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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: July 11, 1997
BOYD GAMING CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Nevada
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(State or Other Jurisdiction of
Incorporation or Organization)
1-12168 88-0242733
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(Commission File Number) (I.R.S. Employer
Identification No.)
2950 South Industrial Road
Las Vegas, Nevada 89109
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(Address of Principal Executive Offices) (Zip Code)
(702) 792-7200
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(Registrant's telephone number, including area code)
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Item 5. Other Events
On July 11, 1997, Boyd Gaming Corporation (the "Company") entered into
a definitive Purchase Agreement (the "Agreement") by and among the Company, Boyd
Kenner, Inc., Boyd Louisiana, L.L.C., Treasure Chest Casino, L.L.C., and certain
members of Treasure Chest Casino, L.L.C., to acquire the 85% equity interests in
Treasure Chest Casino L.L.C. that the Company does not currently own (the
"Remaining Equity Interests"). Treasure Chest Casino L.L.C. owns the Treasure
Chest Casino (the "Casino"), which the Company has been managing since the
opening of the Casino in September 1994.
Pursuant to the terms of the Agreement, the Company will acquire the
Remaining Equity Interests in Treasure Chest Casino L.L.C. for approximately
$115 million (subject to adjustment), including the assumption of debt. Closing
of the transaction is conditioned upon, among other things, approval by the
Louisiana Gaming Control Board. The Company plans to fund the acquisition and
the repayment of Treasure Chest's debt with borrowings under its $500 million
reducing revolving credit facility.
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
2.1 Purchase Agreement, dated as of July 11, 1997, by and
among Boyd Gaming Corporation, Boyd Kenner, Inc., Boyd Louisiana, L.L.C.,
Treasure Chest Casino, L.L.C., and certain members of Treasure Chest Casino,
L.L.C.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BOYD GAMING CORPORATION
Date: August 6, 1997 /s/ KEITH E. SMITH
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Keith E. Smith
Senior Vice President and Controller
(Chief Accounting Officer)
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Index to Exhibits
<TABLE>
<CAPTION>
Exhibit Description
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<S> <C>
2.1 Purchase Agreement, dated as of July 11, 1997, by and among Boyd Gaming Corporation, Boyd
Kenner, Inc., Boyd Louisiana, L.L.C., Treasure Chest Casino, L.L.C., and certain members of
Treasure Chest Casino, L.L.C.
</TABLE>
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EXHIBIT 2.1
PURCHASE AGREEMENT
Purchase Agreement, dated as of July 11, 1997, by and among Boyd
Kenner, Inc., a Louisiana corporation ("BKI"), Boyd Louisiana, L.L.C., a Nevada
limited liability company ("Purchaser"), Boyd Gaming Corporation, a Nevada
corporation ("Guarantor"), Treasure Chest Casino, L.L.C., a Louisiana limited
liability company ("Treasure Chest"), and each of the persons set forth on
Exhibit A hereto (such persons collectively, the "Selling Members," and
severally, a "Selling Member").
WHEREAS, each Selling Member is the record and beneficial owner of the
number of issued and outstanding units of Treasure Chest set forth opposite such
Selling Member's name in Exhibit A hereto (individually as to a Selling Member
and collectively as to all Selling Members, the "Units");
WHEREAS, Purchaser wishes to purchase or acquire, from each Selling
Member, and each Selling Member wishes to sell, assign and transfer to Purchaser
all of his, her or its Units for the purchase price and upon the terms and
subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements made herein and of the mutual benefits to
be derived hereby, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE UNITS
1.1. Purchase and Sale of the Units. Subject to and upon the terms and
conditions set forth in this Agreement, each Selling Member agrees that at the
Closing (as hereinafter defined), he, she or it will transfer, sell and assign,
and Purchaser agrees that at the Closing, Purchaser will purchase and acquire
his, her or its Units, as set forth opposite his, her or its name in Exhibit A
hereto.
1.2. Purchase Price. In consideration of the transfer, sale and
assignment of the Units by the Selling Members, Purchaser agrees that at the
Closing, Purchaser will pay to or for the account of the Selling Members an
aggregate purchase price of $103,670,000, subject to adjustment as provided for
in this Section 1.2 (the "Purchase Price"), consisting of (i) $100,670,000,
subject to adjustment (the "Cash Amount" and, as adjusted, the "Adjusted Cash
Amount") and (ii) $3,000,000 (the "Escrow Fund"). The amount of the Purchase
Price payable to each Selling Member, allocated as between the Cash Amount and
the Escrow Fund, is set forth opposite his, her or its name in Exhibit A hereto.
The Cash Amount shall be (i) increased by an amount equal to 85 percent of the
amount, if any, by which Working Capital (as hereinafter defined) at the
Effective Date (as hereinafter defined) exceeds $5,100,000 and (ii) decreased by
an amount equal to 85 percent of the amount, if any, by which Working Capital at
the Effective Date is less than $5,100,000. For purposes of this Agreement,
"Working Capital" shall mean current assets minus current liabilities, exclusive
of the current
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portion of long-term debt, as determined by the Effective Date Balance Sheet,
which shall be the balance sheet of Treasure Chest as of the Effective Date
prepared jointly by BKI, Treasure Chest and the Members' Representative and
consistent with the financial statements of Treasure Chest as historically
presented. The parties agree that Treasure Chest shall continue to make normal
quarterly cash flow distributions, determined in accordance with past practice
and procedure in the ordinary course, through the Effective Date.
1.3. Post-Closing Purchase Price Adjustment. In the event any asset or
liability (or the facts, conditions or events giving rise to any such asset or
liability), arose, existed or accrued on or before the Closing Date (other than
any Claims and Damages otherwise subject to indemnification under Section 7.1)
which was not provided for or adequately reserved against in the Effective Date
Balance Sheet and which asset or liability is discovered on or prior to the one
year anniversary of the Closing Date (the amount of each such asset or liability
herein, an "Adjustment Amount"), and the amount of such assets or liabilities
exceed in the aggregate $100,000, the Purchase Price shall be (a) increased, in
the case of an asset, by an amount equal to 85 percent of such Adjustment
Amount; provided, however, that in no event shall such increase, in the
aggregate, exceed the lesser of (i) the remaining balance of the Escrow Fund at
the date of such discovery and (ii) $3,000,000, which amount shall be paid
pro-rata to the Selling Members as soon as practicable but in no event more than
one year from the Closing Date and, (b) decreased, in the case of a liability,
by an amount equal to 85 percent of the Adjustment Amount, which amount shall be
recoverable and payable to Purchaser solely and exclusively from the Escrow Fund
pursuant to the terms and conditions of the Escrow Agreement. Notwithstanding
anything in this Section 1.3 to the contrary, no adjustment to the Purchase
Price shall be made for any payments made after Closing for any liabilities,
costs or expenses related to or associated with the sales tax and litigation
matters set forth on Schedule 1.3 (collectively, the "Excluded Liabilities");
provided that liabilities, costs and expenses related to or associated with the
litigation matters listed in Schedule 1.3 do not exceed in the aggregate
$250,000. All liabilities, costs and expenses related to or associated with the
litigation matters listed in Schedule 1.3 in excess of $250,000 shall be subject
in all respects to the purchase price adjustment provisions of this Section 1.3.
Prior to the Closing, all decisions relating to or associated with the Excluded
Liabilities shall be made consistent with the prior practices of Treasure Chest.
1.4. Escrow Agreement. BKI, Purchaser and each Selling Member agree, at
the Closing, to enter into the Escrow Agreement, substantially in the form
attached hereto as Exhibit B, with the Escrow Agent (as defined therein)
providing for the escrow of the Escrow Fund subject to the terms and conditions
of the Escrow Agreement.
1.5. Guaranty. Guarantor, shall deliver contemporaneously with the
execution of this Agreement, its Guaranty, in the form attached hereto as
Exhibit C, providing for the guarantee by Guarantor of the performance by BKI
and Purchaser of their obligations under this Agreement.
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ARTICLE II
THE CLOSING
2.1. Place and Date. The closing of the purchase and sale of the Units
(the "Closing") shall take place at the offices of McGlinchey Stafford, A
Professional Limited Liability Company, 643 Magazine Street, New Orleans,
Louisiana 70130, at 9:00 A.M., New Orleans time, at the election of the Members'
Representative delivered in writing to BKI at least ten days prior to the date
that the application of Treasure Chest to the Louisiana Gaming Control Board is
placed on its agenda, either (a) on the date which is two business days after
the Effective Date (as hereinafter defined), or (b) on the date which is ten
business days after the Effective Date, or, in each such case, on such other
date following the Effective Date upon which the parties may agree (each such
date, the "Closing Date"). The term "Effective Date" shall mean, in the case of
clause (a) above, the date upon which all of the conditions set forth in Article
V of this Agreement are satisfied (or waived, if permitted) and, in the case of
clause (b) above, the earlier of (i) the date which is 15 days after all of the
conditions set forth in Article V of this Agreement are satisfied (or waived, if
permitted) and (ii) the last day of the month in which all of the conditions set
forth in Article V are satisfied (or waived, if permitted). The transactions
contemplated by this Agreement shall be effective on the applicable Effective
Date.
2.2. Payment of Purchase Price; Delivery of Related Agreements. On the
terms and subject to the conditions set forth in this Agreement, at the Closing,
Purchaser shall (i) pay by wire transfer of immediately available funds to a
joint account maintained by the Seller's Representative for the benefit of the
Selling Members the Adjusted Cash Amount, which amount shall be disbursed pro
rata to the Selling Members by the Members' Representative after the payment of
related expenses, (ii) deliver to the Escrow Agent the Escrow Fund and the
Escrow Agreement, duly executed by BKI and Purchaser, (iii) deliver to each of
the Selling Members a copy of the Escrow Agreement, duly executed by BKI,
Purchaser and the Escrow Agent.
2.3. Delivery of the Units; Delivery of Escrow Agreement. On the terms
and subject to the conditions set forth in this Agreement, at the Closing, (i)
the Members' Representative shall deliver to Purchaser certificates representing
the Units, duly endorsed in blank or accompanied by other instruments of
transfer duly executed in blank by the Selling Members, (ii) the Members'
Representative shall deliver to BKI and Purchaser an amendment to the Operating
Agreement, duly executed by each of the Selling Members, pursuant to which the
Selling Members withdraw as Members of Treasure Chest and Purchaser is admitted
as a Member of Treasure Chest, (iii) the Members' Representative shall deliver
to BKI and Purchaser the Unanimous Consent of the Members of Treasure Chest and
Managers of the Executive Committee and the Chief Executive Officer of Treasure
Chest (collectively, the "Managers ") and the Amendment and Restatement of the
Articles of Organization substantially in the form attached hereto as Exhibits D
and E, duly executed by each of the Selling Members and the Managers, as
applicable; and (iv) the Members' Representative shall deliver to Purchaser and
to the Escrow Agent one or more copies of the Escrow Agreement, duly executed by
each of the Selling Members.
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2.4. Management Agreement. Treasure Chest, BKI, BL and the Selling
Members agree that all obligations of BKI under the Management Agreement, dated
August 30, 1993, between Treasure Chest and BKI (the "Management Agreement"),
whether known or unknown, absolute, contingent or otherwise and whether due or
to become due, which arose, existed or accrued prior to the Effective Date,
shall remain in full force and effect and may be enforced by the Selling Members
or the Members' Representative against BKI, Purchaser and Guarantor, as solidary
obligors.
2.5. Other Matters. At the Closing, there shall also be delivered to
BKI, Purchaser and the Members' Representative, as the case may be, the opinions
of counsel and other documents, certificates and instruments to be delivered
pursuant to Article V below.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of the Selling Members. Each
Selling Member (with respect to himself, herself or itself but not with respect
to any other Selling Member) represents and warrants to BKI and Purchaser as
follows:
3.1.1. Authorization, etc. Such Selling Member has the requisite
power and authority to execute and deliver this Agreement, to perform fully his,
her or its obligations hereunder, and to consummate the transactions
contemplated hereby. Such Selling Member has duly executed and delivered this
Agreement and on the Closing Date such Selling Member will have duly executed
and delivered the Escrow Agreement. This Agreement is, and on the Closing Date
the Escrow Agreement will be, a legal, valid and binding obligation of such
Selling Member, enforceable against him, her or it in accordance with their
respective terms.
3.1.2. Title to Units. Such Selling Member, with respect to the
Units owned by him, her or it, hereby represents and warrants that he, she or it
owns, beneficially and of record, all of the Units which are listed on Exhibit A
as owned by him, her or it, which Units shall be, at Closing, free and clear of
all liens, pledges, assessments, charges, security interests, claims or other
encumbrances of any kind (each, a "Lien"), such Units represent the entirety of
the Selling Member's ownership interest in Treasure Chest and all of such Units
are duly and validly issued and fully paid and, upon the consummation of the
transactions contemplated by this Agreement, at the Closing, Purchaser will
acquire good and valid title to such Units, free and clear of any Liens.
3.1.3. No Conflicts, etc. Provided that the consents specifically
contemplated by Sections 5.1.2, 5.1.3 and 5.1.4 of this Agreement are obtained,
the execution delivery and performance by such Selling Member of this Agreement
and the Escrow Agreement, and the consummation of the transactions by such
Selling Member contemplated hereby and thereby, do not and will not conflict
with or result in a violation of or a default under (with or without the giving
of notice or the lapse of time or both) or create in any other person a right or
claim of termination, amendment, modification, acceleration or cancellation
under (i) to the knowledge
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of such Selling Members, any law, statute, ordinance, governmental rule or
regulation (each, a "Law") applicable to such Selling Member, or (ii) any
contract (whether written or oral), agreement, arrangement or other instrument
(each, a "Contract") to which such Selling Member is a party or, to the
knowledge of such Selling Member, by which he, she or it may be bound or
affected, except, in the case of clause (ii), for violations or defaults that,
individually and in the aggregate, would not have a Material Adverse Effect (as
hereinafter defined) on the business, results of operations, condition
(financial or otherwise) or properties of Treasure Chest and would not
materially impair the ability of such Selling Member to perform his, her or its
obligations hereunder or under the Escrow Agreement. For purposes of this
Agreement, Material Adverse Effect shall mean a material adverse change in or
effect upon the business, results of operation, condition (financial or
otherwise) or properties of Treasure Chest. The term "Laws" shall include,
without limitation, all laws, rules and regulations governing or relating to
current or contemplated riverboat casino and gaming activities, including, but
not limited to, the Louisiana Gaming Control Law (LSA-RS 27:1 et seq.) and all
predecessor or successor laws thereto and all rules, orders, directives and
regulations issued or promulgated thereunder. Except as specified in Schedule
3.1.3 and except for such approvals as may be required under the Louisiana
Gaming Control Law, no governmental approval or other approval or other consent
of any party is required to be obtained or made by such Selling Member in
connection with the execution and delivery of this Agreement or the Escrow
Agreement or the consummation of the transactions contemplated hereby or
thereby.
3.1.4. Absence of Undisclosed Liabilities. To the knowledge of
such Selling Member, Treasure Chest has no liabilities or obligations of any
nature, whether known or unknown, absolute, accrued, contingent or otherwise and
whether due or to become due, except (a) as set forth in Schedule 3.1.4, (b) as
and to the extent disclosed and adequately reserved against in the unaudited
balance sheet (the "April Balance Sheet") of Treasure Chest as of April 30, 1997
(the "Balance Sheet Date") and (c) for liabilities and obligations that (i) were
incurred after the Balance Sheet Date, in the ordinary course of business
consistent with prior practice and (ii) individually and in the aggregate are
not material to Treasure Chest and have not had or resulted in, and will not
have or result in, a Material Adverse Effect.
3.1.5. Litigation. Except as set forth in Schedule 3.2.7, there is
no action, suit, proceeding or arbitration, or any citation, summons or subpoena
served on such Selling Member or, to the knowledge of such Selling Member, any
claim, demand, inquiry or investigation of any nature, civil, criminal,
regulatory or otherwise, in law or in equity, pending or, to the knowledge of
such Selling Member, threatened against or relating to such Selling Member with
respect to Treasure Chest, the Units or, to the knowledge of such Selling
Member, against or relating to the transactions contemplated by this Agreement.
3.1.6. Contracts. (a) Except as set forth on Schedule 3.1.6 and
except for Contracts entered into in the ordinary course of business consistent
with prior practice, neither such Selling Member nor any of its affiliates has
executed or entered into any Contract for or on behalf of Treasure Chest, or by
which Treasure Chest or any of its properties or assets is bound or affected,
which Contract is in effect on the date hereof.
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(b) Schedule 3.2.10(b) attached hereto contains
a true and complete list of any Contracts which are effective as of the date of
this Agreement between or among Treasure Chest, on the one hand, and (i) such
Selling Member and/or (ii) any one or more affiliates of such Selling Member, on
the other hand. For purposes of this Section 3.1.6, and Sections 3.2.10(b), 3.6
and 4.2.4 hereof, the term "affiliates" shall include "affiliates" and
"associates" as defined in Rule 12b-2 under the Securities Exchange Act of 1934
but shall exclude Treasure Chest.
3.1.7. Disclosure. To the knowledge of such Selling Member, no
representation or warranty by Treasure Chest and the Selling Members contained
in this Agreement nor any statement or certificate furnished or to be furnished
by or on behalf of Treasure Chest or any Selling Member to BKI, Purchaser or
their representatives in connection herewith or pursuant hereto contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to make the statements contained herein or therein
not misleading.
3.2. Representations and Warranties of Treasure Chest and Robert J.
Guidry. Each of Treasure Chest and Robert J. Guidry ("Guidry") makes the
representations and warranties set forth in this Section 3.2 to BKI and
Purchaser. When a representation and warranty is made herein to the knowledge of
Treasure Chest, the knowledge of Treasure Chest shall be limited to the
knowledge of any present member of the Executive Committee of Treasure Chest.
3.2.1. Authorization, etc. Treasure Chest has the requisite power
and authority to execute and deliver this Agreement, to perform fully its
obligations hereunder, and to consummate the transactions contemplated hereby.
The execution and delivery by Treasure Chest of this Agreement and the
consummation of the transactions contemplated hereby, have been duly authorized
by all requisite corporate action of Treasure Chest. Treasure Chest has duly
executed and delivered this Agreement. This Agreement is a legal, valid and
binding obligation of Treasure Chest, enforceable against it in accordance with
its terms
3.2.2. Status. (a) Treasure Chest is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Louisiana, with full power and authority to carry on its business and
to own or lease and to operate its properties as and in the places where such
business is conducted and such properties are owned, leased or operated.
(b) Treasure Chest is duly qualified or licensed
to do business in each of the jurisdictions in which the operation of its
business or the character of the properties owned, leased or operated by it
makes such qualification or licensing necessary.
(c) Treasure Chest has delivered to BKI complete
and correct copies of its Articles of Organization and Operating Agreement, as
amended and in effect on the date hereof. Treasure Chest is not in violation of
any of the provisions of its Articles of Organization or Operating Agreement.
The minute books and other records of Treasure Chest as made available to BKI
prior to the execution of this Agreement contain a true and complete
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record, in all material respects, of all action taken at all meetings and by all
written consents in lieu of meetings of the members, managers and executive
committee of Treasure Chest. The Unit transfer ledgers and other similar records
of Treasure Chest as made available to BKI Prior to the execution of this
Agreement currently reflect all record transfers prior to the execution of this
Agreement in the membership interests of Treasure Chest.
3.2.3. Capitalization, etc. The authorized, issued and outstanding
membership interests of Treasure Chest consist solely of 10,000 Units and the
record ownership of the Units is as set forth in Exhibit A hereto. Except for
this Agreement, no subscriptions, options, warrants, conversion or other rights,
agreements, commitments arrangements or understandings of any kind obligating
Treasure Chest contingently or otherwise, to issue or sell, or cause to be
issued or sold, any Units, or any securities convertible into or exchangeable
for any such Units are outstanding, and no authorization therefor has been
given. There are no outstanding contractual or other rights or obligations to or
of Treasure Chest to repurchase, redeem or otherwise acquire any outstanding
Units.
3.2.4. No Conflicts, etc. Provided that the consents specifically
contemplated by Sections 5.1.2, 5.1.3 and 5.1.4 of this Agreement are obtained,
the execution, delivery and performance by Treasure Chest of this Agreement and
the consummation of the transactions contemplated hereby, do not and will not
conflict with or result in a material violation of or a material default under
(with or without the giving of notice or the lapse of time or both), create in
any other person a material right or claim of termination, amendment,
modification, acceleration or cancellation of, or result in the creation of any
Lien, except for (i) Liens for taxes accrued but not yet payable, (ii) Liens
arising as a matter of law in the ordinary course of business; provided that the
obligations secured by such Liens are not delinquent or are being contested in
good faith, and (iii) such imperfections of title and encumbrances, if any, as
do not materially detract from the value of or materially interfere with the
present use of any such properties or assets or the pending sale of such owned
properties or assets (the Liens and other matters described in (i), (ii) and
(iii), each, a "Permitted Lien") upon any of the properties or assets of
Treasure Chest under, (i) to the knowledge of Treasure Chest and Guidry, any Law
applicable to Treasure Chest or any of its properties or assets, (ii) the
Articles of Organization or Operating Agreement of Treasure Chest or (iii) to
the knowledge of Treasure Chest and Guidry, except as set forth in Schedule
3.2.4, any Contract to which Treasure Chest is a party or by which it or any of
its properties or assets may be bound or affected, except, in the case of clause
(iii), for violations or defaults that, individually and in the aggregate, would
not have a Material Adverse Effect and would not materially impair the ability
of Treasure Chest to perform its obligations hereunder. To the knowledge of
Treasure Chest and Guidry, except as specified in Schedule 3.2.4, no
governmental approval or other approval or other consent of any party is
required to be obtained or made by Treasure Chest in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
3.2.5. Absence of Undisclosed Liabilities. To the knowledge of
Treasure Chest and Guidry, Treasure Chest has no liabilities or obligations of
any nature, whether known or unknown, absolute, accrued, contingent or otherwise
and whether due or to become due, except (a) as set forth in Schedules 3.2.5 and
3.2.7, (b) as and to the extent disclosed and
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adequately reserved against in the April Balance Sheet, and (c) for liabilities
and obligations that (i) were incurred after the Balance Sheet Date, in the
ordinary course of business consistent with prior practice and (ii) individually
and in the aggregate are not material to Treasure Chest and have not had or
resulted in, and will not have or result in, a Material Adverse Effect.
3.2.6. Absence of Changes. To the knowledge of Treasure Chest and
Guidry, since the Balance Sheet Date, Treasure Chest has conducted its business
only in the ordinary course of business consistent with prior practice and has
not, without the knowledge of BKI as manager under the Management Agreement or
of Guarantor:
(a) suffered any Material Adverse Effect;
(b) declared, set aside, made or paid any
dividend or other distribution in respect of its membership interests or
otherwise purchased or redeemed, directly or indirectly, any Units, except as
provided for in Section 1.2 of this Agreement;
(c) issued or sold any Units or any securities
convertible into or exchangeable for any such Units, or issued, sold, granted or
entered into any subscriptions, options, warrants, conversion or other rights,
agreements, commitments, arrangements or understandings of any kind, contingent
or otherwise, to purchase or otherwise acquire any such Units or any securities
convertible into or exchangeable for any such Units;
(d) incurred any indebtedness for borrowed
money, issued or sold any debt securities or prepaid any debt (including,
without limitation, any borrowings from or prepayments to any Selling Member);
(e) mortgaged, pledged or otherwise subjected to
any Lien (other than any Permitted Lien), any of its properties or assets,
tangible or intangible;
(f) forgiven, canceled, compromised, waived or
released any debts, claims or rights, except for debts of, or claims and rights
against, persons other than any Selling Member that have been forgiven,
canceled, compromised, waived or released in the ordinary course of business;
(g) amended, modified or terminated any existing
Contract or entered into (i) any agreement, commitment or other transaction,
other than agreements entered into in the ordinary course of business and
involving an expenditure of less than $25,000 in each individual case and
$100,000 in the aggregate, or (ii) any agreement or commitment that, pursuant to
its terms, is not cancelable without penalty on notice of 30 days or less from
the end of the first month following the Closing Date;
(h) paid or committed to pay any bonus, other
incentive compensation, change in control or similar compensation to any
officer, director, manager, employee, sales representative, agent or consultant,
or granted or committed to grant to any officer, director, manager, employee,
sales representative, agent or consultant any other
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increase in, or additional, compensation in any form, except for customary
amounts paid in the ordinary course of business in accordance with prior
practice;
(i) entered into, instituted, adopted or amended
or committed to enter into, institute, adopt or amend any employment,
consulting, retention, change-in-control, collective bargaining, bonus or other
incentive compensation, option or other equity, severance, deferred compensation
or other employment, compensation or benefit plan, policy, agreement, trust,
fund or arrangement in respect of or for the benefit of any officer, director,
manager, employee, sales representative, agent, consultant, affiliate or Selling
Member (whether or not legally binding), other than customary employment,
consulting or other agreements and arrangements in the ordinary course of
business in accordance with prior practice;
(j) amended either of its Articles of
Organization or Operating Agreement;
(k) incurred, assumed, guaranteed or otherwise
become directly or indirectly liable with respect to any liability or obligation
in excess of $25,000 in each case or $100,000 in the aggregate at any one time
outstanding (whether absolute, accrued, contingent or otherwise and whether
direct or indirect, or as guarantor or otherwise with respect to any liability
or obligation of any other person) other than agreements for purchases of goods
or services in the ordinary course of business;
(1) sold any assets with a value in excess of
525,000 in each case or S100,000 in the aggregate, except for sales of assets in
the ordinary course of business;
(m) received any notice of termination of any
Contract, lease, or other agreement which, in any case or in the aggregate,
would have or result in a Material Adverse Effect;
(n) made any capital expenditures or capital
additions or improvements in excess of an aggregate of $100,000;
(o) entered into any transaction, Contract or
commitment other than in the ordinary course of business, or paid or agreed to
pay any legal, accounting, brokerage, finder's fees, taxes or other expenses in
connection with, or incurred any severance pay obligations by reason of, this
Agreement or the transactions contemplated hereby;
(p) transferred or granted any rights under, or
entered into any settlement regarding the breach or infringement of, any United
States or foreign patents, trademarks, service marks, trade names, trade dress,
logos, business and product names, slogans, trade secrets and know-how,
copyrights, and intellectual property rights to or similar to and registrations
and applications relating to any of the foregoing (each and collectively,
"Intellectual Property"), or modified any existing rights with respect thereto;
(q) instituted, settled or agreed to settle any
litigation, action or proceeding before any court, or governmental body other
than in the ordinary course of
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business consistent with prior practice but not in any case involving amounts in
excess of $25,000; or
(r) taken any action or omitted to take any
action that would result in the occurrence of any of the foregoing.
3.2.7. Litigation. To the knowledge of Treasure Chest and \Guidry,
except as set forth in Schedule 3.2.7, there is no action, claim, demand, suit,
proceeding, arbitration, citation, summons, subpoena, inquiry or investigation
of any nature, civil, criminal, regulatory or otherwise, in law or in equity,
pending or threatened against or relating to Treasure Chest or against or
relating to the transactions contemplated by this Agreement.
3.2.8. Compliance with Laws and Other Instruments; Governmental
Approvals. (a) To the knowledge of Treasure Chest and Guidry, and except as set
forth in Schedule 3.2.7, Treasure Chest is not in violation of or default under
(i) any Law applicable to it or any of its properties or business, (ii) any
provision of its Articles of Organization or Operating Agreement or (iii) any
Contract, or any other material agreement or instrument to which it is party or
by which it or any of its properties is bound or affected, except for any such
violations of and defaults under any such Law, Contract or other agreement or
instrument that, individually and in the aggregate, would not have a Material
Adverse Effect.
(b) To the knowledge of Treasure Chest and
Guidry, all material governmental approvals necessary for the conduct of the
business and operations of Treasure Chest have been duly obtained and are in
full force and effect. As of the date hereof, to the knowledge of Treasure Chest
and Guidry, except as set forth in Schedule 3.2.7, there are no proceedings
pending or threatened that would result in the revocation, cancellation or
suspension, or any materially adverse modification, of any such governmental
approval, and the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not result in any such revocation,
cancellation, suspension or modification.
3.2.9. Title to Assets. (a) On the Balance Sheet Date, Treasure
Chest had, and as of the date of this Agreement has, good and merchantable title
to the vessel upon which the gaming operations of Treasure Chest are conducted
(the "Riverboat") and the entertainment barge (the "Barge") moored adjacent to
the Riverboat. To the knowledge of Treasure Chest and Guidry, Treasure Chest has
good and merchantable title to all other material properties and assets
reflected on the April Balance Sheet and all real property and all other
material properties and assets acquired since such date, in each case free and
clear of all Liens (other than any Permitted Lien), except as set forth on
Schedule 3.2.9(a). To the knowledge of Treasure Chest and Guidry, Treasure Chest
owns, or has valid leasehold interests in, all material properties and assets
used in the conduct of its business as now conducted. Treasure Chest has rights
of ingress and egress with respect to its owned or leased real property and all
buildings, structures, facilities, fixtures and other improvements thereon.
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(b) To the knowledge of Treasure Chest and
Guidry, with respect to each lease of any real property or a material amount of
personal property to which Treasure Chest is a party, (i) such lease is a legal,
valid and binding agreement, is in full force and effect and is enforceable
against Treasure Chest and each other party thereto, in accordance with its
terms; (ii) all rents and other monetary amounts that have become due and
payable thereunder have been paid or accrued; (iii) there exists no material
default, or event, occurrence, condition or act, which with the giving of
notice, the lapse of time or the happening of any further event, occurrence,
condition or act would become a default under such lease, and which would result
in a Material Adverse Effect; and (iv) the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will not
constitute a breach under, or cause a termination of, such lease, which would
result in a Material Adverse Effect. To the knowledge of Treasure Chest and
Guidry, except as set forth on Schedule 3.2.9(b), no consent of any third party
is required under any such lease as a result of or in connection with, and the
enforceability of any lease will not be affected in any manner by, the
execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby.
(c) To the knowledge of Treasure Chest and
Guidry, Treasure Chest has no legal obligation, absolute or continent, to any
other person to sell or otherwise dispose of any substantial part of its assets;
or to sell to dispose of any material assets except in the ordinary course of
business consistent with prior practice.
(d) To the knowledge of Treasure Chest and
Guidry, none of Treasure Chest's owned or leased real property, buildings,
structures, facilities, fixtures or other improvements, or the use thereof,
contravenes or violates any building, zoning, administrative, occupational
safety and health or other applicable Law in any material respect.
(e) To the knowledge of Treasure Chest and
Guidry, there is no writ, injunction, decree, order or judgment outstanding, nor
any action, claim, suit or proceeding, pending or threatened, relating to the
ownership, lease, use, occupancy or operation of any such real property or the
improvements thereon.
3.2.10. Contracts. (a) Except as set forth on Schedule 3.1.6 and
except for Contracts entered into in the ordinary course of business consistent
with prior practices, neither Guidry nor, to the knowledge of Treasure Chest and
Guidry, any Selling Member, has executed or entered into any Contract for or on
behalf of Treasure Chest, or by which Treasure Chest or any of its properties or
assets is bound or affected, which Contract is in effect on the date hereof. To
the knowledge of Treasure Chest and Guidry, Schedule 3.2.10(a) attached hereto
contains a true and complete list of each Contract to which Treasure Chest is a
party and which involves payments or amounts exceeding $100,000 per annum,
except for Contracts entered into in the ordinary course of business consistent
with prior practices. To the knowledge of Treasure Chest and Guidry, all
Contracts listed in Schedule 3.2.10(a) are in full force and effect and
enforceable against Treasure Chest and each other party thereto, in accordance
with its terms. To the knowledge of Treasure Chest and Guidry, there does not
exist under any Contract listed in Schedule 3.2.10(a) any event of default or
event or condition that, after notice or lapse of time or both, would constitute
a violation, breach or event of default thereunder on
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the part of Treasure Chest or an other party thereto, except for such events or
conditions that, individually and in the aggregate, (i) have not had or resulted
in, and will not have or result in, a Material Adverse Effect and (ii) have not
and will not materially impair the ability of Treasure Chest to perform its
obligations hereunder. To the knowledge of Treasure Chest and Guidry, except as
set forth in Schedule 3.2.10(a), no consent of any third party is required under
any Contract listed in Schedule 3.2.10(a) as a result of or in connection with,
and the enforceability of any such Contract will not be affected in any manner
by, the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
(b) Schedule 3.2.10(b) attached hereto contains
a true and complete list of any Contracts between or among Treasure Chest, on
the one hand, and (i) any one or more Selling Members and/or (ii) any one or
more affiliates of a Selling Member, on the other hand.
3.2.11. Licenses. To the knowledge of Treasure Chest and Guidry,
except as set forth in Schedule 3.2.11 and subject to Section 3.5, Treasure
Chest has all necessary licenses, permits, approvals, registrations and similar
consents and authorizations (including without limitation, those required to
conduct the riverboat gaming activities which it is presently conducting)
(individually, a "License" and, collectively, the "Licenses") required to
lawfully conduct its business as presently conducted, including but not limited
to all material Licenses required for Treasure Chest to operate as it currently
operates and in accordance with all applicable Laws or orders or permits of any
governmental authority, and, to the knowledge of Treasure Chest and Guidry,
except as set forth in Schedule 3.2.11; (a) each such License is valid, binding
and in full force and effect, (b) no such License is subject to revocation or
forfeiture by virtue of any existing circumstance, (c) there is no pending or
threatened proceeding to modify in any material respect or revoke any material
License, (d) no such License is subject to any outstanding order, decree,
judgment or stipulation known to Treasure Chest or Guidry that would materially
affect such License, and (e) Treasure Chest is not, and has not 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 such License.
3.2.12. Intellectual Property. (a) Title. To the knowledge of
Treasure Chest and Guidry, Schedule 3.2.12(a) contains a complete and correct
list of all Intellectual Property that is owned by Treasure Chest, other than
Intellectual Property that is both not registered of subject to application for
registration and not material to the business of Treasure Chest. To the
knowledge of Treasure Chest and Guidry, all Intellectual Property related to,
used in, held for use in connection with, or necessary for the conduct of, or
otherwise material to, the business of Treasure Chest (the "Intellectual
Property Assets") are owned by Treasure Chest, except as disclosed on Schedule
3.2.12(a).
(b) No Infringement. To the knowledge of
Treasure Chest and Guidry, the conduct of its business by Treasure Chest does
not infringe or otherwise conflict with any rights of any person in respect of
any Intellectual Property. To the knowledge of Treasure Chest and Guidry, none
of the Intellectual Property Assets is being infringed.
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(c) Licensing Arrangements. To the knowledge of
Treasure Chest and Guidry, there are no Contracts, agreements or arrangements
pursuant to which Treasure Chest has licensed any Intellectual Property Assets
to, or the use of such Intellectual Property Assets is otherwise permitted
(through non-assertion, settlement or similar agreements or otherwise) by, any
other person. To the knowledge of Treasure Chest and Guidry, there are no
Contracts, agreements or arrangements pursuant to which Treasure Chest has had
Intellectual Property primarily related to, used in, held for use primarily in
connection with, or necessary for the conduct of or otherwise material to its
business licensed to it, or has otherwise been permitted to use such
Intellectual Property (through non-assertion, settlement or similar agreements
or otherwise) (other than off-the-shelf commercially available software).
(d) No Intellectual Property Litigation. To the
knowledge of Treasure Chest and Guidry, no claim or demand of any person has
been made nor is there any proceeding chat is pending or threatened, which (i)
challenges the rights of Treasure Chest in respect of any Intellectual Property
Assets or (ii) asserts that Treasure Chest is infringing or otherwise in
conflict with, or is required to pay any royalty, license fee, charge or other
amount with regard to, any Intellectual Property.
3.2.13. Environmental Matters. To the knowledge of Treasure Chest
and Guidry:
(a) Except for the matters set forth on Schedule
3.2.13, no liability under any citations, fines or penalties has been asserted
against Treasure Chest since January 1, 1993, under any court order or decree,
or Law, ordinance, rule, regulation, notice, plan or demand letter relating to
pollution or protection of human health, safety or the environment, including
those relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes into the environment (including without limitation, ambient air,
surface water, ground water, soil, wetlands, subsurface strata or land) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, chemicals,
or industrial, toxic or hazardous substances or wastes, or use of wetlands
(each, an "Environmental Law Requirement").
(b) (i) Treasure Chest has obtained all Licenses
that are required to be obtained by it in connection with the operation of its
businesses and ownership of its properties (collectively, the "Subject
Properties") under any applicable Environmental Law Requirements, except where
failure to obtain such Licenses would not have a Material Adverse Effect;
(ii) Treasure Chest is in compliance in all
respects with all terms and conditions of such Licenses and with all applicable
Environmental Law Requirements, except where the failure to so comply would not
have a Material Adverse Effect;
(iii) there are no past or present events,
conditions, circumstances, activities or plans, in each case by or relating in
any manner to Treasure Chest
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or its use of the Subject Properties that did or would violate or prevent
compliance or continued compliance with any Environmental Law Requirement or
give rise to any Environmental Liability (as hereinafter defined), except for
such matters as would not have a Material Adverse Effect;
(iv) there is no civil, criminal or
administrative action, suit, demand, claim, order, judgment, hearing, notice or
demand letter, notice of violation, investigation or proceeding pending or, to
the knowledge of Treasure Chest or Guidry, threatened by any person against
Treasure Chest, or any prior owner of any of the Subject Properties, and
relating in any way to any Environmental Law Requirement or seeking to impose
any Environmental Liability, except for such matters as would not have a
Material Adverse Effect;
(v) all river dredging operations and
disposal of dredge spoils have been carried out in compliance in all respects
with all applicable Environmental Law Requirements, except where the failure to
so comply would not have a Material Adverse Effect;
(vi) no hazardous material has been
recycled, treated, stored, disposed of or released by Treasure Chest at any
location; and
(vii) there have been no environmental
investigations, studies, audits, tests, reviews or other analyses conducted by,
or that are in the possession of, Treasure Chest in relation to any site or
facility now or previously owned, operated or leased by Treasure Chest which
have not been delivered to BKI prior to the execution of this Agreement.
(c) "Environmental Liability" shall mean (i) any
liability or obligation arising under any Environmental Law Requirement that has
resulted in or is reasonably likely to result in a Material Adverse Effect, or
(ii) any liability or obligation under any other current theory of law or equity
(including without limitation, any liability for personal injury, property
damage or remediation) that results from, or is based upon or related to, the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handing, or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, chemical, or industrial,
toxic or hazardous substance or waste, which liability or obligation has
resulted in or is reasonably likely to result in a Material Adverse Effect.
3.2.14. Condition of Riverboat. To the knowledge of Treasure Chest
and Guidry, the hull and all major components of the Riverboat are in all
material respects in accordance with generally accepted industry practice for
vessels the its age, type and trade of the Riverboat in good working order and
in good operating condition, repair and maintenance. The Riverboat is classed
"Multese Cross A-1" with the American Bureau of Shipping without outstanding
recommendations or notations.
3.2.15. Brokers; Finders, etc. Except for the DLJ Agreement (as
hereinafter defined), Treasure Chest has not engaged any broker, finder,
consultant or intermediary in connection with the transactions contemplated by
this Agreement who would be entitled to a broker's, finder's or similar fee or
commission in connection therewith or upon the consummation thereof.
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3.2.16. Disclosure. To the knowledge of Treasure Chest and Guidry,
no representation or warranty by Treasure Chest and the Selling Members
contained in this Agreement nor any statement or certificate furnished or to be
furnished by or on behalf of Treasure Chest or any Selling Member to BKI,
Purchaser, or their representatives in connection herewith or pursuant hereto
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact required to make the statements contained
herein or therein not misleading.
3.3. Representations and Warranties of BKI, Purchaser and Guarantor.
BKI, Purchaser and Guarantor represent and warrant to Treasure Chest and each
Selling Member as follows:
3.3.1. Authorization, etc. BKI, Purchaser and Guarantor, as the
case may be, have the power and authority to execute and deliver this Agreement,
the Guarantee and the Escrow Agreement, to perform fully their respective
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by BKI, Purchaser
and Guarantor of this Agreement and by Guarantor of the Guarantee, and the
consummation of the transactions contemplated hereby and thereby have been, and
on the Closing Date the execution and delivery by BKI and Purchaser of the
Escrow Agreement, and the consummation of the transactions contemplated thereby
will have been, duly authorized by all requisite corporate action of BKI,
Purchaser and Guarantor, as the case may be. BKI, Purchaser and Guarantor, as
the case may be, have duly executed and delivered this Agreement and the
Guarantee, and on the Closing Date BKI and Purchaser will have duly executed and
delivered the Escrow Agreement. Each of this Agreement and the Guaranty is, and
on the Closing Date the Escrow Agreement will be, legal, valid and binding
obligations of BKI, Purchaser and Guarantor, as the case may be, enforceable
against such party in accordance with their respective terms.
3.3.2. Corporate Status. Each of BKI and Guarantor is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, with full corporate power and
authority to carry on its respective business. Purchaser is a limited liability
company duly organized, validly existing and in good standing, under the laws of
the jurisdiction of its organization, with full corporate power and authority to
carry on its business.
3.3.3. No Conflicts, etc. Provided that the consents specifically
contemplated by Sections 5.1.2, 5.1.3 and 5.1.4 of this Agreement are obtained,
the execution, delivery and performance by BKI, Purchaser and Guarantor of this
Agreement, by BKI and Purchaser of the Escrow Agreement, and by Guarantor of the
Guarantee, and the consummation of the transactions contemplated hereby and
thereby, do not and will not conflict with or result in a violation of or a
default under (with or without the giving of notice or the lapse of time or
both), create in any other person a right or claim of termination, amendment,
modification,
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acceleration or cancellation of, or result in the creation of any Lien (other
than any Permitted Lien), or any obligation to create any Lien, upon any of the
properties or assets of BKI, Purchaser or Guarantor under (i) any Law applicable
to BKI, Purchaser or Guarantor or any of the properties or assets of BKI,
Purchaser or Guarantor, (ii) the articles of incorporation or by-laws of BKI or
Guarantor or the Articles of Organization or Operating Agreement of Purchaser or
(iii) any Contract, agreement or other instrument to which BKI, Purchaser or
Guarantor is a party or by which BKI, Purchaser or Guarantor or any of their
properties or assets may be bound or affected, except, in the case of clause
(iii), for violations or defaults that, individually and in the aggregate, would
not have a material adverse effect on the business, results of operations,
condition (financial or otherwise) or properties of BKI, Purchaser or Guarantor,
taken as a whole (a "BKI Material Adverse Effect"), and would not materially
impair the ability of BKI, Purchaser or Guarantor, as the case may be, to
perform its respective obligations hereunder and under the Escrow Agreement or
the Guarantee.
3.3.4. Brokers; Finders, etc. BKI and Purchaser have not engaged
any broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement who would be entitled to a broker's,
finder's or similar fee or commission in connection therewith or upon the
consummation thereof.
3.3.5. Purchase for Investment. Purchaser is purchasing the Units
solely for investment, with no present intention to resell the Units. BKI and
Purchaser hereby acknowledge that the Units have not been registered pursuant to
the Securities Act of 1933 or other applicable Law and may not be transferred in
the absence of such registration or an exemption therefrom.
3.3.6. Disclosure. To the knowledge of BKI, Purchaser and
Guarantor, no representation or warranty by BKI, Purchaser or Guarantor
contained in this Agreement nor any statement or certificate furnished or to be
furnished by or on behalf of BKI to Treasure Chest and each Selling Member or
their representatives in connection herewith or pursuant hereto contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to make the statements contained herein or therein
not misleading.
3.4. No Duty to Inquire. When a representation or warranty under this
Article III is made to the knowledge of any Selling Member, there shall be no
duty on the part of such Selling Member to inquire of the employees of Treasure
Chest with respect to such representation or warranty.
3.5 Disclaimer of Certain Representations and Warranties.
3.5.1. Cruising Risks. Treasure Chest and the Selling Members
advised BKI, Purchaser and Guarantor that the Louisiana Gaming Control Board and
the Louisiana State Police are currently examining the cruising records of
Treasure Chest relating to compliance by Treasure Chest with the cruising
requirements of Louisiana law (the "Examination"). In view of the uncertainties
of the Examination, and notwithstanding any representations or warranties of
Treasure Chest or the Selling Members in this Agreement, express or implied,
Treasure
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Chest and the Selling Members hereby specifically disclaim any representation or
warranty that the Examination will not result in material administrative or
judicial actions or proceedings against Treasure Chest or that Treasure Chest
will not as a result thereof incur other Material Adverse Effects, including but
not limited to substantial fines, a declaration of the Kenner site as unsuitable
and/or revocation of the Treasure Chest gaming license (the "Riverboat Gaming
License") (such Material Adverse Effects resulting from the Examination,
collectively, the "Cruising Risks").
3.5.2. License Risks. Treasure Chest and the Selling Members have
advised BKI, Purchaser and Guarantor, and Purchaser and Guarantor acknowledge,
that they are aware that there is a pending federal grand jury proceeding in the
United States District Court for the Eastern District of Louisiana which is
investigating the making of political contributions, the awarding of riverboat
gaming licenses, the awarding of state contracts, and other matters (the
"Investigation"). In view of the uncertainties of the Investigation; and
notwithstanding any of the representations or warranties of Treasure Chest or
the Selling Members in this Agreement, express or implied, Treasure Chest and
the Selling Members hereby specifically disclaim any representation or warranty
that Treasure Chest will not incur Material Adverse Effects arising out of or
relating to the Investigation, including, but not limited to, suspension,
revocation, seizure or forfeiture of the Riverboat Gaming License or any asset
of the Company or any Selling Member (such Material Adverse Effects arising out
of or relating to the Investigation, collectively the "License Risks"). BKI,
Purchaser and Guarantor agree that in making their investment decisions, BKI,
Purchaser and Guarantor have not relied on, and have drawn no favorable
inference from, any failure of the Selling Members to disclose facts that may be
relevant to the License Risks and BKI, Purchaser and Guarantor have assumed that
the Investigation could result in Material Adverse Effects.
3.6. Accuracy of Representations and Warranties. No representation or
warranty under Sections 3.1 and 3.2 given by any Selling Member or Treasure
Chest shall be deemed to be breached by reason of any inaccuracy if the
inaccuracy of such representation or warranty was known by BKI, Purchaser or
Guarantor, or any affiliate of BKI, Purchaser or Guarantor (other than Treasure
Chest) at the time such representation or warranty was given.
ARTICLE IV
COVENANTS
4.1. Covenants of Treasure Chest, the Selling Members, BKI, Purchaser
and Guarantor.
4.1.1. Conduct of Business. On and after the date hereof and until
the Closing, except as expressly permitted or required by this Agreement or as
otherwise expressly consented to by BKI (with respect to acts of any one or more
Selling Members) or the Members' Representative (with respect to acts of BKI)
(in each case prior to or after the date hereof), none of the Selling Members
nor BKI will take any action that would cause Treasure Chest to:
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(a) (i) carry on the business of Treasure Chest
in a manner other than in the ordinary course, in substantially the same manner
as heretofore conducted, or (ii) be unable to preserve intact its present
business organization, maintain its properties in good operating condition and
repair, keep available the services of its present officers and significant
employees, or preserve its relationship with customers, suppliers and others
having business dealings with it, to the end that its Goodwill and going
business shall be in all material respects unimpaired as of the Closing;
(b) violate, or be unable to comply in all
material respects with, any Laws applicable to Treasure Chest and its business;
(c) fail to maintain Treasure Chest's good
standing in its jurisdiction of organization and in the jurisdictions in which
it is qualified to do business as a foreign limited liability company or fail to
maintain any Licenses, governmental approvals or consents necessary for, or
otherwise material to, Treasure Chest, and its business;
(d) merge or consolidate with, or agree to merge
or consolidated with, or purchase substantially all of the assets of, or
otherwise acquire, any business, business organization or division thereof, of
any other person;
(e) materially breach or be unable to perform in
all material respects any of its obligations under any Contracts and agreements
and instruments relating to or affecting Treasure Chest and its business;
(f) declare, set aside, make or pay any dividend
or other distribution in respect of its Units or otherwise purchase or redeem,
directly or indirectly, any Units, except that Treasure Chest shall continue to
make normal quarterly cash flow distributions, determined in accordance with
past practice and procedure in the ordinary course, through the Closing Date, as
provided for in Section 1.2 hereof;
(g) issue or sell any Units, or any securities
convertible into or exchangeable for any such Units, or issue, sell, grant or
enter into any subscriptions, options, warrants, conversion or other rights,
agreements, commitments, arrangements or understandings of any kind,
contingently or otherwise, to purchase or otherwise acquire any such Units;
(h) incur any indebtedness for borrowed money,
issue or sell any debt securities or prepay any debt (including, without
limitation, and borrowings from or prepayments to any Selling Member or other
affiliate) except for the repayment of indebtedness pursuant to current
amortization schedules in the ordinary course of business;
(i) amend either its Articles of Organization or
Operating Agreement;
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(j) mortgage, pledge or otherwise subject to any
Lien (other than any Permitted Lien), any of its real property or other
properties or assets, tangible or intangible, except in the ordinary course of
business;
(k) forgive, cancel, compromise, waive or
release any debts, claims or rights, except for debts of, or claims and rights
against, persons other than any Selling Member or other affiliate that are
forgiven, canceled, compromised, waived or released in the ordinary course of
business;
(1) amend, modify or terminate any existing
Contract or enter into (i) any agreement, commitment or other transaction, other
than agreements entered into the ordinary course of business and involving an
expenditure of less than $25,000 in each individual case and $100,000 in the
aggregate (other than purchases of goods or services in the ordinary course), or
(ii) any agreement or commitment that, pursuant to its terms, is not cancelable
without penalty on notice of 30 days or less from the end of the first month
following the Closing Date;
(m) pay or commit to pay any bonus, other
incentive compensation, change in control or similar compensation to any
officer, director, manager, employee, agent, consultant, Selling Member or
affiliate, or grant or commit to grant to any officer, director, manager,
employee, agent, consultant, Selling Member or affiliate any other increase in,
or additional, compensation in any form, except for customary amounts in the
ordinary course of business in accordance with prior practice;
(n) enter into, institute, adopt or amend or
commit to enter into, institute, adopt or amend any employment, consulting,
retention, change-in-control, collective bargaining, bonus or other incentive
compensation, profit-sharing, health or other welfare, stock option or other
equity, pension, retirement, vacation, severance, deferred compensation or other
employment, compensation or benefit plan, policy, agreement, trust, fund or
arrangement in respect of or for the benefit of any officer, director, manager,
employee, agent, consultant, Selling Member or affiliate (whether or not legally
binding);
(o) incur, assume, guarantee or otherwise become
directly or indirectly liable with respect to any liability or obligation in
excess of $25,000 in each case or $100,000 in the aggregate at any one time
outstanding (whether absolute, accrued, contingent or otherwise and whether
direct or indirect, or as guarantor or otherwise with respect to any liability
or obligation of any other person), other than agreements for purchases of goods
or services in the ordinary course of business;
(p) sell any assets with a value in excess of
$10,000 in each case or $50,000 in the aggregate;
(q) transfer or grant any rights under, or enter
into any settlement regarding the breach or infringement of, any Intellectual
Property, or modify any existing rights with respect thereto;
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(r) make any capital expenditures or capital
additions or improvements or incur capital maintenance expenses in excess of
$25,000 in each case or $100,000 in the aggregate; provided, however, that
notwithstanding anything in this Agreement to the contrary, the parties hereto
agree that (i) capital maintenance expenses for the proper repair of the rip rap
and replacement or purchase of the carpet on the third deck, the slot club
embosser, computer system for generated comps and two kitchen broilers shall be
paid or accrued prior to the Effective Date, and (ii) that all normal and
ordinary course maintenance and repairs shall be continued consistent with prior
practices through the Effective Date;
(s) institute, settle or agree to settle any
litigation, action or proceeding before any court or governmental body other
than in the ordinary course of business consistent with prior practice but not
in any case involving amounts in excess of $25,000 in each case or $100,000 in
the aggregate; or
(t) enter into any transaction, Contract or
commitment other than in the ordinary course of business or, except for the
payment or accrual of a fee not to exceed $1,500,000 to DLJ (as hereinafter
defined) under the DLJ Agreement, pay or agree to pay any legal (other than
reasonable attorneys' fees as provided for in Section 8. 1), accounting,
brokerage or finder's fee or commission, taxes or other expenses in connection
with, or incur any severance pay obligations by reason of, this Agreement or the
transactions contemplated hereby.
(u) make any change in the accounting practices
or procedures of Treasure Chest, including but not limited to changes in reserve
policies or treatment of capital expenditures or capital maintenance expenses.
4.1.2. Access and Information. From the date hereof until the
earlier of the Closing Date or the termination of this Agreement, each of
Treasure Chest, the Selling Members, BKI, Purchaser, Guarantor and persons
acting on behalf of any of them will (and their respective accountants, counsel,
consultants, employees and agents will) give the other parties, Purchaser and
their respective accountants, counsel, consultants, employees and agents, full
access (except as to privileged communications) during normal business hours to,
and furnish them with all documents, records, work papers and information with
respect to, all of the assets, properties, books, Contracts, commitments,
reports and records of Treasure Chest, as such requesting party shall from time
to time reasonably request.
4.1.3. Public Announcements. Except as required by Law, none of
Treasure Chest, any Selling Member, BKI, Purchaser or Guarantor shall, nor shall
any person acting on behalf of any of them, make any public announcement in
respect of this Agreement or the transactions contemplated hereby without the
prior written consent of the other parties. BKI shall consult with Treasure
Chest regarding the content of any public announcement required by Law prior to
such announcement, and shall in good faith incorporate the comments of Treasure
Chest into such announcement to the extent permitted by Law.
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4.2. Additional Covenants of Treasure Chest and the Selling Members.
4.2.1. Payment to Donaldson, Lufkin & Jenrette. Any and all fees
and expenses required to be paid by Treasure Chest to Donaldson, Lufkin &
Jenrette ("DLJ"), pursuant to that certain engagement letter, dated January 22,
1997, a copy of which has been provided to BKI (the "DLJ Agreement"), shall be
paid or accrued by Treasure Chest prior to the Effective Date; provided,
however, that such payment or accrual shall not exceed $1,500,000. Any
additional fees or expenses due to DLJ, pursuant to the DLJ Agreement or
otherwise, and any other broker's or finder's fee or commission due to any party
as a consequence of the transactions contemplated by this Agreement, shall be
paid by the Selling Members.
4.2.2. Waiver of Right of First Refusal. BKI, Treasure Chest and
each of the Selling Members hereby (i) agrees that the provisions of Article 8
of the Amended and Restated Operating Agreement of Treasure Chest, as amended,
shall not be applicable to the transactions contemplated by this Agreement, and
(ii) waives any rights thereunder, or any similar rights with respect to such
transactions.
4.2.3. Noncompetition. Each Selling Member severely agrees that
for a period of two years following the Closing, without the written consent of
BKI, neither such Selling Member nor his, her or its affiliates shall, directly
or indirectly, through equity ownership or otherwise, own, operate, make an
investment (including loans) in, or serve as an officer, director, manager,
employee, consultant or agent of (collectively, an "Engagement") a business
engaged in one or more or all of riverboat, land-based, barge or dockside
casino-style gaming anywhere within the parishes of Orleans, Jefferson, St.
Charles, St. James, St. Tammany, Plaquemines or St. Bernand in the State of
Louisiana; provided, however, this Section 4.2.3 shall not apply to (i)
Engagements by such Selling Member or his, her or its affiliates in video poker
operations, or horse racing (excluding slot operations conducted at such horse
racing facility), (ii) investments in publicly traded companies in which such
Selling Member and his, her or its affiliates, in the aggregate, do not own and,
following such investment, will not own, more than two percent of the voting
securities, or (iii) the provision of legal, lobbying or governmental relations
services.
4.2.4. Termination of Certain Agreements. On the Effective Date,
except as expressly agreed to in writing by Purchaser, in its sole and absolute
discretion, each and every Contract between or among Treasure Chest, on the one
hand, and (i) any one or more Selling Members and/or (ii) any one or more
affiliates of a Selling Member, on the other hand, including without limitation
those Contracts listed in Schedule 3.2.10(b) hereto, shall be terminated in its
entirely, without cost or liability to BKI, Treasure Chest or such Selling
Member or affiliate. The Selling Members release BKI and Treasure Chest from any
and all claims, obligations, liabilities or causes of action relating to or
arising under any such Contract with any Selling Member or any of their
affiliates, except as set forth in Section 2.4 and except with respect to legal
services provided by Adams and Reese, L.L.P. and with respect to amounts accrued
or outstanding at the Effective Date and payable under any such Contract.
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4.2.5. Trade Names, Trademarks or Service Marks. The Members'
Representative shall cause Treasure Chest Casino, Inc., a Louisiana corporation,
to change its corporate name prior to the Closing Date to a name that does not
contain the words "Treasure Chest." Each of the Selling Members agrees that he,
she or it will not use any trade name, trademark or service mark confusingly
similar to any trade name, trademark or service mark used by Treasure Chest,
including without limitation any such name or mark containing the words
"Treasure Chest." Each of the Selling Members further consents to the use and
registration by Treasure Chest of any such name or mark, and agrees that it will
not oppose or petition to cancel any such registration or application therefor.
4.2.6. Further Actions. (a) Treasure Chest and the Selling Members
agree to use, and to cause all persons acting on its and their behalf to use,
all reasonable good faith efforts to take all actions and to do all things
necessary, proper or advisable to consummate the transactions contemplated
hereby by the Closing Date.
(b) Treasure Chest and the Selling Members will,
as promptly as practicable, file or supply, or cause to be filed or supplied,
all applications, notifications and information required to be filed or,
supplied by it or them pursuant to Law in connection with this Agreement and the
consummation of the transactions contemplated hereby.
(c) Treasure Chest and the Selling Members as
promptly as practicable, will use all reasonable efforts to obtain, or cause to
be obtained, all consents (including, without limitation, all governmental
approvals and any consent required under any Contract) necessary to be obtained
by it or them in order to consummate the transactions contemplated by this
Agreement.
(d) Treasure Chest and the Selling Members will,
and will cause all persons acting on its or their behalf to, coordinate and
cooperate with BKI in exchanging such information and supplying such assistance
as may be reasonably requested by BKI in connection with the filings and other
actions contemplated by Sections 4.3.1 and 4.4.
(e) At all times prior to the Closing, Treasure
Chest and the Selling Members shall promptly notify BKI in writing of any fact,
condition, event or occurrence (including any fact that would cause the
representations and warranties of Treasure Chest and the Selling Members set
forth in this Agreement to be incorrect in any material respect) that: (i) will
or may result in the failure of any of the conditions contained in Sections 5.1
and 5.2 to be satisfied, or (ii) individually or in the aggregate, could, to the
knowledge of Treasure Chest or any Selling Member, reasonably be expected to
have or result in a Material Adverse Effect or could cause a breach of Section
4.1.1, promptly upon becoming aware of same.
4.2.7. Further Assurances. Following the Closing, Treasure Chest
and the Selling Members shall, and shall cause all persons acting on its or
their behalf to, from time to time, execute and deliver such additional
instruments, documents, conveyances or assurances and take such other actions as
shall be necessary, or otherwise reasonably requested by BKI or
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Purchaser, to confirm and assure the rights and obligations provided for in this
Agreement and render effective the consummation of the transactions contemplated
hereby.
4.3. Additional Covenants of BKI, Purchaser and Guarantor.
4.3.1. Further Actions. (a) BKI, Purchaser and Guarantor agree to
use all reasonable good faith efforts to take all actions and to do all things
necessary, proper or advisable to consummate the transactions contemplated
hereby by the Closing Date.
(b) BKI, Purchaser and Guarantor will, as
promptly as practicable, file or supply, or cause to be filed or supplied, all
applications, notifications and information required to be filed or supplied by
it or Purchaser pursuant to Law in connection with this Agreement and the
consummation of the transactions contemplated hereby.
(c) BKI, Purchaser and Guarantor as promptly as
practicable, will use all reasonable efforts to obtain or cause to be obtained,
all consents (including, without limitation, all governmental approvals)
necessary to be obtained by it and other persons acting on its behalf in order
to consummate the transactions contemplated by this Agreement.
(d) BKI, Purchaser and Guarantor will coordinate
and cooperate with Treasure Chest and the Selling Members in exchanging such
information and supplying such assistance as may be reasonably requested by
Treasure Chest and the Selling Members in connection with the filings and other
actions contemplated by Sections 4.2.6 and 4.4.
(e) At all times prior to the Closing, BKI,
Purchaser and Guarantor shall promptly notify Treasure Chest in writing of any
fact, condition, event or occurrence (including any fact that would cause any of
the representations and warranties of BKI, Purchaser and Guarantor set forth in
this Agreement to be incorrect in any material respect) that will or may result
in the failure of any of the conditions contained in Section 5.1. and 5.3 to be
satisfied, promptly upon becoming aware of the same.
4.3.2. Repayment of Certain Indebtedness. At the Closing, BKI,
Purchaser and Guarantor will cause Treasure Chest to repay the outstanding
balance of that certain indebtedness of Treasure Chest to (i) Whitney National
Bank in the original principal amount of $8,500,000; (ii) Caterpillar Financial
Services Corporation in the original principal amount of $13,500,000; and (iii)
Guidry in the original principal amount of $4,000,000.
4.3.3. Further Assurances. Following the Closing, BKI, Purchaser
and Guarantor shall, and shall cause their affiliates to, from time to time,
execute and deliver such additional instruments, documents conveyances or
assurances and take such other actions as shall be necessary, or otherwise
reasonably requested by Treasure Chest or the Selling Members, to confirm and
assure the rights and obligations provided for in this Agreement and in the
Escrow Agreement and the Guaranty and render effective the consummation of the
transactions contemplated hereby and thereby.
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4.4. HSR Filing. Each of Treasure Chest, BKI, Purchaser and the Selling
Members will, as promptly as practicable, but in no event later than 10 business
days following the execution and delivery of this Agreement, file or cause to be
filed with the United States Trade Commission (the "FTC") and the United States
Department of Justice (the "DOJ") the notification and report form required for
the transactions contemplated hereby and any supplemental information requested
in connection therewith pursuant to the Hart-Scott-Rodino Antitrust Improvements
Act of 1976 and the rules and regulations promulgated thereunder (the "HSR
Act"). Any such notification and report form and supplemental information will
be in substantial compliance with the requirements of the HSR Act. Each of
Treasure Chest, BKI and the Selling Members will furnish to the others such
necessary information and reasonable assistance as the others may request in
connection with the preparation of any filing or submission which is necessary
under the HSR Act. Each of Treasure Chest, BKI and the Selling Members will keep
each other apprised of the status of any communications with, and inquiries or
requests for additional information addressed to the entity that filed a
notification and report form as an acquired or acquiring person from, the FTC or
the DOJ and shall comply or cause its respective filing person to comply
promptly with any such inquiry or request. Each of Treasure Chest, BKI and the
Selling Members will use commercially reasonable efforts to obtain any clearance
required under the HSR Act for the purchase and sale of the Units.
ARTICLE V
CONDITIONS PRECEDENT
5.1. Conditions to Obligations of Each Party. The obligations of the
parties to consummate the transactions contemplated hereby shall be subject to
the fulfillment on or prior to the Closing Date of the following conditions:
5.1.1. No Injunction, etc. Consummation of the transactions
contemplated hereby shall not have been restrained, enjoined or otherwise
prohibited by any Law, including any order, injunction, decree or judgment of
any court or governmental authority. No court or governmental authority shall
have determined any Law to make illegal the consummation of the transactions
contemplated hereby or by the Escrow Agreement or the Guaranty, and no
proceedings with respect to the application of any such Law to such effect shall
be pending or be threatened by any governmental authority.
5.1.2. Gaming Authority Approvals. All approvals necessary from
the Louisiana Gaming Control Board, the Illinois Gaming Board, the Mississippi
Gaming Commission and the Missouri Gaming Commission shall have been obtained.
5.1.3 City of Kenner Approval. The City of Kenner shall have
consented to the purchase by Purchaser of the Units, as required under that
certain lease between the City of Kenner and Treasure Chest, dated as of
September 17, 1993) (the "Kenner Lease").
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5.1.4. HSR Clearance. In respect of the notifications that may be
required pursuant to the HSR Act, the applicable waiting period and any
extensions thereof shall have expired or been terminated.
5.1.5. Corporate Proceedings. All corporate and other proceedings
of Treasure Chest, on the one hand, and BKI, Guarantor and Purchaser, on the
other hand, in connection with this Agreement, the Escrow Agreement and the
Guaranty and the transactions contemplated hereby and thereby, and all documents
and instruments incident thereto, shall be reasonably satisfactory in substance
and form to BKI and its counsel, on the one hand, and Treasure Chest, its
counsel and the Members' Representative, on the other hand, and BKI and its
counsel, on the one hand, and Treasure Chest, its counsel and the Members'
Representative, on the other hand shall have received all such documents and
instruments, or copies thereof, certified if requested, as may be reasonably
requested.
5.2. Conditions to Obligations of BKI, Purchaser and Guarantor. The
obligations of BKI, Purchaser and Guarantor to consummate the transactions
contemplated hereby shall be subject to the fulfillment (or waiver in writing by
BKI and Purchaser) on or prior to the Closing Date of the following conditions:
5.2.1. Representations; Performance. The representations and
warranties of Treasure Chest, Guidry and the Selling Members contained in this
Agreement (i) shall be true and correct in all respects (in the case of any
representation or warranty containing any materiality qualification) or in all
material respects (in the case of any representation or warranty without any
materiality qualification) at and as of the date hereof, and (ii) shall be
repeated and shall be true and correct in all respects (in the case of any
representation and warranty containing any materiality qualification) or in all
material respects (in the case of any representation or warranty without any
materiality qualification) on and as of the Closing Date with the same effect as
though made on and as of the Closing Date. Treasure Chest and the Selling
Members shall have duty performed and compiled in all material respects with all
agreements, covenants and conditions required by this Agreement to be performed
or complied with by them prior to or on the Closing Date. Treasure Chest, Guidry
and the Selling Members shall have delivered to BKI and Purchaser a certificate,
dated the Closing Date and signed by Treasure Chest's duly authorized officer
and by the Members' Representative to the foregoing effect.
5.2.2. Consents. Treasure Chest or the Members' Representative
shall have obtained and shall have delivered to BKI and Purchaser copies of (i)
all governmental approvals required to be obtained by Treasure Chest or any
Selling Member in connection with the execution and delivery of this Agreement
and the Escrow Agreement and the consummation of the transactions contemplated
hereby and thereby; and (ii) all consents (including, without limitation, all
consents required under any Contract) not included in clause (i), except for any
such other consents the failure of which to be made or obtained, individually
and in the aggregate, would not adversely affect the ability of Treasure Chest
or any Selling Member to consummate the sale and transfer of the Units pursuant
to this Agreement.
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5.2.3. No Material Adverse Effect. No event, occurrence, fact,
condition, change, development or effect shall have occurred, exist or come to
exist since the Balance Sheet Date that, individually or in the aggregate, has
constituted or resulted in, or could reasonably be expected to constitute or
result in, a Material Adverse Effect.
5.2.4. Escrow Agreement. Each of the Selling Members shall have
entered into the Escrow Agreement with BKI, Purchaser and the Escrow Agent.
5.2.5. Opinion of Counsel. BKI and Purchaser shall have received
an opinion, addressed to them and dated the Closing Date, from counsel for
Treasure Chest, substantially in the form attached hereto as Exhibit F.
5.2.6. Transfer Documents. The Selling Members shall have
delivered to Purchaser at the Closing all documents, certificates and agreements
necessary to transfer to Purchaser good and marketable title to the Units, free
and clear of any and all Liens thereon, including without limitation,
certificates representing all of the Units, duly endorsed in blank or
accompanied by other instruments of transfer duly executed in blank.
5.2.7. Amendments of Operating Agreement and Articles of
Organization. The Members' Representative shall have delivered to BKI and
Purchaser the Unanimous Consent of the Members and Manager and the Amendment and
Restatement of the Articles of Organization as provided in Section 2.3 of this
Agreement.
5.2.8. Certain Resignations. All Managers whose resignations shall
have been requested by BKI not less than five days prior to the Closing Date
shall have submitted their resignations or been removed from office effective as
of the Closing Date.
5.2.9. Estoppel Letter. Treasure Chest shall have delivered to BKI
and Purchaser an estoppel letter, reasonably satisfactory to BKI, from the
lessor of the Kenner Lease, to the effect that Treasure Chest has paid all rent
and other amounts due under such lease, is not otherwise in default in any
material respect thereunder and consenting to the transactions contemplated by
this Agreement.
5.3. Conditions to Obligations of Treasure Chest and the Selling
Members. The obligations of Treasure Chest and the Selling Members to consummate
the transactions contemplated hereby shall be subject to the fulfillment (or
waiver in writing by Treasure Chest or the Members' Representative, as the case
may be), on or prior to the Closing Date, of the following conditions:
5.3.1. Representations; Performance, etc. The representations and
warranties of BKI, Purchaser and Guarantor contained in this Agreement (i) shall
be true and correct in all respects (in the case of any representation or
warranty containing an materiality qualification ) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) at and as of the date hereof and (ii) shall be repeated and shall
be true and correct in all respects (in the case of any representation or
warranty containing any materiality
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qualification) or in all material respects (in the case of any representation or
warranty without any materiality qualification ) on and as of the Closing Date
with the same effect as though made at and as of the Closing Date. BKI,
Purchaser and Guarantor shall have duly performed and complied in all material
respects with all agreements, covenants and conditions required by this
Agreement to be performed or compiled with by them prior to or on the Closing
Date. BKI, Purchaser and Guarantor shall have delivered to Treasure Chest a
certificate, dated the Closing Date and signed by its duly authorized officer,
to the foregoing effect.
5.3.2. Escrow Agreement. BKI and Purchaser shall have executed and
delivered the Escrow Agreement.
5.3.3. Consents. BKI, Purchaser or Guarantor shall have obtained
and shall have delivered to Treasure Chest and the Members' Representative
copies of (i) governmental approvals required to be obtained by BKI, Purchaser
or Guarantor in connection with the execution and delivery of the Agreement and
the Escrow Agreement and the Guaranty and the consummation of the transactions
contemplated hereby or thereby, (ii) all consents (including, without
limitation, all consents required under any Contract) not included in clause
(i), except for any such other consents the failure of which to be made or
obtained, individually and in the aggregate, would not adversely affect the
ability of BKI, Purchaser or Guarantor to perform their respective obligations
hereunder and under the Escrow Agreement and the Guaranty.
5.3.4. Opinion of Counsel. Treasure Chest and the Members'
Representative shall have received an opinion, addressed to Treasure Chest and
each Selling Member and dated the Closing Date, from counsel for BKI, Purchaser
and Guarantor substantially in the form attached hereto as Exhibit G.
ARTICLE VI
TERMINATION
6.1. Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by the written agreement of each of BKI, Purchaser, Guarantor,
Treasure Chest and the Members' Representative;
(b) by either BKI or the Members' Representative, by written
notice to the other party hereto by 5:00 p.m., New Orleans time, on September
15, 1997, the Closing shall not have occurred by September 15, 1997 (unless the
failure of the Closing to occur shall be due to any breach of this Agreement by
the party seeking to terminate), unless such date shall be extended by the
mutual written consent of each of BKI, Treasure Chest and the Members'
Representative;
(c) by the Members' Representative, if there has been a material
breach on the part of BKI, Purchaser or Guarantor in the representations,
warranties or covenants of BKI, Purchaser or Guarantor set forth herein, or a
failure on the part of BKI to perform its
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obligations hereunder; provided, however, that Treasure Chest and the Selling
Members shall have performed and complied with, in all material respects, all
agreements and covenants required by this Agreement to have been performed and
complied with by Treasure Chest and the Selling Members prior to such time, or
any other events or circumstances shall have occurred such that, in any such
case, any of the conditions to the Closing set forth in Section 5.1 or 5.3 could
not be satisfied on or prior to the termination date contemplated by Section
6.1(b) hereof;
(d) by BKI, Purchaser or Guarantor if there has been a material
breach on the part of Treasure Chest or the Selling Members in the
representations, warranties or covenants of Treasure Chest or the Selling
Members set forth herein or any failure on the part of Treasure Chest or the
Selling Members to perform their respective obligations hereunder; provided,
however, that BKI, Purchaser and Guarantor shall have performed and complied
with, in all material respects, all agreements and covenants required by this
Agreement to have been performed or complied with by each of them prior to such
time, or any other events or circumstances shall have occurred such that, in any
case, any of the conditions to the Closing set forth in Sections 5.1 and 5.2
could not be satisfied on or prior to the termination date contemplated by
Section 6.1(b) hereof;
(e) by either Members' Representative or BKI if BKI, Purchaser or
Guarantor has received a notification in writing from the Illinois Gaming Board,
the Mississippi Gaming Commission, or the Missouri Gaming Commission that the
transactions contemplated by this Agreement will not be approved. If BKI,
Purchaser or Guarantor receives such written notification from either the
Illinois Gaming Board, the Mississippi Gaming Commission or the Missouri Gaming
Commission, the Members' Representative shall be notified immediately; or
(f) by either Members' Representative, BKI, Purchaser or Guarantor
if any party to this Agreement receives written notification from the Louisiana
Gaming Control Board or its counsel that the transactions contemplated by this
Agreement will not be approved on or before September 15, 1997.
6.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to the provisions of Section 6. 1, this Agreement shall
become void and have no effect, without any liability to any person in respect
hereof or of the transactions contemplated hereby on the part of any party
hereto, or any of its directors, officers, managers, employees, agents.
consultants, representatives, advisors, stockholders, members or affiliates,
except as specified in Section 7.3 and except for any liability resulting from
such party's breach of this Agreement.
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ARTICLE VII
INDEMNIFICATION
7.1. Indemnification by Selling Members.
(a) Each Selling Member (as to himself, herself or itself but not
as to any other Selling Member), severally and subject to the limitations set
forth herein, will defend, indemnify and hold harmless BKI, Purchaser and their
respective directors, officers, employees, representatives and affiliates
(including without limitation, after the Closing, Treasure Chest) (collectively,
the "Purchaser Indemnitees"), for the periods set forth in Section 7.8 from,
against and in respect of any and all claims, demands, actions and proceedings
(collectively, "Claims"), and pay or reimburse the Purchaser Indemnities for and
in respect of any and all damages, losses, costs, liabilities and expenses,
including, without any limitation, reasonable legal fees (but excluding any
indirect or consequential loss or damage including but not limited to loss of
profits or opportunity) (collectively, "Damages"), arising out of any
misrepresentation or breach of or default in connection with any of the
representations or warranties made or given by such Selling Member in Sections
3.1.1. 3.1.2 and 3.1.3.
(b) Each Selling Member (as to himself, herself or itself but not
as to any other Selling Member), severally and subject to the limitations set
forth herein, will defend, indemnify and hold harmless the Purchaser
Indemnitees, for the periods set forth in Section 7.8 from, against and in
respect of any and all Claims and Damages arising out of any misrepresentation
or breach of or default in connection with any of the representations,
warranties, covenants or agreements made or given by such Selling Member or
Treasure Chest in this Agreement (excepting any representations or warranties
set forth in Sections 3.1.1, 3.1.2 and 3.1.3, which shall be governed by Section
7.1 (a)).
7.2. Limitations on Indemnity By Selling Members.
(a) The aggregate amount of all Claims and Damages against a
Selling Member under Section 7.1 shall be limited to the aggregate of such
Selling Member's interest in the Adjusted Cash Amount and the Escrow Fund as
determined under Section 1.2 of this Agreement.
(b) Claims for indemnity under Section 7.1 (a) shall be made
solely against the responsible Selling Member and no Claims and Damages under
Section 7.1(a) may be recovered by Purchaser Indemnitees from the Escrow Fund
except to the extent permitted by clause (f) of this Section 7.2.
(c) All Claims and Damages with respect to a Selling Member under
Section 7.1(b) shall be reduced by 15 percent in determining the amount of such
Claims and Damages.
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(d) All claims for indemnity under Section 7.l(b) against any
Selling Member except Guidry shall be timely made and enforced solely against
the Escrow Fund pursuant to and in accordance with the terms and conditions of
the Escrow Agreement.
(e) All claims for indemnity under Section 7.1(b) against Guidry
may, in BKI's sole discretion, be made and enforced against either or both of
Guidry and the Escrow Fund pursuant to and in accordance with the terms and
conditions of the Escrow Agreement.
(f) If there remain funds in the Escrow Fund on the one year
anniversary of the Closing Date, the Purchaser Indemnitees may, pursuant to and
in accordance with the terms and conditions of the Escrow Agreement, enforce
against such remaining funds on or before the Final Demand Date (as defined in
the Escrow Agreement) (but not thereafter) claims for indemnification against
Selling Members arising under Section 7.1(a).
(g) No claims for indemnification under Section 7.1(b) shall arise
with respect to the breach of any representation or warranty by any Selling
Member or Treasure Chest if the inaccuracy of such representation or warranty
was known by BKI, Purchaser or Guarantor or any affiliate of BKI, Purchaser or
Guarantor (other than Treasure Chest) at the time such representation or
warranty was given.
(h) Notwithstanding any representation or warranty of or
indemnification by any Selling Member or Treasure Chest or any other terms or
provisions of this Agreement, Purchaser, Guarantor and, following the Closing,
Treasure Chest agree to assume the risk of and do hereby unconditionally
relieve, release and discharge each Selling Member from, any damage, liability,
risk, consequence or loss which may arise out of or result, directly or
indirectly, from any Cruising Risks, except for fines and penalties assessed for
any violations relating to cruising prior to the Effective Date. Any fines and
penalties assessed for any violations relating to cruising prior to the
Effective Date shall be deemed to be a liability resulting in a post-closing
Purchase Price Adjustment in accordance with the terms and provisions of Section
1.3.
(i) Notwithstanding any representation or warranty of or
indemnification by any Selling Member or Treasure Chest or any other terms or
provisions of this Agreement, BKI, Purchaser, Guarantor and, following the
Closing, Treasure Chest agree to assume the risk of, and do hereby
unconditionally relieve, release and discharge each Selling Member from any and
all liability, risk, damage, consequence or loss which may arise out of or
result, directly or indirectly, from any License Risks.
7.3. Indemnification by BKI, Purchaser and Guarantor. BKI, Purchaser
and Guarantor, as solidary obligors, covenant and agree to defend, indemnify and
hold harmless each Selling Member and his, her or its respective agents,
advisors, representatives and affiliates (collectively, the "Selling
Indemnitees"), for the periods set forth in Section 7.8, from and against any
and all Claims and Damages resulting from or arising out of:
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(a) any misrepresentation or breach of or default in connection
with any representation or warranty by BKI, Purchaser or Guarantor made or
contained in this Agreement or in connection herewith; and
(b) any failure of BKI, Guarantor or Purchaser to perform, or any
breach of or default in connection with, any covenant or agreement hereunder or
under the Escrow Agreement or the Guaranty.
7.4. Determination of Indemnification Amounts. The amount payable in
respect of any claim for indemnification under Sections 7.1 and 7.3 hereof shall
be determined by agreement between the Indemnified Party and the Indemnifying
Party (as such terms are hereinafter defined) or by final judgment or award
entered by a court or arbitration panel of competent jurisdiction in favor of
the Indemnified Party and against the Indemnifying Party.
7.5. General Limitations on Indemnification. Notwithstanding the
provisions of Sections 7.1, 7.2 and 7.3 hereof, a party otherwise required to
provide indemnification under Section 7.1 or 7.3 shall not be liable for
indemnification pursuant hereto to the extent that any Claims or Damages are
found by a court or arbitration panel of competent jurisdiction, after full
hearing on the merits, to have resulted from the fraudulent, grossly negligent,
bad faith or criminal act or omission of a party otherwise entitled to
indemnification hereunder or of such party's officers, directors, employees,
agents, advisers, representatives or affiliates.
7.6. Adjustments to Indemnification Payments. Without limiting the
obligations of the Indemnifying Party under this Agreement (including the timely
indemnification of the Indemnified Party), any payment made by any Selling
Member to any Purchaser Indemnitee, on the one hand, or by BKI, Purchaser or
Guarantor to any Seller Indemnitee, on the other hand, pursuant to this Article
VII in respect of any Claim shall be net of any insurance proceeds realized by
and paid to the Indemnified Party in respect of such Claim by any insurer or
insured, by any Purchaser Indemnitee or by any Seller Indemnitee or by any
consolidated, combined or unitary group of which such Purchaser Indemnitee or
Seller Indemnitee is a member. The Indemnified Party shall use its reasonable
efforts to make insurance claims relating to any Claim for which it is seeking
indemnification pursuant to this Article VII; provided, however, that the
Indemnified Party shall not be obligated to make such an insurance claim if the
Indemnified Party in its reasonable judgment believes that the cost of pursuing
such an insurance claim together with any corresponding increase in insurance
premiums or other chargebacks to the indemnified Party, would exceed the value
of the Claim for which the Indemnified Party is seeking indemnification. In the
event the Indemnified Party receives such insurance proceeds after being
indemnified by the Indemnifying Party with respect to any Damage, the
Indemnified Party shall pay to the Indemnifying Party the net amount of such
insurance proceeds (less attorneys' fees and other expenses incurred in
connection with such recovery) paid to the Indemnified Party.
7.7. Indemnification Procedures. In the case of any Claim asserted by a
third party against a party entitled to indemnification under this Agreement
(the "Indemnified Party"), notice shall be given by the Indemnified Party to the
party required to provide indemnification
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(the "Indemnifying Party") promptly after such Indemnified Party has actual
knowledge of any Claim as to which indemnity may be sought, and the Indemnified
Party shall permit the Indemnifying Party (at the expense of such Indemnifying
Party) to assume the defense of any claim or any litigation resulting therefrom;
provided, however, that (i) the counsel for the Indemnifying Party who shall
conduct the defense of such Claim or litigation shall be reasonably satisfactory
to the Indemnified Party, (ii) the Indemnified Party may participate in such
defense at such Indemnified Party's expense and (iii) the omission by any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its indemnification obligation under this Agreement except
to the extent that such omission results in a failure of actual notice to the
Indemnifying Party and such Indemnifying Party is materially damaged as a result
of such failure to give notice. Except with the prior written consent of the
Indemnified Party, no Indemnifying Party, in the defense of any such Claim or
litigation, shall consent to entry of any judgment or enter into any settlement
that provides for injunctive or other nonmonetary relief affecting the
Indemnified Party or that does not include as an unconditional term thereof the
giving by each claimant or plaintiff to such Indemnified Party of a release from
all liability with respect to such claim or litigation. In the event that the
Indemnified Party shall in good faith determine that the conduct of the defense
of any Claim subject to indemnification hereunder or any proposed settlement of
any such Claim by the Indemnifying Party might be expected to affect adversely
the Indemnified Party or that the Indemnified Party may have available to it one
or more defenses or counterclaims that are inconsistent with one or more of
those that may be available to the Indemnifying Party in respect of such Claim
or any litigation relating thereto, the Indemnified Party shall have the right
at all times to take over and assume control over the defense, settlement,
negotiations or litigation relating to any such Claim at the sole cost of the
Indemnifying Party; provided, however, that if the Indemnified Party does so
take over and assume control, the Indemnified Party shall not settle such Claim
or litigation without the prior written consent of the Indemnifying Party, such
consent not to be unreasonably withheld. In the event that the Indemnifying
Party does not accept the defense of any matter as above provided, the
Indemnified Party shall have the full right to defend against any such Claim or
demand and shall be entitled to settle or agree to pay in full such Claim or
demand. In any event, the Indemnifying Party and the Indemnified Party shall
cooperate in the defense of any Claim or litigation subject to this Article VII
and the records of each shall be available to the other with respect to such
defense.
7.8. Survival of Representations and Warranties, etc. The
representations and warranties contained in this Agreement shall survive the
execution and delivery of this Agreement, any examination by or on behalf of the
parties hereto and the consummation of the transactions contemplated herein, and
shall continue in full force and effect and remain operative, unless the
Agreement is earlier terminated in accordance with its terms, until the date
that is 18 months after the Closing Date, whereupon such representations and
warranties will expire, except that the representations and warranties of the
Selling Members set forth in Section 3.1.2 will survive without limitation,
subject to the limitations set forth in Section 3.5.
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ARTICLE VIII
MISCELLANEOUS
8.1. Expenses. Except as otherwise expressly provided herein, the
Selling Members, on the one hand, and BKI, Purchaser and Guarantor, on the other
hand, shall bear their respective expenses, costs and fees (including attorneys'
and auditors' fees) in connection with the transactions contemplated hereby,
including the preparation, execution and delivery of this Agreement and
compliance herewith, whether or not the transactions contemplated hereby shall
be consummated. Treasure Chest shall pay fees and expenses required by the DLJ
Agreement as permitted herein, and the filing fees required under the HSR Act,
but shall bear no other expense, cost or fee in connection with the transactions
contemplated hereby (other than reasonable attorneys' fees which shall be paid
or accrued by Treasure Chest on or as of the Effective Date).
8.2. Severability. If any provision of this Agreement, including any
phrase, sentence, clause, section or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of rendering the
provision in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatsoever.
8.3. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
sufficient if in writing, and sent by facsimile transmission and by overnight
courier service (with proof of service), hand delivery or certified or
registered mail (return receipt requested and first class postage prepaid),
addressed as follows:
(i) If to Treasure Chest, Selling Members
or the Members' Representative, at:
Treasure Chest Casino, L.L.C.
c/o Robert J. Guidry
3817 Spencer Street
Harvey, Louisiana 70058
Facsimile: 504/348-8060
With a copy (which shall not
constitute notice) to:
Adams and Reese, L.L.P.
4500 One Shell Square
New Orleans, Louisiana 70139
Attn: Louis A. Wilson, Jr.
Facsimile: 504/566-0210
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(ii) If to BKI, Purchaser or Guarantor at:
Boyd Kenner, Inc.
Boyd Louisiana, L.L.C.
c/o Boyd Gaming Corporation
2950 S. Industrial Road
Las Vegas, Nevada 89109-1100
Attn: Brian A. Larson
Facsimile: 702/792-7335
With a copy (which shall not
constitute notice) to:
McGlinchey Stafford
A Professional Limited Liability
Company
One American Place, 9th Floor
Baton Rouge, Louisiana 70825
Attn: Paul S. West
Facsimile: 504/343-3076
or to such other address as any of the foregoing shall specify by written notice
so given, such notice shall be deemed to have been received (a) if by telecopy,
when receipt is confirmed (unless the receiving party demonstrates within 24
hours that the transmission as received was substantially unreadable), (b) if by
courier service or hand delivery, on the next business following deposit or
delivery of the notice with the courier or deliver service, and (c) if certified
or registered mail, on the fifth business day after the mailing thereof.
8.4. Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
8.5. Entire Agreement. This Agreement and the Escrow Agreement and the
Guaranty (each when executed and delivered) and the representations, warranties,
agreements and covenants contained herein and therein constitute the entire
agreement and supersede all prior agreements, understandings, representations,
warranties, covenants and discussions, both written and oral between the parties
with respect to the subject matter hereof.
8.6. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument. Execution and delivery of
counterpart copies of this Agreement may be effected by facsimile transmission
as provided for in Section 8.3 hereof.
8.7. Governing Law; Forum. This Agreement shall be governed by and
construed in accordance with the laws of the State of Louisiana (regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law). The parties agree that disputes arising
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out of this Agreement shall be litigated in the 24th Judicial District Court for
the Parish of Jefferson.
8.8. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
8.9. Assignment. This Agreement shall not be assignable or otherwise
transferable by any party hereto without the prior written consent of the other
parties hereto.
8.10. No Third Party Beneficiaries. Except as provided in Section 7.1
with respect to indemnification hereunder, nothing in this Agreement shall
confer any rights upon any person or entity other than the parties hereto and
their respective heirs, successors and permitted assigns.
8.11. Amendment Waiver, Limitations, etc. No amendment, modification or
discharge of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, discharge or waiver is sought. Any
such waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other time. Neither the
waiver by any of the parties hereto of a breach of or a default under any of the
provisions of this Agreement, nor the failure by any of the parties, on one or
more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder, shall be construed as a waiver of any
other breach or default of a similar nature, or as a waiver of any of such
provisions, rights or privileges hereunder. The rights and remedies of any party
based upon, arising out of or otherwise in respect of any inaccuracy or breach
of any representation, warranty, covenant or agreement or failure to fulfill any
condition shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement as to which there is no inaccuracy or breach.
8.12. Confidentiality. Except as otherwise provided in this Agreement,
each party to this Agreement will, and will cause its affiliates (and their
respective accountants, counsel, consultants, employees and agents to whom they
such disclose information) to, keep confidential and not disclose all
information obtained by and in the possession of such party and its affiliates
or to which such party and its affiliates are given access that in any way
relates to the business or operations of the other party hereto. The provisions
of this Section 8.12 shall not apply to the disclosure by any party hereto or
their respective affiliates of any information, document or materials (i) which
are, or become, publicly available, other than by reason of a breach of this
Section 8.12 by the disclosing party or any affiliate of the disclosing parry,
(ii) received from a third party not bound by any confidentiality agreement with
the other party hereto, (iii) required by Law to be disclosed by such party, or
(iv) necessary to establish such party's rights under any of this Agreement, the
Escrow Agreement or the Guaranty; provided that, in the case of clauses (iii)
and (iv), the person intending to make disclosure of confidential information
will promptly notify the party to whom it is obligated to keep such information
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confidential and, to the extent practicable, provide such party a reasonable
opportunity to prevent public disclosure of such information. If the
transactions contemplated by this Agreement are not consummated, such
information will be immediately returned to the applicable party (to the extent
such information consists of originals or copies of records, documents, reports
or other written materials).
8.13. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specified terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any Louisiana court of
competent jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
8.14. Members' Representative. The Selling Members shall appoint Robert
J. Guidry as the members' representative (the "Members' Representative") and
attorney-in-fact pursuant to the Power of Attorney attached hereto as Exhibit H,
and the Members' Representative shall accept such appointment. The Members'
Representative shall have full authority to exercise (or refrain from
exercising) all rights and powers of each Selling Member hereunder, and each
Selling Member agrees to be bound by any and all actions taken by the Members'
Representative in his capacity as such. The Selling Members agree to hold the
Members' Representative harmless for all actions taken by him in good faith in
such capacity.
8.15. Intervention. Each spouse of a Selling Member (an "Intervenor")
hereby intervenes in this Agreement, for the purpose of specifically consenting
to the sale of such Selling Member's Units in accordance with this Agreement and
agreeing to the terms and conditions hereof. Each Selling Member agrees that in
the event he or she marries prior to the Closing Date, he or she will cause his
or her spouse to execute a counterpart to this Agreement as an additional
Intervenor.
8.16. Section 754 Election; Tax Return for Year of Termination. Each
Selling Member acknowledges that, at the election of BKI and Purchaser, Treasure
Chest shall make the election provided for by Section 754 of the Internal
Revenue Code of 1986 (the "Code") (and any comparable election under state or
local tax laws) and may cause Treasure Chest to file such election with respect
to the partnership tax return filed by Treasure Chest for the taxable year that
includes the date of termination of Treasure Chest under Section 708(b)(1)(B) of
the Code. BKI shall cause Treasure Chest to prepare and file the Form 1065
partnership tax return for the taxable year that includes the date of
termination of Treasure Chest under Section 708(b)(1)(B) of the Code as well as
any similar returns of income required to be filed by Treasure Chest under state
or local tax laws.
8.17. Construction. The parties acknowledge that they have participated
fully in the negotiation and preparation of this Agreement, and therefore agree
that this Agreement shall be interpreted without giving effect to any principle
of construction that would otherwise require this Agreement or any provision
hereof to be construed against a party because such party
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drafted this Agreement or any provision hereof or is otherwise deemed to have
imposed a provision hereof.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
BOYD KENNER, INC.
By _______________________________
Name: William S. Boyd
Title: President
BOYD LOUISIANA, L.L.C.
By _______________________________
Name: William S. Boyd
Title: Manager
BOYD GAMING CORPORATION
By _______________________________
Name: William S. Boyd
Title: Chairman & Chief Executive
Officer
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TREASURE CHEST CASINO, L.L.C.
By _______________________________
Name:
Title:
__________________________________
Robert J. Guidry,
Members' Representative
and Selling Member
__________________________________
Dick J. Guidry, Selling Member
__________________________________
Robert A. Vosbein, Selling Member
38
