EXHIBIT 2.11
ASSET PURCHASE AGREEMENT
dated as of October 17, 2000
by and among
Lake ▇▇▇▇ Station, Inc.,
a Nevada corporation
("Purchaser"),
Station Casinos, Inc.,
a Nevada corporation
("STN"),
Ameristar Casino Las Vegas, Inc.,
a Nevada corporation
(the "Company"),
and
Ameristar Casinos, Inc.,
a Nevada corporation
("Parent")
with respect to
the assets of
the Company
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.
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ASSET PURCHASE AGREEMENT..........................................................................................1
ARTICLE I SALE OF ASSETS AND CLOSING..............................................................................1
1.01 Assets.............................................................................................1
1.02 Liabilities........................................................................................6
1.03 Purchase Price; Allocation.........................................................................8
1.04 Closing............................................................................................8
1.05 Determination of Surplus or Deficiency; Post-Closing Adjustment....................................9
1.06 Prorations........................................................................................10
1.07 Further Assurances; Post-Closing Cooperation......................................................11
1.08 Third-Party Consents..............................................................................12
1.09 Insurance Proceeds................................................................................12
ARTICLE IIREPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PARENT...............................................13
2.01 Corporate Existence...............................................................................13
2.02 Authority.........................................................................................13
2.03 No Conflicts......................................................................................13
2.04 Governmental Approvals and Filings................................................................14
2.05 Financial Statements and Condition................................................................14
2.06 Taxes.............................................................................................15
2.07 Legal Proceedings.................................................................................15
2.08 Compliance With Laws and Orders...................................................................15
2.09 Benefit Plans; ERISA; Labor Matters...............................................................15
2.10 Real Property.....................................................................................16
2.11 Tangible Personal Property........................................................................17
2.12 Contracts.........................................................................................17
2.13 Licenses..........................................................................................18
2.14 Affiliate Transactions............................................................................18
2.15 Environmental Matters.............................................................................19
2.16 Labor Matters.....................................................................................20
2.17 Brokers...........................................................................................20
2.18 Absence of Certain Changes........................................................................20
2.19 Sufficiency of and Title to the Assets............................................................20
2.20 Insurance.........................................................................................21
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER AND STN..................................................21
3.01 Existence.........................................................................................21
3.02 Authority.........................................................................................21
3.03 No Conflicts......................................................................................21
3.04 Governmental Approvals and Filings................................................................22
3.05 Legal Proceedings.................................................................................22
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3.06 Brokers...........................................................................................22
3.07 Financing.........................................................................................22
3.08 Purchaser's Gaming Licenses.......................................................................22
ARTICLE IV COVENANTS OF THE COMPANY AND PARENT...................................................................23
4.01 Regulatory and Other Approvals....................................................................23
4.02 HSR Filings.......................................................................................23
4.03 Investigation by Purchaser........................................................................23
4.04 Conduct of Business...............................................................................24
4.05 Certain Restrictions..............................................................................24
4.06 Transition Period.................................................................................25
4.07 No Acquisition Negotiation........................................................................25
4.08 Fulfillment of Conditions.........................................................................25
4.09 Noncompetition....................................................................................26
4.10 Title Insurance...................................................................................27
4.11 Delivery of Disclosure Schedule and Diligence Materials...........................................29
4.12 No Solicitation...................................................................................29
ARTICLE V COVENANTS OF PURCHASER.................................................................................30
5.01 Regulatory and Other Approvals....................................................................30
5.02 HSR Filings.......................................................................................30
5.03 Investigation by the Company......................................................................31
5.04 No Solicitation...................................................................................31
5.05 Collection of Gaming Chips and Tokens.............................................................31
5.06 Baggage...........................................................................................31
5.07 Safe Deposits.....................................................................................31
5.08 Valet Parking.....................................................................................32
5.09 Fulfillment of Conditions.........................................................................32
5.10 Return of Books and Records.......................................................................32
5.11 Parent's Gaming Compliance Program................................................................32
ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER................................................................32
6.01 Representations and Warranties....................................................................33
6.02 Performance.......................................................................................33
6.03 Officers'Certificates.............................................................................33
6.04 Orders and Laws...................................................................................33
6.05 Regulatory Consents and Approvals.................................................................33
6.06 Deliveries........................................................................................33
6.07 Required Consents.................................................................................33
6.08 Title Insurance...................................................................................33
6.09 Absence of Material Adverse Effect................................................................34
6.10 Cure of Open Diligence Matters....................................................................34
ARTICLE VII CONDITIONS TO OBLIGATIONS OF THE COMPANY.............................................................34
7.01 Representations and Warranties....................................................................34
7.02 Performance.......................................................................................34
7.03 Officers'Certificates.............................................................................34
7.04 Orders and Laws...................................................................................34
7.05 Regulatory Consents and Approvals.................................................................34
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7.06 Deliveries........................................................................................35
7.07 Required Consents.................................................................................35
ARTICLE VIII TAX MATTERS AND POST-CLOSING TAXES..................................................................35
8.01 Transfer Taxes and Transfer Fees..................................................................35
8.02 Tax Indemnification...............................................................................35
8.03 Tax Cooperation...................................................................................35
8.04 Notification of Proceedings; Control..............................................................36
8.05 Gaming Fees and Taxes.............................................................................36
ARTICLE IX EMPLOYEE BENEFITS MATTERS.............................................................................36
9.01 Offer of Employment...............................................................................36
9.02 Welfare Plans -- Claims Incurred; Pre-Existing Conditions.........................................37
9.03 Vacation..........................................................................................37
9.04 Service Credit....................................................................................38
9.05 Company's Benefit Plans...........................................................................38
9.06 COBRA Matters.....................................................................................38
ARTICLE XSURVIVAL; NO OTHER REPRESENTATIONS......................................................................38
10.01 Survival of Representations, Warranties, Covenants and Agreements..............................38
10.02 No Other Representations.......................................................................38
ARTICLE XI INDEMNIFICATION.......................................................................................39
11.01 Other Indemnification..........................................................................39
11.02 Method of Asserting Claim......................................................................40
11.03 Exclusivity....................................................................................43
ARTICLE XII TERMINATION..........................................................................................43
12.01 Termination....................................................................................43
12.02 Effect of Termination..........................................................................44
ARTICLE XIII DEFINITIONS.........................................................................................44
13.01 Defined Terms..................................................................................44
13.02 Construction of Certain Terms and Phrases......................................................53
ARTICLE XIV MISCELLANEOUS........................................................................................53
14.01 Notices........................................................................................53
14.02 Entire Agreement...............................................................................55
14.03 Expenses.......................................................................................55
14.04 Public Announcements...........................................................................55
14.05 Waiver.........................................................................................55
14.06 Amendment......................................................................................55
14.07 Confidentiality................................................................................56
14.08 No Third Party Beneficiary.....................................................................56
14.09 No Assignment; Binding Effect..................................................................56
14.10 Headings.......................................................................................57
14.11 Invalid Provisions.............................................................................57
14.12 Consent to Jurisdiction and Venue..............................................................57
14.13 Governing Law..................................................................................57
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14.14 Attorney's Fees................................................................................57
14.15 Time of the Essence............................................................................57
14.16 Counterparts...................................................................................57
ARTICLE XV GUARANTEES............................................................................................58
15.01 Guarantee of the Company's Obligations.........................................................58
15.02 Guarantee of Purchaser's Obligations...........................................................58
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SCHEDULES
Section 1.01(a)(i)..............................................................................Owned Real Property
Section 1.01(a)(ii)(A).........................................................................Real Property Leases
Section 1.01(a)(ii)(B).........................................................................Real Property Leases
Section 1.01(a)(v)(A)......................................................................Personal Property Leases
Section 1.01(a)(v)(B)......................................................................Personal Property Leases
Section 1.01(a)(vi)..............................................................................Business Contracts
Section 1.01(a)(viii).............................................................................Business Licenses
Section 1.01(a)(ix)........................................................................................Vehicles
Section 1.01(a)(xiii).............................................................Transferred Intellectual Property
Section 2.03..............................................................................................Conflicts
Section 2.04.................................................................................Governmental Approvals
Section 2.05(a)................................................................................Financial Statements
Section 2.05(b)................................................................................Changes in Condition
Section 2.06(a)...........................................................................................Tax Liens
Section 2.06(b)............................................................................Compliance with Tax Laws
Section 2.07......................................................................................Legal Proceedings
Section 2.08...................................................................................Compliance with Laws
Section 2.09(a).......................................................................................Benefit Plans
Section 2.09(d).....................................................................................Benefit Accrual
Section 2.09(e)....................................................................Collective Bargaining Agreements
Section 2.09(f)................................................................................Terminated Employees
Section 2.10(a).......................................................................................Real Property
Section 2.10(b)...............................................................................................Liens
Section 2.12(a)...........................................................................................Contracts
Section 2.12(b).................................................................................Contract Violations
Section 2.13...............................................................................................Licenses
Section 2.15..................................................................................Environmental Matters
Section 2.18........................................................................................Certain Changes
Section 3.04.....................................................................Purchaser's Governmental Approvals
Section 6.07..........................................................................Required Consents (Purchaser)
Section 7.07.....................................................................Required Consents (Parent/Company)
EXHIBITS
Exhibit A.......................................................................General Assignment and ▇▇▇▇ of Sale
Exhibit B......................................................................................Assumption Agreement
Exhibit C......................................................................Officer's Certificate of the Company
Exhibit D....................................................................Secretary's Certificate of the Company
Exhibit E........................................................................Officer's Certificate of Purchaser
Exhibit F......................................................................Secretary's Certificate of Purchaser
Exhibit G.....................................................................................Intentionally Omitted
Exhibit H............................................................................Net Current Assets Calculation
Exhibit I.....................................................................................Diligence Assumptions
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT dated as of October 17, 2000 (the "EFFECTIVE
DATE") is made and entered into by and among Lake ▇▇▇▇ Station, Inc., a Nevada
corporation ("PURCHASER"), Station Casinos, Inc., a Nevada corporation ("STN"),
Ameristar Casino Las Vegas, Inc., a Nevada corporation (the "COMPANY"), and
Ameristar Casinos, Inc., a Nevada corporation ("PARENT"). Capitalized terms not
otherwise defined herein have the meanings set forth in SECTION 13.01.
WHEREAS, the Company owns and operates that certain hotel and casino
facility known as "The Reserve" located in Henderson, Nevada (the "BUSINESS");
and
WHEREAS, the Company desires to enter into an agreement to sell, transfer
and assign to Purchaser, and Purchaser desires to enter into an agreement to
purchase and acquire from the Company, certain of the assets of the Company
relating to the operation of the Business, and in connection therewith,
Purchaser has agreed to assume certain of the liabilities of the Company
relating to the Business, all on the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
SALE OF ASSETS AND CLOSING
1.01 ASSETS.
(a) ASSETS TRANSFERRED. On the terms and subject to the conditions set
forth in this Agreement, the Company will sell, transfer, convey, assign and
deliver to Purchaser, and Purchaser will purchase and pay for, at the Closing,
all of the Company's right, title and interest in, and to all of the properties,
assets and rights of every nature, kind and description, tangible and intangible
(including goodwill), whether real, personal or mixed, whether accrued,
contingent or otherwise, and whether now existing or hereafter acquired (other
than the Excluded Assets) used primarily in connection with the Business, except
as otherwise provided in SECTION 1.01(b), as the same shall exist on the Closing
Date including but not limited to such properties, assets and rights in the
following categories (collectively with any proceeds and awards referred to in
SECTION 1.09, the "ASSETS"):
(i) REAL PROPERTY. The real property described in SECTION 1.01(a)(i)
OF THE DISCLOSURE SCHEDULE, and all of the rights arising out of the
ownership thereof or appurtenant thereto (the "OWNED REAL PROPERTY"),
together with all buildings, structures, facilities, fixtures and other
improvements thereto (the "IMPROVEMENTS") and all transferable licenses,
permits, approvals and qualifications relating to any Real Property issued
to the Company by any Governmental or Regulatory Authority;
(ii) REAL PROPERTY LEASES AND AGREEMENTS. Subject to SECTION 1.08, (A)
the leases, subleases and licenses of real property and related guarantees
described in SECTION 1.01(a)(ii)(A) OF THE DISCLOSURE SCHEDULE as to which
the Company is the lessor, sublessor or licensor together with any
agreements for use or occupancy of hotel rooms, banquet facilities or
meeting rooms, and (B) the leases, subleases and licenses described in
SECTION 1.01(a)(ii)(B) OF THE DISCLOSURE SCHEDULE as to which the Company
is the lessee, sublessee or licensee (including the land and buildings,
improvements and structures and all appurtenances belonging thereto) (such
real property, the "LEASED REAL PROPERTY"; and, together with the Owned
Real Property, the "REAL PROPERTY"); and all other rights, subleases,
licenses, permits, deposits and profits appurtenant to or related to such
leases, subleases and licenses described in this SECTION 1.01(a)(ii) (the
leases and agreements described in subclauses (A) and (B) and all of the
Company's interest (including the land and buildings, improvements and
structures located thereon and all appurtenances belonging thereto) in
those certain subleases and licenses as to which the Company is the lessee,
sublessee or licensee as described in Section 1.01(a)(ii)(B) of the
Disclosure Schedule, the "REAL PROPERTY LEASES");
(iii) ACCOUNTS RECEIVABLE. All accounts receivable of the Company
existing on the Closing Date and calculated as set forth on the schedule
attached hereto as EXHIBIT H (the "ACCOUNTS RECEIVABLE");
(iv) TANGIBLE PERSONAL PROPERTY. All furniture, fixtures, equipment,
machinery, consumables, inventory, merchandise, liquor, food, supplies,
spare and replacement parts and other tangible personal property
(including, without limitation, all Gaming Devices and all plans, designs
and drawings for future expansion of the Business) used primarily in the
conduct of the Business (the "TANGIBLE PERSONAL PROPERTY");
(v) PERSONAL PROPERTY LEASES. Subject to SECTION 1.08, (A) the leases
or subleases of Tangible Personal Property described in SECTION
1.01(a)(v)(A) OF THE DISCLOSURE SCHEDULE as to which the Company is the
lessor or sublessor and (B) the leases of Tangible Personal Property
described in SECTION 1.01(a)(v)(B) OF THE DISCLOSURE SCHEDULE as to which
the Company is the lessee or sublessee, together with any options to
purchase the underlying property (the leases and subleases described in
SUBCLAUSES (A) and (B), the "PERSONAL PROPERTY LEASES");
(vi) BUSINESS CONTRACTS. Subject to SECTION 1.08, all Contracts (other
than the Real Property Leases and the Personal Property Leases) to which
the Company is a party, the terms of which permit assignment of the
Company's interest therein or with respect to which all necessary consents
to assignment of the Company's interest therein have been obtained prior to
the Closing, and which are utilized primarily in the conduct of the
Business, including, without limitation, Contracts described in SECTION
1.01(a)(vi) OF THE DISCLOSURE SCHEDULE and Contracts relating to suppliers,
sales representatives, distributors, purchase orders, marketing
arrangements and manufacturing arrangements (the "BUSINESS CONTRACTS");
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(vii) PREPAID EXPENSES. All prepaid expenses of the Company existing
on the Closing Date and calculated as set forth on the schedule attached
hereto as EXHIBIT H (the "PREPAID EXPENSES");
(viii) LICENSES. To the extent transfer is permitted under applicable
Laws and pursuant to the terms of such Licenses and subject to SECTION
1.08, Licenses (including applications therefor) issued primarily in
connection with the conduct of the Business, including, without limitation,
the Licenses listed in SECTION 1.01(a)(viii) OF THE DISCLOSURE SCHEDULE
(the "BUSINESS LICENSES");
(ix) VEHICLES. All motor vehicles owned or leased by the Company and
used primarily in the conduct of the Business, all of which are listed in
SECTION 1.01(a)(ix) OF THE DISCLOSURE SCHEDULE (the "VEHICLES");
(x) SECURITY DEPOSITS. All security deposits deposited by or on behalf
of the Company as lessee or sublessee under the Personal Property Leases
existing on the Closing Date and calculated as set forth on the schedule
attached hereto as EXHIBIT H (the "LESSEE SECURITY DEPOSITS");
(xi) OTHER RIGHTS. All third party guarantees, warranties, indemnities
and similar rights in favor of the Company with respect to any Asset, other
than claims and recoveries under litigation of the Company against third
parties arising out of or relating to events or conditions existing or
occurring prior to the Transfer Time;
(xii) HOTEL AND ENTERTAINMENT RESERVATIONS. All security deposits or
payments made to the Company prior to the Transfer Time with regard to any
hotel and entertainment reservations for events following the Transfer
Time;
(xiii) INTELLECTUAL PROPERTY. All of the Company's licensed products
or processes, patents, copyrights, trademarks, service marks, service
names, designs, know-how, processes, trade secrets, inventions, and other
proprietary data (including, without limitation, all customer lists) used
exclusively in the Business or exclusively in connection with the Assets
(other than the trade names and logos described in SECTION 1.01(b)(viii))
(the "TRANSFERRED INTELLECTUAL PROPERTY"), which Transferred Intellectual
Property is listed in SECTION 1.01(a)(xiii) OF THE DISCLOSURE SCHEDULE; and
(xiv) BOOKS AND RECORDS. All Books and Records used primarily in the
conduct of the Business or otherwise relating primarily to the Assets
(including, without limitation, customer lists and customer data bases
relating primarily to the Business (the "BUSINESS CUSTOMER LISTS"), all
Books and Records required by the Commission to be maintained at the
Business, other than the Excluded Books and Records (the "BUSINESS BOOKS
AND RECORDS").
To the extent any of the Business Books and Records are items susceptible
to duplication and are either (x) used in connection with any of the Company's
or its Affiliates' businesses other than the Business or (y) are required by Law
to be retained by the Company or its Affiliates, the Company may deliver
photostatic copies or other reproductions from which, in
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the case of Business Books and Records referred to in clause (x), information
solely concerning the Company's businesses other than the Business has been
deleted.
Subject to the terms and conditions hereof, at the Closing, the Assets
shall be transferred or otherwise conveyed to Purchaser free and clear of all
Liabilities, obligations, liens and encumbrances excepting only Assumed
Liabilities and Permitted Liens which shall be payable by Purchaser only to the
extent they are Assumed Liabilities.
(b) EXCLUDED ASSETS. Notwithstanding anything in this Agreement to the
contrary, the following assets and properties of the Company (the "EXCLUDED
ASSETS") shall be excluded from and shall not constitute Assets:
(i) CASH. All cash (including checks received prior to the Transfer
Time, whether or not deposited or cleared prior to the Transfer Time)
including, without limitation, cage cash, slot fill, drop boxes, valet
register, commercial paper, certificates of deposit and other bank
deposits, treasury bills and other cash equivalents;
(ii) INSURANCE. Subject to SECTION 1.09, life insurance policies of
officers and other employees of the Company and all other insurance
policies relating to the operation of the Business;
(iii) EMPLOYEE BENEFIT PLANS. All assets owned or held by or under any
Benefit Plans including assets held in trust or insurance contracts for the
benefit of Benefit Plan participants or beneficiaries;
(iv) TAX REFUNDS. All refunds or credits, if any, of Taxes due to or
from the Company by reason of its ownership of the Assets or operation of
the Business to the extent attributable to any time or period ending at or
prior to the Transfer Time;
(v) EXCLUDED BOOKS AND RECORDS. The minute books, stock transfer books
and corporate seal of the Company and any other Books and Records relating
primarily to the Excluded Assets or the Retained Liabilities except for the
Business Customer Lists and such Books and Records required by the
Commission to be maintained at the Business (the "EXCLUDED BOOKS AND
RECORDS");
(vi) LITIGATION CLAIMS. All rights (including indemnification) and
claims and recoveries under litigation of the Company against third parties
(other than rights, claims and recoveries acquired by Purchaser pursuant to
SECTION 1.01(a)(xi)), arising out of or relating to events prior to the
Transfer Time;
(vii) EXCLUDED OBLIGATIONS. The rights of the Company in, to and under
all Contracts of any nature, the obligations of the Company under which
expressly are not assumed by Purchaser pursuant to SECTION 1.02(b);
(viii) TRADE NAMES AND LOGOS. All of the Company's right, title and
interest in, to and under the names "Ameristar", "Ameristar Casinos, Inc."
and "Ameristar Casino Las Vegas, Inc.," including any derivative names and
related marks, designs or logos, except for the Transferred Intellectual
Property;
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(ix) GAMING CHIPS AND TOKENS. All of the Company's gaming chips and
tokens, including, without limitation, all (A) Gaming Device tokens not
currently in circulation and (B) "reserve" chips, if any, not currently in
circulation, except that at Purchaser's written election made at any time
prior to the Closing Date (which election shall be subject to the prior
approval of the Commission), such chips and tokens may be acquired by
Purchaser at the Closing without further consideration;
(x) INTELLECTUAL PROPERTY. All trade names, marks, designs, logos,
domain names and web sites other than the Transferred Intellectual
Property;
(xi) RIGHTS UNDER THIS AGREEMENT. The Company's rights under this
Agreement;
(xii) LEVY PURCHASE AGREEMENT. The Company's rights under that certain
Purchase Agreement (the "LEVY PURCHASE AGREEMENT") that may be entered into
between the Company and Levy Realty Trust, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee with
respect to the 10.52 acres of vacant land to be purchased thereunder (and
all related agreements) and, following the closing under the Levy Purchase
Agreement, such land (the "LAND" and collectively, the "LEVY AGREEMENTS AND
LAND"); PROVIDED, HOWEVER, that in the event that Purchaser notifies the
Company in writing within four (4) days after the Effective Date that
Purchaser desires for the Levy Agreements and Land to be an Asset, then
prior to the Closing the Company shall purchase the Land for a price not to
exceed $1,833,005 pursuant to the Levy Purchase Agreement and the Land
shall constitute an Asset and the Purchase Price shall be increased in an
amount equal to the amount actually paid by the Company pursuant to the
Levy Purchase Agreement;
(xiii) SIGNS. All of the Company's signs containing any trade name,
▇▇▇▇, design or logo described in clause (viii) or (x) above, which
Purchaser shall, at Purchaser's sole cost and expense and using reasonable
care, not later than promptly following the expiration of any period that
Purchaser is permitted to use such names, marks, designs or logos pursuant
hereto, remove from the Real Property and Improvements thereto and place in
a reasonably accessible location on the Real Property for prompt retrieval
by the Company, together with all of the Company's right, title and
interest therein, and as promptly as practicable, notify the Company and
Parent that such signs have been removed and as to the location of such
signs; PROVIDED, HOWEVER, that other than as expressly provided herein,
Purchaser shall have no liability to the Company arising out of or
resulting from Purchaser's performance of its removal, storage or other
obligations with respect to such signs; and
(xiv) EXCLUDED CONTRACTS. The Management and Administrative Services
Agreement between the Company and Parent and that certain Vending Equipment
Location Agreement dated March 26, 1996 between C.T.S. Enterprises and The
Reserve Hotel and Casino, as amended.
(xv) EXCLUDED SLOT MACHINES. The 134 slot machines that, on the
Effective Date, are not being used in the operation of the Business and are
in storage.
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1.02 LIABILITIES.
(a) ASSUMED LIABILITIES. In connection with the sale, transfer,
conveyance, assignment and delivery of the Assets pursuant to this Agreement, on
the terms and subject to the conditions set forth in this Agreement, Purchaser
shall assume as of the Transfer Time and shall pay, perform and discharge when
due the following Liabilities of the Company, in each case to the extent arising
out of or relating to the Business or the Assets (x) in the case of items listed
in subsections (i), (iii) and (iv) below, as the same shall accrue after the
Transfer Time and (y) in the case of items listed in subsections (ii) and (v)
through (ix) below, as the same shall exist at the Transfer Time (collectively,
the "ASSUMED LIABILITIES"), and no other Liabilities:
(i) REAL PROPERTY LEASE OBLIGATIONS. Subject to the provisions of
SECTION 1.08, all obligations of the Company under the Real Property
Leases;
(ii) ACCOUNTS PAYABLE. All obligations of the Company with respect to
accounts payable outstanding on the Closing Date and calculated as set
forth on the Schedule attached hereto as EXHIBIT H, but excluding any
Liability owed by the Company to any Affiliate of the Company ("ACCOUNTS
PAYABLE");
(iii) PERSONAL PROPERTY LEASE OBLIGATIONS. Subject to the provisions
of SECTION 1.08, all obligations of the Company under the Personal Property
Leases;
(iv) OBLIGATIONS UNDER CONTRACTS AND LICENSES. Subject to the
provisions of SECTION 1.08, all obligations of the Company under the
Business Contracts and Business Licenses that constitute Assets;
(v) ACCRUED EXPENSES. All obligations of the Company with respect to
accrued expenses outstanding on the Closing Date and calculated as set
forth on EXHIBIT H attached hereto ("ACCRUED EXPENSES");
(vi) RETURNED GOODS. All obligations of the Company for replacement
of, or refund for, damaged, defective or returned goods, to the extent such
goods are subject to full return privileges from the supplier thereof;
(vii) SECURITY DEPOSITS. All outstanding obligations of the Company on
the Closing Date with respect to any security deposit held by the Company
as lessor or sublessor under the Real Property Leases or Personal Property
Leases calculated as set forth on EXHIBIT H attached hereto (the "LESSOR
SECURITY DEPOSITS");
(viii) PROGRESSIVE METERS. All outstanding obligations of the Company
on the Closing Date with respect to any progressive meter on any Gaming
Device calculated as set forth on EXHIBIT H attached hereto;
(ix) RESERVATIONS. All obligations of the Company with respect to
hotel room and entertainment reservations; and
(x) POST-CLOSING LIABILITIES. All Liabilities of the Business (other
than Retained Liabilities) to the extent (A) resulting from events or
conditions occurring
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following the Transfer Time or (B) arising out of the Assets and occurring after
the Transfer Time.
(b) RETAINED LIABILITIES. All Liabilities of the Company other than
Assumed Liabilities (the "RETAINED LIABILITIES") shall be retained and paid,
performed and discharged when due by the Company and Parent (PROVIDED, that the
Company shall have the ability to contest, in good faith, any such claim of
liability asserted in respect thereof by any Person other than Purchaser and its
Affiliates, so long as such contest does not result in a Lien upon any of the
Assets):
(i) except to the extent any such liability is reflected on the
Closing Date Balance Sheet as a current liability of the Business, any loss
or liability of the Company of any nature or description, whether
liquidated or contingent, to the extent (a) resulting from events or
conditions which occurred or existed prior to the Transfer Time or (b)
arising out of or relating to the Excluded Assets (including those items
identified as Retained Liabilities in SECTION 1.08);
(ii) any loss or liability relating to current or former employees of
the Business (and their eligible dependents and beneficiaries), including
with respect to employment or Benefit Plans, which accrued on or prior to
the Transfer Time, except to the extent that such liability is reflected on
the Closing Balance Sheet as a current liability of the Business;
(iii) all Liabilities with respect to gaming chips and tokens issued
by the Company (but not progressive meters), except as provided otherwise
herein;
(iv) all Liabilities related to Benefit Plans, except to the extent
that such liability is reflected on the Closing Balance Sheet as a current
liability of the Business;
(v) all Indebtedness (other than current accounts payable or accrued
expenses of the Company incurred or accrued in the ordinary course of
business, but only to the extent that the accrual for such payables and
expenses has been properly reflected on the Closing Balance Sheet and other
than to the extent arising following the Transfer Time under Contracts that
constitute Assets);
(vi) any Liability, whether currently in existence or arising
hereafter, owed by the Company to any of its Affiliates;
(vii) all Liabilities related to any fines or penalties imposed
against the Company (or with respect to the Business or any Asset) by any
Governmental or Regulatory Authority (including, without limitation, the
Commission) prior to the Transfer Time; and
(viii) all other Liabilities of the Company other than the Assumed
Liabilities.
7
1.03 PURCHASE PRICE; ALLOCATION.
(a) PURCHASE PRICE. Subject to the adjustments set forth in SECTION
1.05, the aggregate purchase price for the Assets shall be Seventy Million
Dollars ($70,000,000) (the "PURCHASE PRICE") plus the amount of any Surplus or
minus the amount of any Deficiency, in each case, as determined in accordance
with SECTION 1.05. Upon Closing, the Purchase Price shall be payable in
immediately available United States funds at the Closing in the manner provided
in SECTION 1.04.
(b) ALLOCATION OF PURCHASE PRICE. Purchaser and the Company shall
negotiate in good faith prior to the Closing Date and determine the allocation
of the consideration paid by Purchaser for the Assets and the covenant not to
compete contained in SECTION 4.09 hereof. Purchaser and the Company each agrees
(i) that any such allocation shall be consistent with the requirements of
Section 1060 of the Code and the regulations thereunder, (ii) to complete
jointly and to file separately Form 8594 with its Federal income Tax Return
consistent with such allocation for the tax year in which the Closing Date
occurs and (iii) that no party will take a position on any income, transfer or
gains Tax Return, before any Governmental or Regulatory Authority charged with
the collection of any such Tax or in any judicial proceeding, that is in any
manner inconsistent with the terms of any such allocation without the consent of
the other party.
1.04 CLOSING. The Closing will take place at the offices of ▇▇▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, or at such
other place as Purchaser and the Company mutually agree, at 10:00 A.M. local
time and shall be deemed to occur at 11:59 P.M., local time, on the Closing Date
(the "TRANSFER TIME"). At the Closing, Purchaser will pay the Estimated Purchase
Price by wire transfer of immediately available funds to such accounts as the
Company may reasonably direct by written notice delivered to Purchaser at least
two (2) Business Days before the Closing Date. Simultaneously, (a) the Company
will assign and transfer to Purchaser all of its right, title and interest in
and to the Assets (free and clear of all Liens, other than Permitted Liens) by
delivery of (i) a General Assignment and ▇▇▇▇ of Sale substantially in the form
of EXHIBIT A hereto (the "GENERAL ASSIGNMENT"), duly executed by the Company,
(ii) Grant, Bargain and Sale Deeds in proper statutory form for recording and
otherwise in form and substance reasonably satisfactory to Purchaser conveying
title to the Real Property and (iii) such other good and sufficient instruments
of conveyance, assignment and transfer, in form and substance reasonably
acceptable to Purchaser's counsel, as shall be effective to vest in Purchaser
good title to the Assets (the General Assignment and the other instruments
referred to in clauses (ii) and (iii) being collectively referred to herein as
the "ASSIGNMENT INSTRUMENTS"), and (b) Purchaser will assume from the Company
the due payment, performance and discharge of the Assumed Liabilities by
delivery of (i) an Assumption Agreement substantially in the form of EXHIBIT B
hereto (the "ASSUMPTION AGREEMENT"), duly executed by Purchaser, and (ii) such
other good and sufficient instruments of assumption, in form and substance
reasonably acceptable to the Company's counsel, as shall be effective to cause
Purchaser to assume the Assumed Liabilities as and to the extent provided in
SECTION 1.02(a) (the Assumption Agreement and such other instruments referred to
in clause (ii) being collectively referred to herein as the "ASSUMPTION
INSTRUMENTS"). At the Closing, there shall also be delivered to the Company and
Purchaser the opinions, certificates and other contracts, documents and
instruments required to be delivered under ARTICLES VI and VII.
8
1.05 DETERMINATION OF SURPLUS OR DEFICIENCY; POST-CLOSING ADJUSTMENT.
(a) On or before the seventh (7th) Business Day preceding the Closing
Date, the Company shall, and Parent shall cause the Company to, prepare and
deliver to Purchaser an interim balance sheet (the "ESTIMATED CLOSING BALANCE
SHEET") of the Company as of the close of business on the final day of the
calendar month immediately preceding the calendar month during which the Closing
Date occurs (the "TEST MONTH"), together with a statement of the Company's Net
Current Assets as of such date calculated in a manner consistent with the
calculation set forth on Exhibit H attached hereto; provided that if the Closing
Date occurs within the first seven (7) Business Days of a calendar month, the
Estimated Closing Balance Sheet shall be as of the close of business on the
final day of the second calendar month immediately preceding the calendar month
during which the Closing Date occurs (in such case, the "TEST MONTH"). The
Estimated Closing Balance Sheet shall be accompanied by a certificate of the
Chief Financial Officer of the Company to the effect that the Estimated Closing
Balance Sheet presents fairly, in accordance with GAAP and the accounting
practices of the Company applied on a consistent basis, the financial condition
of the Company as of the close of business on the last day of the Test Month.
The amount of Net Current Assets set forth in the Estimated Closing Balance
Sheet shall be final and binding for purposes of determining the amount of any
Surplus or Deficiency used in calculating the Purchase Price (the "ESTIMATED
PURCHASE PRICE"), unless Purchaser delivers a good faith written objection to
the calculation of Net Current Assets at least three (3) Business Days prior to
the anticipated Closing Date (the "OBJECTION NOTICE"). The Company shall make
available to Purchaser and its representatives the books, records and workpapers
used to prepare the Estimated Closing Balance Sheet. In the event of an
Objection Notice, the Company and Purchaser shall negotiate in good faith during
the period preceding the Closing Date to resolve the dispute. If the dispute is
not resolved by the specified Closing Date, Purchaser shall pay an Estimated
Purchase Price based upon the amount of any Deficiency or Surplus, as
applicable, resulting from the calculation of Net Current Assets set forth in
the Estimated Balance Sheet.
(b) As promptly as practicable after the Closing Date, but in no event
more than sixty (60) days after the Closing Date (such date on which the Closing
Balance Sheet is delivered, the "CLOSING FINANCIAL STATEMENTS DELIVERY DATE"),
Purchaser will prepare and deliver to the Company and Parent a balance sheet of
the Company as of the close of business on the Closing Date (the "CLOSING
BALANCE SHEET") and a calculation of Net Current Assets, in a manner consistent
with the calculation set forth on Exhibit H attached hereto, from such Closing
Balance Sheet. The Closing Balance Sheet shall be accompanied by a certificate
of the Chief Financial Officer of Purchaser to the effect that the Closing
Balance Sheet presents fairly, in accordance with GAAP and the accounting
practices of the Company applied on a consistent basis, the financial condition
of the Company as of the close of business on the Closing Date and that the Net
Current Assets calculation was made in accordance with the terms of this
Agreement.
(c) The Company and a firm of independent public accountants
designated by the Company (the "COMPANY'S ACCOUNTANT") will be entitled to
reasonable access during normal business hours to the relevant records,
personnel and working papers of the Purchaser to aid in their review of the
Closing Balance Sheet and the calculation of Net Current Assets therefrom. The
Closing Balance Sheet and the calculation of Net Current Assets therefrom shall
be deemed to be accepted by the Company and shall be conclusive for the purposes
of the adjustment
9
described in SECTION 1.05(d) and (e) hereof except to the extent, if any, that
the Company or Company's Accountant shall have delivered, within thirty (30)
days after the Closing Financial Statements Delivery Date, a written notice to
Purchaser setting forth objections thereto, specifying in reasonable detail any
such objection (it being understood that any amounts not disputed as provided
herein shall be paid promptly). If a change proposed by the Company is disputed
by Purchaser, then Purchaser and the Company shall negotiate in good faith to
resolve such dispute. If, after a period of thirty (30) days following the date
on which the Company gives Purchaser notice of any such proposed change, any
such proposed change still remains disputed, then Purchaser and the Company
hereby agree that the Las Vegas, Nevada office of PriceWaterhouseCoopers LLP
(the "ACCOUNTING FIRM") shall resolve any remaining disputes. The Accounting
Firm shall act as an arbitrator to make a determination with respect to the
issues that are disputed by the parties, based on presentations by the Company
and Purchaser, and by independent review of the Accounting Firm if deemed
necessary in the sole discretion of the Accounting Firm, which determination
shall be limited to only those issues still in dispute. The decision of the
Accounting Firm shall be final and binding and shall be in accordance with the
provisions of this Section 1.05(c). The fees and expenses of the Accounting
Firm, if any, shall be paid equally by Purchaser and the Company. The date on
which the Net Current Assets is finally determined pursuant to this SECTION
1.05(c) is referred to hereinafter as the "DETERMINATION DATE."
(d) If the amount of Net Current Assets used to determine the
Estimated Purchase Price pursuant to SECTION 1.05(a) above is greater than the
amount set forth in the Closing Balance Sheet, the Company shall pay to
Purchaser, as an adjustment to the Estimated Purchase Price, an aggregate amount
equal to such excess. Any payments required to be made by the Company pursuant
to this SECTION 1.05(d) shall be made within ten (10) days of the Determination
Date by wire transfer of immediately available funds to an account designated by
Purchaser.
(e) If the amount of Net Current Assets used to determine the
Estimated Purchase Price pursuant to SECTION 1.05(a) above is less than the
amount set forth in the Closing Balance Sheet, Purchaser shall pay to the
Company, as an adjustment to the Estimated Purchase Price, an amount equal to
such difference. Any payments required to be made by Purchaser pursuant to this
SECTION 1.05(e) shall be made within ten (10) days of the Determination Date by
wire transfer of immediately available funds to an account designated by the
Company.
1.06 PRORATIONS. The following prorations relating to the Assets and
the ownership and operation of the Business will be made as of the Transfer
Time, with the Company liable to the extent such items relate to any time period
prior to the Transfer Time and are Retained Liabilities and Purchaser liable to
the extent such items relate to periods beginning with and subsequent to the
Transfer Time or are Assumed Liabilities:
(a) Real estate taxes and assessments on or with respect to the Real
Property provided that proration with respect to Leased Real Property shall be
based upon the amounts payable by the Company in respect to such taxes under the
Real Property Leases.
(b) Rents, additional rents, taxes and other items payable by or to
the Company under the Real Property Leases and Personal Property Leases.
10
(c) The amount of rents, taxes and charges for sewer, water,
telephone, electricity and other utilities relating to the Real Property.
(d) All other items normally adjusted in connection with similar
transactions; provided that receipts of the Company with respect to hotel room
rentals on the Closing Date shall be retained by the Company.
Except as otherwise agreed by the parties or with respect to amounts to
adjustments to the Purchase Price made pursuant to SECTION 1.05, the net amount
of all such prorations will be settled and paid on the Closing Date. If the
Closing shall occur before a real estate tax rate is fixed, the apportionment of
taxes shall be based upon the tax rate for the preceding year applied to the
latest assessed valuation.
1.07 FURTHER ASSURANCES; POST-CLOSING COOPERATION.
(a) Subject to the terms and conditions of this Agreement, at any time
or from time to time after the Closing, at Purchaser's request and without
further consideration, the Company shall execute and deliver to Purchaser such
other instruments of sale, transfer, conveyance, assignment and confirmation,
provide such materials and information and take such other actions as Purchaser
may reasonably deem necessary or desirable in order more effectively to
transfer, convey and assign to Purchaser, and to confirm Purchaser's title to,
all of the Assets (including, without limitation, the delivery to Purchaser of
fully executed Uniform Commercial Code amendment or termination statements
relating to the Assets as Purchaser shall request), and, to the full extent
permitted by Law, to put Purchaser in actual possession and operating control of
the Business and the Assets and to assist Purchaser in exercising all rights
with respect thereto, and otherwise to cause the Company to fulfill its
obligations under this Agreement.
(b) Following the Closing, the Company and Purchaser will afford the
other party, its counsel and its accountants, during normal business hours,
reasonable access to the books, records and other data relating to the Business
in its possession with respect to periods prior to the Closing and the right to
make copies and extracts therefrom, to the extent that such access may be
reasonably required by the requesting party in connection with (i) the
preparation of Tax Returns, (ii) the determination or enforcement of rights and
obligations under this Agreement, (iii) compliance with the requirements of any
Governmental or Regulatory Authority including without limitation the
Commission, (iv) the determination or enforcement of the rights and obligations
of any party to this Agreement and (v) in connection with any actual or
threatened Action or Proceeding. Further, the Company and Purchaser agree for a
period extending six (6) years after the Closing Date not to destroy or
otherwise dispose of any such books, records and other data unless such party
shall first offer in writing to surrender such books, records and other data to
the other party and such other party shall not agree in writing to take
possession thereof during the ten (10) day period after such offer is made.
(c) If, in order properly to prepare its Tax Returns, other documents
or reports required to be filed with Governmental or Regulatory Authorities or
its financial statements or to fulfill its obligations hereunder, it is
necessary that the Company or Purchaser be furnished with additional
information, documents or records relating to the Business not referred to in
paragraph (b) above, and such information, documents or records are in the
possession or control of
11
the other party, such other party shall use its commercially reasonable
efforts to furnish or make available such information, documents or records
(or copies thereof) at the recipient's request, cost and expense.
(d) Notwithstanding anything to the contrary contained in this
Section, if the Company and Purchaser are in an adversarial relationship in
litigation or arbitration, the furnishing of information, documents or records
in accordance with paragraphs (b) and (c) of this Section shall be subject to
applicable rules relating to discovery.
1.08 THIRD-PARTY CONSENTS. To the extent that any Real Property Lease,
Personal Property Lease, Business Contract or Business License is not assignable
without the consent of another party, this Agreement shall not constitute an
assignment or an attempted assignment thereof if such assignment or attempted
assignment would constitute a breach thereof or a default thereunder. The
Company and Purchaser shall use commercially reasonable efforts to obtain the
consent of such other party to the assignment of any such Real Property Lease,
Personal Property Lease, Business Contract or Business License to Purchaser in
all cases in which such consent is required for such assignment, PROVIDED,
HOWEVER, that in the event any such consent, other than any required consent of
the Commission or any consent that is listed in SECTION 6.07 OF THE DISCLOSURE
SCHEDULE (each, a "REQUIRED CONSENT"), is not obtained on or prior to the
Closing Date, such event shall not cause the Closing to be delayed or constitute
a default by the Company of any obligation hereunder or result in a reduction of
the Purchase Price. If any such consent, other than a Required Consent, shall
not be obtained, the Company shall cooperate with Purchaser in any reasonable
arrangement designed to provide for Purchaser the benefits intended to be
assigned to Purchaser under the relevant Real Property Lease, Personal Property
Lease, Business Contract or Business License, including enforcement at the cost
and for the account of Purchaser of any and all rights of the Company against
the other party thereto arising out of the breach or cancellation thereof by
such other party or otherwise, provided that if Purchaser does not receive the
benefits intended to be assigned to Purchaser pursuant to a Real Property Lease,
Personal Property Lease, Business Contract or Business License because a consent
is not obtained and an arrangement transferring such benefit is not entered
into, such Real Property Lease, Personal Property Lease, Business Contract or
Business License, as applicable, shall constitute an Excluded Asset and the
obligations pursuant thereto shall constitute a Retained Liability.
1.09 INSURANCE PROCEEDS. If any of the Assets is destroyed or damaged
or taken in condemnation following the Effective Date, the insurance proceeds or
condemnation award with respect thereto shall be an Asset. At the Closing, the
Company shall pay or credit to Purchaser any such insurance proceeds or
condemnation awards received by it on or prior to the Closing (along with the
amount of any deductible or retention withheld therefrom) and shall assign to or
assert for the benefit of Purchaser all of its rights against any insurance
companies, Governmental or Regulatory Authorities and others with respect to
such damage, destruction or condemnation. As and to the extent that there is
available insurance under policies maintained by the Company and its Affiliates,
predecessors and successors in respect of any Assumed Liability, except for any
such insurance proceeds with respect to which the insured is directly or
indirectly self-insured or has agreed to indemnify the insurer, the Company
shall cause such insurance to be applied toward the payment of such Assumed
Liability.
12
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PARENT
The Company and Parent hereby jointly and severally represent and
warrant to Purchaser as follows as of the Effective Date and as of the Closing
Date, except, to the extent any such representation or warranty is made as of a
specified date earlier than the Closing Date, such earlier date:
2.01 CORPORATE EXISTENCE.
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the Laws of the State of Nevada, and has full
corporate power and authority to conduct its business as and to the extent now
conducted and to own, use and lease its Assets and enter into and perform this
Agreement and consummate the transactions contemplated hereby.
(b) SUBSIDIARIES. The Company does not have any subsidiaries or any
other equity investment in any entity, nor does it own any other securities with
respect to any entity.
2.02 AUTHORITY. The execution and delivery by the Company of this
Agreement, and the performance by the Company and Parent of their obligations
hereunder, have been duly and validly authorized by the Board of Directors and
the stockholder of the Company and the Board of Directors of Parent, no other
action on the part of the Company or Parent or their stockholders being
necessary. This Agreement has been duly and validly executed and delivered by
the Company and Parent and constitutes a legal, valid and binding obligation of
the Company and Parent enforceable against the Company and Parent in accordance
with its terms, except to the extent such enforceability (a) may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally, and (b) is subject to general
principles of equity.
2.03 NO CONFLICTS. Except as set forth in SECTION 2.03 OF THE
DISCLOSURE SCHEDULE, the execution, delivery and performance by the Company of
this Agreement do not and the consummation of the transactions contemplated
hereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of incorporation or bylaws (or
other comparable charter documents) of the Company;
(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in SECTION 2.04 OF THE DISCLOSURE
SCHEDULE, conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to the Company or any of the Assets
(other than such conflicts, violations or breaches (i) which could not in the
aggregate reasonably be expected to materially and adversely affect the validity
or enforceability of this Agreement or to have a Material Adverse Effect or (ii)
as would occur solely as a result of the identity or the legal or regulatory
status of Purchaser or any of its Affiliates); or
13
(c) except as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect or to materially and adversely
affect the ability of (i) the Company to consummate the transactions
contemplated hereby or to perform its obligations hereunder or (ii) Purchaser to
operate the Business after the Transfer Time in a manner substantially
consistent with the Company's past practice, (A) conflict with or result in a
violation or breach of, (B) constitute (with or without notice or lapse of time
or both) a default under, (C) require the Company to obtain any consent,
approval or action of, make any filing with or give any notice to any Person as
a result or under the terms of, (D) result in or give to any Person any right of
termination, cancellation, acceleration or modification in or with respect to,
or (v) result in the creation or imposition of any Lien upon the Company or any
of the Assets under, any Contract or License to which the Company is a party or
by which any of its Assets is bound.
2.04 GOVERNMENTAL APPROVALS AND FILINGS. Except as disclosed in
SECTION 2.04 OF THE DISCLOSURE SCHEDULE, no consent, approval, action, order or
authorization of, or registration, declaration or filing with or notice to any
Governmental or Regulatory Authority on the part of the Company is required in
connection with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, except (a) where the
failure to obtain any such consent, approval or action, to make any such filing
or to give any such notice could not reasonably be expected to materially and
adversely affect the ability of the Company to consummate the transactions
contemplated by this Agreement or to perform its obligations hereunder, or to
have a Material Adverse Effect, and (b) those as would be required solely as a
result of the identity or the legal or regulatory status of Purchaser or any of
its Affiliates.
2.05 FINANCIAL STATEMENTS AND CONDITION.
(a) Prior to the execution of this Agreement, the Company has
delivered to Purchaser true and complete copies of (i) the unaudited balance
sheet and the related statements of operations, stockholder's equity and cash
flows of the Company for the fiscal year ended December 31, 1999 and (ii) the
unaudited balance sheets of the Company as of March 31, 2000 and June 30, 2000
and the related unaudited statement of operations for the portions of the fiscal
year then ended. Except as set forth in the notes thereto and as disclosed in
SECTION 2.05(a) OF THE DISCLOSURE SCHEDULE, all such financial statements were
prepared in accordance with GAAP and fairly present in all material respects the
financial condition and results of operations of the Company as of the
respective dates thereof and for the respective periods covered thereby.
(b) Except for the execution and delivery of this Agreement and the
transactions to take place pursuant hereto on or prior to the Closing Date and
except as disclosed in SECTION 2.05(b) OF THE DISCLOSURE SCHEDULE, during the
period beginning on the Financial Statement Date and ending on the Effective
Date there has not been any change with respect to the Business or the Assets
that could reasonably be expected to have a Material Adverse Effect.
14
2.06 TAXES.
(a) TAX LIENS. Except as set forth in SECTION 2.06(a) OF THE
DISCLOSURE SCHEDULE, there are no Tax Liens upon the assets of the Company
except liens for Taxes not yet due.
(b) COMPLIANCE WITH TAX LAWS. Except as set forth in SECTION
2.06(b) OF THE DISCLOSURE SCHEDULE, the Company has complied (and, with
respect to all amounts due with respect to periods through and including the
Closing Date, will comply) with all applicable laws, rules, and regulations
relating to the filing of Tax Returns and the payment and withholding of
Taxes (including, without limitation, withholding and reporting requirements
under Code Sections 1441 through 1464, 3401 through 3406, 6041 and 6049 and
similar provisions under any other laws) and have, within the time and in the
manner prescribed by law, withheld from employee wages and paid over to the
proper governmental authorities all required amounts.
2.07 LEGAL PROCEEDINGS. Except as disclosed in SECTION 2.07 OF THE
DISCLOSURE SCHEDULE, there are no Orders outstanding and no Actions or
Proceedings pending or, to the Knowledge of the Company, threatened against,
relating to or affecting the Company or any of its Assets which could reasonably
be expected individually or in the aggregate to have a Material Adverse Effect,
or which seek to enjoin, rescind or otherwise prevent the consummation of the
transactions contemplated hereby.
2.08 COMPLIANCE WITH LAWS AND ORDERS. To the Knowledge of the Company,
except as disclosed in SECTION 2.08 OF THE DISCLOSURE SCHEDULE or in the filings
of Parent with the Securities and Exchange Commission, the Company is not in
violation of or in default under any Law or Order applicable to the Company or
any of its Assets the effect of which, individually or in the aggregate with
other such violations and defaults, could reasonably be expected to have a
Material Adverse Effect.
2.09 BENEFIT PLANS; ERISA; LABOR MATTERS.
(a) SECTION 2.09(a) OF THE DISCLOSURE SCHEDULE contains a true and
complete list of each Benefit Plan and "employee benefit plan" (within the
meaning of section 3(3) of ERISA, including, without limitation, multiemployer
plans within the meaning of ERISA section 3(37)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit, collective bargaining,
bonus, incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, legally binding or not,
under which any employee or former employee of the Company has any present or
future right to benefits or under which the Company has any present or future
liability. All such plans, agreements, programs, policies and arrangements shall
be collectively referred to as the "COMPANY PLANS".
(b) With respect to each Company Plan, the Company has delivered to
Purchaser a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) thereof.
15
(c) No Lien has arisen on the Assets by reason of Section 302 of
ERISA, Section 412 of the Code or Title IV of ERISA.
(d) Except as set forth in SECTION 2.09(D) OF THE DISCLOSURE SCHEDULE,
no individual shall accrue or receive additional benefits, service or
accelerated rights to payments of benefits under any Benefit Plan, as defined in
Section 280G of the Code, or become entitled to severance, termination allowance
or similar payments as a direct result of the transactions contemplated by this
Agreement.
(e) There are no controversies pending or, to the Knowledge of the
Company, threatened between the Company and any of its employees which
controversies would have a Material Adverse Effect. The Company is not a party
to any collective bargaining agreement or other labor union Contract applicable
to persons employed by the Company except as disclosed in SECTION 2.09(e) OF THE
DISCLOSURE SCHEDULE. The Company has no knowledge of any strikes, slowdowns,
work stoppages, lockouts or threats thereof by or with respect to any of the
employees of the Company.
(f) SECTION 2.09(f) OF THE DISCLOSURE SCHEDULE lists the number of
employees terminated by the Company at each site of employment of the Business
in the 90-day period ending on the date hereof, and the date of such
termination, with respect to each such termination which would be required to be
taken into account in determining whether a "plant closing" or "mass layoff"
subject to the Worker Adjustment and Retraining Notification Act (the "WARN")
could occur based on subsequent terminations; provided that this sentence shall
not apply with respect to any site of employment at which sufficient employees
have not been employed at any time in such 90-day period for terminations of
employment at such site to be subject to WARN.
2.10 REAL PROPERTY.
(a) SECTION 2.10(a) OF THE DISCLOSURE SCHEDULE contains a list of (i)
each parcel of real property currently owned by the Company and (ii) each parcel
of real property leased by the Company.
(b) The Company has good and marketable title to each parcel of real
property described in CLAUSE (i) of PARAGRAPH (a) above free and clear of Liens,
except for Permitted Liens or as disclosed in SECTION 2.10(b) OF THE DISCLOSURE
SCHEDULE and has a valid and subsisting leasehold estate in the real properties
referred to in CLAUSE (ii) of PARAGRAPH (a) above free and clear of Liens,
except for Permitted Liens or as disclosed in SECTION 2.10(b) OF THE DISCLOSURE
SCHEDULE. To the Knowledge of the Company, all of the Real Property Leases are
valid, binding, and enforceable in accordance with their terms, and are in full
force and effect as of the date hereof. To the Knowledge of the Company, except
as disclosed in SECTION 2.10(b) OF THE DISCLOSURE SCHEDULE there are no existing
material defaults by the Company beyond any applicable grace periods under such
leases and the Company has not received any notice of default under any of such
leases.
(c) Without limiting the generality of the foregoing, as to leasehold
estates under the Real Property Leases, the Company warrants that it has quiet
and peaceful possession of each of the properties leased by it.
16
(d) To the Knowledge of the Company, the Real Property is not subject
to any deferred or rollback taxes on account of any change in zoning or land use
classification and, to the Knowledge of the Company, there are no pending
assessments affecting the Real Property.
(e) Except as could not be reasonably expected to have a Material
Adverse Effect, all water, sewer, gas, electric, telephone and drainage
facilities and all other utilities required by law or for the present normal use
and operation of the Business are all connected and operating pursuant to valid
permits, are adequate to service the Business, and such facilities are connected
by means of one or more public or private easements extending from a property
line to one or more public streets, public rights-of-way or utility facilities.
(f) There are no pending or, to the Knowledge of the Company,
threatened condemnation, eminent domain or similar proceedings affecting the
Real Property or any portion thereof.
(g) The Company is not a "foreign person" within the meaning of
Section 1445 ET SEQ. of the Internal Revenue Code of 1986, as amended.
(h) The mechanical equipment located in any improvements located on
the Real Property, including but not limited to air conditioning and heating
systems and the electrical and plumbing systems, are in sufficient condition to
permit the operation of the Business as it is currently conducted.
2.11 TANGIBLE PERSONAL PROPERTY. The Company is in possession of and
has good title to, or has valid leasehold interests in or valid rights under
Contract to use, all tangible personal property used in and individually or in
the aggregate with other such property material to the Business or Condition of
the Company, except for such tangible personal property sold, consumed or
otherwise disposed of in the ordinary course of business since the Financial
Statement Date. All tangible Assets, taken as a whole, are in sufficient
condition to permit the operation of the Business as it is currently conducted.
2.12 CONTRACTS.
(a) SECTION 2.12(a) OF THE DISCLOSURE SCHEDULE (with paragraph
references corresponding to those set forth below) contains a true and
complete list of each of the following Contracts that constitute Assets as of
the Effective Date:
(i) all Contracts (excluding Benefit Plans) providing for a
commitment of employment or consultation services for a specified
term and payments at any one time or in any one year in excess of One Hundred
Thousand Dollars ($100,000);
(ii) all Contracts with any Person containing any provision or
covenant prohibiting or materially limiting the ability of the
Company to engage in any business activity or compete with any Person;
(iii) all Contracts relating to Indebtedness of the Company
included as an Assumed Liability;
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(iv) all Contracts (other than this Agreement) providing for (A) the
future disposition or acquisition of any assets or properties individually or in
the aggregate material to the Business, other than dispositions or acquisitions
in the ordinary course of business, and (B) any merger or other business
combination;
(v) all Contracts between the Company, on the one hand, and any
Affiliate of the Company, on the other hand and which is included as an Assumed
Liability;
(vi) all Contracts (other than this Agreement) that limit or contain
restrictions on the ability of the Company to incur Indebtedness or incur or
suffer to exist any Lien, to purchase or sell any Assets, to change the lines of
business in which it participates or engages or to engage in any merger or other
business combination and which are included as Assumed Liabilities;
(vii) all other Contracts that (A) involve the payment, pursuant to
the terms of any such Contract, by or to the Company of more than One Hundred
Thousand Dollars ($100,000) annually or (B) cannot be terminated within ninety
(90) days after giving notice of termination without resulting in any material
cost or penalty to the Company; and
(viii) all Real Property Leases.
(b) As of the Effective Date, each Contract required to be disclosed
in SECTION 2.12(a) OF THE DISCLOSURE SCHEDULE, true and complete copies of which
have been delivered to Purchaser, is in full force and effect and constitutes a
legal, valid and binding agreement, enforceable in accordance with its terms, of
the Company and, to the Knowledge of the Company, of each other party thereto;
and except as disclosed in SECTION 2.12(b) OF THE DISCLOSURE SCHEDULE neither
the Company nor, to the Knowledge of the Company, any other party to such
Contract is in violation or breach of or default under any such Contract (or
with notice or lapse of time or both, would be in violation or breach of or
default under any such Contract) as of the Effective Date, the effect of which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
2.13 LICENSES. As of the Effective Date, the Company has all Licenses
required for the conduct of the Business as presently conducted (other than
Licenses, the absence of which could not reasonably be expected to have a
Material Adverse Effect). Except as set forth on SECTION 2.13 OF THE DISCLOSURE
SCHEDULE, each such License is valid, binding and in full force and effect as of
the Effective Date. Except as set forth on SECTION 2.13 OF THE DISCLOSURE
SCHEDULE, to the Knowledge of the Company, as of the Effective Date the Company
is not in default (or with the giving of notice or lapse of time or both, would
be in default) under any such License in any respect that could reasonably be
expected to have a Material Adverse Effect. The Licenses listed in SECTION 2.13
OF THE DISCLOSURE SCHEDULE are not transferable.
2.14 AFFILIATE TRANSACTIONS. There is no Liability between the
Company, on the one hand, and any officer, director or Affiliate of the Company,
on the other, that will constitute an Assumed Liability.
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2.15 ENVIRONMENTAL MATTERS. Except as disclosed in SECTION 2.15 OF THE
DISCLOSURE SCHEDULE or as could not be reasonably expected to have a Material
Adverse Effect, to the Knowledge of the Company:
(a) the Company holds and is in compliance with all Licenses which are
required under applicable Environmental Laws for the Company to own and operate
the Business (the "ENVIRONMENTAL PERMITS") and will use commercially reasonable
efforts to provide copies of such Environmental Permits to Purchaser and to
facilitate the transfer of those Environmental Permits which are transferable to
Purchaser;
(b) the Company and all real property owned, operated or leased by the
Company are in compliance with applicable Environmental Laws;
(c) the Company has not been notified by any Governmental or
Regulatory Authority or third party of any pending or threatened claim arising
under Environmental Laws (an "ENVIRONMENTAL CLAIM") against the Business or the
Company in connection with the Business;
(d) the Company has not been notified by any Governmental or
Regulatory Authority or third party of any pending claim that either the
Business or the Company in connection with the Business may be a potential
responsible party for environmental contamination or any Release of Hazardous
Material, nor has the Company been notified that any site or facility now or
previously owned or leased by the Company is listed or proposed for listing on
the NPL or any similar state or local list of sites requiring investigation or
clean-up;
(e) the Company in connection with the Business has not entered into
or agreed to any consent decree or order with respect to or affecting the Assets
relating to compliance with any Environmental Law or to investigation or cleanup
of Hazardous Material under any Environmental Law;
(f) there are no aboveground or underground storage tanks located on,
in or under any properties currently or formerly owned, operated or leased by
the Company in connection with the Business or any predecessor of the Business
or the Company in connection with the Business;
(g) no Releases of Hazardous Material have occurred at, from, in, on,
to or under any property currently or formerly owned, operated or leased by the
Company in connection with the Business or any predecessor of the Business or
the Company, and no Hazardous Material is present in, on or about or is
migrating to or from any such property that could give rise to an Environmental
Claim by a Governmental or Regulatory Authority or third party against the
Business or the Company;
(h) neither the Company in connection with the Business, nor any
predecessors thereof, has transported or arranged for the treatment, storage,
handling, disposal or transportation of any Hazardous Substance to any location
that could result in an Environmental Claim against or liability to the Business
or the Company;
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(i) there is no amount of asbestos, ureaformaldehyde material,
polychlorinated biphenyl containing equipment or lead paint containing materials
in, at or on any property owned, leased or operated by the Company in connection
with the Business; and
(j) there have been no environmental investigations, studies, audits
or tests with respect to any property currently or formerly owned, leased or
operated by the Company in connection with the Business thereof which have not
been delivered to Purchaser prior to execution of this Agreement.
2.16 LABOR MATTERS. To the Knowledge of the Company, the Company is in
compliance in all material respects with all Laws respecting employment and
employment practices, terms and conditions of employment and wages and hours.
2.17 BROKERS. Except for Deutsche Bank Securities Inc., whose fees,
commissions and expenses are the sole responsibility of the Company, all
negotiations relative to this Agreement and the transactions contemplated hereby
have been carried out by the Company directly with Purchaser without the
intervention of any other Person on behalf of the Company in such manner as to
give rise to any valid claim by any Person against Purchaser for a finder's fee,
brokerage commission or similar payment.
2.18 ABSENCE OF CERTAIN CHANGES. Except as set forth in SECTION 2.18
OF THE DISCLOSURE SCHEDULE, since the Financial Statement Date, the Business has
been conducted in the ordinary course, and there has not been:
(a) any event, occurrence, state of circumstances or facts or change
in the Company, the Assets or the Business that has had or that may be
reasonably expected to have, either alone or together, a Material Adverse
Effect;
(b) any change by the Company in its accounting principles, methods or
practices other than changes required pursuant to GAAP or in the manner it keeps
its books and records or any change by the Company of its current practices with
regards to sales, receivables, payables or accrued expenses;
(c) the entering into of any Contract or other arrangement between the
Company and any officer, director, stockholder or Affiliate of the Company; or
(d) any (i) single commitment for capital expenditures that has not
been performed prior to the Effective Date in excess of $1,000,000 for additions
to property, plant, equipment or intangible capital assets, (ii) commitments for
capital expenditures that has not been performed prior to the Effective Date in
an aggregate amount in excess of $5,000,000 for additions to property, plant,
equipment or intangible capital assets or capital expenditures, (iii) sale,
assignment, transfer, lease or other disposition of or agreement to sell,
assign, transfer, lease or otherwise dispose of any asset or property outside
the ordinary course of business having a value of $2,000,000 in the aggregate.
2.19 SUFFICIENCY OF AND TITLE TO THE ASSETS. Upon consummation of the
transactions contemplated by this Agreement, the Company will have sold,
assigned, transferred and conveyed to Purchaser, free and clear of all Liens,
other than Permitted Liens, all of the
20
Assets, which constitute all of the properties and assets now held or
employed by the Company primarily in connection with the Business (other than
the Excluded Assets).
2.20 INSURANCE. As of the Effective Date, the assets, properties and
operations of the Business are insured under various policies of insurance, all
of which are described in Section 2.20 of the Disclosure Schedule, which
discloses for each policy the type of coverage and the amounts of coverage. As
of the Effective Date, all such policies are in full force and effect, no notice
of cancellation has been received, and there is no existing material default, or
event which the giving of notice or lapse of time or both, would constitute a
material default, by any insured thereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND STN
Purchaser and STN hereby, jointly and severally, represent and warrant
to the Company as follows as of the Effective Time and as of the Closing Date,
except, to the extent any such representation or warranty is made as of a
specified date earlier than the Closing Date, such earlier date:
3.01 EXISTENCE. Purchaser is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Nevada. STN is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Nevada. Each of Purchaser and STN has full corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
3.02 AUTHORITY. The execution and delivery by Purchaser and STN of
this Agreement, and the performance by Purchaser and STN of their respective
obligations hereunder, have been duly and validly authorized by the respective
boards of directors of Purchaser and STN, no other corporate action on the part
of Purchaser or STN or their respective shareholders being necessary. This
Agreement has been duly and validly executed and delivered by each of Purchaser
and STN and constitutes a legal, valid and binding obligation of each of
Purchaser and STN enforceable against each of them in accordance with its terms,
except to the extent such enforceability (a) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally and (b) is subject to general principles of equity.
3.03 NO CONFLICTS. The execution and delivery by each of Purchaser and
STN of this Agreement do not and the consummation of the transactions
contemplated hereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of incorporation (or other
comparable corporate charter document) of Purchaser or STN, as applicable;
(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in SECTION 3.04 OF THE DISCLOSURE
SCHEDULE, conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to
21
Purchaser or STN or any of the Assets (other than such conflicts, violations
or breaches which could not in the aggregate reasonably be expected to
adversely affect the validity or enforceability of this Agreement); or
(c) except as could not, individually or in the aggregate, reasonably
be expected to adversely affect the ability of Purchaser or STN to consummate
the transactions contemplated hereby or to perform its obligations hereunder,
(i) conflict with or result in a violation or breach of, (ii) constitute (with
or without notice or lapse of time or both) a default under, (iii) require
Purchaser or STN to obtain any consent, approval or action of, make any filing
with or give any notice to any Person as a result or under the terms of, or (iv)
result in the creation or imposition of any Lien upon Purchaser or STN or any of
their respective assets or properties under, any Contract or License to which
Purchaser or STN is a party or by which any of their respective assets and
properties is bound.
3.04 GOVERNMENTAL APPROVALS AND FILINGS. Except as disclosed in
SECTION 3.04 OF THE DISCLOSURE SCHEDULE, no consent, approval, action, order or
authorization of, or registration, declaration or filing with or notice to any
Governmental or Regulatory Authority on the part of Purchaser or STN is required
in connection with the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated hereby, except where the
failure to obtain any such consent, approval or action, to make any such filing
or to give any such notice could not reasonably be expected to adversely affect
the ability of Purchaser or STN to consummate the transactions contemplated by
this Agreement or to perform its obligations hereunder.
3.05 LEGAL PROCEEDINGS. There are no Orders outstanding and no Actions
or Proceedings pending or, to the Knowledge of Purchaser or STN, as applicable,
threatened against, relating to or affecting Purchaser or STN, as the case may
be, which could reasonably be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement.
3.06 BROKERS. Except for ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., whose fees,
commissions and expenses are the sole responsibility of Purchaser and/or STN,
all negotiations relative to this Agreement and the transactions contemplated
hereby have been carried out by Purchaser and STN without the intervention of
any Person on behalf of Purchaser or STN in such manner as to give rise to any
valid claim by any Person against the Company for a finder's fee, brokerage
commission or similar payment.
3.07 FINANCING. As of the Effective Date, Purchaser has sufficient
cash and/or available credit facilities (and has provided the Company with
evidence thereof) to pay the Purchase Price and to make all other necessary
payments of fees and expenses in connection with the transactions contemplated
by this Agreement.
3.08 PURCHASER'S GAMING LICENSES. STN and its directors and executive
officers are currently licensed or hold findings of suitability to conduct
gaming activities in the State of Nevada.
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ARTICLE IV
COVENANTS OF THE COMPANY AND PARENT
The Company and Parent covenant and agree with Purchaser that, at all
times from and after the Effective Date until the Closing, and in the case of
SECTIONS 4.06 and 4.09 for the period set forth therein, Parent and the Company
will, and Parent will cause the Company to, comply with all covenants and
provisions of this ARTICLE IV, except to the extent Purchaser may otherwise
consent in writing.
4.01 REGULATORY AND OTHER APPROVALS. The Company will, as promptly as
reasonably practicable (a) take all commercially reasonable steps necessary or
desirable to obtain all consents, approvals, actions, orders or authorizations
of, or make all registrations, declarations or filings with and give all notices
to Governmental or Regulatory Authorities or any other Person required of the
Company to consummate the transactions contemplated hereby (including, without
limitation, the Required Consents), (b) provide such other information and
communications to such Governmental or Regulatory Authorities or other Persons
as such Governmental or Regulatory Authorities or other Persons may reasonably
request in connection therewith and (c) provide reasonable cooperation to
Purchaser in connection with the performance of its obligations under SECTIONS
5.01 and 5.02 below. The Company will provide, or cause to be provided,
notification to Purchaser when any such consent, approval, action, order,
authorization, registration, declaration, filing or notice referred to in clause
(a) above is obtained, taken, made or given, as applicable, and will advise
Purchaser of any communications (and, unless precluded by Law, provide copies of
any such communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated by this
Agreement.
4.02 HSR FILINGS. In addition to and not in limitation of the
Company's covenants contained in SECTION 4.01 above, the Company will (a) take
promptly all actions necessary to make the filings required of the Company or
its Affiliates under the HSR Act, (b) comply at the earliest practicable date
with any request for additional information received by the Company or its
Affiliates from the Federal Trade Commission or the Antitrust Division of the
Department of Justice pursuant to the HSR Act and (c) cooperate with Purchaser
in connection with Purchaser's filing under the HSR Act and in connection with
resolving any investigation or other inquiry concerning the transactions
contemplated by this Agreement commenced by either the Federal Trade Commission
or the Antitrust Division of the Department of Justice or state attorneys
general.
4.03 INVESTIGATION BY PURCHASER. The Company will (a) provide
Purchaser and its officers, employees, counsel, accountants, financial advisors,
consultants and other representatives (together, "REPRESENTATIVES") with full
access, upon reasonable prior notice and during normal business hours, to all
officers, employees, agents and accountants of the Company and its Assets and
Books and Records, but only to the extent that such access does not unreasonably
interfere with the business operations of the Company and (b) furnish Purchaser
and such other Persons with all such information and data (including, without
limitation, copies of Contracts, Benefit Plans and other Books and Records)
concerning the business and operations of the Company as Purchaser or any of
such other Persons reasonably may request in
23
connection with such investigation, except to the extent that furnishing any
such information or data would violate any Law, Order, Contract or License
applicable to the Company or by which any of its Assets is bound.
4.04 CONDUCT OF BUSINESS. Subject to SECTION 4.05 below, the Company
will conduct business only in the ordinary course consistent with past practice
and shall:
(a) take all actions to be in compliance with, and to maintain the
effectiveness of, all Licenses;
(b) preserve the goodwill of those of its suppliers, customers and
distributors having material business relationships with the Business, unless
such failure to preserve such goodwill would not be commercially unreasonable;
(c) maintain policies of insurances with substantially the same
insurance coverage as exists as of the Effective Date against loss or damage to
the Assets;
(d) use commercially reasonable efforts to maintain the Assets, in the
aggregate, in a condition comparable to their current condition, reasonable
wear, tear and depreciation excepted, and except for Assets disposed of, sold or
consumed in the ordinary course of business in accordance with SECTION 4.05(A)
below; and
(e) unless precluded by law, notify Purchaser in writing if to the
Knowledge of the Company there is any event, condition or circumstance, or group
of actions, events, conditions or circumstances, that could reasonably be
expected to have a Material Adverse Effect, provided that nothing contained
herein shall be deemed to require the Company to disclose any information that
is privileged.
4.05 CERTAIN RESTRICTIONS. The Company shall not:
(a) other than in the ordinary course of business, acquire, lease,
dispose of or otherwise transfer, any Assets;
(b) engage with any Person in any merger or other business
combination;
(c) amend or modify in any material respect or terminate any material
Contract that could be reasonably expected to have a Material Adverse Effect;
(d) make any material changes in the Company's staffing levels that
could be reasonably expected to have a Material Adverse Effect;
(e) without Purchaser's prior written approval, which approval shall
not be unreasonably withheld, materially increase the salary, bonus or other
compensation of any of the Company's current employees that are department heads
of the Business, other than pursuant to bonus plans that have been approved
prior to the Effective Date, increases pursuant to employment agreements entered
into prior to the Effective Date and increases consistent with past practices in
an amount not to exceed five percent (5%) of the applicable employee's most
recent annual salary and bonus;
24
(f) enter into any Contract to do or engage in any of items listed in
clauses (a) through (e) above;
(g) except as expressly permitted elsewhere in this Agreement, enter
into or commit or propose to enter into any Contract obligating the Company to
make payments thereunder in excess of $100,000 in any twelve-month period that
cannot be cancelled upon thirty days notice; or
(h) amend its articles of incorporation or bylaws in any manner that
would have an adverse effect on the transactions contemplated hereby.
4.06 TRANSITION PERIOD. Each of the Company and Parent will, beginning
at the Effective Date and for a period of twelve (12) months after the Transfer
Time, upon reasonable request from Purchaser and the sole cost and expense of
Purchaser, promptly provide Purchaser any and all information regarding the
Assets and the Business, including but not limited to financial, accounting, tax
and related data, reasonably necessary for the preparation by Purchaser of
applications, reports and filings with any Governmental or Regulatory Authority.
(b) Each of the Company and Parent will, following the Effective Date
and at the sole cost and expense of Purchaser, provide reasonable assistance to
Purchaser with respect to the transfer of the Assets, including, without
limitation, the transition and integration of payroll and benefit processing,
accounting systems and other similar administrative systems and software systems
constituting Assets. In addition, the Company and Parent will reasonably
cooperate with Purchaser with respect to any permitted transfer of any rating
experience with respect to unemployment and workers' compensation, and such
other processes and procedures with respect to the operation of the Business as
Purchaser may reasonably request.
4.07 NO ACQUISITION NEGOTIATION. From and after the Effective Date,
neither the Company nor Parent shall, directly or indirectly, through any
officer, director, employee, financial advisor, representative or agent of such
party (i) solicit, initiate, or encourage (including by way of furnishing
information) or take any other action to facilitate knowingly any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets, sale of shares of capital stock (including, without
limitation, by way of a tender or exchange offer) or similar transaction
involving the Company or the Business, other than the transactions contemplated
by this Agreement (an "ACQUISITION PROPOSAL"), (ii) engage in negotiations or
discussions with any person (or group of persons) other than Purchaser or its
affiliates (a "THIRD PARTY") concerning, or provide any non-public information
to any person or entity relating to, any Acquisition Proposal, (iii) continue
any prior discussions or negotiations with any Third Party concerning any
Acquisition Proposal or (iv) accept, or enter into any agreement concerning, any
Acquisition Proposal with any Third Party or consummate any Acquisition Proposal
other than as contemplated by this Agreement.
4.08 FULFILLMENT OF CONDITIONS. The Company (a) will execute and
deliver at the Closing each certificate, document and instrument that the
Company is hereby required to execute and deliver as a condition to Closing, (b)
will take all commercially reasonable steps necessary or desirable and proceed
diligently and in good faith (i) to satisfy each condition to the
25
obligations of Purchaser contained in this Agreement and (ii) to consummate all
of the transactions contemplated by this Agreement, and (c) will not take or
fail to take any action that could reasonably be expected to result in the
nonfulfillment of any obligation of the Company or Purchaser contained in this
Agreement.
4.09 NONCOMPETITION.
(a) TERM. The Company and Parent hereby covenant with Purchaser that
from the Closing Date until the date that is three (3) years following the
Closing Date, none of the Company, Parent or their respective subsidiaries shall
(except as otherwise specifically permitted herein), directly or indirectly, for
their own account, or as a partner, member, advisor or agent of any partnership
or joint venture, or as a trustee, officer, director, shareholder, advisor or
agent of any corporation, trust, or other business organization or entity, own,
manage, join, participate in, encourage, support, finance, be engaged in, have
an interest in, give financial assistance or advice to, permit Parent's name to
be used in connection with or be concerned in any way in the ownership,
management, operation or control of any Gaming Business within a twenty-five
(25) mile radius of the location of the Business (excluding any Gaming Business
within (A) the Las Vegas Strip (which is defined as that area bounded by
Paradise Road and straight extensions thereof on the East, Charleston Boulevard
on the North, I-15 on the West, and Sunset Road on the South), or (B) Downtown
Las Vegas (which is defined as that area bounded by Eastern Avenue and straight
extensions thereof on the East, I-515 (U.S. Highway 93/95) on the North, I-15 on
the West, and Charleston Boulevard on the South)) other than a Currently
Existing Gaming Operation (as such operations may be expanded from time to time)
PROVIDED that (i) such entity is acquired by or becomes affiliated with Parent
or its subsidiaries as a result of a transaction between an entity that has
assets other than such Currently Existing Gaming Operation (the "COMPETING
GROUP") and Parent or such subsidiary and (ii) either (A) EBITDA of such
operation for the immediately preceding four fiscal quarters shall not be
greater than 30% of the consolidated EBITDA of the Competing Group for the
immediately preceding four fiscal quarters or (B) Parent or the Competing Group
pays Purchaser an amount equal to $10 million no later than ten (10) Business
Days following consummation of the transaction between Parent and the Competing
Group. For purposes of this Agreement, "CURRENTLY EXISTING GAMING OPERATION"
shall mean a gaming operation that is owned or operated by third parties prior
to the acquisition of ownership or commencement of operations thereof by the
Company, Parent or their Affiliates, and "GAMING BUSINESS" shall mean the
operation of an establishment engaged in unrestricted gaming, as such term is
defined by the Commission as of the date hereof. Each of the Company and Parent
also hereby covenants that it shall not, for a period of eighteen (18) months
after the Closing Date, solicit or encourage any employee (other than a Retained
Employee), agent, consultant or independent contractor of Purchaser to terminate
or curtail his or her relationship with Purchaser.
(b) REMEDIES. The parties agree that the remedy of the Purchaser at
law for any actual or threatened breach of this SECTION 4.09 by the Company or
Parent would be inadequate and that, in the event of such actual or threatened
breach, in addition to any other remedy available to it, Purchaser shall be
entitled to specific performance hereof, injunctive relief, or both, by
temporary or permanent injunction or other appropriate judicial remedy, writ or
order. The remedies provided for in this SECTION 4.09 are non-exclusive and are
in addition to
26
each other and to any other remedy available elsewhere in this Agreement or
available generally at law or in equity.
(c) DIVISIBILITY. If any portion of this SECTION 4.09 is held to be
unreasonable, arbitrary or against public policy, provisions of this SECTION
4.09 shall be considered divisible both as to time and as to geographical areas;
and each month of each year of the specified period shall be deemed to be a
separate period of time. In the event any court determines the specified time
period or geographical area to be unreasonable, arbitrary or against public
policy, the lesser time period or geographical area which is determined to be
reasonable, non-arbitrary and not against public policy may be enforced.
Notwithstanding the foregoing, the Company and Parent agree to honor the terms
of this SECTION 4.09 for the time periods and areas specified herein and not to
contest the enforceability of such periods or areas.
(d) PERMITTED OWNERSHIP. Notwithstanding any language to the contrary
contained in this SECTION 4.09, it shall be permissible for the Company and
Parent to own stock or securities of any company which may be deemed competitive
with Purchaser providing such shares or securities held by the Company or Parent
are issued by a company listed on a national securities exchange or the NASDAQ
Automated Quotation System and represent less than a five percent (5%) interest
in such company.
4.10 TITLE INSURANCE.
(a) On the Closing Date, the Company shall, at the Company's expense
(except as provided hereinafter), cause to be issued and delivered to Purchaser
a policy of title insurance (the "TITLE POLICY") with respect to the Real
Property and conforming to the following specifications:
(i) The form of the policy will be ALTA Owner's Policy Form B 1970
(amended 10/17/70) or the current approved form for the jurisdiction in
which the Real Property is located, with an endorsement deleting any
exclusion or exception for creditors' rights;
(ii) The Title Policy will be issued by First American Title Insurance
Company (the "Title Company");
(iii) The insured will be Purchaser;
(iv) The Title Policy shall be in an amount equal to that portion of
the Purchase Price allocated to the Real Property;
(v) The Title Policy will be dated concurrent with or subsequent to
the Closing;
(vi) There will be no exceptions to coverage other than the Permitted
Liens. Without limiting the generality of the foregoing provisions hereof,
the Title Policy shall not contain any exceptions with respect to:
27
(A) Rights or claims of parties in possession other than tenants, as
tenants only, under the leases and subleases described in Sections
1.01(a)(ii)(A) and 1.01(a)(ii)(B) of the Disclosure Schedule;
(B) Encroachments, overlaps, boundary line disputes or any other
matters which would be disclosed by an accurate survey and inspection;
(C) Easements or claims of easements not shown by the public
records;
(D) Any lien, or right to a lien, for services, labor or materials
heretofore or hereafter furnished; and
(E) Any other exceptions which may be designated or included as
standard exceptions in the area where the Real Property is located;
(vii) The Title Policy, at Purchaser's request and expense, shall
contain a zoning endorsement in the form of ALTA Form 3.1 showing the
zoning classification of the Real Property and confirming that the current
use of the Real Property is in conformance with the applicable zoning laws
and use restrictions;
(viii) The Title Policy, at Purchaser's request, will contain an
assignment endorsement whereby the insurer agrees to consent to the
assignment of the policy to, and to issue without charge an endorsement to
the policy to show as an insured under the policy, any of the following:
(i) any successor to Purchaser, by dissolution, liquidation, merger,
consolidation or reorganization; (ii) any stockholder of Purchaser to whom
the Real Property, or any part thereof, is distributed; and (iii) any
Affiliate of Purchaser, including any entity controlled by, in control of
or under common control with Purchaser and to whom an interest in the Real
Property, or any part thereof, is transferred by Purchaser. In the event
that the Real Property, or any part thereof, consists of more than one
parcel, the Title Policy shall, at Purchaser's request, contain an
affirmative statement of insurance to the effect that all parcels of land
constituting the Real Property, or such part thereof, are contiguous. The
policy also shall contain such other affirmative statements of insurance
and endorsements (for example, but not by way of limitation, an "access
endorsement") as Purchaser may reasonably require; and
(ix) The fee or premium for any endorsements to the Title Policy
whether identified in this SECTION 4.10 or otherwise requested by
Purchaser, shall be for the account of and paid by Purchaser.
(b) The Company shall within ten (10) days after the date hereof
deliver to Purchaser (i) a current commitment from the Title Company setting
forth the basis upon which the Title Company is willing to insure title to the
Real Property (the "TITLE COMMITMENT"), and all documents referenced in Schedule
B thereto, and (ii) a copy of each survey (the "Survey") of each parcel of the
Real Property in the Company's possession, which Purchaser acknowledges and
agrees shall be delivered without any representation or warranty of any kind as
to the accuracy or completeness thereof by the Company or Parent. The cost of
any survey work performed or ordered by the Company prior to the date hereof
shall be paid for by the Company. If Purchaser requires any revisions or updates
to the Survey delivered by the Company or
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requires a new survey, all such work shall be at the cost and expense of
Purchaser. If the Title Commitment or the Survey discloses any liens, easements,
restrictions, reservations or other defects or any other matters objectionable
to Purchaser ("TITLE OBJECTIONS"), other than Permitted Liens, Purchaser shall
advise the Company of the same in writing within ten (10) days after last
receipt by Purchaser of the Title Commitment (with all documents referred to in
Schedule B thereto) and the Survey (as revised or updated as may be required by
Purchaser within 30 days after receipt of the Title Commitment and Survey).
Matters not objected to by Purchaser within said period shall be deemed to be
additional Permitted Liens. As to any Title Objections, the Company may, but
shall not be obligated to, remedy such matters as are susceptible of being
remedied and shall, within ten (10) days after Purchaser gives the Company
notice of its Title Objections, deliver written notice to Purchaser of those
Title Objections which it shall remedy and those which it shall not remedy.
Unless Purchaser elects to terminate this Agreement in accordance with clause
4.10(b)(y) below, the Company shall, as a condition to Purchaser's obligation to
close hereunder, deliver to Purchaser a Title Commitment and Survey revised to
reflect that any Title Objections which the Company has committed to remedy have
been remedied to Purchaser's reasonable satisfaction. If the Company elects not
to remedy any Title Objection, Purchaser shall have the option, which it shall
exercise in writing within ten (10) days of its receipt of the written notice
from the Company, of (x) consummating the transaction contemplated hereby and
accepting such title as the Company holds, without change in or to the terms
hereof, unless such matters are encumbrances or liens for an ascertainable
amount, in which case the Company shall pay the amount thereof to Purchaser in
cash at the Closing, or (y) terminating this Agreement and receiving a refund of
all monies deposited hereunder. If Purchaser fails to deliver the written notice
required in the immediately preceding sentence within the period prescribed
thereby, such failure shall be deemed an irrevocable election by Purchaser to
proceed to close the purchase and sale contemplated by this Agreement in
accordance with clause 4.10(b)(x) above.
4.11 DELIVERY OF DISCLOSURE SCHEDULE AND DILIGENCE MATERIALS. Within
five (5) Business Days following the Effective Date (the "DELIVERY PERIOD"), the
Company shall deliver an initial draft of the Disclosure Schedule (including
without limitation SECTION 6.07 OF THE DISCLOSURE SCHEDULE) and copies of all
documents referenced therein to Purchaser, PROVIDED, HOWEVER, that to the extent
that the Company fails to deliver the Disclosure Schedule (or any material
portion thereof or any document referenced therein) prior to the expiration of
the Delivery Period, such failure shall not constitute a breach of this
Agreement for the purposes of SECTION 12.01 unless the Company thereafter fails
to deliver the Disclosure Schedule (or any material portion thereof or document
referenced therein not previously provided to Purchaser) within three (3)
Business Days following the expiration of the Delivery Period. In addition, the
Company shall also deliver to Purchaser any other agreements or documents
relating to the Business or the Levy Agreements and Land reasonably requested by
Purchaser.
4.12 NO SOLICITATION. For a period of twelve (12) months following the
Closing Date, Parent, the Company and their respective Affiliates shall refrain
from, either alone or in conjunction with any other Person, directly or
indirectly, soliciting for hire any employee of Purchaser or any Affiliate of
Purchaser; provided, however, that the Company shall not be prohibited from
soliciting for employment any Person whose employment with Purchaser or any of
its Affiliates terminated prior to such solicitation or any Retained Employee.
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ARTICLE V
COVENANTS OF PURCHASER
Purchaser covenants and agrees with the Company that, at all times
from and after the date hereof until the Closing and, in the case of SECTIONS
5.04, 5.05, 5.06, 5.07, 5.08 and 5.10 below, thereafter, Purchaser will comply
with all covenants and provisions of this ARTICLE V, except to the extent the
Company may otherwise consent in writing.
5.01 REGULATORY AND OTHER APPROVALS. Purchaser will as promptly as
practicable (a) take all steps necessary or desirable to obtain all consents,
approvals, actions, Licenses, orders or authorizations of, or make all
registrations, declarations or filings with and give all notices to Governmental
or Regulatory Authorities or any other Person required of Purchaser to
consummate the transactions contemplated hereby and will diligently and in good
faith strive to obtain the same including, without limitation, making all
necessary filings under the HSR Act with the Federal Trade Commission and the
Department of Justice no later than three (3) Business Days following the
expiration of the Diligence Period and making all necessary filings with the
Commission no later than five (5) Business Days following the expiration of the
Diligence Period, (b) provide such other information and communications to such
Governmental or Regulatory Authorities or other Persons as such Governmental or
Regulatory Authorities or other Persons may request in connection therewith and
(c) provide cooperation to the Company in connection with the performance of
their obligations under SECTIONS 4.01 and 4.02 above. The parties acknowledge
and agree that so long as Purchaser complies with clauses (a) and (b) of the
foregoing sentence, any failure or refusal by the Commission to approve the
transactions contemplated by this Agreement shall not be deemed to be a breach
of the obligations of Purchaser or Parent hereunder; provided that nothing
contained herein shall limit the obligations of Purchaser to comply with any
other covenant or agreement contained in this Agreement or shall relieve
Purchaser from liability for any breach of a representation or warranty
contained in this Agreement. Purchaser will provide prompt written notification
to the Company when any such consent, approval, action, order, authorization,
registration, declaration, filing or notice referred to in clause (a) above is
obtained, taken, made or given, as applicable, and will advise the Company of
any communications (and, unless precluded by Law, provide copies of any such
communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated by this
Agreement.
5.02 HSR FILINGS. In addition to and without limiting Purchaser's
covenants contained in SECTION 5.01 above, Purchaser will (a) take promptly all
actions necessary to make the filings required of Purchaser or its Affiliates
under the HSR Act and in any event no later than three (3) Business Days
following the expiration of the Diligence Period, (b) comply at the earliest
practicable date with any request for additional information received by
Purchaser or its Affiliates from the Federal Trade Commission or the Antitrust
Division of the Department of Justice pursuant to the HSR Act and (c) cooperate
with the Company in connection with the Company's filing under the HSR Act and
in connection with resolving any investigation or other inquiry concerning the
transactions contemplated by this Agreement commenced by either the Federal
Trade Commission or the Antitrust Division of the Department of Justice or state
attorneys general. Purchaser shall pay the filing fee, if any, required under
the HSR Act.
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5.03 INVESTIGATION BY THE COMPANY. Purchaser will provide the Company
and their respective Representatives with such documentation, data and other
information as the Company may reasonably request in order to verify Purchaser's
representations and warranties set forth in SECTION 3.07 above, but only to the
extent that furnishing any such documentation, data or information would not
violate any Law, Order, Contract or License applicable to Purchaser.
5.04 NO SOLICITATION. Purchaser will, for a period of eighteen (18)
months following the Closing Date, except as expressly permitted or required by
ARTICLE IX of this Agreement, refrain from, either alone or in conjunction with
any other Person, directly or indirectly, through its present of future
Affiliates, soliciting for hire any employee of the Company or any Affiliate of
the Company; PROVIDED, HOWEVER, that Purchaser shall not be prohibited from
soliciting for employment any Person whose employment with the Company or any of
its Affiliates terminated prior to such solicitation.
5.05 COLLECTION OF GAMING CHIPS AND TOKENS. Purchaser shall redeem, in
its capacity as the Company's agent if Purchaser has not elected to acquire such
chips and tokens pursuant to SECTION 1.01(b)(ix) hereof, any gaming chips or
tokens (from any series in use as of or prior to the Transfer Time) of the
Company relating to the use and operation of the Business, which are presented
by patrons of the Business or Purchaser for payment within the applicable Nevada
statutory time periods for such redemptions. The Company's gaming chips and
tokens redeemed by Purchaser shall be reimbursed, at Purchaser's election, as
often as weekly for the first 30 Business Days following the Closing Date, and
thereafter as often as monthly, by the Company, upon delivery by Purchaser to
the Company of such gaming chips and tokens being redeemed. The Company agrees
to make arrangements for the additional redemption of its gaming chips and
tokens as may be required by Nevada law.
5.06 BAGGAGE. At the Transfer Time, an authorized representative of
the Company shall perform the following functions for all baggage, trunks and
other property that was checked and placed in the care of the Company: (i) seal
all pieces of baggage with tape: (ii) prepare an inventory ("INVENTORIED
BAGGAGE") of such items indicating the check number applicable thereto; and
(iii) deliver the Inventoried Baggage to an authorized representative of
Purchaser and secure a receipt for the Inventoried Baggage. Thereafter,
Purchaser shall be responsible for such Inventoried Baggage, PROVIDED that the
Company shall be liable to the owners of such Inventoried Baggage with respect
to any missing or damaged contents of such Inventoried Baggage and such
liability shall be a Retained Liability for the purposes of this Agreement to
the extent that Purchaser is able to prove that such contents were missing or
damaged prior to the Transfer Time.
5.07 SAFE DEPOSITS. Safe deposit boxes in use by customers at the
Transfer Time will be sealed in a reasonable manner mutually agreeable to
Purchaser and the Company. At the Transfer Time, Purchaser and the Company shall
designate in writing their initial safe deposit representatives. Representatives
of Purchaser are to be present when a seal is broken. The Company will have no
further responsibility for seals broken without the presence of the Company's
representative. Purchaser will have no responsibility for loss or theft from a
safe deposit box whose seal was broken in the presence of the Company
representative. The Company will make a representative available within one (1)
hour after Purchaser notifies a
31
person or persons whom the Company will from time to time designate. All safe
deposit keys, combinations and records shall be delivered at the Transfer Time
to Purchaser.
5.08 VALET PARKING. At the Transfer Time, an authorized representative
of the Company shall perform the following functions for all motor vehicles that
were checked and placed in the care of the Company: (i) ▇▇▇▇ all motor vehicles
with a sticker or tape; (ii) prepare a report with respect to any damages to
such vehicles; (iii) prepare an inventory of such vehicles ("INVENTORIED
VEHICLES") indicating the check number applicable thereto; and (iv) transfer
control of the Inventoried Vehicles to an authorized representative of Purchaser
and secure a receipt for the Inventoried Vehicles. Thereafter, Purchaser shall
be responsible for the Inventoried Vehicles, PROVIDED that the Company shall be
liable to the owners of such Inventoried Vehicles with respect to any damages
occurring as a result of actions taken by the Company and its employees prior to
the Transfer Time (including, without limitation, damages (as a result of
actions taken by the Company and its employees) set forth in the damage report)
or items missing from or damaged in such Inventoried Vehicles and such liability
shall be a Retained Liability for the purposes of this Agreement, to the extent
that Purchaser is able to prove that such items were missing or damaged prior to
the Transfer Time.
5.09 FULFILLMENT OF CONDITIONS. Purchaser (a) will execute and deliver
at the Closing each certificate, document and instruments that Purchaser is
hereby required to execute and deliver as a condition to the Closing, (b) will
as promptly as practicable affirmatively take all steps necessary or desirable
and proceed diligently and in good faith (i) to satisfy each other condition to
the obligations of the Company contained in this Agreement and (ii) to
consummate all of the transactions contemplated in this Agreement, and (c) will
not take or fail to take any action that could reasonably be expected to result
in the nonfulfillment of any obligation of the Company or Purchaser contained in
this Agreement.
5.10 RETURN OF BOOKS AND RECORDS. Following the Closing Date, upon the
request of the Company, Purchaser shall return to the Company all Books and
Records relating to the Company that are not used primarily in the conduct of
the Business, including, without limitation, the Books and Records relating to
the businesses of Parent or its Affiliates (other than the Company).
5.11 PARENT'S GAMING COMPLIANCE PROGRAM. Purchaser, STN and their
respective executive officers, directors and principal stockholders shall fully
cooperate with any background investigation with respect to each of them
required to be conducted by Parent pursuant to its Gaming Compliance Program to
the extent required by the Commission.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser hereunder to purchase the Assets
are subject to the fulfillment, at or before the Closing, of each of the
following conditions (all or any of which may be waived in whole or in part by
Purchaser in its sole discretion):
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6.01 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company and Parent in this Agreement shall be true and
correct, in all respects, on and as of the Closing Date as though made on and as
of the Closing Date or, in the case of representations and warranties made as of
a specified date earlier than the Closing Date, on and as of such earlier date,
except in each case as could not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; PROVIDED, HOWEVER,
that for the purposes of determining the accuracy of such representations and
warranties, all "Material Adverse Effect" qualifications and other materiality
qualifications, and any similar qualifications, contained in such
representations and warranties shall be disregarded.
6.02 PERFORMANCE. The Company and Parent shall have performed and
complied with the agreements, covenants and obligations required by this
Agreement to be so performed or complied with by the Company, as the case may
be, at or before the Closing, except in each case as could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
6.03 OFFICERS' CERTIFICATES. The Company and Parent shall have
delivered to Purchaser a certificate, dated the Closing Date and executed in the
name and on behalf of the Company by an executive officer of the Company and on
behalf of the Parent by an executive officer of the Parent, substantially in the
form and to the effect of EXHIBIT C hereto, and certificates, dated the Closing
Date and executed by the Secretary of the Company and the Secretary of Parent,
substantially in the form and to the effect of EXHIBIT D hereto.
6.04 ORDERS AND LAWS. There shall not be in effect at the time of
Closing any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement.
6.05 REGULATORY CONSENTS AND APPROVALS. All consents, approvals,
actions, Licenses, orders or authorizations of, all registrations, declarations
or filings with and all notices to any Governmental or Regulatory Authority
necessary to permit Purchaser and the Company to perform their respective
obligations under this Agreement and to consummate the transactions contemplated
hereby shall have been duly obtained, made or given and shall be in full force
and effect, and all terminations or expirations of waiting periods imposed by
any Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement, including under the HSR Act, shall
have occurred, except for such consents, approvals, actions, orders or
authorizations the failure of which to obtain could not be reasonably expected
to have a Material Adverse Effect.
6.06 DELIVERIES. The Company shall have delivered to Purchaser the
General Assignment and other Assignment Instruments.
6.07 REQUIRED CONSENTS. The third party consents listed in SECTION
6.07 OF THE DISCLOSURE SCHEDULE shall have been obtained and shall not have been
revoked.
6.08 TITLE INSURANCE. Purchaser shall have received a title policy on
substantially the same terms as the title commitment described in SECTION 4.10
hereof.
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6.09 ABSENCE OF MATERIAL ADVERSE EFFECT. Since the date hereof, there
shall not have occurred any Material Adverse Effect or any events or series of
events that constitute a Material Adverse Effect.
6.10 CURE OF OPEN DILIGENCE MATTERS. The Company shall have cured all
Open Diligence Matters to the reasonable satisfaction of Purchaser.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company hereunder to sell the Assets are
subject to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by the Company
in its sole discretion):
7.01 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Purchaser in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as though made on and as of the
Closing Date or, in the case of representations and warranties made as of a
specified date earlier than the Closing Date, on and as of such earlier date,
except in each case as could not, either individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect; PROVIDED, HOWEVER,
that for the purposes of determining the accuracy of such representations and
warranties, all "Material Adverse Effect" qualifications and other materiality
qualifications, and any similar qualifications, contained in such
representations and warranties shall be disregarded.
7.02 PERFORMANCE. Purchaser shall have performed and complied with, in
all material respects, the agreements, covenants and obligations required by
this Agreement to be so performed or complied with by Purchaser at or before the
Closing.
7.03 OFFICERS' CERTIFICATES. Purchaser and STN shall have delivered to
the Company a certificate, dated the Closing Date and executed in the name and
on behalf of Purchaser and STN by an executive officer of Purchaser and STN,
substantially in the form and to the effect of EXHIBIT E hereto, and a
certificate, dated the Closing Date and executed by the Secretary of Purchaser
and STN, substantially in the form and to the effect of EXHIBIT F hereto.
7.04 ORDERS AND LAWS. There shall not be in effect at the time of
Closing any Order or Law restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement.
7.05 REGULATORY CONSENTS AND APPROVALS. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit the Company and Purchaser to materially perform their
obligations under this Agreement and to consummate the transactions contemplated
hereby, shall have been duly obtained, made or given, shall be in full force and
effect and shall be in form and substance satisfactory to the Company and not
subject to any material condition or contingency and all terminations or
expirations of waiting periods imposed by any Governmental or Regulatory
Authority necessary for the consummation of the transactions contemplated by
this Agreement, including under the HSR Act, shall have occurred.
34
7.06 DELIVERIES. Purchaser shall have delivered the Assumption
Agreement and other Assumption Instruments.
7.07 REQUIRED CONSENTS. The third party consents listed in SECTION
7.07 OF THE DISCLOSURE SCHEDULE shall have been obtained and shall not have been
revoked.
ARTICLE VIII
TAX MATTERS AND POST-CLOSING TAXES
8.01 TRANSFER TAXES AND TRANSFER FEES. The Company shall pay all
sales, use, transfer, real property transfer, recording, stock transfer and
other similar taxes and fees (other than Taxes of Purchaser and its Affiliates
based upon or measured by net income or gains) ("TRANSFER TAXES") arising out of
or in connection with the transactions effected pursuant to this Agreement, and
shall indemnify, defend, and hold harmless Purchaser and its Affiliates with
respect to such Transfer Taxes. The Company and Purchaser shall equally share
the costs of Gaming Device transfer fees. The Company shall file all necessary
documentation and Tax Returns with respect to such Transfer Taxes.
8.02 TAX INDEMNIFICATION.
(b) Subject to SECTION 1.06, after the Closing Date, the Company and
Parent will indemnify and hold harmless Purchaser from and against any and all
claims, actions, causes of action, liabilities, losses, damages, and reasonable
out-of-pocket expenses and costs resulting from, arising out of or relating to
any Taxes of, or with respect to, the Company (including, without limitation,
any Tax liability that arises solely by reason of Company being severally liable
for any Tax of any federal or state or local consolidated or combined group of
which it is a member pursuant to Treasury Regulation ss.1.1502-6 or any
analogous state or local Tax provision) or with respect to the income, assets or
operation of the Business or the Assets for all taxable periods ending on or
before the Closing Date and that portion of any taxable period including and
ending on the Closing Date that ends on or after the Closing Date (determined as
if the relevant period ended on the Closing Date) in excess of the amount of
such Taxes shown as Accrued Expenses on the Closing Balance Sheet.
(c) Purchaser will be responsible for and indemnify and hold the
Company harmless against any all liabilities with respect to Taxes relating to
the Assets for all taxable periods beginning on the Closing Date and ending
after the Closing Date other than to the extent such Taxes relate to or result
from a breach of a representation set forth in Section 2.06, and other than
Taxes for which the Company is responsible pursuant to SECTIONS 1.06, 8.01 and
8.02(a) above.
(d) For purposes of clarification, the obligations of the Company,
Parent and Purchaser pursuant to this SECTION 8.02 shall not be subject to the
limits contained in SECTION 11.01(c)(i) hereof.
8.03 TAX COOPERATION.
35
(a) The parties agree that a portion of the Purchase Price shall be
withheld in escrow pending the Company's compliance with NRS 360.525(1) and
612.695(2), it being acknowledged and agreed that the Company shall reasonably
determine the amount to be withheld in order to comply with such provisions of
the NRS and it being further acknowledged and agreed that no such withholding
shall be necessary if, prior to Closing, the Company obtains clearance
certificates from the applicable Governmental or Regulatory Authority sufficient
to absolve Purchaser from liability under such provisions of the NRS.
(b) After the Closing Date, the Company and Parent will cooperate
with Purchaser, and Purchaser will cooperate with the Company and Parent, in the
preparation of all Tax Returns and will provide (or cause to be provided) any
records and other information the other so requests, and will provide access to,
and the cooperation of its auditors. The Company and Parent will cooperate with
Purchaser and Purchaser will cooperate with the Company and Parent in connection
with any Tax investigation, audit or other proceeding.
(c) At Purchaser's request, Parent and the Company will cooperate
with Purchaser in structuring the transaction contemplated by this Agreement so
as to enable the Purchaser to qualify such transaction as part of a "like-kind
exchange" as to Purchaser of property being sold by Purchaser including
permitting Purchaser to assign this agreement to an intermediary selected by
Purchaser.
8.04 NOTIFICATION OF PROCEEDINGS; CONTROL. The Company shall have the
right to control any audit or examination relating to Taxes by any taxing
authority, initiate any claim for refund, file any amended return, contest,
resolve and defend against any assessment, notice of deficiency or other
adjustment or proposed adjustment relating or with respect to any Taxes of any
company for which the Company is responsible pursuant to SECTION 8.02 and shall
be entitled to all refunds with respect to such taxes.
8.05 GAMING FEES AND TAXES. Pursuant to the provisions of NRS
463.3455, the Company shall retain responsibility for the payment of any fees or
taxes due pursuant to any subsequent deficiency determinations made under
Chapter 463 of NRS which encompass any period of time before the Transfer Time.
ARTICLE IX
EMPLOYEE BENEFITS MATTERS
9.01 OFFER OF EMPLOYMENT.
(a) The parties hereto intend that there shall be continuity of
employment with respect to all of the employees of the Business other than those
employees of the Business that the Company or any of its Affiliates decide to
retain in their employ and/or relocate (the "RETAINED EMPLOYEES") (a list of
such Retained Employees to be provided to Purchaser prior to the expiration of
the Diligence Period). Purchaser shall offer employment at will, commencing on
the Closing Date, to all employees (other than the Retained Employees),
including those on vacation, leave of absence or disability, who were employed
by the Business immediately prior to Closing, on substantially the same terms in
the aggregate (including salary, fringe benefits, job
36
responsibility and location but excluding employee stock ownership and incentive
plans) as those provided to similar employees by Purchaser (or its Affiliates)
immediately prior to Closing to the extent permitted under applicable law. Those
persons who accept Purchaser's offer of employment and commence working with
Purchaser on the Closing Date shall hereafter be referred to as "TRANSFERRED
EMPLOYEES." The parties hereto agree that nothing in this Agreement shall limit
Purchaser's ability after the Closing Date to modify or terminate (i) the
employment of any Transferred Employee or (ii) any benefit policy, plan or
program offered to or covering any Transferred Employee.
(b) Prior to, or in connection with, the Closing, Purchaser shall
take no action to cause the Company or the Business to terminate the employment
of any employee of the Business (other than in connection with the retention or
relocation of any Retained Employee), and neither the Company nor the Business
shall be under any obligation to terminate any employee of the Business prior to
or on the Closing Date. Purchaser shall be liable for any amounts to which any
Transferred Employee may become entitled pursuant to any employment or severance
contract as a result of, or in connection with, the sale of the Business
hereunder. Purchaser agrees that it will not take any action which would give
rise to liability under WARN or any similar state, local or federal Law or
regulation.
9.02 WELFARE PLANS -- CLAIMS INCURRED; PRE-EXISTING CONDITIONS.
(a) Notwithstanding any provision of this Agreement to the contrary,
the Company shall retain responsibility for and continue to pay all medical,
life insurance, disability and other welfare plan expenses and benefits for each
Transferred Employee with respect to claims incurred by such Transferred
Employees or their covered dependents prior to the Closing Date. Notwithstanding
any provision of this Agreement to the contrary, expenses and benefits with
respect to claims incurred by Transferred Employees or their covered dependents
on or after the Closing Date shall be the responsibility of Purchaser. For
purposes of this paragraph, a claim is deemed incurred when the services that
are the subject of the claim are performed; in the case of life insurance, when
the death occurs, in the case of long-term disability benefits, when the
disability occurs and, in the case of a hospital stay, when the employee first
enters the hospital.
(b) With respect to any welfare benefit plans (as defined in Section
3(1) of ERISA) maintained by Purchaser for the benefit of Transferred Employees
on and after the Closing Date, Purchaser shall (i) use commercially reasonable
efforts to cause there to be waived any pre-existing condition limitations
(other than those limitations existing under the Company's welfare benefit
plans) and (ii) give effect, in determining any deductible and maximum
out-of-pocket limitations, to claims incurred and amounts paid by, and amounts
reimbursed to, such employees with respect to similar plans maintained by the
Company (and its Affiliates) for their benefit immediately prior to the Closing
Date.
9.03 VACATION. With respect to any accrued but unused vacation time to
which any Transferred Employee is entitled pursuant to the vacation policy
applicable to such employee immediately prior to the Closing Date (the "VACATION
POLICY"), Purchaser shall allow such Transferred Employee to use such accrued
vacation, subject to the terms and conditions of Purchaser's vacation policy;
PROVIDED, HOWEVER, that if Purchaser deems it necessary to disallow such
employee from taking such accrued vacation, Purchaser shall be liable for and
pay in cash
37
to each such Transferred Employee an amount equal to such vacation time in
accordance with terms of the Vacation Policy; PROVIDED, FURTHER, that Purchaser
shall be liable for and pay in cash an amount equal to any remaining accrued
vacation time to any Transferred Employee whose employment terminates for any
reason prior to the close of business on the last calendar day of the year
during which the Closing Date occurs.
9.04 SERVICE CREDIT. Purchaser will provide. for the purposes of
eligibility and vesting (but not for benefit accrual) each Transferred Employee
with credit for all service with the Company and its Affiliates to the extent
possible under each employee benefit plan, program, or arrangement of Purchaser
or its Affiliates in which such employee is eligible to participate; provided,
however, that in no event shall any employee be entitled to any credit to the
extent that it would result in a duplication of benefits with respect to the
same period of service.
9.05 COMPANY'S BENEFIT PLANS. Except as provided in this Agreement,
the parties hereto agree that Purchaser shall not assume any Benefit Plan and
the Company shall retain and be responsible for any cost, expense, liability,
damage or obligation relating to any Benefit Plan, whether arising before, on or
after the Closing Date.
9.06 COBRA MATTERS. The Company agrees to provide and be fully
responsible for the continuation coverage required by Section 4980B of the Code
and Sections 601 through 608 of ERISA ("COBRA") for all employees and former
employees of the Company and their covered beneficiaries who incurred or will
incur a qualifying event prior to the Closing Date, or will incur a qualifying
event as a result of the consummation of the transactions contemplated herein,
and who are entitled to COBRA coverage as a result thereof.
ARTICLE X
SURVIVAL; NO OTHER REPRESENTATIONS
10.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Except for (i) this ARTICLE X, and SECTIONS 2.06, 5.05, 5.06, 5.07,
5.08 and 5.10 above, ARTICLES VIII AND IX above, SECTIONS 14.03, 14.04 AND 14.07
below and the Company's agreements and covenants with respect to Retained
Liabilities, which shall survive and remain enforceable indefinitely, (ii)
SECTIONS 4.06, 4.11 AND 5.04 which shall survive for the period set forth
therein, and (iii) Sections 2.10 and 2.15 which shall survive and remain
enforceable for a period of five (5) years following the Closing Date, the
representations, warranties, agreements and covenants contained in this
Agreement shall survive the Closing for a period of eighteen (18) months
following the Closing Date, after which time there shall be no liability in
respect thereof on the part of either party or its officers, directors,
employees, agents and Affiliates.
10.02 NO OTHER REPRESENTATIONS. Notwithstanding anything to the
contrary contained in this Agreement, but subject to SECTION 10.01 above, it is
the explicit intent of each party hereto that the Company and Purchaser are
making no representation or warranty whatsoever, express or implied, except
those representations and warranties contained in ARTICLE II above and in any
certificate delivered pursuant to SECTION 6.03 above. It is understood that,
except to the extent otherwise expressly provided herein, Purchaser takes the
Assets "as is" and "where is." In particular, but without limiting the
generality of the foregoing, the Company
38
and Parent make no representation or warranty to Purchaser with respect to any
financial projection or forecast relating to the Company. With respect to any
projection or forecast delivered by or on behalf of the Company to Purchaser,
Purchaser acknowledges that (i) there are uncertainties inherent in attempting
to make such projections and forecasts, (ii) it is familiar with such
uncertainties, (iii) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such projections and forecasts
furnished to it and (iv) it shall have no claim against the Company or Parent
with respect thereto.
ARTICLE XI
INDEMNIFICATION
11.01 OTHER INDEMNIFICATION.
(a) Subject to PARAGRAPH (c) of this Section and the other Sections
of this ARTICLE XI, the Company and Parent shall jointly and severally indemnify
the Purchaser Indemnified Parties in respect of, and hold it harmless from and
against, any and all Losses suffered, incurred or sustained by any of them or to
which any of them becomes subject, resulting from, arising out of or relating to
(i) any breach of representation or warranty or nonfulfillment of or failure to
perform any covenant or agreement on the part of the Company or Parent contained
in this Agreement or (ii) a Retained Liability;
(b) Subject to the other Sections of this ARTICLE XI, Purchaser shall
indemnify the Company Indemnified Parties in respect of, and hold each of them
harmless from and against, any and all Losses suffered, incurred or sustained by
any of them or to which any of them becomes subject, resulting from, arising out
of or relating to (i) any breach of representation or warranty or nonfulfillment
of or failure to perform any covenant or agreement on the part of Purchaser
contained in this Agreement or (ii) an Assumed Liability;
(c) Notwithstanding anything to the contrary contained in this
Agreement, no amounts of indemnity shall be payable as a result of any claim in
respect of a Loss arising under PARAGRAPH (a)(i) or (b)(i), as applicable, of
SECTION 11.01 (other than a claim based on fraud or willful misconduct or for or
with respect breaches of SECTION 2.06 hereof or claims under ARTICLE VIII
hereof):
(i) unless, until and then only to the extent that the Purchaser
Indemnified Parties or the Company Indemnified Parties, as applicable, have
suffered, incurred, sustained or become subject to Losses referred to in
such paragraph in excess of one hundred thousand dollars ($100,000) in the
aggregate;
(ii) unless and to the extent that the Purchaser Indemnified Parties
or the Company Indemnified Parties, as applicable, have not received
payments in respect of claims made under Section 11.01(a)(i) of this
Agreement or Section 11.01(b)(i) of this Agreement, respectively, in excess
of Five Million Dollars ($5,000,000) in the aggregate;
(iii) unless the Indemnified Party has given the Indemnifying Party a
Claim Notice or Indemnity Notice, as applicable, with respect to such
claim, setting forth in
39
reasonable detail the specific facts and circumstances pertaining thereto,
(A) as soon as practical following the time at which the Indemnified Party
discovered or reasonably should have discovered such claim (except to the
extent the Indemnifying Party is not prejudiced by any delay in the
delivery of such notice) and (B) in any event prior to the applicable
Cut-off Date; or
(iv) to the extent that the Indemnified Party had a reasonable
opportunity, but failed, in good faith to mitigate such Loss, including,
without limitation, to the failure to use commercially reasonable efforts
to recover under a policy of insurance or under a contractual right of set
off or indemnity.
11.02 METHOD OF ASSERTING CLAIM. All claims for indemnification by any
Indemnified Party under SECTION 11.01 will be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under SECTION 11.01 is asserted against
or sought to be collected from such Indemnified Party by a Person other than the
Company, Parent, STN, Purchaser or any Affiliate of the Company or of Purchaser
(a "THIRD PARTY CLAIM"), the Indemnified Party shall deliver a Claim Notice with
reasonable promptness to the Indemnifying Party. The Indemnifying Party will
notify the Indemnified Party as soon as practicable within the Dispute Period
whether the Indemnifying Party disputes its liability to the Indemnified Party
under SECTION 11.01 and whether the Indemnifying Party desires, at its sole cost
and expense, to defend the Indemnified Party against such Third Party Claim,
PROVIDED that failure to give such notice shall not relieve the Indemnifying
Party of its obligations hereunder except to the extent it shall have been
prejudiced by such failure.
(i) If the Indemnifying Party notifies the Indemnified Party within
the Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this
SECTION 11.02(a), then the Indemnifying Party will have the right to
defend, at the sole cost and expense of the Indemnifying Party, such Third
Party Claim by all appropriate proceedings, which proceedings will be
vigorously and diligently prosecuted by the Indemnifying Party to a final
conclusion or will be settled at the discretion of the Indemnifying Party.
The Indemnifying Party will have full control of such defense and
proceedings, including that if requested by the Indemnifying Party, the
Indemnified Party will, at the sole cost and expense of the Indemnifying
Party, reasonably cooperate with the Indemnifying Party and its counsel in
contesting any Third Party Claim that the Indemnifying Party elects to
contest, or, if appropriate and related to the Third Party Claim in
question, in making any counterclaim against the Person asserting the Third
Party Claim, or any cross-complaint against any Person (other than the
Indemnified Party or any of its Affiliates); PROVIDED that the Indemnified
Party may participate in such settlement or defense through counsel chosen
by such Indemnified Party and paid at its own expense; and PROVIDED FURTHER
that, if in the opinion of counsel for such Indemnified Party, there is a
reasonable likelihood of a conflict of interest between the Indemnifying
Party and the Indemnified Party, the Indemnifying Party shall be
responsible for reasonable fees and expenses of one counsel to such
Indemnifying Party in connection with such defense. Notwithstanding the
foregoing, the Indemnified Party may retain or take over the control of the
defense or settlement of any Third Party
40
Claim the defense of which the Indemnifying Party has elected to control if
the Indemnified Party irrevocably waives its right to indemnity under
SECTION 11.01 with respect to such Third Party Claim.
(ii) If the Indemnifying Party fails to notify the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to defend the
Third Party Claim pursuant to SECTION 11.02(a), then the Indemnified Party
will have the right to defend, at the sole cost and expense of the
Indemnifying Party, the Third Party Claim by all appropriate proceedings,
which proceedings will be vigorously and diligently prosecuted by the
Indemnified Party to a final conclusion or will be settled at the
discretion of the Indemnified Party (with the consent of the Indemnifying
Party, which consent will not be unreasonably withheld). The Indemnified
Party will have full control of such defense and proceedings, including
(except as provided in the immediately preceding sentence) any settlement
thereof; PROVIDED, HOWEVER, that if requested by the Indemnified Party, the
Indemnifying Party will, at the sole cost and expense of the Indemnifying
Party, cooperate with the Indemnified Party and its counsel in contesting
any Third Party Claim which the Indemnified Party is contesting, or, if
appropriate and related to the Third Party Claim in question, in making any
counterclaim against the Person asserting the Third Party Claim, or any
cross-complaint against any Person (other than the Indemnifying Party or
any of its Affiliates). Notwithstanding the foregoing provisions of this
clause (ii), if the Indemnifying Party has notified the Indemnified Party
within the Dispute Period that the Indemnifying Party disputes its
liability hereunder to the Indemnified Party with respect to such Third
Party Claim and if such dispute is resolved in favor of the Indemnifying
Party in the manner provided in clause (iii) below, the Indemnifying Party
will not be required to bear the costs and expenses of the Indemnified
Party's defense pursuant to this clause (ii) or of the Indemnifying Party's
participation therein at the Indemnified Party's request, and the
Indemnified Party will reimburse the Indemnifying Party in full for all
reasonable costs and expenses incurred by the Indemnifying Party in
connection with such litigation. The Indemnifying Party may retain separate
counsel to represent it in, but not control, any defense or settlement
controlled by the Indemnified Party pursuant to this clause (ii), and the
Indemnifying Party will bear its own costs and expenses with respect to
such participation.
(iii) If the Indemnifying Party notifies the Indemnified Party that it
does not dispute its liability to the Indemnified Party with respect to the
Third Party Claim under SECTION 11.02 or fails to notify the Indemnified
Party within the Dispute Period whether the Indemnifying Party disputes its
liability to the Indemnified Party with respect to such Third Party Claim,
the Loss arising from such Third Party Claim will be conclusively deemed a
liability of the Indemnifying Party under SECTION 11.01 and the
Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand following the final determination thereof. If the
Indemnifying Party has timely disputed its liability with respect to such
claim, the Indemnifying Party and the Indemnified Party will proceed in
good faith to negotiate a resolution of such dispute, and if not resolved
through negotiations within the Resolution Period, such dispute shall be
resolved by arbitration in accordance with paragraph (c) of this SECTION
11.02.
41
(b) In the event any Indemnified Party should have a claim under
SECTION 11.02 against any Indemnifying Party that does not involve a Third Party
Claim, the Indemnified Party shall deliver an Indemnity Notice with reasonable
promptness to the Indemnifying Party. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim described in such Indemnity
Notice, the Loss arising from the claim specified in such Indemnity Notice will
be conclusively deemed a liability of the Indemnifying Party under SECTION 11.01
and the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand following the final determination thereof. If the Indemnifying
Party has timely disputed its liability with respect to such claim, the
Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
within the Resolution Period, such dispute shall be resolved by arbitration in
accordance with paragraph (c) of this SECTION 11.02.
(c) Any dispute submitted to arbitration pursuant to this SECTION
11.02 shall be finally and conclusively determined by the decision of a panel of
three arbitrators (hereinafter sometimes called the "BOARD OF ARBITRATION")
selected as herein provided. Each of the Indemnified Party and the Indemnifying
Party shall select one (1) member and the third member shall be selected by
mutual agreement of the other members, or if the other members fail to reach
agreement on a third member within twenty (20) days after their selection, such
third member shall thereafter be selected by the American Arbitration
Association (the "AAA") upon application made to it jointly by the Indemnified
Party and the Indemnifying Party for a third member possessing expertise or
experience appropriate to the dispute. Within 120 days of the selection of the
Board of Arbitration, the Indemnified Party and the Indemnifying Party shall
meet in Las Vegas, Nevada with such Board of Arbitration at a place and time
designated by such Board of Arbitration after consultation with such parties and
present their respective positions on the dispute. The arbitration proceeding
shall be held in accordance with the rules for commercial arbitration of the AAA
in effect on the date of the initial request for appointment of the Board of
Arbitration, that gave rise to the dispute to be arbitrated (as such rules are
modified by the terms of this Agreement or may be further modified by mutual
agreement of the parties). Each party shall have no longer than five (5) days to
present its position, the entire proceedings before the Board of Arbitration
shall be no more than ten consecutive days, and the decision of the Board of
Arbitration shall be made in writing no more than thirty (30) days following the
end of the proceeding. Such an award shall be a final and binding determination
of the dispute and shall be fully enforceable as an arbitration decision in any
court having jurisdiction and venue over such parties. The prevailing party (as
determined by the Board of Arbitration) shall in addition be awarded by the
Board of Arbitration such party's own attorneys' fees and expenses in connection
with such proceeding. The non-prevailing party (as determined by the Arbitrator)
shall pay the Board of Arbitration's fees and expenses.
(d) In the event of any claim for indemnity under SECTION 11.02(a),
Purchaser agrees to give the Company and its Representatives reasonable access
to the Books and Records and employees of the Company in connection with the
matters for which indemnification is sought to the extent the Company reasonably
deems necessary in connection with its rights and obligations under this ARTICLE
XI.
42
11.03 EXCLUSIVITY. After the Closing, to the extent permitted by Law,
the indemnities set forth in ARTICLE VIII and this ARTICLE XI shall be the
exclusive remedies of Purchaser, Parent and the Company and their respective
officers, directors, employees, agents and Affiliates for any misrepresentation,
breach of warranty or nonfulfillment or failure to be performed of any covenant
or agreement contained in this Agreement, and the parties shall not be entitled
to a rescission of this Agreement or to any further indemnification rights or
claims of any nature whatsoever in respect thereof, all of which the parties
hereto hereby waive; PROVIDED, HOWEVER, that no party hereto shall be deemed to
have waived any rights, claims, causes of action or remedies if and to the
extent such rights, claims, causes of action or remedies may not be waived under
applicable law or actual fraud or intentional misrepresentation is proven on the
part of a party by another party hereto.
ARTICLE XII
TERMINATION
12.01 TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement of
the Company and Purchaser;
(b) at any time before the Closing without liability to the
terminating party, by the Company or Purchaser, in the event that any Order or
Law becomes effective restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement upon notification of the non-terminating party by the terminating
party and the terminating party is not then in material breach of this
Agreement;
(c) at any time before the Closing, by the Company or Purchaser in
the event of a material breach of this Agreement by the non-terminating party if
such non-terminating party fails to cure such non-compliance or breach within
ten (10) Business Days following notification thereof by the terminating party;
(d) at any time during the period commencing on the Effective Date
and ending on the 14th day after substantially all of the diligence materials
relating to the Business and the Assets reasonably requested by Purchaser shall
have been delivered to Purchaser (such period, the "DILIGENCE PERIOD"), by
Purchaser, without liability, (i) in the event that (x) Purchaser, in the course
of its investigation of the Assets, discovers or otherwise becomes aware of any
information that could reasonably be expected to have a Material Adverse Effect,
(y) any assumption set forth on EXHIBIT I is not true as of the last day of the
Diligence Period (or, if applicable, the date specified in such assumption) and
the Company has not elected to cure such matter in accordance with the terms of
the following proviso; provided that Purchaser shall deliver written notice to
the Company specifying any matter that is not consistent with such assumptions
and, in the case of any matter that is susceptible of cure prior to the
anticipated Closing Date, the Company shall have the right, but not the
obligation, to cure such matter prior to the Closing Date by notifying Purchaser
of such intention to cure such matter (collectively, the "Open Diligence
Matters") prior to the expiration of the Diligence Period (at which time the
43
Company shall become obligated to so cure such Open Diligence Matters no later
than the Closing Date) and the cure of all Open Diligence Matters to the
reasonable satisfaction of Purchaser shall be a condition to the obligations of
Purchaser to consummate the transactions contemplated hereby, or (z) the
Company's standard of operating the Business materially and adversely differs
from the average standard of operations employed by other owner-operators of
similarly situated casino hotels serving the Las Vegas locals market (i.e.,
excluding the Las Vegas Strip and Las Vegas Downtown areas), or (ii) in
accordance with the definition of "Disclosure Schedule";
(e) at any time, without liability to the terminating party, upon
notification to the non-terminating party by the terminating party if the
Missouri Agreements have been terminated or have expired without consummating
the transactions contemplated thereby, and such termination or expiration of the
Missouri Agreements is not caused by a breach of the Missouri Agreements by the
terminating party or any of its Affiliates.
12.02 EFFECT OF TERMINATION. If this Agreement is validly terminated
pursuant to the provisions of SECTION 12.01 above, this Agreement will forthwith
become null and void, and, except as set forth in the following sentence, there
will be no liability or obligation on the part of Parent, the Company, Purchaser
or STN (or any of their respective officers, directors, employees, agents or
other representatives or Affiliates), except that the provisions of SECTIONS
14.02, 14.03, 14.04 and 14.07 below will continue to apply following any such
termination. Notwithstanding any other provision in this Agreement to the
contrary, upon any termination of this Agreement by the Company pursuant to
SECTION 12.01(c), the non-terminating party shall remain liable to the
terminating party for any and all willful breaches of this Agreement and the
terminating party may seek such remedies, including damages and attorneys' fees,
as are provided in this Agreement or as are otherwise available at Law or in
equity.
ARTICLE XIII
DEFINITIONS
13.01 DEFINED TERMS. As used in this Agreement, the following defined
terms have the meanings indicated below:
"AAA" has the meaning ascribed to it in SECTION 11.02(c).
"ACCOUNTING FIRM" has the meaning ascribed to it in SECTION 1.05(c).
"ACCOUNTS PAYABLE" has the meaning ascribed to it in SECTION 1.02(a).
"ACCOUNTS RECEIVABLE" has the meaning ascribed to it in SECTION
1.01(b).
"ACCRUED EXPENSES" has the meaning ascribed to it in SECTION 1.02(a).
"ACQUISITION PROPOSAL" has the meaning ascribed to it in SECTION 4.07.
"ACTIONS OR PROCEEDINGS" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation.
44
"AFFILIATE" means any Person that directly, or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by Contract or otherwise and, in
any event and without limitation of the previous sentence, any Person owning ten
percent (10%) or more of the voting securities of another Person shall be deemed
to control that Person.
"AGREEMENT" means this Asset Purchase Agreement and the Exhibits, the
Disclosure Schedule and the Schedules hereto and the certificates delivered in
accordance with SECTIONS 6.03 and 7.03, as the same shall be amended from time
to time.
"ASSETS" has the meaning ascribed to it in SECTION 1.01(a).
"ASSIGNMENT INSTRUMENTS" has the meaning ascribed to it in SECTION
1.04.
"ASSUMED LIABILITIES" has the meaning ascribed to it in SECTION
1.02(a).
"ASSUMPTION AGREEMENT" has the meaning ascribed to it in SECTION 1.04.
"ASSUMPTION INSTRUMENTS" has the meaning ascribed to it in SECTION
1.04.
"BENEFIT PLAN" means any Plan established by the Company, or any
predecessor or Affiliate of any of the foregoing, existing at the Closing Date
or at any time since December 31, 1997, to which the Company contributes or has
contributed, or under which any employee, former employee or director of the
Company or any dependent or beneficiary thereof is covered, is eligible for
coverage or has benefit rights.
"BOARD OF ARBITRATION" has the meaning ascribed to it in SECTION
11.02(c).
"BOOKS AND RECORDS" means all files, documents, instruments, papers,
books and records relating primarily to the Business or Condition of the
Company, including, without limitation, financial statements, Tax Returns and
related work papers and letters from accountants, budgets, pricing guidelines,
ledgers, journals, deeds, title policies, minute books, stock certificates and
books, stock transfer ledgers, Contracts, Licenses, customer lists, computer
files and programs, retrieval programs, operating data and plans, environmental
studies, audits, plans, surveys, designs, models and specifications.
"BUSINESS" has the meaning ascribed to it in the forepart of this
Agreement.
"BUSINESS BOOKS AND RECORDS" has the meaning ascribed to it in SECTION
1.01(a).
"BUSINESS CONTRACTS" has the meaning ascribed to it in SECTION
1.01(a).
"BUSINESS CUSTOMER LISTS" has the meaning ascribed to it in SECTION
1.01(a).
45
"BUSINESS DAY" means a day other than Saturday, Sunday or any day on
which banks located in the States of location of the Company's principal
executive offices are authorized or obligated to close.
"BUSINESS LICENSES" has the meaning ascribed to it in SECTION 1.01(a).
"BUSINESS OR CONDITION OF THE COMPANY" means the business, financial
condition or results of operations of the Company.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, and the rules and regulations promulgated
thereunder.
"CLAIM NOTICE" means written notification pursuant to SECTION
11.02(a) of a Third Party Claim as to which indemnity under SECTION 11.01 is
sought by an Indemnified Party, enclosing a copy of all papers served, if
any, and specifying the nature of and basis for such Third Party Claim and
for the Indemnified Party's claim against the Indemnifying Party under
SECTION 11.01, together with the amount or, if not then reasonably
determinable, the estimated amount, determined in good faith, of the Loss
arising from such Third Party Claim.
"CLOSING" means the closing of the transactions contemplated by
SECTION 1.04.
"CLOSING BALANCE SHEET" has the meaning ascribed to it in SECTION
1.05(b).
"CLOSING DATE" means (a) the second Business Day after the day on
which the last of the conditions described in Articles VI and VII hereof above
has been obtained, made or given or has expired, as applicable; PROVIDED,
HOWEVER, that in the event that the transactions contemplated by the Missouri
Agreements have not been consummated, either party may extend the Closing Date
(by providing written notice to the other party) such that the Closing will
occur not more than 15 days after the consummation of the transactions
contemplated by the Missouri Agreements; or (b) such other date as Purchaser and
the Company mutually agree upon in writing;
"CLOSING FINANCIAL STATEMENTS DELIVERY DATE" has the meaning ascribed
to it in SECTION 1.05(b).
"COBRA" has the meaning ascribed to it in SECTION 9.06.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"COMMISSION" means the Nevada Gaming Commission and the Nevada Gaming
Control Board, as applicable.
"COMMON STOCK" means the common stock, no par value, of the Company.
"COMPANY" has the meaning ascribed to it in the forepart of this
Agreement.
46
"COMPANY INDEMNIFIED PARTIES" means Parent, the Company and their
respective officers, directors, employees, agents and Affiliates.
"COMPANY PLANS" has the meaning ascribed to it in SECTION 2.09(a).
"COMPANY'S ACCOUNTANT" has the meaning ascribed to it in SECTION
1.05(c).
"COMPETING GROUP" has the meaning ascribed to it in SECTION 4.09(a).
"CONTRACT" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract.
"CURRENTLY EXISTING GAMING OPERATION" has the meaning ascribed to it
in SECTION 4.09(a).
"CUT-OFF DATE" means, with respect to any representation, warranty,
covenant or agreement contained in this Agreement, the date on which such
representation, warranty, covenant or agreement ceases to survive as provided in
SECTION 10.01, as applicable.
"DEFICIENCY" means the amount, if any, by which Net Current Asses as
determined in accordance with SECTION 1.05 is a negative number.
"DETERMINATION DATE" has the meaning ascribed to it in SECTION
1.05(c).
"DILIGENCE PERIOD" has the meaning ascribed to it in SECTION 12.01(d).
"DISCLOSURE SCHEDULE" means the record delivered to Purchaser by the
Company as provided herein, containing all lists, descriptions, exceptions and
other information and materials as are required to be included therein by the
Company pursuant to this Agreement, as said record may be amended, supplemented
or modified by the Company at any time prior to the Closing without any
liability to the Company; PROVIDED, HOWEVER, that Purchaser shall have the right
until the expiration of the Diligence Period with respect to the initial
delivery of the Disclosure Schedule and for five (5) Business Days after any
amendment, supplement or modification of the Disclosure Schedule to terminate
the Agreement based upon such amendment, supplement or modification of the
Disclosure Schedule if such amendment, supplement or modification of the
Disclosure Schedule reveals a matter which would have a Material Adverse Effect.
Reference herein to the Disclosure Schedule shall mean and refer not only to the
record itself, but to all items, documents, agreements and instruments
referenced therein and to the content of each such item, document, agreement and
instrument. Likewise, reference herein to a certain Section of the Disclosure
Schedule shall refer not only to that portion of the Disclosure Schedule, but to
the items, documents, agreements and instruments referenced in that Section and
the contents of each such item, document, agreement and instrument. Further,
matters disclosed for the purpose of one Section of the Disclosure Schedule
shall constitute disclosure of such matters for the purposes of all other
Sections of the Disclosure Schedule. The duplication or cross-referencing of any
disclosures made in the Disclosure Schedule shall not, in any instance or in the
aggregate, effect a waiver of the foregoing sentence.
47
"DISPUTE PERIOD" means the period ending sixty (60) days following
receipt by an Indemnifying Party of either a Claim Notice or an Indemnity
Notice.
"EBITDA" means, with respect to any Person for any period, the
earnings before interest, taxes, depreciation and amortization of such Person
for such period.
"EFFECTIVE DATE" has the meaning ascribed to it in the forepart of
this Agreement.
"ENVIRONMENTAL CLAIM" has the meaning ascribed to it in SECTION
2.15(c).
"ENVIRONMENTAL LAW" means any federal, state, or local law, statute,
code, ordinance, order, rule, regulation, judgment, decree, injunction, writ,
edict, award, authorization, or other legally binding and enforceable
requirement by any Governmental or Regulatory Authority relating to any
environmental, health or safety matters.
"ENVIRONMENTAL PERMITS" has the meaning ascribed to it in SECTION
2.15(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ESTIMATED CLOSING BALANCE SHEET" has the meaning ascribed to it in
SECTION 1.05(a).
"ESTIMATED PURCHASE PRICE" has the meaning ascribed to it in SECTION
1.05(a).
"EXCLUDED ASSETS" has the meaning ascribed to it in SECTION 1.01(b).
"EXCLUDED BOOKS AND RECORDS" has the meaning ascribed to it in SECTION
1.01(b).
"FINANCIAL STATEMENT DATE" means December 31, 1999.
"FINANCIAL STATEMENTS" means the combined financial statements of the
Company delivered to Purchaser pursuant to SECTION 2.05.
"GAAP" means generally accepted accounting principles, consistently
applied throughout the specified period and in the immediately prior comparable
period.
"GAMING BUSINESS" has the meaning ascribed to it in SECTION 4.09(a).
"GAMING DEVICES" means any gaming devices, associated equipment and
slot tracking systems (as such terms are defined in NRS Chapter 463) that is an
asset or property of the Company and is not an Excluded Asset.
"GENERAL ASSIGNMENT" has the meaning ascribed to it in SECTION 1.04.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal,
arbitrator, authority, administrative or other agency, commission, gaming
authority, licensing board, official or other authority or instrumentality of
the United States or any state, county, city or other political subdivision.
48
"HAZARDOUS MATERIAL" means any chemical, or other material, or
substance regulated under any Environmental Law including, without limitation,
any which are defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "infectious waste,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
or "toxic pollutants" or words of similar import under any Environmental Law.
"HSR ACT" means Section 7A of the ▇▇▇▇▇▇▇ Act (Title II of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended) and the rules
and regulations promulgated thereunder.
"IMPROVEMENTS" has the meaning ascribed to it in SECTION 1.01(a).
"INDEBTEDNESS" of any Person means all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
"INDEMNIFIED PARTY" means any Person claiming indemnification under
any provision of ARTICLE XI.
"INDEMNIFYING PARTY" means any Person against whom a claim for
indemnification is being asserted under any provision of ARTICLE XI.
"INDEMNITY NOTICE" means written notification pursuant to SECTION
11.02(b) of a claim for indemnity under ARTICLE XI by an Indemnified Party,
specifying the nature of and basis for such claim, together with the amount or,
if not then reasonably determinable, the estimated amount, determined in good
faith, of the Loss arising from such claim.
"INVENTORIED BAGGAGE" has the meaning ascribed to it in SECTION 5.06.
"INVENTORIED VEHICLES" has the meaning ascribed to it in SECTION 5.08.
"KNOWLEDGE OF THE COMPANY" means the actual knowledge of the directors
and executive officers of Parent or the Company and the General Manager of the
Business.
"KNOWLEDGE OF PURCHASER" means the actual knowledge of the members,
directors and officers of Purchaser and its Affiliates.
"LAND" has the meaning ascribed to it in SECTION 1.01(b).
"LAWS" means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of the United States or any state,
county, city or other political subdivision or of any Governmental or Regulatory
Authority.
"LEASED REAL PROPERTY" has the meaning ascribed to it in SECTION
1.01(a).
49
"LESSEE SECURITY DEPOSITS" has the meaning ascribed to it in SECTION
1.01(a).
"LESSOR SECURITY DEPOSITS" has the meaning ascribed to it in SECTION
1.02(a).
"LEVY AGREEMENTS AND LAND" has the meaning ascribed to it in SECTION
1.01(b).
"LEVY PURCHASE AGREEMENT" has the meaning ascribed to it in SECTION
1.01(b).
"LIABILITIES" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
"LICENSES" means all licenses, permits, certificates of authority,
findings of suitability, authorizations, approvals, registrations, franchises
and similar consents granted or issued by any Governmental or Regulatory
Authority.
"LIENS" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
"LOSS" or "LOSSES" means any and all damages, fines, penalties,
deficiencies, losses and expenses (including without limitation interest, court
costs, reasonable fees of attorneys, accountants and other experts or other
reasonable expenses of litigation or other proceedings or of any claim, default
or assessment).
"▇▇▇▇" has the meaning ascribed to it in SECTION 4.06(b).
"MATERIAL ADVERSE EFFECT" means any event or circumstance that has or
will have, or could reasonably be expected to have, a material adverse effect on
the Business or Condition of the Company after the Closing Date, it being
understood that in no event shall any of the following shall be deemed by itself
or by themselves, either individually or in the aggregate, to constitute a
Material Adverse Effect: (a) a failure by the Company to meet internal earnings,
revenue or other projections or earnings, revenue or other predictions of any
analyst or (b) any event, circumstance or market condition occurring as a
general economic or financial conditions or other developments which are not
unique to the Company but also is applicable to the gaming industry generally,
or the Nevada gaming industry in particular.
"MISSOURI AGREEMENTS" means, collectively, (i) that certain agreement
dated as of October 17, 2000 by and among Ameristar Casino Kansas City, Inc, a
Missouri corporation, Parent, Kansas City Station Corporation, a Missouri
corporation, and STN, and (ii) that certain agreement dated as of October 17,
2000 by and among Ameristar Casino St. ▇▇▇▇▇▇▇, Inc., a Missouri corporation,
Parent, St. ▇▇▇▇▇▇▇ Riverfront Station, Inc., a Missouri corporation, and STN.
"NET CURRENT ASSETS" means for any date of determination the net
current assets of such Person at such date of determination calculated as set
forth on Exhibit H attached hereto.
"NPL" means the National Priorities List under CERCLA.
50
"NRS" means the Nevada Revised Statutes.
"OBJECTION NOTICE" has the meaning ascribed to it in SECTION 1.05(a).
"OPEN DILIGENCE MATTERS" has the meaning ascribed to it in SECTION
12.01(d).
"ORDER" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"OWNED REAL PROPERTY" has the meaning ascribed to it in SECTION
1.01(a).
"PARENT" has the meaning ascribed to it in the forepart of this
Agreement.
"PERMITTED LIEN" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business by operation of Law
with respect to a Liability that is not yet due or delinquent and (iii) any
minor imperfection of title, easements of public record or similar Liens which
individually or in the aggregate with other such Liens would not have a Material
Adverse Effect.
"PERSON" means any natural person, corporation, limited liability
company, general partnership, limited partnership, proprietorship, other
business organization, trust, union, association or Governmental or Regulatory
Authority.
"PERSONAL PROPERTY LEASES" has the meaning ascribed to it in SECTION
1.01(a).
"PLAN" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave of absence, layoff,
vacation, day or dependent care, legal services, cafeteria, life, health,
accident, disability, workers' compensation or other insurance, severance,
separation or other employee benefit plan, practice, policy or arrangement of
any kind, whether written or oral, including, but not limited to, any "employee
benefit plan" within the meaning of Section 3(3) of ERISA.
"PREPAID EXPENSES" has the meaning ascribed to it in SECTION 1.01(a).
"PURCHASE PRICE" has the meaning ascribed to it in SECTION 1.03(a).
"PURCHASER" has the meaning ascribed to it in the forepart of this
Agreement.
"PURCHASER INDEMNIFIED PARTIES" means Purchaser and its officers,
directors, employees, agents and Affiliates.
"REAL PROPERTY" has the meaning ascribed to it in SECTION 1.01(a).
"REAL PROPERTY LEASES" has the meaning ascribed to it in SECTION
1.01(a).
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment.
51
"REPRESENTATIVES" has the meaning ascribed to it in SECTION 4.03.
"REQUIRED CONSENTS" has the meaning ascribed to it in SECTION 1.08.
"RESOLUTION PERIOD" means the period ending ninety (90) days following
receipt by an Indemnified Party of a written notice from an Indemnifying Party
stating that it disputes all or any portion of a claim set forth in a Claim
Notice or an Indemnity Notice.
"RETAINED EMPLOYEES" has the meaning ascribed to it in SECTION
9.01(a).
"RETAINED LIABILITIES" has the meaning ascribed to it in SECTION
1.02(b).
"STN" means Station Casinos, Inc., a Nevada corporation.
"SURPLUS" means the amount, if any, by which Net Current Assets as
determined in accordance with SECTION 1.05 is a positive number.
"TANGIBLE PERSONAL PROPERTY" has the meaning ascribed to it in SECTION
1.01(a).
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TAXES" means (i) any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not and any expenses incurred in connection with the
determination, settlement or litigation of any Tax liability and (ii) any
liability for payment of amounts described in clause (i) above as a result of
any express or implied agreement to pay or indemnify another Person with
respect to such amounts or any liability for such amounts, any joint and/or
several liability for such amounts, and any such amounts for which a Person
is liable by operation of Law (including but not limited to successor
liability).
"TEST MONTH" has the meaning ascribed to it in SECTION 1.05(a).
"THIRD PARTY" has the meaning ascribed to it in SECTION 4.07.
"THIRD PARTY CLAIM" has the meaning ascribed to it in SECTION
11.02(a).
"TRANSFER TAXES" has the meaning ascribed to it in SECTION 8.01.
"TRANSFER TIME" has the meaning ascribed to it in SECTION 1.04.
"TRANSFERRED EMPLOYEES" has the meaning ascribed to it in SECTION
9.01(a).
52
"TRANSFERRED INTELLECTUAL PROPERTY" has the meaning ascribed to it in
SECTION 1.01(a)(XIII).
"VACATION POLICY" has the meaning ascribed to it in SECTION 9.03.
"VEHICLES" has the meaning ascribed to it in SECTION 1.01(a).
"WARN" means the Worker Adjustment Retraining and Notification Act of
1988.
13.02 CONSTRUCTION OF CERTAIN TERMS AND PHRASES. Unless the context of
this Agreement otherwise requires, (i) words of any gender include each other
gender; (ii) words using the singular or plural number also include the plural
or singular number, respectively; (iii) the terms "hereof," "herein," "hereby"
and derivative or similar words refer to this entire Agreement; (iv) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement; and (v) the phrase "ordinary course of business" refers to the
business of the Company. Whenever this Agreement refers to a number of days,
such number shall refer to calendar days unless Business Days are specified. All
accounting terms used herein and not expressly defined herein shall have the
meanings given to them under GAAP. Any representation or warranty contained
herein as to the enforceability of a Contract shall be subject to the effect of
any bankruptcy, insolvency, reorganization, moratorium or other similar law
affecting the enforcement of creditors' rights generally and to general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at Law).
ARTICLE XIV
MISCELLANEOUS
14.01 NOTICES. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally, by facsimile transmission, by registered or certified mail
(postage prepaid, return receipt requested) or by overnight express courier to
the parties at the following addresses or facsimile numbers:
If to Purchaser, to:
Lake ▇▇▇▇ Station, Inc.,
c/o Station Casinos, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, Esq.
53
with a copy to:
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to STN:
Station Casinos, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, Esq.
If to the Company or Parent, to:
Ameristar Casinos, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President & CEO
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Senior Vice President of Legal Affairs
Ameristar Casinos, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
All such notices, requests and other communications will (a) if
delivered personally to the address as provided in this SECTION 14.01, be deemed
given upon delivery, (b) if delivered by facsimile transmission to the facsimile
number as provided in this SECTION 14.01, be deemed given upon receipt, and (c)
if delivered by mail in the manner described above to the address as provided in
this SECTION 14.01, be deemed given upon receipt (in each case regardless of
whether such notice, request or other communication is received by any other
Person to whom
54
a copy of such notice, request or other communication is to be delivered
pursuant to this SECTION 14.01). Any party from time to time may change its
address, facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other party hereto.
14.02 ENTIRE AGREEMENT. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.
14.03 EXPENSES. Whether or not the transactions contemplated hereby
are consummated, Purchaser and the Company each shall pay the costs and expenses
incurred by such party in connection with the negotiation, execution and closing
of this Agreement and the transactions contemplated hereby.
14.04 PUBLIC ANNOUNCEMENTS. At all times at or before the Closing, the
Company and Parent, on the one hand, and Purchaser and STN, on the other, will
not issue or make any reports, statements or releases to the public or generally
to the employees, customers, suppliers or other Persons to whom the Company
sells goods or provides services or with whom the Company otherwise has
significant business relationships with respect to this Agreement or the
transactions contemplated hereby without the consent of the other, which consent
shall not be unreasonably withheld. If either party is unable to obtain the
approval of its public report, statement or release from the other party and
such report, statement or release is, in the opinion of legal counsel to such
party, required by Law in order to discharge such party's disclosure
obligations, then such party may make or issue the legally required report,
statement or release and promptly furnish the other party with a copy thereof.
Purchaser and STN will obtain the Company's prior approval of any press release
to be issued immediately following the execution of this Agreement or the
Closing announcing this Agreement or the consummation of the transactions
contemplated by this Agreement, which approval shall not be unreasonably
withheld. The Company and Parent will obtain Purchaser's prior approval of any
press release to be issued immediately following the execution of this Agreement
or the Closing announcing this Agreement or the consummation of the transactions
contemplated by this Agreement.
14.05 WAIVER. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party waiving such term or condition. No waiver by any
party of any term or condition of this Agreement, in any one or more instances,
shall be deemed to be or construed as a waiver of the same or any other term or
condition of this Agreement on any future occasion. All remedies, either under
this Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
14.06 AMENDMENT. Except for amendments, supplements and modifications
to the Disclosure Schedule by the Company prior to the Closing (which shall be
made in accordance with the terms and provisions set forth in the definition of
the term "Disclosure Schedule"), this Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of
Purchaser, on the one hand, and the Company, on the other hand.
55
14.07 CONFIDENTIALITY. Each party hereto will hold, and will use its
best efforts to cause its Affiliates , and in the case of Purchaser, any Person
who has provided, or who is considering providing, financing to Purchaser to
finance all or any portion of the Purchase Price, and their respective
Representatives to hold, in strict confidence from any Person (other than any
such Affiliate, Person who has provided, or who is considering providing,
financing or Representative), unless (i) compelled to disclose by judicial or
administrative process (including, without limitation, in connection with
obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of Governmental or Regulatory Authorities) or by other
requirements of Law or (ii) disclosed in an Action or Proceeding brought by a
party hereto in pursuit of its rights or in the exercise of its remedies
hereunder, all documents and information concerning the other party or any of
its Affiliates furnished to it by the other party or such other party's
Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information can
be shown to have been (a) previously known by the party receiving such documents
or information, (b) in the public domain (either prior to or after the
furnishing of such documents or information hereunder) through no fault of such
receiving party or (c) later acquired by the receiving party from another source
if the receiving party is not aware that such source is under an obligation to
another party hereto to keep such documents and information confidential;
provided that following the Closing the foregoing restrictions will not apply to
Purchaser's use of documents and information concerning the Business, the Assets
or the Assumed Liabilities furnished by Seller hereunder. In the event the
transactions contemplated hereby are not consummated, upon the request of the
other party, each party hereto will, and will cause its Affiliates, any Person
who has provided, or who is considering providing, financing to such party and
their respective Representatives to, promptly (and in no event later than five
(5) Business Days after such request) redeliver or cause to be redelivered all
copies of documents and information furnished by the other party in connection
with this Agreement or the transactions contemplated hereby and destroy or cause
to be destroyed all notes, memoranda, summaries, analyses, compilations and
other writings related thereto or based thereon prepared by the party furnished
such documents and information or its Representatives.
14.08 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity pursuant to ARTICLE XI hereof.
14.09 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, except (a) for assignments and transfers by operation of Law
and (b) that Purchaser may assign any or all of its rights, interests and
obligations hereunder (including, without limitation, its rights under ARTICLE
XI) to (i) a wholly-owned subsidiary, provided that any such subsidiary agrees
in writing to be bound by all of the terms, conditions and provisions contained
herein and Purchaser remains liable for its obligations under this Agreement,
(ii) any post-Closing purchaser of the Business or a substantial part of the
Assets or (iii) any financial institution or other entity providing purchase
money or other financing to Purchaser from time to time as collateral security
for such financing. Subject to the preceding sentence, this Agreement is binding
upon,
56
inures to the benefit of and is enforceable by the parties hereto and their
respective successors and assigns.
14.10 HEADINGS. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
14.11 INVALID PROVISIONS. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future Law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, and (c)
the remaining provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid or unenforceable provision or
by its severance herefrom.
14.12 CONSENT TO JURISDICTION AND VENUE. Each party hereby irrevocably
submits to the exclusive jurisdiction of the United States District Court for
the District of Nevada or any court of the State of Nevada located in ▇▇▇▇▇
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 14.12 and shall not be deemed to be a general submission to the
jurisdiction of said courts or in the State of Nevada other than for such
purpose. Each party hereby irrevocably waives, to the fullest extent permitted
by Law, any objection that it may now or hereafter have to the laying of the
venue of any such action, suit or proceeding brought in such a court. Each party
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.
14.13 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Nevada applicable to a Contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
14.14 ATTORNEY'S FEES. In the event of a dispute between the parties
hereto relating to this Agreement, the prevailing party to such dispute will be
entitled to recover its reasonable attorneys fees and other costs and expenses
relating to such dispute from the non-prevailing party.
14.15 TIME OF THE ESSENCE. Time is of the essence in performing
covenants and agreements hereunder.
14.16 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
57
ARTICLE XV
GUARANTEES
15.01 GUARANTEE OF THE COMPANY'S OBLIGATIONS. Parent hereby, to the
fullest extent permitted by applicable law, irrevocably and unconditionally
guarantees to Purchaser and its successors and assigns the prompt performance
and payment in full when due of all obligations of the Company to Purchaser
under this Agreement and hereby agrees to take all reasonably necessary action
as the sole shareholder of the Company to cause the Company to perform its
obligations hereunder.
15.02 GUARANTEE OF PURCHASER'S OBLIGATIONS. STN hereby, to the fullest
extent permitted by applicable law, irrevocably and unconditionally guarantees
to the Company and its successors and assigns the prompt performance and payment
in full when due of all obligations of Purchaser to the Company under this
Agreement and hereby agrees to take all reasonably necessary action as the sole
shareholder of Purchaser to cause Purchaser to perform its obligations under
this Agreement.
58
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officer or trustee, as applicable, of each
party hereto as of the date first above written.
"PURCHASER"
LAKE ▇▇▇▇ STATION, INC.,
a Nevada corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name:
Title:
"STN"
STATION CASINOS, INC.,
a Nevada corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name:
Title:
"THE COMPANY"
AMERISTAR CASINO LAS VEGAS, INC.,
a Nevada corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
"PARENT"
AMERISTAR CASINOS, INC.,
a Nevada corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
and CFO
EXHIBIT I
Purchaser has executed the Agreement based on the following assumptions
regarding the Business.
- None of the employees of the Company is a member of a collective bargaining
unit that is applicable to such employee's employment by the Company and during
the three month period immediately preceding the Effective Date (a) there have
been no threatened attempts to organize collective bargaining units or other
union activities relating to employees of the Business that are different than
the attempts to organize or union activities experienced by Purchaser at its
properties in the Las Vegas area (other than Santa Fe Station) and (b) there has
been no active solicitation to organize collective bargaining units of employees
of the Business;
- The Company generated approximately $4.5 million of EBITDA, the components
of which were calculated in accordance with GAAP applied on a consistent basis,
in the nine months ended September 30, 2000;
- The Company has good and valid fee title to all of the Assets other than
(x) Assets subject to capital leases that will be paid in full at or prior to
the Closing, (y) Assets with a fair market value not in excess of $200,000 that
are subject to operating leases (as defined pursuant to GAAP) and (z) no more
than 120 slot participation games and games on trial;
- The wages and benefits paid to the Company's employees are based on the
UNLV off-strip study average and do not deviate materially from the 2000 wage
and benefits comparison schedules previously provided by the Company to
Purchaser;
- The Company does not have any contracts that will constitute Assumed
Liabilities with a term in excess of one year that cannot be cancelled on less
than 60 days notice and pursuant to which the Company, based on the most recent
twelve month period or such shorter period of time during which the contract has
been in effect, expects to purchase more than $100,000 in goods and services in
a twelve month period of time, other than contracts with economic terms that are
substantially comparable to the economic terms that Purchaser could expect to
obtain for similar contracts at its properties in the Las Vegas area;
- The Company's physical facilities and assets are without physical defects,
are in good maintenance and repair, normal wear and tear excepted, and are of
sufficient quality and condition to permit the operation of the Business prior
to the Closing and to permit Purchaser to operate the Business following the
Closing other than such matters as could not, in the aggregate, be reasonably
expected to cost more than $1,000,000 to repair or replace;
- The Company has not engaged in any transaction with any Affiliate of the
Company that is not reflected in the financial statements of the Company and
that does not have arm's-length terms;
- During the 12-month period ending on the Effective Date, the Company has
not been a party to any litigation involving any claim outside of the ordinary
course of business that has resulted in liability to the Company in an amount in
excess of $100,000 in the aggregate;
- There is no condition affecting the Assets or the Business that could give
rise to any liability pursuant to any Environmental Law in excess of $500,000 in
the aggregate.
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