE. Parent and Seller shall have performed
and complied with, in all material respects, each agreement, covenant and
obligation required by this Agreement to be so performed or complied with by
Parent and Seller at or before the Closing.
6.03. OFFICERS' CERTIFICATES. Seller shall have delivered
to Purchaser a certificate, dated the Closing Date and executed in the name and
on behalf of Seller by the Chairman of the Board, the President or any Executive
or Senior Vice President of Seller, substantially in the form and to the effect
of EXHIBIT C hereto, and a certificate, dated the Closing Date and executed by
the Secretary or any Assistant Secretary of Seller, substantially in the form
and to the effect of EXHIBIT D hereto. Parent shall have delivered to Purchaser
a certificate, dated the Closing Date and executed in the name and on behalf of
Parent by the Chairman of the Board, the President or any Executive or Senior
Vice President of Parent, substantially in the form and to the effect of EXHIBIT
E hereto, and a certificate, dated the Closing Date and executed by the
Secretary or any Assistant Secretary of Parent, substantially in the form and to
the effect of EXHIBIT F hereto.
6.04. ORDERS AND LAWS. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement or any of the Operative Agreements or which could reasonably be
expected to otherwise result in a material diminution of the benefits of the
transactions contemplated by this Agreement or any of the Operative Agreements
to Purchaser, and there shall not be pending on the Closing Date any Action or
Proceeding in, before or by any Governmental or Regulatory Authority which could
reasonably be expected to result in the issuance of any such Order or the
enactment, promulgation or deemed applicability to Purchaser or the transactions
contemplated by this Agreement or any of the Operative Agreements of any such
Law.
6.05. REGULATORY CONSENTS AND APPROVALS.
(a) All consents, approvals and actions of, filings with
and notices to any Governmental or Regulatory Authority (including, without
limitation, the Nevada Gaming Commission or any other gaming authority
exercising jurisdiction over Purchaser and its Affiliates) necessary to permit
Purchaser, Parent and Seller to perform their obligations under this Agreement
and the Operative Agreements and to consummate the transactions contemplated
hereby and thereby (i) shall have been duly obtained, made or given, (ii) shall
be in form and substance reasonably satisfactory to Purchaser, (iii) shall not
be subject to the satisfaction of any condition that has not been satisfied or
waived, and (iv) shall be in full force and effect, and all terminations or
expirations of waiting periods imposed by any Governmental or Regulatory
Authority necessary for the consummation of the transactions contemplated by
this Agreement and the Operative Agreements, including under the HSR Act, shall
have occurred.
(b) All consents, approvals and actions of, filings with
and notices to any Governmental or Regulatory Authority necessary to permit
Purchaser to perform its obligations under this Agreement and the Operative
Agreements and to consummate the transactions
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contemplated hereby and thereby, (i) shall have been duly obtained, made or
given, (ii) shall not be subject to the satisfaction of any condition that has
not been satisfied or waived, and (iii) shall be in full force and effect, and
all terminations or expirations of waiting periods imposed by any Governmental
or Regulatory Authority necessary for the consummation of the transactions by
Purchaser contemplated by this Agreement and the Operative Agreements shall have
occurred.
6.06. THIRD PARTY CONSENTS. In all material respects, the
consents (or in lieu thereof waivers) (i) listed in SECTION 6.06 OF THE
DISCLOSURE SCHEDULE and (ii) all other consents (or in lieu thereof waivers) to
the performance by Purchaser, Parent and Seller of their obligations under this
Agreement and the Operative Agreements or to the consummation of the
transactions contemplated hereby and thereby as are required under any Contract
to which Purchaser or Seller is a party or by which any of their respective
Assets and Properties are bound (a) shall have been obtained, (b) shall be in
form and substance reasonably satisfactory to Purchaser, (c) shall not be
subject to the satisfaction of any condition that has not been satisfied or
waived and (d) shall be in full force and effect, except (in the case of clause
(ii) above) where the failure to obtain any such consent (or in lieu thereof
waiver) could not reasonably be expected, individually or in the aggregate with
other such failures, to materially adversely affect Purchaser, the Transferred
Assets, the Assumed Liabilities or the Business or otherwise result in a
material diminution of the benefits of the transactions contemplated by this
Agreement and the Operative Agreements to Purchaser.
6.07. OPINION OF COUNSEL. Purchaser shall have received the
opinion of Gordon & Silver, Ltd., counsel to Parent and Seller, dated the
Closing Date, in form and substance reasonably satisfactory to Purchaser.
6.08. PERSONAL PROPERTY LEASES. For each of the leases of
personal property and equipment described in SECTION 6.08(i) OF THE DISCLOSURE
SCHEDULE, prior to the Closing Date, Seller shall, and Parent shall cause Seller
to pay in full and take any and all actions necessary to perform all payment
obligations under such leases and to effect the complete discharge, termination
and release of all such leases as is necessary to convey to Purchaser upon the
Closing Date good and valid fee title to all such personal property subject to
such leases, free and clear of all Liens (other than Permitted Liens), in good
working order and condition, ordinary wear and tear excepted. For each of the
leases of personal property and equipment described in SECTION 6.08(ii) OF THE
DISCLOSURE SCHEDULE, prior to the Closing Date, Seller shall, and Parent shall
cause Seller to, assign to Purchaser such leases (and Purchaser shall assume
such leases), and Purchaser shall receive a credit against the Purchase Price in
the amount of the net present value of the aggregate outstanding payments
remaining on such leases, discounted at a rate of 10% per annum.
6.09. DELIVERIES. Parent and Seller shall have delivered to
Purchaser all of the Operative Agreements to be executed by such parties.
6.10. ABSENCE OF CHANGES. There shall have occurred no
material adverse change, or any event or development, which individually or
together with other such events, could be reasonably expected to result in a
material adverse change, in the Condition of the Business.
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6.11. PROCEEDINGS. All proceedings to be taken on the part
of Parent and Seller in connection with the transactions contemplated by this
Agreement and all documents incident thereto shall be reasonably satisfactory in
form and substance to Purchaser, and Purchaser shall have received copies of all
such documents and other evidences as Purchaser may reasonably request in order
to establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller hereunder to sell the Transferred
Assets are subject to the fulfillment, at or before the Closing, of each of the
following conditions (all or any of which may be waived in whole or in part by
Seller in its sole discretion):
7.01. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by Purchaser in this Agreement shall be true
and correct in all material respects on and as of the Closing Date as though
such representation or warranty was made on and as of the Closing Date.
7.02. PERFORMANCE. Purchaser shall have performed and
complied with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by Purchaser at
or before the Closing, including, without limitation, payment of the Purchase
Price.
7.03. OFFICERS' CERTIFICATES. Purchaser shall have
delivered to Seller a certificate, dated the Closing Date and executed in the
name and on behalf of Purchaser by the Chairman of the Board, the President or
any Executive Vice President of Purchaser, substantially in the form and to the
effect of EXHIBIT G hereto, and a certificate, dated the Closing Date and
executed by the Secretary or any Assistant Secretary of Purchaser, substantially
in the form and to the effect of EXHIBIT H hereto.
7.04. ORDERS AND LAWS. There shall not be in effect on the
Closing Date any Order or Law that became effective after the date of this
Agreement restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Operative Agreements.
7.05. REGULATORY CONSENTS AND APPROVALS. All consents,
approvals and actions of, filings with and notices to any Governmental or
Regulatory Authority (including, without limitation, the Nevada Gaming
Authorities) necessary to permit Parent and Seller to perform their respective
obligations under this Agreement and the Operative Agreements and to consummate
the transactions contemplated hereby and thereby (a) shall have been duly
obtained, made or given, (b) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived, (c) shall be in full force and
effect, and (d) all terminations or expirations of waiting periods imposed by
any Governmental or Regulatory Authority under WARN and the HSR Act shall have
occurred.
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7.06. THIRD PARTY CONSENTS. All consents (or in lieu
thereof waivers) to the performance by Seller of its obligations hereunder and
to the consummation of the transactions contemplated hereby as are required
under the Contracts listed in SECTION 7.06 OF THE DISCLOSURE SCHEDULE (a) shall
have been obtained, (b) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and (c) shall be in full force
and effect.
7.07. DELIVERIES. Purchaser shall have delivered to Seller
the Assumption Agreement and the other Assumption Instruments.
7.08. PROCEEDINGS. All proceedings to be taken on the part
of Purchaser in connection with the transactions contemplated by this Agreement
and all documents incident thereto shall be reasonably satisfactory in form and
substance to Seller, and Seller shall have received copies of all such documents
and other evidences as Seller may reasonably request in order to establish the
consummation of such transactions and the taking of all proceedings in
connection therewith.
ARTICLE VIII
TAX MATTERS AND POST-CLOSING TAXES
8.01. TAXES.
(a) Seller shall pay, and Parent shall cause Seller to
pay, all sales, use, withholding, gaming, transfer, real property transfer,
recording, gains, stock transfer and other similar taxes and fees relating to
the pre-closing period or accruing upon the Closing Date ("TRANSFER TAXES")
arising out of or in connection with the transactions effected pursuant to this
Agreement, and shall indemnify, defend, and hold harmless Purchaser on an
after-Tax basis with respect to such Transfer Taxes. Seller shall file, and
Parent shall cause Seller to file, all necessary documentation and Returns with
respect to such Transfer Taxes.
(b) Seller shall be and remain liable for any fees or
taxes due pursuant to NRS Chapter 463 which accrue prior to the Closing Date,
including, without limitation, liability for payment of any fees or taxes due
pursuant to any subsequent deficiency determinations made under such Chapter
which relate to any period of time prior to the Closing Date.
8.02. INTENTIONALLY OMITTED.
8.03. PRE-CLOSING TAXES. Seller shall, and Parent shall
cause Seller to, timely prepare and file all Tax Returns for taxable periods
ending on or before the Closing Date ("PRE-CLOSING TAX RETURNS"). Seller shall
timely pay or cause to be paid all Taxes related to Pre-Closing Tax Returns
("PRE-CLOSING TAXES").
8.04. TAX INDEMNIFICATION.
(a) After the Closing Date, Parent and Seller will
indemnify and hold harmless Purchaser from and against any and all claims,
actions, causes of action, liabilities, losses, damages, and reasonable
out-of-pocket expenses and costs resulting from, arising out of
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or relating to (i) Pre-Closing Taxes and (ii) any Taxes of Seller measured by
net or gross income (including, without limitation, any Tax liability that
arises solely by reason of Seller being severally liable for any Tax of any
current or former Affiliate of Seller pursuant to Treasury Regulation Section
1.1502-6 or any analogous state or local Tax provision).
(b) Subject to the terms of SECTION 1.07, Seller will be
responsible for and indemnify and hold harmless Purchaser against any and all
liabilities with respect to Taxes, for any taxable period that includes the
Closing Date, in an amount equal to the tax liability that would have resulted
had the last day of the period been the Closing Date, with such Taxes being
allocated pro rata per day between the period ending on the Closing Date, and
the period commencing after the Closing Date.
(c) Purchaser will be responsible for and indemnify and
hold Seller harmless against any all liabilities with respect to Taxes relating
to the Transferred Assets for all taxable periods ending after the Closing Date
other than Taxes for which Seller is responsible pursuant to SECTION 8.01 or
SECTION 8.04(b) above.
8.05. TAX COOPERATION. After the Closing Date, Seller will,
and Parent will cause Seller to, cooperate with Purchaser, and Purchaser will
cooperate with Seller, in the preparation of all Tax Returns and will provide
(or cause to be provided) any records and other information the other so
requests, and will provide access to, and the cooperation of its auditors.
Seller will, and Parent will cause Seller to, cooperate with Purchaser and
Purchaser will cooperate with Seller in connection with any Tax investigation,
audit or other proceeding.
8.06. NOTIFICATION OF PROCEEDINGS; CONTROL. Seller shall
have the right to control any audit or examination relating to Pre-Closing Taxes
by any taxing authority, initiate any claim for refund, file any amended return,
contest, resolve and defend against any assessment, notice of deficiency or
other adjustment or proposed adjustment relating or with respect to any
Pre-Closing Taxes and shall be entitled to all refunds with respect to such
taxes. Purchaser shall have the right to control any audit or examination
relating to all Taxes other than Pre-Closing Taxes by any taxing authority, and
shall have the right to initiate any claim for refund, file any amended returns,
contest, resolve and defend against any assessment, notice of deficiency or
other adjustment or proposed adjustment relating or with respect to Taxes other
than Pre-Closing Taxes, and shall be entitled to all refunds with respect to
such Taxes; provided that Purchaser will consult in good faith with Seller with
respect to any Taxes for periods that include the Closing Date, and Seller shall
be entitled to any refunds for such period to the extent the refund is
allocable, in accordance with the principles of SECTION 8.04(b) to that portion
of such period ending on the Closing Date.
ARTICLE IX
TITLE INSURANCE
9.01. TITLE POLICIES AND EXCEPTIONS.
(a) Attached hereto as EXHIBIT M is a preliminary title
report for the Real Property (the "TITLE REPORT"). All title exceptions shown on
the Title Report except those
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exceptions deleted by Purchaser, and all matters disclosed by the Survey, a copy
of which has been provided to Purchaser, are hereinafter referred to as the
"PERMITTED EXCEPTIONS". The Permitted Exceptions shall also include those other
title exceptions which are disclosed or become apparent to Purchaser after the
date hereof, which are not already Permitted Exceptions, which cannot be removed
by the payment of a sum of money, which are not caused by the intentional act of
Seller or any Affiliate of Seller after the date hereof, and which do not
materially adversely affect the value of the Real Property or Improvements, or
the continued use thereof as currently conducted, or as to which Purchaser has
not timely objected. Purchaser must notify Seller in writing of its objection to
any such subsequently arising matter on or before the date which is ten (10)
days after Purchaser's receipt of notice thereof.
(b) Seller shall cause all title exceptions (other than
Permitted Exceptions) not approved by Purchaser to be removed on or before the
Closing. Seller, however, shall have the right to (i) cause the Title Company to
remove a Lien by bonding over such Lien or (ii) obtain the commitment of the
Title Company to insure Purchaser against loss or damage that may be occasioned
by such exceptions that are not Permitted Exceptions.
(c) Prior to the Closing, Purchaser shall obtain an ALTA
extended owner's policy of title insurance (Form B-1970) (Amended 4-6-90),
issued by Stewart Title of Nevada or if such title company is unable to do so,
by a title insurance company reasonably acceptable to Purchaser in its
reasonable discretion ("TITLE COMPANY"), insuring that Purchaser has fee title
to the Real Property and Improvements, subject only to (i) the Permitted
Exceptions, (ii) liens for taxes not yet due and payable, (iii) all standard
exceptions, exclusions, conditions and stipulations from coverage for Title
Company's Extended Coverage Form ALTA Owner's Policy of Title Insurance,
including any and all endorsements and affirmative coverage customary in real
estate sale transactions involving the magnitude and type of the Transferred
Assets (including, without limitation, an ALTA 3.1 Zoning Endorsement) as
Purchaser shall reasonably request, and (iv) those exceptions arising after the
Transfer Time and approved by Purchaser as provided above (the "TITLE POLICY").
The coverage amount of the Title Policy for the Real Property and Improvements
shall be in an amount to be requested by Purchaser, which amount shall not
exceed $205,000,000. Purchaser shall have the right to require the Title Company
to obtain facultative reinsurance, with direct access provisions against the
reinsurer with respect to the Title Policy in such amounts and with such title
companies as Purchaser shall determine in its reasonable discretion.
(d) Seller shall pay the premium for the Title Policy and
for all endorsements thereto. Seller and Purchaser shall cooperate diligently to
provide customary documents required by Title Company as condition to the
issuance of the Title Policy.
(e) Seller shall order an update of the Survey, which
shall be certified to Purchaser, the Title Company, and any other parties
reasonably requested by Purchaser. In addition, Seller shall cause the updated
Survey to be prepared and be certified as having been prepared in accordance
with "Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys"
jointly established and adopted by the ALTA and ACSM in 1997 and including all
ALTA optional items except No. 5 (Contour Maps) and No. 12 (Governmental Agency
Survey Requirements), and the updated Survey shall include a certification as to
whether or not the Real Property and Improvements are located in a floodplain or
designated floodway and such
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information as may be required by the Title Company to issue extended coverage
(consistent with all matters shown on the Survey) over all general printed
exceptions to title.
ARTICLE X
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
10.01. SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS. Notwithstanding any right of Purchaser (whether or not
exercised) to investigate the Business or any right of any party (whether or not
exercised) to investigate the accuracy of the representations and warranties of
the other party contained in this Agreement, Seller, Parent and Purchaser have
the right to rely fully upon the representations, warranties, covenants and
agreements of the other contained in this Agreement. The representations,
warranties, covenants and agreements of Seller, Parent and Purchaser contained
in this Agreement will survive the Closing (a) indefinitely with respect to (i)
the representations and warranties contained in SECTIONS 2.02, 2.14, 2.27, 3.02
and 3.06 and (ii) the covenants and agreements contained in SECTIONS 1.01, 1.02,
1.08, 14.04 and 14.06, (b) until sixty (60) days after the expiration of all
applicable statutes of limitation (including all periods of extension, whether
automatic or permissive) with respect to matters covered by SECTIONS 2.09 and
2.21 and (insofar as they relate to ERISA or the Code) SECTION 2.12 and ARTICLE
VIII, (c) until June 12, 2005 in the case of all other representations and
warranties and any covenant or agreement to be performed in whole or in part on
or prior to the Closing or (d) with respect to each other covenant or agreement
contained in this Agreement, until sixty (60) days following the last date on
which such covenant or agreement is to be performed or, if no such date is
specified, indefinitely; provided that any representation, warranty, covenant or
agreement that would otherwise terminate in accordance with clause (b), (c) or
(d) above will continue to survive if a Claim Notice or Indemnity Notice (as
applicable) shall have been timely given under ARTICLE XI on or prior to such
termination date, until the related claim for indemnification has been satisfied
or otherwise resolved as provided in ARTICLE XI.
ARTICLE XI
INDEMNIFICATION
11.01. INDEMNIFICATION.
(a) Subject to paragraph (c) of this Section and the
other Sections of this ARTICLE XI, Parent and Seller shall jointly and severally
indemnify the Purchaser Indemnified Parties in respect of, and hold each of them
harmless from and against, any and all Losses suffered, incurred or sustained by
any of them or to which any of them becomes subject, resulting from, arising out
of or relating to (i) any breach of representation or warranty or nonfulfillment
of or failure to perform any covenant or agreement on the part of Parent or
Seller contained in this Agreement (determined in all cases as if the terms
"material" or "materially" were not included therein, such determination not to
be construed as creating or implying right to
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terminate this Agreement in favor of Purchaser and not to be construed as
eliminating the materiality requirement of such representations for the purposes
of determining liability for a breach thereof prior to Closing), (ii) any and
all other Liabilities, obligations and costs of Seller arising prior to the
Closing Date (other than the Assumed Liabilities), including, without
limitation, any and all unfair labor practice charges brought against Purchaser
as a successor to Seller under the NLRA or any other federal, state or local
labor laws or any employment laws, and/or (iii) any and all other liabilities,
obligations and costs of Seller arising prior to the Closing Date (other than
the Assumed Liabilities) but which are brought against Purchaser prior to or
after the Closing Date, including, without limitation, any and all unfair labor
practice charges brought against Purchaser as a successor to Seller and/or a
joint and/or separately charged party and/or respondent, under the NLRA or any
other federal, state or local labor laws or any employment laws.
(b) Subject to the other Sections of this ARTICLE XI,
Purchaser shall indemnify Seller Indemnified Parties in respect of, and hold
each of them harmless from and against, any and all Losses suffered, incurred or
sustained by any of them or to which any of them becomes subject, resulting
from, arising out of or relating to (i) any breach of representation or warranty
or nonfulfillment of or failure to perform any covenant or agreement on the part
of Purchaser contained in this Agreement or (ii) an Assumed Liability.
(c) Notwithstanding anything to the contrary contained in
this Agreement, no amounts of indemnity shall be payable as a result of any
claim in respect of a Loss arising under paragraph (a)(i) of SECTION 11.01:
(i) unless, and until Purchaser Indemnified
Parties have suffered, incurred, sustained or become subject to Losses
referred to in this SECTION 11.01 in excess of $250,000 in the
aggregate, in which event the Purchaser Indemnified Parties shall be
entitled to claim indemnity for the full amount of such Losses;
(ii) in excess of $20,000,000 in the aggregate.
Provided that this paragraph (c) shall not apply to a breach of a representation
or warranty contained in SECTION 2.02, SECTION 2.03, SECTION 2.04, SECTION 2.12,
SECTION 2.20, SECTION 2.21 or SECTION 8.01, or to the breach of a covenant
contained in SECTION 1.08, SECTION 4.10, SECTION 14.04, and SECTION 14.06.
11.02. METHOD OF ASSERTING CLAIMS. All claims for
indemnification by any Indemnified Party under SECTION 11.01 will be asserted
and resolved as follows:
(a) In the event any claim or demand in respect of which
an Indemnified Party might seek indemnity under SECTION 11.01 is asserted
against or sought to be collected from such Indemnified Party by a Person other
than Seller or any Affiliate of Seller or of Purchaser (a "THIRD PARTY CLAIM"),
the Indemnified Party shall deliver a Claim Notice with reasonable promptness to
the Indemnifying Party. If the Indemnified Party fails to provide the Claim
Notice with reasonable promptness after the Indemnified Party receives notice of
such Third Party Claim, the Indemnifying Party will not be obligated to
indemnify the Indemnified Party with respect to such Third Party Claim to the
extent that the Indemnifying Party's ability to defend
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has been irreparably prejudiced by such failure of the Indemnified Party. The
Indemnifying Party will notify the Indemnified Party as soon as practicable
within the Dispute Period whether the Indemnifying Party disputes its liability
to the Indemnified Party under SECTION 11.01 and whether the Indemnifying Party
desires, at its sole cost and expense, to defend the Indemnified Party against
such Third Party Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the Indemnifying Party
desires to defend the Indemnified Party with respect to the Third Party
Claim pursuant to this SECTION 11.02(a), then the Indemnifying Party
will have the right to defend, with counsel reasonably satisfactory to
the Indemnified Party, at the sole cost and expense of the Indemnifying
Party, such Third Party Claim by all appropriate proceedings, which
proceedings will be vigorously and diligently prosecuted by the
Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with the consent of the
Indemnified Party, which consent will not be unreasonably withheld, in
the case of any settlement that provides for any relief other than the
payment of monetary damages as to which the Indemnified Party will be
indemnified in full). The Indemnifying Party will be deemed to have
waived its right to dispute its liability to the Indemnified Party
under SECTION 11.01 with respect to any Third Party Claim as to which
it elects to control the defense. The Indemnifying Party will have full
control of such defense and proceedings, including any compromise or
settlement thereof; PROVIDED, HOWEVER, that the Indemnified Party may,
at the sole cost and expense of the Indemnified Party, at any time
prior to the Indemnifying Party's delivery of the notice referred to in
the first sentence of this SECTION 11.02(a)(i), file any motion, answer
or other pleadings or take any other action that the Indemnified Party
reasonably believes to be necessary or appropriate to protect its
interests; and provided further, that if requested by the Indemnifying
Party, the Indemnified Party will, at the sole cost and expense of the
Indemnifying Party, provide reasonable cooperation to the Indemnifying
Party in contesting any Third Party Claim that the Indemnifying Party
elects to contest. The Indemnified Party may retain separate counsel to
represent it in, but not control, any defense or settlement of any
Third Party Claim controlled by the Indemnifying Party pursuant to this
SECTION 11.02(a)(i), and the Indemnified Party will bear its own costs
and expenses with respect to such separate counsel except as provided
in the preceding sentence and except that the Indemnifying Party will
pay the costs and expenses of such separate counsel if (x) in the
Indemnified Party's good faith judgment, it is advisable, based on
advice of counsel, for the Indemnified Party to be represented by
separate counsel because a conflict or potential conflict exists
between the Indemnifying Party and the Indemnified Party which makes
representation of both parties inappropriate under applicable standards
of professional conduct or (y) the named parties to such Third Party
Claim include both the Indemnifying Party and the Indemnified Party and
the Indemnified Party determines in good faith, based on advice of
counsel, that defenses are available to it that are unavailable to the
Indemnifying Party. Notwithstanding the foregoing, the Indemnified
Party may retain or take over the control of the defense or settlement
of any Third Party Claim the defense of which the Indemnifying Party
has elected to control if the Indemnified Party irrevocably waives its
right to indemnity under SECTION 11.01 with respect to such Third Party
Claim.
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(ii) If the Indemnifying Party fails to notify
the Indemnified Party within the Dispute Period that the Indemnifying
Party desires to defend the Third Party Claim pursuant to SECTION
11.02(a), or if the Indemnifying Party gives such notice but fails to
prosecute vigorously and diligently or settle the Third Party Claim,
then the Indemnified Party will have the right to defend, at the sole
cost and expense of the Indemnifying Party, the Third Party Claim by
all appropriate proceedings, which proceedings will be prosecuted by
the Indemnified Party in good faith or will be settled at the
discretion of the Indemnified Party (with the consent of the
Indemnifying Party, which consent will not be unreasonably withheld).
The Indemnified Party will have full control of such defense and
proceedings, including any compromise or settlement thereof; provided,
however, that if requested by the Indemnified Party, the Indemnifying
Party will, at the sole cost and expense of the Indemnifying Party,
provide reasonable cooperation to the Indemnified Party and its counsel
in contesting any Third Party Claim which the Indemnified Party is
contesting. Notwithstanding the foregoing provisions of this SECTION
11.02(a)(ii), if the Indemnifying Party has notified the Indemnified
Party within the Dispute Period that the Indemnifying Party disputes
its liability hereunder to the Indemnified Party with respect to such
Third Party Claim and if such dispute is resolved in favor of the
Indemnifying Party in the manner provided in clause (iii) below, the
Indemnifying Party will not be required to bear the costs and expenses
of the Indemnified Party's defense pursuant to this SECTION
11.02(a)(ii) or of the Indemnifying Party's participation therein at
the Indemnified Party's request, and the Indemnified Party will
reimburse the Indemnifying Party in full for all reasonable costs and
expenses incurred by the Indemnifying Party in connection with such
litigation. The Indemnifying Party may participate in, but not control,
any defense or settlement controlled by the Indemnified Party pursuant
to this SECTION 11.02(a)(ii), and the Indemnifying Party will bear its
own costs and expenses with respect to such participation.
(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its liability to the
Indemnified Party with respect to the Third Party Claim under SECTION
11.01 or fails to notify the Indemnified Party within the Dispute
Period whether the Indemnifying Party disputes its liability to the
Indemnified Party with respect to such Third Party Claim, the Loss
arising from such Third Party Claim will be conclusively deemed a
liability of the Indemnifying Party under SECTION 11.01 and the
Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand following the final determination thereof. If the
Indemnifying Party has timely disputed its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party will
proceed in good faith to negotiate a resolution of such dispute, and if
not resolved through negotiations within the Resolution Period, such
dispute shall be resolved by arbitration in accordance with SECTION
11.02(c).
(b) In the event any Indemnified Party should have a
claim under SECTION 11.01 against any Indemnifying Party that does not involve a
Third Party Claim, the Indemnified Party shall deliver an Indemnity Notice with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party to give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent that an Indemnifying Party demonstrates that it
has been irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim described in such Indemnity
Notice or
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fails to notify the Indemnified Party within the Dispute Period whether the
Indemnifying Party disputes the claim described in such Indemnity Notice, the
Loss arising from the claim specified in such Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under SECTION 11.01
and the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand following the final determination thereof. If the Indemnifying
Party has timely disputed its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
within the Resolution Period, such dispute shall be resolved by arbitration in
accordance with SECTION 11.02(c).
(c) Any dispute submitted to arbitration pursuant to this
SECTION 11.02 shall be finally and conclusively determined by the decision of a
board of arbitration consisting of three (3) members (hereinafter sometimes
called the "BOARD OF ARBITRATION") selected as hereinafter provided. Each of the
Indemnified Party and the Indemnifying Party shall select one (1) member and the
third member shall be selected by mutual agreement of the other members, or if
the other members fail to reach agreement on a third member within twenty (20)
days after their selection, such third member shall thereafter be selected by
the American Arbitration Association upon application made to it for a third
member possessing expertise or experience appropriate to the dispute jointly by
the Indemnified Party and the Indemnifying Party. The Board of Arbitration shall
meet in Las Vegas, Nevada or such other place as a majority of the members of
the Board of Arbitration determines more appropriate, and shall reach and render
a decision in writing (concurred in by a majority of the members of the Board of
Arbitration) with respect to the amount, if any, which the Indemnifying Party is
required to pay to the Indemnified Party in respect of a claim filed by the
Indemnified Party. In connection with rendering its decisions, the Board of
Arbitration shall adopt and follow such rules and procedures as a majority of
the members of the Board of Arbitration deems necessary or appropriate. To the
extent practical, decisions of the Board of Arbitration shall be rendered no
more than thirty (30) days following commencement of proceedings with respect
thereto. The Board of Arbitration shall cause its written decision to be
delivered to the Indemnified Party and the Indemnifying Party. Any decision made
by the Board of Arbitration (either prior to or after the expiration of such
thirty (30) day period) shall be final, binding and conclusive on the
Indemnified Party and the Indemnifying Party and entitled to be enforced to the
fullest extent permitted by law and entered in any court of competent
jurisdiction. Each party to any arbitration shall bear its own expense in
relation thereto, including but not limited to such party's attorneys' fees, if
any, and the expenses and fees of the Board of Arbitration shall be divided
between the Indemnifying Party and the Indemnified Party in the same proportion
as the portion of the related claim determined by the Board of Arbitration to be
payable to the Indemnified Party bears to the portion of such claim determined
not to be so payable.
ARTICLE XII
TERMINATION
12.01. TERMINATION. This Agreement may be terminated, and
the transactions contemplated hereby may be abandoned:
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(a) at any time before the Closing, by mutual written
agreement of Seller and Purchaser;
(b) at any time before the Closing, by Seller or
Purchaser, in the event (i) of a material breach hereof by the non-terminating
party if such non-terminating party fails to cure such breach within twenty (20)
Business Days following notification thereof by the terminating party or (ii)
upon notification of the non-terminating party by the terminating party that the
satisfaction of any condition to the terminating party's obligations under this
Agreement becomes impossible or impracticable with the use of commercially
reasonable efforts if the failure of such condition to be satisfied is not
caused by a breach hereof by the terminating party; or
(c) at any time after July 31, 2000, by Seller in its
sole and absolute discretion, in the event that $36,000,000, in immediately
available funds, has not been delivered by or on behalf of Lender to Borrower in
accordance with the Credit Agreement for any reason other than (i) the failure
of Borrower to obtain the requisite consents of Ground Lessor or (ii) the
failure of Parent or its Affiliates to provide to Borrower funding that together
with the proceeds of the Loan will be sufficient to effectuate the release of
all Liens upon the Assets and Properties of Borrower; or
(d) at any time after November 15, 2000, by Seller or
Purchaser upon notification of the non-terminating party by the terminating
party if the Closing shall not have occurred on or before such date and such
failure to consummate is not caused by a breach of this Agreement by the
terminating party.
12.02. EFFECT OF TERMINATION. If this Agreement is validly
terminated pursuant to SECTION 12.01, this Agreement will forthwith become null
and void, and there will be no liability or obligation on the part of Seller or
Purchaser (or any of their respective officers, directors, employees, agents or
other representatives or Affiliates), except as provided in the next succeeding
sentence and except that the provisions with respect to expenses in SECTION
14.04 and confidentiality in SECTION 14.06 will continue to apply following any
such termination. Notwithstanding any other provision in this Agreement to the
contrary, upon termination of this Agreement pursuant to SECTION 12.01(b), (c)
OR (d), (i) Seller will remain liable to Purchaser for any breach of this
Agreement by Seller existing at the time of such termination, and Purchaser will
remain liable to Seller for any breach of this Agreement by Purchaser existing
at the time of such termination, (ii) Seller or Purchaser may seek such
remedies, including damages and fees of attorneys, against the other with
respect to any such breach as are provided in this Agreement or as are otherwise
available at Law or in equity, and (iii) the Non-Competition Agreement and the
ROFR Agreement shall remain unmodified and in full force and effect.
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ARTICLE XIII
DEFINITIONS
13.01. DEFINITIONS.
(a) DEFINED TERMS. As used in this Agreement, the
following defined terms have the meanings indicated below:
"ACCOUNTS PAYABLE" has the meaning ascribed to it in SECTION
1.03(b)(i).
"ACCRUED EXPENSES" has the meaning ascribed to it in SECTION
1.03(b)(ii).
"ACSM" means the American Congress on Surveying and Mapping.
"ACTIONS OR PROCEEDINGS" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"ADVANCE RESERVATIONS AND DEPOSITS" has the meaning ascribed
to it in SECTION 1.01(a)(viii).
"AFFILIATE" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is under
common control with the Person specified. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by Contract or
otherwise and, in any event and without limitation of the previous sentence, any
Person owning ten percent (10%) or more of the voting securities of another
Person shall be deemed to control that Person.
"AGREEMENT" means this Asset Purchase Agreement and the
Exhibits, the Disclosure Schedule and the Schedules hereto and the certificates
delivered in accordance with SECTIONS 6.03 and 7.03, as the same shall be
amended from time to time.
"ALTA" means the American Land Title Association.
"ANNUAL FINANCIAL STATEMENT DATE" means the last day of the
most recent fiscal year of Parent for which Financial Statements are delivered
to Purchaser pursuant to SECTION 2.06.
"ANNUAL FINANCIAL STATEMENTS" means the Financial Statements
for the most recent fiscal year of Parent delivered to Purchaser pursuant to
SECTION 2.06.
"ASSETS" has the meaning ascribed to it in SECTION 1.01(a).
"ASSETS AND PROPERTIES" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, operated, owned or leased by such Person, including,
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without limitation, cash, cash equivalents, Investment Assets, accounts and
notes receivable, chattel paper, documents, instruments, general intangibles,
real estate, equipment, inventory, goods and Intellectual Property.
"ASSIGNMENT INSTRUMENTS" has the meaning ascribed to it in
SECTION 1.05.
"ASSUMED LIABILITIES" has the meaning ascribed to it in
SECTION 1.02(a).
"ASSUMPTION AGREEMENT" has the meaning ascribed to it in
SECTION 1.05.
"ASSUMPTION INSTRUMENTS" has the meaning ascribed to it in
SECTION 1.05.
"BENEFIT PLAN" means any Plan established by Seller, or any
predecessor or Affiliate of Seller, existing at the Closing Date or prior
thereto, to which Seller contributes or has contributed on behalf of any
Employee, former Employee or director, or under which any Employee, former
Employee or director of Seller or any beneficiary thereof is covered, is
eligible for coverage or has benefit rights.
"BOARD OF ARBITRATION" has the meaning ascribed to it in
SECTION 11.02(c).
"BOOKS AND RECORDS" of any Person means all files, documents,
instruments, papers, books and records relating to the business, operations,
condition of (financial or other), results of operations and Assets and
Properties of such Person, including without limitation financial statements,
Tax Returns and related work papers and letters from accountants, budgets,
pricing guidelines, ledgers, journals, deeds, title policies, minute books,
stock certificates and books, stock transfer ledgers, Contracts, Licenses,
customer lists, computer files and programs, retrieval programs, operating data
and plans and environmental studies and plans.
"BORROWER" means Pioneer Hotel, Inc., a subsidiary of Parent.
"BUSINESS" has the meaning ascribed to it in the forepart of
this Agreement.
"BUSINESS BOOKS AND RECORDS" has the meaning ascribed to it in
SECTION 1.01(a)(x).
"BUSINESS COMBINATION" means with respect to any Person, any
merger, consolidation or combination to which such Person is a party, any sale,
dividend, split or other disposition of capital stock or other equity interests
of such Person or any sale, dividend or other disposition of all or
substantially all of the Assets and Properties of such Person.
"BUSINESS CONTRACTS" has the meaning ascribed to it in SECTION
1.01(a)(iv).
"BUSINESS DAY" means a day other than Saturday, Sunday or any
day on which banks located in the State of Nevada are authorized or obligated to
close.
"BUSINESS LICENSES" has the meaning ascribed to it in SECTION
1.01(a)(vi).
"CASINO CASH" has the meaning ascribed to it in SECTION
1.03(a)(iv).
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"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and the rules and
regulations promulgated thereunder.
"CERCLIS" means the Comprehensive Environmental Response and
Liability Information System, as provided for by 40 C.F.R. Section 300.5.
"CLAIM NOTICE" means written notification pursuant to SECTION
11.02(a) of a Third Party Claim as to which indemnity under SECTION 11.01 is
sought by an Indemnified Party, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party Claim and for the
Indemnified Party's claim against the Indemnifying Party under SECTION 11.01,
together with the amount or, if not then reasonably determinable, the estimated
amount, determined in good faith, of the Loss arising from such Third Party
Claim.
"CLOSING" means the closing of the transactions contemplated
by SECTION 1.05.
"CLOSING BALANCE SHEET" has the meaning ascribed to it in
SECTION 1.03(d)(i).
"CLOSING DATE" means (a) the fifth Business Day after the day
on which the last of the consents, approvals, actions, filings, notices or
waiting periods described in or related to the filings described in SECTIONS
6.05 and 6.06 and SECTIONS 7.05 and 7.06 has been obtained, made or given or has
expired, as applicable, or (b) such other date as Purchaser, Seller and Parent
shall mutually agree upon in writing; PROVIDED, HOWEVER, that if the Closing
Date shall be scheduled to occur prior to October 1, 2000 pursuant to CLAUSE (a)
above, the Closing shall occur on such scheduled Closing Date only upon the
consent of Seller and Parent; PROVIDED, that if Seller and Parent shall consent
to a scheduled Closing Date prior to October 1, 2000 as provided above, then
Seller and Parent must provide no less than ten days' written notice to
Purchaser prior to such scheduled Closing Date.
"CLOSING FINANCIAL STATEMENTS DELIVERY DATE" has the meaning
ascribed to it in SECTION 1.03(d)(i).
"COBRA" means the Congressional Omnibus Budget Reconciliation
Act of 1985, as amended.
"CODE" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
"COMPANY PLANS" has the meaning ascribed to it in SECTION
2.12(a).
"COMPUTER EQUIPMENT" shall have the meaning ascribed to it in
SECTION 1.01(b)(xiv).
"CONDITION OF THE BUSINESS" means the business, financial
condition, results of operations, Assets and Properties and prospects of the
Business.
"CONTRACT" means any agreement, lease, license, evidence of
indebtedness, mortgage, indenture, security agreement or other contract (whether
written or oral).
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"CREDIT AGREEMENT" means the Credit Agreement, dated June 12,
2000, by and between Borrower and Lender.
"CURRENT ASSETS" shall have the meaning ascribed to it in
SECTION 1.03(a).
"CURRENT LIABILITIES" shall have the meaning ascribed to it in
SECTION 1.03(b).
"CUSTOMER LISTS" shall have the meaning ascribed to it in
SECTION 1.01(a)(ix).
"DEFICIENCY" means the amount, if any, by which the Net
Current Assets as determined from the Closing Date Balance Sheet is a negative
number.
"DISCLOSURE SCHEDULE" means the record delivered to Purchaser
by Seller herewith and dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials as are required to
be included therein by Seller pursuant to this Agreement.
"DISPUTE PERIOD" means the period ending thirty (30) days
following receipt by an Indemnifying Party of either a Claim Notice or an
Indemnity Notice.
"EEOC" means the Equal Employment Opportunity Commission
established pursuant to Title VII.
"EMPLOYEE" means each employee, officer or consultant of
Seller engaged in the conduct of the Business.
"ENVIRONMENTAL CLAIM" means, with respect to any Person, any
written or oral notice, claim, demand or other communication (collectively, a
"claim") by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, Governmental or Regulatory Authority
response costs, damages to natural resources or other property, personal
injuries, fines or penalties arising out of, based on or resulting from (a) the
presence, or Release into the environment, of any Hazardous Material at any
location, whether or not owned by such Person, or (b) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law. The term
"Environmental Claim" shall include, without limitation, any claim by any
Governmental or Regulatory Authority for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and any claim by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from the presence of Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
"ENVIRONMENTAL LAW" means any Law or Order relating to the
regulation or protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes
into the environment (including, without limitation, ambient air, soil, surface
water, ground water, wetlands, land or subsurface strata), or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"ESCROW AGENT" has the meaning ascribed to it in SECTION 1.05.
"ESCROW AGREEMENT" means that certain Escrow Agreement,
substantially in the form attached hereto as EXHIBIT O, pursuant to which a
portion of the Purchase Price shall be escrowed at Closing.
"ESTOPPEL CERTIFICATE" means the written certification, issued
not more than thirty (30) days prior to the Closing Date by a lessor, sublessor,
lessee, sublessee or licensee or other party to a lease or occupancy agreement,
stating (a) that such lease or occupancy agreement is (i) in full force and
effect and (ii) has not been modified or amended except as described therein,
(b) the date to which rental has been paid, (c) that no default or event of
default exists thereunder and (d) that to the best of the knowledge of the
issuer thereof, no event has occurred which, with the giving of notice or lapse
of time or both, would be a default or event of default thereunder.
"EXCLUDED ASSETS" has the meaning ascribed to it in SECTION
1.01(b).
"EXCLUDED BOOKS AND RECORDS" has the meaning ascribed to it in
SECTION 1.01(b)(iv).
"FINANCIAL STATEMENTS" means the financial statements
delivered to Purchaser pursuant to SECTION 2.06.
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"GENERAL ASSIGNMENT" has the meaning ascribed to it in SECTION
1.05.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision.
"GROUND LESSOR" means Pall Mall Properties, Inc., a California
corporation, James Schutz and Sharon Schutz as trustees of the James and Sharon
Schutz Trust and Janice Illig as trustee of the Janice Illig Trust.
"HAZARDOUS MATERIAL" means (A) any petroleum or petroleum
products, flammable explosives, radioactive materials, asbestos in any form that
is or could become friable, urea formaldehyde foam insulation and transformers
or other equipment that contain dielectric fluid containing levels of
polychlorinated biphenyls (PCBs); (B) any chemicals or other materials or
substances which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants" or words of similar import under any Environmental Law; and
(C) any other chemical or other material or substance, exposure to which is now
or hereafter prohibited, limited or regulated by any Governmental or Regulatory
Authority under any Environmental Law.
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"HSR ACT" means Section 7A of the Clayton Act (Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the rules
and regulations promulgated thereunder.
"IMPROVEMENTS" has the meaning ascribed to it in SECTION
1.01(a)(i).
"INDEBTEDNESS" of any Person means all obligations of such
Person (i) for the deferred purchase price of goods or services (other than
trade payables or accruals incurred in the ordinary course of business) and (ii)
in the nature of guarantees of the obligations described in clauses (i) and (ii)
above of any other Person.
"INDEMNIFIED PARTY" means any Person claiming indemnification
under any provision of ARTICLE XI.
"INDEMNIFYING PARTY" means any Person against whom a claim for
indemnification is being asserted under any provision of ARTICLE XI.
"INDEMNITY NOTICE" means written notification pursuant to
SECTION 11.02(b) of a claim for indemnity under ARTICLE XI by an Indemnified
Party, specifying the nature of and basis for such claim, together with the
amount or, if not then reasonably determinable, the estimated amount, determined
in good faith, of the Loss arising from such claim.
"INTANGIBLE PERSONAL PROPERTY" has the meaning ascribed to it
in SECTION 1.01(a)(v).
"INTELLECTUAL PROPERTY" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service mark rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights and copyright rights, trade
dress, business and product names, logos, slogans, trade secrets, industrial
models, processes, designs, methodologies, computer programs (including all
source codes) and related documentation, technical information, manufacturing,
engineering and technical drawings, know-how and all pending applications for
and registrations of patents, trademarks, service marks and copyrights.
"INTERIM BALANCE SHEET" has the meaning ascribed to it in
SECTION 1.03(c).
"INVENTORY" has the meaning ascribed to it in SECTION
1.03(a)(i).
"IRCA" means the Immigration Reform Control Act of 1986, as
amended.
"IRS" means the United States Internal Revenue Service.
"KNOWLEDGE OF PURCHASER" means the knowledge, with due
inquiry, of the directors and the officers of Purchaser.
"KNOWLEDGE OF SELLER" or "KNOWN TO SELLER" means the
knowledge, with due inquiry, of Paul Lowden, David Lowden and Chris Lowden and
the officers, directors (with the
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exception of David Lesser and any other directors designated by the preferred
shareholders of Parent) and general managers of Seller and Parent.
"LANDLORD'S CERTIFICATE" has the meaning ascribed to it in the
Credit Agreement.
"LAWS" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental or Regulatory Authority.
"LEASE AMENDMENT" has the meaning ascribed to it in the Credit
Agreement.
"LENDER" has the meaning ascribed to it in the Credit
Agreement.
"LESSOR SECURITY DEPOSITS" has the meaning ascribed to it in
SECTION 1.03(b)(iii).
"LIABILITIES" means all indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
"LICENSES" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.
"LIENS" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.
"LOAN" had the meaning ascribed to it in the Credit Agreement.
"LOSS" or "Losses" means any and all damages, fines, fees,
penalties, deficiencies, losses and expenses (including, without limitation,
interest, court costs, fees of attorneys, accountants and other experts or other
expenses of litigation or other proceedings or of any claim, default or
assessment).
"NLRB" means the National Labor Relations Board established
pursuant to the NLRA.
"NLRA" means the National Labor Relations Act of 1947, as
amended.
"NET CURRENT ASSETS" has the meaning ascribed to it in SECTION
1.03(c)(ii).
"NERA" means the Nevada Equal Rights Act.
"NEVADA GAMING AUTHORITIES" means the applicable gaming
authorities of the State of Nevada, including the Nevada Gaming Commission, the
Nevada State Gaming Control Board, the Clark County Gaming and Liquor Board, the
Las Vegas City Council and all other state and local regulatory and licensing
bodies with authority over gaming activities and devices in the State of Nevada
or City of Las Vegas.
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"NON-COMPETITION AGREEMENT" has the meaning ascribed to it in
SECTION 4.10.
"NPL" means the National Priorities List under CERCLA.
"NRS" means the Nevada Revised Statutes, as amended.
"OPERATIVE AGREEMENTS" means, collectively, the General
Assignment and the other Assignment Instruments, the Assumption Agreement and
the other Assumption Instruments, the Escrow Agreement, the Option Agreement,
and the Shareholders Agreement.
"OPTION" means the option granted by Seller to Purchaser
pursuant to the Option Agreement to purchase the Option Property.
"OPTION AGREEMENT" means that certain Option Agreement,
substantially in the form attached hereto as EXHIBIT L, granting Purchaser the
Option.
"OPTION PROPERTY" means that certain real and personal
property subject to the Option pursuant to the Option Agreement.
"ORDER" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).
"OSHA" means the Occupational Safety and Health Act of 1970,
as amended.
"OTHER ASSETS" has the meaning ascribed to it in SECTION
1.01(a)(xi).
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA.
"PERMITTED EXCEPTIONS" has the meaning ascribed to it in
SECTION 9.01(a).
"PERMITTED LIEN" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business by operation of Law
with respect to a Liability that is not yet due or delinquent and (iii) any
minor imperfection of title or similar Lien which individually or in the
aggregate with other such Liens does not materially impair the value of the
property subject to such Lien or the use of such property in the conduct of the
Business.
"PERSON" means any natural person, corporation, limited
liability company, general partnership, limited partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.
"PLAN" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock option,
stock ownership, stock appreciation rights, phantom stock, leave of absence,
layoff, vacation, day or dependent care, legal services, cafeteria, life,
health, accident, disability, workmen's compensation or other insurance,
severance, separation or other employee benefit plan, practice, policy or
arrangement
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of any kind, whether written or oral, including, but not limited to, any
"employee benefit plan" within the meaning of Section 3(3) of ERISA.
"PLAYERS CLUB" shall mean Seller's promotional marketing club
available to repeat gaming patrons of Seller and that is commonly referred to as
"Desert Fortune".
"PRE-CLOSING TAX RETURNS" has the meaning ascribed to it in
SECTION 8.03.
"PRE-CLOSING TAXES" has the meaning ascribed to it in SECTION
8.03.
"PREPAID EXPENSES" has the meaning ascribed to it in SECTION
1.03(a)(ii).
"PURCHASE PRICE" has the meaning ascribed to it in SECTION
1.04(a).
"PURCHASER" has the meaning ascribed to it in the forepart of
this Agreement.
"PURCHASER INDEMNIFIED PARTIES" means Purchaser and its
officers, directors, employees, agents and Affiliates.
"QUARTERLY FINANCIAL STATEMENT DATE" means the last day of the
most recent fiscal quarter of Seller for which Financial Statements are
delivered to Purchaser pursuant to SECTION 2.06.
"QUARTERLY FINANCIAL STATEMENTS" means the Financial
Statements for the most recent fiscal quarter of Seller delivered to Purchaser
pursuant to SECTION 2.06.
"REAL PROPERTY" has the meaning ascribed to it in SECTION
1.01(a)(i).
"REAL PROPERTY LEASES" has the meaning ascribed to it in
SECTION 1.01(a)(ii).
"RELEASE" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous Materials through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata.
"REPRESENTATIVES" has the meaning ascribed to it in SECTION
4.03.
"RESOLUTION PERIOD" means the period ending thirty (30) days
following receipt by an Indemnified Party of a written notice from an
Indemnifying Party stating that it disputes all or any portion of a claim set
forth in a Claim Notice or an Indemnity Notice.
"RETAINED LIABILITIES" has the meaning ascribed to it in
SECTION 1.02(b).
"ROFR AGREEMENT" means that certain Right of First Refusal,
dated as of November 15, 1999, by and among Seller, Parent and Purchaser.
"SELLER" has the meaning ascribed to it in the forepart of
this Agreement.
"SELLER CONSOLIDATING STATEMENTS" has the meaning ascribed to
it in SECTION 2.14.
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"SELLER INDEMNIFIED PARTIES" means Seller and its officers,
directors, employees, agents and Affiliates.
"SHAREHOLDERS AGREEMENT" means that certain Shareholders
Agreement, substantially in the form attached hereto as EXHIBIT N, executed by
and between Purchaser and Paul W. Lowden, an individual.
"SURVEY" means that certain land title survey of the Real
Property prepared by Carter Burgess, dated as of June 12, 2000.
"SURPLUS" means the amount, if any, by which Net Current
Assets as determined from the Closing Date Balance Sheet is a positive number.
"TANGIBLE PERSONAL PROPERTY" has the meaning ascribed to it in
SECTION 1.01(a)(iii).
"TAX RETURN" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"TAXES" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not and any expenses incurred
in connection with the determination, settlement or litigation of any Tax
liability.
"TENANT SECURITY DEPOSITS" has the meaning ascribed to it in
SECTION 1.03(a)(iii).
"THIRD PARTY CLAIM" has the meaning ascribed to it in SECTION
11.02(a).
"TITLE VII" means Title VII of the Civil Rights Act of 1964,
as amended.
"TITLE COMPANY" has the meaning ascribed to it in SECTION
9.01(c).
"TITLE POLICY" has the meaning ascribed to it in SECTION
9.01(c).
"TITLE REPORT" has the meaning ascribed to it in SECTION
9.01(a).
"TRANSFERRED ASSETS" has the meaning ascribed to it in SECTION
1.03(a).
"TRANSFER TAXES" has the meaning ascribed to it in SECTION
8.01(a).
"TRANSFER TIME" has the meaning ascribed to it in SECTION
1.05.
"VEHICLES" has the meaning ascribed to it in SECTION
1.01(a)(vii).
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"WARN" means the Worker Adjustment and Retraining Notification
Act of 1988, as amended.
(b) CONSTRUCTION OF CERTAIN TERMS AND PHRASES. Unless the
context of this Agreement otherwise requires, (i) words of any gender include
each other gender; (ii) words using the singular or plural number also include
the plural or singular number, respectively; (iii) the terms "hereof," "herein,"
"hereby" and derivative or similar words refer to this entire Agreement; (iv)
the terms "Article" or "Section" refer to the specified Article or Section of
this Agreement; and (v) the phrases "ordinary course of business" and "ordinary
course of business consistent with past practice" refer to the business and
practice of Seller in connection with the Business. Whenever this Agreement
refers to a number of days, such number shall refer to calendar days unless
Business Days are specified. All accounting terms used herein and not expressly
defined herein shall have the meanings given to them under GAAP.
ARTICLE XIV
MISCELLANEOUS
14.01. NOTICES. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
If to Purchaser, to: Station Casinos, Inc.
2411 W. Sahara Avenue
Las Vegas, Nevada 89102
Attention: Scott M. Nielson, Esq.
Telephone: (702) 367-2458
Telecopy: (702) 253-2926
with a copy to: Milbank, Tweed, Hadley & McCloy LLP
601 South Figueroa Street, 30th Floor
Los Angeles, California 90017-5735
Attention: Kenneth J. Baronsky, Esq.
Telephone: (213) 892-4000
Telecopy: (213) 629-5063
If to Parent or Seller, to: Santa Fe Gaming Corporation
4949 North Rancho Drive
Las Vegas, Nevada
Attention: Paul W. Lowden
Telephone: (702) 658-4300
Telecopy: (702) 658-4304
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with a copy to: Gordon & Silver, Ltd.
3960 Howard Hughes Parkway, 9th Floor
Las Vegas, Nevada 89109
Attention: James S. Mace, Esq.
Telephone: (702) 796-5555
Telecopy: (702) 369-2666
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other Person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other party hereto.
14.02. BULK SALES ACT. The parties hereby waive compliance
with the bulk sales act or comparable statutory provisions of each applicable
jurisdiction.
14.03. ENTIRE AGREEMENT. This Agreement and the Operative
Agreements supersede all prior discussions and agreements between the parties
with respect to the subject matter hereof and thereof between the parties, and
contain the sole and entire agreement between the parties hereto with respect to
the subject matter hereof and thereof, other than the ROFR Agreement and the
Non-Competition Agreement.
14.04. EXPENSES. Except as otherwise expressly provided in
this Agreement (including, without limitation, as provided in SECTION 12.02),
whether or not the transactions contemplated hereby are consummated, each party
will pay its own costs and expenses incurred in connection with the negotiation,
execution and closing of this Agreement and the Operative Agreements and the
transactions contemplated hereby and thereby.
14.05. PUBLIC ANNOUNCEMENTS. At all times at or before the
Closing, Seller and Purchaser will not issue or make any reports, statements or
releases to the public with respect to this Agreement or the transactions
contemplated hereby without the consent of the other, which consent shall not be
unreasonably withheld. If either party is unable to obtain the approval of its
public report, statement or release from the other party and the party seeking
such approval reasonably considers such report, statement or release to be
required by Law in order to discharge such party's disclosure obligations, then
such party may make or issue the legally required report, statement or release
and promptly furnish the other party with a copy thereof. Seller and Purchaser
will also obtain the other party's prior approval of any press release to be
issued immediately following the Closing announcing the consummation of the
transactions contemplated by this Agreement.
14.06. CONFIDENTIALITY. Each party hereto will hold, and
will use its best efforts to cause its Affiliates, and in the case of Purchaser,
any Person who has provided, or who is considering providing, financing to
Purchaser to finance all or any portion of the Purchase
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Price, and their respective Representatives to hold, in strict confidence from
any Person (other than any such Affiliate, Person who has provided, or who is
considering providing, financing or Representative), unless (i) compelled to
disclose by judicial or administrative process (including, without limitation,
in connection with obtaining the necessary approvals of this Agreement and the
transactions contemplated hereby of Governmental or Regulatory Authorities) or
by other requirements of Law or (ii) disclosed in an Action or Proceeding
brought by a party hereto in pursuit of its rights or in the exercise of its
remedies hereunder, all documents and information concerning the other party or
any of its Affiliates furnished to it by the other party or such other party's
Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information can
be shown to have been (a) previously known by the party receiving such documents
or information, (b) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault of such
receiving party or (c) later acquired by the receiving party from another source
if the receiving party is not aware that such source is under an obligation to
another party hereto to keep such documents and information confidential;
provided that following the Closing the foregoing restrictions will not apply to
Purchaser's use of documents and information concerning the Business, the
Transferred Assets or the Assumed Liabilities furnished by Seller hereunder. In
the event the transactions contemplated hereby are not consummated, upon the
request of the other party, each party hereto will, and will cause its
Affiliates, any Person who has provided, or who is considering providing,
financing to such party and their respective Representatives to, promptly (and
in no event later than five (5) Business Days after such request) redeliver or
cause to be redelivered all copies of documents and information furnished by the
other party in connection with this Agreement or the transactions contemplated
hereby and destroy or cause to be destroyed all notes, memoranda, summaries,
analyses, compilations and other writings related thereto or based thereon
prepared by the party furnished such documents and information or its
Representatives.
14.07. WAIVER; REMEDIES; ATTORNEYS FEES. Any term or
condition of this Agreement may be waived at any time by the party that is
entitled to the benefit thereof, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the party
waiving such term or condition. No waiver by any party of any term or condition
of this Agreement, in any one or more instances, shall be deemed to be or
construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this Agreement or
by Law or otherwise afforded, will be cumulative and not alternative. The
parties hereto agree that the Business is a unique asset and that damages
suffered by Purchaser as a result of a breach of this Agreement by Seller would
be impracticable to determine. Accordingly, the parties hereto agree that
Purchaser shall be entitled to seek specific performance of the terms of this
Agreement in the event of a breach of the terms of this Agreement. In the event
of a dispute between the parties hereto arising out of or relating to this
Agreement or any breach hereof, the prevailing party in such dispute will be
entitled to recover its reasonable attorneys fees and other costs and expenses
relating to such dispute from the non-prevailing party.
14.08. AMENDMENT. This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by or on
behalf of each party hereto.
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14.09. NO THIRD PARTY BENEFICIARY. The terms and provisions
of this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under ARTICLE XI.
14.10. NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement
nor any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other party hereto and any
attempt to do so will be void, except (a) for assignments and transfers by
operation of Law and (b) that Purchaser may assign any or all of its rights,
interests and obligations hereunder (including, without limitation, its rights
under ARTICLE XI) to (i) a wholly-owned subsidiary, provided that any such
subsidiary agrees in writing to be bound by all of the terms, conditions and
provisions contained herein, (ii) any post-Closing purchaser of the Business or
a substantial part of the Transferred Assets or (iii) any financial institution
providing purchase money or other financing to Purchaser from time to time as
collateral security for such financing. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and assigns.
14.11. HEADINGS. The headings used in this Agreement have
been inserted for convenience of reference only and do not define or limit the
provisions hereof.
14.12. CONSENT TO JURISDICTION; VENUE. Each party hereby
irrevocably submits to the exclusive jurisdiction of the United States District
Court for the District of Nevada or any court of the State of Nevada located in
the City of Las Vegas in any action, suit or proceeding arising out of or
relating to this Agreement or any of the Operative Agreements or any of the
transactions contemplated hereby or thereby, and agrees that any such action,
suit or proceeding shall be brought only in such court, provided, however, that
such consent to jurisdiction is solely for the purpose referred to in this
Section and shall not be deemed to be a general submission to the jurisdiction
of said courts or in the State of Nevada other than for such purpose. Each party
hereby irrevocably waives, to the fullest extent permitted by Law, any objection
that it may now or hereafter have to the laying of the venue of any such action,
suit or proceeding brought in such a court and any claim that any such action,
suit or proceeding brought in such a court has been brought in an inconvenient
forum.
14.13. INVALID PROVISIONS. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present or
future Law, and if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby, (a) such
provision will be fully severable, (b) this Agreement will be construed and
enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof and (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom.
14.14. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the Laws of the State of Nevada applicable to a
contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
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14.15. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer of each party as of the date first
above written.
PURCHASER: STATION CASINOS, INC.,
a Nevada corporation
By: /s/ Glenn C. Christenson
------------------------------------------
Name: Glenn C. Christenson
-----------------------------------
Title: Executive Vice President,
Chief Financial Officer and
Chief Administrative Officer
----------------------------------
SELLER: SANTA FE HOTEL INC.,
a Nevada corporation
By: /s/ Paul W. Lowden
------------------------------------------
Name: Paul W. Lowden
-----------------------------------
Title: Chief Executive Officer and
President
----------------------------------
PARENT: SANTA FE GAMING CORPORATION,
a Nevada corporation
By: /s/ Paul W. Lowden
------------------------------------------
Name: Paul W. Lowden
-----------------------------------
Title: Chief Executive Officer and
President
----------------------------------
AS TO SECTION 4.10 ONLY:
/s/ Paul W. Lowden
---------------------------------------------
PAUL W. LOWDEN, an individual
/s/ David G. Lowden
---------------------------------------------
DAVID G. LOWDEN, an individual
/s/ Christopher W. Lowden
---------------------------------------------
CHRISTOPHER W. LOWDEN, an individual
64
