Exhibit 10.1
DEPOSIT ESCROW AGREEMENT
DEPOSIT ESCROW AGREEMENT (this "Deposit Escrow Agreement"), dated as
of December 24, 2003, by and between LVH Corporation, a Nevada corporation
("Seller"), Colony Resorts LVH Acquisitions, LLC, a Nevada limited liability
company ("Buyer"), and Nevada Title Company, a Nevada corporation ("Escrow
Agent"). Capitalized terms used but not otherwise defined herein shall have the
meaning ascribed thereto in the Agreement (as defined below).
W I T N E S S E T H:
WHEREAS, the parties hereto are entering into this Deposit Escrow
Agreement pursuant to the Purchase and Sale Agreement dated as of December 24,
2003 (the "Agreement"), by and between Buyer, Parent and Seller, a copy of which
has been provided to the Escrow Agent; and
WHEREAS, this Deposit Escrow Agreement is designed to implement the
provisions of Section 2.7 of the Agreement pursuant to which the Deposit (in an
amount equal to FIFTEEN MILLION DOLLARS ($15,000,000) in immediately available
funds plus any additional amounts that may be delivered to the Escrow Agent
pursuant to Section 8.1 of the Agreement) is being deposited with the Escrow
Agent to be distributed to Seller or returned to Buyer, in each case along with
all interest thereon accrued, as provided herein and in the Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and for other good and valuable consideration, the receipt, adequacy
and legal sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Appointment of Escrow Agent. Seller and Buyer hereby appoint the
Escrow Agent to act as escrow agent hereunder and the Escrow Agent agrees to act
as such, pursuant to the terms hereinafter set forth herein.
2. Deposit of Escrow Fund. On the date hereof, in accordance with
Section 2.2(a) of the Agreement, Buyer shall deliver to the Escrow Agent by wire
transfer the Deposit, in U.S. dollars (such sum, together with any additional
amounts that may be delivered to the Escrow Agent pursuant to Section 8.1 of the
Agreement, the "Escrow Amount"), to an account specified in writing by the
Escrow Agent and the Escrow Agent hereby acknowledges receipt of the Escrowed
Amount for deposit in escrow pursuant to the provisions of this Deposit Escrow
Agreement. All interest in respect of the Escrow Amount shall be invested and
maintained by the Escrow Agent in the same manner as the Escrow Amount (the
"Interest Amount") and be subject to the terms hereof. The Interest Amount and
the Escrow Amount are collectively referred to herein as the "Escrow Fund."
3. Escrow Account. (a) Escrow Agent shall invest and reinvest the
Escrow Fund in accordance with Section 2.7 of the Agreement, unless otherwise
instructed in writing by Seller and Buyer. Such written instructions, if any,
referred to in the foregoing sentence shall
specify the type and identity of the investments to be purchased and/or sold and
shall also include the name of the broker-dealer, if any, which Seller and Buyer
direct the Escrow Agent to use in respect of such investment, any particular
settlement procedures required, if any (which settlement procedures shall be
consistent with industry standards and practices), and such other information as
Escrow Agent may require. Escrow Agent shall not be liable for failure to invest
or reinvest funds absent sufficient written direction. Unless Escrow Agent is
otherwise directed in such written instructions, Escrow Agent may use a
broker-dealer of its own selection, including a broker-dealer owned by or
affiliated with Escrow Agent or any of its affiliates. It is expressly agreed
and understood by the parties hereto that Escrow Agent shall not in any way
whatsoever be liable for losses on any investments, including, but not limited
to, losses from market risks due to premature liquidation or resulting from
other actions taken pursuant to this Deposit Escrow Agreement.
(b) Receipt, investment and reinvestment of the Escrow Fund
shall be confirmed by Escrow Agent as soon as practicable by account statement,
and any discrepancies in any such account statement shall be noted by Seller or
Buyer to Escrow Agent within thirty (30) calendar days after receipt thereof.
Failure to inform Escrow Agent in writing of any discrepancies in any such
account statement within said thirty (30) day period shall conclusively be
deemed confirmation of such account statement in its entirety. For purposes of
this paragraph, (x) each account statement shall be deemed to have been received
by the party to whom directed on the earlier to occur of (i) actual receipt
thereof and (ii) five (5) Business Days (hereinafter defined) after the deposit
thereof in the United States Mail, postage prepaid and (y) the term "Business
Day" shall mean any day of the year, excluding Saturday, Sunday and any other
day on which national banks are required or authorized to close in Las Vegas,
Nevada or New York, New York.
4. Taxes on Escrow Fund. The party to whom the Escrow Fund is
distributed in accordance with Section 6 hereof (or the Buyer in the case of a
distribution pursuant to Section 6(a)(ii) hereof) shall bear in full all
federal, state and local taxes based upon or measured by net or gross income
arising from the Escrow Fund and shall provide the Escrow Agent with sufficient
information so that the Escrow Agent can comply with reporting obligations
imposed under any laws relating to such taxes.
5. Rights to Escrow Fund. The Escrow Fund shall be for the exclusive
benefit of Buyer and Seller and their respective successors and permitted
assigns, and no other Person shall have any right, title or interest therein,
except as otherwise contemplated herein or by the Agreement. The Escrow Fund
shall not be property of Seller or Buyer unless and until released to Seller or
Buyer, as the case may be, in accordance with the Agreement and Section 6 below.
6. Claims, Procedures and Payment from Escrow Account.
(a) Joint Written Instructions.
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(i) The Escrow Agent shall hold the Escrowed Fund in its
possession until instructed hereunder to deliver the Escrow Fund or any
specified portion
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thereof in accordance with a written release notice signed jointly by Buyer
and Seller or as set forth in Section 6(b).
(ii) If the transactions contemplated by the Agreement are
consummated, then pursuant to Section 2.2(b) of the Agreement, the Escrow
Amount shall be credited to the Purchase Price thereunder and Buyer and
Seller shall deliver a written release notice instructing the Escrow Agent
to pay (x) to Seller at Closing an amount, in immediately available funds,
equal to the Escrow Amount and (y) to Buyer at Closing an amount, in
immediately available funds, equal to the Interest Amount, as soon as
practicable following receipt of such written release notice.
(b) Failure of Closing to Occur.
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(i) If the Agreement is terminated, and prior to such time
of termination either (x) there shall have been a breach by Buyer of any of
the representations, warranties, agreements or covenants set forth in the
Agreement (including the exhibits and schedules thereto) that has not been
cured within the applicable cure period, or (y) as of the Outside Date,
Buyer shall have not obtained the proceeds of the Financing or shall not
have obtained the Buyer Licenses (including the Gaming Approvals), then, in
each case, Seller shall deliver to the Escrow Agent (with a copy to Buyer)
an instruction letter (a "Direction Letter") instructing the Escrow Agent
to pay to Seller, in accordance with Section 9.3(a) of the Agreement, an
amount, in immediately available funds, equal to the entire Escrow Fund.
(ii) If the Agreement is terminated for any reason other
than as specified in clause (i) above, Buyer shall deliver to the Escrow
Agent (with a copy to Seller) a Direction Letter instructing the Escrow
Agent to pay to Buyer, in accordance with Section 9.3(a) of the Agreement,
an amount, in immediately available funds, equal to the entire Escrow Fund,
less the Escrow Agent's fees and expenses.
(iii) A Direction Letter delivered hereunder (x) shall
clearly identify itself as a Direction Letter delivered pursuant to this
Deposit Escrow Agreement, (y) shall direct the Escrow Agent to distribute
the Escrow Fund in accordance with this Section 6(b) at a specified time or
times and in a specified manner or manners, subject to Section 6(c) hereof,
and (z) may contain such other directions to the Escrow Agent as may be
required by this Deposit Escrow Agreement, reasonably requested by the
Escrow Agent or mutually agreeable in writing to Seller and Buyer.
(c) Payment; Disputes.
-----------------
(i) Subject to the following provisions of this Section
6(c) and the provisions of Section 9, Escrow Agent shall, on the fifteenth
(15th) Business Day following the receipt by it of a Direction Letter,
deliver as specified in such Direction Letter, an amount, in immediately
available funds equal to all of the Escrow Fund.
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(ii) If the Buyer or Seller, as the case may be, shall, in
good faith, notify the Escrow Agent and other party in writing of any
objections or disputes with respect to the instructions of the Direction
Letter within five (5) Business Days following the Escrow Agent's receipt
of such Direction Letter (a "Disputed Claim"), then the Escrow Agent shall
instead set aside such Direction Letter and not make payment thereof until
the Buyer and Seller have agreed in writing upon the terms of the Direction
Letter and shall have notified the Escrow Agent of such an agreement in
writing in a joint Direction Letter signed by both Seller and Buyer.
(iii) Seller and Buyer shall use commercially reasonable
efforts to resolve promptly any Disputed Claims.
(iv) During the pendency of the Disputed Claim, the Escrow
Agent shall not make any distributions of the Escrow Fund.
7. Liability of Escrow Agent. The Escrow Agent shall not incur any
liability to any party for damages, losses or expenses for (a) any act or
failure to act made or omitted in good faith and without gross negligence or
willful misconduct or (b) any action taken or omitted in reliance upon any
instrument that the Escrow Agent shall in good faith believe to be genuine, nor
will the Escrow Agent be liable or responsible for forgeries, fraud,
impersonations or determining the scope of any representative authority. In
addition, the Escrow Agent may consult with legal counsel in connection with the
Escrow Agent's duties under this Deposit Escrow Agreement and shall be fully
protected in any act taken, suffered or permitted by it in good faith in
accordance with the advice of counsel. The Escrow Agent is not responsible for
determining and verifying the authority of any person acting or purporting to
act on behalf of any party to this Deposit Escrow Agreement.
8. Payment of the Escrow Agent; Expenses. Concurrently with the
execution and delivery of this Deposit Escrow Agreement and in consideration of
the services to be provided by the Escrow Agent under this Deposit Escrow
Agreement, Buyer shall pay to the Escrow Agent the amounts specified on Exhibit
A. The Escrow Agent may incur reasonable expenses in connection with its duties
and incur reasonable legal fees and expenses in connection with Section 7 of
this Deposit Escrow Agreement and such expenses shall be paid or reimbursed, as
the case may be, equally by Buyer and Seller upon presentation by the Escrow
Agent of invoices or other documentation evidencing the amounts of such
expenses. In the event that the conditions of this Deposit Escrow Agreement are
not properly fulfilled, or if the Escrow Agent renders any service not provided
for in this Deposit Escrow Agreement, or if the parties request a substantial
modification of its terms, or if any controversy arises, or if the Escrow Agent
is made a party to, or intervenes in, any litigation pertaining to this escrow
or its subject matter, the Escrow Agent shall be reasonably compensated for such
extraordinary service and reimbursed for all reasonable costs, attorneys' fees
and expenses of any firm occasioned by such default, delay, controversy or
litigation and the Escrow Agent shall have the right to retain all documents
and/or other things of value at any time held by the Escrow Agent in this escrow
until such compensation, fees, costs and expenses are paid.
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9. Controversies. If any controversy arises relating to this Deposit
Escrow Agreement, or with any other party concerning the subject matter of this
Deposit Escrow Agreement, its terms or conditions, the Escrow Agent will not be
required to determine the controversy or to take any action regarding it.
Subject to Section 6 of this Deposit Escrow Agreement, if any such controversy
arises, the Escrow Agent may hold the Escrow Fund and may wait until it is
directed otherwise in a joint Direction Letter from Seller and Buyer or pursuant
to Section 6(c)(ii) hereof. In such event, the Escrow Agent will not be liable
for damages as long as the Escrow Agent acts in good faith and without gross
negligence or willful misconduct. The Escrow Agent is authorized to deposit with
the clerk of any court the Escrow Fund held hereunder. Upon initiating an
interpleader or declaratory judgment or any other action seeking to determine
the rights of the parties hereunder and depositing the Escrow Fund, the Escrow
Agent shall be fully released and discharged of and from all further obligations
and liability imposed by the terms of this Deposit Escrow Agreement, but not as
to acts of the Escrow Agent prior thereto.
10. Indemnification of Escrow Agent. Seller and Buyer and their
respective successors and assigns agree to, severally and not jointly, equally
indemnify and hold the Escrow Agent harmless against any and all losses, claims,
damages, liabilities and expenses, including reasonable costs of investigation
and reasonable counsel fees and disbursements, that may be imposed on the Escrow
Agent or incurred by the Escrow Agent in good faith and without gross negligence
or willful misconduct in connection with the performance of the duties under
this Deposit Escrow Agreement, including, but not limited to, any litigation
arising from this Deposit Escrow Agreement or involving its subject matter.
11. Resignation of Escrow Agent. The Escrow Agent may resign at any
time upon giving at least thirty (30) days' written notice to Seller and Buyer;
provided, however, that no such resignation shall become effective until the
appointment of a successor to the Escrow Agent which shall be accomplished as
follows: Seller and Buyer shall use commercially reasonable efforts to select a
successor to the Escrow Agent within thirty (30) days after receiving such
notice. If Seller and Buyer fail to agree on a successor to the Escrow Agent
within such time, the Escrow Agent shall have the right to appoint a successor
to the Escrow Agent or deliver the documents to the JAMS Endispute to have such
association appoint an Escrow Agent who shall be entitled to customary fees. The
successor Escrow Agent shall execute and deliver an instrument accepting such
appointment and it shall, without further acts, be vested with all the estates,
properties, rights, powers and duties of the predecessor Escrow Agent as if
originally named as escrow agent. Thereafter, the Escrow Agent shall be
discharged from any further duties and liabilities under this Deposit Escrow
Agreement but not as to acts of the Escrow Agent prior thereto.
12. Mailing Instructions, Etc. Any Direction Letters, notices or
other communications required or permitted under, or otherwise in connection
with, this Deposit Escrow Agreement shall be in writing and shall be deemed to
have been duly given when delivered in person or upon confirmation of receipt of
a legible copy when transmitted by facsimile transmission (but only if followed
by transmittal by overnight courier or hand for delivery on the next Business
Day) or on receipt after dispatch by registered or certified mail, postage
prepaid, or on the next Business Day if transmitted by an internationally
recognized
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overnight courier, addressed in each case as follows (or to such other address
which has been delivered in accordance with this Section 12):
(a) If to Seller, at:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Executive Vice President and Chief Financial Officer
Park Place Entertainment Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Executive Vice President and General Counsel
Park Place Entertainment Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Buyer, at:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
c/o Colony Capital, LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
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(c) If to the Escrow Agent, at:
▇▇▇▇ ▇▇▇▇▇▇▇▇
Nevada Title Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
13. Amendment. This Deposit Escrow Agreement may be amended or
modified, and any provision of this Deposit Escrow Agreement may be waived, at
any time by Seller, Buyer and the Escrow Agent, but only by an instrument in
writing signed by or on behalf of Seller, Buyer and the Escrow Agent.
14. Binding Effect; Assignment. This Deposit Escrow Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective permitted successors and assigns. Buyer may not assign, transfer or
convey any of its rights and obligations hereunder to any Person without the
prior written consent of Seller, which consent may be withheld by Seller in its
absolute discretion.
15. Term. This Deposit Escrow Agreement shall terminate upon the
disbursement, in accordance with Section 6 or Section 11 hereof, of the Escrow
Fund in full; provided, however, that in the event all fees, expenses, costs and
other amounts required to be paid to Escrow Agent hereunder are not fully and
finally paid prior to termination, the provisions of Section 8 and Section 10
hereof shall survive the termination hereof.
16. Governing Law. The internal laws of the State of New York
applicable to contracts made and wholly performed therein shall govern the
validity, construction, performance and effect of this Deposit Escrow Agreement.
17. Counterparts. This Deposit Escrow Agreement may be executed by
facsimile and in any number of counterparts, each of which when executed by and
delivered shall be an original, but all such counterparts shall constitute one
and the same Agreement. Any signature page of this Deposit Escrow Agreement may
be detached from any counterpart without impairing the legal effect of any
signatures thereon, and may be attached to another counterpart, identical in
form thereto, but having attached to it one or more additional signature pages.
18. Captions. The captions appearing at the commencement of the
sections hereof are descriptive only and for convenience in reference to this
Deposit Escrow Agreement and in no way whatsoever define, limit or describe the
scope or intent of this agreement, nor in any way affect this agreement.
19. Entire Agreement. Except with respect to the Agreement, to which
Seller and Buyer are parties, this Deposit Escrow Agreement sets forth the
entire agreement among the parties with respect to the subject matter thereof
and hereof and supersedes all prior or oral agreements or understandings with
respect thereto. The Escrow Agent undertakes to perform
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only such duties as are specifically set forth herein, and is not charged with
knowledge of, or any duties or responsibilities in connection with, any other
document.
20. Funds Transfer. Subject to Section 6:
(a) In the event funds transfer instructions are given (other
than in writing at the time of execution of the Deposit Escrow Agreement),
whether in writing, by telefax, or otherwise, the Escrow Agent is authorized to
seek confirmation of such instructions by telephone call-back to the person or
person designated on Exhibit B hereto, and the Escrow Agent may rely upon the
confirmations of anyone purporting to be the person or persons so designated. If
the Escrow Agent is unable to contact any of the authorized representatives
identified in Exhibit B, the Escrow Agent is hereby authorized to seek
confirmation of such instructions by telephone call-back to Seller's or Buyer's
Chief Executive Officer or Chief Financial Officer ("Executive Officers"), as
the Escrow Agent may select. Such Executive Officer shall deliver to the Escrow
Agent upon request a fully executed Incumbency Certificate, and the Escrow Agent
may rely upon the confirmation of anyone purporting to be any such officer. The
persons and telephone numbers for call-backs may be changed only in a writing
actually received and acknowledged by the Escrow Agent. The parties to this
Deposit Escrow Agreement acknowledge that such security procedure is
commercially reasonable.
(b) It is understood that the Escrow Agent and the beneficiary's
bank in any funds transfer may rely solely upon any account numbers or similar
identifying number provided by either of the other parties hereto to identify
(i) the beneficiary, (ii) the beneficiary's bank, or (iii) an intermediary bank.
The Escrow Agent may apply any of the escrowed funds for any payment order it
executes using any such identifying number, even where its use may result in a
person other than the beneficiary being paid, or the transfer of funds to a bank
other than the beneficiary's bank or an intermediary bank, designated.
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IN WITNESS WHEREOF, the parties hereto have executed this Deposit
Escrow Agreement as of the day and year first above written.
LVH CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: President
Tax Id No.: ▇▇-▇▇▇▇▇▇▇
COLONY RESORTS LVH ACQUISITIONS, LLC
By: Colony Resorts LVH Holdings, LLC,
its sole member
By: Colony Investors VI, L.P, its sole
member
By: Colony Capital VI, L.P., its
general partner
By: Colony GP VI, LLC, its general
partner
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized ▇▇▇▇▇▇
Tax Id No.: ▇▇-▇▇▇▇▇▇▇
NEVADA TITLE COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
[Signature Page to Escrow Agreement]
Exhibit A
Escrow Agent Fees
$3,000
Exhibit B
Authorized Call-Back Persons
BUYER
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Name Title Telephone
---------------- --------------------------------------- --------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Manager (▇▇▇) ▇▇▇-▇▇▇▇
SELLER
------
Name Title Telephone
---------------- --------------------------------------- --------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Executive Vice President & Chief
Financial Officer (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Senior Vice President & General Counsel (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Vice President - Corporate Law (▇▇▇) ▇▇▇-▇▇▇▇