Exhibit 2.1
EXECUTION COPY
STOCK PURCHASE AGREEMENT
BY AND AMONG
PB GAMING, INC.,
AS SELLER,
POSTER FINANCIAL GROUP, INC.,
LSRI HOLDINGS, INC.,
AS PURCHASER
AND
▇▇▇▇▇▇'▇ RESTAURANTS, INC.
DATED AS OF FEBRUARY 3, 2005
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS...................................................... 1
ARTICLE II PURCHASE AND SALE OF SHARES; CLOSING............................ 14
Section 2.1 Purchase and Sale of Shares; Purchaser Deposit.......... 14
Section 2.2 Closing................................................. 15
Section 2.3 Closing Deliveries...................................... 15
Section 2.4 Allocation of Purchase Price for Tax Purposes........... 17
Section 2.5 Credit Agreement Indebtedness........................... 18
Section 2.6 Working Capital Liability Amount........................ 18
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES........... 18
Section 3.1 Organization and Qualification.......................... 18
Section 3.2 Capitalization.......................................... 19
Section 3.3 Authority; No Conflict; Required Filings and Consents... 21
Section 3.4 PFG Financial Statements................................ 22
Section 3.5 No Undisclosed Liabilities.............................. 23
Section 3.6 Absence of Certain Changes or Events.................... 23
Section 3.7 Taxes................................................... 23
Section 3.8 Real Property........................................... 25
Section 3.9 Tangible Personal Property.............................. 28
Section 3.10 Intellectual Property................................... 28
Section 3.11 Contracts............................................... 30
Section 3.12 Litigation.............................................. 32
Section 3.13 Environmental Matters................................... 32
Section 3.14 Employee Benefit Plans.................................. 34
Section 3.15 Compliance with Applicable Laws......................... 38
Section 3.16 Labor Matters........................................... 39
Section 3.17 Compliance with the WARN Act............................ 40
Section 3.18 Indebtedness............................................ 40
Section 3.19 Insurance............................................... 40
Section 3.20 Internal Controls and Procedures........................ 41
Section 3.21 Nevada Takeover Statute................................. 41
Section 3.22 Brokers................................................. 41
Section 3.23 Suppliers............................................... 41
Section 3.24 Bank Accounts........................................... 41
Section 3.25 Receivables............................................. 41
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER..................... 42
Section 4.1 Organization of Purchaser; No Business Operations of
Purchaser............................................... 42
Section 4.2 Authority; No Conflict; Required Filings and Consents... 42
Section 4.3 Brokers................................................. 43
Section 4.4 Licensing............................................... 43
-i-
Section 4.5 Litigation.............................................. 43
Section 4.6 Investment Intent....................................... 44
ARTICLE V COVENANTS........................................................ 44
Section 5.1 Conduct of Business of the Acquired Entities............ 44
Section 5.2 Cooperation; Notice; Cure............................... 48
Section 5.3 Access to Information................................... 48
Section 5.4 No Acquisition Negotiation.............................. 49
Section 5.5 Confidentiality of Information.......................... 50
Section 5.6 No Intercompany Accounts................................ 50
Section 5.7 Governmental Approvals.................................. 50
Section 5.8 Consents................................................ 51
Section 5.9 Performance............................................. 51
Section 5.10 Publicity............................................... 51
Section 5.11 Change of Corporate Name Post-Closing................... 52
Section 5.12 Certain Matters Related to GNL.......................... 52
Section 5.13 Intellectual Property - Pre-Closing..................... 52
Section 5.14 Senior Notes............................................ 53
Section 5.15 Employee Matters........................................ 54
Section 5.16 Non-Solicitation of Unique Customers.................... 55
Section 5.17 Joint Contracts......................................... 55
Section 5.18 Treatment of Affiliate Contracts........................ 55
Section 5.19 Refund of Non-Refundable Deposit/Liquidated Damages..... 56
Section 5.20 Capital Expenditures.................................... 57
Section 5.21 Funding by LNY.......................................... 57
Section 5.22 Certain Indemnification Matters......................... 57
Section 5.23 Leased Real Property.................................... 58
Section 5.24 Further Actions......................................... 58
Section 5.25 Non-Solicitation of Certain Employees................... 59
Section 5.26 Amendment and Supplement of Disclosure Schedule or
Schedules............................................... 59
ARTICLE VI CONDITIONS TO CLOSING........................................... 60
Section 6.1 Conditions of the Parties' Obligations to Effect the
Closing................................................. 60
Section 6.2 Additional Conditions to Obligation of the Seller
Parties to Effect the Closing........................... 60
Section 6.3 Additional Conditions to Obligation of Purchaser to
Effect the Closing...................................... 61
ARTICLE VII INDEMNIFICATION; REMEDIES...................................... 61
Section 7.1 Indemnification......................................... 61
Section 7.2 Indemnification Procedures.............................. 62
Section 7.3 Indemnification Backstop................................ 65
Section 7.4 Limitation.............................................. 65
ARTICLE VIII TAX MATTERS................................................... 65
Section 8.1 Accounting and Tax Records.............................. 65
Section 8.2 Transfer Taxes.......................................... 65
-ii-
Section 8.3 Tax Status.............................................. 66
ARTICLE IX TERMINATION..................................................... 66
Section 9.1 Termination............................................. 66
Section 9.2 Effect of Termination................................... 67
ARTICLE X MISCELLANEOUS.................................................... 68
Section 10.1 Expenses................................................ 68
Section 10.2 Notices................................................. 68
Section 10.3 Survival of Representations, Warranties and Covenants... 70
Section 10.4 Interpretation; Construction............................ 70
Section 10.5 Governing Law........................................... 70
Section 10.6 Consent to Jurisdiction and Venue; Enforcement of
Agreement; Reimbursement of Costs....................... 71
Section 10.7 Assignment.............................................. 71
Section 10.8 Amendment............................................... 71
Section 10.9 Extension; Waiver....................................... 71
Section 10.10 No Third Party Beneficiaries............................ 72
Section 10.11 Entire Agreement........................................ 72
Section 10.12 Severability............................................ 72
Section 10.13 Counterparts............................................ 72
Section 10.14 Waiver.................................................. 72
-iii-
SCHEDULES
---------
Schedule 5.1 Certain Covenant Exceptions
Schedule 5.12 GNL Stock Purchase Agreement and Related Agreements
Schedule 5.15 Listed Collective Bargaining Agreements
Schedule 5.17 Joint Contracts
Schedule 5.20 Capital Expenditure Budget
Schedule 5.25 Excepted Employees
EXHIBITS
--------
Exhibit 2.6 Working Capital Liability Amount
Exhibit A Form of Escrow Agreement
Exhibit B Form of Guaranty, Confidentiality and Non-Solicitation
Agreement
-iv-
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of February 3,
2005, is by and among PB Gaming, Inc., a Nevada corporation ("Seller"), Poster
Financial Group, Inc., a Nevada corporation ("PFG"), LSRI Holdings, Inc., a
Delaware corporation ("Purchaser"), and, for the purposes of Section 5.14,
Section 5.21, Section 5.22, Article VII and Article X, ▇▇▇▇▇▇'▇ Restaurants,
Inc., a Delaware corporation ("LNY"). Seller, PFG and Purchaser are
collectively referred to herein as "Parties" and individually as a "Party".
This Agreement shall not become effective unless and until such time as Seller
has received written confirmation from the Escrow Agent (as defined herein)
that the Escrow Agent has received the Non-Refundable Deposit Amount and is
holding the Non-Refundable Deposit Amount pursuant to the terms of the Escrow
Agreement (each as defined herein).
WHEREAS, Seller owns of record and beneficially 100 shares of common
stock, no par value per share, of PFG (the "Shares"; Shares will also include
any additional shares of PFG Common Stock (as defined herein) issued and
outstanding prior to Closing), which are all of the issued and outstanding
shares of capital stock of PFG;
WHEREAS, PFG owns of record and beneficially 25,000 shares of common
stock, par value $1.00 per share, of GNLV, CORP., a Nevada corporation
("GNLV"), which are all of the issued and outstanding shares of capital stock
of GNLV;
WHEREAS, GNLV owns of record and beneficially a 100% interest (the "GNELLC
Interest") in Golden Nugget Experience LLC, a Nevada limited liability company
("GNELLC"), which, in turn, owns of record and beneficially a 17.65% voting
interest and a 50% non-voting interest (collectively the "FSELLC Interest") in
The Fremont Street Experience Limited Liability Company, a Nevada limited
liability company ("FSELLC");
WHEREAS, Seller desires to sell, and Purchaser desires to purchase, the
Shares for the consideration and on the terms set forth in this Agreement; and
WHEREAS, as an inducement for, and in partial consideration of, Seller
agreeing to enter into this Agreement, Purchaser shall, on the date hereof, pay
to Seller the Non-Refundable Deposit Amount to the Escrow Agent to be delivered
in accordance with the terms of the Escrow Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, obligations and agreements set forth
below, the Parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
"Acquired Entities" means PFG, GNLV and GNELLC.
"Acquired Entities Owned Intellectual Property" means all Intellectual
Property owned, singly or jointly (if any), by the Acquired Entities.
"Acquisition Proposal" shall have the meaning ascribed in Section 5.4.
"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person. For
purposes of this definition, "control" (including the terms "controlled by" and
"under common control with") with respect to the relationship between or among
two (2) or more Persons, means the possession, directly or indirectly or as a
trustee or executor, of the power to direct or cause the direction of the
management and policies of a Person whether through the ownership of voting
securities, as trustee or executor, by Contract or otherwise, including the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the management and
policies of such Person.
"Affiliate Contracts" shall have the meaning ascribed in Section 3.11(c).
"Agreement" shall have the meaning ascribed in the preamble.
"Allocation" shall have the meaning ascribed in Section 2.4(a).
"Barrick" means Barrick-GNL, LLC, a Nevada limited liability company and
the purchaser under the GNL Stock Purchase Agreement.
"Board of Arbitration" shall have the meaning ascribed in Section 7.2(c).
"Business Day" means any day that is not a Saturday, Sunday or other day
on which banks are required or authorized by Law to be closed in the State of
Nevada.
"CBAs" shall have the meaning ascribed in Section 5.15(c).
"Claim Notice" means written notice pursuant to Section 7.2(a) of a Third
Party Claim as to which indemnity under Section 7.1 is sought by an Indemnified
Party, enclosing a copy of all papers served and specifying in reasonable
detail the nature of, and basis for, such Third Party Claim.
"Cleanup" means all actions required to (a) cleanup, remove, treat or
remediate Hazardous Materials in the indoor or outdoor environment in
accordance with Environmental Laws, (b) perform pre-remedial studies and
investigations and post-remedial monitoring and care or (c) respond to any
requests by a Governmental Entity for information or documents relating to
cleanup, removal, treatment or remediation or potential cleanup, removal,
treatment or remediation of Hazardous Materials in the indoor or outdoor
environment.
"Closing" shall have the meaning ascribed in Section 2.2.
"Closing Date" shall have the meaning ascribed in Section 2.2.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, including the rules and regulations promulgated thereunder.
-2-
"Confidentiality Agreement" means the Confidentiality Agreement, dated as
of January 7, 2005, by and between Purchaser and GNLV, as amended from time to
time.
"Consumable Items" means all food stuffs and nonalcoholic beverages that
are located at the Real Property.
"Contract" means any agreement, undertaking, obligation or understanding,
whether written or oral, or subject to conditions, including any commitment,
letter of intent, mortgage, indenture, note, loan, guarantee, lease, sublease,
license, contract, deed of trust, option agreement, right of first refusal,
security agreement, development agreement, operating agreement, management
agreement, service agreement, partnership agreement, joint venture agreement,
limited liability agreement, put/call arrangement, purchase, sale, merger or
other agreement, together with any amendments or modifications thereto and
restatements thereof; provided that Contracts do not include Leases respecting
Leased Real Property or Tenant Leases.
"Copyrights" means all copyrights, including moral rights and rights of
attribution and integrity, copyrights in Software (if any) and in the content
contained on any Web site and registrations and applications for any of the
foregoing, and rights to ▇▇▇ for past Infringement thereof.
"Covered Person" shall have the meaning ascribed in Section 5.22.
"Credit Agreement" means the Loan and Security Agreement, dated as of
January 23, 2004, by and among PFG, as parent, GNLV and GNL, as borrowers,
▇▇▇▇▇ Fargo, as administrative agent, arranger and documentation agent for the
lenders party thereto, ▇▇▇▇▇▇ Brothers, as syndication agent and the other
lenders party thereto, as amended from time to time.
"Credit Agreement Encumbrances" means Encumbrances created under the Loan
Documents (as such term is defined under the Credit Agreement).
"Credit Agreement Repayment Amount" means, as of the date of
determination, the amount of funds required to repay and discharge in full all
obligations then outstanding under the Credit Agreement, including, (a)
Indebtedness outstanding under the Term Loan, including accrued and unpaid
interest thereon at such time, (b) Indebtedness outstanding under the Revolver,
including accrued and unpaid interest thereon at such time and (c) any
prepayment penalties, fees and expenses incurred in connection with the
repayment in full and discharge of such Indebtedness, including accrued and
unpaid interest thereon at such time.
"Debt Offer" shall have the meaning ascribed in Section 5.14(a)
"Disclosure Schedule" shall have the meaning ascribed in Article III.
"Dispute Period" means the period ending sixty (60) days following receipt
by Seller or Purchaser, as the case may be, of either a Claim Notice or an
Indemnity Notice.
"Domain Names" shall have the meaning set forth in 15 U.S.C. ss. 1127.
-3-
"Encumbrance" means any security interest, pledge, mortgage, option,
lien (including environmental and Tax liens), assessment, lease, charge,
encumbrance, adverse claim, preferential arrangement, condition, equitable
interest, right of first refusal or restriction of any kind, including any
restriction on the use, voting, transfer, receipt of income or other exercise
of any attributes of ownership; provided that licenses to use Intellectual
Property granted (a) prior to the date hereof or (b) after the date hereof in
the Ordinary Course of Business, with the prior written consent of Purchaser
not to be unreasonably withheld or delayed, shall not constitute Encumbrances.
"Environmental Claim" means any claim, action, cause of action or notice
by any Person or investigation by a Governmental Entity, alleging Liability
(including potential Liability for investigatory costs, Cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on, or resulting from,
(a) the presence, Release or threatened Release of any Hazardous Materials at a
location, currently or formerly owned or operated by the Acquired Entities or
at any third party location at which an Acquired Entity or any other Person
whose Liability for any Environmental Claim any of the Acquired Entities has or
may have retained or assumed either by Contract or by operation of Law or (b)
any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all federal, state and local Laws relating to
pollution or protection of human health or the environment, including Laws
relating to Releases or threatened Releases of Hazardous Materials, the
manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Materials and all Laws with regard to
recordkeeping, notification, disclosure and reporting requirements respecting
Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including the rules and regulations promulgated
thereunder.
"ERISA Affiliate" shall have the meaning ascribed in Section 3.14(a).
"Escrow Agent" shall have the meaning ascribed in Section 2.1(b).
"Escrow Agreement" shall have the meaning ascribed in Section 2.1(b).
"FF&E" means all furniture, fixtures and equipment owned or leased by any
of the Acquired Entities or otherwise used in connection with their respective
businesses, including floor coverings, pictures, furniture located within the
Real Property, all Operating Equipment and all other equipment used in the
operation of the casinos, kitchens, dining rooms and bars, cleaning equipment,
office equipment, machinery, vehicles, computers and other data processing
hardware, special lighting and other equipment of a like nature, with such
additions and deletions as may occur in the Ordinary Course of Business.
"FIRPTA" means the Foreign Investment Real Property Tax Act, as amended
from time to time, including the rules and regulations promulgated thereunder.
"Foreign Corrupt Practices Act" means the Foreign Corrupt Practices Act of
1977, as amended from time to time, including the rules and regulations
promulgated thereunder.
-4-
"FSELLC" shall have the meaning ascribed in the preamble.
"FSELLC Interest" shall have the meaning ascribed in the preamble.
"FSELLC Loans" shall have the meaning ascribed in Section 3.2(d).
"FSELLC Operating Agreement" means the Second Amended and Restated
Operating Agreement of FSELLC, as amended from time to time.
"GAAP" means United States generally accepted accounting principles and
practices as in effect from time to time and applied consistently throughout
the periods involved.
"Gaming Authorities" means, collectively, the Nevada Gaming Commission,
the Nevada State Gaming Control Board, and any other Governmental Entity that
holds regulatory, licensing or permit authority over gambling, gaming or casino
activities conducted by the Acquired Entities within their jurisdiction.
"Gaming Laws" means any federal, state, local or foreign statute,
ordinance, rule or regulation governing or relating to the ownership of GNLV
and the gambling, gaming or casino activities and operations of the Acquired
Entities, in each case as amended from time to time. "Gaming Licenses" means
all licenses, permits, approvals, authorizations, registrations, findings of
suitability, waivers and exemptions, including any condition or limitation
placed thereon, that are necessary for the Acquired Entities to own and operate
GNLV's gaming facilities and related amenities issued under the applicable
Gaming Laws.
"GNELLC" shall have the meaning ascribed in the preamble.
"GNELLC Interest" shall have the meaning ascribed in the preamble.
"GNELLC Operating Agreement" means the Operating Agreement of GNELLC,
dated as of May 26, 2000, as amended from time to time.
"GNL" means GNL, CORP., a Nevada corporation, and as of the date of this
Agreement, an indirect, wholly owned Subsidiary of Seller.
"GNL Stock Purchase Agreement" means that certain Stock Purchase
Agreement, entered into on November 8, 2004, by and among Barrick, PFG and GNL,
pursuant to which PFG has agreed to sell all of the issued and outstanding
capital stock of GNL to Barrick, as such Agreement may have been amended prior
to the date hereof and as may be further amended in accordance with Section
5.12.
"GNLV" shall have the meaning ascribed in the preamble.
"GNLV Common Stock" shall have the meaning ascribed in Section 3.2(b).
"GNLV Shares" shall have the meaning ascribed in Section 3.2(b).
-5-
"Governmental Approvals" means all (a) Gaming Licenses, Liquor Licenses
and any other permit, license, certificate, franchise, concession, approval,
consent, ratification, permission, clearance, confirmation, endorsement,
waiver, certification, filing, franchise, notice, variance, right, designation,
rating, registration, qualification, authorization or order that is or has been
issued, granted, given or otherwise made available by or under the authority of
any Governmental Entity or pursuant to any Law and (b) rights under any
Contract with any Governmental Entity that relates to or is used in a Person's
business or operations.
"Governmental Entity" means any (a) nation, principality, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature, (b) governmental or quasi-governmental entity of
any nature, including any governmental division, subdivision, department,
agency, bureau, branch, office, commission, council, board, instrumentality,
officer, official, representative, organization, taxing authority or unit and
any court or other tribunal (foreign, federal, state or local) or (c) Person,
or body exercising, or entitled to exercise, any executive, legislative,
judicial, administrative, regulatory, police, military or taxing authority or
power of any nature, including the Gaming Authorities.
"Governmental Order" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental Entity.
"Hazardous Materials" means (a) any "hazardous substance," as defined by
the Comprehensive Environmental Response, Compensation, and Liability Act
("CERCLA"), 42 U.S.C. 9601 et seq.; (b) any "hazardous waste" or "solid waste,"
in either case as defined by the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. 6901 et seq.; (c) any solid, hazardous, dangerous or toxic
chemical, material, contaminant, or pollutant as those terms are defined by any
Environmental Law or any other substance defined or regulated as a pollutant,
contaminant, or a hazardous or toxic material under any Environmental Law; (d)
any asbestos-containing materials in any form or condition; (e) any
polychlorinated biphenyls in any form or condition; (f) any air pollutant which
is so designated by the U.S. Environmental Protection Agency as authorized by
any Environmental Law or (g) any toxic mold.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended from time to time, including the rules and regulation promulgated
thereunder.
"Improvements" shall have the meaning ascribed in Section 3.8(e).
"Income Tax Distribution" means a distribution of cash in the Ordinary
Course of Business (a) from GNLV in an amount that does not exceed an amount
equal to the difference of (i) the product of (A) the taxable income of the
Acquired Entities determined for federal income tax purposes for the periods or
portions thereof commencing on January 1, 2005 and ending on the Closing Date,
times (B) the highest applicable marginal individual federal income tax rate
and (ii) any amounts previously distributed by the Acquired Entities to Seller
or Seller's stockholders for Taxes in respect of such income and (b) from GNL
in an amount that does not exceed an amount equal to the difference of (i) the
product of (A) the taxable income of GNL determined for federal income tax
purposes for the periods or portions thereof commencing on January 1, 2005 and
ending on the Closing Date, times (B) the highest applicable marginal
-6-
individual federal income tax rate and (ii) any amounts previously distributed
by PFG to Seller or Seller's stockholders for Taxes in respect of such income.
"Indebtedness" means, with respect to a Person without duplication, (a)
all indebtedness for borrowed money, (b) all indebtedness for the deferred
purchase price of property or services (other than property, including
inventory, and services purchased, trade payables, other expense accruals and
deferred compensation items arising in the Ordinary Course of Business), (c)
all obligations evidenced by notes, bonds, debentures or other similar
instruments (other than performance, surety and appeal bonds arising in the
Ordinary Course of Business in respect of which such Person's liability remains
contingent), (d) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (e)
all obligations under leases that have been or should be in accordance with
GAAP, recorded as capital leases, to the extent required to be so recorded, (f)
all reimbursement, payment or similar obligations, contingent or otherwise,
under acceptance, letter of credit or similar facilities, (g) all indebtedness
of others referred to in clauses (a) through (f) above guaranteed directly or
indirectly by a Person, or in effect guaranteed directly or indirectly by a
Person through a Contract (i) to pay or purchase such indebtedness or to
advance or supply funds for the payment or purchase of such indebtedness, (ii)
to purchase, sell or lease (as lessee or lessor) property, or to purchase or
sell services, primarily for the purpose of enabling the debtor to make payment
of such indebtedness, (iii) to supply funds to or in any other manner invest in
the debtor (including any agreement to pay for property or services
irrespective of whether such property is received or such services are
rendered) or (iv) otherwise to assure a creditor against loss in respect of
such indebtedness and (h) all indebtedness referred to in clauses (a) through
(g) above secured by (or for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any Encumbrance upon
or in property (including accounts and Contract rights) owned by a Person, even
though the Person may not have assumed or become liable for the payment of such
indebtedness, and including in clauses (a) through (h) above any accrued and
unpaid interest thereon.
"Indemnified Party" means a Purchaser Indemnified Party or a Seller
Indemnified Party, as the case may be.
"Indemnifying Party" means the Seller or the Purchaser Indemnifying
Parties, as the case may be.
"Indemnity Notice" means written notification pursuant to Section 7.2(b)
of a claim for indemnity under Section 7.1 by an Indemnified Party, specifying
in reasonable detail the nature of and basis for such claim, together with the
amount of the Loss arising from such claim.
"Indenture" means the Indenture, dated as of December 3, 2003, by and
among PFG, HSBC Bank USA, as trustee, and the guarantors party thereto, as
amended or supplemented from time to time.
"Indenture Amendments" shall have the meaning ascribed in Section 5.14(a).
-7-
"Indenture Encumbrances" means Encumbrances created under the Collateral
Documents (as such term is defined under the Indenture).
"Infringement" means an assertion that a given item infringes,
misappropriates, dilutes, unfairly competes with, constitutes unauthorized Use
of or otherwise violates the Intellectual Property rights of any Person.
"Intellectual Property" means all Copyrights, Patents, Rights of
Publicity, Trademarks, Domain Names, Trade Secrets and related intangible
assets and all goodwill associated therewith.
"IP Agreements" means all Contracts, outstanding decrees, orders,
judgments, settlement agreements or stipulations to which any of the Acquired
Entities is a party or otherwise bound (whether oral or written, and whether
between or among the Acquired Entities and an independent Person or
inter-corporate) that contain provisions (a) granting to any Person any rights
in Acquired Entities Owned Intellectual Property or Used Intellectual Property,
(b) granting to any of the Acquired Entities any rights in Used Intellectual
Property, (c) consenting to another Person's Use of Acquired Entities Owned
Intellectual Property or Used Intellectual Property or (d) transferring
ownership of Intellectual Property rights to any of the Acquired Entities.
"IP Claim" means any demand, suit, arbitration, opposition, interference,
cancellation or other adversarial proceeding concerning Intellectual Property
or any rights associated therewith.
"IP Enforcement Documents" means all outstanding decrees, orders,
judgments, settlement agreements or stipulations to which any of the Acquired
Entities is a party or otherwise bound (whether oral or written, and whether
between or among the Acquired Entities and an independent Person or
inter-corporate) that contain provisions (a) covenanting not to ▇▇▇ any Person
for Infringement of any Acquired Entities Owned Intellectual Property or Used
Intellectual Property; or (b) restricting any of the Acquired Entities' Use of
Acquired Entities Owned Intellectual Property or Used Intellectual Property.
"IRS" means the Internal Revenue Service.
"Joint Contracts" shall have the meaning ascribed in Section 5.17.
"Knowledge" means, with respect to a Person other than an individual, the
knowledge of any director or executive officer of such Person and for the
purposes of Sections 3.8, 3.9 and 3.13 only, shall include the Director of
Property Operations at GNLV; and for the purposes of Section 3.10 only, shall
include the Vice President for Information Systems at GNLV. Any such individual
shall be deemed to have "Knowledge" of a particular fact or other matter if
such individual is actually aware of such fact or other matter after inquiry of
a type consistent with the Person's past practice in performance of his or her
office or employment.
"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 Entity, including all Gaming Laws.
-8-
"Leased Real Property" shall have the meaning ascribed in Section 3.8(a).
"Leases" means all leases, ground leases, subleases or other agreements,
including all amendments, extensions, renewals, guaranties or other agreements
with respect to the Real Property, but excluding any lease or sublease as to
which GNLV is the lessor or sublessor.
"Liabilities" means all debts, obligations and other liabilities of a
Person (whether absolute, accrued, contingent, fixed or otherwise, or whether
due or to become due), including those arising under any Law, action,
investigation, inquiry or order and those arising under any Contract.
"Liquor Assets" means the inventory of alcoholic beverages at the Real
Property.
"Liquor Licenses" means all those alcoholic beverage licenses issued by
Governmental Entities to GNLV pursuant to which the sale of alcoholic beverages
is permitted in the casino, restaurants, bars, function rooms and guest rooms
of the hotel owned by GNLV.
"Lists" means all casino player, customer and patron lists, information
and databases.
"LNY" shall have the meaning ascribed in the preamble.
"LNY SEC Reports" means all forms, reports, schedules, statements and
documents (including exhibits thereto, documents incorporated by reference
therein and supplements and amendments thereto) filed with, or submitted to,
the SEC by LNY.
"Loss" means any out-of-pocket cost, damage, Liability, loss, injury,
penalty, or obligation of any kind or nature, including interest, penalties,
fines, legal, accounting, and other out-of-pocket professional fees and
expenses incurred in the investigation, collection, prosecution, determination
and defense thereof, amounts paid in settlement, excluding, in any case, any
incidental or consequential damages and any punitive damages other than, for
the purposes of Article VII, any incidental or consequential and punitive
damages awarded in any action or proceeding against an Indemnified Party to
Third Parties that may be imposed on or otherwise incurred or suffered.
"Material Adverse Effect" means any circumstance, development, change in,
or effect on the Acquired Entities, taken as a whole, that, individually or in
the aggregate with any other circumstances, developments, changes in, or
effects on, the Acquired Entities, taken as a whole, is materially adverse to
(a) the business or the condition (financial or otherwise), results of
operations, operations, assets, properties or liabilities of the Acquired
Entities, taken as a whole or (b) the ability of either of the Seller Parties
to perform its respective obligations under this Agreement or to consummate the
transactions contemplated by this Agreement, other than, in any case, any
circumstance, development, change or effect relating to or arising out of (i)
business or economic conditions in the United States generally or the travel,
hospitality or gaming industries in general in the United States or in the
state of Nevada, (ii) national or international political or social conditions,
including the engagement by the United States in hostilities (or any escalation
thereof), whether or not pursuant to the declaration of a national emergency or
war, or the occurrence of any military or terrorist attack upon Las Vegas,
Nevada or the United States, or any of its territories, possessions, or
diplomatic or consular offices or upon any military installation, equipment or
-9-
personnel of the United States or (iii) the announcement of, or the taking of
any action contemplated by, this Agreement.
"Material Contracts" shall have the meaning ascribed in Section 3.11(a).
"Multiemployer Plan" shall have the meaning ascribed in Section 3.14(b).
"NLRA" means the National Labor Relations Act of 1947, as amended from
time to time, including the rules and regulations promulgated thereunder.
"NLRB" means the National Labor Relations Board established pursuant to
the NLRA.
"Non-Gaming Liabilities" shall have the meaning ascribed in Section
7.1(a).
"Non-Refundable Deposit Amount" shall have the meaning ascribed in Section
2.1(b).
"Non-Represented Employees" shall have the meaning ascribed in Section
5.15(d).
"Notifying Party" shall have the meaning ascribed in Section 5.7(a).
"NRS" means the Nevada Revised Statutes, as amended from time to time,
including the rules and regulations promulgated thereunder.
"Offer Documents" shall have the meaning ascribed in Section 5.14(b).
"Operating Equipment" means all items owned or leased by any of the
Acquired Entities and used in its business, including in the operation or
maintenance of the Real Property, including all specialized casino equipment,
such as slot machines, cards, poker chips, gaming devices, dice, baccarat
chips, gaming tables, pneumatic stools, drop buckets, cans and racks, tokens,
token racks, card shuffler devices and accessories, change sorters, pit stands,
counting equipment, roulette table covers, casino and game table signage, cage
and game tables supplies, and all other gaming equipment relating to its
business, and including food service preparation utensils, chinaware,
glassware, silverware and hollowware, food and beverage service equipment,
uniforms and also including consumable supplies for housekeeping, engineering,
accounting and office use, together with paper supplies and miscellaneous
general supply items.
"Ordinary Course of Business" means an action taken by a Person if such
action is consistent with the past practices of such Person and is taken in the
normal day-to-day operations of such Person.
"Outside Date" shall have the meaning ascribed in Section 9.1(b).
"Owned Real Property" shall have the meaning ascribed in Section 3.8(a).
"Parties" shall have the meaning ascribed in the preamble.
"Patents" means all patents and industrial designs, including any
continuations, divisionals, continuations-in-part, renewals, reissues and
applications for any of the foregoing and rights to ▇▇▇ for past Infringement
thereof.
-10-
"Permitted Exceptions" means, collectively, (a) Encumbrances for real
estate Taxes or ad valorem Taxes that are not past due, (b) easements for the
erection and maintenance of public utilities exclusively serving the properties
and other matters set forth in Section 3.8(b) of the Disclosure Schedule that,
to the Knowledge of any of the Seller Parties, neither (i) materially
interferes with the use or operation of an Acquired Entity in the conduct of
its business as it is presently conducted or (ii) renders title to the Owned
Real Property unmarketable or uninsurable, (c) Tenant Leases and (d) the Credit
Agreement Encumbrances and Indenture Encumbrances.
"Person" means an individual, corporation, partnership, limited liability
company, joint stock company, joint venture, association, trust or other entity
or organization, including a Governmental Entity.
"PFG" shall have the meaning ascribed in the preamble.
"PFG Common Stock" shall have the meaning ascribed in Section 3.2(a).
"PFG Financial Statements" shall have the meaning ascribed in Section 3.4.
"PFG SEC Reports" means all forms, reports, schedules, statements and
documents (including exhibits thereto, documents incorporated by reference
therein and supplements and amendments thereto) filed with, or submitted to,
the SEC by PFG.
"Plans" shall have the meaning ascribed in Section 3.14(a).
"Policies" shall have the meaning ascribed in Section 3.19.
"Purchase Price" shall have the meaning ascribed in Exhibit 2.6.
"Purchaser" shall have the meaning ascribed in the preamble.
"Purchaser Indemnified Parties" means Purchaser and, after the Closing,
the Acquired Entities and their respective directors, managers, officers,
employees, agents and representatives.
"Purchaser Indemnifying Parties" means Purchaser, and after the Closing,
the Acquired Entities.
"Purchaser's Letter" shall have the meaning ascribed in Section 2.4(b).
"Real Property" shall have the meaning ascribed in Section 3.8(a).
"Release" means any release, spill, emission, discharge, leaking, pumping,
injection, deposit, disposal, dispersal, leaching or migration into the indoor
or outdoor environment (including ambient air, surface water, groundwater and
surface or subsurface strata) of Hazardous Materials in, at, on or under the
property, including the movement of Hazardous Materials through or in the air,
soil, surface water, groundwater or real property.
"Rent Roll" shall have the meaning ascribed in Section 3.8(d).
-11-
"Resolution Period" means the period ending thirty (30) days following
receipt by an Indemnified Party of a written notice from the applicable
Indemnifying Party stating that it disputes all or any portion of a claim set
forth in an Indemnity Notice.
"Restricted Party" shall have the meaning ascribed in Section 5.4.
"Revised Allocation" shall have the meaning ascribed in Section 2.4(b).
"Revolver" means the $25,000,000 revolving loan facility pursuant to the
Credit Agreement.
"Rights of Publicity" means all rights of publicity and privacy, as
defined under applicable Law, including the Use of the names, likenesses,
voices, signatures, biographical information, persona and other recognizable
aspects of real Persons, and rights to ▇▇▇ for past Infringement thereof.
"S Corporation" shall have the meaning ascribed in Section 3.7(k).
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, including the rules and regulations promulgated thereunder.
"Seller" shall have the meaning ascribed in the preamble.
"Seller Indemnified Parties" means Seller and their respective directors,
officers, employees, agents and representatives.
"Seller Parties" means Seller and PFG.
"Senior Notes" means the issued and outstanding 8 3/4% Senior Secured
Notes due 2011 of PFG.
"Shares" shall have the meaning ascribed in the preamble.
"Software" means all computer programs (whether in source code or object
code form), databases, compilations and data, and all documentation related to
any of the foregoing.
"SOXA" means the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended from time to time,
including the rules and regulations promulgated thereunder.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust, estate or other Person of which (or
in which), directly or indirectly, more than 50% of (a) the issued and
outstanding capital stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation shall or might
have voting power upon the occurrence of any contingency), (b) the interest in
the capital or profits of such partnership, joint venture or limited liability
company or other Person or (c) the beneficial interest in such trust or estate,
-12-
is at the time owned by such first Person, or by such first Person and one or
more of its other Subsidiaries or by one or more of such Person's other
Subsidiaries.
"Tangible Personal Property" means all items of tangible personal property
owned or leased by any of the Acquired Entities, including (a) FF&E, (b)
Consumable Items, (c) Liquor Assets, (d) accounting, inventory control and
other business related software used by any of the Acquired Entities in
connection with its operation of its business and (e) all such other items of
tangible personal property that are located at, and used in the operation of,
its business.
"Tax Returns" means all information or filing required to be supplied to
any taxing authority or jurisdiction with respect to Taxes, including
attachments thereto, declarations, disclosures, schedules, estimates and
elections and amendments thereof, including information returns.
"Taxes" means any and all taxes, charges, customs, fees, levies, duties,
liabilities, impositions or other assessments, including income, gross
receipts, profits, excise, real or personal property, environmental, recapture,
sales, use, value-added, withholding, social security, retirement, employment,
unemployment, occupation, service, license, net worth, payroll, franchise,
gains, stamp, transfer and recording taxes, general or special assessments,
fees and charges, imposed by the IRS or any other taxing authority (whether
domestic or foreign including any state, county, local or foreign government or
any subdivision or taxing agency thereof (including a United States
possession)), and all taxes, fees and other charges assessed under the Gaming
Laws (excluding any and all fees, charges, costs and expenses assessed against
Purchaser or any of its principals by the Gaming Authorities in connection with
the filing, investigation and/or processing of the applications of Purchaser
and any of its principals to obtain all Governmental Approvals necessary to own
and operate the Acquired Entities and their respective facilities and related
amenities), whether computed on a separate, consolidated, unitary, combined or
any other basis; and any interest, fines, penalties, additions to tax, or
additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, customs, fees, levies, duties, liabilities, impositions or
other assessments. For purposes of this Agreement, "Taxes" also includes any
obligation under any Law, agreement or arrangement with any other Person with
respect to Taxes of such other Person (including pursuant to Treasury
Regulation Section 1.1502-6 or comparable provisions of state, local or foreign
tax Law) and including any liability for Taxes of any predecessor entity.
"Tenant Leases" means all leases and subleases of Real Property as to
which GNLV is the lessor or sublessor.
"Term Loan" means Term Loan A an original aggregate principal in the
amount of $12,500,000 and Term Loan B in the amount of $7,500,000, each
pursuant to the Credit Agreement.
"Third Party" shall have the meaning ascribed in Section 7.2(a).
"Third Party Claim" shall have the meaning ascribed in Section 7.2(a).
"Title IV Plans" shall have the meaning ascribed in Section 3.14(a).
-13-
"Trade Secrets" means all trade secrets (as defined under applicable Law),
if any, including trade secrets of the following nature: financing and
marketing information; technology; know-how; inventions; proprietary processes;
formulae; algorithms; models and methodologies; Lists of Unique Customers; and
rights to ▇▇▇ for past Infringement thereof.
"Trademark Licensing Agreement" means the Trademark Licensing Agreement
described in Section 5.12 and the side agreement for transition access and
domain name which relate to the use of the "Golden Nugget" trade name.
"Trademarks" means all trademarks, service marks, trade names, designs,
logos, emblems, signs or insignia, slogans, other similar designations of
source or origin and general intangibles of like nature, together with the
goodwill of the business symbolized by any of the foregoing, registrations and
applications relating to any of the foregoing, and rights to ▇▇▇ for past
Infringement thereof.
"Transfer Taxes" shall have the meaning ascribed in Section 8.2.
"Transition Services Agreement" means the Transition Services Agreement
described in Section 5.12.
"Unique Customers" shall have the meaning ascribed in Section 5.16.
"Use" means to copy, display, perform, transmit, disclose to Third
Parties, create derivative works from and otherwise modify, make, use, sell (or
offer to make, use or sell), import, export, and otherwise exploit, and grant
to Third Parties the right or license to do the same.
"Used Intellectual Property" means all Intellectual Property owned or
controlled by (a) Seller or its Affiliates other than any of the Acquired
Entities or (b) any other Person other than any of the Acquired Entities, and
Used or held for Use in the business of any of the Acquired Entities, but
excluding Acquired Entities Owned Intellectual Property.
"WARN Act" means the Worker Adjustment and Retraining Notification Act of
1988, as amended from time to time, including the rules and regulations
promulgated thereunder.
"▇▇▇▇▇ Fargo" means ▇▇▇▇▇ Fargo Foothill, Inc.
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
------------------------------------
SECTION 2.1 PURCHASE AND SALE OF SHARES; PURCHASER DEPOSIT.
(a) On and subject to the terms and conditions of this Agreement,
Purchaser agrees to purchase from Seller, and Seller agrees to sell to
Purchaser, the Shares. At the Closing, the Shares shall be transferred or
otherwise conveyed to Purchaser free and clear of all Encumbrances,
excepting only restrictions on the subsequent transfer of the Shares as
may be imposed under applicable Laws. In consideration of the purchase and
sale of the Shares, at the Closing, Purchaser shall pay to Seller, an
-14-
amount equal to $140,000,000. The Purchaser hereby acknowledges and agrees
that the assets and properties of PFG and its Subsidiaries (including the
equity interests held, directly or indirectly, by PFG in GNLV, GNELLC and,
if applicable, GNL) shall at Closing remain subject to the Credit
Agreement Encumbrances and the Indenture Encumbrances.
(b) Upon execution of this Agreement, and as an inducement for, and
in partial consideration of, the Seller Parties entering into this
Agreement, Purchaser shall deliver or cause to be delivered to Chicago
Title Agency of Nevada, Inc., as escrow agent (the "Escrow Agent") an
amount equal to $25,000,000 (the "Non-Refundable Deposit Amount") in
immediately available funds by wire transfer pursuant to the terms and
conditions of the Escrow Agreement of even date herewith by and among
Seller, Purchaser and Escrow Agent, attached hereto as Exhibit A (the
"Escrow Agreement"). The Non-Refundable Deposit Amount (for the avoidance
of doubt, excluding any interest or gains thereon) shall be credited
against the Purchase Price and, accordingly, deducted from the Purchase
Price payable at Closing. The Non-Refundable Deposit Amount shall be
non-refundable other than as expressly set forth in Section 5.19.
SECTION 2.2 CLOSING. The Closing (the "Closing") of the purchase and sale
of the Shares under this Agreement shall take place at the executive offices of
GNLV, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ (or such other location
agreed upon by Purchaser and Seller) at such time to be agreed upon by
Purchaser and Seller on a date to be specified by Purchaser and Seller, which
shall be no later than the second Business Day after satisfaction or, if
permissible, waiver of the conditions set forth in Article VI (the "Closing
Date"), unless a later date is agreed to in writing by Purchaser and Seller.
SECTION 2.3 CLOSING DELIVERIES.
(a) At the Closing, Seller shall deliver or cause to be delivered to
Purchaser:
(i) one or more certificate(s) representing the Shares, duly
endorsed or accompanied by stock powers duly executed in blank and
otherwise in a form reasonably satisfactory to Purchaser for transfer
on the books of PFG (with any requisite Transfer Tax stamps attached
by Seller);
(ii) an executed receipt for the Purchase Price;
(iii) copies of the Articles of Incorporation (in the case of
GNELLC, its Articles of Organization) of each of the Acquired
Entities, certified as of a date within three (3) Business Days of
the Closing Date by the Secretary of State of the State of Nevada;
(iv) a copy, certified by the Secretary of (A) each of the
Seller Parties, of the resolutions of its board of directors
authorizing the execution and delivery of this Agreement and
consummation of the transactions contemplated by this Agreement, and
in each case such resolutions shall be in full force and effect and
not revoked and (B) each of the Acquired Entities, of its Bylaws (in
the case of GNELLC, the GNELLC Operating Agreement);
-15-
(v) a duly executed certificate of the Chairman or President
of each of the Seller Parties pursuant to Section 6.3(c);
(vi) a good standing certificate for each of the Acquired
Entities issued by the Secretary of State of the State of Nevada,
dated as of a date within three (3) Business Days prior to the
Closing Date;
(vii) a bring down good standing certificate, dated as of the
Closing Date, of each of the certificates delivered pursuant to
Section 2.3(a)(vi), or a verbal confirmation or computer print out
from the Secretary of State of the State of Nevada with respect to
such good standing;
(viii) the original stock and corporate minute books (or their
equivalent) of each of the Acquired Entities, except for the GNLV
stock and corporate minute books for the years 1974-1988;
(ix) duly executed resignations effective as of the Closing
Date from such directors, officers and managers of the Acquired
Entities and FSELLC (in the case of any appointees of the Acquired
Entities to the FSELLC Board of Managers) as Purchaser shall have
requested in writing not less than three (3) Business Days prior to
the Closing Date;
(x) duly executed copies of the consents and approvals
obtained by the Seller Parties in accordance with Section 5.8 and
Section 5.17;
(xi) duly executed copies of the documentation obtained by the
Seller Parties in accordance with Section 5.18;
(xii) FIRPTA certificates in form and substance reasonably
satisfactory to Purchaser;
(xiii) a duly executed copy of the agreement attached as Exhibit
B; and
(xiv) all other previously undelivered documents, agreements,
instruments, writings and certificates, and such other documents,
agreements, instruments, writings and certificates as Purchaser may
reasonably request at least two (2) Business Days prior to the
Closing Date to effect the transactions contemplated by this
Agreement, in form and substance reasonably satisfactory to
Purchaser.
(b) At the Closing, Purchaser shall deliver or cause to be delivered
to Seller:
(i) the Purchase Price, minus the Non-Refundable Deposit
Amount, in immediately available funds by wire transfer to an account
designated by Seller in writing to Purchaser with such notice being
provided to Purchaser no less than two (2) Business Days prior to the
Closing Date;
-16-
(ii) an executed receipt for delivery of the Shares;
(iii) a copy, certified by the Secretary of Purchaser, of the
resolutions of its board of directors authorizing the execution and
delivery of this Agreement and consummation of the transactions
contemplated by this Agreement, which resolutions shall be in full
force and effect and not revoked;
(iv) a duly executed certificate of the Chairman or President
of Purchaser pursuant to Section 6.2(c);
(v) a good standing certificate of Purchaser issued by the
Secretary of State of the State of Delaware, dated as of a date
within three (3) Business Days prior to the Closing Date;
(vi) a bring down good standing certificate, dated as of the
Closing Date, of each of the certificates delivered pursuant to
Section 2.3(b)(v), or a verbal confirmation from the Secretary of
State of the State of Delaware on the Closing Date with respect to
such good standing;
(vii) evidence in form and substance reasonably satisfactory to
Seller that Purchaser and its directors, officers, employees,
stockholders and Affiliates have received all necessary Gaming
Licenses and Liquor Licenses required in connection with the
consummation of the transactions contemplated by this Agreement; and
(viii) all other previously undelivered documents, agreements,
instruments, writings and certificates, and such other documents,
agreements, instruments, writings and certificates as Seller may
reasonably request at least two (2) Business Days prior to the
Closing Date to effect the transactions contemplated by this
Agreement, in form and substance reasonably satisfactory to Seller.
SECTION 2.4 ALLOCATION OF PURCHASE PRICE FOR TAX PURPOSES.
(a) Promptly after the Closing, Seller and Purchaser shall use their
reasonable best efforts to agree on an allocation (the "Allocation") of
the consideration paid for the Shares among the assets of PFG for federal
income tax purposes.
(b) If Seller and Purchaser are unable to agree on the Allocation
within sixty (60) days after the Closing, Seller shall provide Purchaser
with a proposed Allocation and Purchaser shall have ten (10) days to
accept such Allocation or provide a written explanation of the reasons for
Purchaser's disagreement with the proposed Allocation (the "Purchaser's
Letter"). Upon Seller's receipt of the Purchaser's Letter, Seller and
Purchaser shall use their reasonable best efforts to resolve the
disagreements regarding the Allocation. If Seller and Purchaser are unable
to resolve their disagreements within thirty (30) days after Seller's
receipt of Purchaser's Letter, then Seller's and Purchaser's obligations
to agree on an Allocation pursuant to this Section 2.4 shall cease and be
of no further force or effect and each Party shall thereafter be entitled
to allocate the consideration among the assets of PFG in the manner each
-17-
deems appropriate using its reasonable business judgment. In the event
that Seller and Purchaser cannot reach agreement on the Allocation, each
of Seller and Purchaser shall promptly provide the other Party with the
allocation it reports to any taxing authority. Seller and Purchaser shall
also use their best efforts, if necessary, to agree upon a revised
Allocation (the "Revised Allocation") reflecting any adjustments to the
consideration for the Shares occurring after the determination of the
Allocation, using the same procedures set forth in this Section 2.4(b) for
determining the Allocation.
(c) To the extent that Seller and Purchaser are able to agree on the
Allocation or the Revised Allocation, as applicable, Seller and Purchaser
shall (i) be bound by such allocation for all relevant Tax purposes, (ii)
prepare and file all Tax Returns in which the acquisition of the Shares is
treated as an asset purchase in a manner consistent with such allocation
and (iii) take no position inconsistent with such allocation in any Tax
Return in which the acquisition of the Shares is treated as an asset
purchase or any related proceeding before any taxing authority. In the
event that the allocation reported to a taxing authority by either party
is disputed by such taxing authority, the party receiving notice of such
dispute shall promptly notify the other party and keep the other party
apprised of material developments concerning resolution of such dispute.
SECTION 2.5 CREDIT AGREEMENT INDEBTEDNESS. Prior to or at the Closing,
Purchaser shall either (i) have obtained the consent of the lenders under the
Credit Agreement such that all amounts thereunder shall remain outstanding at
and following the Closing without any default or acceleration thereunder or
(ii) in the event such consent has not been obtained at or prior to such time,
deliver to the lenders under the Credit Agreement, the Credit Agreement
Repayment Amount in immediately available funds by wire transfer to an account
or accounts designated by such lenders.
SECTION 2.6 WORKING CAPITAL LIABILITY AMOUNT. In consideration of the
purchase and sale of the Shares, at the Closing, Purchaser shall pay to Seller
the Working Capital Liabilities Amount as calculated pursuant to Exhibit 2.6.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES
----------------------------------------------------
The Seller Parties, jointly and severally, represent and warrant to
Purchaser that the statements contained in this Article III are true and
correct, except as set forth (i) herein, (ii) in the PFG SEC Reports filed
with, or submitted to, the SEC by PFG prior to the date of this Agreement or
(iii) in the disclosure schedule delivered by the Seller Parties to Purchaser
concurrent with the execution and delivery of this Agreement (the "Disclosure
Schedule").
SECTION 3.1 ORGANIZATION AND QUALIFICATION.
(a) Seller and each of the Acquired Entities is duly organized,
validly existing and in good standing under the laws of the State of
Nevada and has all requisite corporate or limited liability power and
authority, as the case may be, to carry on its business as now being
-18-
conducted. There are no other jurisdictions where the character of the
property owned, leased or operated by the Acquired Entities or the nature
of the business conducted by the Acquired Entities makes qualification or
licensing to do business necessary, except for such jurisdictions where
the failure to so qualify or be licensed would not reasonably be expected
to have a Material Adverse Effect.
(b) Seller has made available to Purchaser a complete, accurate and
current copy of the Articles of Incorporation and Bylaws or comparable
charter and organizational documents of the Acquired Entities, in each
case as amended to the date of this Agreement. The stock transfer books
and minute books or similar records of the Acquired Entities, which have
heretofore been made available by the Seller Parties to Purchaser, are
complete, accurate and current. To the Knowledge of any of the Seller
Parties, no matter was disclosed in the minute books of GNLV for the years
1974-1988 that would reasonably be expected to have a Material Adverse
Effect.
SECTION 3.2 CAPITALIZATION.
(a) The authorized capital stock of PFG consists solely of 10,000
shares of common stock, no par value per share (the "PFG Common Stock"),
of which 100 shares of PFG Common Stock are, as of the date of this
Agreement, issued and outstanding, all of which are owned of record and
beneficially by Seller and are free and clear of all Encumbrances,
excepting only restrictions on the subsequent transfer as may be imposed
under applicable Laws. As of immediately prior to Closing, Seller owns of
record and beneficially all of the issued and outstanding shares of PFG
Common Stock free and clear of all Encumbrances, excepting only
restrictions on the subsequent transfer as may be imposed under applicable
Laws. All of the issued and outstanding shares of PFG Common Stock have
been duly authorized, validly issued and fully paid, are nonassessable,
are not subject to any preemptive or other similar rights and have not
been issued in violation of any applicable Laws, the PFG Articles of
Incorporation, the PFG Bylaws or the terms of any Contract to which any of
the Seller Parties is a party or bound. Except as required under the
Gaming Laws, there are no obligations, contingent or otherwise, to
repurchase, redeem (or establish a sinking fund with respect to
redemption) or otherwise acquire any shares of PFG Common Stock. There are
no bonds, debentures, notes or other indebtedness of PFG having voting
rights (or convertible into securities having voting rights). There are no
shares or other equity interests or securities of PFG reserved for
issuance or any outstanding subscriptions, options, warrants, rights,
"phantom" stock rights, convertible or exchangeable securities, stock
appreciation rights, or other Contracts (other than this Agreement)
granting to any Person any interest in or right to acquire at any time, or
upon the happening of any stated event, any shares of PFG Common Stock or
other equity interests or securities of PFG, or any interest in,
exchangeable for, or convertible into, shares of PFG Common Stock or other
equity interests or securities of PFG.
(b) The authorized capital stock of GNLV consists solely of 1,000,000
shares of common stock, par value $1.00 per share (the "GNLV Common
Stock"), of which 25,000 shares of GNLV Common Stock are issued and
outstanding (the "GNLV Shares"), all of which are owned of record and
beneficially by PFG and are free and clear of all Encumbrances, except
-19-
those Encumbrances set forth in Section 3.2(b) of the Disclosure Schedule
and those restrictions on the subsequent transfer as may be imposed under
applicable Laws. All of the issued and outstanding shares of GNLV Common
Stock have been duly authorized, validly issued and fully paid, are
nonassessable, are not subject to any preemptive or other similar rights
and have not been issued in violation of any applicable Laws, the GNLV
Articles of Incorporation, the GNLV Bylaws or the terms of any Contract to
which any of the Seller Parties is a party or bound. Except as required
under the Gaming Laws, there are no obligations, contingent or otherwise,
to repurchase, redeem (or establish a sinking fund with respect to
redemption) or otherwise acquire any shares of GNLV Common Stock. There
are no bonds, debentures, notes or other indebtedness of GNLV having
voting rights (or convertible into securities having voting rights). There
are no shares or other equity interests or securities of GNLV reserved for
issuance or any outstanding subscriptions, options, warrants, rights,
"phantom" stock rights, convertible or exchangeable securities, stock
appreciation rights, or other Contracts (other than this Agreement)
granting to any Person any interest in or right to acquire at any time, or
upon the happening of any stated event, any shares of GNLV Common Stock or
other equity interests or securities of GNLV, or any interest in,
exchangeable for, or convertible into, shares of GNLV Common Stock or
other equity interests or securities of GNLV.
(c) The authorized capital of GNELLC consists solely of member's
interests, of which 100% are issued and outstanding, all of which are
owned of record and beneficially by GNLV and are free and clear of all
Encumbrances, except those Encumbrances set forth in Section 3.2(c) of the
Disclosure Schedule and those restrictions on the subsequent transfer as
may be imposed under applicable Laws. The GNELLC Interest has been duly
authorized and validly issued, is not subject to any preemptive or similar
rights and has not been issued in violation of any applicable Laws, the
GNELLC Articles of Organization, the GNELLC Operating Agreement or the
terms of any Contract to which any of the Seller Parties is a party or
bound. Except as required under the Gaming Laws, there are no obligations,
contingent or otherwise, to repurchase, redeem (or establish a sinking
fund with respect to redemption) or otherwise acquire the GNELLC Interest.
There are no bonds, debentures, notes or other indebtedness of GNELLC
having rights (or convertible into securities having voting rights). There
are no equity interests or other securities of GNELLC reserved for
issuance or any outstanding subscriptions, options, warrants, rights,
convertible or exchangeable securities or other Contracts (other than this
Agreement) granting to any Person any interest in or right to acquire at
any time, or upon the happening of any stated event, any equity interests
or other equity securities of GNELLC, or any interest in, exchangeable for
or convertible into, equity interests or other equity securities of
GNELLC.
(d) As of the date of this Agreement, the authorized capital of
FSELLC consists solely of 1,600 voting units and 360 non-voting units, of
which 1,600 voting units and 360 non-voting units are issued and
outstanding, of which 300 voting units and 180 non-voting units are owned
of record and beneficially by GNELLC and are free and clear of all
Encumbrances, except those Encumbrances set forth in Section 3.2(d) of the
Disclosure Schedule and those restrictions on the subsequent transfer as
may be imposed under applicable Laws. The FSELLC Interest has been duly
authorized and validly issued, and has not been issued in violation of any
-20-
applicable Laws, the FSELLC Articles of Organization, the FSELLC Operating
Agreement or the terms of any Contract to which any of the Seller Parties
is a party or bound. As of the date of this Agreement, Section 3.2(d) of
the Disclosure Schedule sets forth, to the Knowledge of any of the Seller
Parties, the managers of FSELLC and the members of FSELLC, together with
their ownership of voting and non-voting units of FSELLC. As of the date
of this Agreement, Section 3.2(d) of the Disclosure Schedule sets forth
the date and amount and number of voting or non-voting units received for
each capital contribution made by Golden Nugget Experience Corp. (the
predecessor of GNELLC) and GNELLC in respect of its purchase of the FSELLC
Interest. As of the date of this Agreement, Section 3.2(d) of the
Disclosure Schedule sets forth a schedule of all loans and advances to,
guarantees made on behalf of, letters of credit issued on behalf of and
any other credit enhancement arrangements made by or on behalf of FSELLC
by GNLV and/or GNELLC (the "FSELLC Loans"), and also contains the material
terms, including, principal amount, maturity date and repayment schedule
of such loans and advances. Seller has made available to Purchaser
complete, accurate and current copies of the FSELLC Loans. To the
Knowledge of any of the Seller Parties, the FSELLC Loans are valid and
binding obligations of FSELLC, except as such enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar Laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity (regardless of whether enforcement is considered in a proceeding at
Law or in equity) and there has been no breach or default or claim of
default and, to the Knowledge of any of the Seller Parties, no event has
occurred which, with or without notice, the passage of time, or both,
would constitute a default by FSELLC. Except as set forth in Section 8.4
(Budget) of the FSELLC Operating Agreement or as required by applicable
Law, GNELLC is not obligated to make any additional capital contributions
in FSELLC. No member of FSELLC is obligated to make loans to FSELLC.
Except for the FSELLC Operating Agreement, GNELLC has not entered into or
consummated any Contract for the purchase or sale of voting and/or
non-voting units of FSELLC or with respect to the voting of the FSELLC
Interest.
(e) Except for its ownership of the GNELLC Interest and the FSELLC
Interest, GNLV does not own directly or indirectly, of record or
beneficially, or have the right to acquire under any Contract, any capital
stock or equity interests or any securities convertible, exchangeable,
redeemable or exercisable into capital stock or equity interests of any
other Person. Except for its ownership of the FSELLC Interest, GNELLC does
not own directly or indirectly, of record or beneficially, or except, with
respect to voting and non-voting units of FSELLC pursuant to Section
4.1(c) (Preemptive Rights) and Section 8.4 (Budget) of the FSELLC
Operating Agreement, have the right to acquire under any Contract, any
capital stock or equity interests or any securities convertible,
exchangeable, redeemable or exercisable into capital stock or equity
interests in any other Person.
SECTION 3.3 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Each of the Seller Parties has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
that are contemplated by this Agreement and to perform its obligations
-21-
hereunder. The execution and delivery of this Agreement by the Seller
Parties and the performance by the Seller Parties of the transactions that
are contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of the Seller Parties,
respectively. This Agreement has been duly executed and delivered by each
of the Seller Parties and, assuming this Agreement constitutes the valid
and binding obligation of Purchaser and LNY, constitutes the valid and
binding obligation of each of the Seller Parties, enforceable against each
of the Seller Parties in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar Laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity (regardless of whether enforcement is
considered in a proceeding at Law or in equity).
(b) The execution and delivery of this Agreement by each of the
Seller Parties does not, and the performance and consummation by each of
the Seller Parties of the transactions to which it is a party that are
contemplated by this Agreement will not, (i) conflict with, or result in
any violation or breach of, any provision of the Articles of Incorporation
or Bylaws of the Seller Parties, (ii) conflict with, result in a breach
of, constitute a default (or an event which with the giving of notice or
lapse of time, or both, would become a default) under, require any notice,
consent, approval or waiver under, or give to others any rights of
termination, acceleration, suspension, revocation or cancellation of, or
result in the creation or continuance of any Encumbrance on the Shares or
any of the assets or properties of the Acquired Entities pursuant to, any
Contract, permit or obligation to which any of the Seller Parties is a
party or by which any of the Seller Parties or any of their respective
assets or properties is bound or (iii) conflict with or violate any Law or
Governmental Order applicable to any of the Seller Parties or the Shares
or any of the assets or properties of the Acquired Entities, other than,
in the case of clauses (ii) and (iii) above, for such conflicts, breaches
or violations that would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect.
(c) Except for (i) the filing of notification reports under the HSR
Act, (ii) any Governmental Approvals related to, or arising out of,
compliance with (x) Gaming Laws and (y) Gaming Licenses, (iii) any
Governmental Approvals related to, or arising out of, compliance with
Liquor Licenses, (iv) any Governmental Approvals as may be required under
applicable state securities Laws, (v) any Governmental Approvals as may be
required under any environmental health or safety Laws pertaining to any
notification, disclosure or required approval triggered by the Closing or
the transactions contemplated by this Agreement and (vi) the satisfaction
or waiver of the closing conditions in Section 6.1 and Section 6.2 and the
closing deliveries in Section 2.3(a), no Governmental Approval, or
consent, approval, authorization or action by, notice to, filing with, or
waiver from, any other Person is required in connection with the
execution, delivery and performance of this Agreement by the Seller
Parties and consummation by the Seller Parties of the transactions
contemplated by this Agreement.
SECTION 3.4 PFG FINANCIAL STATEMENTS. All of the financial statements
included in the PFG SEC Reports, in each case, including any related notes
thereto, as filed with the SEC (collectively, the "PFG Financial Statements"),
-22-
have been prepared in accordance with GAAP (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as may be permitted by
Form 10-Q of the SEC and subject, in the case of such unaudited statements, to
normal, recurring adjustments that would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect) and fairly present
the consolidated financial position of PFG and its Subsidiaries at the
respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated. For periods after November 8, 2004, PFG
will reflect the GNL assets as held for sale in the PFG Financial Statements
and will report financial results of GNL as a component of discontinued
operations.
SECTION 3.5 NO UNDISCLOSED LIABILITIES. There are no liabilities of the
Acquired Entities of any kind whatsoever, whether or not accrued and whether or
not contingent or absolute, that would be required to be reflected or reserved
against on a consolidated balance sheet of PFG and its Subsidiaries or in the
notes thereto prepared in accordance with GAAP, except for liabilities (a)
disclosed or provided for in the consolidated balance sheet of PFG and its
Subsidiaries at December 31, 2004, including the notes thereto, (b) incurred in
the Ordinary Course of Business since December 31, 2004, (c) incurred by or on
behalf of PFG or any of the Acquired Entities in connection with this Agreement
and the transactions contemplated by this Agreement or (d) that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
SECTION 3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 2004,
except as contemplated by this Agreement, the business and operations of each
of the Acquired Entities have been conducted only in the Ordinary Course of
Business and, since such date, there has not been (a) any Material Adverse
Effect and (b) any action which, if taken after the date of this Agreement,
would constitute a breach of the covenants set forth in Section 5.1 (excluding
any requirement set forth in Section 5.1 to give notice as to any action
occurring prior to the date of this Agreement).
SECTION 3.7 TAXES.
(a) Seller and each of the Acquired Entities (i) has timely filed
(taking into account all valid extensions of time for filing) with the
appropriate taxing authorities all material Tax Returns required to be
filed through the date hereof and (ii) will timely file any such returns
required to be filed (taking into account all valid extensions of time for
filing) on or prior to the Closing Date. Such Tax Returns are (and, to the
extent they will be filed prior to the Closing, will be) complete and
accurate in all material respects. None of the Acquired Entities or Seller
has pending any request for an extension of time within which to file Tax
Returns.
(b) Seller and each of the Acquired Entities has timely paid or will
timely pay all material Taxes in respect of periods or portions thereof
beginning prior to and ending on or prior to the Closing Date, or has or
will provide an adequate reserve therefore on its or the Seller's
financial statements.
(c) None of Seller or any of the Acquired Entities has received
written notice of any current or pending (i) federal, state, local or
foreign audits or (ii) other administrative proceedings or court
-23-
proceedings with respect to Seller or any of the Acquired Entities. There
are no outstanding waivers extending the statutory period of limitation
relating to the payment of Taxes due with respect to Seller or any of the
Acquired Entities.
(d) Neither the IRS nor any other taxing authority (whether domestic
or foreign) has asserted, in writing, against any of the Acquired Entities
any material deficiency or material claim for Taxes.
(e) There are no Encumbrances for Taxes upon any property or assets
of the Acquired Entities, except for Encumbrances for Taxes not yet due
and payable and as to which adequate reserves have been established on the
financial statements of Seller or the Acquired Entities.
(f) None of the Acquired Entities has any obligation under any Tax
sharing agreement or similar arrangement with any other Person with
respect to Taxes of such other Person.
(g) Neither Seller nor any of the Acquired Entities has, with regard
to any assets or property held or acquired by the Acquired Entities, filed
a consent to the application of Section 341(f) of the Code, or agreed to
have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the
Code) owned by any of the Acquired Entities.
(h) None of the Acquired Entities has received a written ruling from
any taxing authority. No closing agreement pursuant to Section 7121 of the
Code (or similar provision of state, local or foreign Law) has been
entered into by or with respect to the Acquired Entities.
(i) None of the Acquired Entities has agreed to or is required to
make any adjustment under Section 481(a) of the Code (or any similar
provision of state, local or foreign Law) by reason of a change in
accounting method or otherwise for any taxable period for which the
applicable statute of limitations has not yet expired.
(j) No jurisdiction where any of the Acquired Entities does not pay
Taxes or file a Tax Return has made a written claim that any of such
entities is required to pay Taxes or file a Tax Return in such
jurisdiction.
(k) Seller (i) has at all times since January 23, 2004 been a "small
business corporation" within the meaning of Section 1361(b) of the Code
("S Corporation") and any corresponding provision of applicable state and
local income tax law, (ii) has had in effect at all times during its
existence a valid election under Section 1362(a) of the Code and (iii)
will be treated as an S Corporation at all times from the date hereof
through the Closing Date. Each of PFG and GNLV has at all times since
January 24, 2004 been a qualified subchapter S subsidiary under Section
1361(b)(3)(B) of the Code and any corresponding provision of applicable
state and local income tax law and will be treated as a qualified
-24-
subchapter S subsidiary for federal income tax purposes at all times from
the date hereof through the Closing Date. GNELLC has been a disregarded
entity for federal income tax purposes and any corresponding provision of
applicable state and local income tax law at all times during its
existence and will be treated as a disregarded entity for federal income
tax purposes at all times from the date hereof through the Closing Date.
FSELLC has been a partnership for federal income tax purposes and any
corresponding provision of applicable state and local income tax law at
all times during its existence and will be treated as a partnership for
federal income tax purposes at all times from the date hereof through the
Closing Date. To the Knowledge of the Seller Parties, the transactions
contemplated under this Agreement will not cause a partnership termination
under Section 708 of the Code with regard to FSELLC.
(l) Except as set forth on Schedule 3.7(l), neither the Seller nor
any Acquired Entity has been a member of an "affiliated group" (within the
meaning of Section 1504 of the Code) filing a consolidated federal income
Tax Return or a member of any other group of entities with which the
Seller or any Acquired Entity filed or was required to file Tax Returns on
a consolidated, combined, unitary or similar basis (other than by reason
of being a disregarded entity for income Tax purposes).
SECTION 3.8 REAL PROPERTY.
(a) Section 3.8(a) of the Disclosure Schedule sets forth a complete,
accurate and current list, including the address or other description, and
the identity of the holder of title, of all real property owned by the
Acquired Entities (including all land, and all interests in buildings,
structures, improvements and fixtures located thereon and all easements
and other rights and interests appurtenant thereto, the "Owned Real
Property"), and Section 3.8(a) of the Disclosure Schedule sets forth a
complete, accurate and current list of all real property leased or
operated by the Acquired Entities, including the date of each Lease, the
expiration date of such Lease, the term of such Lease, the parties to such
Lease, all renewal rights and options to purchase and a description of the
demised premises thereunder (including all leasehold, subleasehold, ground
leasehold, or other rights to use or occupy any land, buildings,
structures, improvements, fixtures, or other interest in real property
used in connection with any of the Acquired Entities and the operation of
its business) (collectively, the "Leased Real Property" and together with
the Owned Real Property shall be referred to herein collectively as the
"Real Property"). Each of the Acquired Entities is in lawful possession of
all of the Real Property, subject only to Permitted Exceptions.
(b) With respect to each parcel of the Owned Real Property: (i) an
Acquired Entity has good and marketable indefeasible fee simple title to
the Owned Real Property, free and clear of all Encumbrances, except for
the Permitted Exceptions.; (ii) except for the Permitted Exceptions, an
Acquired Entity has neither leased nor otherwise granted to any Person the
right to use or occupy the Owned Real Property or any portion thereof
except for licensing of hotel rooms in the Ordinary Course of Business;
(iii) there are no outstanding options, rights of first offer, rights of
reverter, or rights of first refusal to purchase the Owned Real Property
or any portion thereof or interest therein and (iv) none of the Acquired
Entities is a party to any Contract to purchase any real property or
interest therein.
-25-
(c) Section 3.8(c) of the Disclosure Schedule sets forth a complete,
accurate and current schedule of all Leases pursuant to which the Leased
Real Property is leased or operated, each of those has been made available
by the Seller Parties to Purchaser, and there are no other material
Contracts between or among the Seller Parties and their respective
Subsidiaries or Affiliates, with respect to the Leased Real Property or
otherwise relating to the use and occupancy of the Real Property other
than the Permitted Exceptions. With respect to each Lease, (i) each
Acquired Entity named therein is not in default thereunder and to the
Knowledge of the Seller Parties the landlord thereunder is not in default
thereunder, (ii) no defaults (whether or not subsequently cured) are
currently alleged thereunder, by or against either party, and no event has
occurred or failed to occur or circumstance exists which, with the
delivery of notice, the passage of time or both, would constitute such a
breach or default, or permit the termination, modification or acceleration
of rent under such Lease, (iii) such Lease is a valid and binding
obligation upon the applicable Acquired Entity and to the Knowledge of the
Seller Parties is a valid and binding obligation of each other party
thereto, and is in full force and effect and enforceable by the applicable
Acquired Entity in accordance with its terms, except as such
enforceability may be limited by (x) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar Laws now or
hereafter in effect relating to creditors' rights generally and (y)
general principles of equity (regardless of whether enforcement is
considered in a proceeding at Law or in equity), (iv) none of the Acquired
Entities owes any brokerage commissions or finder's fees with respect to
such Lease, (v) the landlord thereunder is not an Affiliate of any of the
Acquired Entities, (vi) except for the Tenant Leases and the Permitted
Exceptions, the interest of tenant thereunder has not been subleased,
licensed, or assigned, and no Person has otherwise been granted the right
to use or occupy the Leased Real Property or any portion thereof, (vii)
other than the Permitted Exceptions, the interest of the Acquired Entities
thereunder has not been collaterally assigned nor has any other security
interest in such Lease or any interest therein been granted and (viii)
there are no Encumbrances, Contracts, defects, claims or exceptions on or
affecting the estate or interest created thereby or pursuant thereto,
except the Permitted Exceptions.
(d) A complete, accurate and current rent roll for the Tenant Leases
(the "Rent Roll") is set forth in Section 3.8(d) of the Disclosure
Schedule. There are no Tenant Leases with respect to the Real Property
other than the Tenant Leases which are set forth on the Rent Roll. Except
as set forth in the Rent Roll, (i) to the Knowledge of the Seller Parties,
as of the date of this Agreement, each Tenant Lease is in full force and
effect; (ii) the tenants have accepted possession of, and are in occupancy
of, all of their respective demised premises and have commenced the
payment of rent under the Tenant Leases to the extent set forth on the
Rent Roll, and to the Knowledge of the Seller Parties there are no
offsets, claims or defenses to the enforcement thereof presently
outstanding; (iii) all rents due and payable under the Tenant Leases have
been paid and no portion of any rent has been paid for any period more
than thirty (30) days in advance; (iv) the rent payable under each Tenant
Lease is the amount of rent set forth in the Rent Roll, and to the
Knowledge of the Seller Parties there is no claim or basis for a claim by
the tenant thereunder for an adjustment to such rent; (v) no tenant or
other party in possession of any of the Real Property subject to the
Tenant Leases has any right to purchase, or holds any right of first
refusal to purchase, such properties; (vi) no Tenant Lease letter of
credit has been delivered as a security deposit, or in lieu of cash
-26-
security deposit, under any Tenant Lease; (vii) there is no tenant
improvement work remaining to be done under any Tenant Lease and (viii)
there are no remaining rent concessions, tenant allowances or abatements
with respect to any Tenant Lease. All security deposits under the Tenant
Leases are as set forth on the Rent Roll and each of the Acquired Entities
is in material compliance with all Laws with respect to all security
deposits. The Rent Roll sets forth the scheduled expiration date of each
Tenant Lease and any arrearages in the payment of rent thereunder as of
the date of the Rent Roll. Each Tenant Lease is enforceable in accordance
with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or other similar Laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity (regardless of
whether enforcement is considered in a proceeding at Law or in equity).
The Seller Parties have made available to Purchaser complete, accurate and
current copies of each Tenant Lease. None of the Acquired Entities owes or
will owe any brokerage commissions in respect of the Tenant Leases.
(e) All buildings, structures, fixtures, building systems and
equipment included in the Real Property (the "Improvements") are in good
condition and repair in all material respects, subject to reasonable wear
and tear, and there are no facts or conditions affecting any of the
Improvements that would adversely interfere with the use or occupancy of
the Improvements or any portion thereof in the operation of the business
presently conducted thereon.
(f) None of the Acquired Entities has received notice of, nor do any
of the Seller Parties have any Knowledge of, any currently proposed or
pending assessment for public improvements or otherwise.
(g) The present use of the Improvements is, and the Improvements
themselves are, in substantial conformity with or is excused from
conformity with all applicable Laws, and none of the Acquired Entities has
received any written notice of, nor do any of the Seller Parties have any
Knowledge of, violation thereof. The Seller Parties have not received
written notice of, or to the Knowledge of any of the Seller Parties any
assertion of, violation of any Improvements of any zoning ordinance.
(h) All requisite certificates of occupancy required with respect to
the Improvements on any of the Real Property have been obtained and are
currently in full force and effect.
(i) The Seller Parties have made available to Purchaser complete,
accurate and current copies of all deeds, mortgages, surveys, licenses,
title insurance policies, certificates of occupancy, or equivalent
documentation with respect to the Real Property and other documents
relating to or affecting the title to the Owned Real Property or leasehold
interests in the Leased Real Property in the Seller Parties' possession.
(j) None of the Acquired Entities has received written notice of, nor
do any of the Seller Parties have any Knowledge of, any action, proceeding
or litigation pending, overtly contemplated or threatened: (i) to take all
or any material portion of the Real Property, or any interest therein, by
-27-
eminent domain; (ii) to modify the zoning of, or other governmental rules
or restrictions applicable to, the Real Property or the use or development
thereof; (iii) for any street widening or changes in highway or traffic
lanes or patterns in the immediate vicinity of the Real Property; or (iv)
otherwise relating to the Real Property or the interests of any of the
Acquired Entities therein.
(k) The parcels constituting the Owned Real Property are assessed
separately from all other adjacent property not constituting Owned Real
Property for purposes of real property Taxes and the Leased Real Property
and each of the parcels of the Owned Real Property complies with all
applicable subdivision, land parcelization and local governmental taxation
or separate assessment requirements, without reliance on property not
constituting Real Property.
(l) Except as contemplated by this Agreement, there are no Contracts
or other obligations outstanding for the sale, exchange, Encumbrance or
transfer of any of the Real Property, or any portion of it.
SECTION 3.9 TANGIBLE PERSONAL PROPERTY. As of the date of this Agreement,
Section 3.9 of the Disclosure Schedule sets forth each item of Tangible
Personal Property (other than inventory and supplies) owned by the Acquired
Entities having an initial purchase price in excess of $50,000 (including
subsequent installment payments). As of the date of this Agreement, Section 3.9
of the Disclosure Schedule sets forth each item of Tangible Personal Property
leased by any of the Acquired Entities (other than pursuant to individual
leases having an annual rental of less than $50,000 or that are terminable by
any of the Acquired Entities at or prior to the Closing without material
Liability to the Acquired Entities). As of the date of this Agreement, Section
3.9 of the Disclosure Schedule sets forth an inventory of all gold nuggets on
display at GNLV. Such gold nuggets are either owned by GNLV free and clear of
all Encumbrances or leased by GNLV or one of its Affiliates. As of the date of
this Agreement, Section 3.9 of the Disclosure Schedule lists each live game
(including gaming tables), electronic gaming devices (including all slot
machines), and other gaming-related equipment owned, leased or otherwise used
by the Acquired Entities. The Tangible Personal Property owned by the Acquired
Entities is free and clear of all Encumbrances. The Tangible Personal Property
owned by the Acquired Entities is located at the Real Property. The Tangible
Personal Property owned or leased by the Acquired Entities is in working order,
subject to ordinary wear and tear, or, if not, such failure would not
reasonably be expected to have a Material Adverse Effect. The Tangible Personal
Property owned by the Acquired Entities has been maintained in all material
respects in accordance with past practice of the Acquired Entities.
SECTION 3.10 INTELLECTUAL PROPERTY.
(a) Section 3.10(a) of the Disclosure Schedule sets forth, for all of
the following included in Acquired Entities Owned Intellectual Property, a
complete list of all United States, foreign, international and state: (i)
Patents and Patent applications; (ii) Trademark registrations,
applications and material unregistered Trademarks; (iii) Domain Names;
(iv) Copyright registrations, applications and material unregistered
Copyrights; (v) Trademarks for which registration efforts will not be
pursued or will not be renewed due to discontinued use and (vi) Domain
-28-
Names that will not be maintained or have been discontinued and allowed to
reenter the Domain Name market.
(b) Section 3.10(b) of the Disclosure Schedule sets forth a complete
list of all material IP Agreements and material IP Enforcement Documents.
(c) There is no pending or, to the Knowledge of any of the Seller
Parties, threatened IP Claim against the Acquired Entities, GNL, or their
predecessors in interest involving Acquired Entities Owned Intellectual
Property or Used Intellectual Property, (i) alleging Infringement of
Intellectual Property rights of any Person, (ii) alleging that such
Intellectual Property is defamatory, obscene or otherwise in violation of
applicable Law or (iii) challenging the Acquired Entities' or GNL's
ownership or Use of, or the validity, enforceability or registrability of
any such Intellectual Property, and there is no reasonable basis for an IP
Claim against the Acquired Entities, GNL, or their predecessors in
interest regarding any of the foregoing except as such IP Claim would not
reasonably be expected to have a Material Adverse Effect.
(d) None of the Acquired Entities has brought or threatened an IP
Claim against any Person, which IP Claim remains unresolved, (i) alleging
Infringement of Acquired Entities Owned Intellectual Property or Used
Intellectual Property or (ii) challenging any Person's ownership or Use
of, or the validity, enforceability or registrability of any Intellectual
Property based upon the Acquired Entities' rights in the Acquired Entities
Owned Intellectual Property or Used Intellectual Property, and to the
Knowledge of any of the Seller Parties there is no reasonable basis for an
IP Claim regarding any of the foregoing.
(e) At Closing, the Acquired Entities will own all Acquired Entities
Owned Intellectual Property, free and clear of all Encumbrances, and have
the valid and enforceable right to use all Used Intellectual Property.
(f) Except for Trademarks for which registration efforts will not be
pursued or will not be renewed due to discontinued use and Domain Names
that will not be maintained or have been discontinued and allowed to
reenter the Domain Name market, all of which are set forth in Section
3.10(a) of the Disclosure Schedule, each of the registrations of and
applications for Acquired Entities Owned Intellectual Property and, to the
Knowledge of any of the Seller Parties, the Used Intellectual Property has
been duly maintained, is subsisting, in full force and effect, has not
been cancelled, expired or abandoned, and is valid and enforceable in
accordance with their respective terms, except as such enforceability be
limited by (i) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity (regardless of whether enforcement is considered at Law or equity).
(g) There exists no event or condition (including the consummation of
the transactions contemplated by this Agreement) that will result in a
violation or breach of, or constitute (with the giving of notice or lapse
of time, or both, would become) a default under any IP Agreement or IP
Enforcement Document by the Acquired Entities, or to the Knowledge of any
-29-
of the Seller Parties any other party thereto, except those which would
not reasonably be expected to have a Material Adverse Effect.
(h) Each of the Acquired Entities takes reasonable measures to
protect the confidentiality of its Trade Secrets. No Trade Secret of the
Acquired Entities has been disclosed or authorized to be disclosed to any
Third Party other than pursuant to a written non-disclosure agreement that
adequately protects its proprietary interests in and to such Trade
Secrets, except where such disclosure would not reasonably be expected to
have a Material Adverse Effect.
(i) Neither this Agreement nor the transactions contemplated by this
Agreement will result in (i) any Person being granted rights or access to,
or the placement in or release from escrow of, any Acquired Entities Owned
Intellectual Property, (ii) the granting to any Person of rights to
Acquired Entities Owned Intellectual Property greater than the rights
granted prior to the date of this Agreement, (iii) any of the Acquired
Entities being bound by, or subject to, any non-compete or other
restriction on the operation or scope of its business greater than the
restrictions to which the Acquired Entities are bound or subject to prior
to the date of this Agreement or (iv) any of the Acquired Entities being
obligated to pay any royalties or other amounts to any Person in excess of
the amounts payable by the Acquired Entities prior to the date of this
Agreement, except in each case where such result would not reasonably be
expected to have a Material Adverse Effect.
(j) None of Seller or its Affiliates or any of their current or
former stockholders, partners, members, directors, officers or employees
has or will have, after giving effect to the transactions contemplated by
this Agreement, any legal or equitable right, title, or interest in or to,
or any right to Use, directly or indirectly, in whole or in part, any
Acquired Entities Owned Intellectual Property, other than "fair use"
rights under applicable Law.
(k) Each of the Acquired Entities discloses its personal data
collection and use on its Web site(s) and is and has been in compliance in
all material respects with such posted data protection practices and all
applicable Laws.
SECTION 3.11 CONTRACTS.
(a) As of the date of this Agreement, Section 3.11(a) of the
Disclosure Schedule sets forth a complete, accurate and current list of
any Contract providing for aggregate payments to or by any of the Acquired
Entities in excess of $100,000 (i) during the period from January 23, 2004
to December 31, 2004 or (ii) in the twelve (12) month period from January
1, 2005 to December 31, 2005 in the case of GNLV and $25,000 (i) during
the Period from January 23, 2004 to December 31, 2004 or (ii) in the
twelve (12) month period from January 1, 2005 to December 31, 2005 in the
case of GNELLC, and any other Contract that is necessary to operate their
respective businesses as conducted prior to the Closing (collectively, the
"Material Contracts"). Each Material Contract is a valid and binding
obligation upon the applicable Acquired Entity and, to the Knowledge of
-30-
any of the applicable Acquired Entity, is a valid and binding obligation
of each other party thereto, and is in full force and effect and,
enforceable by the applicable Acquired Entity in accordance with its
terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar
Laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity (regardless of whether enforcement
is considered in a proceeding at Law or in equity). Each of the Acquired
Entities has performed all material obligations required to be performed
by it under each Material Contract to which it is a party, and there has
been no material breach or default or claim of default by it or, to its
Knowledge by any other party thereto, under any provision thereof and no
event has occurred which, with or without notice, the passage of time or
both, would constitute a breach or default by it, or, to its Knowledge any
other party thereto, under any provision thereof or that would permit
modification, acceleration or termination of any Material Contract by any
other party thereto or by it, except where such failure to perform,
breach, default, claim of default, modification, acceleration or
termination would not reasonably be expected to have a Material Adverse
Effect. Complete, accurate and current copies of each of the Contracts set
forth in Section 3.11(a) of the Disclosure Schedule have been made
available by the Seller Parties to Purchaser.
(b) None of the Acquired Entities is a party to or bound by: (i) any
Material Contract with agents, consultants, advisors, salesmen, sales
representatives, distributors, suppliers or dealers that is not cancelable
by the Acquired Entities as applicable, at will, without Liability; (ii)
any Material Contract providing for the payment of any bonus or commission
based on sales or earnings; (iii) any Contract for the purchase or sale of
any security, except as contemplated by this Agreement, the GNL Stock
Purchase Agreement or the FSELLC Operating Agreement; (iv) any Contract
for Indebtedness; (v) any Contract relating to the granting of express
product or service warranties by any of the Acquired Entities; (vi) any
Contract containing a covenant not to compete by any of the Acquired
Entities; (vii) any Contract granting an Encumbrance on the Shares, the
GNLV Shares, the GNELLC Interest, the FSELLC Interest or any of the assets
or properties of the Acquired Entities; (viii) any Material Contract
providing for exclusive purchases by or from any of the Acquired Entities
or containing a requirement purchase obligation; (ix) any Contract with a
Governmental Entity other than licenses and permits used in the Ordinary
Course of Business of any of the Acquired Entities; (x) any Material
Contract permitting or requiring any of the Acquired Entities to provide
insurance or indemnification or advance expenses to any Person or (xi) any
Contract for the sale of any of the assets, properties or rights of any of
the Acquired Entities outside of the Ordinary Course of Business, except
as contemplated by this Agreement or the GNL Stock Purchase Agreement.
(c) Other than the transactions contemplated by this Agreement, set
forth in Section 3.11(c) of the Disclosure Schedule are all Contracts
between or among the Acquired Entities, on the one hand, and Seller or its
Affiliates (other than the Acquired Entities), on the other hand (the
"Affiliate Contracts"). Complete, accurate and current copies of each of
the Contracts set forth in Section 3.11(c) of the Disclosure Schedule have
been made available to Purchaser by the Seller Parties.
-31-
(d) No material purchase commitment of the Acquired Entities, or by
which any of them is bound, is materially in excess of the normal,
ordinary and usual requirements of its business or, to the Knowledge of
any of the Seller Parties, was at a price substantially above market at
the time it was made.
(e) None of the Acquired Entities has given any power of attorney
(whether revocable or irrevocable) to any Person that is or may hereafter
be in force for any purpose whatsoever.
SECTION 3.12 LITIGATION. As of the date of this Agreement, (a) there is no
action, suit or proceeding, claim, arbitration or investigation, including
indemnification matters, against any of the Acquired Entities or any property
or asset of the Acquired Entities, pending, or as to which any of the Acquired
Entities has received notice of assertion, or to the Knowledge of any of the
Seller Parties, threatened against, any of the Acquired Entities or any
property or asset of the Acquired Entities, before any Governmental Entity or
arbitration body, the adverse determination of which would individually or in
the aggregate reasonably be expected to have a Material Adverse Effect, (b)
there is no Governmental Order or arbitration award outstanding against any of
the Acquired Entities or any property or asset of the Acquired Entities which
would reasonably be expected to have a Material Adverse Effect or which could
reasonably be expected to adversely affect in a material manner the ability of
Purchaser to consummate the acquisition of the Shares and (c) there is no
action, suit or proceeding, claim, arbitration or investigation, including
indemnification matters, by any of the Acquired Entities, pending, or as to
which any of the Acquired Entities has sent any written notice of assertion. To
the Knowledge of any of the Seller Parties, none of the Acquired Entities is a
party or subject to (including any property or asset of the Acquired Entities)
or in default of a Governmental Order or arbitration award.
SECTION 3.13 ENVIRONMENTAL MATTERS.
(a) Each of the Acquired Entities is in compliance with all
applicable Environmental Laws (which compliance includes the possession by
each of the Acquired Entities of all permits and other Governmental
Approvals required under applicable Environmental Laws, and compliance
with the terms and conditions thereof), except where the failure to comply
would not reasonably be expected to have a Material Adverse Effect. None
of the Acquired Entities has received any written or, to the Knowledge of
any of the Seller Parties, oral notice from a Person alleging that any of
the Acquired Entities is not in such compliance, and there are no present
or, to the Knowledge of any of the Seller Parties, past or future,
actions, activities, circumstances, conditions, events or incidents that
may prevent or interfere with such compliance. All Governmental Approvals
currently held by each of the Acquired Entities pursuant to applicable
Environmental Laws are set forth in Section 3.13(a) of the Disclosure
Schedule.
(b) Except for notice to an issuing Governmental Entity or the
processing of an administrative amendment with an issuing Governmental
Entity resulting from the change in control of the permittee or a change
in the name or contact information of the Persons identified in the
Governmental Approval resulting from the change in control, to the
Knowledge of any of the Seller Parties, no transfers of permits or other
Governmental Approvals under Environmental Laws, and no additional permits
-32-
or other Governmental Approvals under Environmental Laws, will be required
to permit Purchaser to conduct its business in material compliance with
all applicable Environmental Laws immediately following the Closing Date,
so long as such business is conducted in the same manner as conducted by
each of the Acquired Entities immediately prior to the Closing Date. All
permits required pursuant to Environmental Laws requiring a notice or
application of an administrative amendment are set forth in Section
3.13(b) of the Disclosure Schedule. To the extent that any transfers or
additional permits and other Governmental Approvals under Environmental
Laws are required, each of the Seller Parties agrees to provide all
reasonable cooperation to the Purchaser as Purchaser may reasonably
request to effect such transfers and obtain such permits and other
Governmental Approvals under Environmental Laws prior to the Closing Date
(it being understood that such reasonable best efforts shall not require
Seller or any of its Affiliates to incur or pay any out-of-pocket expenses
or costs except those expenses and costs which are timely reimbursed by
Purchaser or any of its Affiliates); provided that in the event a notice
or application of an administrative amendment is required to be filed, the
Governmental Entity may not provide formal acknowledgment of the requested
change until they have been advised that the Closing has occurred.
(c) There is no Environmental Claim pending or, to the Knowledge of
any of the Seller Parties, threatened, against any of the Acquired
Entities or, to the Knowledge of any of the Seller Parties, against any
Person whose liability for any Environmental Claim any of the Acquired
Entities has or may have retained or assumed either by Contract or by
operation of Law, the adverse determination of which would reasonably be
expected to have a Material Adverse Effect.
(d) There are no present (or to the Knowledge of any of the Seller
Parties, past) actions, activities, circumstances, conditions, events or
incidents, including the Release, threatened Release or presence of any
Hazardous Materials that is reasonably expected to form the basis of any
Environmental Claim against any of the Acquired Entities, or, to the
Knowledge of any of the Seller Parties, against any Person whose Liability
for any Environmental Claim any of the Acquired Entities has or may have
retained or assumed either by Contract or by operation of Law, the adverse
determination of which would reasonably be expected to have a Material
Adverse Effect.
(e) None of the Acquired Entities has, and to the Knowledge of any of
the Seller Parties, no other Person has placed, stored, deposited,
discharged, buried, dumped or disposed of Hazardous Materials or any other
wastes produced by, or resulting from, any business, commercial or
industrial activities, operations or processes, on, beneath or, without
any duty of nor undertaking of any investigation or inquiry by any of the
Acquired Entities, adjacent to any property currently or formerly owned,
operated or leased by any of the Acquired Entities, except (i) for
inventories of such substances to be used, and wastes generated therefrom,
in the Ordinary Course of Business of any of the Acquired Entities (which
inventories and wastes, if any, were and are stored or disposed of in
accordance with applicable Environmental Laws), or (ii) as would not
reasonably be expected to have a Material Adverse Effect.
-33-
(f) The Seller Parties have made available to Purchaser complete,
accurate and current copies and results of any material reports, studies,
analyses, tests or monitoring possessed or initiated by or on behalf of
the Acquired Entities and in their possession pertaining to Hazardous
Materials, if any, in, on, beneath or adjacent to any property currently
or formerly owned, operated or leased by any of the Acquired Entities, or
regarding the Acquired Entities' compliance with applicable Environmental
Laws.
(g) To the Knowledge of any of the Seller Parties, none of the Real
Property contains any of the following in violation of Environmental Laws
or in such a manner that is reasonably expected to form the basis of an
Environmental Claim: underground storage tanks; asbestos; polychlorinated
biphenyls (PCBs); toxic mold; underground injection ▇▇▇▇▇; radioactive
materials; or septic tanks or waste disposal pits in which process
wastewater or any Hazardous Materials have been discharged or disposed,
except for any violation that would not reasonably be expected to have a
Material Adverse Effect.
SECTION 3.14 EMPLOYEE BENEFIT PLANS.
(a) Section 3.14(a) of the Disclosure Schedule sets forth a complete,
accurate and current list of each deferred compensation, savings and bonus
and each bonus or other incentive compensation, stock purchase, stock
option and other equity compensation plan, program, agreement or
arrangement, each severance, vacation or termination pay, medical,
cafeteria, surgical, hospitalization, life, accident or disability
insurance and other "welfare" plan, fund or program (within the meaning of
section 3(1) of ERISA); each profit-sharing, stock bonus or other
"pension" plan, fund or program (within the meaning of section 3(2) of
ERISA), each employment, consulting, termination, change in control or
severance agreement; and each other material employee benefit plan, fund,
program, agreement or arrangement; in each case, that is sponsored,
maintained or contributed to or required to be contributed to by any of
the Acquired Entities or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that together with the Acquired
Entities would be deemed a "single employer" within the meaning of section
4001(b) of ERISA, or to which any of the Acquired Entities or an ERISA
Affiliate is or was a party, whether written or oral, for the benefit of
any current or former employee, director, consultant or independent
contractor or any dependent or beneficiary of any of the Acquired Entities
(collectively, the "Plans"). Section 3.14(a) of the Disclosure Schedule
sets forth each of the Plans that is subject to section 302 or Title IV of
ERISA or section 412 of the Code (collectively, the "Title IV Plans").
None of the Acquired Entities or any ERISA Affiliate has any legally
binding or publicly announced commitment or formal plan to create any
additional employee benefit plan or modify or change any existing Plan
that would affect any employee or former employee of any of the Acquired
Entities.
(b) With respect to each Plan which is not a multiemployer plan
within the meaning of section 3(37) of ERISA (a "Multiemployer Plan"),
Seller has delivered or made available to Purchaser complete, accurate and
current copies of each of the following documents:
-34-
(i) a copy of the Plan and any amendments thereto (or if the
Plan is not a written Plan, a written description of the material
terms thereof);
(ii) a copy of the two (2) most recent annual reports and
actuarial reports, if required under ERISA, and the most recent
report (if any) prepared with respect thereto in accordance with
Statement of Financial Accounting Standards No. 87;
(iii) a copy of the most recent Summary Plan Description
(including all summaries of material modifications) required under
ERISA with respect thereto;
(iv) if the Plan is funded through a trust or any third-party
funding vehicle, a copy of the trust or other funding agreement and
the latest financial statements thereof (if any);
(v) the most recent determination letter received from the IRS
with respect to each Plan intended to qualify under section 401 of
the Code;
(vi) all investment management agreements, consulting
agreements, service, and recordkeeping and/or administration
agreements relating to each Plan; and
(vii) the most recent annual audited financial statement and
opinion pertaining to each Plan that is required to have such
statement and opinion.
(c) None of the Acquired Entities has any material Liability under
Title IV or section 302 of ERISA that has not been satisfied in full
within the period permitted by applicable Law.
(d) To the Knowledge of any of the Seller Parties, the Pension
Benefit Guaranty Corporation has not instituted proceedings to terminate
any Title IV Plan and no condition exists that presents a material risk
that such proceedings will be instituted.
(e) The present value of accrued benefits under each Title IV Plan
which is not a Multiemployer Plan, based upon the actuarial assumptions
used for funding purposes in the most recent actuarial report prepared by
such Plan's actuary with respect to such Plan did not exceed, as of its
latest valuation date, the then current value of the assets of such Plan
allocable to such accrued benefits.
(f) No Title IV Plan which is not a Multiemployer Plan or any trust
established thereunder has incurred any "accumulated funding deficiency"
(as defined in section 302 of ERISA and section 412 of the Code), whether
or not waived, as of the last day of the most recent fiscal year of each
such Title IV Plan ended prior to the Closing Date.
(g) As of the date of this Agreement, all contributions required to
be made by any of the Acquired Entities and/or any ERISA Affiliate on or
prior to December 31, 2004 with respect to any Plan have been timely made,
or are reflected on the applicable balance sheet of the Acquired Entities.
All contributions required to be made with respect to any Plan by any of
-35-
the Acquired Entities from and after the date of this Agreement and prior
to the Closing Date will have been timely made. There has been no
amendment to, written interpretation of or announcement (whether or not
written) by any of the Seller Parties or any ERISA Affiliate relating to,
or change in employee participation or coverage under, any Plan that would
increase materially the expense of maintaining such Plan above the level
or expense incurred in respect thereof for the Acquired Entities' most
recent fiscal year ended prior to the date of this Agreement.
(h) With respect to every Title IV Plan that is a "Multiemployer
Plan," (i) none of the Acquired Entities has made or suffered a "complete
withdrawal" or a "partial withdrawal," as such terms are respectively
defined in sections 4203 and 4205 of ERISA (or any Liability resulting
therefrom has been satisfied in full), (ii) no event has occurred that
presents a material risk of a complete withdrawal or a partial withdrawal
by any of the Acquired Entities, (iii) none of the Acquired Entities has
any contingent Liability under section 4204 of ERISA or any material risk
of such a Liability and (iv) to the Knowledge of each of the Seller
Parties and each ERISA Affiliate, no circumstances exist that present a
material risk that any such Plan will go into reorganization or that a
complete withdrawal or partial withdrawal by any of the Acquired Entities
will occur.
(i) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former director, officer or employee of any of the
Acquired Entities to severance pay, unemployment compensation or any other
payment or distribution, (ii) accelerate the time of payment or vesting
(other than the vesting of equity awards granted under any Plan), or
increase, the amount of compensation due any such director, officer or
employee, (iii) result in the forgiveness of any Indebtedness with respect
to any such director, officer or employee or (iv) result in the obligation
to fund benefits with respect to any such director, officer or employee.
(j) There has been no material failure of a Plan that is a group
health plan (as defined in section 5000(b)(1) of the Code) but is not a
Multiemployer Plan to meet the requirements of section 4980B(f) of the
Code with respect to a qualified beneficiary (as defined in section
4980B(g) of the Code). None of the Acquired Entities has contributed to a
nonconforming group health plan (as defined in section 5000(c) of the
Code) that is not a Multiemployer Plan or has any liability for a Tax
under section 5000(a) of the Code that is or would become a Liability of
Purchaser or the Acquired Entities.
(k) Except for compensation, contributions, premiums and benefits
that are not yet due and payable under any Plan as of the Closing Date,
the Acquired Entities have no Liabilities as of the Closing Date with
respect to the Plans other than those Liabilities reflected on the
applicable balance sheet of the Acquired Entities.
(l) Effective as of the Closing Date, no amounts payable under the
Plans will fail to be deductible for federal income tax purposes by virtue
of Section 280G of the Code.
(m) Each Plan is and has at all times been (i) in substantial
compliance (in both form and operation) with all applicable Laws and (ii)
operated, maintained and administered in substantial compliance with the
-36-
terms of such Plan. There have been no non-exempt "prohibited
transactions" (within the meaning of Section 406 of ERISA and/or Section
4975 of the Code) with respect to any Plan which is not a Multiemployer
Plan. No action, suit, proceeding, hearing, or investigation with respect
to the administration or the investment of the assets of any Plan which is
not a Multiemployer Plan (other than routine claims for benefits) is
pending or, to the Knowledge of any of the Seller Parities or any ERISA
Affiliate, threatened, nor to the Knowledge of any of the Seller Parities
or any ERISA Affiliate does any fact or condition exist which would
constitute the basis for any such action, suit, proceeding, hearing, or
investigation except as would not have a Material Adverse Effect.
(n) No Plan which is not a Multiemployer Plan holds any "employer
security" or "employer real property", within the meaning of Section 407
of ERISA.
(o) Each Plan that is not a Multiemployer Plan which is intended to
qualify under Section 401(a) of the Code so qualifies and its related
trust is exempt from taxation under Section 501(a) of the Code and to the
Knowledge of each of the Seller Parities or each ERISA Affiliate's
Knowledge, there is no basis for revocation of such qualification or
exemption.
(p) Each pension plan that is not qualified under Section 401(a) of
the Code is exempt from Part 2, 3 and 4 of Title I of ERISA as an unfunded
plan that is maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated
employees, pursuant to Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.
No assets of the Acquired Entities are allocated to or held in a "rabbi
trust" or similar funding vehicle.
(q) No Plan which is a "nonqualified deferred compensation plan"
within the meaning of Section 409A of the Code has been modified or
implemented after October 2, 2004.
(r) None of the Seller Parties nor any ERISA Affiliate has ever
sponsored, maintained, administered, contributed to, had any obligation to
contribute to, or had any other Liability under or with respect to, any
"welfare plan" (within the meaning of Section 3(1) of ERISA, which is not
a Multiemployer Plan whether or not such plan is or was covered by ERISA)
providing health, life or other coverage benefits for former directors,
officers or employees (or any spouse or former spouse or dependent or
beneficiary thereof) of the Acquired Entities, other than benefits
required by Section 4980B of the Code, Part 6 of Subtitle B of Title I of
ERISA, or by similar provisions of applicable state Law.
(s) With respect to each of the Plans (other than the employment
agreements and the Multiemployer Plans), one or more of the Seller Parties
has reserved the right in the relevant plan document to amend and
terminate each such Plan without the consent of any Third Party.
-37-
SECTION 3.15 COMPLIANCE WITH APPLICABLE LAWS.
(a) (i) Each of the Acquired Entities has complied with and is in
compliance with all applicable Laws and (ii) none of the Acquired Entities
has received written notification of any asserted present or past failure
to comply, or to its Knowledge, is aware of any threatened action to do
so, except in the case of both clauses (i) and (ii) above where the
failure to have been in compliance or comply would not reasonably be
expected to have a Material Adverse Effect.
(b) Each of the Acquired Entities has and will have in full force and
effect immediately prior to the Closing all Governmental Approvals
necessary for it to acquire, own, lease or operate its assets and
properties and to carry on its business as now conducted and there has
occurred no default, revocation or suspension under any such Governmental
Approval, except for such which would not reasonably be expected to have a
Material Adverse Effect.
(c) GNLV holds and will hold immediately prior to the Closing all
Gaming Licenses necessary to operate its gaming business, and such Gaming
Licenses are in full force and effect and have not been revoked or
suspended, and there has been no violation under such Gaming Licenses that
taken together with all other revocations and suspensions would materially
impair GNLV's operations. GNLV has maintained reserves for working
capital, capital improvements, replacements and/or contingencies to the
extent, and in the amounts, and, in each case, to the extent expressly
required by the Gaming Laws, including the cash reserve requirements
thereunder.
(d) GNLV has not: (i) ever applied for a casino, racing or other
Gaming License in any state or other jurisdiction and been denied; (ii)
experienced any revocation or failure to renew any such license; or (iii)
withdrawn or not applied for any such license or renewal after being
informed orally or in writing by any Governmental Entity that GNLV would
be denied such a license or renewal if it were applied for.
(e) Seller Parties have made available to Purchaser copies of all
correspondence between the Nevada Gaming Authorities and Seller or GNLV
relating to the compliance by GNLV with the rules and regulations of the
Nevada Gaming Authorities and the terms of their respective Gaming
Licenses in Seller's or GNLV's or its Affiliates' possession.
(f) Each of the Acquired Entities' respective directors, officers,
employees and stockholders hold (or have applied for pending approval) all
Governmental Approvals (including, in the case of GNLV, all Gaming
Licenses and other authorizations under Gaming Laws and Liquor Licenses)
necessary to carry on its business as now conducted, each of which is in
full force and effect, and there has occurred no default, revocation or
suspension under any such Governmental Approval.
(g) Neither GNLV nor any of its directors, officers, employees or
stockholders, has received any written claim, demand, notice, complaint,
court order or administrative order from any Governmental Entity since
January 23, 2004 under, or relating to, any violation or possible
violation of any Gaming Laws, except as would not reasonably be expected
-38-
to have a Material Adverse Effect. To the Seller Parties' Knowledge,
neither GNLV nor any of its directors, officers, employees or
stockholders, has received any written claim, demand, notice, complaint,
court order or administrative order from any Governmental Entity from June
24, 2003 through the date of this Agreement under, or relating to, any
violation or possible violation by the business operated by the Acquired
Entities of any Gaming Laws that did or would result in fines or penalties
of $250,000 or more.
(h) None of the Acquired Entities or, to the Knowledge of any of the
Seller Parties, any of its directors, officers, employees or stockholders,
has made any payments to any Person in connection with its business, which
payments violate applicable Law, including the Foreign Corrupt Practices
Act.
SECTION 3.16 LABOR MATTERS.
(a) Each of the Acquired Entities is in compliance with all
applicable Laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and is not engaged in any unfair labor practices as defined in the
NLRA or other applicable Law, except in each case where the failure to
comply or any such labor practice would not reasonably be expected to have
a Material Adverse Effect.
(b) There is no labor strike, dispute, slowdown, stoppage or lockout
pending or, to the Knowledge of any of the Acquired Entities, threatened
against or affecting any of the Acquired Entities, and since January 23,
2004 (and to Seller's and its Affiliates' Knowledge since January 1, 2000)
there has not been any such action with respect to the business operated
by the Acquired Entities.
(c) To the Knowledge of any of the Seller Parties, no union
represents the employees of any of the Acquired Entities in their
capacities as employees of the Acquired Entities.
(d) None of the Acquired Entities is a party to any collective
bargaining or similar agreement with any labor organization, or work rules
or practices agreed to with any labor organization or employee association
applicable to employees of any of the Acquired Entities.
(e) To the Knowledge of any of the Acquired Entities, there are no
current union organizing activities among the employees of the Acquired
Entities nor does any question concerning representation exist concerning
such employees.
(f) The Seller Parties have made available to Purchaser a complete,
accurate and current copy of all written personnel policies, rules or
procedures applicable to employees of the Acquired Entities.
(g) None of the Acquired Entities has received written notice of, or
has any Knowledge of, any unfair labor practice charge or complaint
against it pending or threatened before the NLRB or any other Governmental
Entity.
-39-
(h) None of the Acquired Entities has received written notice of, or
has any Knowledge of, any written grievance arising out of any collective
bargaining agreement or other grievance procedure against it.
(i) None of the Acquired Entities has received written notice of, or
has any Knowledge of, the intent of any Governmental Entity responsible
for the enforcement of labor, employment, wages and hours of work, or
occupational safety and health Laws to conduct an investigation with
respect to or relating to it and no such investigation is in progress the
adverse determination of which would not reasonably be expected to have a
Material Adverse Effect.
SECTION 3.17 COMPLIANCE WITH THE WARN ACT. Since January 23, 2004, none of
the Acquired Entities has (a) effectuated a "plant closing" (as defined in the
WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of any of the
Acquired Entities, (b) effectuated a "mass layoff" (as defined in the WARN Act)
affecting any site of employment or facility of any of the Acquired Entities or
(c) been affected by any transaction which would, or engaged in layoffs or
employment terminations sufficient in number to, trigger application of any
similar Law. None of the employees of any of the Acquired Entities or an
Affiliate thereof has suffered an "employment loss" (as defined in the WARN
Act) since six (6) months prior to the date of this Agreement.
SECTION 3.18 INDEBTEDNESS. Section 3.18 of the Disclosure Schedule sets
forth a complete, accurate and current list of all outstanding Indebtedness of
each of the Acquired Entities as of the date of this Agreement. None of the
Acquired Entities is in default and no waiver of default is currently in
effect, in the payment of any principal or interest on any Indebtedness of the
Acquired Entities and no event or condition exists with respect to any
Indebtedness of the Acquired Entities that would permit (or that with notice or
lapse of time, or both, would permit) one or more Persons to cause such
Indebtedness to become due and payable before its stated maturity or before its
regularly scheduled dates of payment. None of the Acquired Entities has agreed
or consented to cause or permit in the future (upon happening of a contingency
or otherwise), itself or any of its equity interests, assets or properties,
whether now owned or hereafter acquired, to be subject to an Encumbrance.
SECTION 3.19 INSURANCE. Section 3.19 of the Disclosure Schedule sets forth
a complete, accurate and current list of all policies of property and casualty
insurance, including physical damage, general liability, workers compensation
and all other forms of insurance and similar arrangements (collectively, the
"Policies") presently in effect with respect to the properties, assets and
operations of the Acquired Entities. All Policies are in full force and effect,
all premiums with respect thereto covering all periods up to and including the
Closing Date have been paid, and no notice of cancellation or termination has
been received with respect to any Policies, except for such cancellations or
terminations which would not reasonably be expected to have a Material Adverse
Effect; and, other than pursuant to the Credit Agreement and the Indenture, no
insurance or proceeds relating to such Policies have been assigned by any of
the Acquired Entities to any Person. For each Policy, Section 3.19 of the
Disclosure Schedule sets forth: (a) the date thereof; (b) the name of the
insurer; (c) the names of the entities covered thereby; (d) the premiums (or
similar consideration) paid therefor for each Contract/calendar year for the
-40-
relevant Policy since January 23, 2004 and (e) the expiration date. The
Policies (i) are sufficient for compliance in all material respects with all
Contracts to which any of the Acquired Entities is a party or bound, (ii) are
valid, outstanding and enforceable in accordance with their terms and (iii)
provide sufficient insurance coverage for the properties, assets and operations
of the Acquired Entities. The Seller Parties have made available to Purchaser a
list of all material claims made under the Policies set forth in Section 3.19
of the Disclosure Schedule and of all payments made to the insured party or
parties thereunder since January 23, 2004, and the information contained in
such list is complete, accurate and current.
SECTION 3.20 INTERNAL CONTROLS AND PROCEDURES. Each of the Acquired
Entities maintains accurate books and records reflecting its assets and
liabilities and maintains proper and adequate internal accounting controls that
provide assurance that: (a) transactions are executed materially with
management's authorization; (b) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain reasonable
accountability for its assets; (c) access to its assets is permitted materially
in accordance with management's authorization; (d) the reporting of its assets
is compared with existing assets at regular intervals and (e) accounts, notes,
casino collection receivables, and other receivables and inventory are recorded
accurately, and proper and adequate procedures are implemented to effect the
collection thereof on a current and timely basis.
SECTION 3.21 NEVADA TAKEOVER STATUTE. As of the date hereof and at all
times from June 24, 2003 through the Closing, Seller is not and will not be an
"issuing corporation" as defined in Section 78.3788 of the NRS.
SECTION 3.22 BROKERS. No broker, financial advisor or finder is entitled
to any brokerage fees, commissions or finder's fees in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Seller or its Affiliates for which the Purchaser would become
obligated or liable.
SECTION 3.23 SUPPLIERS. Section 3.23 of the Disclosure Schedule sets forth
a complete, accurate and current list of the names and addresses of the
twenty-five largest suppliers (indicating approximate dollar volume for each)
of products and services to each of the Acquired Entities during the period
from January 23, 2004 through December 31, 2004, indicating the existing
contractual arrangements, if any, for continued supply from each such firm.
None of the Acquired Entities has received any written notice of, and has no
Knowledge of any reasonable basis for, any development that threatens to affect
adversely its arrangements with its suppliers that would reasonably be expected
to result in a Material Adverse Effect.
SECTION 3.24 BANK ACCOUNTS. Section 3.24 of the Disclosure Schedule sets
forth the names and locations of all banks in which the Acquired Entities have
a bank account or safe deposit box, if any, and the names of all Persons
authorized to draw thereon or to have access thereto.
SECTION 3.25 RECEIVABLES. Seller has made available to Purchaser a
complete, accurate and current copy of a list and the aging of the accounts
receivable and casino collection receivables, by customer, of the Acquired
Entities that are outstanding as of December 31, 2004. All accounts receivable
and casino collection receivables (a) arise out of bona fide sales and
-41-
deliveries of goods, performance of services or other transactions in
connection with the business and represent income earned in the Ordinary Course
of Business and (b) are not to the Knowledge of any of the Seller Parties
subject to material defenses, setoffs or counterclaims other than normal
allowances. Unless paid prior to the Closing Date, the accounts receivable and
casino collection receivables of the Acquired Entities are expected to be
collected in the Ordinary Course of Business, net of the reserves set forth on
the most recent balance sheet of each of the Acquired Entities.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser represents and warrants to the Seller Parties that the
statements contained in this Article IV are true and correct, except as set
forth (i) herein or (ii) except for Section 4.5 in the LNY SEC Reports filed
with, or submitted to, the SEC by LNY prior to the date of this Agreement.
SECTION 4.1 ORGANIZATION OF PURCHASER; NO BUSINESS OPERATIONS OF
PURCHASER.
(a) Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Purchaser is a
wholly owned Subsidiary of LNY, whose common stock is publicly traded on
the New York Stock Exchange.
(b) Other than in connection with the transactions contemplated by
this Agreement, since its date of incorporation, Purchaser has not
conducted any business, has not owned, leased or operated any real
property, has not entered into any Contract and has not incurred any
liabilities.
SECTION 4.2 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Each of Purchaser and LNY has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
that are contemplated by this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by each of
Purchaser and LNY and the consummation by each of Purchaser and LNY of the
transactions that are contemplated by this Agreement to which it is a
party have been duly authorized by all necessary corporate action on the
part of Purchaser and LNY. This Agreement has been duly executed and
delivered by Purchaser and LNY and, assuming this Agreement constitutes
the valid and binding obligation of the Seller Parties and LNY,
constitutes the valid and binding obligation of each of Purchaser and LNY,
enforceable against Purchaser, in accordance with its terms, except as
such enforceability may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar Laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity (regardless of whether enforcement is
considered in a proceeding at Law or in equity).
-42-
(b) The execution and delivery of this Agreement by each of Purchaser
and LNY does not, and the performance and consummation by each of
Purchaser and LNY of the transactions to which it is a party that are
contemplated by this Agreement will not, (i) conflict with, or result in
any violation or breach of, any provision of the Certificate of
Incorporation or Bylaws of Purchaser and LNY, (ii) conflict with, result
in a breach of, constitute a default (or an event which with the giving of
notice or lapse of time, or both, would become a default) under, require
any notice, consent, approval or waiver under, or give to others any
rights of termination, acceleration, suspension, revocation or
cancellation of any Contract, permit or obligation to which Purchaser or
LNY is a party or by which it or any of its respective assets or
properties is bound or (iii) conflict with or violate any Law or
Governmental Order applicable to Purchaser or LNY or any of the assets or
properties of Purchaser or LNY.
(c) Except for (i) the filing of notification reports under the HSR
Act, (ii) any Governmental Approvals related to, or arising out of,
compliance with Gaming Laws, (iii) any Governmental Approvals related to,
or arising out of, compliance with Liquor Licenses, (iv) any Governmental
Approvals as may be required under applicable state securities Laws, (v)
any Governmental Approvals as may be required under any environmental
health or safety Laws pertaining to any notification, disclosure or
required approval triggered by the Closing or the transactions
contemplated by this Agreement and (vi) the satisfaction or waiver of the
closing conditions in Section 6.1 and Section 6.3 and the closing
deliveries in Section 2.3(b), no Governmental Approval, or consent,
approval, authorization or action by, notice to, filing with, or waiver
from, any other Person is required in connection with the execution,
delivery and performance of this Agreement by Purchaser and LNY and
consummation by Purchaser and LNY of the transactions contemplated by this
Agreement.
SECTION 4.3 BROKERS. No broker, financial advisor or finder is
entitled to any brokerage fees, commissions or finder's fees in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Purchaser or its Affiliates for which any of the Seller Parties
would become obligated or liable.
SECTION 4.4 LICENSING. Purchaser has no reason to expect that all Gaming
Licenses necessary for it to acquire the Shares in accordance with its terms
and to own and operate the Acquired Entities immediately after Closing will not
be obtained prior to the Outside Date.
SECTION 4.5 LITIGATION. As of the date of this Agreement, (a) there is no
action, suit or proceeding, claim, arbitration or investigation, including
indemnification matters, against Purchaser or any property or asset of either
Purchaser or LNY, pending, or as to which Purchaser or LNY has received notice
of assertion, or to the Knowledge of Purchaser or LNY, threatened against
Purchaser or LNY or any property or asset of Purchaser or LNY, before any
Governmental Entity or arbitration body, the adverse determination of which
would reasonably be expected to have a material adverse effect on Purchaser or
its ability to consummate the acquisition of the Shares and for Purchaser and
LNY to consummate the other transactions contemplated hereby and (b) there is
no Governmental Order or arbitration award outstanding against Purchaser or any
property or asset of Purchaser which would reasonably be expected to have a
material adverse effect on (i) Purchaser, (ii) Purchaser's ability to
consummate the acquisition of the Shares or (iii) the ability of Purchaser to
-43-
consummate the transactions contemplated by this Agreement. To the Knowledge of
Purchaser, Purchaser is not a party or subject to (including any property or
asset of Purchaser) or in default of a Governmental Order or arbitration award.
SECTION 4.6 INVESTMENT INTENT. Purchaser acknowledges that the Shares may
not be sold, transferred or otherwise disposed of, without registration under
the Securities Act and any applicable state securities laws and regulations or
a valid exemption from registration under the Securities Act and any applicable
state securities laws and regulations and that in the absence of an effective
registration statement covering the Shares or a valid exemption from
registration under the Securities Act and any applicable state securities laws
and regulations, the Shares must be held indefinitely. Purchaser is acquiring
the Shares in a non-registered transaction for its own account solely for the
purpose of investment and not with a view to, or for offer or sale in
connection with, any distribution thereof.
ARTICLE V
COVENANTS
---------
SECTION 5.1 CONDUCT OF BUSINESS OF THE ACQUIRED ENTITIES. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing, subject to the limitations and
exceptions set forth below, each of the Acquired Entities (to the extent
applicable) agrees, except to the extent Purchaser shall consent in writing or
as expressly contemplated or permitted by this Agreement, to (a) carry on its
business and operations diligently, only in the Ordinary Course of Business,
(b) pay its debts when due (or within any applicable grace periods) and to pay
its (or permit Seller or any of its Affiliates acting on behalf of the Acquired
Entities to pay) Taxes relating to the Acquired Entities when due subject to
the right of each Acquired Entity (or Seller or any of its Affiliates acting on
behalf of the Acquired Entities) to timely contest the payment of any such Tax,
so long as Purchaser is provided with prompt written notice of such contest and
it is done in good faith and a reasonable position under applicable Law exists
in the case of contesting the payment of any Tax, (c) pay or perform its other
obligations when due (or within any applicable grace periods), (d) maintain
reserves for working capital, capital improvements, replacements and/or
contingencies to the extent, and in the amounts, in each case, to the extent
expressly required by the Gaming Laws, including the cash reserve requirements
thereunder, (e) subject to the terms of Section 5.20, maintain the Real
Property and Tangible Personal Property in good repair, order and condition
(subject to normal wear and tear) consistent with the current needs of its
business, replace in the Ordinary Course of Business its inoperable, worn out
or obsolete assets with assets of quality consistent with past practice and, in
the event of a casualty, loss or damage to any property prior to the Closing
Date, whether or not its property is insured, either repair or replace such
damaged property to the condition it was in immediately prior to such casualty,
loss or damage to the extent the failure to so repair or replace would
reasonably be expected to have a Material Adverse Effect and (f) use all
reasonable best efforts consistent with past practices and policies to preserve
intact its present business organization, keep available the services of its
present officers and key employees and preserve its relationships with its
customers, suppliers, distributors, and others having business dealings with
it. Without limiting the generality of the foregoing and except (w) as
expressly contemplated or permitted by this Agreement or the GNL Stock Purchase
-44-
Agreement as currently in effect or as amended in compliance with Section 5.12
or the Transition Services Agreement or the Trademark Licensing Agreement (and
any actions taken or not taken in furtherance for each such Agreement), (x) as
set forth in Schedule 5.1 or (y) to the extent Purchaser shall consent in
writing (which such consent shall not be unreasonably withheld or delayed;
provided that if Seller or the applicable Acquired Entity has delivered written
notice for consent to Purchaser and Purchaser has not informed Seller or the
applicable Acquired Entity within two (2) Business Days thereafter that it does
not so approve, then such consent shall be deemed granted), during the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing, none of the Acquired Entities
(nor any of Seller or its Affiliates acting for or on behalf of any of the
Acquired Entities) shall:
(i) amend (whether by merger, consolidation or otherwise) or
restate its Articles of Incorporation or Bylaws (or comparable
organizational documents) or convert into a different form of entity;
(ii) issue, pledge or sell, or authorize the issuance, pledge
or sale of additional equity securities, or securities convertible
into equity securities, or any rights, warrants or options to acquire
any convertible securities or equity securities, or any other
securities in respect of, in lieu of, or in substitution for, equity
securities;
(iii) set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof)
in respect of any equity securities, or any of its other securities
other than in each case for Income Tax Distributions;
(iv) split, combine, subdivide, reclassify or redeem, purchase
or otherwise acquire, or propose to redeem, purchase or otherwise
acquire, any equity securities;
(v) increase or otherwise alter the compensation or fringe
benefits payable or to become payable to or for its directors,
officers, managers or employees, or pay any compensation or benefit
not required by any existing plan or arrangement (including the
granting of stock options, stock appreciation rights, shares of
restricted stock or performance units), or grant any severance or
termination pay to (except with the prior written consent of
Purchaser, which consent shall not be unreasonably withheld so long
as such actions by the Acquired Entities or Seller or its Affiliates
are pursuant to existing agreements or policies, which shall be
interpreted and implemented in a manner consistent with past
practice; provided that if Seller or the applicable Acquired Entity
has delivered written notice for consent to Purchaser and Purchaser
has not informed Seller or the applicable Acquired Entity within two
(2) Business Days thereafter that it does not so approve, then such
consent shall be deemed granted), or enter into or amend (except with
the prior written consent of Purchaser, which consent shall not be
unreasonably withheld so long as such action by the Acquired Entities
or Seller or its Affiliates is in the Ordinary Course of Business;
provided that if Seller or the applicable Acquired Entity has
-45-
delivered written notice for consent to Purchaser and Purchaser has
not informed Seller or the applicable Acquired Entity within two (2)
Business Days thereafter that it does not so approve, then such
consent shall be deemed granted) any employment or severance
agreement with any of its directors, officers, managers or employees
or establish, adopt, enter into, or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, savings, welfare, deferred compensation,
employment, termination, severance or other employee benefit plan,
agreement, trust, fund, policy or arrangement for the benefit or
welfare of any of its directors, officers, managers or current or
former employees, including any Plan, except in each case (A) to the
extent required by applicable Law, (B) pursuant to any collective
bargaining agreements or Plan as in effect on the date of this
Agreement, (C) except in each case with the prior written consent of
Purchaser, which consent shall not be unreasonably withheld, so long
as such action by the Acquired Entities or Seller or its Affiliates
is for salary and other benefit increases, grants, payments or
modifications in the Ordinary Course of Business, to employees other
than its directors, executive officers or managers; provided that if
Seller or the applicable Acquired Entity has delivered written notice
for consent to Purchaser and Purchaser has not informed Seller or the
applicable Acquired Entity within two (2) Business Days thereafter
that it does not so approve, then such consent shall be deemed
granted or (D) to extend the term of any existing employment
agreements to a date not later than the day following the Closing
Date on the same terms as such previous employment agreements;
(vi) (A) sell, pledge, lease, dispose of, grant, encumber, or
otherwise authorize the sale, pledge, disposition, grant or
Encumbrance (other than Permitted Exceptions) of any of its
properties or assets, except (1)(a) for sales of current assets in
the Ordinary Course of Business and (b) for sales of equipment and
other non-current assets in the Ordinary Course of Business and (2)
any Encumbrance arising from the operation of existing Indebtedness
of the Seller Parties; provided that the amount of each such sale of
equipment and other non-current assets in the Ordinary Course of
Business shall not exceed $75,000 individually, or $300,000 in the
aggregate or (B) acquire, including by merger, consolidation, lease
or acquisition of stock or assets, any corporation, partnership,
other business organization or any division thereof (or a substantial
portion of the assets thereof) or any other assets, except for (1)
acquisitions of current assets in the Ordinary Course of Business and
(2) acquisitions of non-current assets in the Ordinary Course of
Business; provided that the amount of each such purchase of
non-current assets in the Ordinary Course of Business shall not
exceed $50,000 individually, or $100,000 in the aggregate;
(vii) (A) incur or assume any Indebtedness, except that it may
incur Indebtedness in the Ordinary Course of Business, (B) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the Indebtedness obligations
of any other Person or (C) except as contractually required as of the
date of this Agreement, make any loans, advances or capital
-46-
contributions to, or investments in, any other Person (including
advances to officers, managers or employees), except in the Ordinary
Course of Business; it being understand that nothing in the Agreement
shall limit the ability of Seller or any of the Acquired Entities
from repaying or otherwise satisfying any obligations under the
existing Indebtedness of the Acquired Entities, including under the
Term Loan and Revolver;
(viii) authorize, recommend, propose or announce an intention to
adopt a plan of complete or partial liquidation or dissolution of it
or its Subsidiaries;
(ix) make or rescind any material express or deemed election
relating to Taxes, settle or compromise any material claim, action,
suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, or except as may be required by
applicable Law, make any change to any of its material Tax accounting
policies or procedures; provided, however, that Purchaser shall not
unreasonably withhold its consent to any such matter that would
preclude any of the Seller Parties or Acquired Entities from timely
filing Tax Returns or timely paying Taxes;
(x) pay, discharge or satisfy any Liabilities, other than the
payment, discharge or satisfaction in the Ordinary Course of Business
of Liabilities, except, in each case, as otherwise permitted pursuant
to this Agreement;
(xi) conduct any material reevaluation of any asset, including
any write-down of inventory or writing-off of accounts receivable,
other than in the Ordinary Course of Business or as otherwise
required by GAAP;
(xii) change any of its current policies or practices relating
to the extension of credit to customers or the collection from
customers of receivables from gaming operations other than in the
Ordinary Course of Business;
(xiii) fail to continue to administer claims involving or
relating to its properties, assets and operations, covered under
and/or addressed by the self-insurance arrangements in place at the
Acquired Entities in the Ordinary Course of Business;
(xiv) terminate, cancel or amend, or cause the termination,
cancellation or amendment of, any insurance coverage (and any surety
bonds, letters of credit, cash collateral or other deposits related
thereto required to be maintained with respect to such coverage)
maintained by any of the Acquired Entities that is not replaced by a
comparable insurance coverage, other than in the Ordinary Course of
Business;
(xv) make any material change with respect to financial
accounting methods, policies or procedures, unless required by GAAP
or other than reasonable and usual actions in the Ordinary Course of
Business;
-47-
(xvi) modify or amend in any material respect or terminate any
of the Material Contracts or waive, release or assign any material
rights or claims thereunder;
(xvii) except for any Contracts which the Acquired Entities are
required to enter into pursuant to the GNL Stock Purchase Agreement,
enter into any Contract that would exceed $10,000 in payments or
enter into any Contract with a term greater than one (1) year that is
not terminable prior to the Closing Date without Liability to it;
provided, however, with respect to any purchase order the dollar
threshold set forth above shall be $100,000;
(xviii) engage in any transaction with, or enter into any
Contract with any Affiliate other than pursuant to the Affiliate
Contracts existing on the date of this Agreement (without giving
effect to any amendments or restatements);
(xix) except as expressly contemplated hereby, amend or
terminate the GNL Stock Purchase Agreement, the Trademark Licensing
Agreement or the Transition Services Agreement; or
(xx) enter into a Contract to do any of the foregoing, or to
authorize or announce an intention to do any of the foregoing.
SECTION 5.2 COOPERATION; NOTICE; CURE. Subject to compliance with
applicable Law (including antitrust Laws and Gaming Laws), each of Seller and
Purchaser shall confer on a regular and frequent basis with one or more
representatives of the other Person to discuss the general status of the
business and ongoing operations of the Acquired Entities. Each of the Parties
shall promptly notify the other(s) in writing of, and shall use its reasonable
best efforts to cure prior to the Closing Date, any event, transaction or
circumstance, as soon as practical after it becomes known to such Party, that
causes or may reasonably be expected to cause any covenant, obligation or
agreement under this Agreement to be violated or remain unfilled in any
material respect or that causes or may reasonably be expected to cause any
representation or warranty contained in this Agreement to be untrue in any
material respect. Nothing contained in this Section 5.2 above shall prevent any
of the Parties from giving such notice, using such efforts or taking any action
to cure or curing any such event, transaction or circumstance. No written
notice given pursuant to this Section 5.2 shall have any effect on the
representations, warranties, covenants, obligations or agreements contained in
this Agreement for purposes of determining satisfaction of any condition
contained herein.
SECTION 5.3 ACCESS TO INFORMATION.
(a) Upon reasonable advance notice, subject to applicable Law,
including privacy Laws, antitrust Laws and Gaming Laws, the Seller Parties
shall afford to the directors, officers, employees, accountants, counsel,
agents, auditors and other authorized representatives of Purchaser
reasonable access, during normal business hours to the Seller Parties'
personnel and to the properties, books, statements, accounts, Contracts
and records relating to the Acquired Entities, as well as to the Seller
Parties' internal auditors and outside auditors in order to allow for the
audit of financial statements of the Acquired Entities; provided that any
-48-
such access shall be conducted in a manner so as not to interfere
unreasonably with the operation of any business by Seller or any of its
Subsidiaries. Each of the Acquired Entities shall permit Purchaser's
senior officers to meet with its respective personnel who are responsible
for its financial statements, its internal controls, and its disclosure
controls and procedures to discuss such matters as Purchaser may deem
reasonably necessary or appropriate for Purchaser to satisfy its
obligations (if any) under SOXA post-Closing Date.
(b) Each of the Acquired Entities shall deliver to Purchaser promptly
after they become available and, in any case, within fifteen (15) days
after the end of each calendar month, an unaudited balance sheet of each
of GNLV and GNELLC as of the end of such month and an unaudited statement
of income of GNLV and GNELLC for the one (1) month period then ending and
the period since December 31, 2004. Such balance sheets and statements of
income shall be in the form currently prepared for management's use. All
such balance sheets and statements of income shall be prepared in
accordance with the books of account and other financial records of the
Acquired Entities in good faith by the management of the Acquired Entities
based upon reasonable assumptions and consistent with past practice.
(c) Subject to Gaming Laws, the Seller Parties shall cause GNLV to
deliver to Purchaser promptly after they become available and, in any
case, within five (5) days after the end of each week, separate reports
setting forth the gross gaming win of GNLV during such week. Such reports
shall be prepared in good faith and derived from the books and records of
GNLV.
(d) Subject to Gaming Laws, each of the Acquired Entities shall
deliver to Purchaser monthly reports setting forth all hirings,
terminations and resignations of its employees, the date of termination or
resignation and the stated reason or cause (if known) for such termination
or resignation within five (5) days after the end of each month beginning
the month after the date of this Agreement.
(e) With respect to each Multiemployer Plan, Seller will make
available to Purchaser complete, accurate and current copies of all
material communications in respect thereof during the six (6) year period
ending immediately prior to the Closing Date with any Governmental Entity.
SECTION 5.4 NO ACQUISITION NEGOTIATION. Subject to compliance with Section
5.7, from and after the date of this Agreement, neither Seller nor its
Affiliates shall, directly or indirectly, through any director, officer,
employee, stockholder, financial advisor, representative or agent of such
Person (a) solicit, initiate, aid or encourage (including by way of furnishing
information or advice) or take any other action to facilitate any inquiries or
proposals that constitute, or would reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
all or substantially all of the assets or properties (other than as permitted
in Section 5.1(vi)(A)), sale of shares of all or substantially all of the
capital stock (including by way of a tender or exchange offer) or similar
transaction involving any of the Acquired Entities (an "Acquisition Proposal"),
(b) engage in negotiations or discussions with any Person (or group of Persons)
other than Purchaser and its Affiliates and the directors, officers, employees,
-49-
financial advisors or representatives or agents of such persons (a "Restricted
Party") concerning, or provide any non-public information or advice to any
Person relating to, any Acquisition Proposal, (c) continue any prior
discussions or negotiations with any Restricted Party concerning any
Acquisition Proposal or (d) accept, or enter into any Contract (whether or not
contingent upon consummation of the transactions contemplated by this
Agreement) concerning, any Acquisition Proposal with any Restricted Party or
consummate any Acquisition Proposal other than as contemplated by this
Agreement.
SECTION 5.5 CONFIDENTIALITY OF INFORMATION. Except as necessary or
appropriate to comply with its respective obligations under this Agreement and
to consummate the transactions contemplated by this Agreement, each of Seller
and its Affiliates and Purchaser and its Affiliates shall comply with, and
shall cause their respective directors, officers, employees, agents and
representatives to comply with the provisions of the Confidentiality Agreement
(including in connection with Section 5.3).
SECTION 5.6 NO INTERCOMPANY ACCOUNTS. After giving effect to the Closing,
none of the Acquired Entities, on the one hand, and Seller, on the other hand,
shall owe or be liable for the satisfaction of any intercompany accounts or
amounts payable (or accrued) to the other, except those between or among the
Acquired Entities, if any.
SECTION 5.7 GOVERNMENTAL APPROVALS.
(a) The Parties shall cooperate with each other and use their
reasonable best efforts to (and, with respect to the Gaming Laws, and
antitrust Laws, if applicable, shall use their reasonable best efforts to
cause their respective directors and officers to) promptly prepare and
file all necessary documentation, to effect all applications, notices,
petitions and filings, to obtain as promptly as practicable all
Governmental Approvals, and to comply (and, with respect to the Gaming
Laws, to cause their respective directors and officers to comply) with the
terms and conditions of all such Governmental Approvals. The Parties and
their respective directors and officers shall use their reasonable best
efforts to file within twenty (20) days after the date of this Agreement
all required initial applications and documents in connection with
obtaining the Governmental Approvals (including under applicable Gaming
Laws and the HSR Act) and shall act reasonably and promptly thereafter in
responding to additional requests and comments in connection therewith.
The Parties acknowledge that this Agreement and the transactions
contemplated hereby are subject to the review and approval of the
applicable Gaming Authorities. Each of Seller and Purchaser shall have the
right to consult with the other on, in each case subject to applicable
Laws relating to the exchange of information (including antitrust Laws and
Gaming Laws), all the information relating to the other Person and any of
its Affiliates that appears in any filing made with, or written materials
submitted to, any Third Party or Governmental Entity in connection with
the transactions contemplated by this Agreement. Without limiting the
foregoing, each of Seller and Purchaser (the "Notifying Party") shall
notify the other promptly of the receipt of comments or requests from
Governmental Entities relating to Governmental Approvals, and shall supply
the other with copies of all correspondence between the Notifying Party or
any of its representatives and Governmental Entities with respect to
Governmental Approvals; provided, however, that none of the Seller
Parties, on the one hand, and Purchaser, on the other hand, shall be
-50-
required to supply the other with copies of communications relating to the
personal applications of individual applicants except for evidence of
filing.
(b) Each of Seller and Purchaser shall promptly notify the other
Party upon receiving any communication from any Governmental Entity whose
consent or approval is required for consummation of the transactions
contemplated by this Agreement that causes such Person to reasonably
believe that there is a reasonable likelihood that such consent or
approval from such Governmental Entity will not be obtained by the Outside
Date or that the receipt of any such consent or approval will be
materially delayed.
(c) Each of Seller, on the one hand, and Purchaser, on the other
hand, shall use its respective reasonable best efforts to take, or cause
to be taken, all actions reasonably necessary to (i) defend any lawsuits
or other legal proceedings challenging this Agreement or the consummation
of the transactions contemplated by this Agreement and (ii) prevent the
entry by any Governmental Entity of any Governmental Order challenging
this Agreement or the consummation of the transactions contemplated by
this Agreement, appealing as promptly as possible any such Governmental
Order and having any such Governmental Order vacated or reversed.
SECTION 5.8 CONSENTS. Each of the Seller Parties shall use its reasonable
best efforts to obtain prior to the Closing all consents, other than
Governmental Approvals that are governed by Section 5.7, necessary to the
consummation of the transactions contemplated by this Agreement; provided that
Purchaser shall provide all reasonable cooperation to the Seller Parties in
furtherance of this Section 5.8 as any Seller Party may reasonably request;
provided, further, that for the purposes of this Section 5.8, reasonable best
efforts shall not require Seller or any of its Affiliates to incur or pay any
out-of-pocket expenses or costs except those which are timely reimbursed by
Purchaser or any of its Affiliates.
SECTION 5.9 PERFORMANCE. Each of the Parties shall perform all acts to be
performed by it pursuant to this Agreement and shall refrain from taking or
omitting to take any action that would violate or cause to remain unfilled its
covenants, obligations or agreements or breach its representations and
warranties hereunder or render them inaccurate in any material respect or that
in any way would prevent or materially adversely affect the consummation of the
transactions contemplated by this Agreement. Subject to the other provisions of
this Agreement, each of the Parties shall use its reasonable best efforts to
satisfy or cause to be satisfied all of the conditions to the obligations of
the other Parties/Party set forth in Section 6.2 and Section 6.3, respectively.
SECTION 5.10 PUBLICITY. Seller and Purchaser shall agree on the form and
content of any initial press releases regarding the transactions contemplated
by this Agreement and thereafter shall consult with each other prior to
issuing, provide each other the opportunity to review and comment upon and use
all reasonable best efforts to agree upon, any press release or other public
statement with respect to any of the transactions contemplated hereby and shall
not issue directly or indirectly any such press release or make directly or
indirectly any such public statement prior to such consultation and prior to
considering in good faith any such comments, except as may be required by
applicable Law or regulation or, with respect to LNY, in connection with LNY
-51-
complying with its obligations under the rules of the New York Stock Exchange.
Nothing in this Section 5.10 shall be deemed to limit, impede or prohibit
Purchaser from exercising its rights under or receiving the benefits of Section
5.15(a).
SECTION 5.11 CHANGE OF CORPORATE NAME POST-CLOSING. Purchaser agrees that
it shall, and shall cause PFG, as promptly as practicable after the Closing
Date and, in any case, within ninety (90) days of the Closing, take such
actions and make such filings with the applicable Governmental Entities in
order to change the corporate name of PFG to a name that does not include the
word "Poster".
SECTION 5.12 CERTAIN MATTERS RELATED TO GNL. Purchaser acknowledges that
PFG and GNL are each a party to the GNL Stock Purchase Agreement a current copy
of which is attached to Schedule 5.12. Seller shall not, without the prior
written consent of Purchaser (which such consent shall not be unreasonably
withheld or delayed), make or consent to any amendment to, or waive any right
that it has under, the GNL Stock Purchase Agreement which would adversely
affect any of the Acquired Entities following the Closing. Purchaser
acknowledges that, in connection with the GNL Stock Purchase Agreement, PFG and
GNLV will enter into a certain Trademark Licensing Agreement with GNL and that
PFG will enter into a certain Transition Services Agreement with GNL and
Barrick; current copies of the form of such agreements are attached to Schedule
5.12; provided, however, that no amendment to the Trademark Licensing Agreement
or Transition Services Agreement may be made without the prior written consent
of Purchaser, which such consent shall not be unreasonably withheld or delayed
unless such amendment would adversely affect any of the Acquired Entities
following the Closing. In the event that the GNL Stock Purchase Agreement is
terminated or the transactions contemplated thereby are otherwise abandoned
prior to the Closing, GNL shall thereafter be deemed an Acquired Entity for all
purposes under this Agreement. In the event that the closing occurs under the
GNL Stock Purchase Agreement, PFG shall, within a reasonable time thereafter,
apply the net proceeds from such transaction to pay any amounts due and payable
under clause (a) and clause (b) of the definition of Credit Agreement Repayment
Amount.
SECTION 5.13 INTELLECTUAL PROPERTY - PRE-CLOSING.
(a) None of the Acquired Entities shall, directly or indirectly, do
any act or omit to do any act whereby any registrations of or applications
for Acquired Entities Owned Intellectual Property may lapse, become
abandoned, dedicated to the public, or unenforceable.
(b) None of the Acquired Entities shall cease the use of any of the
Trademarks included in the Acquired Entities Owned Intellectual Property
or fail to maintain the level of the quality of products sold and services
rendered under any such Trademark at a level at least substantially
consistent with the quality of such products and services as of the date
of this Agreement and the Acquired Entities shall take or cause to be
taken all steps necessary or appropriate to insure that licensees of such
Trademarks use such consistent standards of quality during the period
between the date of this Agreement and the Closing Date.
-52-
SECTION 5.14 SENIOR NOTES.
(a) At such time as reasonably requested by Purchaser in writing
(provided that it shall coordinate with PFG regarding such timing), PFG
shall, subject to compliance with any applicable provisions of the
Indenture, (i) commence a cash tender offer to purchase all of the
outstanding Senior Notes and/or (ii) solicit the consent of the holders of
the Senior Notes regarding certain amendments (the "Indenture Amendments")
to certain of the covenants contained in the Indenture. Such offer to
purchase and/or consent solicitation (individually or collectively, the
"Debt Offer") shall be made on such terms and conditions as are reasonably
requested by Purchaser and agreed to by PFG (such agreement not to be
unreasonably withheld); provided that, in any event, the terms and
conditions of the Debt Offer shall provide that the closing thereof shall
be contingent upon the Closing. It is expressly understood and agreed that
the foregoing shall not be a condition to Closing and shall in no event
delay or hinder the Closing. PFG shall waive any of the conditions to the
Debt Offer and make any other changes in the terms and conditions of the
Debt Offer as may be reasonably requested by Purchaser and PFG shall not,
without Purchaser's prior consent, waive any condition to the Debt Offer
or make any changes to the terms and conditions of the Debt Offer, in each
case except as required by applicable Law and subject to compliance with
any applicable provisions of the Indenture. PFG covenants and agrees,
subject to the terms and conditions of this Agreement and the receipt of
the necessary funds from LNY pursuant to the immediately following
sentence, including the terms and conditions to the Debt Offer, to accept
for payment, and pay for, the Senior Notes and effect the Indenture
Amendments, in each case contemporaneously with, and contingent upon, the
Closing, in each case except as required by applicable Law and subject to
compliance with any applicable provisions of the Indenture. Without, in
any way limiting Section 5.14(d), LNY covenants and agrees to provide the
necessary funds to effect the foregoing sentence. PFG agrees to enter into
a customary dealer manager agreement and a customary information agent
agreement with a dealer manager and information agent, respectively,
recommended by Purchaser (and reasonably acceptable to PFG).
(b) Within ten (10) Business Days following the date of agreement on
the terms of the Debt Offer, PFG shall prepare, subject to the reasonable
advice and comments of Purchaser, an offer to purchase the Senior Notes
and forms of the related letters of transmittal and summary advertisement,
appropriate consent solicitation materials, as well as all other
information and exhibits that may be necessary in connection with the Debt
Offer (collectively, the "Offer Documents"). In the event that this
Agreement is terminated in accordance with this Agreement, PFG shall have
the right to amend the Offer Documents without Purchaser's consent,
including such amendment as shall terminate the Debt Offer. All mailings
to the holders of Senior Notes in connection with the Debt Offer shall be
subject to the prior reasonable review, comment and approval of Purchaser;
provided, however, that the comment and approval of Purchaser shall not be
unreasonably withheld or delayed. PFG will use its reasonable best efforts
to cause the Offer Documents to be mailed to the holders of the Senior
Notes as promptly as practicable following receipt of the written request
from Purchaser under paragraph (a) above to do so.
-53-
(c) PFG agrees to amend the Offer Documents and distribute amended
copies thereof as required by applicable Law.
(d) LNY shall bear all costs and expenses (including costs and
expenses of counsel, accounting and other advisors) of the Debt Offer
(including any Taxes resulting from the Debt Offer), whether or not the
Debt Offer is consummated, and whether or not the Closing occurs, and
shall reimburse PFG (or its direct or indirect stockholders) for any such
costs and expenses (including costs and expenses of counsel, accounting
and other advisors) on a timely basis upon LNY's receipt of reasonable
written documentation thereof.
(e) If Purchaser fails to timely perform any of its obligations under
this Section 5.14, LNY shall undertake any and all such obligations of the
Purchaser under this Section 5.14.
SECTION 5.15 EMPLOYEE MATTERS.
(a) Upon execution of this Agreement, Purchaser shall be permitted to
hold joint meetings with all employees of each of the Acquired Entities
and, to the extent applicable, any bargaining representatives of such
employees, provide preliminary information relating to the transactions
contemplated by this Agreement, and thereafter Purchaser shall be entitled
to conduct one-on-one meetings with all employees of each of the Acquired
Entities at such times as Purchaser shall reasonably request and at space
provided by each of the Acquired Entities at the Real Property or at such
other location as shall be reasonably acceptable to Purchaser. In
connection therewith, each of the Acquired Entities shall provide
Purchaser with access to complete personnel files of all employees of each
of the Acquired Entities subject to any restrictions or limitations under
the Acquired Entities' internal policies and procedures and subject to
Gaming Laws, privacy Laws or any other Law, in each case as applicable.
From and after the date of this Agreement, Seller shall cause GNLV to (to
the extent practicable) provide Purchaser with reasonable space at the
Real Property on an as needed basis and at no cost to Purchaser in order
for Purchaser to handle employment and transition related matters.
Purchaser in exercising its rights under this Section 5.15 shall comply
with Gaming Laws, privacy Laws and any other Law, in each case, as
applicable.
(b) Seller shall use its reasonable best efforts, including providing
all information reasonably necessary and taking all reasonably necessary
actions, to assist Purchaser in transitioning any employee benefit plans,
programs and arrangements for the Acquired Entities prior to the Closing
Date.
(c) From and after the Closing Date, Purchaser shall cause each
Acquired Entity to honor its obligations under the collective bargaining
agreements listed on Schedule 5.15 (the "CBAs").
(d) For a period of at least one (1) year following the Closing Date,
Purchaser shall or shall cause each Acquired Entity to (i) provide each
employee of the Acquired Entities who are not covered by a CBA and who
continue to be employed by an Acquired Entity following the Closing Date
-54-
(collectively, the "Non-Represented Employees") with base compensation,
bonus opportunity, annual and long-term incentive compensation and
severance, in each case that is substantially similar, in the aggregate,
to that which each of the Non-Represented Employees was eligible to
receive immediately prior to the Closing and (ii) maintain for the
Non-Represented Employees "employee benefit plans" (as defined by ERISA)
that are similar, in the aggregate, to the "employee benefit plans"
applicable to such Non-Represented Employees immediately prior to the
Closing.
(e) In the event that Purchaser or one of the Acquired Entities shall
adopt or maintain any "employee benefit plan" with respect to the
Non-Represented Employees at any time prior to the one year anniversary of
the Closing Date, Purchaser or the Acquired Entity, as applicable, shall
cause each such plan to (i) waive all limitations as to any preexisting
conditions, exclusions and waiting periods with respect to participation
and coverage and (ii) recognize service with the Acquired Entities to the
same extent such service had been recognized by Seller under a similar
type of benefit plan immediately prior to the Closing (except to the
extent necessary to avoid duplication of benefits).
SECTION 5.16 NON-SOLICITATION OF UNIQUE CUSTOMERS. For purposes of this
Section 5.16, the term "Unique Customers" means customers who are listed on the
Lists of GNLV. From and after the date hereof until the second anniversary of
the Closing Date, neither Seller nor any of its Affiliates (other than the
Acquired Entities) shall intentionally engage in any direct or targeted
solicitation of any of the Unique Customers. On the Closing Date, Seller shall
deliver or make available to Purchaser a list of the Unique Customers as of the
Closing Date; provided, however, the foregoing shall not prohibit Seller or any
of its Affiliates from soliciting customers by use of advertisements or the
media or other indirect methods of solicitation that are not directly targeted
at any Unique Customers.
SECTION 5.17 JOINT CONTRACTS. Schedule 5.17 sets forth each third party
Material Contract to which both GNLV and GNL are parties (collectively, the
"Joint Contracts"). Seller shall use its reasonable best efforts to cause the
Joint Contracts to be "split-out" prior to Closing (which may include entering
into one or more new separate agreements) so that GNLV is a party to a contract
with the service provider in question only and not together with GNL and, in
connection therewith, Seller shall use its reasonable best efforts to provide
for a release of GNLV of all Liability or Losses under the Joint Contract as to
services provided to, or the actions by or on behalf of, GNL; provided that the
Purchaser shall provide all reasonable cooperation to Seller in furtherance of
this Section 5.17 as Seller may reasonably request; provided, further, that for
the purposes of this Section 5.17, reasonable best efforts shall not require
Seller or any of its Affiliates to incur or pay any out-of-pocket expenses or
costs except those which are timely reimbursed by Purchaser or any of its
Affiliates. Purchaser shall use its reasonable best efforts to cooperate with
Seller in its efforts to obtain any such "split-out."
SECTION 5.18 TREATMENT OF AFFILIATE CONTRACTS. PFG shall cause its
Affiliates (other than the Acquired Entities), on the one hand, and the
Acquired Entities, on the other hand to terminate the Affiliate Contracts with
effect as of the Closing without Liability or Loss to the Acquired Entities,
including the termination of the employment agreements between PFG and each of
▇▇▇▇▇▇▇ ▇. Poster and ▇▇▇▇▇▇ ▇. Breitling at or prior to the Closing without
Liability or Loss to the Acquired Entities, except for salary and accrued
benefits (if any) due under such agreements (it being understood the
-55-
determination of salary and accrued benefits under such agreements shall be
without giving effect to the termination thereof). PFG shall use its reasonable
best efforts to cause GNLV to assign or otherwise transfer at no cost to GNLV,
(a) the "Interests" conveyed to it under the two Assignment, Consent and
Exclusive Use Agreements, each effective as of July 1, 2004, by and between M
AND M Ventures III, LLC and GNLV to M AND M Ventures III, LLC and (b) the
"Interests" conveyed to it under the two Assignment, Consent and Exclusive Use
Agreements, each effective as of July 1, 2004, by and between TB Management,
LLC and GNLV to TB Management LLC, at or prior to the Closing and, if
applicable, to provide a release or novation of all obligations of GNLV or the
Acquired Entities for obligations relating to such Interests.
SECTION 5.19 REFUND OF NON-REFUNDABLE DEPOSIT/LIQUIDATED DAMAGES. In the
event that this Agreement is terminated by Purchaser (a) and Purchaser makes a
bona fide, good faith allegation that the Seller Parties have committed fraud
with respect to this Agreement (provided that a judicial determination of such
fraud must be made before the refund entitlement set forth below vests in
Purchaser) or (b) pursuant to Section 9.1(c), if the Seller Parties (i) have
intentionally or willfully failed to perform any of their obligations required
under this Agreement in order to consummate the transactions contemplated by
this Agreement or (ii) are in breach of their obligations in Sections 5.1
(Conduct of Business of the Acquired Entities), 5.6 (No Intercompany Accounts),
5.12 (Certain Matters Related to GNL), 5.18 (Treatment of Affiliate Contracts),
5.20 (Capital Expenditures) and 5.23 (Leased Real Property) provided such
breach has or would reasonably be expected to have a Material Adverse Effect as
to the aforementioned sections other than Sections 5.6, 5.12 (only as to
repayment of amounts under the Credit Agreement) and 5.18 and such breach by
the Seller Parties would reasonably be expected to have resulted in the failure
to satisfy any of the conditions set forth in Section 6.3(b); provided that in
the case of clause (a) or clause (b) above all other conditions set forth in
Article VI have been satisfied, or are capable of, being satisfied (it being
understood that the action or inaction of the Seller Parties shall be taken
into account in determining whether all other conditions set forth in Article
VI have been satisfied, or are capable of, being satisfied), then solely in the
case of clause (a) or clause (b) above, Purchaser shall be entitled to a refund
of the Non-Refundable Deposit Amount. In such event, Escrow Agent shall,
pursuant to the Escrow Agreement, refund to Purchaser the Non-Refundable
Deposit Amount in immediately available funds to an account designated in
writing by Purchaser. Further, the Parties acknowledge and agree that (A) the
non-refundable nature of the Non-Refundable Deposit (in circumstances other
than as described above) is an integral part of the transactions contemplated
by this Agreement and that, in the absence of such agreement, Seller Parties
would not have entered into this Agreement and (B) the damages resulting from
the termination of this Agreement other than as set forth in this Section 5.19
are uncertain and incapable of accurate calculation and that the amount of the
Non-Refundable Deposit is a reasonable forecast of the actual damages which may
be incurred by the Seller Parties. The retention of the Non-Refundable Deposit
by Seller under this Agreement constitutes liquidated damages in full and
complete satisfaction of, and shall be the Seller Parties' sole and exclusive
remedy for, any Loss, Liability, damage or claim of the Seller Parties arising
out of or in connection with any termination of this Agreement or the facts and
circumstances resulting in such termination or otherwise related thereto or
otherwise arising out of or in connection with this Agreement. The terms of
this Section 5.19 shall survive any termination of this Agreement.
-56-
SECTION 5.20 CAPITAL EXPENDITURES. The Acquired Entities may make any of
the capital expenditures set forth in the capital expenditure budget attached
as Schedule 5.20 and, in addition thereto, may make capital expenditures not so
identified in the capital expenditure budget up to an aggregate of $100,000 in
excess of any applicable insurance proceeds; provided that nothing contained in
this Section 5.20 shall prohibit the Acquired Entities from responding to an
emergency situation (it being understood and agreed that Seller shall promptly
notify Purchaser of any such emergency and the emergency expenditures and other
actions taken in response thereto). The Acquired Entities compliance with this
Section 5.20 is subject to compliance with the Gaming Laws.
SECTION 5.21 FUNDING BY LNY. LNY has available on the date of this
Agreement, and will have on the Closing Date, and shall ensure that Purchaser
has available on the Closing Date, all funds necessary to consummate the
acquisition of the Shares and to pay its portion of associated costs and
expenses in connection therewith, including all funds necessary to (a) if
required, pay in full the Credit Agreement Repayment Amount and (b) satisfy
amounts, if any, due to the holders of the Senior Notes that may arise as a
result of the transactions contemplated by this Agreement and, in each case,
LNY shall, to the extent any such payment is required, guaranty (and cause to
be performed) Purchaser's full and timely payment thereof.
SECTION 5.22 CERTAIN INDEMNIFICATION MATTERS. From and after the Closing,
LNY shall indemnify, defend and hold harmless each person who is now, or has
been at any time since January 23, 2004 or who becomes prior to the Closing, a
director or officer of any of the Acquired Entities (each a "Covered Person")
from and against all losses, claims, damages, costs and expenses (including
attorneys' fees and expenses), liabilities, judgments and, subject to the
proviso of this sentence, settlement amounts that are paid or incurred in
connection with any pending, threatened or completed claim, action, suit,
formal or informal proceeding, formal or informal investigation or formal or
informal inquiry (whether civil, criminal, administrative or investigative and
whether asserted or claimed prior to, at or after the Closing) that is (a)
based on, or arises out of, the fact that such Covered Person is or was a
director or officer of any of the Acquired Entities or (b) based on, or arising
out of, or pertaining hereto or the transactions contemplated hereby, in each
case under clause (a) or clause (b) above, to the fullest extent the applicable
Acquired Entity is permitted under applicable Nevada Law to indemnify its own
directors or officers. Without limiting the foregoing, in the event that any
such claim, action, suit, proceeding, investigation or inquiry is brought
against any Covered Person, (A) LNY shall have the right to assume the defense
thereof with legal counsel of LNY's choosing and LNY shall not be liable to
such Covered Person for any legal expenses of other counsel or any expenses
subsequently incurred by such Covered Person in connection with the defense
thereof; provided, however, that such Covered Person may employ counsel of its
own choosing, and LNY shall pay such Covered Person for reasonable legal fees
and expenses of such counsel, if under applicable standards of professional
conduct the counsel selected by LNY may be reasonably determined by counsel
consulted by such Covered Person, to have a material conflict on a significant
issue representing the applicable Acquired Entity and the Covered Person in the
conduct of the defense of an action and (B) LNY shall not be liable for any
settlement of any claim effected without its written consent (which consent
shall not be unreasonably withheld or delayed). Any Covered Person wishing to
obtain indemnification under this Section 5.22, upon learning of any claim,
action, suit, proceeding, investigation or inquiry, shall promptly notify LNY
thereof; provided, however, the failure of any Covered Person to give such
-57-
notice shall not waive any rights of the Covered Person under this Section
5.22, except to the extent that the rights of LNY are actually materially
prejudiced thereby. In the event LNY does not assume the defense of an action
in accordance with this Section 5.22, (w) the Covered Persons as a group
seeking indemnification with respect to the same or a substantially related
matter may retain only one (1) law firm with respect to such matter, except to
the extent that under applicable standards of professional conduct, such
counsel would have a material conflict on a significant issue representing such
Covered Person and any other Covered Person or Covered Persons, (x) LNY shall
pay all reasonable out-of-pocket costs and expenses of the disposition of any
such claim, action, suit, proceeding, investigation or inquiry to each Covered
Person promptly after statements therefor are received and otherwise advance to
such Covered Person upon request reimbursement of documented expenses
reasonably incurred, (y) LNY shall pay all reasonable fees and expenses of such
counsel for the Covered Persons and all reasonable out-of-pocket costs and
expenses of the Covered Persons in connection with seeking and obtaining
indemnification from LNY, from time to time, in each case within three (3)
Business Days of the receipt by LNY of a statement from such counsel for the
Covered Persons and (z) LNY shall use reasonable best efforts to assist in the
defense of any such matter. Without limiting the foregoing, to the extent that
any Covered Person is, by reason of the fact that such Covered Person is or was
a director or officer of any of the Acquired Companies, a witness in any claim,
action, suit, proceeding, investigation or inquiry to which such Covered Person
is not a party, such Covered Person shall be indemnified and held harmless
against all reasonable out-of-pocket costs and expenses in connection
therewith. LNY shall not enter into any settlement of any claim in which LNY or
any of its Affiliates is jointly liable with an Covered Person (or would be if
joined in such claim) unless such settlement provides for a full and final
release of all claims asserted against such Covered Person. Neither LNY nor any
of its Affiliates shall take any action so as to amend, modify, limit or repeal
the provisions for indemnification of Covered Persons contained in the Articles
of Incorporation or Bylaws (or other comparable organizational documents) of
the Acquired Entities in such a manner as would adversely affect the rights of
any Covered Person to be indemnified by such corporations in respect of their
serving in such capacities prior to the Closing. Notwithstanding anything to
the contrary set forth in this Section 5.22, LNY shall in no event be required
under this Section 5.22 to provide indemnification and reimbursement of fees,
costs and expenses to the Covered Persons in an aggregate amount exceeding
$15,000,000.
SECTION 5.23 LEASED REAL PROPERTY. Seller shall use its reasonable best
efforts to obtain prior to the Closing the written consent of each of the
landlords of the Leased Real Property whose consent is required pursuant to
such lease to the consummation of the transactions contemplated by this
Agreement; provided that Purchaser shall provide all reasonable cooperation to
the Seller Parties in furtherance of this Section 5.23 as any Seller Party may
reasonably request; provided, further, that for the purposes of this Section
5.23, reasonable best efforts shall not require Seller or any of its Affiliates
to incur or pay any out-of-pocket expenses or costs except those which are
timely reimbursed by Purchaser or any of its Affiliates.
SECTION 5.24 FURTHER ACTIONS. In case at any time after the date of this
Agreement and from time to time any further action is necessary to carry out
the purposes of this Agreement and to vest Purchaser with valid and legal
title, to the Shares, free and clear of all Encumbrances, excepting only the
restrictions on the subsequent transfer of the Shares as may be imposed under
applicable Laws, the Parties shall and shall use reasonable best efforts to
cause any of their Affiliates to take or cause to be taken all such necessary
or appropriate action in accordance with and subject to the terms of this
-58-
Agreement including to execute, deliver and file all such further documents;
provided that Purchaser shall provide all reasonable cooperation to the Seller
Parties in furtherance of this Section 5.24 as any Seller Party may reasonably
request; provided, further, that for the purposes of this Section 5.24, subject
to Article VII, reasonable best efforts shall not require the Parties or their
respective Affiliates to incur or pay any out-of-pocket expenses or costs
except those which are timely reimbursed by the other Party or any Affiliate
thereof.
SECTION 5.25 NON-SOLICITATION OF CERTAIN EMPLOYEES. From and after the
date of this Agreement until the second anniversary of the Closing Date,
neither Seller nor any of its Affiliates shall (a) except with respect to those
individuals set forth on Schedule 5.25, solicit or induce, or attempt to
solicit or induce, any employee of, or independent contractor exclusive to, the
Acquired Entities or Purchaser or any of Purchaser's Affiliates engaged in the
business or the casino and gaming activities and operations of GNLV to leave
the Acquired Entities or Purchaser or any of Purchaser's Affiliates engaged in
the business or the casino and gaming activities and operations of GNLV for any
reason whatsoever or (b) except with respect to those individuals set forth on
Schedule 5.25, hire, solicit to hire, or in any other manner interfere with the
business relationship between the Acquired Entities or Purchaser or any of
Purchaser's Affiliates and any employee or independent contractor of the
Acquired Entities. If any employee (i) is terminated by Purchaser or
Purchaser's Affiliates with cause under the terms of such employee's employment
agreement (or, if no employment agreement has been executed, under the
definition of cause in the last draft employment agreement offered to such
employee by Purchaser or Purchaser's Affiliate, if applicable) or (ii)
terminates his or her employment with Purchaser or Purchaser's Affiliates for
good reason under the terms of such employee's employment agreement (or, if no
employment agreement has been executed, under the definition of good reason in
the last draft employment agreement offered to such employee by Purchaser or
Purchaser's Affiliate, if applicable), then the provisions of this Section 5.25
will not apply with respect to that employee after a period of six (6) months
following such employee's termination of employment with Purchaser or
Purchaser's Affiliate, as applicable, nor shall such employee receive
compensation or payments from Seller or any of its Affiliates during or with
respect to such six-month period. Notwithstanding anything to the contrary,
Seller and its Affiliates may conduct general searches for employees or
independent contractors by use of advertisements or the media that are not
directly targeted at the employees or independent contractors of the Acquired
Entities, Purchaser or any of Purchaser's Affiliates engaged in the business or
the casino and gaming activities and operations of GNLV.
SECTION 5.26 AMENDMENT AND SUPPLEMENT OF DISCLOSURE SCHEDULE OR SCHEDULES.
The Purchaser agrees that the Seller Parties shall have the ability, with
respect to their representations, warranties and covenants contained in this
Agreement, (through the Closing to amend or supplement the Disclosure Schedule
and Schedules with respect to any matter hereafter arising or discovered,
which, if existing or known on the date of this Agreement, would have been
required or permitted to be set forth in the Disclosure Schedule or on a
Schedule. Each Party agrees that, notwithstanding the foregoing sentence, no
amendment or supplement to the Disclosure Schedule or a Schedule that
constitutes or reflects an event or occurrence that would have a Material
Adverse Effect (individually or when combined with all prior amendments or
supplements), may be made unless Purchaser consents to such amendment or
supplement, which consent may be withheld in Purchaser's sole discretion. For
all purposes of this Agreement, including for purposes of determining whether
the conditions set forth in Section 6.3(a) have been fulfilled, the Disclosure
-59-
Schedule and Schedules shall be deemed to be the Disclosure Schedule as amended
or supplemented pursuant to this Section 5.26. The Seller Parties agree to
deliver on or about the tenth day prior to the expected Closing Date, the
Disclosure Schedule and Schedules to the Purchaser supplemented for matters
occurring between the date of this Agreement and the day immediately prior to
the delivery of the supplemented Disclosure Schedule and Schedules.
ARTICLE VI
CONDITIONS TO CLOSING
---------------------
SECTION 6.1 CONDITIONS OF THE PARTIES' OBLIGATIONS TO EFFECT THE CLOSING.
The respective obligations of the Parties to this Agreement to effect the
Closing shall be subject to the satisfaction or waiver by each of the Parties
prior to the Closing of the following conditions:
(a) No Injunctions. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any Governmental Order or Law
that is in effect and that has the effect of making the Closing illegal or
otherwise prohibiting the consummation of the Closing.
(b) Governmental Approvals. All Governmental Approvals required to
consummate the transactions contemplated hereby shall have been obtained
(including under Gaming Laws), all such approvals shall remain in full
force and effect, all statutory waiting periods in respect thereof
(including under the HSR Act) shall have expired.
SECTION 6.2 ADDITIONAL CONDITIONS TO OBLIGATION OF THE SELLER PARTIES TO
EFFECT THE CLOSING. The obligation of the Seller Parties to effect the Closing
is subject to the satisfaction of each of the following conditions prior to or
concurrent with the Closing, any of which may be waived in writing exclusively
by the Seller Parties:
(a) Representations and Warranties. The representations and
warranties of Purchaser contained in this Agreement shall have been true
and correct when made and shall be true and correct as of the Closing
Date, with the same force and effect as if made as of the Closing Date
(other than such representations and warranties as are made as of another
date, which shall be true and correct as of such date, if earlier than the
Closing Date), except where the failure of such representations and
warranties to be so true and correct (without giving effect to any
limitation as to "materiality" or "material adverse effect" qualifiers set
forth therein), individually or in the aggregate, does not have a material
adverse effect on the ability of Purchaser to consummate the transactions
contemplated by this Agreement.
(b) Performance of Obligations of Purchaser and LNY. The Purchaser
shall have performed in all material respects all covenants and conditions
required to be performed by Purchaser under this Agreement on or prior to
the Closing Date. LNY shall have performed in all respects all of its
covenants set forth in Section 5.21 of this Agreement on or prior to the
Closing Date.
-60-
(c) Officer's Certificate. Seller shall have received a certificate
dated the Closing Date duly executed by the Chairman or President of
Purchaser to the effect of Section 6.2(a) and Section 6.2(b).
SECTION 6.3 ADDITIONAL CONDITIONS TO OBLIGATION OF PURCHASER TO EFFECT THE
CLOSING. The obligation of Purchaser to effect the Closing is subject to the
satisfaction of each of the following conditions prior to or concurrent with
the Closing, any of which may be waived in writing exclusively by Purchaser:
(a) Representations and Warranties. The representations and
warranties of the Seller Parties contained in this Agreement shall have
been true and correct when made and shall be true and correct as of the
Closing Date, with the same force and effect as if made as of the Closing
Date (other than such representations and warranties as are made as of
another date, which shall be true and correct as of such date, if earlier
than the Closing Date), except where the failure of such representations
and warranties to be so true and correct (without giving effect to any
limitation as to "materiality" or "Material Adverse Effect" qualifiers set
forth therein), individually or in the aggregate, does not have a Material
Adverse Effect.
(b) Performance of Obligations of the Seller Parties. The Seller
Parties shall have performed in all material respects all covenants and
conditions required to be performed by the Seller Parties under this
Agreement on or prior to the Closing Date (including all those covenants
set forth in Article V and Article VIII hereof to be performed by Seller
or the Seller Parties).
(c) Officer's Certificate. Purchaser shall have received a
certificate dated the Closing Date duly executed by the Chairman or
President of the Seller Parties to the effect of Section 6.3(a) and
Section 6.3(b).
(d) Tax Withholding Forms and Certificates. Purchaser shall have
received a statement or statements (in form and substance reasonably
satisfactory to Purchaser) that satisfies Purchaser's obligations under
Treasury Regulation Section 1.1445-2(b)(2).
ARTICLE VII
INDEMNIFICATION; REMEDIES
-------------------------
SECTION 7.1 INDEMNIFICATION.
(a) Following the Closing, Seller shall defend and 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, only to
the extent such Losses are resulting from, arising out of, or relating to
(i) any breach of or inaccuracy in any representation or warranty of the
Seller Parties contained in Sections 3.1, 3.2 and 3.3(a), (ii)
nonfulfillment of or failure to perform any covenant, obligation or
agreement of the Seller contained in Section 5.16 and Section 5.25, (iii)
assuming the closing of the transactions under the GNL Stock Purchase
-61-
Agreement, PFG's indemnification obligations to GNL, Barrick or their
respective Affiliates under the GNL Stock Purchase Agreement; provided
that for purposes of this subclause (iii) the definition of "Loss" shall
be deemed to have the same scope as "Adverse Consequences" (as such term
is defined in the GNL Stock Purchase Agreement) and (iv) the activities
and operations of PFG not resulting from, arising out of, or relating to
the gaming business, operations, administration and activities
("Non-Gaming Liabilities"); it being acknowledged and agreed among the
Parties that Non-Gaming Liabilities shall in no event include Liabilities
or Losses resulting from, arising out of or relating to (A) the Credit
Agreement or the Indenture, including the Senior Notes, (B) acquisitions,
divestitures or similar transactions relating to PFG's (or its
Affiliates') gaming business, activities or operations (including any
financings, refinancings and borrowings relating thereto), excluding those
pursuant to the GNL Stock Purchase Agreement, (C) any action required by
applicable Law or Governmental Entity (except for the failure of the
Seller Parties to take any such action, which shall not be an exception to
these indemnities), (D) any action taken in connection with Section 5.14
and (E) any actions, claims, omissions and activities related to any of
the foregoing clauses (A) through (D), including any Liabilities or Losses
relating to Taxes of the Acquired Entities.
(b) Following the Closing (other than with respect to indemnification
for the matters described in clause (ii) below (but only with respect to
Section 5.14) and clause (iv) below (but only with respect to the Debt
Offer), in each case, which shall be effective from the date hereof
notwithstanding whether the Closing occurs), Purchaser shall defend and
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, only to
the extent such Losses are resulting from, arising out of, or relating to
(i) any breach of or inaccuracy in any representation or warranty of the
Purchaser set forth in Sections 4.1 and 4.2(a), (ii) nonfulfillment of or
failure to perform any covenant, obligation or agreement of LNY contained
in Section 5.14 and Section 5.22, (iii) the Credit Agreement (including in
connection with the payment or refinancing of any amounts thereunder and
any action or omission in connection therewith) and (iv) the Indenture and
the Senior Notes (including in connection with the payment or refinancing
of any amounts thereunder, the Debt Offer and any action or omission in
connection therewith).
SECTION 7.2 INDEMNIFICATION PROCEDURES. All claims for indemnification by
an Indemnified Party under Section 7.1 shall be asserted and resolved as
follows:
(a) In the event any claim or demand (a "Third Party Claim") in
respect of which an Indemnified Party might seek indemnity under Section
7.1 is asserted against or sought to be collected from such Indemnified
Party by a Person other than a Seller Indemnified Party or the Indemnified
Party (a "Third Party"), the Indemnified Party shall promptly deliver a
Claim Notice to the Indemnifying Party; provided that no delay on the part
of the Indemnified Party in giving any such Claim Notice shall relieve the
Indemnifying Party of any indemnification obligation hereunder unless the
Indemnifying Party is materially prejudiced by such delay. The
Indemnifying Party shall notify the Indemnified Party in writing as soon
as practicable within the Dispute Period whether or not the Indemnifying
-62-
Party desires, at the Indemnifying Party's sole cost and expense and by
counsel of its own choosing (which counsel shall be reasonably acceptable
to the Indemnified Party) to defend against such Third Party Claim;
provided, further, that if, under applicable standards of professional
conduct a material conflict on any significant issue between the
Indemnifying Party and the Indemnified Party exists in respect of such
Third Party Claim, then the Indemnifying Party shall reimburse the
Indemnified Party for the reasonable out-of-pocket fees and expenses of
one additional counsel (reasonably satisfactory to the Indemnifying Party)
to be retained in order to resolve such conflict, promptly upon
presentation by the Indemnified Party of invoices or other documentation
evidencing such amounts to be reimbursed.
(i) If the Indemnifying Party notifies the Indemnified Party
within the Dispute Period that it desires to defend against such
Third Party Claim, (A) the Indemnifying Party shall use its
reasonable best efforts to defend and protect the interests of the
Indemnified Party with respect to such Third Party Claim, (B) the
Indemnified Party, prior to or during the period in which the
Indemnifying Party assumes the defense of such matter, may take such
reasonable actions as the Indemnified Party deems necessary to
preserve any and all rights with respect to such matter, without such
actions being construed as a waiver of the Indemnified Party's rights
to indemnification pursuant to this Article VII, (C) the Indemnifying
Party shall not, without the prior written consent of the Indemnified
Party, consent to any settlement that (1) does not contain an
unconditional release of the Indemnified Party from the subject
matter of the settlement, (2) imposes any liabilities or obligations
on the Indemnified Party and (3) with respect to any non-monetary
provision of such settlement, would reasonably be expected to have a
material adverse effect on the business, assets, properties,
condition (financial or otherwise) or results of operations of the
Indemnified Party, (D) the Indemnified Party shall cooperate (during
regular business hours) with the Indemnifying Party and its counsel
in the investigation, defense and settlement thereof and (E) the
Indemnifying Party shall be deemed to have agreed that it will
indemnify the Indemnified Party pursuant to this Article VII.
(ii) If the Indemnifying Party does not notify the Indemnified
Party within the Dispute Period that it desires to defend against
such Third Party Claim, then the Indemnifying Party shall have the
right to conduct any such defense at its sole cost and expense, but,
in such case, the Indemnified Party shall control the investigation
and defense and may settle or take any other actions the Indemnified
Party deems reasonably advisable without in any way waiving or
otherwise affecting the Indemnified Party's rights to indemnification
pursuant to this Article VII.
(iii) The Indemnified Party and the Indemnifying Party agree to
make available to each other, their counsel and other
representatives, all information and documents available to them
which relate to such Third Party Claim. The Indemnified Party and the
Indemnifying Party, the Acquired Entities and their respective
employees and representatives also agree to render to each other such
-63-
assistance and cooperation as may reasonably be required to ensure
the proper and adequate defense of such Third Party Claim.
(iv) Notwithstanding the foregoing, in any event, if the
Indemnified Party desires to participate in any defense of a Third
Party Claim it may do so at its sole cost and expense, and the
Indemnified Party shall have the right to control, pay or settle any
Third Party Claim which the Indemnifying Party shall have undertaken
to defend so long as the Indemnified Party shall also waive any right
to indemnification therefor by the Indemnifying Party.
(b) In the event that an Indemnified Party should have a claim
against the Indemnifying Party pursuant to Section 7.1 which it determines
to assert, but which does not involve a Third Party Claim, the Indemnified
Party shall send an Indemnity Notice with respect to such claim to the
Indemnifying Party. The Indemnifying Party shall have the Dispute Period
during which to notify the Indemnified Party in writing of any good faith
objections it has to the Indemnified Party's Indemnity Notice, setting
forth in reasonable detail each of the Indemnifying Party's objections
thereto. If the Indemnifying Party does not deliver such written notice of
objection within the Dispute Period, the Indemnifying Party shall be
deemed to have accepted responsibility for the prompt payment of the
Indemnified Party's claims for indemnification set forth in the Indemnity
Notice and shall have no further right to contest the validity of such
indemnification claims. If the Indemnifying Party does deliver such
written notice of objection within the Dispute Period, the Indemnifying
Party and the Indemnified Party shall attempt in good faith to resolve any
such dispute within the Resolution Period and if not resolved through
negotiations within the Resolution Period, such dispute shall be resolved
by arbitration in accordance with Section 7.2(c).
(c) Any dispute submitted to arbitration pursuant to this Section
7.2(c) shall be finally and conclusively determined by the decision of a
board of arbitration consisting of three members (hereinafter sometimes
called the "Board of Arbitration") selected as hereinafter provided. Each
of the Indemnified Party and the Indemnifying Party shall select one
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 the selection of the second
arbitrator, 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 the Indemnified Party's claims for indemnification set forth
in the Indemnity Notice. In connection with rendering its decision, 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
-64-
shall cause its written decision to be delivered to the Indemnified Party
and Indemnifying Party. Any decision made by the Board of Arbitration
(either prior to or after the expiration of such thirty 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 expenses in relation thereto,
including but not limited to such party's attorneys' fees, if any, and the
expenses and fees of the Board of Arbitration shall be divided between the
Indemnifying Party and the Indemnified Party in the same proportion as the
portion of the related claim determined by the Board of Arbitration to be
payable to the Indemnified Party bears to the portion of such claim
determined not to be so payable.
SECTION 7.3 INDEMNIFICATION BACKSTOP. In the event that Purchaser is
required to provide indemnification to the Seller Indemnified Parties under
Section 7.1(b) and Purchaser fails to make due and timely payment with respect
thereto, then within ten (10) days of written notice to LNY and Purchaser by a
Seller Indemnified Party, LNY shall, without duplication, satisfy any such
obligation on behalf of the Purchaser without right of set-off. At or prior to
Closing, the Seller Parties shall cause ▇▇▇▇▇▇▇ ▇. Poster and ▇▇▇▇▇▇ ▇.
Breitling to enter into an agreement to be effective at Closing, substantially
in the form of Exhibit B hereto. Notwithstanding any of the foregoing, any
Indemnified Party must first seek indemnification from the Seller or Purchaser,
as the case may be, and LNY, on the one hand, and ▇▇▇▇▇▇▇ ▇. Poster and ▇▇▇▇▇▇
▇. Breitling, on the other hand, shall have no obligation pursuant to this
Article VII unless and until the non-occurrence of payment as described above.
SECTION 7.4 LIMITATION. Notwithstanding anything to the contrary set forth
in this Agreement, Seller (and ▇▇▇▇▇▇▇ ▇. Poster and ▇▇▇▇▇▇ ▇. Breitling, if
applicable), on the one hand, and Purchaser (and LNY, if applicable), on the
other hand, shall in no event be required to provide indemnification to the
Purchaser Indemnified Parties and Seller Indemnified Parties, respectively,
under this Article VII to the extent the amount of Losses paid by, or on behalf
of, Seller or Purchaser, as the case may be, exceeds, in the aggregate, an
amount equal to the Purchase Price.
ARTICLE VIII
TAX MATTERS
-----------
SECTION 8.1 ACCOUNTING AND TAX RECORDS. Seller shall provide Purchaser
with all Tax Returns (and other information relating to Taxes) of or relating
solely to the Acquired Entities reasonably requested by Purchaser. Purchaser
shall keep and maintain all such Tax Returns (and other information relating to
Taxes) and shall make available to Seller such Tax Returns and information as
reasonably required by Seller.
SECTION 8.2 TRANSFER TAXES. Purchaser shall pay, or cause to be paid, all
sales, use, real property transfer, real property gains, transfer, stamp,
registration, documentary, recording, filing or similar Taxes, if any, together
with any interest thereon, penalties, fines, costs, fees, additions to Tax or
additional amounts with respect thereto (collectively, "Transfer Taxes")
incurred in connection with the purchase and sale of the Shares. The Person
with primary responsibility under applicable Law for filing Tax Returns
-65-
relating to Transfer Taxes shall be responsible for preparing and timely filing
any Tax Returns required with respect to any such Transfer Taxes.
SECTION 8.3 TAX STATUS.
(a) Seller shall provide evidence in form and substance reasonably
satisfactory to Purchaser of (i) acceptance by the IRS of Seller's
election to be treated as an S Corporation under Section 1362 of the Code
and (ii) acceptance or acknowledgment by any relevant taxing authority of
Seller's similar status under any corresponding provision of applicable
state and local income tax Law. Seller shall provide evidence (or access
to information) in form and substance reasonably satisfactory to Purchaser
that Seller's election to be treated as an S Corporation under Section
1362 of the Code has not been terminated or revoked and will be in effect
as of the Closing Date.
(b) Seller shall provide evidence in form and substance reasonably
satisfactory to Purchaser of (i) acceptance by the IRS of Seller's
election to treat each of PFG and GNLV as a qualified subchapter S
subsidiary under Section 1361(b) of the Code and Treasury Regulation
Section 1.1361-3 and (ii) acceptance or acknowledgement by any relevant
taxing authority of such entities' similar status under any corresponding
provision of applicable state and local income tax Law. Seller shall
provide evidence (or access to information) in form and substance
reasonably satisfactory to Purchaser that Seller's elections under Section
1361 of the Code to treat each of PFG and GNLV as a qualified subchapter S
subsidiary have not been terminated or revoked and will be in effect as of
the Closing Date.
(c) None of Seller or the stockholders of Seller shall revoke
Seller's election to be taxed as an S Corporation within the meaning
Sections 1361 and 1362 of the Code, take or allow any action (other than a
change in Law) that would result in the termination of Seller's status as
a validly electing S Corporation within the meaning of Sections 1361 and
1362 of the Code, or take or allow any action (other than a change in Law)
that would result in the termination of any Acquired Entity's status for
federal income tax purpose as a qualified subchapter S subsidiary or
disregarded entity, as applicable.
ARTICLE IX
TERMINATION
-----------
SECTION 9.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) by mutual written consent of the Parties;
(b) by the Seller Parties, on the one hand, or Purchaser, on the
other hand, if the transactions contemplated hereby shall not have been
consummated on or prior to February 3, 2006 unless extended pursuant to
the following clause, the later of such dates shall be the "Outside Date";
provided that if the only condition to the Closing that remains
-66-
unsatisfied (except for any condition that by its terms can only be
satisfied at the Closing) on February 3, 2006 is Purchaser's receipt of
Governmental Approvals under the Gaming Laws, such date shall be
automatically be extended to 5:00 p.m., New York City time, on April 30,
2006 without further action by or consent of any of the Parties; provided,
further, that the right to terminate this Agreement under this Section
9.1(b) shall not be available to any of the Parties whose willful breach
or nonfulfillment or failure to perform has prevented the consummation of
the transactions contemplated by this Agreement;
(c) by Purchaser, if there has been a material breach or violation by
any of the Seller Parties of any of their representations and warranties
or covenants contained in this Agreement which breach or violation has not
been waived by Purchaser in writing;
(d) by Seller, if there has been a material breach or violation by
Purchaser of any of its representations and warranties or covenants
contained in this Agreement, has not been waived by Seller in writing;
(e) by Purchaser if any of the conditions to the obligation of
Purchaser set forth in Section 6.3 shall have become incapable of
fulfillment and shall not have been waived by Purchaser in writing;
provided, however, that Purchaser shall not be entitled to terminate this
Agreement pursuant to this Section 9.1(e) if Purchaser is in breach in any
material respect of its representations and warranties or covenants
contained in this Agreement;
(f) by Seller if any of the conditions to the obligation of Seller
set forth in Section 6.2 shall have become incapable of fulfillment and
shall not have been waived by Seller in writing; provided, however, that
Seller shall not be entitled to terminate this Agreement pursuant to this
Section 9.1(f) if the Seller Parties are in breach in any material respect
of their representations and warranties or covenants contained in this
Agreement;
(g) by Seller, on the one hand, or Purchaser, on the other hand, if a
Governmental Entity shall have issued a nonappealable, final Governmental
Order or taken any other nonappealable final action, in each case having
the effect of permanently restraining, enjoining or otherwise prohibiting
the Closing and the transactions contemplated by this Agreement; or
(h) by Purchaser, for any reason or no reason in its sole and
absolute discretion.
SECTION 9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 9.1, this Agreement shall immediately become
void and, there shall be no Liability or obligation on the part of the Parties,
or their respective directors, officers, members, employees, stockholders or
Affiliates, except that such termination shall not limit Liability for a
material breach or material willful violation of this Agreement prior to the
time of such termination; except that the provisions of this Section 9.2 and
Sections 5.5, 5.14, 5.19, 7.1(b) (but only to the extent as expressly set forth
therein) as well as the other provisions of Article VII to the extent relating
thereto, 10.1, 10.2, 10.5, 10.6 and 10.10 shall remain in full force and effect
and survive any termination of this Agreement.
-67-
ARTICLE X
MISCELLANEOUS
-------------
SECTION 10.1 EXPENSES. Except as expressly provided in this Agreement,
each of the Parties shall pay its own legal, accounting and other miscellaneous
expenses incident to this Agreement whether or not the Closing is consummated;
provided that Purchaser shall bear all costs and expenses incurred by Purchaser
and Seller (and Seller's Affiliates) in connection with (a) the filing of
notices under the HSR Act and (b) any approvals related to or arising out of
the Gaming Laws or Gaming Licenses.
SECTION 10.2 NOTICES. All notices, requests, demands and other
communications made under or by reason of the provisions of this Agreement
shall be in writing and shall be given by hand delivery, certified or
registered mail, return receipt requested, facsimile or next-Business Day
courier to the affected Party at the address and facsimile number set forth
below. Such notices shall be deemed given: at the time personally delivered, if
delivered by hand with receipt acknowledged; at the time received, if sent by
certified or registered mail; upon issuance by the transmitting machine of a
confirmation slip that the number of pages constituting the notice has been
transmitted without error and confirmed telephonically, if sent by facsimile;
and the first Business Day after timely delivery to the courier, if sent by
next-Business Day courier specifying next-Business Day delivery.
(a) if to Seller to:
PB Gaming, Inc.
c/o Poster Financial Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Poster, Chairman and
Chief Executive Officer
▇▇▇▇▇▇ ▇. Breitling, President, Treasurer and
Secretary
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
-68-
(b) if to PFG, GNLV or GNELLC to:
Poster Financial Group, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Poster, Chairman and
Chief Executive Officer
▇▇▇▇▇▇ ▇. Breitling, President, Treasurer and
Secretary
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to Purchaser, to:
LSRI Holdings, Inc.
c/▇ ▇▇▇▇▇▇'▇ Restaurants, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile Nos.: (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
-69-
(d) if to LNY, to:
▇▇▇▇▇▇'▇ Restaurants, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile Nos: (▇▇▇) ▇▇▇-▇▇▇▇ and (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 10.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. Except
for the representations and warranties contained in Sections 3.1, 3.2, 3.3(a),
4.1 and 4.2(a), which shall survive Closing indefinitely, no representations,
warranties or covenants in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive or be of any force or effect beyond
the Closing (other than covenants which contemplate performance following the
Closing that shall survive in accordance with their terms).
SECTION 10.4 INTERPRETATION; CONSTRUCTION. When a reference is made in
this Agreement to a Section or Sections, such reference shall be to a Section
or Sections of this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used in this
Agreement they shall be deemed to be followed by the words "without
limitation." Words used in the singular form in this Agreement shall be deemed
to import the plural, and vice versa, as the sense may require. The phrases
"the date of this Agreement," "the date hereof," and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to the date on
the cover page of this Agreement. A reference to the male gender shall be
deemed to be a reference to the female gender and vice versa. Whenever the last
day for the exercise of any right or the discharge of any duty under this
Agreement falls on other than a Business Day, the Party having such right or
duty shall have until the next Business Day to exercise such right or discharge
such duty. Unless otherwise indicated, the word "day" shall be interpreted as a
calendar day. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement will be construed as if drafted jointly
by the Parties and no presumption or burden of proof will arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement.
SECTION 10.5 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws applicable to contracts made and to be performed
-70-
entirely in Nevada, without regard to any applicable conflicts of Law, except
to the extent the mandatory provisions of the Gaming Laws apply.
SECTION 10.6 CONSENT TO JURISDICTION AND VENUE; ENFORCEMENT OF AGREEMENT;
REIMBURSEMENT OF COSTS. Each of the Parties 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 ▇▇▇▇▇ County in any
action, suit or proceeding arising out of or relating to this Agreement or any
of the transactions contemplated hereby, 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
10.6 and shall not be deemed to be a general submission to the jurisdiction of
said court or in the State of Nevada other than for such purpose. Each of the
Parties 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. Each of the Parties
further irrevocably waives and agrees not to plead or claim that any such
action, suit or proceeding brought in such a court has been brought in an
inconvenient forum. The Parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with its specific terms or was otherwise breached. It is accordingly
agreed that the Parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in either of the above named courts, this being in addition
to any other remedy to which they are entitled at law or in equity.
SECTION 10.7 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned by any of the
Parties (whether by operation of Law or otherwise) without the prior written
consent of each of the other Parties. Notwithstanding the foregoing, Purchaser
shall have the right to assign all of its rights, interests and obligations
under this Agreement, including the right to enforce all of the terms of this
Agreement to a direct or indirect wholly owned Subsidiary of LNY, without the
prior written consent of the Seller Parties; provided that such assignee
expressly agrees in writing to be bound by the terms of this Agreement;
provided, further, that no such assignment shall relieve Purchaser from its
obligations hereunder unless the Seller Parties expressly agree in writing.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the Parties and their respective
permitted assigns.
SECTION 10.8 AMENDMENT. This Agreement may not be amended or modified by
the Parties except (a) by an instrument in writing signed by each of the
Parties and (b) by a waiver in accordance with Section 10.9.
SECTION 10.9 EXTENSION; WAIVER. At any time prior to the Closing, the
Parties, by action taken or authorized by their respective boards of directors
or similar governing body (may, to the extent legally allowed), (a) extend the
time for or waive the performance of any of the covenants, obligations or other
acts of the other Parties, (b) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto
and (c) waive compliance with any of the conditions contained in this
Agreement. Any agreement on the part of any of the Parties to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on its behalf. The failure of any of the Parties to assert any of its
rights under this Agreement shall not constitute a waiver of such rights.
-71-
SECTION 10.10 NO THIRD PARTY BENEFICIARIES. Except for the provisions of
(a) Article VII with respect to the Seller Indemnified Parties and Purchaser
Indemnified Parties and (b) as set forth in Section 5.22, this Agreement is for
the sole benefit of the Parties and their respective permitted assigns and
nothing herein expressed or implied shall give or be construed to give any
Person, other than the Parties and such permitted assigns, any legal or
equitable rights hereunder. All references herein or in a Disclosure Schedule
to the enforceability of agreements with third parties, the existence or
non-existence of third-party rights, the absence of breaches or defaults by
third parties, or similar matters or statements, are intended only to allocate
rights and risks among the Parties and were not intended to be admissions
against interests, give rise to any inference or proof of accuracy, be
admissible against any Party by any non-Party, or give rise to any claim or
benefit to any non-Party. Notwithstanding any provision of this Agreement to
the contrary, nothing in this Agreement shall alter the at will employment
status of any employee of the Acquired Entities.
SECTION 10.11 ENTIRE AGREEMENT. This Agreement, the Disclosure Schedule,
the Schedules, the Exhibits, the Escrow Agreement and the Confidentiality
Agreement constitute the entire agreement with respect to the subject matter
hereof and thereof and supersede all prior agreements and undertakings, both
written and oral, among the Parties with respect to the subject matter hereof
and thereof.
SECTION 10.12 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any Law or
public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not effected in any manner
materially adverse to any of the Parties. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
Parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
SECTION 10.13 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, including facsimile counterparts, each of which shall be deemed
an original, but all of which shall constitute one and the same agreement.
SECTION 10.14 WAIVER. EXCEPT AS EXPRESSLY PROVIDED IN ARTICLE VII, OR WITH
RESPECT TO ANY COVENANTS WHICH CONTEMPLATE PERFORMANCE FOLLOWING THE CLOSING,
FROM AND AFTER THE CLOSING THE ACQUIRED ENTITIES, PURCHASER AND LNY HEREBY
RELEASE AND IRREVOCABLY DISCHARGE SELLER AND ITS DIRECTORS, OFFICERS,
STOCKHOLDERS, MEMBERS, MANAGERS, EMPLOYEES, AGENTS, REPRESENTATIVES,
SUBSIDIARIES, SUCCESSORS AND ASSIGNS OF AND FROM ANY AND ALL CLAIMS, DEMANDS,
ACTIONS, CAUSES OF ACTION, LIABILITIES, DAMAGES, EXPENSES AND SUITS OF EVERY
KIND, CHARACTER AND DESCRIPTION, KNOWN OR UNKNOWN, AT LAW OR IN EQUITY (IN EACH
CASE OTHER THAN FOR FRAUD), WHICH THE ACQUIRED ENTITIES, PURCHASER OR LNY MAY
HAVE HAD AT ANY TIME HERETOFORE, MAY HAVE NOW OR MAY HAVE AT ANY TIME
HEREAFTER, ARISING FROM, RELATING TO, RESULTING FROM OR IN ANY MANNER
INCIDENTAL TO ANY AND EVERY MATTER, THING OR EVENT WHATSOEVER OCCURRING OR
-72-
FAILING TO OCCUR AT ANY TIME IN THE PAST UP TO AND INCLUDING THE DATE OF THIS
AGREEMENT AND, BY RECEIPT OF THE CONSIDERATION TO BE RECEIVED BY SELLER AND THE
SHARES TO BE RECEIVED BY PURCHASER AT CLOSING, UP TO AND INCLUDING THE CLOSING,
INCLUDING MATTERS RELATING TO (A) THE ACQUIRED ENTITIES, (B) EXCEPT AS
EXPRESSLY PROVIDED IN ARTICLE VII, THE SHARES OR ANY OTHER OWNERSHIP INTEREST
IN THE ACQUIRED ENTITIES AND (C) ANY INFORMATION PROVIDED BY OR ON BEHALF OF
THE SELLER PARTIES TO PURCHASER OR LNY IN CONNECTION WITH OR RELATING TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
The remainder of this page is intentionally left blank.
-73-
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
signed by their respective duly authorized officers as of the date first
written above.
PB GAMING, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. Poster
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. Poster
Title: Chairman of the Board and
Chief Executive Officer
POSTER FINANCIAL GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. Breitling
--------------------------------
Name: ▇▇▇▇▇▇ ▇. Breitling
Title: President, Secretary and
Treasurer
LSRI HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇'▇ RESTAURANTS, INC., for the
purposes of Section 5.14, Section
5.21, Section 5.22, Article VII and
Article X
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chrairman of the Board,
President and Chief
Executive Officer
Exhibit 2.6
-----------
Working Capital Liability Amount shall be equal to (i) 23,000,000, minus (ii)
the amount drawn down under the Revolver (excluding letters of credit) in
excess of $22,000,000 as of immediately prior to the Closing, plus (iii) 100%
of the amount of any capital contributions from Seller to PFG applied to
satisfy the interest payment due June 1, 2005 under the Senior Notes if the
Closing (as such term is defined under the GNL Stock Purchase Agreement) does
not occur before May 31, 2005, except in the case that the reason for such
non-occurrence of such Closing is a material breach by Barrick of a material
representation, warranty or covenant under the GNL Stock Purchase Agreement.
The Working Capital Liability Amount together with the amount set forth in
Section 2.1(a) shall be referred to as the "Purchase Price."