Exhibit 10.20
MEMBERSHIP INTEREST PURCHASE AGREEMENT
This Membership Interest Purchase Agreement (the "Agreement") is
made and entered into this 31st day of March, 1999 by and among HWCC-Louisiana,
Inc., a Louisiana corporation ("Purchaser"), Sodak Gaming, Inc., a South Dakota
corporation ("Seller"), and Sodak Louisiana, L.L.C., a Louisiana limited
liability company (the "Company"). Certain definitions for this Agreement are
set forth in Section 10.15.
RECITALS:
A. Purchaser, the Company and Shreveport Paddlewheels, L.L.C.
("Paddlewheels") are parties to that certain Amended and Restated Joint Venture
Agreement of QNOV (formerly known as the "Queen of New Orleans at the Hilton
Joint Venture") dated July 31, 1998 (as amended from time to time, the "Joint
Venture Agreement").
B. Pursuant to the Joint Venture Agreement, Purchaser, the Company
and Paddlewheels agreed to enter into a joint venture named QNOV (the "Joint
Venture") for the purposes of participating in, constructing and operating a
riverboat gaming vessel, hotel and casino in Shreveport, Louisiana.
C. Seller owns all of the outstanding membership interest in the
Company (the "Membership Interest");
D. Seller desires to sell the Membership Interest to Purchaser, and
Purchaser desires to purchase the Membership Interest from Seller, all on the
terms and subject to the conditions set forth herein;
THEREFORE, Purchaser, Seller and the Company agree as follows:
ARTICLE I
SALE OF MEMBERSHIP INTEREST AND CLOSING
1.1 Purchase and Sale of Membership Interest. Subject to the terms and
conditions of this Agreement, Seller agrees to sell the Membership Interest to
Purchaser and Purchaser agrees to purchase the Membership Interest from Seller.
1.2 Purchase Price.
Purchaser shall pay to Seller the amount of $2,500,000 in cash in
consideration for the sale of the Membership Interest (the "Purchase Price"),
$1,000 of which is payable at Closing (as defined herein) and the balance of
which is payable on the six month anniversary of the Commencement Date (as
defined in the Joint Venture Agreement) (the "Subsequent Payment Date").
1.3 Closing.
(a) Within 5 days after the satisfaction of the conditions set
forth in ARTICLES V and VI, the closing (the "Closing") will take place at the
offices of Purchaser, or at such other place as Seller and Purchaser may agree
in writing.
(b) At the Closing, Purchaser shall deliver to Seller (i) a
check payable to Seller in the amount of $1,000 and (ii) such documents and
instruments required to be delivered by Purchaser pursuant to this Agreement. On
the Subsequent Payment Date, Purchaser shall deliver to Seller via wire transfer
of immediately available funds, cash in the amount of $2,499,000.
(c) At the Closing, Seller will deliver to Purchaser (i) a
certificate or certificates, if any, representing all the Membership Interest in
appropriate form for transfer to Purchaser duly endorsed in blank and (ii) such
other documents and instruments required to be delivered by Seller pursuant to
this Agreement.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER AND COMPANY
Each of Seller and the Company hereby represents and warrants to Purchaser
as follows:
2.1 Organization of Seller. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of South
Dakota.
2.2 Corporate Authority. Seller has all requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder.
Seller's execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
requisite corporate action on the part of Seller. This Agreement has been duly
and validly executed and delivered by Seller and constitutes the legal, valid
and binding obligation of Seller, enforceable against it in accordance with its
terms.
2.3 Organization and Operation of the Company. The Company is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Louisiana and has all requisite limited liability
company power and authority to own, lease and operate its assets and carry on
its business as it is now being conducted. The Company has no, and has never had
any, (i) assets or property or debts, obligations or other liabilities (whether
absolute, accrued, contingent, fixed or otherwise) (collectively,
"Liabilities"), other than by virtue of its ownership interest in the Joint
Venture or (ii) employees. Since its formation, the Company has not conducted
any business other than any business related to its ownership in the Joint
Venture.
2.4 Membership Interest of the Company. The Membership Interest is duly
authorized, validly issued, fully paid and nonassessable, and has not been
issued in violation of any preemptive or similar rights. Seller is the owner of
record and beneficially of the Membership Interest, free and clear of all
mortgages, pledges, encumbrances, security interests, charges, agreements or
claims of any kind (collectively, "Liens). There are no authorized or
outstanding options, warrants, calls, subscriptions or rights, commitments or
other agreements of any kind to purchase any membership interest or other
capital stock of the Company or to cause the Company to issue any membership
interest or other shares of capital stock or securities convertible into or
exchangeable or exercisable for any membership interest or other shares of such
stock. There are no authorized or outstanding securities of the Company
convertible into or exchangeable or exercisable for any membership interest or
other capital stock of the Company. There are no agreements or understandings to
which the Company is a party or by which it is bound with respect to the voting,
sale or transfer of the Membership Interest, other than the Joint Venture
Agreement. Upon delivery of the Membership Interest against payment therefor in
accordance with this Agreement, Purchaser will acquire good and marketable title
to the Membership Interest, free and clear of any and all Liens.
2.5 Interest in the Joint Venture. The Company owns 2,500,000 JV Interests
(as defined in the Joint Venture Agreement), which accounts for 50% of the total
JV Interests of the Joint Venture (the "Company JV Interests"). The Company is
the owner of record and beneficially of the Company JV Interests, free and clear
of all Liens. There are no agreements or understandings to which the Company is
a party or by which it is bound with respect to the voting, sale or transfer of
the Company JV Interests, other than the Joint Venture Agreement. As of the date
hereof, the Company has made all capital contributions required by it to be made
to the Joint Venture pursuant to the Joint Venture Agreement.
2.6 Consents and Approvals. Neither the Seller, the Company nor the Joint
Venture is required to make any filing with, or to obtain any permit,
authorization, consent or approval of or from, any governmental authority as a
condition to the consummation of the transactions contemplated by this
Agreement, except to obtain the approval of the State of Louisiana Gaming
Control Board (the "Gaming Board"). The execution and delivery of this Agreement
by Seller does not, and the performance by Seller of its obligations under this
Agreement will not: (i) conflict with or result in a breach of any of the terms,
conditions or provisions of the certificate of incorporation or bylaws of Seller
or the articles of
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organization or operating agreement of the Company; (ii) conflict with or
constitute a default under, or give rise to any right to terminate, cancel,
modify or accelerate, or to the loss of any material right under, any contract,
agreement, license, mortgage, note, debenture or other evidence of indebtedness
to which Seller or the Company is a party or by which any of their respective
properties may be bound; (iii) violate any term or provision of any law, rule or
regulation or any permit, concession, grant, franchise, license, writ, judgment,
decree, injunction, order or ruling of any court or governmental or regulatory
authority applicable to Seller or the Company; or (iv) result in the creation or
imposition of any Lien upon Seller or the Company or any of their respective
assets.
2.7 Absence of Changes. Except as set forth in Schedule 2.7, since its
formation, there has not been (i) any material adverse change in the condition,
financial or otherwise, business, assets, properties or results of operations of
the Company, or any event, occurrence or circumstance that could reasonably be
expected to result in such a material adverse change, (ii) any event which, if
it had taken place after the execution of this Agreement, would not have been
permitted by ARTICLE IV hereof, or (iii) any condition, event or occurrence
which could reasonably be expected to prevent, hinder or materially delay the
ability of the Company to consummate the transactions contemplated by this
Agreement.
Without limiting the generality of the foregoing, since the
formation of the Company, there has not been:
(a) any declaration, setting aside, or payment of any dividend
or distribution (whether in cash, securities, property or a combination thereof)
in respect of the Membership Interest of the Company or any direct or indirect
redemption, purchase, or other acquisition by the Company of any membership
interest of the Company or of any interest in or right to acquire any such
membership interest;
(b) (i) any employment, deferred compensation, or other
salary, wage, or compensation contract entered into between the Company and any
of its officers, managers, agents, consultants or representatives; (ii) any
salary, wages, or other compensation, whether current or deferred, of any
officer, manager, agent, consultant or representative of the Company or (iii)
any creation of an Employee Benefit Plan (as hereinafter defined);
(c) any mortgage or pledge of, or the creation of any Lien on,
any assets of the Company securing Liabilities of the Company or another person
or the creation of any Liabilities of the Company;
(d) any change in any financial reporting, tax, or accounting
practice or policy followed by the Company or in any assumption underlying such
a practice or policy, or in any method of calculating any contingency or other
reserve for financial reporting purposes or for any other tax or accounting
purposes;
(e) any cancellation of any Liability owed to the Company by
any other person;
(f) any write-off or write-down of, or any determination to
write off or write down, the assets of the Company or any portion thereof;
(g) any sale, transfer, or conveyance of any assets of the
Company;
(h) any amendment, termination, waiver, disposal, or lapse of,
or other failure to preserve, any license, permit, or other form of
authorization of the Company, the result of which individually or in the
aggregate has had or could have a material adverse effect on the business,
condition (financial or otherwise), assets, results of operations or prospects
of the Company;
(i) any transaction or arrangement under which the Company
paid, lent, advanced or invested any amount to or in respect of, or sold,
transferred, or leased any of its assets or any services to, (i) Seller, (ii)
any officer or manager of the Company or of any affiliate of Seller; (iii) any
affiliate of Seller, the Company or any subsidiary or of any such officer or
manager, or (iv) any business or other person in which Seller, the Company, any
subsidiary, any such officer or manager, or any such affiliate has any material
interest;
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(j) any amendment to the articles of organization or operating
agreement of the Company;
(k) any agreement or commitment to take any of the actions
that should be disclosed as exceptions to this Section 2.7.
2.8 Taxes. Except as disclosed on Schedule 2.8,
(a) Since the date of the organization of the Company, all of
the Membership Interests of the Company have been owned by Seller;
(b) For federal and Louisiana income tax purposes, at all
times the Company has been a disregarded entity and all of its assets have been
properly treated as being owned directly by Seller;
(c) Since the date of its organization, the Company's only
asset has been its interest in the Joint Venture;
(d) Since the date of its organization, the Company has not
been required to file any Tax Returns in any Taxing Jurisdiction;
(e) There are no encumbrances for Taxes upon the assets or
properties of the Company, except for statutory encumbrances for current Taxes
not yet due;
(f) The Company is not liable for Taxes of any other Person by
agreement or pursuant to any applicable law or regulation;
(g) No power of attorney has been granted with respect to
either of the Company and the Joint Venture as to any matter relating to Taxes;
(h) No property owned by any of the Company and the Joint
Venture (i) is property required to be treated as being owned by another person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of
1954, as amended, and in effect immediately prior to the enactment of the Tax
Reform Act of 1986, (ii) constitutes "tax-exempt use property" within the
meaning of Section 168(h)(1) of the Code, or (iii) is tax-exempt bond financed
property within the meaning of Section 168(g) of the Code;
(i) Since its formation, the Company has not incurred any
liability for Taxes other than in the ordinary course of business;
(j) Schedule 2.8 sets forth each and every Taxing Jurisdiction
in which (A) consummation of the transactions that are the subject of this
Agreement subjects the Purchaser to a liability for any Taxes of the Seller or
the Company, or (B) the nature of the Seller's or the Company's business or
assets requires the Seller, the Company or the Purchaser to notify a Taxing
Authority of the transactions that are the subject of this Agreement, if the
failure to make such notification would subject the Purchaser to a liability for
any Taxes of Seller or the Company; and
(k) The Seller is not a foreign person within the meaning of
Section 1445 of the Code.
2.9 Litigation. Except as disclosed in Schedule 2.9:
(a) There are no actions, suits, investigations, arbitrations,
or proceedings pending, or, to the knowledge of Seller or the Company,
threatened, against Seller or the Company or, to the knowledge of the Seller or
the Company, the Joint Venture or any of their assets that questions the
validity or enforceability of this Agreement or that could have an adverse
effect on the ability of Seller to perform its obligations hereunder.
(b) There are no actions, suits, investigations, arbitrations,
or proceedings pending, or, to the knowledge of Seller or the Company,
threatened, against the Seller or Company or, to the knowledge of the Seller or
the Company, the Joint Venture, which relates to, or effects the Company, the
Joint Venture or any of their assets.
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(c) There are no writs, judgments, decrees, injunctions, or
similar orders of any court or governmental or arbitral authority outstanding
against Seller or the Company or to the knowledge of Seller or the Company, the
Joint Venture, which relates to, or effects the Company, the Joint Venture or
any of their assets.
2.10 Compliance With Laws. Except as disclosed in Schedule 2.10, since its
formation, the Company has not been in violation (or with or without notice or
lapse of time or both would be in violation) of any term or provision of any
law, rule or regulation or any writ, judgment, decree, injunction, or similar
order applicable to such entity or any of its assets. Without limiting the
generality of the foregoing the Company has duly and validly filed or caused to
be filed all reports, statements, documents, registrations, filings, or
submissions that were required by law, rule or regulation to be filed with any
court or other governmental authority. All such filings complied with applicable
laws, rules or regulations in all material respects when filed, and to the
knowledge of Seller and the Company, no deficiencies have been asserted by any
person with respect to any such filings.
2.11 ERISA. The Company does not employ, and has never employed, any
person. The Company does not sponsor, maintain or contribute to, and has never
sponsored, maintained or contributed to, any "employee benefit plan" (within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), nor does the Company have any direct or indirect
liability with respect to any employee benefit plan.
2.12 Contracts. Schedule 2.12 contains a true and complete list of each of
the contracts (whether or not in writing) or other documents or arrangements
(true and complete copies, or, in the case of oral contracts or arrangements,
written summaries of the terms, of which have been furnished to Purchaser), to
which the Company is a party or by which any of its assets is or may be bound.
2.13 Licenses and Permits. Except as disclosed in Schedule 2.13, the
Company owns or validly holds all licenses, franchises, permits, approvals,
authorizations, exemptions, classifications, certificates, registrations and
similar documents or instruments that are required for its business, operations
and affairs. All such licenses, franchises, permits, approvals, authorizations,
exemptions, classifications, certificates, registrations and similar documents
or instruments are valid, binding and in full force and effect.
2.14 Insurance. Schedule 2.14 contains a true and complete list and
description of all liability, property, workers compensation, managers and
officers liability and other similar insurance contracts that insure the
business, operations, or affairs of the Company or that affect or relate to the
ownership, use, or operations of any of its assets.
2.15 Intercompany Liabilities. Except as disclosed in Schedule 2.15, (a)
neither Seller nor any other Affiliate of Seller or the Company provides or
causes to be provided to the Company any products, services, equipment,
facilities, or similar items and (b) there are no Liabilities between the
Company and Seller or any other affiliate of the Company or the Seller.
2.16 Limited Liability Company Records. The minute books and membership
records of the Company contain complete and accurate records of all proceedings
and actions taken at all meetings, or by written consent in lieu of meetings, of
the members and the managers and all authorized committees of the managers
thereof.
2.17 Bank Accounts. Schedule 2.17 contains (a) a true and complete list of
the names and locations of all banks, trust companies, securities brokers and
other financial institutions at which the Company has accounts or safe deposit
boxes or maintain banking, custodial, trading, or other similar relationships
and (b) a true and complete list and description of each such account, box and
relationship.
2.18 Disclosure. No representation or warranty made by Seller or the
Company in this Agreement, in the schedules hereto, or in any certificate
furnished by Seller or the Company to Purchaser in connection with this
Agreement or the transactions contemplated hereby contains any untrue statement
of material fact or omits to state a material fact necessary to make the
statements herein or therein not misleading in light of the circumstances under
which they were made.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER
Purchaser hereby represents and warrants, with respect to Sections
3.1 through 3.4, and covenants, with respect to Section 3.5, to Seller as
follows:
3.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of Louisiana.
3.2 Corporate Authority. Purchaser has full corporate power and authority
to enter into this Agreement and to perform its obligations hereunder. The
Purchaser's execution and delivery of this Agreement and the performance of its
obligations hereunder have been duly and validly authorized by all necessary
corporate action on the part of Purchaser. This Agreement constitutes a legal,
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms.
3.3 Consents and Approvals. Purchaser is not required to make any filing
with, or to obtain any permit, authorization, consent or approval of, any
governmental authority as a condition to the lawful consummation of the
transactions contemplated by this Agreement, except to obtain the approval of
the Gaming Board. The execution and delivery of this Agreement by Purchaser does
not, and the performance by Purchaser of its obligations under this Agreement
will not: (i) conflict with or result in a breach of any of the terms,
conditions or provisions of the articles of incorporation or bylaws of
Purchaser; (ii) conflict with or constitute a default under, or give rise to any
right to terminate, cancel, modify or accelerate, any contract, agreement,
license, mortgage, note, bond, debenture or other evidence of indebtedness to
which Purchaser is a party or by which any of its assets may be bound; or (iii)
violate any term or provision of any law, rule or regulation or any permit,
concession, grant, franchise, license, writ, judgment, decree, injunction, order
or ruling of any court or governmental or regulatory authority applicable to
Purchaser.
3.4 Purchase for Investment. Purchaser is acquiring the Membership
Interest for its own account for investment purposes and not with a view to the
distribution of the Membership Interest. Purchaser has such knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the Membership Interest. Purchaser
will not, directly or indirectly, dispose of the Membership Interest except in
compliance with applicable federal and state securities laws.
3.5 Contract and Regulatory Approvals. Purchaser will (a) take all
commercially reasonable steps necessary or desirable, and proceed diligently and
in good faith and use all commercially reasonable efforts, to obtain as promptly
as practicable all (i) approvals and consents of any person under all contracts
to which Purchaser is a party, or by which its assets may be bound, necessary to
permit Purchaser to consummate the transactions contemplated hereby and (ii) all
approvals, authorizations and clearances of governmental authorities required of
Purchaser to consummate the transactions contemplated hereby, (b) provide such
other information and communications to such governmental authorities as Seller
or such authorities may reasonably request and (c) cooperate with Seller in
pursuing, as promptly as practicable, all approvals, authorizations and
clearances of governmental authorities (including the Gaming Board) and other
persons required of Seller to consummate the transactions contemplated hereby.
ARTICLE IV
COVENANTS OF SELLER
Each of Seller and the Company covenants and agrees with Purchaser
as follows:
4.1 Contract and Regulatory Approvals. Seller will take and will cause the
Company to, and the Company will, (a) take all commercially reasonable steps
necessary or desirable, and proceed diligently and in good faith and use all
commercially reasonable efforts, to obtain as promptly as practicable all (i)
approvals and consents of any person under all contracts to which the Seller or
the Company is a party, or by which their respective assets may be bound,
necessary to permit Seller to consummate the transactions contemplated hereby
and (ii) all approvals, authorizations and clearances of governmental
authorities required of the Seller or the Company to consummate the transactions
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contemplated hereby, (b) provide such other information and communications to
such governmental authorities as Purchaser or such authorities may reasonably
request and (c) cooperate with Purchaser in pursuing, as promptly as
practicable, all approvals, authorizations and clearances of governmental
authorities (including the Gaming Board) and other persons required of Purchaser
to consummate the transactions contemplated hereby.
4.2 Investigation by Purchaser. Seller will provide and will cause the
Company to, and the Company will, provide, Purchaser, its counsel, accountants
and other representatives (including its financing sources and their respective
representatives) with full access, upon prior notice and during normal business
hours, to all facilities, officers, agents, accountants, assets and books and
records of the Company and will furnish Purchaser and such other persons with
all such information and data (including without limitation copies of contracts,
and other books and records) concerning the business, operations and affairs of
the Company as Purchaser or any of such other persons reasonably may request.
4.3 No Negotiations. Seller shall not initiate or encourage (including by
way of furnishing information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal that constitutes, or may
be reasonably expected to lead to, any Company Acquisition Proposal (as defined
below), or enter into discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain a Company Acquisition Proposal, or
authorize or permit any of the officers, directors or employees of Seller or the
Company, or any investment bank, financial advisor, attorney, accountant or
other representative of Seller or the Company to take any such action; provided,
however, in the event that the Gaming Board fails to approve the transactions
contemplated by this Agreement by May 31, 1999, this sentence shall not prohibit
▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ from filing after May 31, 1999 documentation
with the Gaming Board and any other regulatory authority necessary to obtain
approval for such individuals to own an interest in the Joint Venture and/or the
Company. Seller shall promptly notify Purchaser of all relevant terms of any
such inquiries and proposals received by it or the Company or by any such
officer, director, employee, investment banker, financial advisor, attorney,
accountant or other representative relating to such matters, and if such inquiry
or proposal is in writing, Seller shall deliver or cause to be delivered to
Purchaser a copy of such inquiry or proposal. For purposes of this Agreement,
"Company Acquisition Proposal" shall mean any of the following (other than the
transactions between Seller and Purchaser contemplated hereunder) involving the
Company: (i) any merger, consolidation, share exchange, business combination, or
other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of any of the assets or securities of the Company
in a single transaction or series of transactions; or (iii) any acquisition,
issuance or transfer of shares of capital stock or other securities of the
Company.
4.4 No Disposal of Property. Seller will cause the Company to refrain from
(a) disposing of any assets of the Company and from permitting any of such
assets to be subjected to any Liens, (b) entering into any contracts obligating
the Company to administer or manage the operations of any other person, and (c)
entering into any contracts permitting any person, other than the Company to
administer or manage the operations of the Company.
4.5 No Breach or Default. Seller will cause the Company to, and the
Company will, refrain from violating, breaching, or defaulting and from taking
or failing to take any action that (with or without notice or lapse of time or
both) would constitute a violation, breach, or default, under any term or
provision of any contract listed in Schedule 2.12.
4.6 No Acquisitions. Seller will cause each of the Company to, and the
Company will, refrain from (a) merging, consolidating, or otherwise combining or
agreeing to merge, consolidate, or otherwise combine with any other person, (b)
acquiring or agreeing to acquire all or substantially all assets or capital
stock or other equity securities of any other person, or (c) otherwise acquiring
or agreeing to acquire control or ownership of any other person.
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4.7 Resignations of Managers. Seller will cause such managers and such
officers of the Company as are designated by Purchaser to tender, effective at
the Closing, their resignations as managers and officers. If requested by
Purchaser, Seller will cause the election of Purchaser's nominees as managers of
the Company.
4.8 Tax Matters.
(a) The Company shall not, prior to the Closing Date, admit
any new members.
(b) All transfer and sales Taxes incurred in connection with
this Agreement and the transactions contemplated hereby shall be borne by
Seller, and the Seller shall, at its own expense, file to the extent required by
applicable law all necessary Tax Returns and other documentation with respect to
all such transfer or sales Taxes and, if required by applicable law, the
Purchaser will join in the execution of any such Tax Returns or other
documentation.
4.9 Books and Records. On the date of the Closing (the "Closing Date")
Seller will deliver to Purchaser all books and records of the Company. If (at
any time after the Closing) Seller discovers in its possession or under its
control any other books and records of the Company, Seller will forthwith
deliver such books and records to Purchaser.
4.10 Notice and Cure. Seller will notify Purchaser promptly in writing of
and contemporaneously will provide Purchaser with true and complete copies of
any and all information or documents relating to, any event, transaction, or
circumstance occurring after the date hereof that causes or will cause any
covenant or agreement of Seller or the Company under this Agreement to be
breached or that renders or will render untrue any representation or warranty of
Seller or the Company contained in this Agreement. Seller will use all
commercially reasonable efforts to cure, before the Closing, (a) any such breach
or misrepresentation and (b) any violation or breach of any representation,
warranty, covenant, or agreement made by it in this Agreement, whether occurring
or arising before or after the date hereof.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to close is subject to the following
conditions precedent:
5.1 Representations and Warranties. Each representation and warranty made
by Seller or the Company in this Agreement, in the certificates delivered by
Seller or the Company pursuant to this Agreement and in schedules hereto shall
be true in all material respects on the date on which made and shall be true in
all material respects on and as of the Closing Date as though such
representation and warranty were made on and as of the Closing Date.
5.2 Performance. Each of Seller and the Company shall have performed or
complied with all its agreements, covenants and obligations required to be
performed or complied with by this Agreement on or before the Closing Date.
5.3 No Injunctions. There shall not be in effect on the Closing Date any
injunction or similar restraining order of any court or governmental authority
of competent jurisdiction preventing either party from consummating any of the
transactions contemplated by this Agreement nor shall there be any writ,
injunction, decree or similar order or any court or governmental authority of
competent jurisdiction that would impose any limitation on Purchaser's ability
to exercise full rights of ownership of the Membership Interest.
5.4 Consents and Authorizations. Each of the governmental and other
approvals, consents, permits, or waivers listed in Schedule 2.6 and in Schedule
3.3 and the consent of the Gaming Board shall have been obtained for the
consummation of the transactions contemplated by this Agreement.
5.5 No Adverse Change. Prior to the Closing Date, there shall not have
been, occurred, or arisen any change in, or any event, condition, or state of
facts of any character that individually or in the aggregate has or may
reasonably be expected to have a material adverse effect on the business,
condition (financial or otherwise), assets, results of operations or properties
of the Company or the Joint Venture.
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5.6 Officer's Certificates. Seller and the Company shall have delivered to
Purchaser a certificate, dated the Closing Date and signed by a duly authorized
officer of the Seller and the Company, to the effect of the statements set forth
in Sections 5.1 and 5.2. In addition, Seller and the Company shall have
delivered to Purchaser a certificate, dated the Closing Date and executed by the
secretary or any assistant secretary of Seller and the Company, certifying as to
the certificate of incorporation, bylaws, resolutions and encumbancy of the
Seller and certificate of formation, operating agreement, resolution and
encumbancy of the Company. Each such certificate shall be in form and substance
reasonably satisfactory to Purchaser.
5.7 Resignations. Seller shall have delivered to Purchaser the written
resignations of the managers and officers of the Company.
5.8 Consulting Agreement. On or before the Closing, the Seller and the
Joint Venture shall execute any necessary documents to (i) terminate the
Consulting Agreement between the Joint Venture and the Seller dated September
22, 1998, and (ii) release Seller and the Joint Venture from all obligations
thereunder.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF SELLER
The obligation of Seller to close is subject to the following
conditions precedent:
6.1 Representations and Warranties. Each representation and warranty made
by Purchaser in this Agreement, in the certificates delivered by Purchaser
pursuant to this Agreement and in schedules hereto shall be true in all material
respects on the date on which made and shall be true in all material respects on
and as of the Closing Date as though such representations and warranties were
made on and as of the Closing Date.
6.2 Performance. Purchaser shall have performed or complied with all its
agreements, covenants and obligations required to be performed or complied with
by this Agreement on or before the Closing Date.
6.3 No Injunctions. There shall not be in effect on the Closing Date any
injunction or similar restraining order of any court or governmental authority
of competent jurisdiction preventing either party from consummating any of the
transactions contemplated by this Agreement.
6.4 Consents and Authorizations. The consent of the Gaming Board shall
have been obtained.
6.5 Officer's Certificates. Purchaser shall have delivered to Seller a
certificate, dated the Closing Date and signed by an authorized officer, to the
effect of the statements set forth in Sections 6.1 and 6.2. In addition,
Purchaser shall have delivered to Seller a certificate, dated the Closing Date
and executed by the secretary or any assistant secretary of Purchaser certifying
as to the articles of incorporation, bylaws, resolutions and encumbancy of
Purchaser. Such certificates shall be in the form and substance reasonably
satisfactory to Seller.
ARTICLE VII
SURVIVAL OF PROVISIONS
7.1 Survival of Representations and Warranties. The representations and
warranties respectively made by Seller, the Company (before the Closing Date)
and Purchaser in this Agreement, in the schedules hereto and in any certificate
delivered pursuant to this Agreement will survive the Closing and will remain in
full force and effect for 18 months thereafter; provided, however, that the
representations and warranties in (i) Sections 2.1, 2.2, 2.3, 2.4, 2.5 and 2.6
shall survive forever, and (ii) Section 2.8 shall survive until the expiration
of the applicable statues of limitations relating to such taxes.
7.2 Survival of Covenants and Agreements. All covenants and agreements
respectively made by Seller, the Company (before the Closing Date) and Purchaser
in this Agreement to be performed after the date hereof will survive the Closing
and will remain in full force and effect thereafter, until the expiration of the
terms or periods specified therein or (if there is no such specified term or
period) indefinitely without regard to duration.
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ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Seller. Subject to the provisions of Sections 7.1,
8.4 and 8.5 hereof, Seller, and the Company before the Closing Date, will
indemnify and hold harmless the Purchaser and its officers, directors,
shareholders, employees and agents (each a "Purchaser Party") (whether or not
such Purchaser Party owns any Membership Interest) in respect of any and all
taxes, monetary damages, Liabilities, fines, fees, penalties, interest
obligations, deficiencies, losses and expenses (including without limitation
punitive, treble, or other exemplary or extra contractual damages, amounts paid
in settlement, interest, court costs, costs of investigation, fees and expenses
of attorneys, accountants, actuaries, consultants and other experts and other
expenses of litigation or of any claim, default, or assessment) (collectively,
"Damages") resulting from or relating to any breach by Seller or the Company of
any representation, warranty, covenant, or agreement made by Seller or the
Company in this Agreement, in the schedules hereto, or in any certificate
delivered by Seller or the Company in connection with this Agreement.
8.2 Indemnification by Purchaser. Subject to the provisions of Sections
8.4 and 8.5 hereof, Purchaser will indemnify and hold harmless Seller and its
officers, directors, shareholders, employees and agents (each a "Seller Party")
(whether or not such Seller Party sells any Membership Interest) in respect of
any and all Damages resulting from or relating to any breach by Purchaser of any
representation, warranty, covenant, or agreement made by Purchaser in this
Agreement or in any schedule hereto or certificate delivered by Purchaser in
connection with this Agreement.
8.3 ERISA Indemnification. Seller shall indemnify and hold Purchaser
harmless with respect to any Damages arising as a result of any "employee
benefit plan" (within the meaning of Section 3(3) of ERISA) maintained,
sponsored or contributed to at any time by the Company or any trade or business
(whether or not incorporated) which is under common control or treated as a
single employer with the Company under Sections 414(b), (c), (m) or (o) of the
Code.
8.4 Indemnification Procedures.
(a) If any Purchaser Party or Seller Party, as the case may be
(each an "Indemnitee") becomes aware of any matter for which it believes it is
entitled to indemnification hereunder that involves (i) any claim made against
the Indemnitee by any person or entity other than a Purchaser Party or a Seller
Party or (ii) the commencement of any action, suit, investigation, arbitration,
or similar proceeding against the Indemnitee by any person other than a
Purchaser Party or a Seller Party, the Indemnitee will give the Seller or
Purchaser, as appropriate (each an "Indemnifying Party") prompt written notice
of such claim or the commencement of such action, suit, investigation,
arbitration, or similar proceeding. Such notice will (A) provide (with
reasonable specificity) the basis on which indemnification is being asserted,
(B) set forth the actual or estimated amount of Damages for which
indemnification is being asserted, if known, and (C) be accompanied by copies of
all relevant pleadings, demands and other papers served on the Indemnitee.
(b) The Indemnifying Party will have a period of 30 days after
the delivery of each notice required by Section 8.4(a) hereof during which to
respond to such notice. If the Indemnifying Party elects to defend the claim
described in such notice or does not respond within such 30-day period, the
Indemnifying Party will be obligated to compromise or defend (and will control
the defense of) such claim, at its own expense and by counsel chosen by the
Indemnifying Party and reasonably satisfactory to the Indemnitee. The Indemnitee
will cooperate fully with the Indemnifying Party and counsel for the
Indemnifying Party in the defense against any such claim and the Indemnitee will
have the right to participate at its own expense in the defense of any such
claim. If the Indemnifying party responds within such 30-day period and elects
not to defend such claim, the Indemnitee will be free to compromise or defend
(and control the defense of) such claim and to pursue such remedies as may be
available to the Indemnitee under applicable law.
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(c) Any compromise or settlement of any claim (whether
defended by the Indemnitee or by the Indemnifying Party) will require the prior
written consent of the Indemnitee and the Indemnifying Party.
(d) If an Indemnitee becomes aware of any matter for which it
believes it is entitled to indemnification hereunder and such matter involves a
claim made by any Purchaser Party or Seller Party, the Indemnitee will give the
Indemnifying Party prompt written notice of such claim. Such notice will (i)
provide (with reasonable specificity) the basis for which indemnification is
being asserted and (ii) set forth the actual or estimated amount of Damages for
which indemnification is being asserted. The Indemnifying Party will have a
period of 10 days after the delivery of each notice required by this Section
8.4(d) during which to respond to such notice. If the Indemnifying Party accepts
(in writing) full responsibility for the claim described in such notice, the
actual or estimated amount of Damages reflected in such notice will be
conclusively deemed a Liability that the Indemnifying Party owes and will pay
(in cash) upon demand, to the Indemnitee. If the Indemnifying Party has disputed
such claim or does not respond within such 10-day period, the Indemnifying Party
and the Indemnitee agree to proceed in good faith to negotiate a resolution of
such dispute. If all such disputes are not resolved through negotiations within
10 days after such negotiations begin, either the Indemnifying Party or the
Indemnitee may initiate litigation to resolve such disputes. If the Indemnifying
Party does not respond within 10 days after delivery of any claim notice
required by this Section 8.4(d), the Indemnitee may initiate litigation to
resolve such claim.
8.5 Indemnification Payments. Seller and Purchaser agree that any payment
made under ARTICLE VIII hereof will be treated by the parties on their Tax
Returns as an adjustment to the aggregate consideration for the Membership
Interest. If, notwithstanding such treatment by the parties, any indemnity
payment is determined to be taxable to Purchaser by any taxing authority, Seller
shall indemnify Purchaser for any Taxes payable by Purchaser by reason of the
receipt of such indemnity payment (including any payments under this Section
8.5), determined at a Tax rate equal to the maximum marginal federal, state and
local corporate income Tax rate for the taxable year in which the indemnity is
determined to be taxable to Purchaser.
ARTICLE IX
TERMINATION
9.1 Termination. Without limiting the rights or remedies that any party
hereto may otherwise have, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned:
(a) at any time before the Closing by written agreement of
Seller and Purchaser; or
(b) at any time after August 31, 1999, by Seller or Purchaser
if the Closing has not occurred on or before such date and such failure to close
is not caused by a breach of this Agreement (or any representation, warranty,
covenant, or agreement included herein) by the party electing to terminate
pursuant to this Section 9.1(b).
9.2 Effect of Termination. If this Agreement is validly terminated
pursuant to Section 9.1 hereof, (a) the obligation of Purchaser to purchase the
Membership Interest and the obligation of Seller to sell the Membership Interest
will terminate, (b) the provisions of Sections 10.5, 10.7 and 10.8 hereof will
continue to apply following any such termination and (c) no party hereto will be
relieved of any Liability for Damages that such party may have to the other
party by reason of such party's breach of this Agreement (or any representation,
warranty, covenant, or agreement included herein).
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ARTICLE X
MISCELLANEOUS
10.1 Notices. Any notice or other communication given pursuant to this
Agreement must be in writing and (a) delivered personally, (b) sent by
telefacsimile or other similar facsimile transmission, (c) delivered by
overnight express, charges prepaid, or (d) sent by registered or certified mail,
postage prepaid, as follows:
(i) If to Seller or Company:
Sodak Gaming, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Purchaser:
HWCC-Louisiana, Inc.
c/o Hollywood Gaming Corporation
Two Galleria Tower, Suite 2200
13455 ▇▇▇▇ Road, LB48
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Weil, Gotshal & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile number: ▇▇▇-▇▇▇-▇▇▇▇
All notices and other communications required or permitted under this
Agreement that are addressed as provided in this Section 10.1 will (A) if
delivered personally or by overnight express, be deemed given upon delivery; (B)
if delivered by telefacsimile or similar facsimile transmission, be deemed given
when electronically confirmed; and (C) if sent by registered or certified mail,
be deemed given on the third day after delivery of such notice to the United
States Post Office for delivery. Any party from time to time may change its
address for the purpose of notices to that party by giving a similar notice
specifying a new address, but no such notice will be deemed to have been given
until it is actually received by the party sought to be charged with the
contents thereof.
10.2 Entire Agreement; Interpretation. Except for documents executed by
Seller, the Company and Purchaser pursuant hereto, this Agreement supersedes all
prior discussions and agreements between the parties with respect to the subject
matter of this Agreement and this Agreement contains the sole and entire
agreement between the parties hereto with respect to the subject matter hereof.
Unless the context of this Agreement otherwise requires, (a) words of any gender
are deemed to include each other gender; (b) words using the singular or plural
number also include the plural or singular number, respectively; (c) the terms
"hereof," "herein," "hereby," "hereto," and derivative or similar words refer to
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this entire Agreement; (d) the terms "ARTICLE" or "Section" refer to the
specified ARTICLE or Section of this Agreement; (e) the term "or" means
"and/or"; (f) the term "party" means, on the one hand, Purchaser and, on the
other hand, Seller and the Company (before the Closing Date) and (g) all
references to "dollars" or "$" refer to currency of the United States of
America.
10.3 Expenses. Except as otherwise expressly provided in this Agreement
(including without limitation as provided in ARTICLE VIII hereof), each of
Seller and Purchaser will pay its own costs and expenses in connection with this
Agreement and the transactions contemplated hereby.
10.4 Brokers. Seller will indemnify and hold harmless each Purchaser Party
in respect of any and all claims or demands for commission, compensation, or
other Damages by any broker, finder, or other agent (whether or not a present or
former employee or agent of Seller or the Company) claiming to have been engaged
by Seller or the Company in connection with the transactions contemplated by
this Agreement.
10.5 Further Assurances. Seller and Purchaser agree that, from time to
time after the Closing, upon the reasonable request of the other, they will
cooperate and will cause their respective Affiliates to cooperate with each
other to effect the orderly transition of the business, operations and affairs
of the Company. Without limiting the generality of the foregoing, (a) Seller
will provide, and will cause its Affiliates to provide, representatives of
Purchaser reasonable access to all books and records of the Company reasonably
requested by Purchaser in the preparation of any post-Closing financial
statements, reports, or tax returns of the Company; (b) Purchaser will provide
representatives of Seller reasonable access to all pre-closing books and records
of the Company reasonably requested by Seller in the preparation of any
post-Closing financial statements, reports, or tax returns of Seller; and (c)
each party hereto will execute such documents and instruments as the other party
hereto may reasonably request containing terms and conditions mutually
satisfactory to each party hereto to further effectuate the terms hereof.
10.6 Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof. Such waiver must be
in writing and must be executed by an executive officer of such party. A waiver
on one occasion will not be deemed to be a waiver of the same or any other
breach or nonfulfillment on a future occasion. All remedies, either under this
Agreement, or by law or otherwise afforded, will be cumulative and not
alternative.
10.7 Amendment. This Agreement may be modified or amended only by a
writing duly executed by or on behalf of Seller, the Company and Purchaser.
10.8 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which will be deemed an original, but all of
which will constitute one and the same instrument.
10.9 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of Seller, Purchaser, each Seller
Party, each Purchaser Party and their respective successors and permitted
assigns and it is not the intention of the parties to confer third-party
beneficiary rights upon any other person.
10.10 Governing Law. This Agreement will be governed by and construed and
enforced in accordance with the laws of the State of Louisiana (without regard
to the principles of conflict of laws) applicable to a contract executed and
performable in such state.
10.11 Binding Effect. This Agreement is binding upon and will inure to the
benefit of the parties and their respective successors and permitted assigns.
10.12 No Assignment. Neither this Agreement nor any right or obligation
hereunder or part hereof 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 as otherwise specifically provided herein and except that
Purchaser may assign all or any part of the rights or obligations of Purchaser
hereunder to one or more affiliates of Purchaser without the consent Seller;
provided, however, that upon such assignment Purchaser shall not be deemed to be
released from any of its obligations hereunder.
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10.13 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future law and if the
rights or obligations under this Agreement of Seller and Purchaser 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; (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; and (d) in lieu of such illegal, invalid, or
unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible.
10.14 Confidentiality. (a) Each of Purchaser and Seller will refrain, and
will cause its respective officers, directors, employees, agents and other
representatives to refrain, from disclosing to any other person any confidential
documents or confidential information concerning the other party hereto
furnished to it in connection with this Agreement or the transactions
contemplated hereby and (b) Seller will refrain, and will cause its respective
officers, directors, employees, agents and other representatives to refrain,
from disclosing to any person any confidential documents or confidential
information concerning the Company or the Joint Venture unless (i) such
disclosure is compelled by judicial or administrative process or by other
requirements of law and notice of such disclosure is furnished to such other
party hereto; (ii) either party hereto deems it advisable (upon advice of such
party's legal counsel) to disclose any such confidential documents or
information in connection with the requirements of any securities law; or (iii)
such confidential documents or information can be shown to have been (A)
previously known by the party hereto receiving such documents or information,
(B) in the public domain through no fault of such receiving party, or (C) later
acquired by such receiving party from other public sources.
10.15 Certain Definitions.
"Code" means the Internal Revenue Code of 1986, as amended unless
otherwise provided.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, ,unincorporated organization,
governmental body or other entity.
"Taxing Authority" means any department, bureau or agency of any Taxing
Jurisdiction having the legal authority to collect taxes, or administer the tax
laws of any Taxing Jurisdiction, or with whom or which Tax Returns are required
to be filed.
"Taxing Jurisdiction" means the United States of America, any foreign
country, any state or local government, or any political subdivision of any of
the foregoing, that imposes or administers any Tax, or which requires, by
statue, regulation or otherwise, the filing of any Tax Return.
"Taxes" means (i) all federal, state, local or foreign taxes, charges,
fees, imposts, levies or other assessments, including, without limitation, all
net income, gross receipts, capital sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation, property and estimated taxes, customs duties, fees, assessments and
charges of any kind whatsoever, (ii) all interest, penalties, fines, additions
to tax or additional amounts imposed by any Taxing Authority in connection with
any item described in clause (i), and (iii) any transferee liability in respect
of any items described in clauses (i) and (ii).
"Tax Returns" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the date first written above by the duly authorized officers of
Seller, the Company and Purchaser.
PURCHASER:
HWCC-LOUISIANA, INC.
By:
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
President
SELLER:
SODAK GAMING, INC.
By:
---------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
CEO
COMPANY:
SODAK LOUISIANA, L.L.C.
By:
---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
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