EXHIBIT 10.56
ASSET PURCHASE AGREEMENT
dated as of
July 19, 2000
by and among
STATION CASINOS, INC.,
a Nevada corporation
("PURCHASER"),
FIESTA HOTEL CORPORATION,
a Nevada corporation
("SELLER"),
LOS PUEBLOS, INC.,
a New Mexico corporation
("LOS PUEBLOS")
and
▇▇▇ ▇. ▇▇▇▇▇▇ & CO., INC.,
a New Mexico corporation
("PARENT")
with respect to certain assets of
FIESTA HOTEL CORPORATION and LOS PUEBLOS
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.
Page
NO.
ARTICLE I SALE OF ASSETS AND CLOSING.............................................................................1
1.01. Assets.........................................................................................1
1.02. Liabilities....................................................................................5
1.03. Purchase Price; Allocation; Adjustment.........................................................7
1.04. Closing........................................................................................8
1.05. Pre-Closing Purchase Price Adjustment..........................................................9
1.06. Funds Escrowed to Comply with NRS..............................................................9
1.07. Prorations....................................................................................10
1.08. Further Assurances; Post-Closing Cooperation..................................................10
1.09. Third-Party Consents..........................................................................11
1.10. Insurance Proceeds............................................................................11
1.11. Redemption of Gaming Chips and Tokens.........................................................12
1.12. Collection of Accounts Receivable.............................................................12
ARTICLE II REPRESENTATIONS AND WARRANTIES OF PARENT, SELLER AND LOS PUEBLOS.....................................12
2.01. Organization of Seller and Parent.............................................................12
2.02. Authority.....................................................................................13
2.03. No Conflicts..................................................................................13
2.04. Governmental Approvals and Filings............................................................14
2.05. Books and Records.............................................................................14
2.06. Financial Statements..........................................................................14
2.07. Absence of Changes............................................................................14
2.08. No Undisclosed Liabilities....................................................................16
2.09. Taxes.........................................................................................16
2.10. Legal Proceedings.............................................................................17
2.11. Compliance With Laws and Orders...............................................................17
2.12. Benefit Plans; ERISA..........................................................................17
2.13. Real Property.................................................................................18
2.14. Tangible Personal Property....................................................................20
2.15. Intellectual Property Rights..................................................................20
2.16. Contracts.....................................................................................21
2.17. Licenses......................................................................................22
2.18. Insurance.....................................................................................22
2.19. Affiliate Transactions........................................................................23
2.20. Employees; Labor Relations....................................................................23
2.21. Environmental Matters.........................................................................24
2.22. Inventory.....................................................................................25
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2.23. Vehicles......................................................................................25
2.24. No Guarantees.................................................................................25
2.25. Entire Business...............................................................................26
2.26. Brokers.......................................................................................26
2.27. Solvency; Sufficient Capital..................................................................26
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER.........................................................27
3.01. Organization..................................................................................27
3.02. Authority.....................................................................................27
3.03. No Conflicts..................................................................................27
3.04. Governmental Approvals and Filings............................................................27
3.05. Legal Proceedings.............................................................................28
3.06. Brokers.......................................................................................28
ARTICLE IV COVENANTS OF PARENT, SELLER AND LOS PUEBLOS..........................................................28
4.01. Regulatory and Other Approvals................................................................28
4.02. HSR Filings...................................................................................28
4.03. Investigation by Purchaser....................................................................29
4.04. No Solicitations..............................................................................29
4.05. Conduct of Business...........................................................................29
4.06. Financial Statements and Reports; Filings.....................................................29
4.07. Employee Matters..............................................................................30
4.08. Certain Restrictions..........................................................................30
4.09. Security Deposits.............................................................................31
4.10. Delivery of Books and Records, etc.; Removal of Property......................................31
4.11. Noncompetition................................................................................31
4.12. Notice and Cure...............................................................................33
4.13. Baggage.......................................................................................33
4.14. Safe Deposits.................................................................................33
4.15. Valet Parking.................................................................................34
4.16. Fulfillment of Conditions.....................................................................34
4.17. Estoppel Certificates.........................................................................34
4.18. Transition Support............................................................................34
4.19. Environmental Survey..........................................................................34
4.20. Gardunos Agreement............................................................................34
ARTICLE V COVENANTS OF PURCHASER................................................................................35
5.01. Regulatory and Other Approvals................................................................35
5.02. HSR Filings...................................................................................35
5.03. Notice and Cure...............................................................................35
5.04. Fulfillment of Conditions.....................................................................36
5.05. Limited Use of Name...........................................................................36
5.06. Gardunos Restriction..........................................................................36
5.07. 36
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ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER...............................................................36
6.01. Representations and Warranties................................................................36
6.02. Performance...................................................................................36
6.03. Officers'Certificates.........................................................................37
6.04. Orders and Laws...............................................................................37
6.05. Regulatory Consents and Approvals.............................................................37
6.06. Third Party Consents..........................................................................38
6.07. Opinion of Counsel............................................................................38
6.08. Personal Property Leases; Real Property Lease.................................................38
6.09. Deliveries....................................................................................38
6.10. Gardunos Agreement............................................................................38
6.11. Title Policies and Exceptions.................................................................38
ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLER AND LOS PUEBLOS.................................................39
7.01. Representations and Warranties................................................................39
7.02. Performance...................................................................................39
7.03. Officers'Certificates.........................................................................39
7.04. Orders and Laws...............................................................................39
7.05. Regulatory Consents and Approvals.............................................................40
7.06. Third Party Consents..........................................................................40
7.07. Deliveries....................................................................................40
ARTICLE VIII TAX MATTERS AND POST-CLOSING TAXES.................................................................40
8.01. Taxes.........................................................................................40
8.02. Nevada Unemployment Tax Experience Rating.....................................................40
8.03. Pre-Closing Taxes.............................................................................41
8.04. Tax Indemnification...........................................................................41
8.05. Tax Cooperation...............................................................................41
8.06. Like-Kind Exchange............................................................................41
8.07. Notification of Proceedings; Control..........................................................42
ARTICLE IX [RESERVED]...........................................................................................42
ARTICLE X SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.....................................42
10.01. Survival of Representations, Warranties, Covenants and Agreements...........................42
ARTICLE XI INDEMNIFICATION......................................................................................43
11.01. Indemnification.............................................................................43
11.02. Method of Asserting Claims..................................................................44
ARTICLE XII TERMINATION.........................................................................................47
12.01. Termination.................................................................................47
12.02. Effect of Termination.......................................................................47
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Page
NO.
ARTICLE XIII DEFINITIONS........................................................................................48
13.01. Definitions.................................................................................48
ARTICLE XIV MISCELLANEOUS.......................................................................................58
14.01. Notices.....................................................................................58
14.02. Bulk Sales Act..............................................................................59
14.03. Entire Agreement............................................................................59
14.04. Expenses....................................................................................59
14.05. Public Announcements........................................................................59
14.06. Confidentiality.............................................................................60
14.07. Waiver; Remedies; Attorneys Fees............................................................60
14.08. Amendment...................................................................................61
14.09. No Third Party Beneficiary..................................................................61
14.10. No Assignment; Binding Effect...............................................................61
14.11. Headings....................................................................................61
14.12. Consent to Jurisdiction; Venue..............................................................61
14.13. Invalid Provisions..........................................................................62
14.14. Governing Law...............................................................................62
14.15. Counterparts................................................................................62
EXHIBITS
Exhibit A Escrow Agreement
Exhibit B General Assignment and ▇▇▇▇ of Sale
Exhibit C Assumption Agreement
Exhibit D Officer's Certificate of Seller
Exhibit E Secretary's Certificate of Seller
Exhibit F Officer's Certificate of Parent
Exhibit G Secretary's Certificate of Parent
[RESERVED]
Exhibit I Officer's Certificate of Purchaser
Exhibit J Secretary's Certificate of Purchaser
Exhibit K Affidavit of Nonforeign Status
SCHEDULES
Schedule 1.01(a)(i) Real Property
Schedule 1.01(a)(ii)(A) Real Property Leases (Lessor/Sublessor)
Schedule 1.01(a)(ii)(B) Real Property Leases (Lessee/Sublessee)
Schedule 1.01(a)(iv) Tangible Personal Property
Schedule 1.01(a)(v) Business Contracts
Schedule 1.01(a)(vi)(A) Prepaid Expenses
Schedule 1.01(a)(vi)(B) Excluded Prepaid Expenses
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Schedule 1.01(a)(vii) Intangible Personal Property
Schedule 1.01(a)(viii) Business Licenses
Schedule 1.01(a)(ix) Vehicles
Schedule 1.01(a)(xii) Billboards
Schedule 1.02(a)(ii) Accounts Payable
Schedule 1.02(a)(iv) Accrued Expenses
Schedule 1.02(a)(vi) Security Deposits
Schedule 1.02(b) Retained Liabilities
Schedule 2.03 Consents (Seller)
Schedule 2.04 Governmental Approvals and Filings (Seller)
Schedule 2.05 Books and Records
Schedule 2.06 Financial Statements
Schedule 2.07 Changes in Condition
Schedule 2.08 Undisclosed Liabilities
Schedule 2.09(a) Tax Return Filings
Schedule 2.09(b) Tax Liens
Schedule 2.09(c) Withholding Taxes
Schedule 2.09(d) Changes in Methods of Accounting
Schedule 2.10 Legal Proceedings
Schedule 2.11 Noncompliance With Laws and Orders
Schedule 2.12(a) Benefit Plans
Schedule 2.13(b) Title to Real Property
Schedule 2.13(c) Leases
Schedule 2.13(e) Tenant Rights
Schedule 2.13(f) Condition of Improvements
Schedule 2.13(g) Violations of Law
Schedule 2.13(h) Improvement Contracts
Schedule 2.13(m) Insurance Issues
Schedule 2.14 Tangible Personal Property Liens
Schedule 2.15 Intellectual Property Rights
Schedule 2.16(a) Contracts
Schedule 2.16(b) Breaches of Contracts
Schedule 2.16(c) Contract Termination Rights
Schedule 2.17 Licenses
Schedule 2.18 Insurance
Schedule 2.19 Affiliate Transactions
Schedule 2.20 Employees
Schedule 2.21 Environmental Matters
Schedule 2.22 Accounts Receivable
Schedule 2.23 Vehicles
Schedule 2.25 Shared Facilities or Services
Schedule 3.03 Consents (Purchaser)
Schedule 3.04 Governmental Approvals and Filings (Purchaser)
Schedule 4.11 Key Employee Names
Schedule 6.06 Third Party Consents (Purchaser Condition)
Schedule 6.08 Personal Property Leases
v
Schedule 7.06 Third Party Consents (Seller Condition)
vi
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of July 19, 2000 is
made and entered into by and among STATION CASINOS, INC., a Nevada
corporation ("PURCHASER"), FIESTA HOTEL CORPORATION, a Nevada corporation
("SELLER"), LOS PUEBLOS, INC., a New Mexico corporation ("LOS PUEBLOS") and
▇▇▇ ▇. ▇▇▇▇▇▇ & CO., INC., a New Mexico corporation ("PARENT"). Capitalized
terms not otherwise defined herein have the meanings set forth in SECTION
13.01.
WHEREAS, Seller is engaged in the business of owning and
operating the Fiesta Hotel & Casino, located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ (the "Business");
WHEREAS, Los Pueblos owns certain of the real estate on
which the Business is located and certain other assets used in the Business;
WHEREAS, Seller and Los Pueblos are wholly-owned
subsidiaries of Parent; and
WHEREAS, Seller and Los Pueblos desire to sell, transfer
and assign to Purchaser, and Purchaser desires to purchase and acquire from
Seller and Los Pueblos certain of the assets of Seller and Los Pueblos
relating to the operation of the Business, and in connection therewith,
Purchaser has agreed to assume certain of the liabilities of Seller relating
to the Business, all on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants
and agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
SALE OF ASSETS AND CLOSING
1.01. ASSETS.
(a) ASSETS TRANSFERRED. On the terms and subject to the
conditions set forth in this Agreement, Seller and Los Pueblos will, and
Parent will cause Seller and Los Pueblos to, sell, transfer, convey, assign
and deliver to Purchaser, and Purchaser will purchase and pay for, at the
Closing, all of Seller's and Los Pueblos' right, title and interest in, to
and under all of the Assets and Properties of Seller and Los Pueblos used or
held for use in connection with the Business, free and clear of all Liens and
encumbrances, except as otherwise provided in SECTION 1.01(b), as the same
shall exist on the Closing Date (it being understood and agreed that Los
Pueblos may transfer its right, title and interest in and to any or all of
such Assets and Properties to Seller prior to the Closing, whereupon Seller
shall be obligated to transfer its right, title and interest in and to such
Assets and Properties to Purchaser at the Closing) (collectively
with any proceeds and awards referred to in SECTION 1.10, the "ASSETS"),
including, without limitation, the following:
(i) REAL PROPERTY. The real property described in
SECTION 1.01(A)(I) OF THE DISCLOSURE SCHEDULE, and all of the rights
arising out of the ownership thereof or appurtenant thereto (including,
without limitation, any and all easements, rights-of-way, and other
appurtenants relating thereto) (the "REAL PROPERTY"), together with all
buildings, structures, facilities, fixtures, fittings thereon and other
improvements thereto (the "IMPROVEMENTS");
(ii) REAL PROPERTY LEASES. Subject to SECTION 1.09,
(A) the leases and subleases of real property described in SECTION
1.01(a)(ii)(a) OF THE DISCLOSURE SCHEDULE as to which Seller or Los
Pueblos are the lessor or sublessor and (B) the leases and subleases of
real property described in SECTION 1.01(a)(ii)(B) OF THE DISCLOSURE
SCHEDULE as to which Seller and Los Pueblos or the lessee or sublessee,
together with any options to purchase the underlying property and
leasehold improvements thereon, and in each case all other rights,
subleases, licenses, permits, deposits and profits appurtenant to or
related to such leases and subleases (the leases and subleases
described in subclauses (A) and (B), the "REAL PROPERTY LEASES");
(iii) INVENTORY. All inventories of office,
restaurant, bar and other supplies (including all foods and alcoholic
and non-alcoholic beverages), parts, packaging materials and other
accessories related thereto which exist on the Closing Date and are
held at, or are in transit from or to, the locations at which the
Business is conducted, in each case, which are used or held for use by
Seller in the conduct of the Business, including any of the foregoing
purchased subject to any conditional sales or title retention agreement
in favor of any other Person, together with all rights of Seller
against suppliers of such inventories (the "INVENTORY");
(iv) TANGIBLE PERSONAL PROPERTY. All furniture,
fixtures, equipment, supplies, parts, computer hardware, software
and computer-related equipment, machinery and other tangible
personal property (including, without limitation, any and all
tangible "gaming devices" (as defined in NRS 463.0155), gaming
device parts inventory and other related gaming equipment and
supplies used in connection with the operation of the casino,
including, without limitation, slot machines, gaming tables, cards,
dice (but excluding gaming chips and tokens) and tangible
"associated equipment" (as defined in NRS 463.0136) (collectively
"Gaming Equipment"))(other than Inventory and Vehicles) used or held
for use in the conduct of the Business at the locations at which the
Business is conducted, or otherwise used or held for use by Seller
or Los Pueblos in the conduct of the Business (including, without
limitation, the items listed in SECTION 1.01(a)(iv) OF THE
DISCLOSURE SCHEDULE), including any of the foregoing purchased
subject to any conditional sales or title retention agreement in
favor of any other Person (the "TANGIBLE PERSONAL PROPERTY");
(v) BUSINESS CONTRACTS. Subject to SECTION 1.09, all
Contracts (other than the Real Property Leases, the Personal Property
Leases and the Receivables listed in SECTION 1.01(a)(v) OF THE
DISCLOSURE SCHEDULE to which Seller or Los Pueblos is a party
2
and which are utilized in the conduct of the Business, including,
without limitation, Contracts relating to suppliers, purchase orders
and marketing arrangements, but excluding any and all collective
bargaining agreements (the "BUSINESS CONTRACTS");
(vi) PREPAID EXPENSES. All prepaid expenses relating
to the Business existing on the Closing Date, including, without
limitation, the items listed in SECTION 1.01(a)(vi)(A) OF THE
DISCLOSURE SCHEDULE, but excluding any Excluded Prepaid Expenses listed
in SECTION 1.01(a)(vi)(b) OF THE DISCLOSURE SCHEDULE (the "PREPAID
EXPENSES");
(vii) INTANGIBLE PERSONAL PROPERTY. All Intellectual
Property used or held for use and necessary to conduct the Business as
it is presently conducted (including, without limitation, intangible
"gaming devices" (as defined in NRS 463.0155), player tracking systems,
"cashless wagering systems" (as defined in NRS 463.014) and intangible
"associated equipment" (as defined in NRS 463.0136)), and all goodwill
associated therewith, and all rights, privileges, claims, causes of
action and options relating or pertaining to the Intellectual Property,
the Business or the Assets, including, without limitation, the name
"Fiesta Hotel & Casino" and any derivative names and related marks,
designs, and logos, together with and all of Seller's right, title and
interest in, to and under the items listed in SECTION 1.01(a)(viii) OF
THE DISCLOSURE SCHEDULE (the "INTANGIBLE PERSONAL PROPERTY");
(viii) LICENSES. To the extent their transfer is
permitted under applicable Laws, and subject to SECTION 1.09, all
Licenses (including applications therefor) utilized in and necessary to
conduct and promote the Business as it is presently conducted,
including, without limitation, the Licenses listed in SECTION
1.01(a)(viii) OF THE DISCLOSURE SCHEDULE (the "BUSINESS LICENSES");
(ix) VEHICLES. All motor vehicles owned or leased
by Seller and used or held for use in the conduct of the Business,
including but not limited to the vehicles listed in SECTION
1.01(a)(ix) OF THE DISCLOSURE SCHEDULE (the "VEHICLES");
(x) SECURITY DEPOSITS. All security deposits
deposited by or on behalf of Seller or Los Pueblos as lessee or
sublessee under the Real Property Leases existing on the Closing
Date (the "TENANT SECURITY DEPOSITS");
(xi) NEVADA UNEMPLOYMENT EXPERIENCE RATE AND
RESERVES. The Nevada Unemployment Experience Rate and Reserves of
Seller relating to the Business;
(xii) ADVANCE RESERVATIONS AND DEPOSITS. All advance
reservations, bookings and room deposits applicable to any period
following the Closing, and originals of casino credit files with
respect to the casino operations, and any telephone numbers used
exclusively in connection with the Business;
(xiii) CUSTOMER LISTS. All customer lists and
databases relating to the Business;
3
(xiv) CAGE CASH. All cash contained in the cage, slot
booths, count rooms and drop boxes at the Business existing at the
Transfer Time (the "CAGE CASH");
(xv) CLAIMS AND REFUNDS. All claims, deposits
(excluding bank deposits), refunds, causes of action, choices in
action, rights of recovery, rights of set off, and rights of recoupment
(including any such item relating to the payment of Taxes, subject to
SECTION 1.01(b)(iii));
(xvi) BOOKS AND RECORDS. All Books and Records used
or held for use in the conduct of the Business or otherwise relating to
the Assets in all mediums of expression (including, without limitation,
such books and records required by the Nevada Gaming Authorities to be
maintained at the casino), other than the Excluded Books and Records
(the "BUSINESS BOOKS AND RECORDS"). Purchaser shall cooperate and
afford Seller, its counsel and its accountants, during normal business
hours, reasonable access to the Business Books and Records after the
Closing Date; and
(xvii) OTHER ASSETS AND PROPERTIES. All other Assets
and Properties (but in no event any Liabilities other than the Assumed
Liabilities) of Seller or Los Pueblos used or held for use in
connection with the Business except as otherwise provided in SECTION
1.01(b) (the "OTHER ASSETS").
To the extent any of the Business Books and Records are items
susceptible to duplication and are either (x) used in connection with any of
Seller's businesses other than the Business or (y) are required by Law to be
retained by Seller, Seller may deliver photostatic copies or other reproductions
from which, in the case of Business Books and Records referred to in clause (x),
information solely concerning Seller's businesses other than the Business has
been deleted.
(b) EXCLUDED ASSETS. Notwithstanding anything in this
Agreement to the contrary, the following Assets and Properties of Seller and Los
Pueblos (the "EXCLUDED ASSETS") shall be excluded from and shall not constitute
Assets:
(i) INSURANCE. Subject to SECTION 1.10, life
insurance policies of officers and other employees of Seller and all
other insurance policies relating to the operation of the Business;
(ii) EMPLOYEE BENEFIT PLANS. All assets owned or
held by any Company Plans;
(iii) TAX REFUNDS. All refunds or credits, if any,
of Taxes due to or from Seller;
(iv) EXCLUDED BOOKS AND RECORDS. The minute books,
stock transfer books and corporate seal of Seller and any other Books
and Records relating solely to the Excluded Assets or the Retained
Liabilities, except for such Books and Records required by the Nevada
Gaming Authorities to be maintained at the Business (the "EXCLUDED
BOOKS AND RECORDS");
4
(v) EXCLUDED OBLIGATIONS. The rights of Seller and
Los Pueblos in, to and under all Contracts of any nature, the
obligations of Seller or Los Pueblos under which are not expressly
assumed by Purchaser pursuant to SECTION 1.02(b);
(vi) EXCLUDED PREPAID EXPENSES. The prepaid expenses
relating to the Business listed in SECTION 1.01(a)(vi)(B) OF THE
DISCLOSURE SCHEDULE (the "EXCLUDED PREPAID EXPENSES");
(vii) GAMING CHIPS AND TOKENS. Subject to SECTION
1.11, all of Seller's gaming chips and tokens (including all (i) slot
machine tokens not currently in circulation, and (ii) "reserve" chips,
if any, not currently in circulation), except that at Purchaser's
written election made within three (3) months following the date of
this Agreement, such chips and tokens may be acquired by Purchaser at
the Closing without further consideration other than Purchaser's
assumption of Seller's liability with respect to chips or tokens in
circulation;
(viii) CASH. Cash (including checks received prior to
the close of business on the Closing Date, whether or not deposited or
cleared prior to the close of business on the Closing Date), commercial
paper, certificates of deposit and other bank deposits, treasury bills
and other cash equivalents, other than Cage Cash;
(ix) LITIGATION CLAIMS. Any rights (including
indemnification) and claims and recoveries under litigation of Seller
against third parties arising out of or relating to events prior to the
Closing Date;
(x) FLAMINGO PROPERTY ASSETS. The investment made by
Seller in the development of the proposed hotel/casino to be located at
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ (the "Flamingo Property")
including, without limitation, all plans, materials, drawings,
specifications and models relating to such proposed hotel/casino;
(xi) RECEIVABLES. Accounts, notes and other
receivables;
(xii) BILLBOARDS. The Billboards leased or owned by
Seller listed in SCHEDULE 1.01(a)(xii); and
(xiii) Seller's and Los Pueblos' rights under this
Agreement and the Operative Agreements.
1.02. LIABILITIES.
(a) ASSUMED LIABILITIES. In connection with the sale,
transfer, conveyance, assignment and delivery of the Assets pursuant to this
Agreement, on the terms and subject to the conditions set forth in this
Agreement, at the Closing, Purchaser will assume and agree to pay, perform and
discharge when due the following obligations of Seller and Los Pueblos arising
in connection with the operation of the Business, as the same shall exist on the
Closing Date (the "ASSUMED LIABILITIES"), and no others:
5
(i) REAL PROPERTY LEASE OBLIGATIONS. All obligations
of Seller and Los Pueblos under the Real Property Leases arising and to
be performed on or after the Closing Date, and excluding any such
obligations arising or to be performed prior to the Closing Date;
(ii) ACCOUNTS PAYABLE. All obligations of Seller with
respect to accounts payable existing on the Closing Date reflected or
reserved against in the balance sheet included in the Annual Financial
Statements or those incurred in the ordinary course of business since
the Annual Financial Statement Date, including, without limitation, the
items listed in SECTION 1.02(a)(ii) OF THE DISCLOSURE SCHEDULE (the
"ACCOUNTS PAYABLE");
(iii) OBLIGATIONS UNDER CONTRACTS AND LICENSES. All
obligations of Seller and Los Pueblos under the Business Contracts and
Business Licenses arising and to be performed on or after the Closing
Date, and excluding any such obligations arising or to be performed
prior to the Closing Date;
(iv) ACCRUED EXPENSES. All obligations of Seller with
respect to accrued expenses existing on the Closing Date reflected or
reserved against in the balance sheet included in the Annual Financial
Statements or those incurred in the ordinary course of business since
the Annual Financial Statement Date, including, without limitation, the
items listed in SECTION 1.02(a)(iv) OF THE DISCLOSURE and any Players
Club Liabilities that relate to (A) members of Seller's Players Club
who shall have earned credits in such Players Club after the date which
is six (6) months prior to the Closing Date and have a balance
outstanding as of the Closing Date ("Current Players") no matter when
such Players Club credits are redeemed and (B) members of Seller's
Players Club who are not Current Players and who elect to redeem
Players Club credits on or after the sixth month anniversary of the
Closing Date (the "ACCRUED EXPENSES");
(v) RESERVATIONS. All obligations of the Seller with
respect to hotel room and entertainment reservations at the Property;
(vi) SECURITY DEPOSITS. All security deposits
deposited by or on behalf of lessees or sublessees under any leases or
subleases under which Seller or Los Pueblos is lessor or sublessor
existing on the Closing Date ("LESSOR SECURITY DEPOSITS"); and
(vii) PROGRESSIVE METERS. All outstanding obligations
of the Company on the Closing Date with respect to any progressive
meter on any Gaming Device, which meter amounts as of such date shall
constitute a current liability for purposes of SECTION 1.5 hereof.
(b) RETAINED LIABILITIES. Except for the Assumed Liabilities,
Purchaser shall not assume by virtue of this Agreement or the transactions
contemplated hereby, and shall have no liability for, any Liabilities of Seller
or Los Pueblos of any kind, character or description whatsoever, including (i)
those liabilities listed in SECTION 1.02(b) OF THE DISCLOSURE SCHEDULE and all
Liabilities and obligations under collective bargaining agreements and Company
Plans and Players Club Liabilities that relate to members of Seller's Players
Club who are not Current
6
Players and who redeem Players Club credits on a date that is following the
Closing Date and prior to the six (6) month anniversary of the Closing Date,
which liability shall be in an amount equal to the cost incurred by Purchaser
in satisfying such Players Club Liability (the "RETAINED LIABILITIES").
Seller and Los Pueblos shall, and Parent shall cause Seller and Los Pueblos
to, discharge in a timely manner or shall make adequate provision for all of
the Retained Liabilities, provided that Seller and Los Pueblos shall have the
ability to contest, in good faith, any such claim of liability asserted in
respect thereof by any Person other than Purchaser and its Affiliates.
1.03. PURCHASE PRICE; ALLOCATION; ADJUSTMENT.
(a) PURCHASE PRICE. Subject to adjustment as set forth in
SECTION 1.03(c) and SECTION 1.05 below, the aggregate purchase price for the
Assets and the covenant contained in SECTION 4.11, is $185,000,000 (the
"PURCHASE PRICE"). $500,000 of the Purchase Price is allocable to, and deemed
to be in consideration of, the covenant contained in SECTION 4.11. The
remainder of the Purchase Price is allocable to, and deemed to be in
consideration of, the Assets.
(b) ALLOCATION OF PURCHASE PRICE. Purchaser, Seller and Los
Pueblos shall negotiate in good faith prior to the Closing Date and determine
the allocation of the consideration paid by Purchaser for the Assets. Each
party hereto agrees (i) that any such allocation shall be consistent with
paragraph (a) above and the requirements of Section 1060 of the Code and the
regulations thereunder, (ii) to complete jointly and to file separately Form
8594 with its Federal income Tax Return consistent with such allocation for
the tax year in which the Closing Date occurs and (iii) that no party will
take a position on any income, transfer or gains Tax Return, before any
Governmental or Regulatory Authority charged with the collection of any such
Tax or in any judicial proceeding, that is in any manner inconsistent with
the terms of any such allocation without the consent of the other party.
(c) POST-CLOSING PURCHASE PRICE ADJUSTMENT. It is the
intention of the parties hereto that current assets shall equal current
liabilities as of the Closing Date.
(i) As promptly as practicable after the Closing
Date, but in no event more than sixty (60) days after the Closing Date
(such date on which the Closing Balance Sheet is delivered, the
"CLOSING FINANCIAL STATEMENTS DELIVERY DATE"), Purchaser will prepare
and deliver to Seller a balance sheet of Seller as of the close of
business on the day immediately preceding the Closing Date (the
"CLOSING BALANCE SHEET"). The Closing Balance Sheet shall be
accompanied by a certificate of an officer of Purchaser to the effect
that the Closing Balance Sheet presents fairly, in accordance with GAAP
and the accounting practices of Seller applied on a consistent basis,
the financial condition of Seller as of the close of business on the
day immediately preceding the Closing Date.
(ii) In the event that there is a Deficiency with
respect to the Net Current Assets, Seller shall pay, and Parent shall
cause Seller to pay, to Purchaser, as an adjustment to the Purchase
Price (as the same may have been adjusted at Closing pursuant to
SECTION 1.05), an aggregate amount equal to the Deficiency, less any
amount that the Purchase Price has been previously reduced or plus any
amount that the Purchase Price has been previously increased, in each
case pursuant to SECTION 1.05. If the Purchase Price was previously
reduced pursuant to SECTION 1.05 and such reduction
7
exceeded the amount of the Deficiency, then Purchaser shall pay the
amount of such excess to Seller. Any payments required to be made by
Parent or Seller pursuant to this SECTION 1.03(c)(ii) shall be made
within ten (10) days of the Closing Financial Statements Delivery
Date by wire transfer of immediately available funds to an account
designated by Purchaser.
(iii) In the event that there is a Surplus with
respect to the Net Current Assets, Purchaser shall pay to Seller, as an
adjustment to the Purchase Price (as the same may have been adjusted at
Closing pursuant to SECTION 1.05), an amount equal to the Surplus less
any amount that the Purchase Price has been previously increased or
plus any amount that the Purchase Price has been previously decreased,
in each case pursuant to SECTION 1.05. Any payments required to be made
by Purchaser pursuant to this SECTION 1.03(c)(iii) shall be made within
ten (10) days of the Closing Financial Statements Delivery Date by wire
transfer of immediately available funds to an account designated by
Seller.
1.04. CLOSING. The Closing will take place at the offices of
Lionel, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, 1700 Bank of America Plaza, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, or at such other place as Purchaser and Seller
mutually agree, at 8:00 A.M. local time, on the Closing Date and shall be deemed
to occur at 11:59 p.m., Las Vegas time, on the Closing Date (the "TRANSFER
TIME"). At the Closing, Purchaser will pay the Purchase Price, by wire transfer
of immediately available funds to such accounts as Seller may reasonably direct
by written notice delivered to Purchaser by Seller at least two (2) Business
Days before the Closing Date, PROVIDED that $1,500,000 of the Purchase Price
shall be delivered by Purchaser by wire transfer of immediately available funds
to Nevada Title Company, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, as escrow agent (the "ESCROW AGENT"), to be held
pursuant to the terms and conditions of the Escrow Agreement. Simultaneously,
(a) Seller and Los Pueblos will, and Parent will cause Seller and Los Pueblos
to, assign and transfer to Purchaser all of its right, title and interest in and
to the Assets (free and clear of all Liens, other than Permitted Liens) by
delivery of (i) a General Assignment and ▇▇▇▇ of Sale substantially in the form
of EXHIBIT B hereto (the "GENERAL ASSIGNMENT"), duly executed by Seller, (ii) a
General Assignment, duly executed by Los Pueblos, (iii) grant, bargain and sale
deeds in proper statutory form for recording and otherwise in form and substance
reasonably satisfactory to Purchaser conveying title to the Real Property and
(iv) such other good and sufficient instruments of conveyance, assignment and
transfer, in form and substance reasonably acceptable to Purchaser's counsel, as
shall be effective to vest in Purchaser good title to the Assets (the General
Assignment and the other instruments referred to in clauses (iii) and (iv) being
collectively referred to herein as the "ASSIGNMENT INSTRUMENTS"), and (b)
Purchaser will assume from Seller and Los Pueblos the due payment, performance
and discharge of the Assumed Liabilities by delivery of (i) an Assumption
Agreement substantially in the form of EXHIBIT C hereto (the "ASSUMPTION
AGREEMENT"), duly executed by Purchaser, and (ii) such other good and sufficient
instruments of assumption, in form and substance reasonably acceptable to
Seller's and Los Pueblos' counsel, as shall be effective to cause Purchaser to
assume the Assumed Liabilities as and to the extent provided in SECTION 1.02(a)
(the Assumption Agreement and such other instruments referred to in clause (ii)
being collectively referred to herein as the "ASSUMPTION INSTRUMENTS"). At the
Closing, there shall also be delivered to Seller, Los Pueblos and Purchaser
8
the opinions, certificates and other contracts, documents and instruments
required to be delivered under ARTICLES VI and VII.
1.05. PRE-CLOSING PURCHASE PRICE ADJUSTMENT.
(a) It is the intention of the parties hereto that current
assets shall equal current liabilities as of the Closing Date.
(b) On or before the fifth (5th) Business Day preceding the
Closing Date, Seller shall, and Parent shall cause Seller to, prepare and
deliver to Purchaser an interim balance sheet of the Seller as of the close of
business on the final day of the calendar month immediately preceding the
calendar month during which the Closing Date occurs; provided that if the
Closing Date occurs within the first five (5) days of a calendar month, the
interim balance sheet shall be as of the close of business on the final day of
the second calendar month immediately preceding the calendar month during which
the Closing Date occurs. Such interim balance sheet shall be accompanied by a
calculation of the Net Current Assets as of such date prepared from the interim
balance sheet, and a certificate of an officer of Seller to the effect that such
calculation was prepared in accordance with the terms of this Agreement and that
such interim balance sheet presents fairly, in accordance with GAAP and the
accounting practices of the Seller applied on a consistent basis, the financial
condition of the Seller as of the close of business on the final day of the
calendar month preceding the calendar month during which the Closing Date
occurs.
(c) In the event that there is a Deficiency with respect to
the Net Current Assets calculated in accordance with clause (b) above, the
Purchase Price shall be reduced in amount equal to 125% of such Deficiency.
(d) In the event that there is a Surplus with respect to the
Net Current Assets calculated in accordance with clause (b) above, Purchaser
shall pay to Seller at Closing as an adjustment to the Purchase Price, an amount
equal to the Surplus.
(e) In the event the results of the Phase I delivered pursuant
to SECTION 4.19 reveals an environmental condition as to the Real Property in
breach of the representations and warranties in SECTION 6.01, to the extent that
the cost of curing such condition is more than $100,000 and less than
$1,000,000, such breach shall not be considered material and the Purchase Price
shall be reduced by the amount equal to the reasonable estimated cost of
remedying such environmental condition; provided, however, that in the event the
cost of curing such condition is less than $100,000 there shall be no adjustment
to the Purchase Price.
1.06. FUNDS ESCROWED TO COMPLY WITH NRS. Parent, Seller and
Los Pueblos acknowledge and agree that there may be withheld from funds payable
to Seller at the Closing such amounts as shall be necessary to comply with the
provisions of NRS 360.525, 612.695, and 616B.269, or to satisfy requirements to
which the Real Property or a portion thereof may be subject pursuant to NRS
244.335. To the extent any such funds are withheld from Seller or Los Pueblos by
Purchaser, Purchaser shall deposit such funds into the Escrow Account to be held
by the Escrow Agent until such time as Seller or Los Pueblos furnishes the
Escrow Agent with receipts or certificates provided for in said statutes
certifying that the applicable obligations have been paid or discharged or that
funds out of the Purchase Price sufficient for such purpose are
9
held by the Escrow Agent. If Seller or Los Pueblos does not produce such
receipts, certificates or evidence within the time periods provided for in
said statutes, or if any lien or other claim therefor is asserted against
Purchaser or the Real Property (or any portion thereof) the Escrow Agent may
pay such sums as may be required by such statutes to the appropriate
authority.
1.07. PRORATIONS. The following prorations relating to the
Assets and the ownership and operation of the Business will be made as of the
Closing Date, with Seller or Los Pueblos liable to the extent such items
relate to any time period prior to the Closing Date and Purchaser liable to
the extent such items relate to periods beginning with and subsequent to the
Closing Date:
(a) Real estate taxes on or with respect to the Assets.
(b) Rents, additional rents, taxes and other items payable
by Seller or Los Pueblos under the Real Property Leases.
(c) The amount of rents, taxes and charges for sewer, water,
telephone, electricity and other utilities relating to the Real Property and the
real property subject to the Real Property Leases.
(d) All other items normally or customarily adjusted in
connection with similar transactions.
Except as otherwise agreed by the parties, the net amount of all such
prorations will be settled and paid on the Closing Date. If the Closing shall
occur before a real estate tax rate is fixed, the apportionment of taxes
shall be based upon the tax rate for the preceding year applied to the latest
assessed valuation.
1.08. FURTHER ASSURANCES; POST-CLOSING COOPERATION.
(a) At any time or from time to time after the Closing, at
Purchaser's request and without further consideration, Seller and Los Pueblos
shall, and Parent shall cause Seller and Los Pueblos to, execute and deliver
to Purchaser such other instruments of sale, transfer, conveyance, assignment
and confirmation, provide such materials and information and take such other
actions as Purchaser may reasonably deem necessary or desirable in order more
effectively to transfer, convey and assign to Purchaser, and to confirm
Purchaser's title to, all of the Assets, and, to the full extent permitted by
Law, to put Purchaser in actual possession and operating control of the
Business and the Assets and to assist Purchaser in exercising all rights with
respect thereto, and otherwise to cause Seller and Los Pueblos to fulfill
their obligations under this Agreement and the Operative Agreements.
(b) Following the Closing, each party will afford the other
party, its counsel and its accountants, during normal business hours, reasonable
access to the books, records and other data relating to the Business in its
possession with respect to periods prior to the Closing and the right to make
copies and extracts therefrom, to the extent that such access may be reasonably
required by the requesting party in connection with (i) the preparation of Tax
Returns, (ii) the determination or enforcement of rights and obligations under
this Agreement,
10
(iii) compliance with the requirements of any Governmental or Regulatory
Authority, (iv) the determination or enforcement of the rights and
obligations of any party to this Agreement or any of the Operative Agreements
or (v) in connection with any actual or threatened Action or Proceeding.
Further each party agrees for a period extending six (6) years after the
Closing Date not to destroy or otherwise dispose of any such books, records
and other data unless such party shall first offer in writing to surrender
such books, records and other data to the other party and such other party
shall not agree in writing to take possession thereof during the ten (10) day
period after such offer is made.
(c) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations
hereunder, it is necessary that a party be furnished with additional
information, documents or records relating to the Business not referred to in
paragraph (c) above, and such information, documents or records are in the
possession or control of the other party, such other party shall use its best
efforts to furnish or make available such information, documents or records
(or copies thereof) at the recipient's request, cost and expense. Any
information obtained by Seller or Los Pueblos in accordance with this
paragraph shall be held confidential by Seller or Los Pueblos, as the case
may be, in accordance with SECTION 14.06.
(d) Notwithstanding anything to the contrary contained in
this Section, if the parties are in an adversarial relationship in litigation
or arbitration, the furnishing of information, documents or records in
accordance with paragraphs (c) or (d) of this Section shall be subject to
applicable rules relating to discovery.
1.09. THIRD-PARTY CONSENTS. To the extent that any Real
Property Lease, Personal Property Lease, Business Contract or Business
License is not assignable without the consent of another party, this
Agreement shall not constitute an assignment or an attempted assignment
thereof if such assignment or attempted assignment would constitute a breach
thereof or a default thereunder. Parent, Seller and Los Pueblos, on the one
hand, and Purchaser, on the other hand, shall use commercially reasonable
efforts to obtain the consent of such other party to the assignment of any
such Real Property Lease, Personal Property Lease, Business Contract or
Business License to Purchaser in all cases in which such consent is or may be
required for such assignment. If any such consent shall not be obtained,
Parent, Seller and Los Pueblos shall cooperate with Purchaser in any
reasonable arrangement designed to provide for Purchaser the benefits
intended to be assigned to Purchaser under the relevant Real Property Lease,
Personal Property Lease, Business Contract or Business License, including
enforcement at the cost and for the account of Purchaser of any and all
rights of Seller or Los Pueblos against the other party thereto arising out
of the breach or cancellation thereof by such other party or otherwise. If
and to the extent that such arrangement cannot be made, Purchaser shall have
no obligation pursuant to SECTION 1.02 or otherwise with respect to any such
Real Property Lease, Personal Property Lease, Business Contract or Business
License. The provisions of this SECTION 1.09 shall not affect the right of
Purchaser not to consummate the transactions contemplated by this Agreement
if the condition to its obligations hereunder contained in SECTION 6.06 has
not been fulfilled.
1.10. INSURANCE PROCEEDS. If any of the Assets are
destroyed or damaged or taken in condemnation, the insurance proceeds or
condemnation award or claim for insurance
11
proceeds or condemnation award with respect thereto shall be an Asset. At the
Closing, Seller and Los Pueblos shall, and Parent shall cause Seller and Los
Pueblos to, pay or credit to Purchaser any such insurance proceeds or
condemnation awards received by it on or prior to the Closing and shall
assign to or assert for the benefit of Purchaser all of its rights against
any insurance companies, Governmental or Regulatory Authorities and others
with respect to such damage, destruction or condemnation. As and to the
extent that there is available insurance under policies maintained by Seller
or Los Pueblos and their Affiliates, predecessors and successors in respect
of any Assumed Liability, except for any such insurance proceeds with respect
to which the insured is directly or indirectly self-insured or has agreed to
indemnify the insurer, Parent, Seller and Los Pueblos shall cause such
insurance to be applied toward the payment of such Assumed Liability. The
provisions of this SECTION 1.10 shall not affect the right of Purchaser not
to consummate the transactions contemplated by this Agreement if the
condition to its obligations hereunder contained in SECTION 6.01 has not been
fulfilled.
1.11. REDEMPTION OF GAMING CHIPS AND TOKENS. In the event
that Purchaser does not elect to acquire Seller's chips and tokens pursuant
to SECTION 1.01(b)(vii), Purchaser shall: (i) redeem as Seller's agent, but
without any liability therefor, any gaming chips, tokens, racebook,
sportsbook and keno tickets (from any series in use as of or prior to the
Transfer Time) of Seller relating to the use and operation of the Business,
which are presented by patrons of the Business or Purchaser within the
applicable Nevada statutory time periods for such redemptions; (ii) be
reimbursed by Seller for redeeming Seller's gaming chips, tokens, racebook,
sportsbook and keno tickets, to the extent redeemed by Purchaser during such
statutory periods; and (iii) be reimbursed as often as weekly by Seller, upon
delivery to Seller of such Seller's gaming chips, tokens, racebook,
sportsbook and keno tickets. In such event, Parent and Seller agree to make
arrangements for additional redemption of its gaming chips, tokens, racebook,
sportsbook and keno tickets as required by Nevada law.
1.12. COLLECTION OF ACCOUNTS RECEIVABLE. For a period of
ninety (90) days following the Closing Date, Purchaser shall use commercially
reasonable efforts in the ordinary course of business to collect all accounts
receivable of the Business and promptly remit the proceeds to Seller. Upon
the expiration of such ninety (90) day period, Purchaser shall thereafter be
under no obligation to use such efforts to collect such accounts receivable;
PROVIDED, HOWEVER, that any such accounts receivable actually collected
thereafter by Purchaser shall be promptly remitted to Seller.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT, SELLER AND LOS PUEBLOS
Parent, Seller and Los Pueblos hereby jointly and severally
represent and warrant to Purchaser as follows:
2.01. ORGANIZATION OF SELLER AND PARENT.
(a) Seller is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Nevada, and has
full corporate power and authority to
12
conduct the Business as and to the extent now conducted and to own, use or
lease the Assets. Seller has no subsidiaries.
(b) Parent is a corporation duly organized, validly
existing and in good standing under the Laws of the State of New Mexico, and
has full corporate power and authority to conduct its business as and to the
extent now conducted and to own the capital stock of Seller and Los Pueblos.
(c) Los Pueblos is a limited liability company duly
organized, validly existing and in good standing under the Laws of the State
of Nevada, and has full limited liability company power and authority to
conduct its business as and to the extent now conducted and to own its assets.
2.02. AUTHORITY. Each of Parent, Seller and Los Pueblos
have full corporate or limited liability company, as applicable, power and
authority to execute and deliver this Agreement and the Operative Agreements
to which they are a party, to perform their obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and
thereby, including, without limitation, to sell and transfer (pursuant to
this Agreement) the Assets. The execution and delivery by Parent, Seller and
Los Pueblos of this Agreement and the Operative Agreements to which they are
a party, and the performance by Parent, Seller and Los Pueblos of their
obligations hereunder and thereunder, have been duly and validly authorized
by the Board of Directors and shareholders of Parent and Seller and the
members of Los Pueblos, no other corporate or limited liability company
action on the part of Parent, Seller or Los Pueblos or the shareholders or
members of Parent, Seller or Los Pueblos being necessary. This Agreement has
been duly and validly executed and delivered by Parent, Seller and Los
Pueblos and constitutes, and upon the execution and delivery by Parent,
Seller and Los Pueblos of the Operative Agreements to which they are a party,
such Operative Agreements will constitute, legal, valid and binding
obligations of Parent, Seller and Los Pueblos enforceable against Parent,
Seller and Los Pueblos in accordance with their terms.
2.03. NO CONFLICTS. The execution and delivery by Parent,
Seller and Los Pueblos of this Agreement do not, and the execution and
delivery by Parent, Seller and Los Pueblos of the Operative Agreements to
which each is a party, the performance by Parent, Seller and Los Pueblos of
their obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any
of the terms, conditions or provisions of the articles of incorporation or
by-laws (or other comparable corporate charter documents) of either Parent,
Seller or Los Pueblos;
(b) subject to obtaining the consents, approvals and
actions, making the filings and giving the notices disclosed in SECTION 2.04
OF THE DISCLOSURE SCHEDULE, conflict with or result in a violation or breach
of any term or provision of any Law or Order applicable to Parent, Seller,
Los Pueblos or any other Affiliates of Parent, or any of the Assets and
Properties of Seller, Los Pueblos, Parent or any other Affiliates of Parent;
or
13
(c) except as disclosed in SECTION 2.03 OF THE DISCLOSURE
SCHEDULE, (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require Parent, Seller, Los Pueblos or any other Affiliates of Parent
to obtain any consent, approval or action of, make any filing with or give
any notice to any Person as a result or under the terms of, or (iv) result in
the creation or imposition of any Lien upon Parent, Seller or any other
Affiliates of Parent, or any of the Assets and Properties of Seller, Los
Pueblos, Parent or any other Affiliates of Parent under, any Contract or
License to which Seller, Los Pueblos, Parent or any other Affiliates of
Parent, is a party or by which any of the Assets and Properties of Seller,
Los Pueblos, Parent or any other Affiliates of Parent are bound.
2.04. GOVERNMENTAL APPROVALS AND FILINGS. Except as
disclosed in SECTION 2.04 OF THE DISCLOSURE SCHEDULE, no consent, approval or
action of, filing with or notice to any Governmental or Regulatory Authority
on the part of Parent, Seller or Los Pueblos is required in connection with
the execution, delivery and performance of this Agreement or any of the
Operative Agreements to which it is a party or the consummation of the
transactions contemplated hereby or thereby.
2.05. BOOKS AND RECORDS. Except as disclosed in SECTION
2.05 OF THE DISCLOSURE SCHEDULE, none of the Business Books and Records is
recorded, stored, maintained, operated or otherwise wholly or partly
dependent upon or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) which (including all means
of access thereto and therefrom) are not under the direct control of one or
more Employees.
2.06. FINANCIAL STATEMENTS. Prior to the execution of this
Agreement, Seller has delivered to Purchaser true and complete copies of the
following financial statements:
(a) the audited balance sheets of the Seller as of April
30, 1999, 1998 and 1997, and the related audited statement of operations for
each of the fiscal years then ended, together with a true and correct copy of
the report on such audited information by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP and all letters
from such accountants with respect to the results of such audits; and
(b) the unaudited balance sheets of the Seller as of April
30, 2000, and the related unaudited statement of operations for the portion
of the fiscal year then ended.
Except as set forth in the notes thereto or as disclosed in SECTION 2.06 OF
THE DISCLOSURE SCHEDULE, all such financial statements (i) were prepared in
accordance with GAAP, (ii) fairly present the financial condition and results
of operations of the Seller in all material respects as of the respective
dates thereof and for the respective periods covered thereby, and (iii) were
compiled from Business Books and Records regularly maintained by management
and used to prepare the financial statements of Seller in accordance with the
principles stated therein. Seller has maintained the Business Books and
Records in a manner sufficient to permit the preparation of financial
statements in accordance with GAAP.
2.07. ABSENCE OF CHANGES. Except for the execution and
delivery of this Agreement and the transactions to take place pursuant hereto
on or prior to the Closing Date, since the Annual Financial Statement Date
there has not been any material adverse change, or any event or development
which, individually or together with other such events, could
14
reasonably be expected to result in a material adverse change, in the
Condition of the Business. Without limiting the foregoing, except as
disclosed in SECTION 2.07 OF THE DISCLOSURE SCHEDULE, there has not occurred,
between the Annual Financial Statement Date and the date hereof, any of the
following:
(i) (x) any increase, out of the ordinary course of
business consistent with past practice, in the salary, wages or other
compensation of any Employee whose annual salary is, or after giving
effect to such change would be, $50,000 or more; (y) any establishment
or modification out of the ordinary course of business consistent with
past practice of (A) targets, goals, pools or similar provisions in
respect of any fiscal year under any Benefit Plan or any
employment-related Contract or other compensation arrangement with or
for Employees or (B) salary ranges, increase guidelines or similar
provisions in respect of any Benefit Plan or any employment-related
Contract or other compensation arrangement with or for Employees; or
(z) any adoption, entering into or becoming bound by any Benefit Plan,
employment-related Contract or amendment, modification or termination
(partial or complete) of any Benefit Plan, employment-related Contract
out of the ordinary course of business consistent with past practice,
except to the extent required by applicable Law and, in the event
compliance with legal requirements presented options, only to the
extent the option which Seller reasonably believed to be the least
costly was chosen;
(ii) any physical damage, destruction or other
casualty loss (that was not covered by insurance) affecting any of the
plant, real or personal property or equipment of Seller or Los Pueblos
used or held for use in the conduct of the Business in an aggregate
amount exceeding $100,000;
(iii) any material change in (A) any pricing,
investment, accounting, financial reporting, inventory, credit,
allowance or Tax practice or policy of the Business or (B) any method
of calculating any bad debt, contingency or other reserve of the
Business for accounting, financial reporting or Tax purposes;
(iv) any disposition of any Assets and Properties
used or held for use in the conduct of the Business, other than
Inventory in the ordinary course of business consistent with past
practice;
(v) any entering into, amendment, modification,
termination (partial or complete) or granting of a waiver under or
giving any consent with respect to (A) any Contract which is required
(or had it been in effect on the date hereof would have been required)
to be disclosed in the Disclosure Schedule pursuant to SECTION 2.16(a)
or (B) any License disclosed in SECTION 1.01(a)(viii) OF THE DISCLOSURE
SCHEDULE;
(vi) commitments for additions to property, plant or
equipment used or held for use in the conduct of the Business
constituting capital assets in an aggregate amount exceeding
$1,000,000;
15
(vii) any transaction with any officer, director or
Affiliate of Seller (A) outside the ordinary course of business
consistent with past practice or (B) other than on an arm's-length
basis;
(viii) any entering into of a Contract to do or
engage in any of the foregoing after the date hereof; or
(ix) any other transaction involving or development
affecting the Business or the Assets outside the ordinary course of
business consistent with past practice.
2.08. NO UNDISCLOSED LIABILITIES. Except as reflected or
reserved against in the balance sheet included in the Annual Financial
Statements or in the notes thereto or as disclosed in SECTION 2.08 OF THE
DISCLOSURE SCHEDULE or any other Section of the Disclosure Schedule, there are
no Liabilities against, relating to or affecting the Business or any of the
Assets, other than Liabilities (i) incurred in the ordinary course of business
consistent with past practice or (ii) which, individually or in the aggregate,
are not material to the Condition of the Business.
2.09. TAXES.
(a) TAX RETURN FILINGS. Except as disclosed in SECTION
2.09(a) OF THE DISCLOSURE SCHEDULE, Seller and Los Pueblos have filed all Tax
Returns (or the Tax Returns have been filed on its behalf) required to be
filed by applicable law prior to the date of the Disclosure Schedules. All
Tax Returns were (and, as to Tax Returns not filed as of the date hereof,
will be) true, complete and correct and filed on a timely basis. Seller and
Los Pueblos (i) have paid all Taxes that are due, or claimed or asserted by
any taxing authority to be due, from Seller or Los Pueblos for the periods
covered by the Tax Returns or (ii) have duly and fully provided reserves
adequate to pay all Taxes.
(b) TAX LIENS. Except as disclosed in SECTION 2.09(b) OF THE
DISCLOSURE SCHEDULE, there are no Tax liens upon the assets of Seller or Los
Pueblos except liens for Taxes not yet due.
(c) WITHHOLDING TAXES. Except as disclosed in SECTION 2.09(c)
OF THE DISCLOSURE SCHEDULE, Seller and Los Pueblos have complied (and until the
Closing Date will comply) with all applicable laws, rules, and regulations
relating to the payment and withholding of Taxes (including withholding and
reporting requirements under Code Sections 1441 through 1464, 3401 through 3406,
6041 and 6049 and similar provisions under Any other laws) and have, within the
time and in the manner prescribed by law, withheld from employee wages and paid
over to the proper governmental authorities all required amounts.
(d) NO CHANGES IN METHOD OF ACCOUNTING. Except as disclosed
in SECTION 2.09(d) OF THE DISCLOSURE SCHEDULE, Seller and Los Pueblos are not
required to include in income any adjustment pursuant to Code Section 481(a)
by reason of a voluntary change in accounting method initiated by Seller or
Los Pueblos, respectively, and the Internal Revenue Service has not proposed
an adjustment or change in accounting method.
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2.10. LEGAL PROCEEDINGS. Except as disclosed in SECTION 2.10
OF THE DISCLOSURE SCHEDULE (with paragraph references corresponding to those set
forth below):
(a) there are no Actions or Proceedings pending or, to the
Knowledge of Seller, threatened against, relating to or affecting Seller, Los
Pueblos or Parent with respect to the Business or any of its Assets and
Properties which (i) could reasonably be expected to result in the issuance of
an Order restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Operative Agreements or otherwise result in a material diminution of the
benefits contemplated by this Agreement or any of the Operative Agreements to
Purchaser, or (ii) if determined adversely to Seller or Los Pueblos, could
reasonably be expected to result in (x) any injunction or other equitable relief
that would interfere in any material respect with the Business or (y) Losses by
Seller, individually or in the aggregate with Losses in respect of other such
Actions or Proceedings, exceeding $100,000;
(b) there are no facts or circumstances Known to Seller that
could reasonably be expected to give rise to any Action or Proceeding that would
be required to be disclosed pursuant to clause (a) above; and
(c) there are no Orders outstanding against Parent, Seller or
Los Pueblos with respect to the Business or any of its Assets or Properties
other than routine Orders by the Nevada Gaming Commission or the City of North
Las Vegas regarding gaming or liquor regulation that have not had and could not
be reasonably expected to have a material adverse effect on the Condition of the
Business.
Prior to the execution of this Agreement, Seller has delivered to Purchaser all
responses of counsel to auditors' requests for information delivered in
connection with the Annual Financial Statements (together with any updates
provided by such counsel) regarding Actions or Proceedings pending or threatened
against, relating to or affecting the Business.
2.11. COMPLIANCE WITH LAWS AND ORDERS. Except as disclosed in
SECTION 2.11 OF THE DISCLOSURE SCHEDULE, Seller and Los Pueblos are not, nor
have they at any time within the last five (5) years been, nor have they
received any notice that they are or have at any time within the last five (5)
years been, in violation of or in default under, in any material respect, any
Law or Order applicable to the Business or the Assets.
2.12. BENEFIT PLANS; ERISA.
(a) SECTION 2.12(a) OF THE DISCLOSURE SCHEDULE contains a true
and complete list of each "employee benefit plan" (within the meaning of section
3(3) of ERISA, including, without limitation, multiemployer plans within the
meaning of ERISA section 3(37)), stock purchase, stock option, severance,
employment, change-in-control, fringe benefit, collective bargaining, bonus,
incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, legally binding or not,
under which any employee or former employee of Seller has
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any present or future right to benefits or under which the Seller has any
present or future liability. All such plans, agreements, programs, policies
and arrangements shall be collectively referred to as the "COMPANY PLANS".
(b) With respect to each Company Plan, Seller has delivered to
Purchaser a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) thereof.
(c) No Lien has arisen on the Assets by reason of Section 302
of ERISA, Section 412 of the Code or Title IV of ERISA.
(d) No Company Plan exists that could result in the payment to
any present or former employee of Seller of any money or other property or
accelerate or provide any other rights or benefits to any present or former
employee of Seller as a result of the transaction contemplated by this
Agreement, whether or not such payment would constitute a parachute payment
within the meaning of Code section 280G.
2.13. REAL PROPERTY.
(a) SECTION 1.01(a)(i) OF THE DISCLOSURE SCHEDULE contains a
true and correct list of each parcel of real property owned by Seller or Los
Pueblos and used or held for use in connection with the Business, and SECTION
1.01(a)(ii) OF THE DISCLOSURE SCHEDULE contains a true and correct list of each
parcel of real property leased by Seller or Los Pueblos (as lessor or lessee)
and used or held for use in connection with the Business.
(b) Except as disclosed in SECTION 2.13(b) OF THE DISCLOSURE
SCHEDULE, Seller and Los Pueblos have good and marketable fee simple title to
the Real Property, free and clear of all Liens other than Permitted Liens.
Except for the Real Property subject to Real Property Leases described in
SECTION 1.01(a)(ii)(A) OF THE DISCLOSURE SCHEDULE, Seller and Los Pueblos are in
possession of the Real Property. Seller and Los Pueblos have adequate rights of
ingress and egress with respect to the Real Property. None of the Real Property,
or the Improvements, or the use thereof, contravenes or violates any building,
administrative, occupational safety and health or other applicable Law in any
material respect (whether or not permitted on the basis of prior nonconforming
use, waiver or variance).
(c) Seller and Los Pueblos have a valid and subsisting
leasehold estate in and the right to quiet enjoyment of the real properties
subject to the Real Property Leases described in SECTION 1.01(a)(ii)(B) OF THE
DISCLOSURE SCHEDULE for the full term thereof. Each Real Property Lease is a
legal, valid and binding agreement, enforceable in accordance with its terms, of
Seller or Los Pueblos and of each other Person that is a party thereto, and
except as disclosed in SECTION 2.13(c) OF THE DISCLOSURE SCHEDULE, there is no,
nor has Seller or Los Pueblos received any notice of any, default (or any
condition or event which, after notice or lapse of time or both, would
constitute a default) thereunder. Seller and Los Pueblos do not owe any
brokerage commissions with respect to any such leased space.
(d) Seller and Los Pueblos have delivered to Purchaser prior
to the execution of this Agreement true and complete copies of (i) all deeds,
leases, mortgages, deeds of trust,
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certificates of occupancy, title insurance policies, title reports, surveys
and similar documents, and all amendments thereof, with respect to the Real
Property, and (ii) all Real Property Leases (including any amendments and
renewal letters) and, to the extent reasonably available, all other documents
referred to in clause (i) of this paragraph (d) with respect to the real
property subject to the Real Property Leases described in SECTION
1.01(a)(ii)(B) OF THE DISCLOSURE SCHEDULE.
(e) Except as disclosed in SECTION 2.13(e) OF THE DISCLOSURE
SCHEDULE, no tenant or other party has any right to purchase, or holds any right
of first refusal to purchase, the Real Property.
(f) Except as disclosed in SECTION 2.13(f) OF THE DISCLOSURE
SCHEDULE, the Improvements are in good operating condition and in a state of
good maintenance and repair, ordinary wear and tear excepted, are adequate and
suitable for the purposes for which they are presently being used and, to the
Knowledge of Seller, there are no condemnation or appropriation, environmental,
zoning or other land use regulation proceedings pending or threatened against
any of the Real Property, or the Improvements, which would detrimentally affect
the value of the Real Property, or the Improvements or the use and operation
thereof as a hotel/casino, nor are there any assessments affecting the Real
Property, or the Improvements.
(g) Except as disclosed in SECTION 2.13(g) OF THE DISCLOSURE
SCHEDULE, none of the Real Property, or the Improvements, or the use and
operation thereof, contravenes or violates any building, zoning, subdivision,
land use, administrative, occupational safety and health, environmental or other
applicable Law in any material respect (whether or not permitted on the basis of
prior nonconforming use, waiver or variance). Seller and Los Pueblos have not
received any notice from any Governmental or Regulatory Authority advising
Seller or Los Pueblos of (i) a violation of any such Laws (whether now existing
or which will exist with the passage of time) or (ii) any action which must be
taken to avoid a violation thereof.
(h) Except as disclosed in SECTION 2.13(h) OF THE DISCLOSURE
SCHEDULE, there are no outstanding contracts made by Seller or Los Pueblos for
the construction or repair of any improvements to the Real Property which have
not been fully paid for.
(i) To the Knowledge of Seller, there are no material physical
defects in the Real Property.
(j) Any survey and the plan and specifications, warranties,
and all other contracts or documents required to be delivered to Purchaser
pursuant to this Agreement, are true, correct and complete copies, and are in
full force and effect, without default by any party and without any right of
setoff, except as disclosed in writing at the time of such delivery.
(k) All water, sewer, gas, electric, telephone, and drainage
facilities and all other utilities required by law for Purchaser's use and
operation of the Real Property as a casino are installed, or may be installed
without additional consent of any third party, across public property or valid
easements to the boundary lines of the Real Property.
(l) The Real Property is zoned "C-3" and is designated by the
City of North Las Vegas as being part of a gaming enterprise district. Seller
has obtained all licenses, permits,
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easements, and rights-of-way, including a use permit, required from all
governmental authorities having jurisdiction over the Real Property or from
private parties for the use and operation of the Real Property as a
hotel/casino with all of the amenities necessary for the operation of the
Business and to assure vehicular and pedestrian ingress to and egress from
the Real Property.
(m) Neither Seller nor Los Pueblos has received any notice
from any insurance carrier of any defects or inadequacies in the Real Property,
or in any portion thereof, which would adversely affect the insurability thereof
or the cost of such insurance. Except as disclosed in SECTION 2.13(m) OF THE
DISCLOSURE SCHEDULE, there are no pending insurance claims.
(n) Neither Seller nor Los Pueblos is a "foreign person"
within the meaning of Section 1445(f)(3) of the Code, and Seller and Los Pueblos
will furnish to Purchaser, and Parent will cause Seller and Los Pueblos to
furnish to Purchaser, prior to the Closing, an affidavit in the form attached
hereto as EXHIBIT K.
2.14. TANGIBLE PERSONAL PROPERTY. As of the date hereof,
Seller and Los Pueblos are in possession of and has good title to, or has valid
leasehold interests in or valid rights under Contract to use, all the Tangible
Personal Property, which includes all tangible personal property reflected on
the balance sheet included in the Annual Financial Statements and tangible
personal property acquired since the Annual Financial Statement Date other than
tangible personal property disposed of since such date in the ordinary course of
business consistent with past practice. As of the Closing Date, Seller and Los
Pueblos shall be in possession of and has good and valid fee title to all such
Tangible Personal Property. All the Tangible Personal Property is free and clear
of all Liens, other than Permitted Liens and Liens disclosed in SECTION 2.14 OF
THE DISCLOSURE SCHEDULE, and is in good working order and condition, ordinary
wear and tear excepted, and its use complies in all material respects with all
applicable Laws.
2.15. INTELLECTUAL PROPERTY RIGHTS. Seller has interests in or
uses only the Intellectual Property disclosed in SECTION 1.01(a)(vii) OF THE
DISCLOSURE SCHEDULE in connection with the conduct of the Business, each of
which Seller either has all right, title and interest in or a valid and binding
rights under Contract to use. No other Intellectual Property is used or
necessary in the conduct of the Business. Except as disclosed in SECTION 2.15 OF
THE DISCLOSURE SCHEDULE, (i) Seller has the exclusive right to use the
Intellectual Property disclosed in SECTION 1.01(a)(vii) OF THE DISCLOSURE
SCHEDULE, (ii) all registrations with and applications to Governmental or
Regulatory Authorities in respect of such Intellectual Property are valid and in
full force and effect and are not subject to the payment of any Taxes or
maintenance fees or the taking of any other actions by Seller to maintain their
validity or effectiveness, (iii) there are no restrictions on the direct or
indirect transfer of any Contract, or any interest therein, held by Seller in
respect of such Intellectual Property, (iv) Seller has taken reasonable security
measures to protect the secrecy, confidentiality and value of its trade secrets
in respect of the Business, (v) Seller is not, nor has it received any notice
that it is, in default (or with the giving of notice or lapse of time or both,
would be in default) under any Contract to use such Intellectual Property and
(vi) to the Knowledge of Seller, no such Intellectual Property is being
infringed by any other Person. Seller has not received notice that Seller is
infringing any Intellectual Property of any other Person in connection with the
conduct of the Business, no claim is pending or, to the Knowledge of Seller, has
been made to such effect that has not been resolved and, to the
20
Knowledge of Seller, Seller is not infringing any Intellectual Property of
any other Person in connection with the conduct of the Business.
2.16. CONTRACTS.
(a) SECTION 2.16(a) OF THE DISCLOSURE SCHEDULE (with paragraph
references corresponding to those set forth below) contains a true and complete
list of each of the following Contracts or other arrangements (true and complete
copies or, if none, reasonably complete and accurate written descriptions of
which, together with all amendments and supplements thereto and all waivers of
any terms thereof, have been delivered to Purchaser prior to the execution of
this Agreement) to which Seller is a party or by which any of the Assets is
bound:
(i) (A) all Contracts (excluding Benefit Plans)
providing for a commitment of employment or consultation services for a
specified or unspecified term to, or otherwise relating to employment
or the termination of employment of, any Employee, the name, position
and rate of compensation of each Employee party to such a Contract and
the expiration date of each such Contract; and (B) any written or
unwritten representations, commitments, promises, communications or
courses of conduct (excluding Benefit Plans and any such Contracts
referred to in clause (A)) involving an obligation of Seller to make
payments in any year, other than with respect to salary or incentive
compensation payments in the ordinary course of business, to any
Employee exceeding $25,000 or any group of Employees exceeding $100,000
in the aggregate;
(ii) all Contracts with any Person containing any
provision or covenant prohibiting or limiting the ability of Seller to
engage in any business activity or compete with any Person in
connection with the Business or , except as provided in SECTION 4.11,
prohibiting or limiting the ability of any Person to compete with
Seller in connection with the Business;
(iii) all partnership, joint venture, shareholders'
or other similar Contracts with any Person in connection with the
Business;
(iv) all Contracts with distributors, dealers,
manufacturer's representatives, sales agencies or franchises with whom
Seller or Los Pueblos deals in connection with the Business;
(v) all Contracts relating to the future disposition
or acquisition of any Assets, other than dispositions or acquisitions
of Inventory in the ordinary course of business consistent with past
practice;
(vi) all collective bargaining or similar
labor Contracts covering any Employee; and
(vii) all other Contracts (other than Benefit Plans,
the Real Property Leases and insurance policies listed in SECTION 2.18
OF THE DISCLOSURE SCHEDULE) with respect to the Business that (A)
involve the payment or potential payment, pursuant to the terms of any
such Contract, by or to Seller of more than $100,000 annually and
21
(B) cannot be terminated within thirty (30) days after giving notice of
termination without resulting in any material cost or penalty to
Seller.
(b) Each Contract required to be disclosed in SECTION 2.16(a)
OF THE DISCLOSURE SCHEDULE is in full force and effect and constitutes a legal,
valid and binding agreement, enforceable in accordance with its terms, of each
party thereto; and except as disclosed in SECTION 2.16(b) OF THE DISCLOSURE
SCHEDULE neither Seller, Los Pueblos, nor, to the Knowledge of Seller, any other
party to such Contract is, or has received notice that it is, in violation or
breach of or default under any such Contract (or with notice or lapse of time or
both, would be in violation or breach of or default under any such Contract) in
any material respect.
(c) Except as disclosed in SECTION 2.16(c) OF THE DISCLOSURE
SCHEDULE, the execution, delivery and performance by Seller and Los Pueblos of
this Agreement and the Operative Agreements to which it is a party, and the
consummation of the transactions contemplated hereby and thereby, will not (A)
result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (B) result in or give to any
Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (C) result in the creation or
imposition of any Lien upon Seller or any of its Assets and Properties under,
any Business Contract.
2.17. LICENSES. SECTION 1.01(a)(viii) OF THE DISCLOSURE
SCHEDULE contains a true and complete list of all material Licenses used or held
for use in the Business (and all pending applications for any such Licenses),
setting forth the grantor, the grantee, the function and the expiration and
renewal date of each. Prior to the execution of this Agreement, Seller has
delivered to Purchaser true and complete copies of all such Licenses. Except as
disclosed in SECTION 2.17 OF THE DISCLOSURE SCHEDULE:
(i) Seller owns or validly holds in its name all
Licenses that are material, individually or in the aggregate, to the
Business;
(ii) each Business License is valid, binding and in
full force and effect;
(iii) Seller is not, nor has it received any notice
that it is, in default (or with the giving of notice or lapse of time
or both, would be in default) under any Business License; and
(iv) the execution, delivery and performance by
Seller of this Agreement and the Operative Agreements to which it is a
party, and the consummation of the transactions contemplated hereby and
thereby, will not (A) result in or give to any Person any right of
termination, cancellation, acceleration or modification in or with
respect to, (B) result in or give to any Person any additional rights
or entitlement to increased, additional, accelerated or guaranteed
payments under, or (C) result in the creation or imposition of any Lien
upon Seller or any of its Assets and Properties under, any Business
License.
2.18. INSURANCE. SECTION 2.18 OF THE DISCLOSURE SCHEDULE
contains a true and complete list (including the names and addresses of the
insurers, the names of the Persons to
22
whom such Policies have been issued, the expiration dates thereof, the annual
premiums and payment terms thereof, whether it is a "claims made" or an
"occurrence" policy and a brief description of the interests insured thereby)
of all liability, property, workers' compensation and other insurance
policies currently in effect that insure the Business, the Employees or the
Assets. Each such insurance policy is valid and binding and in full force and
effect, no premiums due thereunder have not been paid and Seller has not
received any notice of cancellation or termination in respect of any such
policy or is in default thereunder. Such insurance policies are placed with
financially sound and reputable insurers and, in light of the nature of the
Business and the Assets, are in amounts and have coverages that are
reasonable and customary for Persons engaged in such business and having such
Assets and Properties. Neither Seller nor the Person to whom such policy has
been issued has received notice that any insurer under any policy referred to
in this Section is denying liability with respect to a claim thereunder or
defending under a reservation of rights clause.
2.19. AFFILIATE TRANSACTIONS. Except as disclosed in
SECTION 2.19 OF THE DISCLOSURE SCHEDULE, (i) no officer, director or
Affiliate of Parent, Seller or Los Pueblos provides or causes to be provided
any assets, services or facilities used or held for use in connection with
the Business, and (ii) the Business does not provide or cause to be provided
any assets, services or facilities to any such officer, director or
Affiliate. Except as disclosed in SECTION 2.19 OF THE DISCLOSURE SCHEDULE,
each of the transactions listed in SECTION 2.19 OF THE DISCLOSURE SCHEDULE is
engaged in on an arm's-length basis.
2.20. EMPLOYEES; LABOR RELATIONS.
(a) Except as disclosed in SECTION 2.20 OF THE DISCLOSURE
SCHEDULE, (i) no Employee is presently a member of a collective bargaining
unit and, to the Knowledge of Seller, there are no threatened or contemplated
attempts to organize for collective bargaining purposes any of the Employees,
and (ii) no unfair labor practice charge or sex, age, race or other
discrimination claim has been brought during the last five (5) years against
Seller with respect to the conduct of the Business before the NLRB, the Equal
Employment Opportunity Commission or any other Governmental or Regulatory
Authority. Since December 31, 1996, there has been no work stoppage, strike
or other concerted action by employees of Seller engaged in the Business.
During that period, Seller has complied in all material respects with all
applicable Laws relating to the employment of labor, including, without
limitation, those relating to wages, hours and collective bargaining.
(b) Except as disclosed in SECTION 2.20 OF THE DISCLOSURE
SCHEDULE, Seller has filed and/or submitted all documents required of it as
an employer, including, without limitation, those required by the NLRA, Title
VII, the NERA and federal and/or state laws regulating the payment of wages
and workplace safety. Seller (i) has paid all wages and other
employment-related obligations that are due or (ii) has duly and fully
provided reserves adequate to pay all wages and other employment related
obligations.
(c) Except as disclosed in SECTION 2.20 OF THE DISCLOSURE
SCHEDULE, Seller has not executed any outstanding waivers or comparable
consents regarding the application of the statute of limitations for any
labor and employment-related obligation (and no extensions have been executed
on its behalf).
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(d) Except as disclosed in SECTION 2.20 OF THE DISCLOSURE
SCHEDULE, no audits, investigative or other administrative proceedings or
court proceedings are presently pending or, to the Knowledge of Seller,
threatened, with regard to any obligation of Seller as an employer.
(e) Except as disclosed in SECTION 2.20 OF THE DISCLOSURE
SCHEDULE, Seller has not received any written decision, ruling and/or order
from a government agency and/or its representative or a court (and to the
Knowledge of Seller, no such decision, ruling and/or order has been
threatened) related in any way to Seller's obligations as an employer.
(f) Seller has made available (or in the case of documents
received and/or submitted after the Closing Date, will make available) to
Purchaser complete and accurate copies of all collective bargaining
agreements, other agreements and material correspondence relating to or
regarding in any way the relationship between Seller and the union(s)
representing bargaining unit(s) of the Employees.
2.21. ENVIRONMENTAL MATTERS. Seller and Los Pueblos have
obtained all Licenses which are required under applicable Environmental Laws
in connection with the conduct of the Business or the construction, ownership
or operation of the Assets. Each of such Licenses is in full force and effect
and is held in the name of Seller or Los Pueblos. Seller and Los Pueblos have
conducted the Business in compliance in all material respects with the terms
and conditions of all such Licenses and with any applicable Environmental
Law. In addition, except as disclosed in SECTION 2.21 OF THE DISCLOSURE
SCHEDULE (with paragraph references corresponding to those set forth below):
(a) No Order has been issued, no Environmental Claim has
been filed, no penalty has been assessed and no investigation or review is
pending or, to the Knowledge of Seller, threatened by any Governmental or
Regulatory Authority with respect to any alleged failure by Seller or Los
Pueblos to possess or comply with any License required under applicable
Environmental Laws in connection with the conduct of the Business or with
respect to any generation, treatment, storage, recycling, transportation,
discharge, disposal or Release of any Hazardous Material in connection with
the Business, and to the Knowledge of Seller there are no facts or
circumstances in existence which could reasonably be expected to form the
basis for any such Order, Environmental Claim, penalty or investigation.
(b) Seller and Los Pueblos do not own, operate or lease a
treatment, storage or disposal facility on any of the Real Property requiring
a permit under the Resource Conservation and Recovery Act, as amended, or
under any other comparable state or local Law; and, without limiting the
foregoing, to the best of their knowledge (i) no polychlorinated biphenyl is
or has been present, (ii) no asbestos or asbestos-containing material is or
has been present, (iii) there are no underground storage tanks or surface
impoundments for Hazardous Materials, active or abandoned, and (iv) no
Hazardous Material has been Released in a quantity reportable under, or in
violation of, any Environmental Law or otherwise Released, in the cases of
clauses (i) through (iv), at, on or under any such site or facility during
any period that Seller or Los Pueblos owned, operated or leased such property.
(c) To the best of its Knowledge, Seller has not
transported or arranged for the transportation of any Hazardous Material in
connection with the operation of the Business to any
24
location that is (i) listed on the NPL under CERCLA, (ii) listed for possible
inclusion on the NPL by the Environmental Protection Agency in CERCLIS or on
any similar state or local list or (iii) the subject of enforcement actions
by federal, state or local Governmental or Regulatory Authorities that may
lead to Environmental Claims against Seller or the Business.
(d) No Hazardous Material generated in connection with the
operation of the Business has been recycled, treated, stored, disposed of or
Released by Seller at any location.
(e) No oral or written notification of a Release of a
Hazardous Material in connection with the operation of the Business has been
filed by or on behalf of Seller, and no site or facility now or previously
owned, operated or leased by Seller on any of the Real Property is listed or
proposed for listing on the NPL, CERCLIS or any similar state or local list
of sites requiring investigation or clean-up.
(f) No Liens have arisen under or pursuant to any
Environmental Law on any site or facility owned, operated or leased by Seller
on any of the Real Property, and no federal, state or local Governmental or
Regulatory Authority action has been taken or, to the Knowledge of Seller, is
in process that could subject any such site or facility to such Liens, and
Seller would not be required to place any notice or restriction relating to
the presence of Hazardous Materials at any such site or facility in any deed
to the Real Property on which such site or facility is located.
(g) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by, or that are
in the possession of, Seller in relation to any site or facility now or
previously owned, operated or leased by Seller on any of the Real Property
which have not been delivered to Purchaser prior to the execution of this
Agreement.
2.22. INVENTORY. All the Inventory consists of a quality
and quantity usable and salable in the ordinary course of business consistent
with past practice, subject to normal and customary allowances in the
industry for spoilage, damage and outdated items. All items included in the
Inventory are the property of Seller, free and clear of any Lien other than
Permitted Liens, have not been pledged as collateral, are not held by Seller
on consignment from others and conform in all material respects to all
standards applicable to such inventory or its use or sale imposed by
Governmental or Regulatory Authorities.
2.23. VEHICLES. SECTION 1.01(a)(ix) OF THE DISCLOSURE
SCHEDULE contains a true and complete list of all motor vehicles owned or
leased by Seller or Parent and used or held for use in the conduct of the
Business. Except as disclosed in SECTION 2.23 OF THE DISCLOSURE SCHEDULE,
Seller has good and valid title to, or has valid leasehold interests in or
valid rights under Contract to use, each Vehicle, free and clear of all Liens
other than Permitted Liens.
2.24. NO GUARANTEES. Other than the guarantees by Parent,
Affiliates of Parent or the Maloof family members of the obligations of
Seller under its bank credit facility, none of the Liabilities of the
Business or of Seller incurred in connection with the conduct of the Business
is guaranteed by or subject to a similar contingent obligation of any other
Person, nor has Seller guaranteed or become subject to a similar contingent
obligation in respect of the Liabilities of any customer, supplier or other
Person to whom Seller sells goods or provides
25
services in the conduct of the Business or with whom Seller otherwise has
significant business relationships in the conduct of the Business.
2.25. ENTIRE BUSINESS. The sale of the Assets by Seller and
Los Pueblos to Purchaser pursuant to this Agreement will effectively convey
to Purchaser the entire Business and all of the tangible and intangible
property used by Seller and Los Pueblos (whether owned, leased or held under
license by Seller or Los Pueblos, by any of Seller's or Los Pueblos'
Affiliates or by others) in connection with the conduct of the Business as
heretofore conducted by Seller (except for the Excluded Assets and subject to
SECTION 1.09) including, without limitation, all tangible Assets and
Properties of Seller reflected in the balance sheet included in the Annual
Financial Statements and Assets and Properties acquired since the Annual
Financial Statement Date in the conduct of the Business, other than the
Excluded Assets and Assets and Properties disposed of since such date,
consistent with SECTION 2.06. Except as disclosed in SECTION 2.25 OF THE
DISCLOSURE SCHEDULE, there are no shared facilities or services which are
used in connection with any business or other operations of Seller or any of
Seller's Affiliates other than the Business.
2.26. BROKERS. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by Parent,
Seller and Los Pueblos directly with Purchaser without the intervention of
any Person on behalf of Parent, Seller or Los Pueblos in such manner as to
give rise to any valid claim by any Person against Purchaser for a finder's
fee, brokerage commission or similar payment.
2.27. SOLVENCY; SUFFICIENT CAPITAL.
(a) After giving effect to the transactions contemplated by
this Agreement and the payment of fees and expenses in connection therewith:
(i) the fair saleable value of all of the assets
(including goodwill) of Seller, taken as a whole, will be greater than
the total amount of liabilities, including contingent, subordinated,
absolute, fixed, matured or unmatured and liquidated or unliquidated
liabilities, of Seller, taken as a whole; and
(ii) the projected cash flow from operating
activities of Seller is sufficient to pay the probable liability of
Seller on its existing debts as such debts become due and payable.
(b) Seller currently pays its debts and other liabilities,
contingent obligations and other commitments as they become due and payable
in the normal course of business. Seller is not engaged, and is not about to
engage, in business or transactions for which it has unreasonably small
capital.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
3.01. ORGANIZATION. Purchaser is a corporation duly
organized, validly existing and in good standing under the Laws of the State
of Nevada. Purchaser has full corporate power and authority to enter into
this Agreement and the Operative Agreements to which it is a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby.
3.02. AUTHORITY. The execution and delivery by Purchaser of
this Agreement and the Operative Agreements to which it is a party, and the
performance by Purchaser of its obligations hereunder and thereunder, have
been duly and validly authorized by the Board of Directors of Purchaser, no
other corporate action on the part of Purchaser or its stockholders being
necessary. This Agreement has been duly and validly executed and delivered by
Purchaser and constitutes, and upon the execution and delivery by Purchaser
of the Operative Agreements to which it is a party, such Operative Agreements
will constitute, legal, valid and binding obligations of Purchaser
enforceable against Purchaser in accordance with their terms.
3.03. NO CONFLICTS. The execution and delivery by Purchaser
of this Agreement do not, and the execution and delivery by Purchaser of the
Operative Agreements to which it is a party, the performance by Purchaser of
its obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any
of the terms, conditions or provisions of the articles of incorporation or
by-laws (or other comparable corporate charter document) of Purchaser;
(b) subject to obtaining the consents, approvals and
actions, making the filings and giving the notices disclosed in SECTION 3.04
OF THE DISCLOSURE SCHEDULE, conflict with or result in a violation or breach
of any term or provision of any Law or Order applicable to Purchaser or any
of its Assets and Properties; or
(c) except as disclosed in SECTION 3.03 OF THE DISCLOSURE
SCHEDULE, (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require Purchaser to obtain any consent, approval or action of, make
any filing with or give any notice to any Person as a result or under the
terms of, or (iv) result in the creation or imposition of any Lien upon
Purchaser or any of its Assets or Properties under, any Contract or License
to which Purchaser is a party or by which any of its Assets and Properties is
bound.
3.04. GOVERNMENTAL APPROVALS AND FILINGS. Except as
disclosed in SECTION 3.04 OF THE DISCLOSURE SCHEDULE, no consent, approval or
action of, filing with or notice to any Governmental or Regulatory Authority
on the part of Purchaser is required in connection with
27
the execution, delivery and performance of this Agreement or the Operative
Agreements to which it is a party or the consummation of the transactions
contemplated hereby or thereby.
3.05. LEGAL PROCEEDINGS. There are no Actions or
Proceedings pending or, to the Knowledge of Purchaser, threatened against,
relating to or affecting Purchaser or any of its Assets and Properties which
could reasonably be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any
of the Operative Agreements.
3.06. BROKERS. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried out by Purchaser
directly with Seller without the intervention of any Person on behalf of
Purchaser in such manner as to give rise to any valid claim by any Person
against Seller for a finder's fee, brokerage commission or similar payment.
ARTICLE IV
COVENANTS OF PARENT, SELLER AND LOS PUEBLOS
Parent, Seller and Los Pueblos jointly and severally
covenant and agree with Purchaser that, at all times from and after the date
hereof until the Closing and, with respect to any covenant or agreement by
its terms to be performed in whole or in part after the Closing, for the
period specified therein or, if no period is specified therein, indefinitely,
Parent, Seller and Los Pueblos will comply with all covenants and provisions
of this ARTICLE IV, except to the extent Purchaser may otherwise consent in
writing.
4.01. REGULATORY AND OTHER APPROVALS. Parent, Seller and
Los Pueblos will, as promptly as practicable, (a) take all commercially
reasonable steps necessary or desirable to obtain all consents, approvals or
actions of, make all filings with and give all notices to Governmental or
Regulatory Authorities or any other Person required of Seller or Los Pueblos
to consummate the transactions contemplated hereby and by the Operative
Agreements, including, without limitation, those described in SECTIONS 2.03
AND 2.04 OF THE DISCLOSURE SCHEDULE, (b) provide such other information and
communications to such Governmental or Regulatory Authorities or other
Persons as Purchaser or such Governmental or Regulatory Authorities or other
Persons may reasonably request in connection therewith and (c) cooperate with
Purchaser in connection with the performance of its obligations under
SECTIONS 5.01 and 5.02. Parent, Seller and Los Pueblos will provide prompt
notification to Purchaser when any such consent, approval, action, filing or
notice referred to in clause (a) above is obtained, taken, made or given, as
applicable, and will advise Purchaser of any communications (and, unless
precluded by Law, provide copies of any such communications that are in
writing) with any Governmental or Regulatory Authority or other Person
regarding any of the transactions contemplated by this Agreement or any of
the Operative Agreements.
4.02. HSR FILINGS. In addition to and not in limitation of
Parent's and Seller's covenants contained in SECTION 4.01, Parent and Seller
will (a) take promptly all actions necessary to make the filings required of
Seller or its Affiliates under the HSR Act, (b) comply at the earliest
practicable date with any request for additional information received by
Seller or its
28
Affiliates from the Federal Trade Commission or the Antitrust Division of the
Department of Justice pursuant to the HSR Act and (c) cooperate with
Purchaser in connection with Purchaser's filing under the HSR Act and in
connection with resolving any investigation or other inquiry concerning the
transactions contemplated by this Agreement commenced by either the Federal
Trade Commission or the Antitrust Division of the Department of Justice or
state attorneys general.
4.03. INVESTIGATION BY PURCHASER. Seller and Los Pueblos
will (a) provide Purchaser and any Person who is considering providing
financing to Purchaser to finance all or any portion of the Purchase Price
and their respective officers, directors, employees, agents, counsel,
accountants, financial advisors, consultants and other representatives
(collectively, "REPRESENTATIVES") with full access, upon reasonable prior
notice and during normal business hours, to the Employees and such other
officers, employees and agents of Seller or Los Pueblos who have any
responsibility for the conduct of the Business, to Seller's accountants and
to the Assets, and (b) furnish Purchaser and such other Persons with all such
information and data (including, without limitation, copies of Business
Contracts, Business Licenses, Benefit Plans and other Business Books and
Records) concerning the Business, the Assets and the Assumed Liabilities as
Purchaser or any of such other Persons reasonably may request in connection
with such investigation.
4.04. NO SOLICITATIONS. Neither Parent, Seller nor Los
Pueblos will take, nor will it permit any Affiliate thereof (or authorize or
permit any investment banker, financial advisor, attorney, accountant or
other Person retained by or acting for or on behalf of Parent, Seller or Los
Pueblos or any such Affiliate) to take, directly or indirectly, any action to
solicit, encourage, receive, negotiate, assist or otherwise facilitate
(including by furnishing confidential information with respect to the
Business or permitting access to the Assets and Properties and Books and
Records of Seller) any offer or inquiry from any Person concerning the direct
or indirect acquisition of the Business or Assets by any Person other than
Purchaser or its Affiliates. If Parent, Seller, Los Pueblos or any such
Affiliate (or any such Person acting for or on their behalf) receives from
any Person any offer, inquiry or informational request referred to above,
Parent, Seller or Los Pueblos, respectively, will promptly advise such
Person, by written notice, of the terms of this SECTION 4.04 and will
promptly, orally and in writing, advise Purchaser of such offer, inquiry or
request and deliver a copy of such notice to Purchaser.
4.05. CONDUCT OF BUSINESS. Seller will operate the Business
only in the ordinary course consistent with past practice.
4.06. FINANCIAL STATEMENTS AND REPORTS; FILINGS.
(a) As promptly as practicable and in any event no later
than twenty (20) days after the end of each calendar month ending after the
date hereof and before the Closing Date, or ninety (90) days after the end of
each fiscal year ending after the date hereof and before the Closing Date, as
the case may be, Seller will deliver to Purchaser true and complete copies of
(in the case of any such fiscal year) the audited and (in the case of any
such calendar month) the unaudited balance sheet, and the related audited or
unaudited statement of operations, of the Seller, as of and for the fiscal
year then ended or as of and for the calendar month and the portion of the
fiscal year then ended, as the case may be, together with the notes, if any,
relating thereto,
29
which financial statements shall be prepared on a basis consistent with the
Annual Financial Statements.
(b) As promptly as practicable, Seller will deliver to
Purchaser true and complete copies of such other financial statements,
reports and analyses relating to the Business as may be prepared or received
by Seller or as Purchaser may otherwise reasonably request.
(c) As promptly as practicable, Seller will deliver copies
of all License applications and other filings made by Seller in connection
with the operation of the Business after the date hereof and before the
Closing Date with any Governmental or Regulatory Authority (other than
routine, recurring filings made in the ordinary course of business consistent
with past practice).
4.07. EMPLOYEE MATTERS.
(a) Seller will administer each Benefit Plan, or cause the
same to be so administered, in all material respects in accordance with the
applicable provisions of the Code, ERISA and all other applicable Laws.
Seller will promptly notify Purchaser in writing of each receipt by Seller
(and furnish Purchaser with copies) of any notice of investigation or
administrative proceeding by the IRS, Department of Labor, PBGC or other
Person involving any Benefit Plan.
(b) Seller shall fully comply with all Laws governing
and/or regulating the termination of the employment relationship and satisfy
all obligations as an employer, including, without limitation, those imposed
by WARN, ERISA, COBRA, IRCA, OSHA, Title VII, the NLRA and any state or
federal law and/or regulation regulating wages, hours and/or working
conditions of current and/or former employees, including, without limitation,
applicants, retirees and those who in the future could be classified as such.
Seller shall deliver all appropriate notices required under WARN in a timely
manner so that neither Seller nor Purchaser has any liability for any payment
or additional obligation pursuant to WARN.
4.08. CERTAIN RESTRICTIONS. Seller and Los Pueblos will
refrain from:
(a) disposing of any Assets and Properties used or held for
use in the conduct of the Business, other than Inventory in the ordinary
course of business consistent with past practice and other dispositions not
exceeding $100,000 in the aggregate, or creating or incurring any Lien, other
than a Permitted Lien, on any Assets and Properties used or held for use in
the conduct of the Business;
(b) entering into, amending, modifying, terminating
(partially or completely), granting any waiver under or giving any consent
with respect to any Business Contract or any material Business License;
(c) violating, breaching or defaulting under in any
material respect, or taking or failing to take any action that (with or
without notice or lapse of time or both) would constitute a material
violation or breach of, or default under, any term or provision of any
Business Contract or any Business License;
30
(d) incurring, purchasing, canceling, prepaying or otherwise
providing for a complete or partial discharge in advance of a scheduled payment
date with respect to, or waiving any right of Seller under, any Liability of or
owing to Seller in connection with the Business, other than in the ordinary
course of business consistent with past practice;
(e) engaging with any Person in any Business Combination;
(f) engaging in any transaction with respect to the Business
with any officer, director or Affiliate of Seller, either outside the ordinary
course of business consistent with past practice or other than on an
arm's-length basis;
(g) making capital expenditures or commitments for additions
to property, plant or equipment constituting capital assets on behalf of the
Business in an aggregate amount exceeding $2,000,000; or
(h) entering into any Contract to do or engage in any of
the foregoing.
4.09. SECURITY DEPOSITS. Seller and Los Pueblos will take all
actions necessary to transfer to Purchaser on the Closing Date all of Seller's
and Los Pueblos' right, title and interest in and to the Tenant Security
Deposits and the Landlord Security Deposits.
4.10. DELIVERY OF BOOKS AND RECORDS, ETC.; REMOVAL OF
PROPERTY.
(a) On the Closing Date, Seller and Los Pueblos will deliver
or make available to Purchaser at the location at which the Business is
conducted all of the Business Books and Records and such other Assets as are in
Seller's possession at other locations, and if at any time after the Closing
Seller discovers in its possession or under its control any other Business Books
and Records or other Assets, it will forthwith deliver such Business Books and
Records or other Assets to Purchaser. Purchaser shall cooperate and afford
Seller, its counsel and its accountants, during normal business hours,
reasonable access to the Business Books and Records.
(b) Within sixty (60) days after the Closing Date, Seller and
Los Pueblos shall remove all Assets and Properties not being sold to Purchaser
hereunder from the Real Property and Improvements. Such removal shall be at the
sole cost and risk of Seller and Los Pueblos, including risk of loss and damage
to such Assets and Properties. Purchaser shall have no liability to Seller or
Los Pueblos with respect to such removal and transportation. Seller and Los
Pueblos shall be responsible for all repairs to the Real Property and
Improvements due to damage caused by Seller or Los Pueblos or their employees
and agents in connection with the removal of Seller's and Los Pueblos' Assets
and Properties.
4.11. NONCOMPETITION.
(a) Parent, Seller, Los Pueblos, each member of the Maloof
family, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ will, for a period of three (3)
years from the Closing Date, refrain from, either alone or in conjunction with
any other Person, or directly or indirectly through its present or future
Affiliates:
31
(i) employing, engaging or seeking to employ or
engage any Person, other than the individuals listed on SECTION 4.11 OF
THE DISCLOSURE SCHEDULE, who within the prior year had been an employee
of Purchaser or any of its Affiliates, unless such employee (A) resigns
voluntarily (without any solicitation from Parent, Seller, Los Pueblos,
or any member of the Maloof family or any of their Affiliates) or (B)
is terminated by Purchaser or any of its Affiliates after the Closing
Date, provided that the foregoing shall not be deemed to prohibit
general advertisement or solicitations that are not directed to
employees of Purchaser or its subsidiaries;
(ii) causing or attempting to cause (A) any client,
customer or supplier of the Business to terminate or materially reduce
its business with Purchaser or any of its Affiliates, provided that the
foregoing shall not be deemed to prohibit general advertisements or
solicitations that are not directed to customers of the Business or (B)
any officer, employee or consultant of Purchaser or any of its
Affiliates engaged in the Business to resign or sever a relationship
with Purchaser or any of its Affiliates;
(iii) disclosing (unless compelled by judicial or
administrative process) or using any confidential or secret information
relating to the Business or any client, customer or supplier of the
Business; or
(iv) directly or indirectly, engaging or,
participating in, or having any interest as a shareholder, partner,
joint venturer, proprietor, employee, officer, director, agent,
security holder, creditor or consultant, or in any other capacity
(other than through the ownership of 5% or less of any class of
securities registered under the Securities Exchange Act of 1934, as
amended), or having any other direct or indirect financial interest in
or in connection with, the business or operations of any business,
firm, person, partnership, corporation, enterprise or concern, which is
in the Gaming Business or is in any manner competitive with the
business of Station within a twenty-five (25) mile radius of the
location of the Business (with the exception of (A) a Gaming Business
located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, (B) the Las Vegas Strip
(which is defined as that area bounded by Paradise Road and straight
extensions thereof on the East, Charleston Boulevard on the North, I-15
on the West, and Sunset Road on the South) and (C) Downtown Las Vegas
(which is defined as that area bounded by Eastern Avenue and straight
extensions thereof on the East, I-515 (U.S. Highway 93/95) on the
North, I-15 on the West, and Charleston Boulevard on the South)). As
used in this provision, "GAMING BUSINESS" means the operation of an
establishment engaged in unrestricted gaming, as such term is defined
by the Nevada Gaming Commission as of the date hereof.
(b) The parties hereto recognize that the Laws and public
policies of the various states of the United States may differ as to the
validity and enforceability of covenants similar to those set forth in this
Section. It is the intention of the parties that the provisions of this Section
be enforced to the fullest extent permissible under the Laws and policies of
each jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such Laws or policies) of
any provisions of this Section shall not render unenforceable, or impair, the
remainder of the provisions of this Section. Accordingly, if any provision of
this Section shall be determined to be invalid or unenforceable, such invalidity
32
or unenforceability shall be deemed to apply only with respect to the operation
of such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction. If any of the
covenants contained in this SECTION 4.11, or any part thereof, is held to be
unenforceable because of the duration of such provisions or the area covered
thereby, Seller, Parent, Los Pueblos and each member of the Maloof family agree
that the court making such determination shall have the power to reduce the
duration and the area or both of any such provision and, in its reduced form,
said provision shall then be enforceable. The parties hereto intend to and
hereby confer jurisdiction to enforce the covenants contained in this SECTION
4.11 upon the courts of any Nevada within the geographical scope of such
covenants.
(c) The parties hereto acknowledge and agree that any remedy
at Law for any breach of the provisions of this SECTION 4.11 would be
inadequate, and Parent, Seller, Los Pueblos and each member of the Maloof family
hereby consent to the granting by any court of an injunction or other equitable
relief, without the necessity of actual monetary loss being proved, in order
that the breach or threatened breach of such provisions may be effectively
restrained. Parent, Seller, Los Pueblos and each member of the Maloof family
acknowledge and agree that the scope and duration of the provisions of this
SECTION 4.11 are reasonable in all respects.
4.12. NOTICE AND CURE. Seller and Los Pueblos will notify
Purchaser in writing (where appropriate, through updates to the Disclosure
Schedule) of, and contemporaneously will provide Purchaser with true and
complete copies of any and all information or documents relating to, and will
use all commercially reasonable efforts to cure before the Closing, any
event, transaction or circumstance, as soon as practicable after it becomes
Known to Seller, occurring after the date of this Agreement that causes any
covenant or agreement of Seller under this Agreement to be breached or that
renders untrue any representation or warranty of Seller contained in this
Agreement as if the same were made on or as of the date of such event,
transaction or circumstance. No notice given pursuant to this Section shall
have any effect on the representations, warranties, covenants or agreements
contained in this Agreement for purposes of determining satisfaction of any
condition contained herein or shall in any way limit Purchaser's right to
seek indemnity under ARTICLE XI.
4.13. BAGGAGE. At the Transfer Time, an authorized
representative of Seller shall perform the following functions for all baggage,
trunks and other property that was checked and placed in the care of Seller at
the Property: (i) seal all pieces of baggage with tape: (ii) prepare an
inventory ("INVENTORIED BAGGAGE") of such items indicating the check number
applicable thereto; and (iii) deliver the Inventoried Baggage to an authorized
representative of Purchaser and secure a receipt for the Inventoried Baggage.
Thereafter, Purchaser shall be responsible for such Inventoried Baggage.
4.14. SAFE DEPOSITS. On or before the Transfer Time, Seller
shall remove, all items stored by Seller, Parent or any of their respective
Affiliates in safe deposit boxes located at the Property, and all such safe
deposit boxes shall be made available for Purchaser's use thereafter. Safe
deposit boxes in use by customers at the Property at the Transfer Time will be
sealed in a reasonable manner mutually agreeable to Purchaser and Seller. At the
Transfer Time, Purchaser and Seller shall designate in writing their initial
safe deposit representatives.
33
Representatives of both Seller and Purchaser are to be present when a seal is
broken. Seller will make a representative available within one (1) hour after
Purchaser notifies Seller that the representative is required. Purchaser
shall have no responsibility for loss or theft from a safe deposit box whose
seal was broken in the presence of Seller's representative. All safe deposit
keys, combinations and records shall be delivered at the Transfer Time to
Purchaser.
4.15. VALET PARKING. At the Transfer Time, an authorized
representative of Seller shall perform, the following functions for all motor
vehicles that were checked and placed in the care of Seller at the Property: (i)
▇▇▇▇ all motor vehicles with a sticker or tape; (ii) prepare an inventory of
such vehicles ("INVENTORIED VEHICLES") indicating the check number applicable
thereto; and (iii) transfer control of the Inventoried Vehicles to an authorized
representative of Purchaser and secure a receipt for the Inventoried Vehicles.
Thereafter, Purchaser shall be responsible for the Inventoried Vehicles.
4.16. FULFILLMENT OF CONDITIONS. Seller and Los Pueblos will
execute and deliver at the Closing each Operative Agreement that Seller and Los
Pueblos are required hereby to execute and deliver as a condition to the
Closing, will take all commercially reasonable steps necessary or desirable and
proceed diligently and in good faith to satisfy each other condition to the
obligations of Purchaser contained in this Agreement and will not take or fail
to take any action that could reasonably be expected to result in the
nonfulfillment of any such condition.
4.17. ESTOPPEL CERTIFICATES. Seller and Los Pueblos shall use
commercially reasonable efforts to deliver to Purchaser customary tenant
estoppel certificates signed by all tenants under Real Property Leases.
4.18. TRANSITION SUPPORT. Seller and Los Pueblos hereby grants
and will provide Purchaser, for a period of up to six (6) months following the
Transfer Time, unlimited access and a paid-up license to and use of Seller's
financial, accounting, human resources and other computer and management
information systems.
4.19. ENVIRONMENTAL SURVEY. Seller further agrees that it
will, at its sole cost and expense, and within twenty (20) days from the date
hereof, order a phase I environmental site assessment with respect to the Real
Property (the "Phase I") to be conducted by an environmental consultant,
certified for the benefit of the Purchaser, pursuant to a scope of work
reasonably satisfactory to Purchaser, and shall deliver such Phase I to
Purchaser as promptly as possible after the date hereof, and in no event later
than five (5) days prior to Closing Date.
4.20. GARDUNOS AGREEMENT. Seller shall commercially reasonable
efforts to modify and to cause the other party thereto to modify the Renewal
Restatement and Extension of Management and License Agreement dated as of
February 25, 1999 by and between Tortilla, Inc. (d/b/a Gardunos of Mexico) and
Fiesta Hotel & Casino, including any Addenda thereto (the "GARDUNOS AGREEMENT")
to provide that (i) Tortilla, Inc. consents to the assignment of the Gardunos
Agreement from Seller to Purchaser, (ii) Purchaser develop only two (2)
additional Gardunos restaurants prior to 2008, (iii) Seller and its affiliates
develop one (1) Gardunos restaurant at the Flamingo Property, and (iv) Tortilla,
Inc. consents to the operation of those certain restaurants known as
"Guadalajara Bar & Grill" by the Purchaser and its Affiliates.
34
ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with Seller that, at all times
from and after the date hereof until the Closing and with respect to SECTIONS
5.05 AND 5.06, for the period specified therein, Purchaser will comply with all
covenants and provisions of this ARTICLE V, except to the extent Seller may
otherwise consent in writing.
5.01. REGULATORY AND OTHER APPROVALS. Purchaser will, as
promptly as practicable, (a) take all commercially reasonable steps necessary or
desirable to obtain all consents, approvals or actions of, make all filings with
and give all notices to Governmental or Regulatory Authorities or any other
Person required of Purchaser to consummate the transactions contemplated hereby
and by the Operative Agreements, including, without limitation, those described
in SECTIONS 3.03 and 3.04 OF THE DISCLOSURE SCHEDULE, (b) provide such other
information and communications to such Governmental or Regulatory Authorities or
other Persons as Seller or such Governmental or Regulatory Authorities or other
Persons may reasonably request in connection therewith and (c) cooperate with
Seller in connection with the performance of its obligations under SECTIONS 4.01
and 4.02, including taking such action as is reasonably necessary in connection
with filings made with the Nevada Gaming Commission to permit Seller to transfer
the Assets through a "qualified intermediary" for purposes of Section 1031 of
the Code, which transfer through the qualified intermediary shall include the
Gaming Equipment only to the extent permitted by the Nevada Gaming Commission.
Purchaser will provide prompt notification to Seller when any such consent,
approval, action, filing or notice referred to in clause (a) above is obtained,
taken, made or given, as applicable.
5.02. HSR FILINGS. In addition to and without limiting
Purchaser's covenants contained in SECTION 5.01, Purchaser will (i) take
promptly all actions necessary to make the filings required of Purchaser or its
Affiliates under the HSR Act, (ii) comply at the earliest practicable date with
any request for additional information received by Purchaser or its Affiliates
from the Federal Trade Commission or the Antitrust Division of the Department of
Justice pursuant to the HSR Act, (iii) cooperate with Seller in connection with
Seller's filing under the HSR Act and in connection with resolving any
investigation or other regulatory inquiry concerning the transactions
contemplated by this Agreement commenced by either the Federal Trade Commission
or the Antitrust Division of the Department of Justice or state attorneys
general, and (iv) pay any and all filing fees due and payable in connection
therewith.
5.03. NOTICE AND CURE. Purchaser will notify Seller in writing
of, and contemporaneously will provide Seller with true and complete copies of
any and all information or documents relating to, and will use all commercially
reasonable efforts to cure before the Closing, any event, transaction or
circumstance, as soon as practicable after it becomes known to Purchaser,
occurring after the date of this Agreement that causes any covenant or agreement
of Purchaser under this Agreement to be breached or that renders untrue any
representation or warranty of Purchaser contained in this Agreement as if the
same were made on or as of the date of such event, transaction or circumstance.
No notice given pursuant to this Section shall have any effect on the
representations, warranties, covenants or agreements contained in this
35
Agreement for purposes of determining satisfaction of any condition contained
herein or shall in any way limit Seller's right to seek indemnity under
ARTICLE XI.
5.04. FULFILLMENT OF CONDITIONS. Purchaser will execute and
deliver at the Closing each Operative Agreement that Purchaser is hereby
required to execute and deliver as a condition to the Closing, will take all
commercially reasonable steps necessary or desirable and proceed diligently and
in good faith to satisfy each other condition to the obligations of Seller
contained in this Agreement and will not take or fail to take any action that
could reasonably be expected to result in the nonfulfillment of any such
condition.
5.05. LIMITED USE OF NAME. Purchaser shall permit Seller to
continue to use the "Fiesta" ▇▇▇▇ for a period of up to 120 days following the
Closing Date, which use shall be limited to prosecution of Seller's application
to receive a trademark for the "Palms" name. Thereafter, Seller shall cease all
use of the "Fiesta" ▇▇▇▇.
5.06. GARDUNOS RESTRICTION. 5.07. Purchaser agrees to use
commercially reasonable efforts to modify and to cause the parties thereto to
modify the Gardunos Agreement to provide that (i) Tortilla, Inc. consents to the
assignment of the Gardunos Agreement from Seller to Purchaser, (ii) Purchaser
develop only two (2) additional Gardunos locations prior to 2008, (iii) Seller
and its affiliates develop one (1) Gardunos restaurant at the Flamingo Property,
and (iv) Tortilla, Inc. consents to the operation of those certain restaurants
known as "Guadalajara Bar & Grill" by the Purchaser and its Affiliates. Further,
Purchaser agrees not to establish, own or operate a Gardunos restaurant within a
five (5) mile radius of the Flamingo Property.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the Assets
and to assume and to pay, perform and discharge the Assumed Liabilities are
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by Purchaser
in its sole discretion):
6.01. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by Parent, Seller and Los Pueblos in this
Agreement (other than those made as of a specified date earlier than the Closing
Date) shall be true and correct in all material respects on and as of the
Closing Date as though such representation or warranty was made on and as of the
Closing Date, and any representation or warranty made as of a specified date
earlier than the Closing Date shall have been true and correct in all material
respects on and as of such earlier date.
6.02. PERFORMANCE. Parent, Seller and Los Pueblos shall have
performed and complied with, in all material respects, each agreement, covenant
and obligation required by this Agreement to be so performed or complied with by
Parent, Seller and Los Pueblos at or before the Closing.
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6.03. OFFICERS' CERTIFICATES. Each of Seller and Los Pueblos
shall have delivered to Purchaser a certificate, dated the Closing Date and
executed in the name and on behalf of Seller and Los Pueblos, respectively, by
the Chairman of the Board, the President or any Executive or Senior Vice
President of Seller and Los Pueblos, respectively, substantially in the form and
to the effect of EXHIBIT D hereto, and a certificate, dated the Closing Date and
executed by the Secretary or any Assistant Secretary of Seller and Los Pueblos,
respectively, substantially in the form and to the effect of EXHIBIT E hereto.
Parent shall have delivered to Purchaser a certificate, dated the Closing Date
and executed in the name and on behalf of Parent by the Chairman of the Board,
the President or any Executive or Senior Vice President of Parent, substantially
in the form and to the effect of EXHIBIT F hereto, and a certificate, dated the
Closing Date and executed by the Secretary or any Assistant Secretary of Parent,
substantially in the form and to the effect of EXHIBIT G hereto.
6.04. ORDERS AND LAWS. There shall not be in effect on the
Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement or any of the Operative Agreements or which could reasonably be
expected to otherwise result in a material diminution of the benefits of the
transactions contemplated by this Agreement or any of the Operative Agreements
to Purchaser, and there shall not be pending or threatened on the Closing Date
any Action or Proceeding in, before or by any Governmental or Regulatory
Authority which could reasonably be expected to result in the issuance of any
such Order or the enactment, promulgation or deemed applicability to Purchaser
or the transactions contemplated by this Agreement or any of the Operative
Agreements of any such Law.
6.05. REGULATORY CONSENTS AND APPROVALS.
(a) All consents, approvals and actions of, filings with and
notices to any Governmental or Regulatory Authority (including, without
limitation, the Nevada Gaming Commission or any other gaming authority
exercising jurisdiction over Purchaser and its Affiliates) necessary to permit
Purchaser, Parent, Seller and Los Pueblos to perform their obligations under
this Agreement and the Operative Agreements, to consummate the transactions
contemplated hereby and thereby and to permit the Purchaser to operate the
Business in substantially the manner it is conducted as of the date hereof (i)
shall have been duly obtained, made or given, (ii) shall be in form and
substance reasonably satisfactory to Purchaser, (iii) shall not be subject to
the satisfaction of any condition that has not been satisfied or waived, and
(iv) shall be in full force and effect, and all terminations or expirations of
waiting periods imposed by any Governmental or Regulatory Authority necessary
for the consummation of the transactions contemplated by this Agreement and the
Operative Agreements, including under the HSR Act, shall have occurred.
(b) All consents, approvals and actions of, filings with and
notices to any Governmental or Regulatory Authority necessary to permit
Purchaser to perform its obligations under this Agreement and the Operative
Agreements, to consummate the transactions contemplated hereby and thereby and
to permit the Purchaser to operate the Business in substantially the manner it
is conducted as of the date hereof (i) shall have been duly obtained, made or
given, (ii) shall not be subject to the satisfaction of any condition that has
not been
37
satisfied or waived, and (iii) shall be in full force and effect, and all
terminations or expirations of waiting periods imposed by any Governmental or
Regulatory Authority necessary for the consummation of the transactions by
Purchaser contemplated by this Agreement and the Operative Agreements shall
have occurred.
6.06. THIRD PARTY CONSENTS. The consents (or in lieu thereof
waivers) (i) listed in SECTION 6.06 OF THE DISCLOSURE SCHEDULE and (ii) all
other consents (or in lieu thereof waivers) to the performance by Purchaser,
Parent, Seller and Los Pueblos of their obligations under this Agreement and the
Operative Agreements or to the consummation of the transactions contemplated
hereby and thereby as are required under any Contract to which Purchaser or
Seller or Los Pueblos is a party or by which any of their respective Assets and
Properties are bound (a) shall have been obtained, (b) shall be in form and
substance reasonably satisfactory to Purchaser, (c) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived and (d)
shall be in full force and effect, except (in the case of clause (ii) above)
where the failure to obtain any such consent (or in lieu thereof waiver) could
not reasonably be expected, individually or in the aggregate with other such
failures, to materially adversely affect Purchaser, the Assets, the Assumed
Liabilities or the Business.
6.07. OPINION OF COUNSEL. Purchaser shall have received the
opinion of Lionel, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel to Parent, Seller and Los Pueblos,
dated the Closing Date in form and substance reasonably satisfactory to
Purchaser.
6.08. PERSONAL PROPERTY LEASES; REAL PROPERTY LEASE. For each
of the leases of personal property and equipment described in SECTION 6.08 OF
THE DISCLOSURE SCHEDULE, prior to the Closing Date, Seller shall, and Parent
shall cause Seller to, pay in full and take any and all actions necessary to
perform all payment obligations under such leases and to effect the complete
discharge, termination and release of all such leases as is necessary to convey
to Purchaser upon the Closing Date good and valid fee title to all such personal
property subject to such leases, free and clear of all Liens (other than
Permitted Liens), in good working order and condition, ordinary wear and tear
excepted. Seller and Los Pueblos shall have taken all necessary action to
terminate the Los Pueblos Leases and the property and improvements subject to
the Los Pueblos Leases shall constitute part of the Real Property, Improvements
and Assets transferred free and clear of all Liens and encumbrances.
6.09. DELIVERIES. Parent, Seller and Los Pueblos shall have
delivered to Purchaser all of the Operative Agreements to be executed by such
parties.
6.10. GARDUNOS AGREEMENT. Purchaser shall have obtained from
Tortilla, Inc. a waiver of any obligation they might be subject to as of the
Closing Date under SECTION 6.6 of the Gardunos Agreement, as in effect on the
date hereof, in order to permit the operation of those certain restaurants known
as "Guadalajara Bar & Grill" by the Purchaser and its Affiliates.
6.11. TITLE POLICIES AND EXCEPTIONS.
(a) Prior to the Closing, Purchaser shall obtain an ALTA
extended owner's policy of title insurance (Form B-1970) (Amended 4-6-90),
issued by Nevada Title Company or if such title company is unable to do so, by a
title insurance company reasonably acceptable to
38
Purchaser in its reasonable discretion ("TITLE Company"), insuring that
Purchaser has fee title to the Real Property and Improvements, subject only
to (i) the exceptions to title as shall be reasonably satisfactory to
Purchaser in its discretion, (ii) liens for taxes not yet due and payable,
(iii) all standard exceptions, exclusions, conditions and stipulations from
coverage for Title Company's Extended Coverage Form ALTA Owner's Policy of
Title Insurance, including any and all endorsements and affirmative coverage
customary in real estate sale transactions involving the magnitude and type
of the Assets (including, without limitation, an ALTA 3.1 Zoning Endorsement)
as Purchaser shall reasonably request, and (iv) those exceptions arising
after the Transfer Time and approved by Purchaser as provided above (the
"TITLE POLICY"). The coverage amount of the Title Policy for the Real
Property and Improvements shall be in an amount to be requested by Purchaser,
which amount shall not exceed $185,000,000. Purchaser shall have the right to
require the Title Company to obtain facultative reinsurance, with direct
access provisions against the reinsurer with respect to the Title Policy in
such amounts and with such title companies as Purchaser shall determine in
its reasonable discretion.
(b) Seller and Los Pueblos shall pay the premium for the Title
Policy and for all endorsements thereto. Seller and Purchaser shall cooperate
diligently to provide customary documents required by Title Company as condition
to the issuance of the Title Policy.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER AND LOS PUEBLOS
The obligations of Seller and Los Pueblos hereunder to sell
the Assets are subject to the fulfillment, at or before the Closing, of each of
the following conditions (all or any of which may be waived in whole or in part
by Seller in its sole discretion):
7.01. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by Purchaser in this Agreement shall be true
and correct in all material respects on and as of the Closing Date as though
such representation or warranty was made on and as of the Closing Date.
7.02. PERFORMANCE. Purchaser shall have performed and complied
with, in all material respects, each agreement, covenant and obligation required
by this Agreement to be so performed or complied with by Purchaser at or before
the Closing, including, without limitation, payment of the Purchase Price.
7.03. OFFICERS' CERTIFICATES. Purchaser shall have delivered
to Seller a certificate, dated the Closing Date and executed in the name and on
behalf of Purchaser by the Chairman of the Board, the President or any Executive
Vice President of Purchaser, substantially in the form and to the effect of
EXHIBIT I hereto, and a certificate, dated the Closing Date and executed by the
Secretary or any Assistant Secretary of Purchaser, substantially in the form and
to the effect of EXHIBIT J hereto.
7.04. ORDERS AND LAWS. There shall not be in effect on the
Closing Date any Order or Law that became effective after the date of this
Agreement restraining, enjoining or
39
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Operative
Agreements.
7.05. REGULATORY CONSENTS AND APPROVALS. All consents,
approvals and actions of, filings with and notices to any Governmental or
Regulatory Authority (including, without limitation, the Nevada Gaming
Authorities) necessary to permit Parent, Seller and Los Pueblos to perform their
respective obligations under this Agreement and the Operative Agreements and to
consummate the transactions contemplated hereby and thereby (a) shall have been
duly obtained, made or given, (b) shall not be subject to the satisfaction of
any condition that has not been satisfied or waived, (c) shall be in full force
and effect, and (d) all terminations or expirations of waiting periods imposed
by any Governmental or Regulatory Authority under WARN and the HSR Act shall
have occurred. The parties hereto acknowledge and agree that receipt of the
consent of the Nevada Gaming Authorities shall not be a condition to the
obligations of Parent, Seller or Los Pueblos under this Agreement or the
Operative Agreements.
7.06. THIRD PARTY CONSENTS. All consents (or in lieu thereof
waivers) to the performance by Seller of its obligations hereunder and to the
consummation of the transactions contemplated hereby as are required under the
Contracts listed in SECTION 7.06 OF THE DISCLOSURE SCHEDULE (a) shall have been
obtained, (b) shall not be subject to the satisfaction of any condition that has
not been satisfied or waived and (c) shall be in full force and effect.
7.07. DELIVERIES. Purchaser shall have delivered to Seller and
Los Pueblos the Assumption Agreement and the other Assumption Instruments.
ARTICLE VIII
TAX MATTERS AND POST-CLOSING TAXES
8.01. TAXES.
(a) Seller shall pay, and Parent shall cause Seller to pay,
all sales, use, withholding, gaming, transfer, real property transfer,
recording, gains, stock transfer and other similar taxes and fees ("TRANSFER
TAXES") arising out of or in connection with the transactions effected pursuant
to this Agreement, and shall indemnify, defend, and hold harmless Purchaser on
an after-Tax basis with respect to such Transfer Taxes. Seller and Los Pueblos,
as applicable, shall file, and Parent shall cause Seller and Los Pueblos, as
applicable, to file, all necessary documentation and Returns with respect to
such Transfer Taxes.
(b) Seller shall be and remain liable for any fees or taxes
due pursuant to NRS Chapter 463 which accrue prior to the Closing Date,
including, without limitation, liability for payment of any fees or taxes due
pursuant to any subsequent deficiency determinations made under such Chapter
which relate to any period of time prior to the Closing Date.
8.02. NEVADA UNEMPLOYMENT TAX EXPERIENCE RATING. At the option
of the Purchaser, Seller shall transfer, and Parent shall cause Seller to
transfer, to the Purchaser the Nevada Unemployment Tax Experience Rating of the
Business (the "TAX EXPERIENCE RATING").
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If Purchaser requests such transfer of the Tax Experience Rating, Seller
agrees to cooperate with and assist Purchaser in such transfer in accordance
with SECTION 1.08.
8.03. PRE-CLOSING TAXES. Seller shall, and Parent shall cause
Seller to, timely prepare and file all Tax Returns for taxable periods ending on
or before the Closing Date ("PRE-CLOSING TAX RETURNS"). Seller shall timely pay
or cause to be paid all Taxes related to Pre-Closing Tax Returns ("PRE-CLOSING
TAXES").
8.04. TAX INDEMNIFICATION.
(a) After the Closing Date, Parent and Seller will
indemnify and hold harmless the Purchaser from and against any and all
claims, actions, causes of action, liabilities, losses, damages, and
reasonable out-of-pocket expenses and costs resulting from, arising out of or
relating to (i) Pre-Closing Taxes and (ii) any Taxes of Seller measured by
net or gross income (including, without limitation, any Tax liability that
arises solely by reason of Seller being severally liable for any Tax of any
current or former Affiliate of Seller pursuant to Treasury Regulation
Sections 1.1502-6 or any analogous state or local Tax provision).
(b) Subject to the terms of SECTION 1.07, Seller will be
responsible for and indemnify and hold harmless the Purchaser against any and
all liabilities with respect to Taxes, for any taxable period that includes the
Closing Date, in an amount equal to the tax liability that would have resulted
had the last day of the period been the Closing Date, with such Taxes being
allocated pro rata per day between the period ending on the Closing Date, and
the period commencing after the Closing Date.
(c) Purchaser will be responsible for and indemnify and hold
Seller and Los Pueblos harmless against any all liabilities with respect to
Taxes relating to the Assets for all taxable periods ending after the Closing
Date other than Taxes for which Seller or Los Pueblos is responsible pursuant to
SECTION 8.01 or SECTION 8.04(b) above.
8.05. TAX COOPERATION. After the Closing Date, Seller and Los
Pueblos will, and Parent will cause Seller and Los Pueblos to, cooperate with
Purchaser, and Purchaser will cooperate with Seller and Los Pueblos, in the
preparation of all Tax Returns and will provide (or cause to be provided) any
records and other information the other so requests, and will provide access to,
and the cooperation of its auditors. Seller and Los Pueblos will, and Parent
will cause Seller and Los Pueblos to, cooperate with Purchaser and Purchaser
will cooperate with Seller in connection with any Tax investigation, audit or
other proceeding.
8.06. LIKE-KIND EXCHANGE. If requested in writing by
Purchaser, Seller and Los Pueblos shall, to the extent that there will be no
costs incurred by Seller or Los Pueblos that are not refunded or reimbursed by
Purchaser, (i) use commercially reasonable efforts to assist Purchaser in
assuring the transactions contemplated herein shall be consistent with the
requirements of Section 1031 of the Code and the regulations thereunder, and
(ii) not take a position before any Governmental or Regulatory Authority or in a
judicial proceeding that is inconsistent with the foregoing.
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8.07. NOTIFICATION OF PROCEEDINGS; CONTROL. Seller shall have
the right to control any audit or examination relating to Pre-Closing Taxes by
any taxing authority, initiate any claim for refund, file any amended return,
contest, resolve and defend against any assessment, notice of deficiency or
other adjustment or proposed adjustment relating or with respect to any
Pre-Closing Taxes and shall be entitled to all refunds with respect to such
taxes. Purchaser shall have the right to control any audit or examination
relating to all Taxes other than Pre-Closing Taxes by any taxing authority, and
shall have the right to initiate any claim for refund, file any amended returns,
contest, resolve and defend against any assessment, notice of deficiency or
other adjustment or proposed adjustment relating or with respect to Taxes other
than Pre-Closing Taxes, and shall be entitled to all refunds with respect to
such Taxes; provided that Purchaser will consult in good faith with Seller with
respect to any Taxes for periods that include the Closing Date, and Seller shall
be entitled to any refunds for such period to the extent the refund is
allocable, in accordance with the principles of SECTION 8.04(b) to that portion
of such period ending on the Closing Date.
ARTICLE IX
[RESERVED].
ARTICLE X
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
10.01. SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Notwithstanding any right of Purchaser (whether or not exercised) to
investigate the Business or any right of any party (whether or not exercised) to
investigate the accuracy of the representations and warranties of the other
party contained in this Agreement, Seller, Parent, Los Pueblos and Purchaser
have the right to rely fully upon the representations, warranties, covenants and
agreements of the other parties in this Agreement. The representations,
warranties, covenants and agreements of Seller, Parent, Los Pueblos and
Purchaser contained in this Agreement will survive the Closing (a) indefinitely
with respect to (i) the representations and warranties contained in SECTIONS
2.02, 2.26, 3.02 and 3.06 and (ii) the covenants and agreements contained in
SECTIONS 1.01, 1.02, 1.08, 8.05, 14.04 and 14.06, (b) until sixty (60) days
after the expiration of all applicable statutes of limitation (including all
periods of extension, whether automatic or permissive) with respect to matters
covered by SECTIONS 2.09 and 2.21 and (insofar as they relate to ERISA or the
Code) SECTION 2.12 and ARTICLE VIII, (c) until the date that is two years
following the Closing Date in the case of all other representations and
warranties and any covenant or agreement to be performed in whole or in part on
or prior to the Closing or (d) with respect to each other covenant or agreement
contained in this Agreement, until sixty (60) days following the last date on
which such covenant or agreement is to be performed; provided that any
representation, warranty, covenant or agreement that would otherwise terminate
in accordance with clause (b), (c) or (d) above will continue to survive if a
Claim Notice or Indemnity Notice (as applicable) shall have been timely given
under ARTICLE XI on or prior to
42
such termination date, until the related claim for indemnification has been
satisfied or otherwise resolved as provided in ARTICLE XI.
ARTICLE XI
INDEMNIFICATION
11.01. INDEMNIFICATION.
(a) Subject to paragraph (c) of this Section and the other
Sections of this ARTICLE XI, Parent, Seller and Los Pueblos shall jointly and
severally indemnify the Purchaser Indemnified Parties in respect of, and hold
each of them harmless from and against, any and all Losses suffered, incurred or
sustained by any of them or to which any of them becomes subject, resulting
from, arising out of or relating to (i) any breach of representation or warranty
or nonfulfillment of or failure to perform any covenant or agreement on the part
of Parent, Seller, Los Pueblos or Maloof family members contained in this
Agreement (determined in all cases as if the terms "material" or "materially"
were not included therein) or (ii) any and all other Liabilities, obligations
and costs of Seller arising prior to the Closing Date (other than the Assumed
Liabilities), including, without limitation, any and all unfair labor practice
charges brought against Purchaser as a successor to Seller under the National
Labor Relations Act or any other federal, state or local labor laws or any
employment laws.
(b) Subject to the other Sections of this ARTICLE XI,
Purchaser shall indemnify the Seller Indemnified Parties in respect of, and hold
each of them harmless from and against, any and all Losses suffered, incurred or
sustained by any of them or to which any of them becomes subject, resulting
from, arising out of or relating to (i) any breach of representation or warranty
or nonfulfillment of or failure to perform any covenant or agreement on the part
of Purchaser contained in this Agreement or (ii) an Assumed Liability.
(c) Notwithstanding anything to the contrary contained in this
Agreement, no amounts of indemnity shall be payable as a result of any claim in
respect of a Loss arising under paragraph (a)(i) of SECTION 11.01:
(i) unless, and until Purchaser Indemnified Parties
have suffered, incurred, sustained or become subject to Losses referred
to in this SECTION 11.01 in excess of $250,000 in the aggregate, in
which event the Purchaser Indemnified Parties shall be entitled to
claim indemnity for the full amount of such Losses;
(ii) in excess of $20,000,000 in the aggregate.
Provided that this paragraph (c) shall not apply to a breach of a representation
or warranty contained in SECTION 2.02, SECTION 2.03, SECTION 2.04, SECTION 2.12,
SECTION 2.20, SECTION 2.21, SECTION 2.25, SECTION 2.26 or SECTION 8.01, or to
the breach of a covenant contained in SECTION 1.03(C), SECTION 1.08, SECTION
4.11, SECTION 8.05, SECTION 14.04 and SECTION 14.06.
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11.02. METHOD OF ASSERTING CLAIMS. All claims for
indemnification by any Indemnified Party under SECTION 11.01 will be asserted
and resolved as follows:
(a) In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under SECTION 11.01 is asserted against
or sought to be collected from such Indemnified Party by a Person other than
Seller, Los Pueblos or any Affiliate of Seller or of Purchaser (a "THIRD PARTY
CLAIM"), the Indemnified Party shall deliver a Claim Notice with reasonable
promptness to the Indemnifying Party. If the Indemnified Party fails to provide
the Claim Notice with reasonable promptness after the Indemnified Party receives
notice of such Third Party Claim, the Indemnifying Party will not be obligated
to indemnify the Indemnified Party with respect to such Third Party Claim to the
extent that the Indemnifying Party's ability to defend has been irreparably
prejudiced by such failure of the Indemnified Party. The Indemnifying Party will
notify the Indemnified Party as soon as practicable within the Dispute Period
whether the Indemnifying Party disputes its liability to the Indemnified Party
under SECTION 11.01 and whether the Indemnifying Party desires, at its sole cost
and expense, to defend the Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the Indemnifying Party
desires to defend the Indemnified Party with respect to the Third Party
Claim pursuant to this SECTION 11.02(a), then the Indemnifying Party
will have the right to defend, with counsel reasonably satisfactory to
the Indemnified Party, at the sole cost and expense of the Indemnifying
Party, such Third Party Claim by all appropriate proceedings, which
proceedings will be vigorously and diligently prosecuted by the
Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with the consent of the
Indemnified Party, which consent will not be unreasonably withheld, in
the case of any settlement that provides for any relief other than the
payment of monetary damages as to which the Indemnified Party will be
indemnified in full). The Indemnifying Party will be deemed to have
waived its right to dispute its liability to the Indemnified Party
under SECTION 11.01 with respect to any Third Party Claim as to which
it elects to control the defense. The Indemnifying Party will have full
control of such defense and proceedings, including any compromise or
settlement thereof; provided, however, that the Indemnified Party may,
at the sole cost and expense of the Indemnified Party, at any time
prior to the Indemnifying Party's delivery of the notice referred to in
the first sentence of this SECTION 11.02(a)(i), file any motion, answer
or other pleadings or take any other action that the Indemnified Party
reasonably believes to be necessary or appropriate to protect its
interests; and provided further, that if requested by the Indemnifying
Party, the Indemnified Party will, at the sole cost and expense of the
Indemnifying Party, provide reasonable cooperation to the Indemnifying
Party in contesting any Third Party Claim that the Indemnifying Party
elects to contest. The Indemnified Party may retain separate counsel to
represent it in, but not control, any defense or settlement of any
Third Party Claim controlled by the Indemnifying Party pursuant to this
SECTION 11.02(a)(i), and the Indemnified Party will bear its own costs
and expenses with respect to such separate counsel except as provided
in the preceding sentence and except that the Indemnifying Party will
pay the costs and expenses of such separate counsel if (x) in the
Indemnified Party's good faith judgment, it is advisable, based on
advice of counsel, for the
44
Indemnified Party to be represented by separate counsel because a
conflict or potential conflict exists between the Indemnifying Party
and the Indemnified Party which makes representation of both parties
inappropriate under applicable standards of professional conduct or
(y) the named parties to such Third Party Claim include both the
Indemnifying Party and the Indemnified Party and the Indemnified
Party determines in good faith, based on advice of counsel, that
defenses are available to it that are unavailable to the
Indemnifying Party. Notwithstanding the foregoing, the Indemnified
Party may retain or take over the control of the defense or
settlement of any Third Party Claim the defense of which the
Indemnifying Party has elected to control if the Indemnified Party
irrevocably waives its right to indemnity under SECTION 11.01 with
respect to such Third Party Claim.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the Indemnifying Party
desires to defend the Third Party Claim pursuant to SECTION 11.02(a),
or if the Indemnifying Party gives such notice but fails to prosecute
vigorously and diligently or settle the Third Party Claim, then the
Indemnified Party will have the right to defend, at the sole cost and
expense of the Indemnifying Party, the Third Party Claim by all
appropriate proceedings, which proceedings will be prosecuted by the
Indemnified Party in good faith or will be settled at the discretion of
the Indemnified Party (with the consent of the Indemnifying Party,
which consent will not be unreasonably withheld). The Indemnified Party
will have full control of such defense and proceedings, including any
compromise or settlement thereof; provided, however, that if requested
by the Indemnified Party, the Indemnifying Party will, at the sole cost
and expense of the Indemnifying Party, provide reasonable cooperation
to the Indemnified Party and its counsel in contesting any Third Party
Claim which the Indemnified Party is contesting. Notwithstanding the
foregoing provisions of this SECTION 11.02(a)(ii), if the Indemnifying
Party has notified the Indemnified Party within the Dispute Period that
the Indemnifying Party disputes its liability hereunder to the
Indemnified Party with respect to such Third Party Claim and if such
dispute is resolved in favor of the Indemnifying Party in the manner
provided in clause (iii) below, the Indemnifying Party will not be
required to bear the costs and expenses of the Indemnified Party's
defense pursuant to this SECTION 11.02(a)(ii) or of the Indemnifying
Party's participation therein at the Indemnified Party's request, and
the Indemnified Party will reimburse the Indemnifying Party in full for
all reasonable costs and expenses incurred by the Indemnifying Party in
connection with such litigation. The Indemnifying Party may participate
in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this SECTION 11.02(a)(ii), and the
Indemnifying Party will bear its own costs and expenses with respect to
such participation.
(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its liability to the
Indemnified Party with respect to the Third Party Claim under SECTION
11.01 or fails to notify the Indemnified Party within the Dispute
Period whether the Indemnifying Party disputes its liability to the
Indemnified Party with respect to such Third Party Claim, the Loss
arising from such Third Party Claim will be conclusively deemed a
liability of the Indemnifying Party under SECTION 11.01 and the
Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand following the final determination thereof. If the
Indemnifying Party has timely
45
disputed its liability with respect to such claim, the Indemnifying
Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through
negotiations within the Resolution Period, such dispute shall be
resolved by arbitration in accordance with SECTION 11.02(c).
(b) In the event any Indemnified Party should have a claim
under SECTION 11.01 against any Indemnifying Party that does not involve a Third
Party Claim, the Indemnified Party shall deliver an Indemnity Notice with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party to give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent that an Indemnifying Party demonstrates that it
has been irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim described in such Indemnity
Notice, the Loss arising from the claim specified in such Indemnity Notice will
be conclusively deemed a liability of the Indemnifying Party under SECTION 11.01
and the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand following the final determination thereof. If the Indemnifying
Party has timely disputed its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
within the Resolution Period, such dispute shall be resolved by arbitration in
accordance with SECTION 11.02(c).
(c) Any dispute submitted to arbitration pursuant to this
SECTION 11.02 shall be finally and conclusively determined by the decision of a
board of arbitration consisting of three (3) members (hereinafter sometimes
called the "BOARD OF ARBITRATION") selected as hereinafter provided. Each of the
Indemnified Party and the Indemnifying Party shall select one (1) member and the
third member shall be selected by mutual agreement of the other members, or if
the other members fail to reach agreement on a third member within twenty (20)
days after their selection, such third member shall thereafter be selected by
the American Arbitration Association upon application made to it for a third
member possessing expertise or experience appropriate to the dispute jointly by
the Indemnified Party and the Indemnifying Party. The Board of Arbitration shall
meet in Las Vegas, Nevada or such other place as a majority of the members of
the Board of Arbitration determines more appropriate, and shall reach and render
a decision in writing (concurred in by a majority of the members of the Board of
Arbitration) with respect to the amount, if any, which the Indemnifying Party is
required to pay to the Indemnified Party in respect of a claim filed by the
Indemnified Party. In connection with rendering its decisions, the Board of
Arbitration shall adopt and follow such rules and procedures as a majority of
the members of the Board of Arbitration deems necessary or appropriate. To the
extent practical, decisions of the Board of Arbitration shall be rendered no
more than thirty (30) days following commencement of proceedings with respect
thereto. The Board of Arbitration shall cause its written decision to be
delivered to the Indemnified Party and the Indemnifying Party. Any decision made
by the Board of Arbitration (either prior to or after the expiration of such
thirty (30) day period) shall be final, binding and conclusive on the
Indemnified Party and the Indemnifying Party and entitled to be enforced to the
fullest extent permitted by law and entered in any court of competent
jurisdiction. Each party to any arbitration shall bear its own expense in
relation thereto, including but not limited to such party's attorneys' fees, if
any, and the
46
expenses and fees of the Board of Arbitration shall be divided between the
Indemnifying Party and the Indemnified Party in the same proportion as the
portion of the related claim determined by the Board of Arbitration to be
payable to the Indemnified Party bears to the portion of such claim
determined not to be so payable.
ARTICLE XII
TERMINATION
12.01. TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written
agreement of Seller, Los Pueblos and Purchaser;
(b) at any time before the Closing, by Seller, Los Pueblos or
Purchaser, in the event (i) of a material breach hereof by the non-terminating
party if such non-terminating party fails to cure such breach within twenty (20)
Business Days following notification thereof by the terminating party or (ii)
upon notification of the non-terminating party by the terminating party that the
satisfaction of any condition to the terminating party's obligations under this
Agreement becomes impossible or impracticable with the use of commercially
reasonable efforts if the failure of such condition to be satisfied is not
caused by a breach hereof by the terminating party; or
(c) at any time after January 31, 2000, by Seller, Los Pueblos
or Purchaser upon notification of the non-terminating party by the terminating
party if the Closing shall not have occurred on or before such date and such
failure to consummate is not caused by a breach of this Agreement by the
terminating party.
12.02. EFFECT OF TERMINATION. If this Agreement is validly
terminated pursuant to SECTION 12.01, this Agreement will forthwith become null
and void, and there will be no liability or obligation on the part of Parent,
Seller, Los Pueblos or Purchaser (or any of their respective officers,
directors, employees, agents or other representatives or Affiliates), except as
provided in the next succeeding sentence and except that the provisions with
respect to expenses in SECTION 14.04 and confidentiality in SECTION 14.06 will
continue to apply following any such termination. Notwithstanding any other
provision in this Agreement to the contrary, upon termination of this Agreement
pursuant to SECTION 12.01(b) or (c), (i) Parent, Seller and Los Pueblos will
remain liable to Purchaser for any respective breach of this Agreement by
Parent, Seller or Los Pueblos existing at the time of such termination, and
Purchaser will remain liable to Parent, Seller and Los Pueblos for any breach of
this Agreement by Purchaser existing at the time of such termination and (ii)
Parent, Seller, Los Pueblos or Purchaser may seek such remedies, including
damages and fees of attorneys, against the other with respect to any such breach
as are provided in this Agreement or as are otherwise available at Law or in
equity.
47
ARTICLE XIII
DEFINITIONS
13.01. DEFINITIONS.
(a) DEFINED TERMS. As used in this Agreement, the
following defined terms have the meanings indicated below:
"ACCOUNTS PAYABLE" has the meaning ascribed to it in
SECTION 1.02(a)(ii).
"ACCRUED EXPENSES" has the meaning ascribed to it in
SECTION 1.02(a)(iv).
"ACSM" means the American Congress on Surveying and Mapping.
"ACTIONS OR PROCEEDINGS" means any action, suit,
proceeding, arbitration or Governmental or Regulatory Authority investigation
or audit.
"AFFILIATE" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is under
common control with the Person specified. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or cause
the direction of the management and policies of such Person whether by
Contract or otherwise and, in any event and without limitation of the
previous sentence, any Person owning ten percent (10%) or more of the voting
securities of another Person shall be deemed to control that Person.
"AGREEMENT" means this Asset Purchase Agreement and the
Exhibits, the Disclosure Schedule and the Schedules hereto and the
certificates delivered in accordance with SECTIONS 6.03 and 7.03, as the same
shall be amended from time to time.
"ALTA" means the American Land Title Association.
"ANNUAL FINANCIAL STATEMENT DATE" means April 30, 1999
"ANNUAL FINANCIAL STATEMENTS" means the Financial
Statements of the Seller for the year ended April 30, 1999.
"ASSETS" has the meaning ascribed to it in SECTION 1.01(a).
"ASSETS AND PROPERTIES" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, operated, owned or leased by such Person, including, without
limitation, cash, cash equivalents, accounts and notes receivable, chattel
paper, documents, instruments, general intangibles, real estate, equipment,
inventory, goods and Intellectual Property.
48
"ASSIGNMENT INSTRUMENTS" has the meaning ascribed to it in
SECTION 1.04.
"ASSUMED LIABILITIES" has the meaning ascribed to it in
SECTION 1.02(a).
"ASSUMPTION AGREEMENT" has the meaning ascribed to it in
SECTION 1.04.
"ASSUMPTION INSTRUMENTS" has the meaning ascribed to it in
SECTION 1.04.
"BOARD OF ARBITRATION" has the meaning ascribed to it in
SECTION 11.02(c).
"BOOKS AND RECORDS" of any Person means all files,
documents, instruments, papers, books and records relating to the business,
operations, condition of (financial or other), results of operations and
Assets and Properties of such Person, including without limitation financial
statements, Tax Returns and related work papers and letters from accountants,
budgets, pricing guidelines, ledgers, journals, deeds, title policies, minute
books, stock certificates and books, stock transfer ledgers, Contracts,
Licenses, customer lists, computer files and programs, retrieval programs,
operating data and plans and environmental studies and plans.
"BUSINESS" has the meaning ascribed to it in the forepart
of this Agreement.
"BUSINESS BOOKS AND RECORDS" has the meaning ascribed to it
in SECTION 1.01(a)(xvi).
"BUSINESS COMBINATION" means with respect to any Person,
any merger, consolidation or combination to which such Person is a party, any
sale, dividend, split or other disposition of capital stock or other equity
interests of such Person or any sale, dividend or other disposition of all or
substantially all of the Assets and Properties of such Person.
"BUSINESS CONTRACTS" has the meaning ascribed to it in
SECTION 1.01(a)(v).
"BUSINESS DAY" means a day other than Saturday, Sunday or
any day on which banks located in the State of Nevada are authorized or
obligated to close.
"BUSINESS LICENSES" has the meaning ascribed to it in
SECTION 1.01(a)(viii).
"CAGE CASH" has the meaning ascribed to it in SECTION
1.01(a)(xiv).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and the rules and
regulations promulgated thereunder.
"CERCLIS" means the Comprehensive Environmental Response
and Liability Information System, as provided for by 40 C.F.R. Section 300.5.
"CLAIM NOTICE" means written notification pursuant to
SECTION 11.02(a) of a Third Party Claim as to which indemnity under SECTION
11.01 is sought by an Indemnified Party, enclosing a copy of all papers
served, if any, and specifying the nature of and basis for such Third Party
Claim and for the Indemnified Party's claim against the Indemnifying Party
under
49
SECTION 11.01, together with the amount or, if not then reasonably
determinable, the estimated amount, determined in good faith, of the Loss
arising from such Third Party Claim.
"CLOSING" means the closing of the transactions
contemplated by SECTION 1.04.
"CLOSING DATE" means (a) the fifth Business Day after the
day on which the last of the consents, approvals, actions, filings, notices
or waiting periods described in or related to the filings described in
SECTIONS 6.05 and 6.06 and SECTIONS 7.05 and 7.06 has been obtained, made or
given or has expired, as applicable, provided that if such date occurs prior
to January 15, 2001, Purchaser may, in its sole discretion, elect to defer
the closing date to such other date, which shall be no later than January 15,
2001, as Purchaser shall specify by written notice delivered to Seller, or
(b) such other date as Purchaser and Seller mutually agree upon in writing.
"CLOSING FINANCIAL STATEMENTS DELIVERY DATE" has the
meaning ascribed to it in SECTION 1.03(c)(i).
"CLOSING BALANCE SHEET" has the meaning ascribed to it in
SECTION 1.03(c)(i).
"COBRA" means the Congressional Omnibus Budget
Reconciliation Act of 1985, as amended.
"CODE" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
"COMPANY PLANS" has the meaning ascribed to it in SECTION
2.12(a).
"CONDITION OF THE BUSINESS" means the business, financial
condition, results of operations, Assets and Properties and prospects of the
Business.
"CONTRACT" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract
(whether written or oral).
"CURRENT PLAYERS" shall have the meaning ascribed to it in
Section 1.02(iv).
"DEFICIENCY" means the amount, if any, by which the Net
Current Assets as determined from the Closing Date Balance Sheet is a
negative number.
"DEFINED BENEFIT PLAN" means each Benefit Plan which is
subject to Part 3 of Title I of ERISA, Section 412 of the Code or Title IV of
ERISA.
"DISCLOSURE SCHEDULE" means the record delivered to
Purchaser by Seller herewith and dated as of the date hereof, containing all
lists, descriptions, exceptions and other information and materials as are
required to be included therein by Seller pursuant to this Agreement.
"DISPUTE PERIOD" means the period ending thirty (30) days
following receipt by an Indemnifying Party of either a Claim Notice or an
Indemnity Notice.
50
"EEOC" means the Equal Employment Opportunity Commission
established pursuant to Title VII.
"EMPLOYEE" means each employee, officer or consultant of
Seller engaged in the conduct of the Business.
"ENVIRONMENTAL CLAIM" means, with respect to any Person,
any written or oral notice, claim, demand or other communication
(collectively, a "claim") by any other Person alleging or asserting such
Person's liability for investigatory costs, cleanup costs, Governmental or
Regulatory Authority response costs, damages to natural resources or other
property, personal injuries, fines or penalties arising out of, based on or
resulting from (a) the presence, or Release into the environment, of any
Hazardous Material at any location, whether or not owned by such Person, or
(b) circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law. The term "Environmental Claim" shall include,
without limitation, any claim by any Governmental or Regulatory Authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and any claim by any third
party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from the presence of Hazardous
Materials or arising from alleged injury or threat of injury to health,
safety or the environment.
"ENVIRONMENTAL LAW" means any Law or Order relating to the
regulation or protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
wastes into the environment (including, without limitation, ambient air,
soil, surface water, ground water, wetlands, land or subsurface strata), or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or
wastes.
"ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" means any Person who is in the same
controlled group of corporations or who is under common control with Seller
(within the meaning of Section 414 of the Code).
"ESCROW AGENT" shall have the meaning ascribed to it in
SECTION 1.04.
"ESCROW AGREEMENT" means that certain Escrow Agreement
dated of the date hereof, by and among Seller, Purchaser, Escrow Agent, and
the other parties thereto, attached hereto as EXHIBIT A.
"ESTOPPEL CERTIFICATE" means the written certification,
issued not more than thirty (30) days prior to the Closing Date by a lessor,
sublessor, lessee, sublessee, or licensee or other party to a lease or
occupancy agreement, stating (a) that such lease or occupancy agreement is
(i) in full force and effect and (ii) has not been modified or amended except
as described therein, (b) the date to which rental has been paid, (c) that no
default or event of default exists thereunder
51
and (d) that to the best of the knowledge of the issuer thereof, no event has
occurred which, with the giving of notice or lapse of time or both, would be
a default or event of default thereunder.
"EXCLUDED ASSETS" has the meaning ascribed to it in SECTION
1.01(b).
"EXCLUDED BOOKS AND RECORDS" has the meaning ascribed to it
in SECTION 1.01(b)(iv).
"EXCLUDED PREPAID EXPENSES" shall have the meaning assigned
to it in SECTION 1.01(a)(vi).
"FINANCIAL STATEMENTS" means the financial statements
delivered to Purchaser pursuant to SECTION 2.06.
"FLAMINGO PROPERTY" shall have the meaning ascribed to it
in Section 1.01(b)(x).
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"GAMING BUSINESS" has the meaning ascribed to it in SECTION
4.11(a)(iv).
"GENERAL ASSIGNMENT" has the meaning ascribed to it in
SECTION 1.04.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision.
"HAZARDOUS MATERIAL" means (A) any petroleum or petroleum
products, flammable explosives, radioactive materials, asbestos in any form
that is or could become friable, urea formaldehyde foam insulation and
transformers or other equipment that contain dielectric fluid containing
levels of polychlorinated biphenyls (PCBs); (B) any chemicals or other
materials or substances which are now or hereafter become defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants" or words of similar import
under any Environmental Law; and (C) any other chemical or other material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated by any Governmental or Regulatory Authority under any Environmental
Law.
"HSR ACT" means SECTION 7A of the ▇▇▇▇▇▇▇ Act (Title II of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended) and the
rules and regulations promulgated thereunder.
"IMPROVEMENTS" has the meaning ascribed to it in SECTION
1.01(a)(i).
"INDEBTEDNESS" of any Person means all obligations of such
Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) for the deferred purchase price of goods or
services (other than trade payables or accruals incurred in the
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇), (▇▇) under capital leases and (v) in the nature
of guarantees of the obligations described in clauses (i) through (iv) above
of any other Person.
"INDEMNIFIED PARTY" means any Person claiming
indemnification under any provision of ARTICLE XI.
"INDEMNIFYING PARTY" means any Person against whom a claim
for indemnification is being asserted under any provision of ARTICLE XI.
"INDEMNITY NOTICE" means written notification pursuant to
SECTION 11.02(b) of a claim for indemnity under ARTICLE XI by an Indemnified
Party, specifying the nature of and basis for such claim, together with the
amount or, if not then reasonably determinable, the estimated amount,
determined in good faith, of the Loss arising from such claim.
"INTANGIBLE PERSONAL PROPERTY" has the meaning ascribed to
it in SECTION 1.01(a)(vii).
"INTELLECTUAL PROPERTY" means all patents and patent
rights, trademarks and trademark rights, trade names and trade name rights,
service marks and service ▇▇▇▇ rights, service names and service name rights,
brand names, inventions, processes, formulae, copyrights and copyright
rights, trade dress, business and product names, logos, slogans, trade
secrets, industrial models, processes, designs, methodologies, computer
programs (including all source codes) and related documentation, technical
information, manufacturing, engineering and technical drawings, know-how and
all pending applications for and registrations of patents, trademarks,
service marks and copyrights.
"INVENTORIED BAGGAGE" has the meaning ascribed to it in
SECTION 4.13.
"INVENTORIED VEHICLES" has the meaning ascribed to it in
SECTION 4.15.
"INVENTORY" has the meaning ascribed to it in SECTION
1.01(a)(iii).
"IRCA" means the Immigration Reform Control Act of 1986, as
amended.
"IRS" means the United States Internal Revenue Service.
"KNOWLEDGE OF PURCHASER" means the knowledge, with due
inquiry, of the directors and the officers of Purchaser.
"KNOWLEDGE OF SELLER" or "KNOWN TO SELLER" shall mean the
knowledge, with due inquiry, of the officers, directors, members and general
managers of Seller, Los Pueblos and Parent.
"LAWS" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental or Regulatory Authority.
53
"LESSOR SECURITY DEPOSITS" has the meaning ascribed to it
in SECTION 1.02(a)(vi).
"LIABILITIES" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
"LICENSES" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.
"LIENS" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance of
any kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.
"LOS PUEBLOS LEASES" means that certain improvements lease
between Los Pueblos, as lessor, and Fiesta Hotel Corporation, as lessee,
dated as of April 26, 1996, concerning the improvements to the Real Property
and that certain ground lease dated as of March 1, 1996, by and between
Seller, as lessor, and Los Pueblos, as lessee, concerning that certain real
property located at the Business.
"LOSS" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses (including, without limitation, interest,
court costs, fees of attorneys, accountants and other experts or other
expenses of litigation or other proceedings or of any claim, default or
assessment).
"MALOOF FAMILY" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇.
"NLRB" means the National Labor Relations Board established
pursuant to the NLRA.
"NLRA" means the National Labor Relations Act of 1947, as
amended.
"NET CURRENT ASSETS" means the net current assets of Seller
means the difference of (a) the sum of (i) Cage Cash, (ii) Inventory, (iii)
Prepaid Expenses, and (iv) Tenant Security Deposits and utility and other
deposits minus (b) the sum of (i) Accounts Payable, (ii) Accrued Expenses and
(iii) Lessor Security Deposits, each as reflected on the Closing Date Balance
Sheet as finally determined pursuant to Section 1.03(c)(i) hereof.
"NERA" means the Nevada Equal Rights Act.
"NEVADA GAMING AUTHORITIES" shall mean the applicable
gaming authorities of the State of Nevada, including the Nevada Gaming
Commission, the Nevada State Gaming Control Board, the ▇▇▇▇▇ County Gaming
and Liquor Board, the Las Vegas City Council and all other state and local
regulatory and licensing bodies with authority over gaming activities and
devices in the State of Nevada or City of Las Vegas.
"NPL" means the National Priorities List under CERCLA.
54
"NRS" means the Nevada Revised Statutes, as amended.
"OPERATIVE AGREEMENTS" means, collectively, the General
Assignment and the other Assignment Instruments, the Assumption Agreement and
the other Assumption Instruments.
"ORDER" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).
"OSHA" means the Occupational Safety and Health Act of
1970, as amended.
"OTHER ASSETS" has the meaning ascribed to it in SECTION
1.01(a)(xvii).
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA.
"PENSION BENEFIT PLAN" means each Benefit Plan which is a
pension benefit plan within the meaning of Section 3(2) of ERISA.
"PERMITTED EXCEPTIONS" has the meaning ascribed to it in
SECTION 9.01(a).
"PERMITTED LIEN" means (i) any Lien for Taxes not yet due
or delinquent or being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP, (ii)
any statutory Lien arising in the ordinary course of business by operation of
Law with respect to a Liability that is not yet due or delinquent and (iii)
any minor imperfection of title or similar Lien which individually or in the
aggregate with other such Liens does not materially impair the value of the
property subject to such Lien or the use of such property in the conduct of
the Business.
"PERSON" means any natural person, corporation, limited
liability company, general partnership, limited partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.
"PHASE I" shall have the meaning ascribed to it in SECTION
4.19.
"PLAYERS CLUB" means Seller's Amigos Players Club.
"PLAYERS CLUB LIABILITIES" means the Players Club credits
as of the date of determination multiplied by (i) the percentage of such
credits that are customarily redeemed by Seller over a period of one (1) year
and (ii) by the average cost to Seller of redeeming each credits based on the
last full calendar month immediately preceding the Closing Date.
"PRE-CLOSING TAX RETURNS" has the meaning ascribed to it in
SECTION 8.03.
"PRE-CLOSING TAXES" has the meaning ascribed to it in
SECTION 8.03.
"PREPAID EXPENSES" has the meaning ascribed to it in
SECTION 1.01(a)(vi).
55
"PURCHASE PRICE" has the meaning ascribed to it in SECTION
1.03(a).
"PURCHASER" has the meaning ascribed to it in the forepart
of this Agreement.
"PURCHASER INDEMNIFIED PARTIES" means Purchaser and its
officers, directors, employees, agents and Affiliates.
"QUALIFIED PLAN" means each Benefit Plan which is intended
to qualify under Section 401 of the Code.
"QUARTERLY FINANCIAL STATEMENT DATE" means the last day of
the most recent fiscal quarter of the Business for which Financial Statements
are delivered to Purchaser pursuant to SECTION 2.06.
"QUARTERLY FINANCIAL STATEMENTS" means the Financial
Statements for the most recent fiscal quarter of the Business delivered to
Purchaser pursuant to SECTION 2.06.
"REAL PROPERTY" has the meaning ascribed to it in SECTION
1.01(a)(i).
"REAL PROPERTY LEASES" has the meaning ascribed to it in
SECTION 1.01(a)(ii).
"RELEASE" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without
limitation, the movement of Hazardous Materials through ambient air, soil,
surface water, ground water, wetlands, land or subsurface strata.
"REPRESENTATIVES" has the meaning ascribed to it in SECTION
4.03.
"RESOLUTION PERIOD" means the period ending thirty (30)
days following receipt by an Indemnified Party of a written notice from an
Indemnifying Party stating that it disputes all or any portion of a claim set
forth in a Claim Notice or an Indemnity Notice.
"RETAINED LIABILITIES" has the meaning ascribed to it in
SECTION 1.02(b).
"SECURITY AGREEMENTS" has the meaning ascribed to it in
SECTION 2.22.
"SELLER" has the meaning ascribed to it in the forepart of
this Agreement.
"SELLER INDEMNIFIED PARTIES" means Seller and Los Pueblos
and their respective officers, directors, employees, agents and Affiliates.
"SUBJECT DEFINED BENEFIT PLAN" means each Defined Benefit
Plan listed and described in SECTION 2.12(a) OF THE DISCLOSURE SCHEDULE.
"SURPLUS" means the amount, if any, by which Net Current
Assets as determined from the Closing Date Balance Sheet is a positive number.
56
"TANGIBLE PERSONAL PROPERTY" has the meaning ascribed to it
in SECTION 1.01(a)(iv).
"TAX RETURN" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"TAXES" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not and any expenses incurred in connection with the
determination, settlement or litigation of any Tax liability.
"TAX EXPERIENCE RATING" has the meaning ascribed to it in
SECTION 8.02.
"TENANT SECURITY DEPOSITS" has the meaning ascribed to it
in SECTION 1.01(a)(x).
"THIRD PARTY CLAIM" has the meaning ascribed to it in
SECTION 11.02(a).
"TITLE VII" means Title VII of the Civil Rights Act of
1964, as amended.
"TITLE COMPANY" has the meaning ascribed to it in SECTION
9.01(c).
"TITLE POLICY" has the meaning ascribed to it in SECTION
9.01(c).
"TITLE REPORT" has the meaning ascribed to it in SECTION
9.01(a).
"TRANSFER TAXES" has the meaning ascribed to it in SECTION
8.01(a).
"TRANSFER TIME" has the meaning ascribed to it in SECTION
1.04.
"VEHICLES" has the meaning ascribed to it in SECTION
1.01(a)(ix).
"WARN" means the Worker Adjustment and Retraining
Notification Act, as amended, and the regulations promulgated thereunder.
(b) CONSTRUCTION OF CERTAIN TERMS AND PHRASES. Unless the
context of this Agreement otherwise requires, (i) words of any gender include
each other gender; (ii) words using the singular or plural number also
include the plural or singular number, respectively; (iii) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Agreement; (iv) the terms "Article" or "Section" refer to the
specified Article or Section of this Agreement; and (v) the phrases "ordinary
course of business" and "ordinary course of business consistent with past
practice" refer to the business and practice of Seller in connection with the
Business. Whenever this Agreement refers to a number of days, such number
shall refer to
57
calendar days unless Business Days are specified. All accounting terms used
herein and not expressly defined herein shall have the meanings given to them
under GAAP.
ARTICLE XIV
MISCELLANEOUS
14.01. NOTICES. All notices, requests and other
communications hereunder must be in writing and will be deemed to have been
duly given only if delivered personally or by facsimile transmission or
mailed (first class postage prepaid) to the parties at the following
addresses or facsimile numbers:
If to Purchaser, to: Station Casinos, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
with a copy to: Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller, to: Fiesta Hotel Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
1700 Bank of America
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Los Pueblos, to: Los Pueblos, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
58
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
1700 Bank of America
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent, to: ▇▇▇ ▇. ▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
1700 Bank of America
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number
as provided in this Section, be deemed given upon receipt, and (iii) if
delivered by mail in the manner described above to the address as provided in
this Section, be deemed given upon receipt (in each case regardless of
whether such notice, request or other communication is received by any other
Person to whom a copy of such notice, request or other communication is to be
delivered pursuant to this Section). Any party from time to time may change
its address, facsimile number or other information for the purpose of notices
to that party by giving notice specifying such change to the other party
hereto.
14.02. BULK SALES ACT. The parties hereby waive compliance
with the bulk sales act or comparable statutory provisions of each applicable
jurisdiction.
14.03. ENTIRE AGREEMENT. This Agreement and the Operative
Agreements supersede all prior discussions and agreements between the parties
with respect to the subject matter hereof and thereof.
14.04. EXPENSES. Except as otherwise expressly provided in
this Agreement (including, without limitation, as provided in SECTION 12.02),
whether or not the transactions contemplated hereby are consummated, each
party will pay its own costs and expenses incurred in connection with the
negotiation, execution and closing of this Agreement and the Operative
Agreements and the transactions contemplated hereby and thereby.
14.05. PUBLIC ANNOUNCEMENTS. At all times at or before the
Closing, Seller and Purchaser will not issue or make any reports, statements
or releases to the public with
59
respect to this Agreement or the transactions contemplated hereby without the
consent of the other, which consent shall not be unreasonably withheld. If
either party is unable to obtain the approval of its public report, statement
or release from the other party and the party seeking such approval
reasonably considers such report, statement or release to be required by Law
in order to discharge such party's disclosure obligations, then such party
may make or issue the legally required report, statement or release and
promptly furnish the other party with a copy thereof. Seller and Purchaser
will also obtain the other party's prior approval of any press release to be
issued immediately following the Closing announcing the consummation of the
transactions contemplated by this Agreement.
14.06. CONFIDENTIALITY. Each party hereto will hold, and
will use its best efforts to cause its Affiliates, and in the case of
Purchaser, any Person who has provided, or who is considering providing,
financing to Purchaser to finance all or any portion of the Purchase Price,
and their respective Representatives to hold, in strict confidence from any
Person (other than any such Affiliate, Person who has provided, or who is
considering providing, financing or Representative), unless (i) compelled to
disclose by judicial or administrative process (including, without
limitation, in connection with obtaining the necessary approvals of this
Agreement and the transactions contemplated hereby of Governmental or
Regulatory Authorities) or by other requirements of Law or (ii) disclosed in
an Action or Proceeding brought by a party hereto in pursuit of its rights or
in the exercise of its remedies hereunder, all documents and information
concerning the other party or any of its Affiliates furnished to it by the
other party or such other party's Representatives in connection with this
Agreement or the transactions contemplated hereby, except to the extent that
such documents or information can be shown to have been (a) previously known
by the party receiving such documents or information, (b) in the public
domain (either prior to or after the furnishing of such documents or
information hereunder) through no fault of such receiving party or (c) later
acquired by the receiving party from another source if the receiving party is
not aware that such source is under an obligation to another party hereto to
keep such documents and information confidential; provided that following the
Closing the foregoing restrictions will not apply to Purchaser's use of
documents and information concerning the Business, the Assets or the Assumed
Liabilities furnished by Parent, Seller or Los Pueblos hereunder. In the
event the transactions contemplated hereby are not consummated, upon the
request of the other party, each party hereto will, and will cause its
Affiliates, any Person who has provided, or who is considering providing,
financing to such party and their respective Representatives to, promptly
(and in no event later than five (5) Business Days after such request)
redeliver or cause to be redelivered all copies of documents and information
furnished by the other party in connection with this Agreement or the
transactions contemplated hereby and destroy or cause to be destroyed all
notes, memoranda, summaries, analyses, compilations and other writings
related thereto or based thereon prepared by the party furnished such
documents and information or its Representatives.
14.07. WAIVER; REMEDIES; ATTORNEYS FEES. Any term or
condition of this Agreement may be waived at any time by the party that is
entitled to the benefit thereof, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the party
waiving such term or condition. No waiver by any party of any term or
condition of this Agreement, in any one or more instances, shall be deemed to
be or construed as a waiver of the same or any other term or condition of
this Agreement on any future occasion.
60
All remedies, either under this Agreement or by Law or otherwise afforded,
will be cumulative and not alternative. The parties hereto agree that the
Business is a unique asset and that damages suffered by Purchaser as a result
of a breach of this Agreement by Parent, Seller or Los Pueblos would be
impracticable to determine. Accordingly, the parties hereto agree that
Purchaser shall be entitled to seek specific performance of the terms of this
Agreement in the event of a breach of the terms of this Agreement. In the
event of a dispute between the parties hereto arising out of or relating to
this Agreement or any breach hereof, the prevailing party in such dispute
will be entitled to recover its reasonable attorneys fees and other costs and
expenses relating to such dispute from the non-prevailing party.
14.08. AMENDMENT. This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by or on
behalf of each party hereto.
14.09. NO THIRD PARTY BENEFICIARY. The terms and provisions
of this Agreement are intended solely for the benefit of each party hereto
and their respective successors or permitted assigns, and it is not the
intention of the parties to confer third-party beneficiary rights upon any
other Person other than any Person entitled to indemnity under ARTICLE XI.
14.10. NO ASSIGNMENT; BINDING EFFECT. Neither this
Agreement nor any right, interest or obligation hereunder may be assigned by
any party hereto without the prior written consent of the other party hereto
and any attempt to do so will be void, except (a) for assignments and
transfers by operation of Law, (b) to a "qualified intermediary" for purposes
of Section 1031 of the Code and (c) that Purchaser may assign any or all of
its rights, interests and obligations hereunder (including, without
limitation, its rights under ARTICLE XI) to (i) a wholly-owned subsidiary,
provided that any such subsidiary agrees in writing to be bound by all of the
terms, conditions and provisions contained herein, (ii) any post-Closing
purchaser of the Business or a substantial part of the Assets or (iii) any
financial institution providing purchase money or other financing to
Purchaser from time to time as collateral security for such financing.
Subject to the preceding sentence, this Agreement is binding upon, inures to
the benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
14.11. HEADINGS. The headings used in this Agreement have
been inserted for convenience of reference only and do not define or limit
the provisions hereof.
14.12. CONSENT TO JURISDICTION; VENUE. Each party hereby
irrevocably submits to the exclusive jurisdiction of the United States
District Court for the District of Nevada or any court of the State of Nevada
located in the City of Las Vegas in any action, suit or proceeding arising
out of or relating to this Agreement or any of the Operative Agreements or
any of the transactions contemplated hereby or thereby, and agrees that any
such action, suit or proceeding shall be brought only in such court,
provided, however, that such consent to jurisdiction is solely for the
purpose referred to in this Section and shall not be deemed to be a general
submission to the jurisdiction of said courts or in the State of Nevada other
than for such purpose. Each party hereby irrevocably waives, to the fullest
extent permitted by Law, any objection that it may now or hereafter have to
the laying of the venue of any such action, suit or proceeding brought in
such a court and any claim that any such action, suit or proceeding brought
in such a court has been brought in an inconvenient forum.
61
14.13. INVALID PROVISIONS. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under any present
or future Law, and if the rights or obligations of any party hereto under
this Agreement will not be materially and adversely affected thereby, (a)
such provision will be fully severable, (b) this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof and (c) the remaining provisions of this Agreement
will remain in full force and effect and will not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom.
14.14. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the Laws of the State of Nevada applicable
to a contract executed and performed in such State, without giving effect to
the conflicts of laws principles thereof.
14.15. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
62
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by the duly authorized officer of each party as of the date
first above written.
PURCHASER: STATION CASINOS, INC.,
a Nevada corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
Chief Financial Officer
Chief Administrative Officer
SELLER: FIESTA HOTEL CORPORATION,
a Nevada corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
LOS PUEBLOS: LOS PUEBLOS, INC.,
a New Mexico corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
PARENT: ▇▇▇ ▇. ▇▇▇▇▇▇ CO., INC.,
a New Mexico corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
63
Agreed and Accepted Solely as to
SECTION 4.11:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, JR.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
64