EXHIBIT 2.1
AGREEMENT OF PURCHASE AND SALE
BY AND BETWEEN
EXBER, INC., UNION PLAZA HOTEL AND CASINO, INC., UNION PLAZA
OPERATING COMPANY, INC. AND ▇▇▇▇▇▇▇ SOUTH CORP.
("SELLER")
AND
BARRICK CORPORATION
("PURCHASER")
TABLE OF CONTENTS
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ARTICLE 1. PARTICULAR TERMS AND DEFINITIONS .................................................................. 10
ARTICLE 2. PURCHASE AND SALE OF AND DESCRIPTION OF ASSETS .................................................... 18
2.1 PURCHASE AND SALE ................................................................................... 18
2.2 DESCRIPTION OF ASSETS ............................................................................... 18
2.3 DESCRIPTION OF GAMING ASSETS ........................................................................ 24
2.4 DESCRIPTION OF EXCLUDED ASSETS ...................................................................... 25
2.5 OPTION AND RIGHT OF FIRST REFUSAL TO ACQUIRE ASSETS OF EL ▇▇▇▇▇▇ HOTEL & CASINO ..................... 27
ARTICLE 3. CONTRACTS AND LIABILITIES TO BE ASSUMED ........................................................... 27
3.1 CONTRACTS ........................................................................................... 27
3.2 ASSUMED LIABILITIES AND RETAINED LIABILITIES ........................................................ 30
3.3 REQUIRED CONSENTS ................................................................................... 32
ARTICLE 4. EXCLUDED CONTRACTS AND OTHER EXCLUDED LIABILITIES.................................................. 33
4.1 NO INDIVIDUAL EMPLOYMENT CONTRACTS ASSUMED .......................................................... 33
4.2 NO OTHER LIABILITIES ASSUMED ........................................................................ 34
ARTICLE 5. PURCHASE PRICE .................................................................................... 38
5.1 TOTAL PURCHASE PRICE ................................................................................ 38
5.2 [INTENTIONALLY OMITTED].............................................................................. 38
5.3 PAYMENT OF ASSETS PURCHASE PRICE AND GAMING ASSETS PURCHASE PRICE ................................... 38
5.4 LIQUIDATED DAMAGES .................................................................................. 41
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5.5 DISBURSEMENT OF ASSETS PURCHASE PRICE AND THE GAMING ASSETS PURCHASE PRICE .......................... 41
5.6 ALLOCATION OF ASSETS PURCHASE PRICE ................................................................. 42
5.7 STAND STILL DEPOSIT AND EVENTS RESULTING IN REFUND TO PURCHASER ..................................... 42
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF SELLER .......................................................... 45
6.1 SELLER'S REPRESENTATIONS AND WARRANTIES ............................................................. 45
6.2 DISCOVERY DURING INVESTIGATION ...................................................................... 42
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER ....................................................... 58
ARTICLE 8. TITLE INSURANCE ................................................................................... 60
8.1 TITLE POLICIES AND EXCEPTIONS ....................................................................... 60
8.2 TITLE POLICY PREMIUMS ............................................................................... 64
8.3 SURVEY .............................................................................................. 64
ARTICLE 9. CONDUCT OF BUSINESSES PRIOR TO CLOSING ............................................................ 64
9.1 SELLER'S CONDUCT .................................................................................... 65
9.2 OPERATING RESTRICTIONS .............................................................................. 66
9.3 INSURANCE ........................................................................................... 68
ARTICLE 10. OTHER OBLIGATIONS ................................................................................ 68
10.1 ACCESS: OBSERVERS: CONFIDENTIALITY ............................................................... 68
10.2 NO CONTROL ....................................................................................... 70
10.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ FILING ......................................................................... 71
10.4 COOPERATION ...................................................................................... 71
10.5 FINANCIAL INFORMATION ............................................................................ 72
10.6 GAMING AND LIQUOR LICENSE ........................................................................ 72
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10.7 BULK TRANSFER COMPLIANCE ......................................................................... 74
10.8 ACCESS TO REAL ESTATE ............................................................................ 74
10.9 NOTICES OF GOVERNMENTAL ACTION ................................................................... 74
10.10 HAZARDOUS SUBSTANCE .............................................................................. 75
10.11 SECURITY DEPOSIT ................................................................................. 76
10.12 CERTIFICATES OF INSPECTION ....................................................................... 76
10.13 TRANSFER OF TELEPHONE NUMBERS .................................................................... 76
10.14 ESTOPPEL CERTIFICATES ............................................................................ 77
10.15 GAMING TAXES ..................................................................................... 77
10.16 [INTENTIONALLY OMITTED] .......................................................................... 77
10.17 ENVIRONMENTAL REMEDIATION ........................................................................ 77
10.18 ENVIRONMENTAL SURVEY ............................................................................. 78
ARTICLE 11. CONDITIONS TO CLOSING ............................................................................ 78
11.1 PURCHASER'S CONDITIONS ........................................................................... 78
11.2 FAILURE OF PURCHASER'S CONDITIONS ................................................................ 82
11.3 SELLER'S CONDITIONS .............................................................................. 83
11.4 FAILURE OF SELLER'S CONDITIONS ................................................................... 86
11.5 SELLER'S FAILURE OF CERTAIN CONDITIONS DURING INSPECTION PERIOD .................................. 83
11.6 FAILURE OF CERTAIN OF SELLER'S REPRESENTATIONS AND WARRANTIES BETWEEN
AUGUST ___,2003 AND THE TRANSFER TIME ............................................................ 86
ARTICLE 12. ESCROW ........................................................................................... 87
ARTICLE 13. CLOSING .......................................................................................... 87
13.1 TIME: LOCATION ................................................................................... 87
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13.2 RECORDATION OF DEEDS ............................................................................. 89
13.3 SELLER'S DELIVERY TO PURCHASER ................................................................... 89
13.4 SELLER'S DELIVERIES TO ESCROWEE .................................................................. 91
13.5 PURCHASER'S DELIVERIES TO ESCROWEE ............................................................... 91
13.6 PURCHASER'S DELIVERIES TO SELLER ................................................................. 92
13.7 TRANSFER OF POSSESSION ........................................................................... 92
13.8 TRANSFER OF LIQUOR ASSETS ........................................................................ 92
ARTICLE 14. PRORATIONS, ALLOCATIONS, ADJUSTMENTS AND CLOSING COSTS ........................................... 93
14.1 PRO-RATIONS AND ALLOCATIONS ...................................................................... 93
14.2 PRORATION DISPUTES ............................................................................... 97
ARTICLE 15. DEFAULT ........................................................................................... 98
15.1 PURCHASER'S REMEDIES ............................................................................. 98
15.2 NOTICE OF SELLER'S BREACH; RIGHT TO CURE ......................................................... 99
15.3 SELLER'S REMEDIES ................................................................................ 101
15.4 NOTICE OF PURCHASER'S BREACH; RIGHT TO CURE ...................................................... 101
ARTICLE 16. RECEIVABLES: COLLECTION OF CHIPS AND TOKENS ...................................................... 102
16.1 COLLECTION OF CHIPS AND TOKENS ................................................................... 102
16.2 COLLECTION OF RECEIVABLES ........................................................................ 103
ARTICLE 17. BAGGAGE AND SAFE DEPOSITS ........................................................................ 103
17.1 BAGGAGE .......................................................................................... 103
17.2 SAFE DEPOSITS .................................................................................... 104
17.3 VALET PARKING .................................................................................... 104
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ARTICLE 18. LOSS BY FIRE OR OTHER CASUALTY: CONDEMNATION ..................................................... 104
18.1 FIRE OR OTHER CASUALTY: CONDEMNATION ............................................................. 104
18.2 MATERIAL DAMAGE .................................................................................. 102
ARTICLE 19. FINANCIAL RECORDS OF THE BUSINESSES .............................................................. 106
19.1 MAINTENANCE OF BOOKS AND RECORDS ................................................................. 106
19.2 PURCHASER FINANCIAL SUPPORT SERVICES ............................................................. 106
19.3 SELLER FINANCIAL SUPPORT SERVICES ................................................................ 107
ARTICLE 20. ADVISORS'. BROKERS' OR FINDERS' FEES ............................................................. 107
20.1 PURCHASER ........................................................................................ 107
20.2 SELLER ........................................................................................... 108
ARTICLE 21. ADDITIONAL POST-CLOSING COVENANTS ................................................................ 108
21.1 COOPERATION, RETENTION OF RECORDS ................................................................ 108
21.2 USE OF INTANGIBLE PROPERTY ....................................................................... 109
21.3 ASSISTANCE WITH COMPUTER SYSTEMS ................................................................. 109
ARTICLE 22. EMPLOYEE AND EMPLOYEE BENEFIT MATTERS ............................................................ 109
22.1 TERMINATION OF SELLER'S EMPLOYEES AT TRANSFER TIME ............................................... 106
22.2 SELLER'S INDEMNITY RELATED TO EMPLOYEE WAGE CLAIMS ............................................... 108
22.3 SELLER'S INDEMNITY RELATED TO OTHER EMPLOYEE RELATED CLAIM ....................................... 109
22.4 PURCHASER'S EMPLOYMENT OF NEW EMPLOYEES .......................................................... 109
22.5 [INTENTIONALLY OMITTED.].......................................................................... 111
22.6 PENDING LABOR ARBITRATIONS AND GRIEVANCES OF SELLER .............................................. 111
ARTICLE 23. MISCELLANEOUS .................................................................................... 117
23.1 ENTIRE AGREEMENT ................................................................................. 117
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23.2 NOTICES .......................................................................................... 117
23.3 GOVERNING LAW .................................................................................... 118
23.4 SURVIVAL ......................................................................................... 118
23.5 SUCCESSORS AND ASSIGNS ........................................................................... 119
23.6 CLOSING COSTS .................................................................................... 120
23.7 ATTORNEYS' FEES .................................................................................. 120
23.8 NO PARTY DEEMED DRAFTER .......................................................................... 120
23.9 AMENDMENTS ....................................................................................... 120
23.10 TIME OF THE ESSENCE .............................................................................. 120
23.11 FURTHER ASSURANCES ............................................................................... 121
23.12 HEADINGS ......................................................................................... 121
23.13 NON-WAIVER ....................................................................................... 121
23.14 NO THIRD PARTY BENEFITTED ........................................................................ 121
23.15 LIMITED ASSUMPTION OF SELLER'S LIABILITIES ....................................................... 121
23.16 INDEMNIFICATION .................................................................................. 122
23.17 KNOWLEDGE ........................................................................................ 125
23.18 PUBLICITY ........................................................................................ 126
23.19 COUNTERPARTS ..................................................................................... 126
23.20 SEVERABILITY ..................................................................................... 126
23.21 SCHEDULES ........................................................................................ 126
23.22 EXECUTION BY BOTH PARTIES ........................................................................ 126
23.23 PROCEDURES FOR ESTIMATING OF COSTS OF WORK ....................................................... 127
23.24 CONFIDENTIALITY .................................................................................. 127
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ARTICLE 24. MEMORANDUM ....................................................................................... 128
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THIS AGREEMENT OF PURCHASE AND SALE ("Agreement") is made and entered
into as of the 6th day of December, 2002, by and between Exber, Inc., Union
Plaza Hotel and Casino, Inc. Union Plaza Operating Company and ▇▇▇▇▇▇▇ South
Corp., all Nevada corporations, and Barrick Corporation, a Nevada corporation,
its Assignees or Designees with reference to the following facts:
A. Exber, Inc (which also does business under the name Western
Hotel & Casino, Ambassador Hotel and Las Vegas Club & Casino)., Union Plaza
Hotel and Casino, Inc., Union Plaza Operating Company and ▇▇▇▇▇▇▇ South Corp.
(which also does business under the name Gold Spike Hotel & Casino) (hereinafter
collectively "Seller") are the owners of the Total Assets (as hereinafter
defined).
B. Seller desires to sell to Barrick Corporation, its Assignees
or Designees (collectively "Purchaser"), and Purchaser desires to purchase from
Seller, the Total Assets on the terms and conditions set forth herein.
NOW, THEREFORE, IN CONSIDERATION of the foregoing and the mutual
covenants and agreements herein set forth, and other valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1. PARTICULAR TERMS AND DEFINITIONS.
As used in this Agreement, the following terms shall have the
respective meanings indicated opposite each of them. Certain other capitalized
terms are defined where they appear in this Agreement:
"Accountant" The accounting firm of ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
Woodbury.
"Advances" As defined in Section 14.1(c) hereof.
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"Advance Bookings" All blocks and reservations for
individuals, groups or conventions for
rooms, convention and/or recreational
facilities confirmed at commercially
reasonable rates and made in the ordinary
course of business.
"Agreement" This entire Agreement of Purchase and Sale
together with all Schedules, all of which
shall be deemed part hereof by reference
and incorporation herein.
"Assets" As defined in Section 2.1 hereof.
"Assets Purchase Price" As defined in Section 5.1 hereof.
"Assets Purchase Price Balance" As defined in Section 5.3(a)(ii) hereof.
"Assignees or Designees" Any one or more of the subsidiaries or
affiliates which Barrick controls to which
Barrick assigns any or all of its rights
and obligations under this Agreement.
Control as used herein shall mean not less
than 51% ownership of the entity's equity
and voting rights (but only if such
percentage is adequate to control the day
to day operations and elect a majority of
the entity's governing body, and if not,
such greater percentage necessary to do
so).
"Assumed Contracts" As defined in Section 3.1(a) hereof.
"Benefit Plans" As defined in Section 6.1(s)ii hereof.
"Businesses" The businesses operated as hotel casinos
and known as Las Vegas Club Hotel & Casino,
Plaza Hotel & Casino, Gold Spike Hotel &
Casino, and Western Hotel & Casino,
including the Ambassador Hotel and the real
properties shown on Schedule 2.2(a)(i)
attached hereto.
"Business Day" Any day other than a Saturday, a Sunday or
a day on which banking institutions in Las
Vegas, Nevada are authorized by law to
close.
"Business Premises" The real property identified in EXHIBIT A
hereto.
"CERCLA" Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42.
U.S.C. Sections 9601 et. seq. as now or
hereafter amended.
"Claim" As defined in Section 23.16(c).
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"Closing" As defined in Section 13.1(a) hereof.
"Closing Date" As defined in Section 13.1(c) hereof.
"Closing Extension Fee" As defined in Section 13.1(c) hereof.
"COBRA" The Consolidated Omnibus Reconciliation Act
of 1986, 29 U.S.C. Sections 1161 to 1167.
"Code" The Internal Revenue Code of 1986 as
amended.
"Computer Hardware" As defined in Section 2.2(j) hereof.
"Computer Software" As defined in Section 2.2(j) hereof.
Consumables Products used in the operation of the
Businesses that are regularly consumed and
are required to be replaced on a periodic
basis, including but not limited to, food,
beverages, liquor, paper products,
toiletries, glassware, china and flatware,
and items held for resale to customers or
as awards or prizes for patrons.
"Deeds" Collectively, the grant, bargain and sale
deeds to be delivered pursuant to Article
13 hereof and as defined in Section 2.2(a)
hereof.
"Deposit" As defined in Section 5.3(a)(i) hereof.
"Disclosed Agreements" As defined in Section 6.1(j) hereof.
"Effective Date" The date this Agreement is finally executed
by all parties hereto.
"El ▇▇▇▇▇▇ Assets" The property identified in Schedule 2.4(d)
hereto. (Schedule 6 & Ex. D of LOI) Casino.
"Environmental Engineer" As defined in Section 10.18 hereof.
"Environmental Issues" A condition that is a violation of any
Hazardous Waste Laws, is a Hazardous
Substance which is required to be
remediated by law or friable or non-friable
asbestos.
"Environmental Report" As defined in Section 10.18 hereof.
"Escrow" As defined in Article 12 hereof.
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"Escrowee" Nevada Title Company, a Nevada corporation
and/or United Title Company, a Nevada
corporation as applicable to the particular
parcels of Real Estate at the discretion of
Seller.
"Exber" As defined in Section 6.1(a).
"Exceptions" As defined in Section 8.1(a) hereof.
"ERISA" Employee Retirement Income Security Act of
1974, as amended.
"Excluded Assets" As defined in Section 2.4 hereof.
"Failed Condition Matter" As defined in Section 15.2(a) hereof.
"Gaming Assets" As defined in Section 2.3 hereof.
"Gaming Assets Purchase Price" As defined in Section 5.3(b) hereof.
"Gaming Equipment" "Associated equipment" as defined in NRS
Section 463.136; "gaming devices" as
defined in NRS Section 463.155; gaming
tables; keno and sports book furniture and
equipment; and all other equipment and
paraphernalia used in the conduct of gaming
on the Business Premises except those
assets owned by Coast Casinos relating to
the Sports Book at the Plaza Casino as
identified in EXHIBIT B.
"Gaming Licenses" As defined in Section 10.6 hereof.
"Gaming Receivables" Receivables comprised of gaming obligations
as described in Nevada law.
"▇▇▇▇▇▇▇" As defined in Section 6.1(e) hereof.
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"Hazardous Substance" Those substances, chemicals and mixtures
defined as "hazardous substances",
"hazardous materials", "toxic substances",
"imminently hazardous chemical substance or
mixture", "pesticide", "heavy metal",
"hazardous air pollutant", "toxic
pollutant", "solid waste", "hazardous
waste", "medical waste" or "radioactive
waste" in the Toxic Substance Control Act,
15 U.S.C. Section 2601 et. seq., CERCLA,
RCRA, the Federal Hazardous Substances Act,
15 U.S.C. Section 1261 et. seq., the
Federal Water Pollution Control Act, 33
U.S.C. Section 1251 et. seq., the Clean Air
Act, 42 U.S.C. Section 7401 et. seq., the
Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. Section 136 et.
seq., the Emergency Planning and Community
Right to Know Act of 1986, 42 U.S.C.
Section 11001 et. seq., the Occupational
Safety and Health Act of 1970, 29 U.S.C.
Section 651 et. seq., the Hazardous
Materials Transportation Act, 49 U.S.C.
Section 1801 et. seq., and the rules,
orders and regulations now in effect or now
promulgated and effective hereafter
pursuant to each respective law listed
above; those substances defined as
"hazardous waste", "radioactive waste",
"solid waste", "toxic waste", "pollutant",
"hazardous material", "regulated
substance", "asbestos", or "asbestos
containing material" in NRS ch. ▇▇▇, ▇▇▇
▇▇. ▇▇▇, ▇▇▇ ▇▇. ▇▇▇, ▇▇▇ Sections
618.750-618.850, inclusive, NRS Section
477.45, or in the regulations now existing
pursuant thereto, or in the Uniform Fire
Code, 1991 edition; those substances listed
in the United States Department of
Transportation table (49 CFR 172.101 and
amendments thereto) or by the Environmental
Protection Agency (or any successor agency)
as hazardous substances (40 CFR Part 302
and amendments thereto); petroleum and
petro-chemical products; and such other
substances, materials and wastes which are
classified as hazardous or toxic under
federal, state or local laws or
regulations.
"Hazardous Waste Laws" Any law, statute, ordinance, or regulation
pertaining to Hazardous Substances
including, but not limited to, CERCLA,
RCRA, and NRS ch. ▇▇▇, ▇▇▇ ▇▇. ▇▇▇, ▇▇▇ ▇▇.
▇▇▇, ▇▇▇ Sections 618.750-618.850, inclusive,
and NRS Section 477.45 (1989), or the Uniform
Fire Code, 1991 edition.
"HSR Act" As defined in Section 10.3 hereof.
"Indemnitor" As defined in Section 23.16(c) hereof.
"Inspection Period" The 120 day period following the Effective
Date.
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"Intangible Property" As defined in Section 2.2(g) hereof.
"Inventoried Baggage" As defined in Section 17.1 hereof.
"Laws As defined in Section 6.1(p) hereof.
"Leases" As defined in Section 3.1(a) (vi) hereof.
"Letter of Intent" That certain letter of intent between
Purchaser and Seller executed as of August
7, 2002 by Seller pertaining to the
transaction described herein which is dated
July 25, 2002.
"Liquor Assets" Unopened alcoholic beverages located on the
Business Premises as of the Date of
Closing.
"Liquor Licenses" As defined in Section 10.6 hereof.
"Liquor Wholesaler" A wholesale liquor distributor, licensed to
do business in the City of Las Vegas,
Nevada selected by Purchaser for the
purpose of transferring the Liquor Assets
from Seller to Purchaser.
"Material Adverse Effect" Any event or circumstance that is
reasonably likely to be materially adverse
to the Businesses collectively or any one
of them individually, or to materially and
adversely affect the value of the
Businesses, or any of them individually,
except for circumstances or events, (a)
whose affect is not likely to last beyond
the Closing; (b) affecting the downtown Las
Vegas hotel and/or casino business
generally; or (c) arising from actions
required to be taken by Seller pursuant to
this Agreement or in accordance with
instructions from, or with the consent of,
Purchaser.
"Nevada Gaming Authorities" As defined in Section 4.2(e) hereof.
"Non-Compliance Matter" As defined in Sections 15.2(a) and 15.4(a)
hereof.
"Non-Compliance Notice" As defined in Sections 15.2(a) and 15.4(a)
hereof.
"NRS" Nevada Revised Statutes.
"Permitted Title Exceptions" As defined in Section 8.1(a) hereof.
"Personal Property" As defined in Section 2.2(e) hereof.
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"Pro-rations" As defined in Section 14.1(j) hereof.
"Proxy Deposit" As defined in Section 5.2 (a)(ii) hereof.
"Purchaser" As defined on page 1 hereof.
"Purchaser Indemnitee" As defined in Section 23.16(a) hereof.
"Purchaser's Conditions" As defined in Section 11.1 hereof.
"Purchaser's Default" As defined in Section 15.4(d) hereof.
"RCRA" Resource Conservation and Recovery Act of
1976, 42 U.S.C. Sections 6901 et. seq. as
hereafter amended.
"Real Estate" As defined in Section 2.2(a) hereof.
"Receivables" All of Seller's accounts receivable, notes
receivable, Gaming Receivables, any tenant
receivables and guest ledger receivables
except the following: Gold Spike Ambassador
East Receivable Account #1103.09, Gold
Spike Misc. Receivable Account # 1103.20,
Gold Spike Note Receivable - ▇▇▇ ▇▇▇▇▇▇
Account #1104.01, Las Vegas Club - Exber,
Inc. d/b/a El ▇▇▇▇▇▇ Hotel Account #
2401.04, Insurance Claims receivables to
the extent Seller agrees to repair or
replace any damage or loss which is the
subject of a retained insurance claims
receivable and any liability relating
thereto which is not assumed by Purchaser,
and El ▇▇▇▇▇▇ Intracompany accounts listed
in Schedule 2.4(k).
"Recording Instructions" As defined in Section 5.5 hereof.
"Retained Liabilities" As defined in Section 4.2(g) hereof.
"Seller" As defined on page 1 hereof.
"Seller Indemnitee" As defined in Section 23.16(b) hereof.
"Seller's Conditions" As defined in Section 11.3 hereof.
"Seller's Default" As defined in Section 15.2(g) hereof.
"Seller Water Permits" As defined in Section 2.2(d) hereof.
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"Spill" A discharge, uncontrolled loss, seepage or
filtration of oil or petroleum or Hazardous
Substance at, upon, under or within the
Real Estate.
"Standstill Deposit" The $160,000 paid into Escrow by Purchaser
at the time of signing the Letter of
Intent.
"Star" Any performer who is a party to a Star
Agreement.
"Star Agreements" All those agreements, if any, with Seller
whereby a recognized star agrees to perform
at the Real Estate for compensation which
includes stock or stock options.
"Start Date" As defined in Section 23.23 hereof.
"Survey" As defined in Section 8.3 hereof.
"Tax" Any income, gross receipts, sales, use,
real estate, ad valorem, transfer,
franchise, withholding, payroll,
employment, excise, severance, occupation,
premium or property tax or other like
assessment or charge of any kind
whatsoever, together with any interest,
penalty or other additional amount imposed
by any taxing authority.
"Tax Return" Any Tax return, report or form.
"Title Date" As defined in Section 8.1(a) hereof.
"Title Insurer" As defined in Section 8.1(g) hereof.
"Title Non-compliance Matter" As defined in Section 8.1(f) hereof.
"Title Policies" As defined in Section 8.1(g) hereof.
"Title Reports" As defined in Section 8.1(a) hereof.
"Total Assets" The Assets and the Gaming Assets.
"Transfer Time" As defined in Section 13.1(a) hereof.
"Union Contracts" As defined in Section 6.1(s) (i) hereof.
"Union Plaza" As defined in Section 6.1(c) hereof.
"Utilities" As defined in Section 4.2(c) hereof.
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"WARN Act" Worker Adjustment and Retraining and
Notification Act, 29 U.S.C. Sections 2101,
et. Seq.
ARTICLE 2. PURCHASE AND SALE OF AND DESCRIPTION OF ASSETS.
2.1 Purchase and Sale. Subject to the terms and provisions of this
Agreement, Seller shall grant, bargain, sell, convey, transfer and assign to
Purchaser, Purchaser's Assignees or Designees at the Closing free and clear of
all liens and encumbrances (except as otherwise expressly permitted herein), and
Purchaser, Purchaser's Assignees or Designees shall purchase from Seller, all of
the assets owned and used by Seller (including its parent and their respective
divisions and affiliates) constituting, associated with or used in the conduct
of the Businesses, except the Excluded Assets of Seller (all of said
non-excluded assets, other than the Gaming Assets, being hereinafter
collectively referred to as the "Assets"), including, without limitation, those
items described in Section 2.2 hereof. Subject to the terms and provisions of
this Agreement, Seller shall also sell, convey, transfer and assign to Purchaser
at the Closing and Purchaser shall purchase from Seller all of the Gaming
Assets, as described in Section 2.3 hereof, free and clear of liens and
encumbrances (except as otherwise expressly permitted herein).
2.2 Description of Assets. The term Assets shall include, but
not be limited to, all of the tangible and intangible assets owned by Seller and
used or usable in connection with the ownership or operation of the Businesses
existing as of the Effective Date whether or not such assets are located on or
about the Real Estate, as augmented or diminished subject to Section 9.2 hereof
in the ordinary course of the operation of the Businesses between the Effective
Date and the Transfer Time (except the Excluded Assets and Gaming Assets),
including without limitation:
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(a) fee simple title to all that real property
owned by Seller located in the City of Las Vegas, County of
▇▇▇▇▇, State of Nevada, and legally described on Schedule
2.2(a) (i) hereto, together with all buildings, improvements
and fixtures (other than such fixtures which are leased and
are listed on Schedule 2.2(a) (ii)) located thereon, and all
of Seller's right, title and interest in and to all
hereditaments and rights appurtenant thereto, including (i)
any mineral, oil, gas, and water rights or interests and air
rights on or under said real property, if any; (ii) any
easements or rights of way pertaining to or benefiting said
real property; and (iii) any interest in streets, alleys,
advantages, and any strips or gores appurtenant thereto, and
to the extent included within the perimeter boundaries of said
real estate (collectively, the "Real Estate") subject to the
Permitted Exceptions will be conveyed by Grant, Bargain and
Sale Deed ("Deeds");
(b) all of Seller's right, title and interest in
and to any development rights, if any, appurtenant to the Real
Estate.;
(c) all of Seller's right, title and interest in
and to all files relating to the Businesses stored both at the
Businesses' locations and at sites or locations other than at
the Businesses' locations, however, to the extent the
information contained in these files is pertinent to the
business operations of Seller in its businesses not being sold
hereunder or the assets not transferred or the liabilities not
assumed, Seller shall be entitled to retain copies of the
transferred files and the interest conveyed to Purchaser will
not be exclusive;
(d) all of Seller's right, title and interest in
and to all rights existing under any State of Nevada water
appropriation certificates and/or permits held by
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Seller or any parent, affiliate or subsidiary of Seller which
relate to the Real Estate (collectively, the "Seller Water
Permits"). Copies of the Seller Water Permits, if any, and
copies of the State of Nevada water appropriation permits, if
any, are attached as Schedule 2.2(d);
(e) all of Seller's right, title and interest in
and to all non-gaming personal property owned by Seller and
used or usable in the Businesses, including but not limited
to, all office, hotel, casino, showroom, restaurant, bar,
convention, meeting and recreational furniture, rugs and
carpeting, pictures and art work, fixtures, furnishings,
appliances, televisions, equipment, heating and cooling
equipment and systems, telephone equipment and systems,
maintenance equipment, fittings, tools, fuel, signs and
signage, public relations pamphlets, supplies, consumable
items (including, without limitation, all liquor as may be
allowed, food and beverage and paper goods, cleaning supplies
and operating supplies), uniforms, utensils, chinaware,
glassware, silverware, office supplies, Advance Bookings
(including advance deposits with respect thereto) without
regard to the physical location of such personal property
(collectively, the "Personal Property") and all warranties and
maintenance agreements relating to such Personal Property;
(f) all of Seller's right, title and interest in
and to any plans, specifications, drawings, renderings and
estimates with respect to the Real Estate, including, without
limitation, any pending or contemplated expansion, renovation,
remodeling or improvement of the Assets, if and to the extent
transferable, and
- 20 -
assignable and relinquishable licenses, warranties,
certificates and permits relating to the Assets and/or the
Businesses;
(g) all of Seller's right, title and interest in
and to any and all copyrights, trademarks, trade names,
service marks, displays, symbols, color arrangements, designs
and logos relating to and/or used in the ownership, use and/or
operation of the Businesses and/or the Total Assets, if any,
all those certain federal and state trademarks and fictitious
firm names for which certificates exist, copies of which
certificates are attached hereto as Schedule 2.2(g), any other
use by Seller or its parent, subsidiaries or affiliates of any
of the names or forms of the names of the Businesses and/or
the portions of the Businesses' names either alone or in
conjunction with the words "Hotel," "Casino," "Hall," "Motel",
"Saloon" or "Gambling Club" or any form or variation thereof,
if any, telephone numbers relating to the Businesses, except
as provided in Section 10.13 hereof, or to products sold or
distributed by the Businesses, all existing forms, stationery
and other disposables bearing the name or names of the
Businesses and/or any of their logos and any variations
thereof, and other names, words or devices and related
applications and registrations, all internet web sites, domain
names, registrations, web page designs, hosting agreements,
maintenance agreements, if any, except as otherwise provided
herein, and all other intangible property and/or rights, and
all goodwill associated therewith, directly or indirectly
relating thereto and/or used in the ownership, use and/or
operation of the Businesses and/or the Total Assets
(collectively, the "Intangible Property") unless Seller's
rights and interest therein arose from a license or other
permissive use
- 21 -
agreement with a third party which strictly prohibits the
sub-licensing or other type of transfer to the Purchaser
unless such prohibition can be avoided by obtaining the
consent of such third party owner as provided in Section 3.3
hereof. Excluded from the Intangible Property being sold to
and purchased by Purchaser shall be the ongoing use of the
names "▇▇▇▇▇▇ ▇▇▇▇▇▇▇" or "▇▇▇ ▇▇▇▇▇." It is agreed between
the parties that Purchaser shall be entitled to continue to
use until fully depleted, Consumables on which the name
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇" appears. As to supplies which are not
ordinarily consumed, Purchaser shall have a reasonable period
of time following Closing to remove, dispose of, or obliterate
the name "▇▇▇▇▇▇ ▇▇▇▇▇▇▇" from such Assets or the Business
Premises. In furtherance of the provisions contained in this
Section 2.2(g), Purchaser is granted a temporary non-exclusive
license for such uses of the name "▇▇▇▇▇▇ ▇▇▇▇▇▇▇" as allowed
herein. The parties hereto further agree that they shall enter
into a separation agreement relating to the internet web sites
and related Intangible Property as soon as is practicable but
in no event shall the failure to have executed such an
agreement be cause to delay or forego Closing; not
withstanding anything contained herein to the contrary, and
subject to Gaming Authority approval, Purchaser agrees that
within 2 days of the Transfer Time, it shall deliver to Seller
all playing cards, tokens and chips that bear the name "▇▇▇▇▇▇
▇▇▇▇▇▇▇;"
(h) all of Seller's right, title and interest in
and to all benefits arising after the Transfer Time, if any,
of contracts included in the Assumed Contracts;
(i) all of Seller's right, title and interest in
and to copies of all customer lists, player lists, originals
of all credit records and files relating to the
- 22 -
Businesses and the patrons thereof (in the possession or
control of Seller and/or its parents and/or their respective
divisions and affiliates), however, to the extent the
information contained in these files is pertinent to the
business operations of Seller in its businesses not being sold
hereunder, Seller shall be entitled to retain copies of such
files and the interest conveyed to Purchaser will not be
exclusive;
(j) all of Seller's right, title and interest in
and to (i) computer hardware used or usable in connection with
the Businesses or the Total Assets except as otherwise
excluded pursuant to Section 2.4(c), ("Computer Hardware");
(ii) except as provided in Section 2.4(c), all computer
software used or usable in connection with the Businesses or
the Total Assets, if and to the extent transferable,
including, without limitation, all source codes and data,
whether on tape, disc or other computerized format, and all
related user manuals, computer records, service codes,
programs, stored materials and databases, including, without
limitation, all access codes and instructions needed to obtain
access to and to utilize the information contained on such
computer records, together with any and all updates and
modifications of all of the foregoing (the "Computer
Software") and (iii) all copyrights related to the Computer
Software, if and to the extent owned by Seller and
transferable;
(k) all of Seller's right, title and interest to
the motor vehicles used in the operation of the Businesses.
Set forth on Schedule 2.2(k) is a description of such motor
vehicles, their vehicle identification numbers and whether or
not they are owned or leased;
- 23 -
(l) Seller's customer accounts receivables for
all amounts owed to Seller pro-rated as of Closing and except
as such are included in the Excluded Assets;
(m) all Seller's right, title and interests in
any and all leases, whether as lessee or lessor, including,
but not limited to, all capital leases, real estate leases,
equipment leases and tangible personal property leases as well
as all conditional sales contracts, except as otherwise
excluded in this Agreement;
(n) all Seller's sports memorabilia and
collectibles located in or on the Las Vegas Club property as
of the Closing Date;
(o) all Seller's rights and interests in all
telephone numbers relating to the Businesses and listings for
same;
(p) all Seller's trade organization memberships
and board seats to the extent they are transferable or
assumable;
(q) all Gaming Assets except those specifically
excluded as hereinafter provided.
2.3 Description of Gaming Assets. As used herein, the term "Gaming
Assets" shall mean and refer to all Gaming Equipment owned by Seller, its
parents and their respective divisions and affiliates and used or usable in
connection with the ownership or operation of the Businesses existing as of the
date hereof and located on or about the Real Estate. Further Purchaser shall
have the right to inspect Gaming Equipment not located on the Business Premises
but stored in the Exber, Inc. warehouse facilities within ten (10) days prior to
the Closing Date and Purchaser may elect to have included in the Gaming Assets
being acquired hereunder any equipment identified as being previously used in
the operation of the Businesses.
- 24 -
All Gaming Assets described herein shall be as augmented or diminished in the
ordinary course of Seller's business pursuant to Section 9.2 of this Agreement
between the Effective Date and the Transfer Time. Purchaser agrees that in the
event it elects to include in the Gaming Assets equipment located in an Exber,
Inc. warehouse, its relocation shall be at Purchaser's expense.
2.4 Description of Excluded Assets. Seller shall not sell, convey,
transfer or assign to Purchaser, and Purchaser shall not purchase or acquire
from Seller, any of the following assets, which shall remain the sole and
exclusive property of Seller (collectively, the "Excluded Assets"):
(a) all original taxpayer copies of tax returns
and original supporting schedules and documents of Seller and
all refunds, claims, entitlements or liabilities for income
taxes or other taxes of any type whatsoever which Seller may
hereafter receive or be responsible for by reason of its
ownership of the Assets or operation of the Businesses;
(b) all of Seller's cash on hand and/or on
deposit in banks or other financial institutions, cash
equivalents, coins, trade deposits, Casino cage, slot banks,
coin/cash/ticket redemption machines, letters of credit,
certificates of deposit, prepaid accounts and deposits,
whether or not such assets relate to the Seller's ownership of
Assets and/or the operation of the Business except as provided
in Section 14.1;
(c) the computer software and hardware used in
the operation of the Western Hotel & Casino, the Gold Spike
Hotel & Casino and, in part, the Las Vegas Club Hotel & Casino
and Union Plaza Hotel & Casino to the extent such
- 25 -
are utilized in the operation of the El ▇▇▇▇▇▇ Hotel & Casino
and as identified in Schedule 2.4(c);
(d) the business assets of Exber, Inc. used
exclusively in the operation of the El ▇▇▇▇▇▇ Hotel & Casino
and ▇▇▇▇▇ Hotel as specifically set forth in Schedule 2.4(d)
except as provided in Section 2.5, or those assets not
associated with or used in the Businesses, however Seller
acknowledges its obligations to transfer the real property
identified in Schedule 2.2(a)(i);
(e) all life insurance policies purchased by
Seller;
(f) all directors' and officers' liability
policies purchased by Seller;
(g) all policies of liability, casualty, or
property insurance issued to Seller as of the Closing Date ;
(h) to the extent Purchaser does not assume
liabilities relating to any of Seller's employee benefit
plans, the assets of such plans;
(i) all Seller's corporate minute books and any
books or records pertaining exclusively to assets owned by
Seller which are not sold or transferred to Purchaser;
(j) all rights of Seller to payments from
insurance for events happening or matters occurring prior to
Closing to the extent any damage for which coverage is sought
has been fully repaired to Purchaser's reasonable
satisfaction, otherwise such insurance receivable shall be
assigned to Purchaser;
(k) all Seller's intercompany or intracompany
liabilities and all Exber, Inc. d/b/a El ▇▇▇▇▇▇ Hotel & Casino
receivables held by Seller as identified in Schedule 2.4(k);
- 26 -
(l) all those assets of Seller listed in
Schedule 2.4(l) (Schedule 2,3,4 & 5 of the LOI) as to which
the account number has been struck through (Sch. 2,3,4) or
which is identified as Seller's Property/Liability (Schedule
5);
(m) all tokens, playing cards or chips bearing
the name "▇▇▇▇▇▇ ▇▇▇▇▇▇▇;"
(n) any right to use the name "▇▇▇▇▇▇ ▇▇▇▇▇▇▇"
except as provided in Section 2.2(g); and
(o) the personal property identified in Schedule
2.4(o).
2.5 Option and Right of First Refusal to Acquire Assets of El
▇▇▇▇▇▇ Hotel & Casino. Seller agrees that Purchaser or its Assignees or
Designees shall have an option and right to first refusal to acquire the El
▇▇▇▇▇▇ Assets pursuant to the terms of the agreement attached hereto as Schedule
2.5.
ARTICLE 3. CONTRACTS AND LIABILITIES TO BE ASSUMED.
3.1 Contracts.
(a) The "Assumed Contracts" are:
(i) all contracts which are listed on
Schedule 3.1(a)(i) hereto to the extent such
contracts remain in effect as of the Closing Date;
(ii) all contracts (other than those
listed on Schedule 3.1(a)(i)) relating to the
Businesses (but excluding any leases of premises in
the Real Estate) which were or are entered into by
Seller before or after the date hereof and prior to
the Closing, in the ordinary course of business, and
which individually require aggregate consideration in
cash or in kind
- 27 -
of Twenty-five Thousand Dollars ($25,000.00) or less
for the unexpired term thereof; to the extent such
are in effect on the Closing Date;
(iii) all contracts relating to the
Businesses which are entered into by Seller after the
Effective Date and prior to the Closing, in the
ordinary course of business, which individually
require aggregate consideration in cash or in kind in
excess of Twenty-five Thousand Dollars ($25,000.00)
for the unexpired term thereof and which either (A)
are approved by Purchaser, whose approval shall not
be unreasonably withheld, or (B) are cancelable on
thirty (30) days prior written notice without any
liability and which require a payment of no more than
Twenty-five Thousand Dollars ($25,000.00) during that
thirty (30) day period, to the extent such are in
effect on the Closing Date;
(iv) any and all post-Closing
liabilities arising from or related to trade
organization memberships or board seats transferred
to Purchaser by Seller;
(v) any Union Contracts having an
unexpired term, or if expired being honored, by
Seller at the Transfer Time shall be assumed by
Purchaser;
(vi) Landlord's rights and obligations
under those leases of premises located within the
Real Estate as well as other lease agreements as
listed on Schedule 3.1(a)(vi) (collectively the
"Leases") to the extent such leases are in effect as
of the Closing Date;
- 28 -
(vii) any other contract entered into with
respect to the Businesses which is expressly
consented to in writing by Purchaser;
(viii) any Advance Bookings, and all
obligations incurred in the ordinary course of
business or arising therefrom, for which deposits
related thereto are to be paid to Purchaser pursuant
to Section 14.1 hereof;
(ix) to the extent that Purchaser is
entitled to receive pro-ration funds pursuant to
Section 14.1 hereof, all accrued and accruing gaming
obligations as of the Transfer Time relating solely
to any slot club and coin operated gaming device
and/or progressive prizes associated with bingo,
keno, and slot machines;
(x) to the extent that Purchaser is
entitled to receive pro-ration funds pursuant to
Section 14.1 hereof, all payments due or to become
due in the future on ▇▇▇▇▇▇ placed prior to or at the
Transfer Time relating to all racebook gaming and Las
Vegas Club sports pools (The parties acknowledge that
the sports pool at the Union Plaza is operated by
Coast Resorts and those assets are not being acquired
by Purchaser. In the event Purchaser and Coast
Resorts enter into an agreement to continue the
sports pool, the sports pool will also be subject to
pro-ration at Closing pursuant to Section 14.1);
(xi) leases for the following equipment:
(A) Union Plaza two-stage boiler; (B) new slot
machines acquired between the Effective Date and the
Closing for use in any of the Businesses or new
upgrades to existing slot machines; (C) new
Perconta/▇▇▇▇▇▇▇▇ machines acquired
- 29 -
between the Effective Date and the Closing for use in
any of the Businesses; and (D) IGT/CDS equipment or
system upgrades acquired between the Effective Date
and the Closing for use in any of the Businesses. The
total of purchases for the equipment described in
(B), (C), and (D) above shall be limited to
$1,500,000 annually unless otherwise agreed by
Purchaser. It is acknowledged and agreed by Purchaser
that Exber, Inc. shall have the option to call any
financed obligation for the equipment purchases
described herein immediately due and payable at the
time of Closing in which case Purchaser shall pay
Exber, Inc. in full at the Closing the balance
remaining due and owing on the financing obligations
described herein. In the event Exber, Inc. elects to
be paid in full at Closing, it shall be obligated to
provide written notice to Purchaser of such election
not less than 30 days prior to Closing and to inform
Purchaser of the total amount that will be due and
payable at Closing in such notice.
(b) At Closing, Seller shall assign to Purchaser
all of Seller's rights under the Assumed Contracts, and
Purchaser shall assume all of Seller's obligations to be
performed and all liabilities accruing after the Transfer Time
under the Assumed Contracts. Subject to Section 3.3, Seller
shall take all steps necessary to cause the effective
assignment of the Assumed Contracts at the Closing.
3.2 Assumed Liabilities and Retained Liabilities.
(a) The "Assumed Liabilities" are composed of:
- 30 -
(i) the accounts payable liability
incurred in the ordinary course for Consumables
delivered after the Transfer Time, or if delivered
prior to the Transfer Time consented to in writing
by Purchaser's agent and still in existence at the
Transfer Time;
(ii) all reasonable bona fide
liabilities, obligations or consideration owed as a
result of orders for services, products, materials,
labor or other commodity which are provided or
delivered subsequent to the Transfer Time;
(iii) any liability for the unpaid
purchase price for the following equipment which was
financed by Exber, Inc.: (A) Union Plaza two-stage
boiler; (B) new slot machines acquired between the
Effective Date and the Closing for use in any of the
Businesses or new upgrades to existing slot
machines; (C) new Perconta/▇▇▇▇▇▇▇▇ machines
acquired between the Effective Date and the Closing
for use in any of the Businesses; and (D) IGT/CDS
equipment or system upgrades acquired between the
Effective Date and the Closing for use in any of the
Businesses. The total of purchases for the equipment
described in (B)(C) and (D) above shall be limited
to $1.5 million annually unless otherwise agreed by
Purchaser. It is acknowledged and agreed by
Purchaser that Exber, Inc. shall have the option to
call any financed obligation for the equipment
purchases described herein immediately due and
payable at the time of Closing in which case
Purchaser shall pay Exber, Inc. in full at the
Closing the balance remaining due and owing on the
financing obligations described
- 31 -
herein. In the event Exber, Inc. elects to be paid in
full at Closing, it shall be obligated to provide
written notice to Purchaser of such election not less
than 30 days prior to Closing and to inform Purchaser
of the total amount that will be due and payable at
Closing in such notice.
(iv) such other liabilities specifically
described in Section 14.1.
(b) [INTENTIONALLY OMITTED]
(c) At the Closing, Purchaser shall assume all
of the Assumed Liabilities.
3.3 Required Consents. To the extent that the assignment of any of
the Assumed Contracts or the transfer of any Asset requires the consent of any
other party thereto (including, without limitation, Seller or any affiliate), or
shall be subject to any option in any other person or entity by virtue of a
request for permission to assign or transfer, or by reason of or pursuant to any
transfer to Purchaser, this Agreement shall not constitute a contract to assign
the same if any attempted assignment would constitute a breach thereof or give
rise to such an option, and Seller shall use commercially reasonable efforts to
procure consent to any such assignment; provided however, that in the event that
any such consent is not obtained at or prior to the Closing, such event shall
not cause the Closing to be delayed or constitute a default by Seller of any
obligation hereunder. All Assumed Contracts which are in existence as of the
date hereof which are subject to such rights and which require the payment of
more than Twenty-five Thousand Dollars ($25,000.00) in cash or in kind for the
unexpired portion thereof are listed on Schedule 3.3. If any such consent is not
obtained, or if for any reason any such assignment is not consummated, at
Purchaser's request, Seller shall cooperate with Purchaser to provide for
Purchaser the benefit, monetary or otherwise, of any such Assumed Contract
including, without limitation, enforcement
- 32 -
of any and all rights of Seller against the other party thereto arising out of
any breach or cancellation thereof by such party or otherwise, provided that
such cooperation (i) shall be at Purchaser's cost and expense and (ii) shall not
cause Seller to violate any such Assumed Contract. Purchaser shall not assume
any liability of any sort for any Assumed Contract which is not assigned to it
as a result of Seller's failure to obtain the required consent.
ARTICLE 4. EXCLUDED CONTRACTS AND OTHER EXCLUDED LIABILITIES.
4.1 No Individual Employment Contracts Assumed. Seller has
represented to Purchaser that no non-union employee is employed under an
employment contract, either written or oral, implied or express, and that all
non-union employees are employed on an "at will" basis. The parties acknowledge
and agree that, other than as provided herein as to union or collective
bargaining agreements, Purchaser is not assuming any contract of employment with
any employee of Seller, including members of management. Purchaser agrees that
effective immediately after Closing, it will hire all employees of Seller, not
covered by a collective bargaining agreement, except those identified in
Schedule 22.1(a), on such terms and conditions as are comparable to those of
Seller as of the Effective Date. Employees in bargaining units represented by
labor organizations will be hired on such terms as provided in the applicable
current unexpired collective bargaining agreement, or in the event that the
applicable collective bargaining agreement has expired and no extension or
successor agreement has been reached at the time of Closing, under the terms of
the expired collective bargaining agreement until such time as the Purchaser can
consult with the respective labor organization to fix the applicable terms and
conditions of employment. Purchaser acknowledges that some persons are "shared
employees" working within the Businesses being sold pursuant hereto as well as
other enterprises owned or controlled by the principals of Seller and that such
principals desire to
- 33 -
continue to employ such persons on a shared basis subsequent to Closing.
Purchaser agrees that, subsequent to Closing, it will cooperate with the
principals of Seller in an ongoing arrangement for the "shared employees" on
terms and conditions substantially similar to those by which such employees are
engaged immediately prior to Closing unless and until Purchaser determines such
a "shared employee" arrangement is not commercially or economically feasible.
4.2 No Other Liabilities Assumed. Notwithstanding anything in this
Agreement to the contrary, except as otherwise specifically provided in this
Agreement, Purchaser does not assume or agree to discharge or be liable for, any
obligations or liabilities not described in Article 3, including without
limitation:
(a) any liability under any Assumed Contract
relating to the benefits derived from such Assumed Contract
and which were actually received or used during the period
prior to or at the Transfer Time;
(b) any liability with respect to the providing
of goods or services or to the purchase of goods or services
except as provided in 3.2(a)(i) and 3.2 (a) (ii);
(c) all accounts payable for goods delivered or
for services rendered prior to or at the Transfer Time,
including, without limitation, gas, electrical, water, sewer,
telephone, telegraph, scavenger and other utility services
(collectively, the "Utilities");
(d) except for those liabilities for unpaid
Taxes or assessments subject to proration pursuant to Section
14.1 hereof, all liabilities to any federal, state or local
governmental agency, or to any special purpose district for
unpaid Taxes or assessments of any type or description, or
penalties or interest, arising by reason of Seller's
ownership, use and/or operation of the Assets prior to or at
the
- 34 -
Transfer Time, or any sales/use tax arising from the
implementation and closing of the transactions contemplated by
this Agreement, whether or not imposed on or measured by
income, including any amounts due or which may become due and
owing under NRS Sections 612.695, 244.3352, 372.620 and
244.335 and 364A.200;
(e) all liabilities of Seller to the Nevada
State Gaming Control Board, the Nevada Gaming Commission and
the applicable City of Las Vegas and ▇▇▇▇▇ County authorities
(collectively, the "Nevada Gaming Authorities") relating to
gaming activities prior to or at the Transfer Time;
(f) all liabilities of Seller arising prior to
or at the Transfer Time to any employees, unions, independent
contractors, Employee Benefit Plans, trustees of such plans
and the like, including liabilities or obligations arising
under ERISA;
(g) any liability of Seller resulting from
events occurring or matters existing prior to or at the
Transfer Time or relating to the Excluded Assets, including
all pending litigation and asserted claims against Seller
("Retaining Liabilities");
(h) all racebook and sportsbook gaming payments
owed to patrons of the Businesses prior to or at the Transfer
Time, as well as any and all liabilities or obligations
arising from Seller's chips or tokens, except to the extent
Purchaser is entitled to receive payments therefore from
Seller pursuant to Section 14.1(g) hereof;
- 35 -
(i) all security and other deposits, advance or
prepaid rents and key money or deposits (including any
interest thereon) held by Seller from tenants of the Real
Estate with leases in effect as of the Transfer Time and
assumed by Purchaser as part of the Assumed Contracts, to the
extent such deposits and assets are not paid or credited to
Purchaser as a pro-ration pursuant to Section 14.1 hereof or
otherwise;
(j) all liabilities or obligations for Advance
Bookings to the extent any deposits related thereto are not
paid to Purchaser pursuant to Section 14.1 hereof;
(k) all claims and liabilities relating to any
contract or lease included in the Assumed Contracts based on
any state of facts existing prior to or at the Transfer Time
unless such claims or liabilities are specifically identified
in Section 3.2;
(l) all claims related to or obligations arising
under or by reason of Seller's termination or breach prior to
the Transfer Time of any and all employment, agency,
representation, or independent contractor agreements,
contracts, arrangements or relationships between Seller and
any third party, including, without limitation, any
grievances, claims, liabilities, obligations or arbitrations
under any collective bargaining or labor agreement; (excluding
reinstatement);
(m) all claims of and liabilities to former,
retired, furloughed, vacationing, ailing or present employees,
whether employed before or after the date hereof, attributable
to the period prior to the Transfer Time, whether in the
nature of liabilities relating to employee wages and benefits
earned prior to or as
- 36 -
of the Transfer Time or otherwise, including, without
limitation, unemployment compensation or contributions
(including, without limitation, any amounts which may be or
become due and owing pursuant to NRS Section 612.695), FICA
contributions, severance pay, profit sharing benefits,
bonuses, vacation time or pay, sick leave or pay, ▇▇▇▇▇▇▇'▇
compensation and other similar employee benefits, including,
without limitation, benefits arising under any Benefit Plan
attributable to the period prior to the Transfer Time;
(n) any unfunded past service liability under
any collective bargaining or other labor agreement
attributable to the period prior to the Transfer Time;
(o) all liabilities or obligations attributable
to the period prior to the Transfer Time for due ▇▇▇▇
contracts or other "trade-out" liabilities (as such term is
customarily used in the hotel and gaming industry in the State
of Nevada) unless Seller pays Purchaser for same at Closing;
(p) (INTENTIONALLY OMITTED);
(q) all liabilities and obligations relating to
work performed or materials or equipment furnished during the
period prior to or at the Transfer Time with respect to the
capital improvements that Seller has completed, begun or are
in progress unless Purchaser has given its prior consent to
including a particular capital improvement in those expenses
to be prorated as of Closing or has agreed to include such
capital improvement within the Assumed Contracts and Assumed
Liabilities;
(r) any other liabilities of Seller, whether
liquidated or contingent, regardless of whether they are due
and payable before, at or after the Transfer
- 37 -
Time which are not assumed by Purchaser pursuant to the terms
of this Agreement; and
(s) arising from Seller's performance of any act
described in Article 17 hereof.
ARTICLE 5. PURCHASE PRICE.
5.1 Total Purchase Price. In consideration of the aforesaid grant,
bargain, sale, conveyance, transfer and assignment of the Assets and the Gaming
Assets, Purchaser shall pay to Seller the sum of Eighty Two Million Dollars
($82,000,000.00) in cash or other immediately available funds (the "Total Assets
Purchase Price") which shall be allocated between and among the individual
Assets ("Asset Purchase Price") and the Gaming Assets ("Gaming Asset Purchase
Price") as provided in Section 5.6.
5.2 [INTENTIONALLY OMITTED]
5.3 Payment of Assets Purchase Price and Gaming Assets Purchase
Price.
(a) The portion of the Total Assets Purchase
Price which is allocated to the Assets shall be payable as
follows:
(i) One Hundred and Sixty Thousand
Dollars ($160,000.00) in cash or other immediately
available funds (the "Deposit"), which shall be
delivered to either Nevada Title Company and/or
United Title Company as selected by Seller in amounts
to be determined by Seller and such title
company(ies) shall act as Escrow Agents for the
transactions contemplated by this Agreement
(collectively "Escrowee"). The Deposit shall be
delivered to Escrowee as directed by Seller on the
date Purchaser executes
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this Agreement and shall be deposited in
interest-bearing investments approved by Purchaser
and Seller (Seller and Purchaser acknowledge that the
interest on said $160,000.00 earned while invested is
the property of Purchaser); and
(ii) Purchaser shall also deposit in
escrow with an Escrowee of Seller's choosing the sum
of Sixty Thousand Dollars ($60,000) ("Proxy Deposit")
on or before two (2) business days of receipt from
Seller of Seller's letter engaging counsel (to
prepare the necessary proxy materials) for the
purpose of indemnifying the Seller for the cost of
preparing the necessary documentation for the Union
Plaza Hotel and Casino, Inc. and Union Plaza
Operating Company shareholders vote to approve the
transactions contemplated in this Agreement. Seller
shall engage such counsel within two (2) business
days of the Gaming Disclosure Date (defined in
Section 10.6(b) below) and Purchaser's disclosure of
the required forms and information. In the event this
Agreement is terminated as a result of Purchaser's
failure to satisfy the conditions set forth in
Section 5.2(a)(iii) or Section 11.3 of this
Agreement, an amount equal to Seller's attorney's
fees and costs incurred in relation to the
preparation of the Seller's proxy solicitation and
obtaining its approval by the required governmental
authorities (such amount being the "Earned Proxy
Deposit") shall be paid to Seller from this Proxy
Deposit up to the maximum amount of Sixty Thousand
Dollars ($60,000). Purchaser shall have no liability
to Seller for any costs related to the proxy
solicitation in excess of Sixty
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Thousand Dollars ($60,000.00). In the event Closing
occurs as provided in this Agreement, the entire
Proxy Deposit shall be applied toward the Purchase
Price as provided in Section 5.2 (a)(iii) below. The
Proxy Deposit shall be deposited by the Escrowee in
an interest bearing account and the interest shall,
under all circumstances, be the property of and
payable to the Purchaser.
(iii) upon the Closing, Seventy-nine
Million Eight Hundred and Forty Thousand Dollars
($79,840,000.00) (less the sum of any Closing
Extension Fee, if any, paid to Seller by Purchaser
and less the sum of the "Stand Still Deposit" of
$160,000.00 placed in escrow contemporaneously with
Purchaser's execution of the Letter of Intent ("Stand
Still Deposit") and less the Proxy Deposit as
described in Section 5.2(a)(ii) above and less any
pro-rations credited to Purchaser as provided in this
Agreement) (the "Assets Purchase Price Balance"),
which shall be deposited into Escrow (as hereinafter
defined) in cash or other immediately available funds
on the Closing Date. If the transactions provided for
herein do not close, the Deposit shall be paid by
Escrowee to Purchaser or Seller as provided herein
(together with interest earned on the Deposit in the
case where the Deposit is paid to Purchaser) together
with so much of the Proxy Deposit as shall be
necessary to pay the fees billed by Seller's legal
counsel for their work in the preparation of
documentation necessary for the Union Plaza Hotel and
Casino, Inc. shareholders' proxy solicitation as
described in Section 5.2(a)(ii) above. In the event
such fees are less than
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the total of the Proxy Deposit, the difference shall
be refunded and paid over immediately by the Escrowee
to the Purchaser together with the interest earned on
the Proxy Deposit as provided in Section 5.2(a)(ii).
(b) The Gaming Assets Purchase Price of Two
Million Dollars ($2,000,000.00) shall be payable on the
Closing Date by deposit into Escrow in cash or other
immediately available funds except as otherwise provided in
Section 13.7.
5.4 Liquidated Damages. If Purchaser fails to complete Closing
pursuant to the terms of this Agreement, Seller may, by a written notice of
termination given to Purchaser, terminate this Agreement effective as of the
date specified in said notice (which shall not be less than ten (10) days after
the date of sending such written notice of termination) and, subject to any
required approval of any of the Nevada Gaming Authorities, Seller shall be
entitled to retain the Deposit as liquidated damages. The parties acknowledge
that Seller's actual damages in the event the sale of the Assets is not
consummated because of a Purchaser failure to complete Closing are extremely
difficult or impracticable to determine. Therefore, by signing this Agreement,
the parties acknowledge that the Deposit has been agreed upon, after significant
negotiation by extremely sophisticated parties who have been advised by counsel,
as the parties' reasonable estimate of Seller's damages. The remedy set forth in
this Section shall be the sole and exclusive remedy of Seller for Purchaser's
failure to complete Closing and shall be in lieu of all other remedies provided
by law or equity.
5.5 Disbursement of Assets Purchase Price and the Gaming Assets
Purchase Price. Seller and Purchaser shall provide joint written instructions to
Escrowee in a form mutually approved by Seller and Purchaser, each of whose
approval shall not be unreasonably withheld
- 41 -
(the "Recording Instructions"), which shall among other things, govern the
disbursement of the Assets Purchase Price, the payment for and obtaining
Purchaser's title insurance policies, and the Gaming Assets Purchase Price (each
of which shall be paid in immediately available funds) upon Closing. The
Recording Instructions shall comply with all applicable Code provisions. The
Escrowee shall be designated as the "reporting party" for purposes of the Code.
The Recording Instructions are intended to carry out the intent of this
Agreement and shall not be inconsistent with this Agreement.
5.6 Allocation of Assets Purchase Price. The Assets Purchase Price
shall be allocated Fifty-five Million Five Hundred Thousand Dollars
($55,500,000.00) as to the Plaza Hotel & Casino and personal property located
therein and thereon and shall be allocated among the remaining land, buildings,
improvements, inventory and other items in such proportion as Purchaser and
Seller agree. Seller and Purchaser will file any and all applicable tax returns
and other tax related schedules and documents in accordance with such
allocations and the Gaming Assets Purchase Price and will not adopt or otherwise
assert tax positions inconsistent therewith. Purchaser shall furnish a copy of a
completed form 8594 reflecting the allocation of the Assets Purchase Price to
Seller within one hundred twenty (120) days of the Closing.
5.7 Stand Still Deposit and Events Resulting in Refund to
Purchaser.
(a) At the time of the Purchaser's execution of
the Letter of Intent, Purchaser deposited with the Title
Insurers the sum of $160,000 ("Stand Still Deposit") which is
to be held in escrow until Closing and credited against the
Total Purchase Price (together with interest thereon) except
as otherwise provided in this Agreement.
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(b) This Agreement shall be deemed immediately
terminated and the Stand Still Deposit (together with interest
accrued thereon) shall be returned to Purchaser within seven
(7) Business Days of notice to Seller by Purchaser of the
occurrence of any of the following:
(i) Seller defaults in the delivery of
clear and marketable title (Permitted Exceptions
allowed) to the Real Estate on the terms and
conditions set forth in this Agreement;
(ii) during the Inspection Period
Purchaser discovers material environmental matters
which are not disclosed in the environmental reports
provided by Seller to Purchaser (except for the
existence of asbestos in the Union Plaza north tower
HVAC system and ceilings, portions of the hotel rooms
at the Gold Spike and in other locations within the
Real Estate so long as remediation is not presently
required in the current undisturbed state of such
asbestos which is hereby disclosed by Seller to
Purchaser and which Purchaser acknowledges they are
aware of its existence.);
(iii) [INTENTIONALLY OMITTED];
(iv) during the Inspection Period
Purchaser discovers litigation or claims not
identified in Schedule 5.7(b)(iv) that have an
aggregate liability in excess of $500,000 which have
or, if taken to judgment or conclusion would have, a
Material Adverse Effect on the continued operation of
the Businesses, or any one of them, or the Value of
the Businesses, or any one of them; and (A) Purchaser
or the Businesses
- 43 -
would be subject to the liability as of
Closing; and (B) Seller refuses to assume that
liability or alternatively credit to Purchaser a
reasonable amount for those liabilities against the
Purchase Price; and (C) the liability was not
incurred in the ordinary course;
(v) any material warranty or
representation of the Seller, is found to be
fraudulent prior to the release to Seller of the
Stand Still Deposit;
(vi) Seller fails to provide Purchaser
with the necessary approval of the shareholders of
Exber, Inc. for all the transactions contemplated by
this Agreement on or before January 7, 2003;
(vii) Seller fails to provide Purchaser
with the necessary approval of Union Plaza Hotel and
Casino, Inc. for all the transactions contemplated by
this Agreement on or before 10 days after Purchaser's
receipt of all necessary Gaming Approvals to complete
these transactions;
(viii) Seller fails to provide Purchaser
with the necessary approval of ▇▇▇▇▇▇▇ South, Inc.
for all the transactions contemplated by this
Agreement on or before January 7, 2003 and
(ix) Seller fails to provide Purchaser
with the necessary approval of Union Plaza Operating
Company, Inc. for all the transactions contemplated
by this Agreement on or before 10 days after
Purchaser's receipt of all necessary Gaming Approvals
to complete these transactions.
(c) The parties acknowledge that but for the
happening of an event set forth in subsection (b) hereof,
Seller shall be entitled to receive the Stand Still
- 44 -
Deposit upon the Closing or disbursement of the Escrow, be it
as a result of Closing being completed or the transaction
being terminated.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF SELLER.
6.1 Seller's Representations and Warranties. Seller makes the
following representations and warranties to Purchaser, as of the date hereof
and, except as otherwise provided for in Section 11.5, as of the Transfer Time
(unless an earlier date is indicated in the representation, in which case as of
such earlier date), as the case may be:
(a) Exber, Inc. ("Exber") is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Nevada, with all requisite corporate
power and authority to enter into and subject to shareholder
approval carry out its obligations under this Agreement. Each
officer of Exber who shall execute and deliver this Agreement
has been duly authorized to so act by the Board of Directors
of Exber. Its shareholders have not yet voted on, or approved,
this Agreement.
(b) The execution, delivery, and performance of
this Agreement by the persons executing the same on behalf of
Exber have been duly and validly authorized by Exber's Board
of Directors and this Agreement and the other agreements and
instruments contemplated hereby constitute legal, valid and
binding obligations of Exber, enforceable in accordance with
their respective terms, subject however to approval by its
shareholders which the Board shall seek to obtain no later
than December 31, 2002.
(c) Union Plaza Hotel and Casino, Inc. ("Union
Plaza") is a corporation duly organized, validly existing and
in good standing under the laws
- 45 -
of the State of Nevada, with all requisite corporate power and
authority to enter into and subject to shareholder approval
carry out its obligations under this Agreement. Each officer
of Union Plaza who shall execute and deliver this Agreement
has been duly authorized by Union Plaza's Board of Directors
to so act on the part of Union Plaza. The parties acknowledge,
however, that as of the Effective Date the shareholders of
Union Plaza have not yet voted on or approved the execution of
this Agreement or the transactions contemplated herein.
(d) The execution, delivery, and performance of
this Agreement by the persons executing the same on behalf of
Union Plaza have been duly and validly authorized by Union
Plaza's Board of Directors and this Agreement and the other
agreements and instruments contemplated hereby constitute
legal, valid and binding obligations of Union Plaza,
enforceable in accordance with their respective terms. The
parties acknowledge, however, that as of the Effective Date
the shareholders of Union Plaza have not yet voted on or
approved the execution of this Agreement or the transactions
contemplated herein and that such approval is necessary and
required under the Union Plaza bylaws and NRS 78.560.
(e) ▇▇▇▇▇▇▇ South Corp. ("▇▇▇▇▇▇▇") is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, with all
requisite corporate power and authority to enter into and
carry out its obligations under this Agreement. Each officer
of ▇▇▇▇▇▇▇ who shall execute and deliver this Agreement has
been duly authorized to so act by all requisite corporate
action on the part of ▇▇▇▇▇▇▇.
- 46 -
(f) The execution, delivery, and performance of
this Agreement by the persons executing the same on behalf of
▇▇▇▇▇▇▇ have been duly and validly authorized and this
Agreement and the other agreements and instruments
contemplated hereby constitute legal, valid and binding
obligations of ▇▇▇▇▇▇▇, enforceable in accordance with their
respective terms.
(g) E.G. & H., Inc. was a corporation duly
organized, validly existing and in good standing under the
laws of the State of Nevada, which was merged into Exber, Inc.
prior to the Effective Date;
(h) Union Plaza Operating Company is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada, which is a
wholly owned subsidiary of Union Plaza Hotel and Casino, Inc.,
with all requisite corporate power and authority to enter
into, and subject to shareholder approval, carry out its
obligations under this Agreement. The execution, delivery, and
performance of this Agreement by the persons executing the
same on behalf of Union Plaza Operating Company have been duly
and validly authorized and this Agreement and the other
agreements and instruments contemplated hereby constitute
legal, valid and binding obligations of Union Plaza Operating
Company, enforceable in accordance with their respective
terms. The parties acknowledge, however, that as of the
Effective Date the shareholders of Union Plaza Operating
Company have not yet voted on or approved the execution of
this Agreement or the transactions contemplated herein and
that such approval is necessary and required under that
company's bylaws and NRS 78.560.
- 47 -
(i) The execution, delivery and performance of
this Agreement will not, with or without the giving of notice
and/or the passage of time except as set forth in subsection
(t) hereof, (i) violate any provision of law applicable to any
of the Total Assets, or the Businesses, the violation of which
would have a material adverse effect on any of the Total
Assets or the Businesses or which would prevent the
consummation of the transaction contemplated by this Agreement
or (ii) conflict with or result in the breach or termination
of, or constitute a default under or pursuant to any judgment,
order, injunction, decree or ruling of any court or
governmental authority, or other agreement or instrument by
which Seller, any of the Total Assets, or the Businesses are
bound, or to which any of them are subject, which would have a
material adverse effect on any of the Total Assets or which
would prevent the consummation of the transaction contemplated
by this Agreement, or (iii) result in the creation of any
lien, charge or encumbrance upon any of the Total Assets which
is not removed prior to the Closing.
(j) Seller has heretofore delivered to Purchaser
true, complete and correct copies of the Assumed Contracts
listed on Schedule 3.l (a) (i), or as have been subsequently
provided to Purchaser as provided for herein and which qualify
as Assumed Contracts, (collectively the "Disclosed
Agreements"). The Disclosed Agreements together with the
agreements referred to in or permitted by Sections 3.1 (a)
(iii) and 9.2 constitute or will constitute all agreements
which individually require aggregate consideration in cash or
in kind in excess of Twenty-Five Thousand Dollars ($25,000.00)
for the unexpired term thereof relating to the Businesses. To
the best of Seller's knowledge, as of the Effective Date, none
of
- 48 -
the Disclosed Agreements are in default by Seller or are in
default by a third party which has not been disclosed in
writing to Purchaser. To the best of Seller's knowledge, as of
the Closing Date, none of the Disclosed Agreements will be in
material default, which default will have a material adverse
effect on the Businesses or the Total Assets.
(k) Seller has delivered (or in the case of
(iii) below will deliver) to Purchaser true, correct and
complete copies of: (i) all material permits and licenses
evidenced by written instruments relating to the Assets,
Gaming Assets and/or the Businesses existing on the date
hereof; (ii) all material gaming financial reports, if any,
filed by Seller with respect to the Businesses with the State
of Nevada and/or local gaming authorities between the date
hereof and the Closing; (iii) audited balance sheets of the
Businesses dated December 31, 2000 and December 31, 2001, and
related audited statements of income, retained earnings and
cash flow for the periods then ended; and (iv) unaudited
balance sheets and income statements of the Businesses as of
August 31, 2002.
(l) Seller shall have as of the Closing Date
good and marketable title to the Total Assets, free and clear
of all liens, security interests and encumbrances (except (i)
those pertaining to the Disclosed Agreements; (ii) the
Permitted Title Exceptions; (iii) title exceptions which do
not constitute a Seller's Default as provided for in Section
8.1(b) hereof; (iv) mechanic's liens for work in progress
which Seller shall remove or bond over prior to Closing; (v)
those otherwise expressly permitted hereunder; or (vi) those
relating to tangible or intangible personal property, which
shall not be material to the personal property taken as a
- 49 -
whole), and, subject to Section 3.3 hereof, Seller shall have
the right, power and authority to sell, convey, transfer and
assign the Total Assets at the Closing. Schedule 6.1(l)
identifies all items of Personal Property leased by Seller as
of the Effective Date, other than those items of Personal
Property which in the aggregate do not have a value in excess
of One Hundred Thousand Dollars ($100,000.00), and as to which
no one item has a value in excess of Twenty-five Thousand
Dollars ($25,000.00).
(m) To the best of Seller's knowledge, except as
set forth in Schedule 6.1(m) hereto, any and all utilities and
infrastructure (including water pipes and pipelines) necessary
to operate the Businesses as it is presently being operated
are available and in place; and all water, sewer, electric and
telephone facilities and all other utilities required for the
normal use and operation of the Businesses Premises as it is
presently being operated are installed at the Business
Premises and duly connected and can be used by the Business
Premises other than the boiler and water softening treatment
system located in the Plaza Hotel property and are in good
working order and condition. To the best of Seller's
knowledge, as of the date hereof no notice or demand has been
received by Seller requiring modifications to the water or
sewer pipes serving any Business Premises.
(n) To the best of Seller's knowledge and belief
and except as set forth in the environmental reports
identified in Section 6.1(q) or on Schedule 6.1(n), as of the
Effective Date, there is no Hazardous Substance nor any
underground storage tank in existence on or below the surface
of the Real Estate, asbestos in or on such Real Estate, PCB's
in any transformer or other equipment located in or on
- 50 -
such Real Estate, or use or storage of Hazardous Substances on
such Real Estate, which constitutes a violation of any
Hazardous Waste Laws. At Closing Seller shall disclose any
knowledge of any violations of any Hazardous Waste Law arising
between the end of the Inspection Period and the Closing Date
that have not been previously disclosed to Purchaser.
(o) Except as shown on Schedule 6.1(r) to the
best of Seller's knowledge, as of the date hereof there are no
actions, investigations, claims, suits or proceedings pending
or, to Seller's knowledge threatened, against Seller, the
Businesses, the Real Estate or the Business Premises in any
court or before any administrative agency that are not being
retained by Seller, nor does Seller have any likely reason to
believe that any such investigation, suit or proceeding will
be brought, which would have a material adverse effect on the
Businesses, the Assets, Gaming Assets, or the Business
Premises that are not being retained by Seller.
(p) To the best of Seller's knowledge, and
except as otherwise disclosed in this Agreement or the
Schedules hereto, the use of the Real Estate and the operation
of the Business Premises by Seller conform to any and all
applicable federal, state and local laws, zoning and building
ordinances and codes and health, safety and fire ordinances in
effect as of the date hereof ("Laws"), the violation of which
would have a material adverse effect on the Businesses or such
Real Estate. To the best of Seller's knowledge and belief, all
Real Estate is zoned for the various purposes for which such
Real Estate is currently being used and/or the use of the Real
Estate constitutes a conforming use.
- 51 -
(q) Seller has disclosed to Purchaser all
environmental studies, soil tests, building tests, asbestos
tests, and tests for other Hazardous Substances concerning the
Business Premises, and Real Estate, known to and available to
Seller as of the Effective Date, which reports are identified
in Schedule 6.1(q)(i). Seller has disclosed to Purchaser in
Schedule 6.1(q)(ii) any and all structural defects, defects in
workmanship and/or building defects in the Business Premises
which are known to Seller. Furthermore, to the best of
Seller's knowledge, all laws, statutes, ordinances, rules and
regulations of all governmental authorities which would affect
the Business Premises which Seller was required to comply with
prior to the date hereof have been complied with in all
material respects. To the best of Seller's knowledge, as of
the Effective Date, the buildings and improvements which
comprise the Business Premises are in reasonably good
condition except for ordinary wear and tear and except as may
otherwise be identified in Schedule 6.1(q)(iii).
(r) To the best of Seller's knowledge and
belief, the Businesses name(s) and any variation thereof
presently used by Seller, and any trademarks or service marks
containing the same, do not infringe on or violate the rights
of any other person. To the best knowledge of Seller, except
as set forth on Schedule 6.1(r), as of the date hereof there
has been no infringement by Seller of any trade name,
trademark, service ▇▇▇▇ or other similar right of any other
person or claim that Seller has engaged in any such
infringement.
(s) Seller has provided to Purchaser as of the
Effective Date, all of the (i) collective bargaining
agreements and labor agreements affecting the
- 52 -
Businesses ("Union Contracts") existing as of the date hereof,
and (ii) complete and correct copies of all employee benefit
plans, including but not limited to pension plans, retirement
savings plans, health plans, and life insurance plans
("Benefit Plans") existing as of the date hereof and not
contained within the Union Contracts. In the event any Union
Contract or Benefit Plan is replaced, amended or modified, a
complete copy of the new, amended or modified Union Contract
or Benefit Plan shall be promptly delivered to Purchaser by
Seller.
(t) To Seller's actual knowledge at the
Effective Date, other than approvals from the Nevada Gaming
Authorities, and consents that may be necessary to assign to
Purchaser the Assumed Contracts or the Assumed Liabilities as
contemplated hereby, the Seller's shareholder approvals
described herein, and the termination or expiration (without
objection to the consummation of the transaction) of the HSR
Act waiting period, no consent or approval or authorization of
any governmental authority or private party is required in
connection with the execution, delivery and performance of
this Agreement by Seller.
(u) As of the Closing, no labor shall have been
performed or building material furnished for the Real Estate,
or any part thereof, for which Seller will not have fully
paid, or for which a mechanic's or materialman's lien or liens
could be properly claimed by any person, party or entity,
except where such mechanic's or materialman's lien or liens
are bonded over at the Closing.
(v) As of the date hereof, all of the lease
agreements or other agreements which purport to grant to any
person, firm or legal entity the right to
- 53 -
occupy any portion of any Business Premise to which Seller is
a party are listed on Schedule 3.1(a)(vi) (the "Leases"). To
the best of Seller's knowledge, Seller has duly complied with
all material provisions of the Leases required to be complied
with.
(w) [INTENTIONALLY OMITTED]
(x) Seller has not received official written
notice of, nor to Seller's knowledge are there, any
condemnation or zoning proceedings which would materially and
adversely affect the use and operation of the Real Estate as
it is currently used and operated. To the best of Seller's
knowledge, as of the date hereof, it has not received written
notice of any special assessment proceedings with respect to
the Real Estate.
(y) [INTENTIONALLY OMITTED]
(z) Seller shall deliver to Purchaser during the
Inspection Period all policies of insurance with respect to
all aspects of the Businesses which are in force as of the
Effective Date. In the event any policy of insurance is
replaced, amended or modified prior to the Closing Date,
Seller shall promptly provide a complete copy of any new,
amended or modified policy of insurance.
(aa) To the best of Seller's knowledge, as of the
date hereof no judgment, order, injunction, decree or ruling
of any court or governmental authority exists by which the
Total Assets or the Businesses are bound, or to which any of
them are subject and which would have a Material Adverse
Effect on the Businesses or the Purchaser's ability to operate
the Businesses at a level
- 54 -
and in a manner comparable to the level and manner of Seller's
operation of the Business as of the Effective Date, except as
shown on Schedule 6.l (aa).
(bb) As of the Transfer Time, Seller's inventory
of food, beverages, saleable merchandise, operating supplies
and linen, dishware, flatware, glassware, serving dishes and
utensils, kitchen equipment, cookware, cooking utensils, bar
supplies and equipment, gaming supplies, and other personal
property utilized in the day-to-day operation of the
Businesses is and shall not be materially less than required
for normal operating levels.
(cc) The financial statements described in
Section 6.1(k)(iv) have been prepared in accordance with
accounting principles applied on a consistent basis during the
period or periods involved (except as may be expressly
indicated in the notes thereto), and fairly present the
consolidated assets, liabilities and financial position of
Seller and its consolidated subsidiaries as of the dates
thereof, and the consolidated results of operations and
changes in cash flow for the periods then ended. Purchaser
acknowledges that Seller has made and will make no
representation as to the future profitability of the
Businesses.
(dd) Seller is not a "foreign person" as such
term is defined in the Code.
(ee) [INTENTIONALLY OMITTED]
(ff) As of the date hereof, except as described
on Schedule 6.1(ff), to the best of Seller's knowledge, there
are no material pending labor arbitrations or grievance
proceedings.
(gg) To the best of Seller's knowledge, Seller
possesses no Water Permits relating to the Business Premises.
- 55 -
(hh) As of the date hereof, there are no
outstanding oral or written employment contracts for any
employees of the Businesses that are not the subject of an
existing or being honored collective bargaining agreement
except for those listed on Schedule 6.1 (hh).
(ii) No representation or warranty by Seller,
given in connection with the transaction contemplated hereby,
contains or will contain any untrue statement of a material
fact and Seller represents and warrants that it has, at all
times, acted in good faith in the negotiation of and in the
representations made in reaching this Agreement.
(jj) [INTENTIONALLY OMITTED]
(kk) To the extent a Star Agreement exists,
Seller has attached a true, correct and complete copy as
Schedule 6.1 (kk).
(ll) To the best of Seller's knowledge and
belief, all Schedules attached hereto are true, complete and
accurate in all material respects.
(mm) Seller has, since the date of the last
audited financial statement (December 31, 2001) operated the
Businesses in the ordinary course consistent with past
practices as to inventory purchases, maintenance and
replacement; there have been no material adverse changes in
the Businesses, Total Assets, liabilities or prospects of
Seller since December 31, 2001, except as expressly disclosed
in this Agreement. Purchaser acknowledges that Seller is
negotiating new collective bargaining agreements and agrees
that a new collective bargaining agreement which is not worse
than the "industry standard" shall not be deemed to be a
breach of this representation and warranty.
- 56 -
(nn) The representations and warranties made by
Seller in this Agreement are in lieu of, and are exclusive of,
all other representations and warranties, including, without
limitation, any implied warranties, notwithstanding the
delivery or disclosure to Purchaser of its officers,
directors, employees, agents or representatives of any
documentation or other information including any financial
projections or other supplemental data except as to the
completeness and accuracy of all such documentation,
information, projections and data. Seller disclaims any
warranty (express or implied) of merchantability or fitness or
for a particular purpose as to the personal property being
sold by reason of this Agreement. This disclaimer, however,
does not pertain or apply to Seller's warranty of the
merchantability of title of the Real Estate conveyed pursuant
to this Agreement. Except as otherwise expressly provided for
herein, all assets are being sold to Purchaser on an "as is"
"where is" basis. Notwithstanding any provision to the
contrary contained herein, Seller makes no representation or
warranty with respect to the Excluded Assets.
(oo) Seller represents and warrants that it has
no knowledge of, or information indicating Purchaser's breach
of any representation, warranty or covenant under this
Agreement or the Letter of Intent.
6.2 Discovery During Investigation. Notwithstanding anything
in this Agreement to the contrary, Seller shall have no liability for matters
Buyer discovers, or should have discovered, during its investigation.
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ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser makes the following representations and warranties to Seller,
as of the date hereof and as of the Transfer Time (unless an earlier date is
indicated in the representation, in which case as of such earlier date), as the
case may be:
(a) Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Nevada, with all requisite corporate power and
authority to enter into and carry out its obligations under
this Agreement. Each officer of Purchaser who shall execute
and deliver this Agreement has been duly authorized to so act
by all requisite corporate action on the part of Purchaser.
(b) The execution, delivery, and performance of
this Agreement by the persons executing the same on behalf of
Purchaser have been duly and validly authorized and this
Agreement and the other agreements and instruments
contemplated hereby constitute the legal, valid and binding
obligations of Purchaser, enforceable in accordance with their
respective terms.
(c) The execution, delivery and performance of
this Agreement by Purchaser will not, with or without the
giving of notice and/or the passage of time, (i) violate the
Articles of Incorporation (or equivalent) or Bylaws of
Purchaser; or (ii) violate any provision of law applicable to
Purchaser, the violation of which would have a material
adverse effect on Purchaser or which would prevent the
consummation of the transaction contemplated by this
Agreement, or (iii) conflict with or result in the breach or
termination of, or constitute a default under or pursuant to
any judgment, order, injunction, decree or ruling of any court
or
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governmental authority, or other agreement or instrument by
which Purchaser or its properties is bound, or to which any of
them are subject, which would have a material adverse effect
on Purchaser or which would prevent the consummation of the
transaction contemplated by this Agreement.
(d) There are no actions, suits, arbitrations or
other legal, administrative or other governmental proceedings
pending or, to Purchaser's knowledge, threatened against or
affecting Purchaser which might affect Purchaser's ability to
perform its obligations under this Agreement, and Purchaser is
not aware of any circumstances which might result in any such
action, suit, arbitration or other proceeding.
(e) To Purchaser's actual knowledge at the
Effective Date, other than approvals from the Nevada Gaming
Authorities, and the termination or expiration (without
objection to the consummation of the transaction) of the HSR
Act waiting period, no consent or approval or authorization of
any governmental authority or private party (other than a yet
to be formed Assignee or Designee) is required in connection
with the execution, delivery and performance of this Agreement
by Purchaser.
(f) Purchaser covenants and agrees to cooperate
with Seller subsequent to Closing in its defense of any claim
or litigation involving the Businesses.
(g) No representation or warranty by Purchaser
given in connection with the transactions contemplated hereby,
contains any untrue statement of a material fact and Purchaser
represents and warrants that it has at all times acted in
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good faith in the negotiation of and in the representations
made in reaching this Agreement.
(h) Purchaser represents and warrants that it
understands that the purchase of Assets is "as-is, where-is"
and that Seller shall have no liability for matters under
Article 6 that Buyer discovers or should have discovered
during its investigation.
(i) Purchaser represents and warrants that upon
completion of its inspection during the Inspection Period, and
upon Closing it has knowledge of and has examined, reviewed
and inspected matters which in Purchaser's judgment bear upon
the Total Assets and Businesses. Purchaser represents and
warrants that it is a sophisticated investor and is relying
upon the knowledge of its principals and employees regarding
the casino/hotel industry and not upon Seller's experiences or
judgment.
(j) Purchaser represents and warrants that it
has no knowledge of, or information indicating Seller's breach
of any representation, warranty or covenant under this
Agreement or the Letter of Intent.
ARTICLE 8. TITLE INSURANCE.
8.1 Title Policies and Exceptions.
(a) Seller has provided Purchaser with
preliminary title reports for the Real Estate ("Title
Reports") pertaining to each parcel of real estate together
with copies of all documents reasonably available evidencing
each exception noted on the Title Reports ("Exception
Documents"). Attached hereto as Schedule 8.1(a)(i) are the
list of the Permitted Title Exceptions as of the Effective
Date, which list
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may be supplemented as provided herein. Attached hereto as
Schedule 8.1(a)(ii) are the list of the exceptions in the
Title Reports objected to by Purchaser ("Objected
Exceptions"). Seller agrees to "remove" the Objected
Exceptions to the extent they are not prorated at Closing
under the procedure identified in subparagraph (b) below.
Purchaser shall have a period of thirty (30) days from the
date Purchaser receives Purchaser's Surveys for all of the
Real Estate ("Title Date") to review such and to notify Seller
in writing of each objection to the condition of title as
reflected in the Surveys and which were not previously
disclosed in the Exception Documents ("Survey Exceptions").
Purchaser shall obtain Purchaser's Surveys by December 2, 2002
or this condition shall be deemed waived by Purchaser. Failure
by Purchaser to notify Seller in writing of Purchaser's
objections to the Survey Exceptions to title of the Real
Estate on or before the Title Date shall result in a waiver by
Purchaser of such objections to title.
(b) If Purchaser timely notifies Seller of
Purchaser's objections to title and Seller agrees in writing
to remove the objectionable Survey Exception, Seller shall
take whatever steps are necessary to cause such exception to
not appear as an exception in the final relevant policy of
title insurance issued to the Purchaser as of the date of
Closing. Seller may comply with this requirement by (i)
causing the Title Insurer to remove a lien by bonding over it,
or (ii) obtain the commitment of the Title Insurer to insure
Purchaser against loss or damage that may be occasioned by
such unpermitted exceptions at Seller's expense.
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(c) If Seller elects to not remove or correct
the Survey Exceptions objected to by Purchaser or the Objected
Exceptions, then Purchaser shall have the right to terminate
this Agreement and Purchaser shall be entitled to the refund
and return of its Deposit. Purchaser shall only be entitled to
the refund and return of its Stand Still Deposit if the
Objected Exception or Survey Exception which Seller refuses to
remove materially interferes with the operation of the
Businesses or the value of the parcel of Real Estate (which
must be a parcel necessary to the actual gaming operations)
affected by the Objected Exception or Survey Exception as it
is currently being used.
(d) If (i) Seller commits in writing to have a
Survey Exception removed but is unable to have the exception
removed by the time of Closing, or (ii) if the Real Estate is,
at the Closing Date, subject to the Objected Exceptions or
additional liens or encumbrances not shown on the Title Report
and previously approved or caused by Purchaser and which
materially interfere with the current use or materially
diminishes the value of the Real Estate, and Seller refuses to
have such liens or encumbrances removed or corrected prior to
or at Closing, then, in either case, Purchaser may, at its
option, either waive its objection and proceed with Closing or
terminate this Agreement. If Purchaser elects to terminate
this Agreement the Proxy Deposit, Stand Still Deposit and
Deposit will be promptly returned to Purchaser by Seller,
Seller will pay all costs incurred in regard to the Title
Reports, Exception Documents, Escrow Fees and any other fees
or charges assessed by the Title Insurers issuing the Title
Reports and/or handling the Closing. In such case, neither
Purchaser nor Seller shall have any
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further liability to the other except as may be expressly
stated to survive termination of this Agreement.
(e) All additional title exceptions arising
after the Inspection Period that are shown on Schedule B-II of
any new title reports or the Surveys (other than mortgage,
judgment or other liens or suits related thereto)which are not
timely objected to by Purchaser or are waived by Purchaser,
shall be added to the "Permitted Title Exceptions" as to the
Real Estate.
(f) Notwithstanding anything to the contrary
contained herein, if Seller is unable, or fails to remove any
such item or bond over any additional title Exception objected
to by Purchaser, or obtain a commitment with respect to such
Exception as provided above and such item was not the direct
result of an intentional act of Seller or its affiliates, such
title Exception shall not be deemed to be a breach of any of
Seller's representations and warranties contained herein (a
"Title Non-Compliance Matter").
(g) This sale is subject to Purchaser being
able to obtain a CLTA extended owner's policy of title, Form
1990, issued by Nevada Title Company as to the gaming
properties and United Title Company as to the non-gaming
properties (collectively "Title Insurer"), for the Real Estate
insuring that Purchaser has fee title thereto subject (in the
case of each respective policy) only to (i) the Permitted
Title Exceptions for each respective parcel, (ii) the lien of
taxes not yet due and payable, (iii) those exceptions arising
after the date hereof and approved by Purchaser (the "Title
Policies"). The coverage amount of the Title Policies for the
Real Estate shall be equal to the Purchase Price attributable
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to the Real Estate but in no event shall coverage exceed
Eighty Million Dollars ($80,000,000.00).
(h) The Title Policies shall have attached
thereto such endorsements as Purchaser may reasonably
require which are obtainable and which (except as otherwise
provided below) do not require any indemnification by Seller
of the Title Insurer other than to the best of Seller's
knowledge, including but not limited to, endorsements insuring
against encroachments, access to one or more of Las Vegas
Boulevard, Fremont Street, ▇▇▇▇▇, and Main Street to the
extent such real estate abuts thereon and has access thereto,
violations of covenants and restrictions and mechanic's liens,
insuring contiguity and zoning endorsement provided. Purchaser
shall determine the availability of the Title Policies and all
such endorsements prior to the expiration of the Inspection
Period, or this matter is deemed to be waived.
8.2 Title Policy Premiums. Seller shall pay an amount equal to the
premium for CLTA owner's title policies on all the Real Property. The parties
agree than any premium charged for any endorsements or for an ALTA owner's
policy rather than a CLTA owner's policy shall be the responsibility of and paid
by Purchaser.
8.3 Survey. If Seller is in possession of surveys of the Real
Estate such shall not be provided to Purchaser. Purchaser has arranged for its
own surveys of the Real Estate ("Surveys") to be prepared but such shall be at
Purchaser's sole cost and expense.
ARTICLE 9. CONDUCT OF BUSINESSES PRIOR TO CLOSING
Seller agrees that, after the execution hereof and prior to Closing, as
applicable (unless Purchaser consents in writing otherwise):
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9.1 Seller's Conduct. Seller shall:
(a) deliver the Assets and the Gaming Assets to
Purchaser, Purchaser's Assignees or Designees at Closing in
substantially their present condition, except as otherwise
permitted herein, and prior to such time make such repairs and
replacements and perform such maintenance operations as are
appropriate in order to maintain and keep the Assets and the
Gaming Assets in substantially the same repair, working order
and condition as the Assets and the Gaming Assets are in on
the Effective Date hereof (ordinary wear and tear and damage
from fire or other casualty excepted) so as to maintain the
Businesses in substantially the same quality as such
establishments exist as of the date hereof;
(b) continue in the ordinary course the existing
use and operation of the Businesses, including without
limitation advertising, promotional and customer relations
activity, it being the intention of the parties that the
general use and operation of the Businesses shall not be
changed materially between the Effective Date and the Transfer
Time;
(c) except to the extent such are included in
the Assumed Contracts Seller shall terminate prior to the
Closing all of the Star Agreements, if any, and Purchaser
shall assume no liability whatsoever with respect thereto;
(d) in the event a judgment, order, injunction,
decree or ruling of any court or authority is filed or issued
after the Effective Date by which any of the Total Assets or
the Businesses are bound, or to which any of them are subject,
and Seller has knowledge of same, Seller shall within five (5)
business days after receipt of such judgment, order,
injunction, decree or ruling, but in no event later
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than Closing, deliver a copy of said judgment, order,
injunction, decree or ruling to Purchaser.
9.2 Operating Restrictions. Except as otherwise expressly provided
or allowed for in this Agreement, Seller, nor any entity which is a component of
Seller, as that term is used herein, shall not, without the prior written
approval of Purchaser:
(a) mortgage, pledge, lien, encumber or charge
any of the Assets or the Gaming Assets except in the ordinary
course of business, but in no event shall Seller encumber the
Assets or Gaming Assets for a collective sum in excess of
$75,000 without first obtaining Purchaser's consent thereto;
(b) sell or transfer the Real Estate except as
provided by Section 2.5 herein.
(c) sell or transfer any of the Personal
Property included as part of the Assets or any of the Gaming
Assets other than in the ordinary course of business
(Purchaser acknowledges and agrees that there is an industry
trend to reduce the number of slot machines and agrees and
consents that Seller shall be permitted, in its ordinary
course of doing business between the Effective Date and the
Closing Date, to reduce the number of slot machines located in
the Business Premises by not more than thirteen percent (13%)
during such time);
(d) cancel or terminate (other than for cause or
in the ordinary course of business) any of the Assumed
Contracts or, without Purchaser's prior written consent, enter
into any new contracts in excess of $25,000.00 which cannot be
terminated on thirty (30) days notice without liability to
Purchaser (in any event, any such new contract will not have a
monthly payment obligation greater than
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$25,000.00 unless Purchaser has approved such contract in
writing unless otherwise permitted by this Agreement);
(e) waive any material rights of substantial
value which are included as a part of the Assets or the Gaming
Assets;
(f) enter into any Advance Bookings affecting
periods following the Transfer Time other than in the ordinary
course of business;
(g) operate the Businesses other than in the
ordinary course of business except in times of, or in response
to, emergencies which are not of the Seller's own making;
(h) permanently remove from the Business
Premises any material Asset or any material Gaming Asset
unless (i) such Asset or Gaming Asset is being replaced in the
ordinary course of business, (ii) such removal is at
Purchaser's request or is otherwise consented to by Purchaser,
or (iii) such removal is required by law;
(i) except as provided for in Schedule 9.2(i),
renew or extend any Lease (which Seller is not legally
obligated to so renew or extend) or otherwise enter into any
lease other than on a month-to-month tenancy unless, to the
extent permitted by applicable Nevada gaming laws: (i) Seller
shall have first given Purchaser not less than ten (10)
Business Days prior written notice of any such proposed action
and (ii) Purchaser shall have given Seller its prior written
approval thereof, which approval Purchaser shall not
unreasonably withhold and such renewal, extension or leasing
is done in the ordinary course of Seller's business;
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(j) except as may be required by a Union
Contract, adopt or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan,
agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any employee or increase in any manner
the compensation or fringe benefits of any employee or pay any
benefit not required by any existing plan, current practice or
arrangement, except that, notwithstanding this clause to the
contrary, Seller may grant or agree to provide or pay (i)
salary increases or other employee benefit arrangements in the
ordinary course of business and (ii) non-recurring bonuses
which do not comprise part of the regular employment
compensation; or
(k) make any representation to any employee
of Seller that is inconsistent with or contrary to the
provisions of this Agreement.
Purchaser agrees to respond to Seller's request with respect to any of
the matters set forth in this Section 9.2 within ten (10) Business Days after
receipt by Purchaser of Seller's written request, and the failure of Purchaser
to respond within such ten (10) Business Day period shall be deemed disapproval
thereof by Purchaser. Purchaser shall not unreasonably withhold any consent or
approval.
9.3 Insurance. Seller will use its commercially reasonable efforts
to maintain in full force and effect its existing insurance covering the
Businesses, the Assets and the Gaming Assets. Seller, however, shall have the
right to change insurance carriers provided the same general level and type of
coverages are obtained and there is no gap in coverage.
ARTICLE 10. OTHER OBLIGATIONS
10.1 Access: Observers: Confidentiality.
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(a) After the date hereof and prior to the
Closing, upon prior written notice from Purchaser and, if
requested by Seller, accompanied by a representative of
Seller, Seller shall give Purchaser and its representatives,
employees and agents reasonable access during normal business
hours to the offices of Seller which are located on the Real
Estate, and to the books and records relating to the Assets
and the Gaming Assets, unless prohibited by law or regulation,
and shall furnish Purchaser during such period with such
information in Seller's possession concerning the Assets and
the Gaming Assets, unless prohibited by law or regulation, and
operation of the Businesses as Purchaser may reasonably
request. Seller and Purchaser agree that prior to the Closing,
Seller shall have no obligation to give Purchaser the names or
addresses of, or other identifying information with respect
to, any of Seller's customers, and Purchaser shall not have
any access to such identifying information. Purchaser shall,
subject to all gaming laws and regulations and the foregoing,
be permitted to access through the General Manager of each of
the Businesses, the directors of each department within each
of the Businesses and to consult with such directors and
General Managers regarding the Businesses and shall be
furnished during such period with all such information
concerning the Businesses and the Property as Purchaser may
reasonably request. Any such access, consulting and the
furnishing of any such information shall not unduly interfere
with the normal activities of the Businesses.
(b) Unless otherwise agreed to in writing by
Seller, except as required by law, Purchaser agrees to keep
all the data and information it has received or
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will receive from Seller or Seller's representatives or in the
exercise of Purchaser's rights under this Section 10.1
confidential and not to disclose or reveal any such
information or data to any person other than those employed or
hired by Purchaser who are actively and directly participating
in the evaluation of the information and data for the purpose
of evaluating the transaction contemplated by this Agreement
and the representations and warranties contained herein and to
cause those persons to observe the above and not to use said
information and data for any purpose other than in connection
with the evaluation and consummation of the transaction set
forth herein. Said persons shall execute a confidentiality
agreement as provided by Seller prior to their having access
to such information. If the transaction set forth herein does
not close, upon Seller's request, Purchaser will promptly
deliver to Seller all of said information and data including
all copies, reproductions, summaries, analyses or extracts
thereof or based thereon in Purchaser's possession or in the
possession of any of its representatives. Purchaser agrees
that in the event of disclosure of any confidential
information by Purchaser, its principals, directors, officers,
employees, agents, attorneys or representatives that Seller
shall have all remedies available at law or in equity for such
disclosure.
10.2 No Control. Prior to the Transfer Time, Purchaser shall not
directly or indirectly control, supervise, direct or interfere with, or attempt
to control, supervise, direct or interfere with, the Assets, the Gaming Assets
or the Businesses. Until the Transfer Time, the operations and affairs of the
Businesses are the sole responsibility of and (subject to the provisions of
Article 9 hereof) under Seller's complete control.
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10.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing. Purchaser and Seller shall use their
respective best efforts to comply with the requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended ("HSR Act"), to the extent
applicable to the transactions contemplated by this Agreement, and shall make
their initial filings with the Federal Trade Commission and the United States
Department of Justice so as to not adversely affect the confidential nature of
the transactions contemplated in this Agreement but in no event later than sixty
(60) days following the Effective Date. Each party agrees to use its best
efforts to satisfy any requests for additional information or other requirements
imposed by the Federal Trade Commission or the Department of Justice in
connection with the transactions contemplated by this Agreement as soon as
practical and, if requested by any party, to request early termination of any
waiting period otherwise imposed by statute. Purchaser shall pay the filing fee,
if any, required under the HSR Act. As set forth in Sections 11.1(d) and 11.3(d)
hereof, termination of the HSR Act waiting period, or expiration thereof,
without objection to the consummation of the transaction contemplated hereby, is
a condition to Purchaser's and Seller's obligations hereunder. The parties agree
that the HSR filing shall take place timely but the timing of the filing shall
be determined so as to minimize the likelihood of a premature public disclosure
of the transactions contemplated herein.
10.4 Cooperation. Each party shall use all reasonable good faith
efforts to make or file all other required notifications and to obtain all
consents, approvals and authorizations which must be obtained by such party in
order to consummate the transactions contemplated hereby. Each party shall
render the other its full and complete cooperation in giving such notices or
obtaining such consents, approvals and authorizations. Each party covenants and
agrees promptly to furnish to the other all information and data in the
furnishing party's possession
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requested in writing by the requesting party which such furnishing party has the
right to disclose and which is reasonable or necessary in order to assist the
requesting party to give the necessary notices or secure the permits, licenses
and approvals required as contemplated by this Agreement. Each party covenants
and agrees to promptly notify the other of any claim, action, suit, proceeding
or investigation which is commenced or threatened and becomes known to either of
them between the date hereof and the Closing relating to the Businesses or this
Agreement.
10.5 Financial Information.
Seller agrees to furnish to Purchaser at any time (so long as the
request is no sooner than ninety (90) days following the year end in which the
Closing occurs), its audited financial statements for the fiscal year in which
the Closing occurs and for any fiscal year prior thereto. Said statements shall
include, but need not be limited to, a balance sheet, statement of income from
operations, and statements of cash flows, certified by Accountant. Seller
agrees during the period between the date hereof and the Transfer Time to
provide Purchaser upon its written request with the latest available monthly
unaudited financial statements of the Businesses.
10.6 Gaming and Liquor License. (a) Purchaser will file within 45
days of the Effective Date applications with the Nevada Gaming Authorities for
nonrestricted gaming licenses and all liquor licenses in connection with the
Businesses ("Liquor Licenses"), and all related necessary findings of
suitability, registrations and approvals, and Seller will file applications for
all approvals it may require from the Nevada Gaming Authorities, including,
without limitation, approval for sale of the Gaming Assets (collectively the
"Gaming Licenses"). Purchaser and Seller will use their best efforts to obtain
their respective Gaming Licenses and the Liquor Licenses by May 1, 2003,
including, without limitation, responding promptly to all
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requests made by the Nevada Gaming Authorities. Upon request of Purchaser,
Seller shall promptly deliver to Purchaser a copy of its written system of
internal control, and all amendments thereto, submitted to the Nevada State
Gaming Control Board pursuant to Regulation 6.090 of the Regulations of the
Nevada Gaming Commission. Purchaser may adapt and use said system of internal
control in its operation of the Business Premises. Notwithstanding anything to
the contrary contained herein, the failure to timely file a complete Application
or to obtain Gaming Licenses (including the Liquor Licenses) or Purchaser's
withdrawal of its Application or the denial of its Application shall relieve
Purchaser of its obligation to consummate the transactions contemplated hereby,
but in such event Purchaser shall not be entitled to the return of the Earned
Proxy Deposit Standstill Deposit and Deposit or the Closing Extension Fee, and
Escrowee shall forthwith pay the Earned Proxy Deposit, Standstill Deposit and
Deposit or Closing Extension to Seller;
(b) Purchaser shall provide to Seller within five (5) business
days of filing with the Nevada Gaming Control Board a copy of Purchaser's (or
Licensee's) original (corporate or other) licensing application as filed with
the Nevada Gaming Control Board together with page 4 of each Form 7 (multi
Jurisdictional Personal History Disclosure Form) filed with the Nevada Gaming
Control Board by all persons associated with Purchaser filing such Form
(collectively "Licensing Information"). The date of Seller's receipt shall be
the "Gaming Disclosure Date". If any material amendments are made to those
applications they shall be provided to Seller within five (5) business days.
Seller represents and warrants to Purchaser and Purchaser's principals that it
will limit disclosure of the Licensing Information to the Sellers' Boards of
Directors and Seller's legal counsel. Seller agrees that all Licensing
Information is strictly confidential and that the Purchaser's application may
contain proprietary and trade secret
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information and that the disclosure of any of the Licensing Information will be
detrimental to the Purchaser and the associated individuals. For this reason,
Seller agrees that in the event of disclosure of any Licensing Information by
Seller, its directors, officers, employees, agents, attorneys or representatives
that Purchaser shall have all remedies available at law or in equity for such
disclosure.
10.7 Bulk Transfer Compliance. Seller and Purchaser agree and
acknowledge that Nevada has repealed Article 6 of the Nevada Uniform Commercial
Code, NRS Section 104.6101, et. seq., relating to Bulk Transfers.
10.8 Access to Real Estate. Seller shall afford Purchaser, upon
prior notice from Purchaser and, if requested by Seller, accompanied by a
representative of Seller, reasonable access to the Real Estate for the purposes
of reviewing the condition thereof and the Assets thereon. Any entry thereon by
Purchaser shall be subject to and conducted in accordance with any applicable
Leases or subleases, which have been disclosed to Purchaser and any necessary
approvals of the Nevada Gaming Authorities and in such a manner as to minimize
interference with the operation of the Businesses and occupancy of all property
entered on by Purchaser.
If this Agreement is terminated other than by Seller's Default,
Purchaser, if legally permitted, shall deliver to Seller, at Seller's request,
the results and copies of any and all surveys, reports, tests or studies made by
or for Purchaser with respect to the Real Estate or the other Assets upon
payment to Purchaser of the actual cost of copying such surveys, reports, tests
or studies.
10.9 Notices of Governmental Action.
(a) Prior to the Closing, Seller shall provide
Purchaser with notice of and copies of any document relating
to (i) any condemnation proceedings
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affecting the use and operation of the Real Estate as it is
currently used and operated of which Seller receives official
written notice or of which Seller obtains knowledge after the
Effective Date, and (ii) any zoning proceedings of which
Seller receives official notice or of which Seller obtains
knowledge after the Effective Date which would affect the
Purchaser's ability to continue to operate the Businesses at a
level comparable to that at which the Businesses are being
operated as of the Effective Date;
(b) In the event a notice is received by Seller
prior to Closing from any governmental body relating to the
Business Premises claiming any violation of any Law (which Law
is in effect on the date hereof), Seller shall within two (2)
business days of receipt of said notice (but in no event later
than the Closing Date) provide Purchaser with a copy of the
notice. To the extent the work required by a notice which was
received by Seller prior to Closing has not been completed
within thirty (30) days prior to the Closing Date, Purchaser
and Seller shall seek to reach agreement on the cost
associated with such matter by obtaining three separate bids
for the required work from three contractors reasonably
acceptable to Purchaser and Seller. If such required work has
not been completed at Seller's expense prior to Closing, the
Assets Purchase Price shall be reduced by the average of the
two closest bids.
10.10 Hazardous Substance. From the Effective Date, Seller shall
comply in all material respects with the requirements of the Hazardous Waste
Laws and shall notify Purchaser promptly in the event of any Spill occurring
after the date hereof of which Seller has knowledge or of any Hazardous
Substance upon the Real Estate known to Seller which would be a violation
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of the Hazardous Waste Laws, and shall notify Purchaser promptly in the event of
any Spill occurring after the date hereof of which Seller has knowledge or of
any Hazardous Substance upon the Real Estate known to Seller which would be a
violation of the Hazardous Waste Laws, and shall promptly forward to Purchaser
copies of all orders, notices, permits, applications or other communications and
reports received by Seller in connection with any such Spill or any other
matters relating to violation of Hazardous Waste Laws, as they may affect the
Real Estate. Seller will not hereafter cause a Spill at, upon, under or within
the Real Estate or any contiguous real estate, which would be a violation of the
Hazardous Waste Laws. Notwithstanding anything to the contrary contained in this
Section, Seller shall not be liable for (and shall not be deemed to have
violated this Section 10.10 with respect to) acts of third parties during the
period between the Effective Date and the Transfer Time with respect to matters
covered by this Section 10.10.
10.11 Security Deposit. Attached as Schedule 10.11 is a true and
complete list as of the date hereof of all deposits with Seller either as
security, prepayment of rent, or otherwise, under the Leases.
10.12 Certificates of Inspection. Prior to the Closing, upon
Purchaser's request, Seller will reasonably cooperate with the Purchaser's
applications for business licenses and permits, which Purchaser anticipates will
result in inspections of the Business Premises by the appropriate Fire
Department, the Department of Building and Safety and the Health Department. Any
modifications required upon a change of ownership shall be the responsibility of
the Purchaser. Changes required to continue Seller's operation of the Businesses
are Seller's responsibility.
10.13 Transfer of Telephone Numbers. Purchaser and Seller shall use
commercially reasonable efforts for the transfer of the telephone numbers and
listings associated with the Businesses to Purchaser effective as of the
Closing. Purchaser and Seller agree that as to the telephone number ▇▇▇-▇▇▇-▇▇▇▇
Purchaser and Seller may both use such telephone number for a period of six (6)
months from the Closing Date and Seller agrees that it will not delete
references
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on the ▇▇▇-▇▇▇-▇▇▇▇ telephone number recording to the Businesses being acquired
by Purchaser hereunder for such six month period without the prior consent of
the Purchaser and Seller will forward calls for the Businesses for a period of
not less than six (6) months following the Closing date. After the six (6)
months following the Closing Date the telephone number ▇▇▇-▇▇▇-▇▇▇▇ shall become
the sole and exclusive property of Seller and Purchaser shall have no further
rights therein.
10.14 Estoppel Certificates. Seller shall use its commercially
reasonable efforts to deliver to Purchaser written certificates executed by each
lessee under each of the Leases dated not more than thirty (30) days before the
Closing Date, substantially in the form and substance of the estoppel
certificate attached as Schedule 10.14 hereto. In the event Seller is unable to
obtain one or more of the above-described estoppel certificates, Seller shall
complete such certificate and at the Closing deliver the same to Purchaser as a
representation and warranty of Seller to the best of its knowledge.
10.15 Gaming Taxes. Pursuant to NRS 463.3455, provision shall be
made to the satisfaction of Nevada Gaming Authorities that Seller shall be
responsible for the payment of any fees or taxes relating to the Businesses due
and payable for a period of time prior to the Transfer Time but found due as a
result of subsequent deficiency determinations.
10.16 [INTENTIONALLY OMITTED].
10.17 Environmental Remediation. In the event of the discovery
during the Inspection Period of an Environmental Issue (other than those
described in Section 5.7(a)(ii) above and possible ground water contamination
resulting from the possible presence of petroleum products along the Union
Pacific Right of Way which traverses a portion of the Real Estate), Purchaser
shall have the option to either terminate this Agreement as provided in Section
11.1(l) and
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receive a refund of the Deposit together with interest earned thereon (in which
case neither party shall have any further liability under this Agreement), or
proceed to Closing with Purchaser assuming the responsibility for the
remediation, disposal and removal costs of all Environmental Issues. In the
event an Environmental Issues is discovered by Purchaser between the close of
the Inspection Period and the Closing Date and Purchaser elects not to proceed
with Closing, then Purchaser shall forfeit the Earned Proxy Deposit, Stand Still
Deposit and the Deposit unless the Purchaser's failure to discover the
Environmental Issue was the result of fraud by the Seller.
10.18 Environmental Survey. Purchaser will engage an environmental
engineer (the "Environmental Engineer") to conduct an environmental survey on
the Real Estate. Purchaser agrees to cause the Environmental Engineer to render
a final report with respect to the Real Estate not later than 20 days prior to
the end of the Inspection Period. Purchaser agrees to cause all written reports
or other written information given by the Environmental Engineer to Purchaser to
be given concurrently therewith to Seller. Seller shall have the right to make
any requests for information directly to Environmental Engineer so long as a
representative of Purchaser is present, and Purchaser agrees to cooperate with
Seller in connection therewith. The final report or reports prepared by the
Environmental Engineer are hereinafter collectively referred to as the
"Environmental Report."
ARTICLE 11. CONDITIONS TO CLOSING.
11.1 Purchaser's Conditions. The obligation of Purchaser to close
the transaction contemplated by this Agreement is conditioned upon the
satisfaction (or, other than with respect to the condition set forth in Section
11.1(c) hereof, the waiver by Purchaser) on or before the Closing Date, or on or
before the indicated date, as the case may be, of each of the following
conditions (collectively, "Purchaser's Conditions"):
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(a) During the Inspection Period Seller has
timely provided to Purchaser all due diligence documents or
records requested by Purchaser as part of Purchaser's due
diligence investigation, unless as provided in Section 7 of
the Letter of Intent Seller objected to such request of
Purchaser and Purchaser was deemed to have waived its right to
terminate the transaction.
(b) All the terms, covenants, agreements and
conditions of this Agreement to be complied with and performed
by Seller on or prior to the Closing Date shall have been
complied with and performed in all material respects, and all
of the representations and warranties of Seller herein shall
be true in all material respects on the Closing Date as if
made on and as of such date (unless an earlier date is
indicated in the representation and warranty, in which case it
shall have been true in all material respects as of such
earlier date) and Seller shall have delivered to Purchaser a
certificate, dated as of the Closing, to that effect;
(c) Seller shall have delivered to Purchaser or
Escrowee the instruments, documents and certificates required
to be delivered pursuant to this Agreement including, without
limitation, those described in Sections 13.3 and 13.4 hereof;
(d) The waiting period, including extensions
thereof, applicable to the consummation of the transactions
contemplated hereunder required pursuant to the provisions of
the HSR Act shall have either expired without notice of
objection to the transaction or been previously terminated;
(e) (i) No action shall have been brought which
remains undismissed, the adverse determination of which would
materially and adversely affect
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Purchaser's title to the Total Assets or Purchaser's ability
to continue operation of the Businesses, or any one of them,
at such level and in such a manner as Seller's level and
manner of operation of the Businesses as of the Effective
Date, and as to which Seller's legal counsel has rendered its
opinion to Purchaser and Seller that it is likely that the
determination thereof will materially and adversely affect
Purchaser's title to the Total Assets, or Purchaser's
continuing operation of the Businesses, or any one of them;
and (ii) no injunction shall have been entered which prohibits
or makes impossible the consummation of the transaction
contemplated hereby, whether preliminary or permanent;
(f) Purchaser shall have received the Title
Policies subject only to Permitted Exceptions;
(g) (INTENTIONALLY OMITTED)
(h) Purchaser shall have received from Seller's
counsel an opinion dated as of the Closing Date, in form and
substance reasonably satisfactory to Purchaser and its
counsel, that:
(i) Seller is a duly incorporated and
validly existing Nevada corporation in good standing
under the laws of the State of Nevada and has all
necessary corporate power to enter into and carry out
its obligations under this Agreement.
(ii) This Agreement has been duly and
validly authorized by the requisite number of
shareholders and directors of each entity comprising
Seller so that this Agreement will, on the Closing
Date, be valid and binding on Seller and enforceable
in accordance with its terms,
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subject to bankruptcy, insolvency, moratorium and
similar laws affecting the rights of creditors
generally and to general principles of equity
(regardless of whether such enforceability is
considered in a proceeding in equity or at law) and
except that certain provisions of this Agreement may
not be enforceable in whole or in part under the laws
of the State of Nevada.
(iii) To such counsel's "actual
knowledge" (as "actual knowledge" is defined in the
Legal Opinion Accord of the Section of Business Law of
the ABA), there is no suit, action, arbitration,
legal, administrative, or other proceeding or
governmental investigation pending or threatened
against Seller which might affect Seller's ability to
perform its obligations under this Agreement except
those noted in the opinion or on attachment thereto.
(iv) Neither the execution nor delivery
of this Agreement nor the performance by Seller of
this Agreement will to such counsel's actual
knowledge:
(A) materially conflict with or
result in any material
violation of or constitute
a material default under
the Articles of
Incorporation or Bylaws of
Seller as presently in
effect; or
(B) without independent or
special inquiry or
investigation, any judicial
stipulation, judgment,
statute, writ, injunction,
license, permit or decree
or
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order of any court or
other governmental
authority relating to
Seller and by which Seller
is bound.
In rendering such opinion, counsel, at its option, may incorporate by
reference all provisions of the said Legal Opinion Accord and may include other
routine or reasonable qualifications.
(i) Purchaser shall have obtained all necessary
approvals from the Nevada Gaming Authorities, and Purchaser
shall have obtained all Gaming Licenses and Liquor Licenses.
(j) Purchaser shall have approved within the
Inspection Period all Assumed Contracts;
(k) Seller shall have obtained all necessary
approvals or consents of third parties for the Purchaser's
assumption of the Assumed Contracts or, in the event such
approval or consent is not obtained, the Seller shall retain
all liability and obligation as to any such contract. Seller's
obligations under this subsection is limited to its use of
commercially reasonable efforts to obtain such necessary
approvals or consents in a form and substance reasonably
satisfactory to Purchaser;
(l) Purchaser shall not have elected to
terminate this Agreement pursuant to its rights under
Section 10.17.
11.2 Failure of Purchaser's Conditions. If, as of October 6, 2003
or such later date as Purchaser may elect pursuant to Section 13.1(c), the
conditions set forth in Section 11.1 have not been either satisfied or noticed
by Purchaser and cured by Seller in accordance with the terms of provisions of
Section 15.2 or waived by Purchaser, then, except as otherwise provided for in
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Section 11.6 hereof, this Agreement shall, at Purchaser's option, terminate.
Upon such termination, the Deposit and the Closing Extension Fee, if any,
together with interest thereon shall be returned to Purchaser, unless the
condition which was unsatisfied is that contained in Section 11.1(i), in which
event the Deposit shall be paid by Escrowee to Seller and the Closing Extension
Fee, if any, shall be retained by Seller. In addition, if the failure of such
condition is also a Seller's Default (as hereinafter defined), Purchaser shall
also have all the rights described in Section 15.1.
11.3 Seller's Conditions. The obligation of Seller to close the
transaction contemplated by this Agreement is conditioned upon the satisfaction
(or, other than with respect to the condition set forth in Section 11.3(d)
hereof, the waiver by Seller) on or before the Closing Date, or on or before the
indicated date, as the case may be, of each of the following conditions
(collectively, "Seller's Conditions"):
(a) All the terms, covenants, agreements and
conditions of this Agreement to be complied with and performed
by Purchaser on or prior to the Closing Date shall have been
complied with and performed in all material respects, and all
of the representations and warranties of Purchaser herein
shall be true in all material respects on the Closing Date as
if made on and as of such date (unless an earlier date is
indicated in the representation and warranty, in which case it
shall have been true in all material respects as of such
earlier date), and Purchaser shall have delivered to Seller a
certificate, dated as of the Closing, to that effect;
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(b) Purchaser shall have delivered to Seller or
Escrowee the instruments, documents and certificates required
to be delivered pursuant to this Agreement including, without
limitation, those described in Section 13.5 hereof;
(c) Seller shall have received from Purchaser's
counsel an opinion dated as of the Closing Date, in form and
substance reasonably satisfactory to Seller and its counsel,
that:
(i) Purchaser is a duly incorporated
and validly existing Nevada corporation in good
standing under the laws of the State of Nevada and
has all necessary corporate power to enter into and
carry out its obligations under this Agreement;
(ii) This Agreement has been duly and
validly authorized by the requisite number of
shareholder and directors of Purchaser so that this
Agreement and will, on the Closing Date, be valid and
binding on Purchaser and enforceable in accordance
with its terms, subject to bankruptcy, insolvency,
moratorium and similar laws affecting the rights of
creditors generally and to general principles of
equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and
except that certain provisions of this Agreement may
not be enforceable in whole or in part under the laws
of the State of Nevada;
(iii) To such counsel's "actual
knowledge" (as "actual knowledge" is defined in the
Legal Opinion Accord of the Section of Business Law
of the ABA), there is no suit, action, arbitration,
legal, administrative, or other proceeding or
governmental investigation pending
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or threatened against Purchaser which might affect
Purchaser's ability to perform its obligations under
this Agreement except those noted in the opinion or
on attachment thereto;
(iv) Neither the execution nor delivery
of this Agreement performance by Purchaser of this
Agreement will to such counsel's "actual knowledge":
(A) Materially conflict with or
result in any material
violation of or constitute
a material default under
the Articles of
Incorporation or Bylaws of
Purchaser as
presently in effect; or
(B) Without independent or
special inquiry or
investigation, any judicial
stipulation, judgment,
statute, writ, injunction,
license permit or decree or
order of any court or other
government authority
relating to Purchaser and
by which Purchaser is
bound.
(d) The waiting period, including extensions
thereof, applicable to the consummation of the transactions
contemplated hereunder required pursuant to the provisions of
the HSR Act shall have either expired without notice of
objection to the transaction or been previously terminated;
(e) Purchaser and Seller shall have obtained all
necessary approvals from the Nevada Gaming Authorities;
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(f) Purchaser shall have provided to Seller the
approval of the execution of this Agreement by Purchaser's
shareholders and Board of Directors by the Effective Date;
(g) A majority of Seller's shareholders shall
have approved this Agreement as required under Seller's bylaws
and NRS 78.560.
11.4 Failure of Seller's Conditions. If, as of October 6, 2003 or
such later date as Purchaser may elect pursuant to Section 13.1(c), the
conditions set forth in Section 11.3 have not been either satisfied or noticed
by Seller and cured by Purchaser (excluding subparagraph (g)) in accordance with
the terms and provisions of Section 15.4 hereof, or waived by Seller, this
Agreement shall, at Seller's option, terminate.
11.5 Seller's Production of Records. Notwithstanding anything to
the contrary herein, under no circumstances shall Seller be required to produce
records or documents that do not exist, or that it is prohibited or restricted
by law from disclosing and in such circumstance Purchaser shall have no right to
terminate.
11.6 Failure of Certain of Seller's Representations and Warranties
Between October 6, 2003 and the Transfer Time. Notwithstanding anything to the
contrary contained in this Agreement if: (i) the Closing is extended beyond
October 6, 2003 and the conditions set forth in Sections 11.1(d) and 11.1(i)
have not occurred; (ii) Purchaser has not advised Seller in writing that any of
the representations and warranties of Seller were un-true in any material
respects as of October 6, 2003; and (iii) between October 6, 2003 and the
Closing Date any of the representations and warranties set forth in Sections
6.1(m), 6.1(n), 6.1(o), 6.1(p), 6.1(r), 6.1(x), 6.1(aa), 6.1(ff) and 6.1(mm) are
no longer true in all material respects, Purchaser shall not be able to use the
fact that such representations and warranties are no longer true in all material
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respects as a basis for not Closing, or as a basis for any suit against Seller
based on such failure of any of the said specified representations and
warranties, unless the reason for such representations and warranties no longer
being materially true is because of the acts or omissions of Seller.
ARTICLE 12. ESCROW.
Concurrently with the execution hereof, Purchaser and Seller shall open
an escrow (the "Escrow") with both Escrowees by delivery of a fully executed
copy of this Agreement to both Escrowees. Escrowees will notify Seller and
Purchaser when Escrow has been opened. This Agreement together with the
Recording Instructions shall constitute joint escrow instructions to the
Escrowees. In addition, Seller and Purchaser agree to be bound by such other
reasonable and customary escrow instructions as may be necessary or reasonably
required by other Escrowee or the parties hereto in order to consummate the
purchase and sale described, or otherwise to distribute and pay the funds held
in Escrow as provided in this Agreement; provided, that in the event of any
inconsistency between the terms and provisions of such supplemental escrow
instructions and the terms and provisions of this Agreement and the Recording
Instructions, the terms and provisions of this Agreement and the Recording
Instructions shall control, absent an express written agreement between Seller
and Purchaser to the contrary which acknowledges this Article 12. The Real
Estate shall be conveyed at the Closing through Escrow. The other Assets shall
be conveyed at the Closing outside of Escrow, all in accordance with the terms
and provisions of this Agreement.
ARTICLE 13. CLOSING.
13.1 Time: Location.
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(a) The consummation of the purchase and sale of
the Total Assets (subject to Section 13.7 hereof as to the
Gaming Assets) pursuant to this Agreement (the "Closing")
shall be held at the office of Nevada Title Company, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, and shall be
deemed to occur at midnight following 11:59 p.m. on the
Closing Date (the "Transfer Time"). Seller shall be
responsible for coordinating a single location of the Closing
at which both Escrowees and both Title Insurers participate.
(b) The parties shall prepare a detailed Change
Over Plan and submit it to the Nevada Gaming Authorities with
sufficient time to allow their review and approval prior to
the Closing Date.
(c) Subject to the provisions of Sections 11.1,
11.3, 15.2 and 15.4, the Closing shall occur within 30 days
after the end of the Inspection Period or as soon as practical
after satisfaction (or waiver by the applicable party) of the
conditions set forth in Sections 11.1(c), 11.1(h) and 11.1(i)
in the case of Purchaser and Sections 11.3(c), 11.3(d) and
11.3(e) in the case of Seller, but in no event later than
October 6, 2003; provided, further if Purchaser is unable to
proceed to Closing on October 6, 2003, Purchaser shall be
required to pay to Seller an extension fee (the "Closing
Extension Fee") of $100,000 for each of up to eight one month
extensions unless the inability to proceed to Closing is due
to Seller's unfulfilled obligation. Each one month Closing
Extension Fee shall be payable at the beginning of the one
month extension period and shall be deemed earned by Seller
when paid and shall be paid into Escrow by Purchaser. For
example, if Purchaser must close by October 6, 2003 but
extends closing twice,
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the first payment is due October 6, the second payment
November 6. The right of Purchaser to extend the Closing shall
also be conditioned on Purchaser not being in default under
the terms of this Agreement. Purchaser shall notify Seller in
writing within five (5) business days of the date Purchaser
receives notice of the date of its scheduled hearing before
the Nevada State Gaming Control Board. As used herein, the
"Closing Date" shall mean and refer to the date on which the
Closing takes place.
(d) The Closing Extension Fee shall be
non-refundable but shall be credited against the Assets
Purchase Price in the event the Closing occurs.
13.2 Recordation of Deeds. Upon the Closing, the Closing shall, for
all purposes under this Agreement, be deemed to have occurred as of the Transfer
Time. The matters and deliveries hereafter described in this Article 13 shall be
deemed accomplished concurrently. The recordation of the Deeds shall be
accomplished on the Closing Date, if possible, but in any event not later than
one (l) day following the Closing and only then provided that the Title Insurer
will insure over the gap.
13.3 Seller's Delivery to Purchaser. At the Closing, Seller shall
deliver to Purchaser:
(a) a ▇▇▇▇ of sale, and endorsements of
certificates of title where appropriate, and/or other
appropriate instruments of conveyance for the Personal
Property in favor of Purchaser in a form reasonably
satisfactory to Purchaser's and Seller's counsel;
(b) assignment(s) of the Assumed Contracts
assumed by Purchaser; which assignment(s) Purchaser shall
execute evidencing its assumption of Seller's obligations and
liabilities with respect thereto as provided herein, including
an
- 89 -
Assignment and Assumption of Leases in a form reasonably
satisfactory to Purchaser's and Seller's counsel, a Memorandum
of Assignment and Assumption of Leases duly recordable in a
form reasonably satisfactory to Purchaser's and Seller's
counsel, and an Assignment and Assumption of Contracts in a
form reasonably satisfactory to Purchaser's and Seller's
counsel;
(c) assignment(s) of the Intangible Property,
including an Assignment of Intangible Property in a form
reasonably satisfactory to Purchaser's and Seller's counsel,
an Assignment of Federal Trademarks in a form reasonably
satisfactory to Purchaser's and Seller's counsel, an
Assignment of Trademarks (California) in a form reasonably
satisfactory to Purchaser's and Seller's counsel, and
Assignment of Trademarks (Nevada) in a form reasonably
satisfactory to Purchaser's and Seller's counsel;
(d) a written statement by Seller in a form
reasonably satisfactory to Purchaser's and Seller's counsel
certifying to Purchaser that Seller's representations and
warranties contained in Article 6.1 are remade as provided
therein;
(e) Seller's customer and player lists and
related documents and any other documents, instruments or
agreements called for under this Agreement which have not
previously been delivered; and
(f) an Assignment of Warranties, assigning all
warranties held by Seller to the extent assignable, in form
and substance reasonably acceptable to Seller and Purchaser.
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13.4 Seller's Deliveries to Escrowee. At or before the Closing,
Seller shall deliver to Escrowee:
(a) Grant, Bargain and Sale Deeds conveying fee
simple title to the Real Estate, subject only to the Permitted
Title Exceptions except as otherwise expressly provided
herein, in a form reasonably satisfactory to Purchaser's and
Seller's counsel;
(b) [INTENTIONALLY OMITTED]
(c) a "non-foreign affidavit," properly executed
by an officer of Seller, and each of them, in a form
reasonably satisfactory to Purchaser's and Seller's counsel,
containing such information as shall be required by Section
1445(b) (2) of the Code and the temporary regulations issued
thereunder; provided, however, that in the event final
regulations shall have been issued under Section 1445(b) (2)
of the Code by the Closing Date, such non-foreign affidavit
shall be in the form required thereunder.
13.5 Purchaser's Deliveries to Escrowee. At the Closing, Purchaser
shall deliver to Escrowee:
(a) the Assets Purchase Price Balance; provided,
however, that (A) the Assets Purchase Price Balance shall not
be disbursed to Seller until the Deeds are recorded and the
Title Companies commit to issue the Title Policies, and all
interest earned on the Assets Purchase Price until the Deeds
are recorded shall be the property of and paid to Purchaser,
and (B) Purchaser shall cause Escrowee to withhold such amount
therefrom as Purchaser estimates is necessary to comply with
the provisions of NRS 612.695, 372.620, 616.323 and 364A.200
or to which
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the Businesses or a portion thereof may be subject pursuant to
NRS 244.335 until such time as Seller furnishes Purchaser and
Escrowee the receipts or certificates provided for in said
statutes or, if not so provided for, such evidence as
Purchaser may reasonably require to assure Purchaser that the
applicable obligations have been paid, provided for or bonded.
If Seller does not produce such receipts or certificates
within the time periods provided in said statutes, or if any
lien or other claim therefore is asserted against Purchaser or
the Businesses, Purchaser shall cause Escrowee to pay such
withheld sums to the appropriate authority; and
(b) the Gaming Assets Purchase Price.
13.6 Purchaser's Deliveries to Seller. At the Closing, Purchaser
shall deliver to Seller:
(a) the instruments and documents, if any, to be
accepted and executed by Purchaser as specified in Sections
13.3 and 13.4 hereof;
(b) a written statement by Purchaser certifying
to Seller that all of Purchaser's representations and
warranties contained herein are deemed remade as of the
Closing Date except to the extent otherwise provided for
herein; and
(c) any other documents, instruments or
agreements called for under this Agreement which have not
previously been delivered.
13.7 Transfer of Possession. Possession of the Total Assets shall
be delivered to Purchaser at the Transfer Time.
13.8 Transfer of Liquor Assets. Seller shall transfer by sale or
otherwise all unopened liquor located on the Business Premises as of the
Transfer Time to the Liquor Wholesaler for resale to Purchaser. The transfer of
the Liquor Assets shall be subject to the pro-ration provisions of
Section 14.1(f).
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ARTICLE 14. PRORATIONS, ALLOCATIONS, ADJUSTMENTS AND CLOSING COSTS.
14.1 Pro-rations and Allocations. Credits and payments shall be
prorated, allocated and adjusted as of the Transfer Time (except as otherwise
indicated), including, but not limited to:
(a) Non-delinquent real and personal property
taxes, including assessments.
(b) All unrefunded cash deposits made to Seller
by guests or customers (including advance reservation cash
deposits), for rooms or services to be furnished after the
Transfer Time shall be paid by Seller to Purchaser and
Purchaser shall thereafter assume all obligations and
liabilities with respect to the amount of such deposits paid
to Purchaser. Seller shall have no further liability or
responsibility thereafter with respect thereto.
Notwithstanding the foregoing, Seller shall be entitled to
retain such deposits to the extent of rooms and/or services
furnished by Seller up to the Transfer Time.
(c) All security and other deposits, advance or
prepaid rents, or deposits paid to Seller (collectively,
"Advances") which are non-refundable shall be transferred to
and assumed by Purchaser as of the Transfer Time. All
refundable Advances and "front money" deposits (including
Advances the refundability of which is disputed) shall be paid
by Seller to Purchaser and Purchaser shall thereafter assume
all responsibility with respect to the amount of such Advances
paid to Purchaser. Seller, however, shall retain all "Key
Money."
(d) All guest ledger receivables (charges
accrued by hotel guests currently at the Business Premises as
of the Transfer Time) shall be the property
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of Seller. Room rentals for the night during which the
Transfer Time falls shall be split equally between Seller and
Purchaser. All restaurant and lounge revenues shall be
Seller's up to the Transfer Time.
(e) Utilities, prepaid expenses, and all other
operating income and expenses shall be prorated as of the
Transfer Time. In lieu of prorating power, gas, water and
other utility fees and charges (other than telephone), the
appropriate Utilities shall be advised to take meter readings
as close as practicable to the Transfer Time, to ▇▇▇▇ Seller
for service prior to such readings and to ▇▇▇▇ Purchaser for
service thereafter. Said readings may occur before or after
the Transfer Time. Telephone Service Providers shall be
informed to cancel Seller's service as of the Transfer Time
and to transfer service and the telephone numbers of the
Businesses to Purchaser. The next regular billing of Telephone
Service Providers will be sent to Purchaser. Upon receiving a
copy of said ▇▇▇▇, Seller shall pay Purchaser for those
charges attributable to calls made before the Transfer Time.
General service charges will be prorated as of the time of the
billing on the basis of the number of days before and after
the Transfer Time, respectively. Purchaser shall make
appropriate arrangements for transfer of all necessary utility
and other services into its name to be effective as of the
Transfer Time.
(f) Not later than seven (7) days after the
Effective Date hereof (or at such other time as Purchaser and
Seller may agree), Seller shall provide to Purchaser a copy of
any monthly inventory records which exist reflecting the
quantity of all supplies of Consumables, furniture, fixtures
and equipment and all
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Gaming Assets which are used in or have been purchased for use
in the Business during the preceding 12 months.
Within 10 days following Transfer Time, Purchaser
shall make an inventory of all Consumables, furniture,
fixtures, equipment and Gaming Assets which are transferred to
Purchaser by Seller as part of the sale of the Total Assets.
Any material reduction in the second inventory from
the 12 month average of Seller's inventory shall reduce the
Total Purchase Price, by the total amount of the difference in
inventory transferred at Closing and the 12 month average
(allowance for normal seasonal adjustments in inventory shall
be permitted). For the purposes of this Agreement, a material
reduction shall mean a reduction in the value of the inventory
(which is not a normal seasonal adjustment) by Twenty-five
Thousand Dollars ($25,000.00) or more, the same being based on
Seller's costs.
(g) All accrued and accruing gaming obligations
as of the Transfer Time relating to any progressive prizes
associated with bingo, slot machines, slot club, and coin
operated gaming devices shall be assumed by Purchaser. Seller
shall reimburse Purchaser for 30% of the slot club liabilities
that are outstanding for 12 months or less. Seller shall pay
to Purchaser all amounts bet with respect to Las Vegas Club
sportsbook futures and all keno and racebook futures, the
results of which occur after the Transfer Time. All Plaza
sportsbook futures shall remain the property of Coast Resorts.
(h) The parties agree and acknowledge that
Seller's share of condemnation proceeds, if any, (less any
reasonable expenses of Seller relating to
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such condemnation) shall be the property of Purchaser provided
Closing occurs. Seller agrees that Purchaser shall be
consulted with and shall have the right to approve any
settlement offer that is of an amount which is less than 75%
of the allocated portion of the Purchase Price assigned to the
condemned property by the Seller as provided in Section 5.5
that is made in any condemnation proceeding affecting any
portion of the Real Property which approval shall not be
unreasonably withheld. There shall be no right of approval
with respect to the real property that is the subject of
United Title's preliminary title report. If a condemnation
which was begun prior to Closing is not concluded as of
Closing, Purchaser shall assume the defense of such proceeding
with the full cooperation of Seller. If Seller has not been
paid a condemnation award by the condemnor as of Closing,
Seller shall deliver to Purchaser at the Closing an assignment
of said proceeds in form and substance reasonably acceptable
to Purchaser. If condemnation proceeds have already been paid
to Seller by the Closing, the Assets Purchase Price shall be
reduced by an amount equal to the amount of such proceeds less
any reasonable expenses of Seller relating to such
condemnation.
(i) At the Transfer Time, Seller shall either
remove all cash and tokens from the slot machines and casino
cages, casino bankroll, customer's letters of credit,
Certificates of Deposit or Purchaser shall pay to Seller an
amount in cash equal to the face amount of such. Purchaser
shall be required to provide Seller with two weeks prior
written notice in the event Purchaser elects to pay Seller for
the cash equivalents described herein.
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(j) Insurance proceeds for any and all
unrepaired or unrestored damage to the Business Premises as of
the Closing Date;
(k) At Closing Seller shall sell all Liquor
Assets to a Liquor Wholesaler. The amount received by Seller
shall be credited to the Purchase Price. It is anticipated
that Purchaser shall acquire those liquor assets at Closing.
(l) Except as otherwise set forth herein,
Purchaser and Seller shall account and pay for the foregoing
and any other applicable prorations and allocations within
three (3) Business Days after the Transfer Time. The
prorations, allocations, adjustments and other accountings
required under this Agreement (collectively, the "Prorations")
shall be made by authorized representatives of Seller and
Purchaser, each party to bear its own costs and expenses in
connection therewith.
14.2 Proration Disputes. If Purchaser and Seller are unable to
agree within three (3) Business Days upon the appropriate proration of or
payment due for an item of revenue or expense or other item pursuant to this
Article 14, then either party may require that the Accountant determine the
amount of the proration or payment as of the Transfer Time consistent with the
provisions of this Agreement. All undisputed amounts shall be paid within three
(3) Business Days after the Transfer Time. Accountant shall make such
determination as promptly as possible and in no event later than forty-five (45)
days following such employment. The amount of the proration or payment as of the
Transfer Time as determined by Accountant shall be final and binding upon Seller
and Purchaser. This Section is an agreement to arbitrate as such is defined in
NRS ch. 38, NRS Sections 38.75, 38.85 and 38.95 are waived. The time periods
contained in NRS Sections 38.145(2) and 38.155(l) are hereby shortened to thirty
(30) days. The
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arbitration is to be performed in ▇▇▇▇▇ County, Nevada. Purchaser and Seller
each consent to the procedure herein set forth and waive any rights (including
any right to a hearing, representation by attorney at such hearing, or any
rights with respect to witnesses, cross-examination, subpoenas, and depositions)
they may have or conflicting provisions of the Nevada Uniform Arbitration Act,
NRS Section 38.15 et seq. The parties agree that judgment may be entered upon
the decision of Accountant. The parties agree to cooperate with Accountant and
provide any requested information while the determination is pending. Judgment
may be entered upon the decision of Accountant. The fees and costs of Accountant
in connection with this allocation shall be borne equally by Purchaser and
Seller.
ARTICLE 15. DEFAULT.
15.1 Purchaser's Remedies.
(a) In the event of a Seller's Default arising
from the failure of a Seller's representation, warranty or
covenant discovered prior to Closing:
(i) Purchaser may terminate this
Agreement. Upon such termination, the Closing
Extension Fee if paid by Purchaser, together with
interest earned thereon, shall be returned to
Purchaser and any and all other items deposited by
Purchaser with Escrowee, including the Deposit, the
Standstill Deposit and the Assets Purchase Price
Balance, shall be immediately returned to Purchaser
by Escrowee;
(ii) Purchaser shall also have the
right, notwithstanding a Seller's Default hereunder,
to proceed with the transaction; and
(iii) Purchaser shall have the right to
seek money damages from Seller only to the extent
Purchaser suffers direct damages (but not
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exemplary, special or consequential) prior to Closing
for any actual and material fraud.
(b) In the event Purchaser discovers subsequent
to Closing, a material and intentional fraud by Seller which
has a material adverse impact on Purchaser or the Businesses
then Purchaser shall have the right to recover from Seller all
actual and consequential damages incurred by Purchaser as a
result of such fraud.
15.2 Notice of Seller's Breach; Right to Cure.
(a) If at any time between the Effective Date
hereof and the Transfer Time, Purchaser becomes aware of any
fact or circumstance which leads it to believe that (i) any
representation or warranty made by Seller hereunder either was
inaccurate in a material respect when made, except as
otherwise provided for in Section 11.5 hereof, or will be
inaccurate in a material respect as of the Transfer Time (if
remade as of that date), or (ii) that any covenant of Seller
cannot be performed by Seller in a material respect on or
before the time for performance thereof hereunder (any such
inaccuracy or inability being herein referred to as a
"Non-Compliance Matter"), or (iii) any condition to
Purchaser's obligations to consummate the transaction
contemplated hereby (that is not also a Non-Compliance Matter)
cannot be satisfied (any such condition being herein referred
to as a "Failed Condition Matter"), Purchaser shall give
prompt written notice to Seller (the "Non-Compliance Notice"),
which notice shall set forth in reasonable detail the asserted
Non-Compliance Matter or the Failed Condition Matter.
(b) Seller shall correct any Non-Compliance
Matter except to the extent the Non-Compliance Matter results
from a Title Non-Compliance Matter.
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(c) Seller shall have the option, exercisable in
its sole discretion, to cure any Failed Condition Matter or
any Title Non-Compliance Matter.
(d) In the event that within thirty (30) days
after receipt of the Non-Compliance Notice, Seller shall (i)
cure the Non-Compliance Matter or (ii) shall agree to reduce
the Assets Purchase Price by an amount sufficient to correct
such Non-Compliance Matter (provided that the Non-Compliance
Matter is curable by the payment of money), or (iii) shall
cause the Failed Condition Matter to no longer be a Failed
Condition Matter, Purchaser may not seek the remedies provided
in Section 15.1 hereof and must consummate the transactions
contemplated by this Agreement.
(e) In the event the Non-Compliance Matter is
not cured as provided for in Section 15.2 (d) hereof within
said thirty (30) day period or the Failed Condition Matter
remains a Failed Condition Matter at the end of said thirty
(30) day period, Purchaser may seek the remedies provided in
Section 15.1(a) hereof.
(f) In the event the Closing Date is scheduled
for a date which is less than thirty (30) days following
receipt by Seller of the Non-Compliance Notice, the Closing
Date shall be extended for the number of Business Days
necessary to allow Seller to have thirty (30) days following
receipt of the Non-Compliance Notice to correct any
Non-Compliance Matter, Title Non-Compliance Matter or Failed
Condition Matter which is the subject of such notice;
provided, however, that in no event shall the Closing Date be
extended more than thirty (30) days beyond the then scheduled
Closing Date.
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(g) A Non-Compliance Matter (other than a Title
Non-Compliance Matter) not corrected by Seller within the time
periods set forth in this Section 15.2 is a "Seller's
Default."
(h) Notwithstanding anything contained in
Section 15.1 or 15.2, Seller shall have no liability for
matters Purchaser discovers or should have discovered during
its due diligence investigation.
15.3 Seller's Remedies. In the event Purchaser fails to complete
the Closing, unless due to Seller's Default or Seller's breach of this
Agreement, then Seller shall have only the right to receive the Earned Proxy
Deposit, Standstill Deposit, the Deposit and retain the Closing Extension Fee
(if any). In the event of a Purchaser's Default, other than failure to complete
Closing, Seller shall have available to it any remedy at law or in equity.
15.4 Notice of Purchaser's Breach; Right to Cure.
(a) If at any time between the date hereof and
the Transfer Time, Seller becomes aware of any fact or
circumstance which leads it to believe that (i) any
representation or warranty made by Purchaser hereunder either
was inaccurate in a material respect when made or will be
inaccurate in a material respect as of the Transfer Time, or
(ii) that any covenant of Purchaser cannot be performed by
Purchaser in a material respect on or before the time for
performance thereof hereunder (any such inaccuracy or
inability being herein referred to as a "Non-Compliance
Matter"), Seller shall give prompt written notice to Purchaser
(the "Non-Compliance Notice"), which notice shall set forth in
reasonable detail the asserted Non-Compliance Matter.
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(b) Purchaser shall correct any Non-Compliance
Matter prior to Closing.
(c) In the event the Closing Date is scheduled
for a date which is less than thirty (30) days following
receipt by Purchaser of the Non-Compliance Notice, other than
in connection with the failure by Purchaser to deliver all or
any portion of the Assets Purchase Price, the Closing Date
shall be extended for the number of Business Days necessary to
allow Purchaser to have thirty (30) days following receipt of
such written notice to correct any Non-Compliance Matter which
is the subject of such notice; provided, however, that in no
event shall the Closing Date be extended more than thirty (30)
days beyond the then scheduled Closing Date.
(d) A Non-Compliance Matter not corrected by
Purchaser within the time periods set forth in this Section
15.4 is a "Purchaser's Default."
ARTICLE 16. RECEIVABLES: COLLECTION OF CHIPS AND TOKENS.
16.1 Collection of Chips and Tokens. Purchaser shall redeem, as
Seller's agent but without any liability therefore, any chips or tokens (not to
exceed $5,000.00 per individual for the first 3 days following closing and
$1,000.00 per individual thereafter without Seller's prior consent), racebook
and keno tickets (from any series in use as of the Transfer Time) of Seller
relating to the use and operation of the Businesses, which are presented by
guests of the Businesses or Purchaser for payment within ninety (90) days (sixty
days in the case of racebook tickets only) after the Transfer Time. Seller's
chips and tokens, racebook and keno tickets, to the extent redeemed by Purchaser
during such ninety (90) day (or sixty (60) days for racebook tickets) period,
shall be redeemed as often as weekly by Seller, upon delivery to Seller of such
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Seller's chips, tokens, racebook and keno tickets redeemed. Seller agrees to
make arrangements for the additional redemption of its chips, tokens and ▇▇▇▇▇▇
as required by Nevada law.
16.2 Collection of Receivables. Purchaser shall not be obligated
to Seller for the collection of Seller's Receivables, except as follows:
(a) Purchaser shall not be obligated to assist
Seller in the collection of any Receivables allocated to
Seller as provided herein. Purchaser agrees, however, to
accept payment from guests and customers of the Businesses
which are due to Seller. Seller may provide Purchaser at
Closing with a list of customer receivables and Purchaser will
forward to Seller within three (3) Business Days as instructed
by Seller, any payments on Seller's receivables that Purchaser
receives. In the event a customer owing money to Seller wishes
to settle such account in cash at a gaming table such cash
shall first be applied by Purchaser to credit instruments at
the table, then to amounts owed Purchaser either for
receivables owed directly to Purchaser or for receivables
assigned to Purchaser as a result of the provisions in Section
2.2(1) and then such cash shall be applied to receivables owed
to Seller by such customer.
(b) [Intentionally Omitted]
ARTICLE 17. BAGGAGE AND SAFE DEPOSITS.
17.1 Baggage. At the Transfer Time an authorized representative of
Seller shall perform the following functions for all baggage, trunks, and other
property that was checked and placed in the care of Seller: (i) wrap all pieces
of baggage with plastic or cellophane and seal 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
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representative of Purchaser and secure a receipt for the Inventoried Baggage.
Thereafter, Purchaser shall be responsible for such Inventoried Baggage.
17.2 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 Seller. At the Transfer Time, Seller and Purchaser shall designate
in writing their initial safe deposit representatives. Representatives of both
Purchaser and Seller are to be present when a seal is broken. Seller will have
no further responsibility for seals broken without the presence of Seller's
representative. Purchaser will have no responsibility for loss or theft from a
safe deposit box whose seal was broken in the presence of Seller's
representative. Seller will make a representative available within one (1) hour
after Purchaser notifies a person or persons whom Seller will from time to time
designate. All safe deposit keys, combinations and records shall be delivered to
Purchaser at the Transfer Time.
17.3 Valet Parking. At the Transfer Time, an authorized
representative of Seller shall perform the following functions for all motor
vehicles that were checked and placed in the care of Seller: (i) ▇▇▇▇ all motor
vehicles with a sticker or tape; (ii) prepare an inventory ("Inventoried
Vehicles") of such items indicating the check number applicable thereto; and
(iii) transfer control of the Inventoried Vehicles to an authorized
representative of Purchaser and secure a receipt for the Inventoried Vehicles.
Thereafter, Purchaser shall be responsible for the Inventoried Vehicles.
ARTICLE 18. LOSS BY FIRE OR OTHER CASUALTY: CONDEMNATION.
18.1 Fire or Other Casualty: Condemnation. In the event that prior
to October 6, 2003, a portion of the Total Assets are destroyed or damaged (as
described in Section 18.2 hereof), or if condemnation proceedings are threatened
or commenced against all or a portion of the Real
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Estate, Seller shall promptly give Purchaser written notice of the occurrence of
such damage, destruction or condemnation proceeding. Purchaser shall then have
the right, exercisable by giving notice of such decision to Seller within ten
(10) Business Days after receiving such written notice from Seller of such
damage, destruction or condemnation proceedings, to terminate this Agreement, in
which case neither party shall have any further rights or obligations hereunder
and the Deposit (and the Closing Extension Fee, if paid by Purchaser), together
with interest thereon, shall be returned to Purchaser; provided, however, that
in no event shall the Closing Date be extended by reason thereof. If Purchaser
elects within such ten (10) Business Day period to accept the Total Assets in
their then condition, after deducting all reasonable expenses of Seller actually
incurred in repairing damage, if any, all proceeds of insurance (other than any
business interruption insurance applicable to periods prior to the Transfer
Time) or Seller's share of any such condemnation awards (but exclusive of awards
for business interruption applicable for periods prior to the Transfer Time) or
any claim against a third party believed to be responsible for loss or damage
shall be paid or assigned to Purchaser at Closing with no reduction in the
Assets Purchase Price or Gaming Assets Purchase Price. In the event that, prior
to Closing, there is damage to the Total Assets, or any single component of the
Total Assets, which does not constitute material damage (as described in
section 18.2 hereof) Purchaser shall not have the right to terminate the
Agreement by reason thereof and Seller will pay to Purchaser at Closing the cost
of all repairs or replacements (unless Seller shall have elected to repair or
replace all damaged or destroyed property to Purchaser's reasonable satisfaction
prior to Closing). Any payment to be made by Seller shall be based on any bids
or other advice from one or more qualified contractor, architect or engineer
reasonably acceptable to Purchaser and Seller. In the event of condemnation
Purchaser shall not have the right to terminate this Agreement by
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reason thereof and all condemnation awards payable to Seller by reason thereof
shall be paid to Purchaser at Closing with no reduction in the Asset Purchase
Price. In the event of a condemnation, Purchaser shall have the right to pursue
additional damages or an additional award from the condemning authority.
18.2 Material Damage. For the purposes of Section 18.1 hereof only,
"material damage" shall be deemed to have occurred if the damage is such that it
is reasonably expected to prevent or materially and adversely affect the conduct
of gaming operations or the operation of the Business for a period in excess of
sixty (60) days or result in an insured or uninsured loss in excess of One
Million Six Hundred Thousand ($1,600,000.00).
ARTICLE 19. FINANCIAL RECORDS OF THE BUSINESSES.
19.1 Maintenance of Books and Records. Seller agrees to maintain at
all times prior to the Closing all business and financial records of the
Businesses substantially in accordance with current practices in this regard.
19.2 Purchaser Financial Support Services. Purchaser shall make
available to Seller, at Seller's expense, the following financial services for a
period of nine (9) months following the Closing Date: (i) sufficient personnel
to assist Seller in the accumulation and aggregation of information needed for
the conclusion of operations by Seller via manual or magnetic documentation,
including support for the final Nevada State Gaming Control Board audit, tax
workpapers, W-2 and W-2G filings, and those necessary reports and filings
related to the close of Seller's Businesses; and (ii) sufficient administrative
and accounting personnel to provide information in Purchaser's possession to
Seller necessary to respond to customer loss and damage claims, employee claims,
and any other claims made against Seller relating to Seller's operation of the
Businesses prior to the Transfer Time.
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19.3 Seller Financial Support Services. Seller shall make available
to Purchaser, at Purchaser's expense, the following financial services
following Closing:
(a) access to any financial information needed
for the transition of operation of the Businesses by Seller to
Purchaser;
(b) sufficient personnel to assist Purchaser in
locating information in Seller's records and understanding
such records as is necessary for Purchaser to identify the
information it requires within Seller's records; and
(c) information and assistance necessary to
respond to customer loss and damage claims, if applicable,
employee claims, and any other claims made against the
Businesses, including but not limited to, the Assumed
Liabilities.
This duty to cooperate shall survive so long as any of the Assumed
Liabilities remain outstanding.
ARTICLE 20. ADVISORS, BROKERS', OR FINDERS' FEES.
20.1 Purchaser. Purchaser agrees to indemnify, defend (with counsel
reasonably satisfactory to Seller), and hold Seller and its successors and
assigns and their respective directors, officers, affiliates, representatives,
stockholders, employees and agents harmless from and against any and all claims,
loss, cost, damage and expense, including reasonable attorneys' fees and
expenses arising from, by reason of or in connection with any claim for or
entitlement to any fee, commission, compensation or reimbursement for brokerage,
finders, advisers, or similar services by any person, firm or entity claiming
by, through or under Purchaser or any officer, director, agent or affiliate of
Purchaser. Purchaser acknowledges that assistance has been provided with this
transaction by ▇▇▇▇▇▇▇▇ Properties, Inc. and that Purchaser will pay any and
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all fees which are determined to be owed ▇▇▇▇▇▇▇▇ Properties, Inc. for such
assistance and to indemnify, defend and hold Seller harmless from any liability
relating thereto.
20.2 Seller. Seller agrees to indemnify, defend (with counsel
reasonably satisfactory to Purchaser), and hold and save Purchaser and its
successors and assigns and their respective directors, officers, affiliates,
representatives, stockholders, employees and agents harmless from and against
any and all claims, loss, cost, damage and expense, including reasonable
attorneys' fees and expenses arising from, by reason of or in connection with
any claim for or entitlement to any such fee, commission, compensation, or
reimbursement for brokerage, finders, advisers, or similar services by any
person, firm or entity claiming by, through or under Seller or any officer,
director, agent, or affiliate of Seller.
ARTICLE 21. ADDITIONAL POST-CLOSING COVENANTS.
21.1 Cooperation, Retention of Records. Each party acknowledges
that the other may be a party to audits, investigations, litigation and other
proceedings following the Closing' which relate to the Businesses or the Assets
or the Gaming Assets, and covenants to fully cooperate with the other in the
handling or defense of such matters and to maintain and make available to the
other upon reasonable request and at the expense of the requesting party (i) any
and all files and business records in its custody or control relating to the
Businesses or the Assets or to the Gaming Assets, and (ii) any and all
individuals employed by the other party hereto whose testimony or knowledge, in
the reasonable opinion of the other party's counsel, is necessary or useful to
it with respect to the issues involved in such matters or preparation therefore.
Each party shall cooperate with the other in the response to audits,
investigations, litigation and other proceedings until all such matters are
fully concluded. Seller shall keep and maintain all files, records and other
information relating to the Businesses which Seller shall retain, either at
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Purchaser's offices or at storage locations in Las Vegas, Nevada for a period of
at least five (5) years after the Closing. Each party shall be entitled at all
reasonable times to inspect and make copies at such party's expense of the other
party's pertinent files, records and information.
21.2 Use of Intangible Property. Immediately after Closing, Seller
shall take all appropriate steps to eliminate, cease, abandon and disclaim all
use by Seller and its parent and their respective subsidiaries or affiliates of
the Businesses name(s) either alone or in conjunction with any other word or
phrase. Seller shall as soon as practical after Closing effect an amendment to
its articles of incorporation, bylaws and similar charter documents and those of
its parent and their respective subsidiaries and affiliates to remove any
reference to the Businesses from their respective corporate names and shall
permit Purchaser to use such names in its corporate name except, however,
Purchaser shall not use the names "▇▇▇▇▇▇ ▇▇▇▇▇▇▇" or "▇▇▇ ▇▇▇▇▇" in its
corporate names or in regard to the Businesses except as is expressly permitted
herein in Section 2.2(g). Seller agrees to cooperate with Purchaser so that such
filings of name changes will coincide with Purchaser's filing to preserve the
name for Purchaser. Purchaser grants to Seller for a period of 6 months
following Transfer Time a license to use the names of the Businesses in the
collection of the accounts receivables and settlement of accounts.
21.3 Assistance with Computer Systems. Seller agrees that for a
period of 30 days following Closing, it shall share the computer systems
identified in Schedule 2.4(c) and cooperate with Purchaser to the extent
necessary to insure a smooth transition from such system to Purchaser's computer
system used in the operation of the Businesses.
ARTICLE 22. EMPLOYEE AND EMPLOYEE BENEFIT MATTERS.
22.1 Assumption of Employment.
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(a) Immediately after Closing, Seller shall layoff all employees
(including those on its active payroll, on lay-off status, on leave of absence
status, and those not actively at work due to disability), except for those
specifically identified herein. Seller shall inform employees that their layoffs
are temporary as the Purchaser is expected to re-hire them. Purchaser agrees to
assume the employment of all individuals that were employees of the Seller
immediately after Closing on terms comparable to their employment with Seller,
except for the individuals that will be identified by Seller at Closing in a
then produced Schedule 22.1(a). With respect to employees represented by a labor
organization, Purchaser recognizes its obligations under Section 3(a)(v) and
Section 22.9.
(b) Upon assuming employment of Seller's employees as set forth
herein at Section 22.1(a), Purchaser will provide benefits to employees
comparable to as those provided by Seller. In furtherance of the foregoing,
Purchaser shall, with respect to all of its employees who were employed by the
Seller immediately preceding the Closing Date and who are offered employment
with the Seller in accordance with this Agreement ("Affected Employees"), (1)
grant credit for and otherwise recognize all periods of employment with Seller
under all of Purchaser's benefit plans, programs, and policies ("Purchaser's
Plans") for all purposes, other than for determining benefit accrual under any
defined benefit pension plan, including for purposes of satisfying eligibility
waiting periods, pre-existing condition periods, and vesting; (2) grant credit
for and recognize all payments made by such Affected Employees under Seller's
welfare benefit plans and programs, such as co-pays, as payments made under
Purchaser's Plans which are welfare plans, for all purposes, including for
purposes of satisfying deductibles and out-of-pocket maximums under Purchaser's
Plans; and (3) waive any exclusions for pre-existing conditions under
Purchaser's Plans that would result in a lack of coverage for any conditions for
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which the applicable Affected Employee would have been entitled to coverage
under the corresponding plan, program or policy in which such Affected Employee
was a participant immediately prior to commencement of participation in
Purchaser's Plans;
(c) Except as otherwise provided herein, Seller shall be solely
responsible for all obligations and liabilities arising for acts or omissions
occurring prior to the Transfer Time as well as those obligations and
liabilities resulting from or relating to (i) the Seller's termination of any
contracts of employment of Seller's employees; and (ii) the employment, layoff,
and/or termination of employees by Seller as provided herein, including but not
limited to (1) any obligation of Seller to continue to employ such person or to
pay salaries, wages, bonuses, severance pay, vacation pay, pay in lieu of
notice, leave of absence pay, workmen's compensation, or make contributions or
payments to any health insurance plan, contributions or payments to any Benefit
Plans or any other employee benefits; (2) any breach of express or implied
employment contract between Seller and an employee of Seller; (3) any wrongful
discharge claim by Seller's employees; (4) any breach of any provision of any
Union Contracts for the period prior to the Transfer Time (other than any
alleged breaches resulting from Purchaser's failure to assume any such Union
Contract); or (5) other than with respect to the WARN Act, any other
obligations, responsibilities or liabilities to Seller's laid off or terminated
employees.
(d) Seller agrees not to take any action within the ninety (90)
day period prior to Closing that would result in an "employment loss," as that
term is defined in the WARN Act.
(e) Purchaser assumes all WARN Act obligations from Closing
forward. In the event that within ninety (90) days of Closing, Purchaser fails
to continue the employment of a sufficient number of Seller's former employees
such that the total number of Seller's former
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employees suffer an "employment loss," as that term is defined in the WARN Act,
or otherwise undertakes actions that lead to WARN Act liability, Purchaser shall
indemnify, defend and hold the Seller and its Indemnitees harmless from any and
all liabilities, costs, damages and/or expenses, including, without limitation,
reasonable attorney's fees and costs, directly or indirectly attributable to
such failure or the failure to take any required actions under the WARN Act and
corresponding regulations.
22.2 Seller's Indemnity Related to Employee Wage Claims. Seller
shall indemnify and hold Purchaser harmless from any expense, loss, claim,
demand, action, judgment, grievance, or award of any employee of the Business
for matters or events arising or occurring prior to the Transfer Time, including
but not limited to, claims for accrued wages, benefits, vacations, pensions
(including those under multi-employer plans), overtime pay or other obligations
to employees, except as such matters are included in the Assumed Liabilities.
Seller shall be solely responsible for, and shall also indemnify and hold
Purchaser harmless from, all obligations and liabilities (other than those
relating to Purchaser's failure to assume the Union Contracts) arising prior to
the Transfer Time under any union contracts or collective bargaining agreements
in effect with respect to the operation of the Business that existed prior to
the date of Closing or that arose as a consequence of the withdrawal of Seller
from any Benefit Plans. The provisions of Section 23.16(c) shall apply to the
indemnification set forth in this Section.
22.3 Seller's Indemnity Related to Other Employee Related Claim.
Except as set forth in Section 22.1(e), with respect to any National Labor
Relations Board, Equal Employment Opportunity Commission, obligations to
Nevada's State Industrial Insurance System, wrongful termination and/or other
administrative agency claim or claims by any employee of Seller with respect to
discrimination or damages of any kind, or any pending or unresolved grievances,
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Seller shall be responsible for any damages of any kind, back pay or benefits
that any such employee is entitled to or is awarded as a result of events
occurring prior to the Transfer Time. Seller shall defend and be solely
responsible for responding to any claims, charges or suits by any such employee
alleging discrimination or other illegal conduct by Seller and shall indemnify
and hold Purchaser harmless from any such claims, charges or suits and from any
expense or attorneys' fees incurred by Purchaser in responding thereto. The
provisions of Section 23.16(c) shall apply to the indemnifications set forth in
this Section.
22.4 Purchaser's Employment of Seller's Employees.
(a) Seller shall provide to Purchaser at the due diligence rooms
complete lists of employees as of the Effective Date including employees on
leave or disability with their titles, hourly wages or salaries, benefit
packages and years of employment working at the Business as of such date. Seller
agrees to provide on Purchaser's request at Seller's place of business an
updated list of the above information thirty (30) days prior to Closing.
(b) Immediately after Closing, Seller will provide Purchaser with
all human resources and personnel files, including but not limited to those
stored electronically, on computer disk, microfiche, or in a HRIS software
system related to those individuals Purchaser is obligated to assume employment
for under Section 22.1. Purchaser agrees to retain said files for a period of
ten (10) years after Closing.
(c) Purchaser shall indemnify and hold the Seller and its
Indemnitees harmless from any and all liabilities, costs, damages and/or
expenses, including without limitation, reasonable attorney's fees and costs
directly or indirectly arising from or relating to the acts or omissions of
Purchaser or its Indemnitees in regard to its handling of matters pertaining to
the transfer or management of the human resources and personnel files of
Seller's employees as provided in
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Section 22.4(b) above, including but not limited to those arising under the Fair
Credit Reporting Act (FCRA), Health Insurance Portability and Accountability Act
(HIPAA) and common law privacy tort claims.
(d) Seller and its representatives shall have reasonable access
during regular business hours to the aforementioned human resources and
personnel files for legitimate business reasons, including litigation, tax and
other matters. Seller is entitled to make copies of said files at Seller's
expense. Seller shall indemnify and hold the Purchaser and its Indemnitees
harmless from any and all liabilities, costs, damages and/or expenses, including
without limitation, reasonable attorney's fees and costs directly or indirectly
arising from or relating to the acts or omissions of Seller in regard to its
handling of matters pertaining to the creation or management of the human
resources and personnel files of Seller's employees prior to the transfer of
such files to Purchaser as provided in Section 22.4(b) above, as well as
Seller's acts or omissions in regard to Seller's access to such files subsequent
to Closing, including but not limited to those arising under the Fair Credit
Reporting Act (FCRA), Health Insurance Portability and Accountability Act
(HIPAA) and common law privacy tort claims.
(e) At Seller's expense, Purchaser shall also make available to
Seller, without necessity of subpoena, current employees of the Purchaser who
previously worked for Seller whose assistance is needed for litigation, tax, or
other matters.
22.5 (INTENTIONALLY OMITTED.)
22.6 Pending Labor Arbitrations and Grievances of Seller. In the
event there remain pending and unresolved at Closing any grievances under the
terms of a collective bargaining agreement between Seller and any labor union,
or discrimination complaints in any state or federal agency or court filed by
employees or former employees of Seller, to the extent same fall
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within the provisions of Section 3.2, Purchaser agrees to assume liability for
such claims. Seller shall make available to Purchaser all records in the
possession of Seller and all witnesses employed by Seller which Purchaser
reasonably believes are necessary or appropriate in connection with the handling
or resolution of such matters. Seller agrees to cooperate with Purchaser in any
other manner reasonably requested by Purchaser for the satisfactory resolution
of such matters.
22.7 COBRA. Purchaser shall provide continuation coverage in
accordance with Section 4908B of the Code to each former employee of Seller (and
each of their qualified beneficiaries) and to each Affected Employee (and each
of their qualified beneficiaries) who, as of the Closing Date, is receiving or
is eligible to elect to receive such continuation coverage and to each Affected
Employee (and each of their qualified beneficiaries) who is eligible for such
continuation coverage on or after the Closing Date, including as a result of the
consummation of the transactions contemplated hereby.
22.8 401(k) Plan. Purchaser may, but is not obligated, to establish
a Section 401(k) plan for non-bargaining employees and agrees to permit such
employees to transfer their assets in Seller's qualified Section 401(k) plan to
any such plan of Purchaser.
22.9 Assumption of Collective Bargaining Agreements
Purchaser agrees to assume any and all collective bargaining
agreements between the Seller and entities representing Seller's employees that
are in effect at the time of Closing. Purchaser will also provide a written
assumption for each collective bargaining agreement to Seller at Closing as well
as those collective bargaining agreements that are expired and being honored at
the Transfer Time.
22.10 Optional Exemption from Withdrawal Liability Multi-employer
Pension Plans
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On or before Closing, Seller shall request, and upon receiving shall
promptly furnish to Purchaser, written representations from all Multi-Employer
Plans, as that term is defined by Section 3(37) of ERISA, subject to the
provisions of Title IV of ERISA to which the Seller contributes with respect to
any of the Businesses advising Seller of its potential withdrawal liability with
respect to each Multi-employer Pension Plan as of the most recent date
practicable before Closing. As of Closing, Purchaser shall be substituted for
Seller as the contributing employer under each Multi-employer Pension Plan to
which Seller contributes with respect to the Businesses. Purchaser agrees that:
(i) from and after Closing to contribute to any Multi-employer Pension Plan
subject to Title IV of ERISA with respect to the Businesses for substantially
the same number of contribution base units for which the Seller had an
obligation to contribute to the Multi-employer Pension Plan, as required by
Section 4204(a)(1)(A) of ERISA; (ii) to provide to the respective Multi-employer
Pension Plan for the period required by Section 4204(a)(1)(A) of ERISA a bond or
other security permitted by such section in the amount required by such section,
or to obtain a variance from such requirement by the end of the first plan year
subsequent to Closing; and (iii) otherwise comply with the obligations of
"purchaser" under Section 4204 of ERISA. The Seller agrees that it will: (i)
assume the secondary liability to the Multi-employer Pension Plan contemplated
by Section 4204 (a)(1)(C) of ERISA in the event and to the extent provide for in
that section; and (ii) otherwise comply with the obligations of a "seller" under
section 4204 of ERISA. The Purchaser agrees to indemnify and hold the Seller
harmless from any other liability, cost, expense or damage suffered or incurred
by the Seller (including secondary liability pursuant to the foregoing) in
connection with any withdrawal, whether partial or complete, or contribution
default occurring after Closing under any Multi-employer Pension Plan and ERISA
Sections 4203 or 4205. Seller agrees to cooperate
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with Purchaser if Purchaser seeks to obtain a variance from the bonding
requirements as described above.
ARTICLE 23. MISCELLANEOUS.
23.1 Entire Agreement. This Agreement (and the Schedules) shall be
deemed to be the complete and entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes any and all prior
negotiations, correspondence, understandings or other agreements or statements
between the parties and/or their representatives.
23.2 Notices. All notices required, permitted, or given pursuant to
the provisions of this Agreement shall be made in writing, and either (i) hand
delivered, (ii) delivered by certified mail, postage prepaid, return receipt
requested, (iii) delivered by an overnight delivery service, or (iv) delivered
by facsimile machine followed within twenty-four (24) hours by transmittal under
options (i), (ii) or (iii) addressed as follows:
If To Seller: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with copies to:
a) Union Plaza
c/o ▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
b) Exber, Inc.
▇/▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, (▇▇▇ ▇▇▇▇▇)
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
c) ▇▇▇▇▇▇▇ South
c/o ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with copies as to all Seller Entities to:
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Ike ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇. South, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If To Purchaser: ▇▇▇▇▇▇▇ Corporation
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
with copies to:
▇. ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. Crystal ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Notices shall be deemed delivered (i) on the date that is four (4)
calendar days after the notice is deposited in the U. S. mail (not counting the
mailing date), if sent by certified mail, (ii) on the date the hand delivery is
made, if hand delivered, (iii) on the date the transmission is made, if
delivered by facsimile machine, or (iv) on the date that the notice is delivered
by an overnight delivery service, if given by an overnight delivery service. The
addresses given above may be changed by any party by notice given in the manner
provided herein.
23.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without giving
effect to any conflicts of law.
23.4 Survival.
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(a) All covenants, agreements and indemnities
contained herein shall survive the execution of this
Agreement, the Closing, the delivery and recordation of the
Deeds and the transfer of title to the Real Estate, all other
Assets and the Gaming Assets.
(b) All representations and warranties contained
herein shall survive the execution of this Agreement, the
Closing, the delivery and recordation of the Deeds and the
transfer of title to the Real Estate, all other Assets and the
Gaming Assets for a period of six (6) months after the closing
of Escrow. CLAIMS FOR LOSSES COVERED BY OR ARISING OUT OF
BREACH OF WARRANTY OR INACCURATE OR ERRONEOUS REPRESENTATION,
INCLUDING CLAIMS MADE PURSUANT TO THE INDEMNITY PROVISIONS
WITH RESPECT TO SUCH REPRESENTATIONS AND WARRANTIES SET FORTH
IN THIS AGREEMENT MAY BE MADE ONLY BY WRITTEN NOTICE GIVEN
WITHIN THE AFORESAID SURVIVAL PERIOD.
23.5 Successors and Assigns. Seller may not assign this Agreement
or any interest herein (by operation of law or otherwise) to any other person
without the prior written consent of Purchaser. Purchaser may assign this
Agreement only to an Assignee or Designee. All of the terms, covenants and
conditions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. No
assignment or transfer permitted hereunder shall relieve any such assignor or
transferor of any of its obligations hereunder and any assignee or transferee
shall assume in writing (which writing shall be in form reasonably satisfactory
to Seller) all of the undertakings of assignor or transferor under this
Agreement.
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23.6 Closing Costs. Seller and Purchaser shall each bear their
respective costs of negotiating and completing this transaction, including
attorneys' and accountants' fees. The fees charged by Escrowee, and any and all
recording fees, shall be paid one-half by Seller and one-half by Purchaser. All
real property transfer fees, and documentary taxes or fees shall be paid by
Seller. All personal property transfer taxes or fees shall be paid by Seller.
Seller and Purchaser, on or before the Closing Date, shall each deposit with
Escrowee in immediately available funds on or prior to the Closing Date an
amount sufficient to cover each party's costs set forth herein.
23.7 Attorneys' Fees. Should an action be instituted by either of
the parties hereto in any court of law or equity pertaining to the enforcement
of any of the provisions of this Agreement, the prevailing party shall be
entitled to recover, in addition to any judgment or decree rendered therein, all
court costs and reasonable attorneys' fees and expenses.
23.8 No Party Deemed Drafter. The parties agree that neither party
shall be deemed to be the drafter of this Agreement and that in the event this
Agreement is ever construed by a court of law or equity, such court shall not
construe this Agreement or any provision hereof against either party as the
drafter of the Agreement. Seller and Purchaser, and each of them, acknowledging
that both parties hereto have contributed substantially and materially to the
preparation hereof.
23.9 Amendments. This Agreement shall not be modified except by an
instrument in writing signed by the parties hereto.
23.10 Time of the Essence. The parties hereto agree that time is of
the essence, including, without limitation, the time and date on which all
payments of money or deliveries of documents are required.
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23.11 Further Assurances. From time to time, at the request and
expense of the requesting party, whether prior to, at or after the Closing, and
without further consideration and without increasing any party's obligations
hereunder, each party agrees to and shall execute and deliver such further
instruments and take such other action as the requesting party may reasonably
request in order to effectuate the transactions set forth herein.
23.12 Headings. All of the Article and Section headings herein are
inserted for convenience only and shall have no meaning for purposes of this
Agreement.
23.13 Non-Waiver. No delay or omission or exercise of a right or
remedy accruing to Seller on any breach or default by Purchaser shall impair any
such right or remedy, and the same shall not be construed to be a waiver of any
such breach or default. No delay or omission in the exercise of a right or
remedy accruing to Purchaser on any breach or default by Seller shall impair any
such right or remedy, and the same shall not be construed to be a waiver of any
such breach or default. Any waiver must be in writing and executed by all the
parties hereto and shall be effective only to the extent specifically allowed by
such writing.
23.14 No Third Party Benefited. No term or provision of this
Agreement is intended to be, nor shall any term or provision of this Agreement
be, for the benefit of any person or entity not a party hereto, and no such
other person or entity shall have any right or cause of action hereunder.
23.15 Limited Assumption of Seller's Liabilities. Purchaser is not
to be deemed a successor of Seller. It is understood that Purchaser will only be
acquiring the Total Assets pursuant to the terms of this Agreement, and it is
expressly understood and agreed that Purchaser is not assuming or agreeing to
assume any liability or obligation whatsoever of Seller, except as expressly
agreed to by Purchaser in this Agreement.
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23.16 Indemnification.
(a) Seller's Indemnification of Purchaser.
Notwithstanding any investigations made by or on behalf of
Purchaser prior to Closing, Seller agrees to indemnify, defend
and hold Purchaser, its successors and assigns, and their
respective directors, officers, affiliates, shareholders,
employees and agents (individually a "Purchaser Indemnitee"
and collectively the "Purchaser Indemnitees") harmless from
and against any and all liability, loss, cost, damage and/or
expense (including, without limitation, reasonable expense of
investigation, reasonable attorneys' fees and costs) arising
out of or attributable to: (i) third-party claims with respect
to the Total Assets, the Businesses, the Real Estate, the
Assumed Contracts, and arising from events occurring prior to
the Transfer Time unless such is expressly assumed by
Purchaser in this Agreement; (ii) the Excluded Assets; (iii)
all liabilities of Seller of any nature, whether accrued,
absolute, contingent or otherwise, except those expressly
assumed by Purchaser pursuant to this Agreement; (iv) any
material breach of Seller's warranties or representations
contained herein (except as otherwise provided for in Section
15.2(h) hereof); (v) breach of any covenant by Seller; (vi)
all liabilities and obligations arising from or related to the
Assumed Contracts to be performed before the Transfer Time;
(vii) all liabilities and obligations for labor and materials
furnished to the Real Estate prior to the Transfer Time;
(viii) the Star Agreements, unless expressly assumed by
Purchaser as provided herein; (ix) liability under, violation
of or non-compliance with any Laws other than Hazardous Waste
Laws by Seller relating to the Businesses prior to the
Transfer
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Time; (x) Seller's and its agents' post-closing presence
and/or activities on the Real Estate in connection with the
matters set forth in Article 16; (xi) any liability as of the
Transfer Time which is a Retained Liability; (xii) any
liability of the Seller as of the Transfer Time which is not a
Permitted Title Exception; and (xiii) the financial support
services rendered pursuant to Section 19.2 hereof.
(b) Purchaser's Indemnification of Seller.
Purchaser agrees to indemnify, defend and hold Seller, its
successors and assigns, and their respective directors,
officers, affiliates, shareholders, employees and agents
(individually a "Seller Indemnitee" and collectively the
"Seller Indemnitees") harmless from and against any and all
liability, loss, cost, damage and/or expense (including,
without limitation, reasonable expense of investigation,
reasonable attorney's fees and costs) arising out of or
attributable to: (i) the Total Assets, the Businesses, the
Real Estate, the Assumed Contracts, the Retained Liabilities
and the Assumed Liabilities, and arising from events occurring
after the Transfer Time except as otherwise provided herein;
(ii) all liabilities of Purchaser and all liabilities of
Seller expressly assumed by Purchaser pursuant to this
Agreement of any nature, whether accrued, absolute, contingent
or otherwise; (iii) any material breach of any of Purchaser's
representations and warranties contained herein; or (iv)
breach of any covenant by Purchaser; (v) any activities of
Purchaser, its agents, employees, representatives or
contractors upon the Real Estate in connection with the
exercise by Purchaser of its rights under Section 10.1 or
Section 10.8; (vi) Purchaser's entry onto the Real Estate;
(vii) the presence on the Premises and the activities of
Purchaser's employees who are referred to in Section 10.24;
(viii) all
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liabilities and obligations arising from or related to the
Assumed Contracts which arose from events or matters occurring
subsequent to the Transfer Time; (ix) all liability for labor
and materials furnished to the Real Estate subsequent to the
Transfer Time; (x) all liability for Star Agreements assumed
by Purchaser which arise from or relate to events or matters
occurring subsequent to the Transfer Time; (xi) all liability
under, violation of or non-compliance with any Laws by
Purchaser arising from or relating to matters or events
arising or occurring subsequent to the Transfer Time.
(c) Indemnification Procedure As To Third Party
Claims. Promptly after a Purchaser Indemnitee or a Seller
Indemnitee (individually an "Indemnitee") obtains knowledge of
the commencement of any third party claim, action, suit or
proceeding or of the occurrence of any event or the existence
of any state of facts which may become the basis of a third
party claim (any such claim, action, suit or proceeding or
event or state of facts being hereinafter referred to in this
Section 23.16 as a "Claim"), in respect of which an Indemnitee
is entitled to indemnification under any Section of this
Agreement, such Indemnitee shall notify the indemnitor under
this Agreement (the "Indemnitor") of such Claim in writing,
provided, however, that any failure to give such notice (i)
will not waive any rights of the Indemnitee except to the
extent that the rights of the Indemnitor are prejudiced
thereby and (ii) will not relieve the Indemnitor of its
obligations as hereinafter provided in this Section 23.16
after such notice is given. With respect to any Claim as to
which such notice is given by the Indemnitee to the
Indemnitor, the Indemnitor shall, subject to the provisions of
the following
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paragraph of this Section 23.16, promptly assume and control
the defense and settlement of such Claim with counsel
reasonably satisfactory to the Indemnitee at the Indemnitor's
sole risk and expense, provided, however, that the Indemnitee
(i) shall be permitted to join in the defense and settlement
of such Claim (subject to the Indemnitor's control) and to
employ counsel at its own expense; (ii) shall cooperate with
the Indemnitor in the defense and settlement of such Claim in
any manner reasonably requested by the Indemnitor; and (iii)
shall have the right to pay or settle such Claim at any time
in which event the Indemnitee shall be deemed to have waived
any right to indemnification therefore by the Indemnitor.
If the Indemnitor fails to assume the defense of such Claim or, having
assumed the defense and settlement of such Claim, fails to contest such Claim in
good faith, the Indemnitee, without waiving its right to indemnification, may
assume the defense and settlement of such Claim, provided, however, that the
Indemnitor shall be permitted to join in the defense and settlement of such
Claim and to employ counsel at its own expense, the Indemnitor shall cooperate
with the Indemnitee in the defense and settlement of such Claim in any manner
reasonably requested by the Indemnitee.
As used in this Section 23.16, the term Indemnitee shall be deemed to
include the plural thereof where the rights or obligations of more than one
Indemnitee may be involved.
23.17 Knowledge. Whenever in the course of the representations,
warranties and covenants of Seller set forth in this Agreement reference is made
in connection with any matter to the best of Seller's knowledge, or to Seller's
knowledge, or known to Seller, or of which Seller has knowledge, or similar
terms, Purchaser understands and intends that such reference shall be deemed to
include only those matters within the actual knowledge of Seller's directors
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and the following officers and departmental heads: ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇.
23.18 Publicity. Neither Purchaser or Seller, their employees or
representatives, shall make any public disclosure, comment, statement or
communication of any sort regarding the transactions contemplated in this
Agreement nor any of the terms, conditions or other aspects of the proposed
transactions. Any announcement regarding the transactions between the parties
shall only be made at such time as mutually agreed to between the parties and
the parties shall mutually agree on the content of any such announcement.
Neither party, however, shall be restrained, after consultation with the other,
from making such disclosure as it shall be advised by counsel it is required by
law (whether the laws of the United States or another country) or by the
applicable regulations of any stock exchange to make.
23.19 Counterparts. This Agreement may be executed in any number of
counterparts, which when so executed and delivered shall be deemed an original,
and such counterparts shall constitute one and the same Agreement.
23.20 Severability. The invalidity or unenforceability of any one or
more of the provisions of this Agreement or the Schedules hereto shall not
affect the validity or enforceability of any of the other provisions of this
Agreement.
23.21 Schedules. The Schedules attached hereto are hereby
incorporated by reference herein and made a part hereof as if fully rewritten or
reproduced herein.
23.22 Execution By Both Parties. This Agreement shall not become
effective and binding until fully executed and delivered by all parties
("Effective Date"). The submission of draft(s) of this Agreement or comment(s)
on such draft(s) does not constitute an offer to
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purchase or sell the Total Assets on the terms and conditions of this Agreement
or any other terms and conditions.
23.23 Procedures for Estimating of Costs of Work. Whenever a
provision of this Agreement requires that any cost or expense be estimated
(unless such provision contains another mechanism for estimating such cost or
expense), the parties shall utilize the procedure set forth in this Section
23.23. First, the parties shall attempt, in good faith, to agree upon the amount
to be estimated. If the parties cannot so agree within five (5) business days of
either party's receipt of written notice from the other ("Start Date"), each
party shall select a qualified contractor or other appropriate expert qualified
in the subject matter of the item to be estimated and shall immediately notify
each other of the name thereof. Said contractors or experts shall, within two
(2) additional business days select a third similarly qualified contractor or
expert. All three such parties shall, within five (5) business days thereafter
submit to Seller and Purchaser their best estimates of such cost or expenses.
The average of the two closest estimates shall be binding on Purchaser and
Seller.
23.24 Confidentiality. Except as and to the extent required by law,
Purchaser shall not disclose or use, and it shall cause its representatives not
to disclose or use, any Confidential Information (as defined below) with respect
to the Seller furnished, or to be furnished by Seller, or its respective agents
to Purchaser or its representatives in connection herewith at any time or in any
manner other than in connection with its evaluation of the transaction. For
purposes of this Paragraph, "Confidential Information" means any information
about the Seller stamped "confidential" or identified in writing as such to
Purchaser by Seller; provided that it does not include information which
Purchaser can demonstrate (i) is generally available to or known by the public
other than as a result of improper disclosure by Purchaser, or (i) is obtained
by
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Purchaser from a source other than Seller, provided that such source was not
bound by a duty of confidentiality to Seller or another party with respect to
such information.
ARTICLE 24. MEMORANDUM
Concurrently with the execution of this Agreement, the parties shall
execute a Memorandum of Purchase and Sale Agreement, in the form of Schedule 24,
and shall record the same in the records of the County Recorder, ▇▇▇▇▇ County,
Nevada. The real property encumbered thereby shall be the Real Estate.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
as of the date first above written.
SELLER:
EXBER, INC. UNION PLAZA HOTEL & CASINO, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------- -------------------
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President Its: President
UNION PLAZA OPERATING COMPANY ▇▇▇▇▇▇▇ SOUTH CORP.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------- -------------------
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President Its: President
PURCHASER:
BARRICK CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------
By: ▇▇▇▇▇▇▇ ▇. Crystal
Its: President and General Counsel
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SCHEDULE 2.5
OPTION AGREEMENT AND RIGHT OF FIRST REFUSAL
TO ACQUIRE PROPERTY
This Agreement is made as of the 6th day of December, 2002, ("Effective
Date") by and between ▇▇▇▇▇▇▇ Gaming Corporation, its designees or assignees
(collectively "Barrick") whose address is ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and Exber, Inc. ("Exber") whose business address is c/o ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and ▇▇▇▇ ▇.
▇▇▇▇▇▇▇
WHEREAS, Barrick has expressed its interest in acquiring the real
property commonly known as the El ▇▇▇▇▇▇ Hotel and Casino and the ▇▇▇▇▇ Hotel
which are legally described as set forth in Exhibit A hereto ("Real Estate")
together with all personal property and gaming equipment located within and used
in the operations of the El ▇▇▇▇▇▇ Hotel and Casino and the ▇▇▇▇▇ Hotel; and
WHEREAS, Exber, Barrick and others have simultaneously entered into an
Agreement of Purchase and Sale and an Agreement as to Voting Shares under which
Exber has contracted to sell and Barrick has contracted to buy certain other
real and personal property of Exber and related persons used in the gaming
business ("Purchase Transaction"); and
WHEREAS, this Agreement is entered into as part of the Purchase
Transaction and is conditioned on the Purchase Transaction closing.
NOW, THEREFORE, in consideration of the mutual premises and promises
contained herein, together with other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Right of First Refusal.
a) Exber hereby grants to Barrick the right of first refusal to
acquire ("Right of First Refusal") the real property described in
Exhibit A hereto (Exhibit E of the LOI) and the personal property
including gaming equipment identified in Exhibit B hereto (Schedule
7 of the LOI) (collectively consisting of 5 pages) which shall be
referred to collectively hereafter as the EC Property. Catagories
or line items with lines drawn through them are excluded from the
sale, the designation "PR" means prorated at Closing.
b) This Right of First Refusal shall be exercisable in the event Exber
receives and desires to accept a bona fide offer for the purchase,
conveyance, assignment or other transfer of the EC Property (but
excluding any lending transaction) ("Proposed Transfer") from a
third party unaffiliated with Exber, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Union Plaza
Hotel and Casino, Inc., Union Plaza Operating Company, Inc. or
▇▇▇▇▇▇▇ South Corp. (hereinafter "Offeror")
c) In the event Exber receives a Proposed Transfer offer, Exber shall
have ten (10) days from its determination to accept the Proposed
Transfer offer to notify Barrick of the Proposed Transfer and to
simultaneously therewith provide Barrick
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with the form of agreement the proposed buyer is offering that will
be legally binding upon ▇▇▇▇▇▇▇'▇ execution and delivery, that
contains all material terms, conditions and provisions of the
Proposed Transfer acceptable to Exber, but excluding the offeror's
identity (collectively the "Notice of Sale").
d) Barrick shall have a period of thirty (30) days from the date of
receipt of the Notice of Sale to deliver to Exber ▇▇▇▇▇▇▇'▇ written
notice of its intent to exercise its Right of First Refusal to
acquire the EC Property. Simultaneously with providing notice of
its intent to exercise its Right of First Refusal, Barrick shall
also delivery to Exber ▇▇▇▇▇▇▇'▇ (its Assignee's or Designee's as
defined hereafter) fully executed, authorized and legally binding
acceptance of Exber's offer to sell the EC Property on the same
terms and conditions as the Proposed Transfer, which shall include
representations and warranties by Exber and Barrick in
substantially the same as the representations and warranties
contained in the Proposed Transfer. Barrick shall also, at such
time as it delivers its notice of intent to exercise its Right of
First Refusal and its acceptance of the offer, pay to Exber an
amount equal to any deposit offered by the Offeror pursuant to the
terms of the Proposed Transfer.
e) Barrick shall have a period of thirty (30) days from the date of
its receipt from Exber of all due diligence materials and
information which Exber provided to the Offeror (but if not all due
diligence materials are delivered at the same time to Barrick then
30 days from the delivery to Barrick of the last of the due
diligence materials and information, including a preliminary title
report pertaining to the Real Estate issued by Exber's title
insurer) to conduct its due diligence investigation into the
purchase of the EC Property under its Right of First Refusal. Exber
shall provide Barrick with all and identical due diligence
materials and information which the Offeror under the Proposed
Transfer requested and/or received.
f) The purchase price for the EC Property in the event Barrick
exercises its Right of First Refusal as provided herein shall be
the same amount payable on the same terms as the Proposed Transfer,
notwithstanding the above in no event shall the purchase price paid
by Barrick be less than Twenty Million Dollars ($20,000,000).
g) Closing on the purchase of the EC Property under the Right of First
Refusal shall occur on the same time table as that provided in the
Proposed Transfer.
2. Option to Purchase.
a) Exber hereby grants to Barrick an option to acquire the EC Property
("Option") on the terms and conditions set forth below.
b) The Option shall be exercisable upon the occurrence of either of
the following (collectively "Option Event"):
(i) the death of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇; or
(ii) the sale, conveyance, assignment or other transfer
(excluding estate planning and loan transactions) of a
majority (more than fifty percent (50%)) of the equity
interest of Exber, Inc. owned by ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as of
the Effective Date of this Agreement to an unrelated or
unaffiliated third party ("Stock Transfer").
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c) Upon the happening of an Option Event, Exber shall have ten (10)
days to notify Barrick of the occurrence of the Option Event
("Notice of Option Event").
d) Barrick shall have a period of thirty (30) days from ▇▇▇▇▇▇▇'▇
receipt of the Notice of Option Event to provide Exber with
▇▇▇▇▇▇▇'▇ written notice of its intent to exercise its Option to
acquire the EC Property ("Notice Exercising Option").
Simultaneously with providing to Exber ▇▇▇▇▇▇▇'▇ Notice Exercising
Option, Barrick shall also deliver to Exber a deposit of Eighty
Thousand Dollars ($80,000) which shall be non-refundable. The terms
and conditions of the Option shall be on substantially the same
terms and conditions as those contained in the Agreement for
Purchase and Sale between Exber, Inc., Union Plaza Hotel and
Casino, Inc., Union Plaza Operating Company, Inc. and ▇▇▇▇▇▇▇ South
Corp. and Barrick pertaining to the Union Plaza Hotel & Casino, Las
Vegas Club Hotel & Casino, Gold Spike Hotel & Casino and Western
Hotel & Casino ("Initial Purchase Agreement").
e) The purchase price to be paid by Barrick to Exber, Inc. when
exercising the Option for the EC Property shall be an amount equal
to five times the average annual earnings before interest, tax,
depreciation, and amortization ("EBIDTA") realized by Exber, Inc.
on the EC Property for the previous three (3) years ending on the
date of the Notice of Option Event, but in no case shall the price
paid be less than Twenty Million Dollars ($20,000.000). The
purchase price shall be paid in cash (immediately available funds)
at the time of closing.
f) Barrick shall receive from Exber due diligence information
consistent with the Seller's obligations to provide the due
diligence material under the Initial Purchase Agreement which shall
be provided within thirty (30) days after the delivery of ▇▇▇▇▇▇▇'▇
Notice Exercising Option to Exber. Barrick shall have a period of
thirty (30) days from the date of delivery of those due diligence
materials by Exber, including a preliminary title report for the
Real Estate from Exber's title insurance company (or 30 days from
the date of delivery of the last of the due diligence materials if
all the requested materials, including the preliminary title
report, are not delivered on a single date) to conduct its due
diligence investigation into the EC Property. g) Closing shall
occur within nine (9) months from the date Barrick receives the
Notice of Option Event and there shall be no extensions except by
the mutual consent of both Exber and Barrick.
3. Term.
Both the Right of First Refusal and the Option shall have a term of
Fifteen (15) years from the date of Closing under the Initial Purchase Agreement
unless any of the following events occur, in which case, both the Option and the
Right of First Refusal shall be immediately terminated:
a) a transfer of the EC Property to the Offeror pursuant to the terms
of the Proposed Transfer as a result of Barrick not exercising its
Right of First Refusal as provided herein;
b) ▇▇▇▇▇▇▇'▇ failure to timely exercise its Option after receipt of
Notice of Option Event;
c) the Union Plaza Hotel and Casino, the Western Hotel and Casino, the
Gold Spike Hotel and Casino or the Las Vegas Club Hotel and Casino
(collectively "Originally
- 131 -
Acquired Properties"), or any one of them, being no longer owned by
Barrick, or its Assignees or Designees (as defined in the Initial
Purchase Agreement) determined as of that Closing;
d) Barrick attempts to transfer or assign its rights under this
Agreement except as permitted in this Agreement;
e) the shareholders of the entity(ies) taking title to the Originally
Acquired Properties at the time of Closing under the Initial
Purchase Agreement (or their family members), cease to control (as
defined under the definition of Assignees or Designees in the
Initial Purchase Agreement) those entity(ies);
f) Barrick exercises its Option or Right of First Refusal and then
breaches or defaults in the performance of its obligations under
its agreement to acquire the EC Property either by Option or Right
of First Refusal;
g) Barrick materially breaches the terms of the Initial Purchase
Agreement;
h) the Initial Purchase Agreement terminates for any reason; or
i) the termination of the Agreement as to Voting Shares of Stock of
Exber, Inc. and Union Plaza Hotel and Casino, Inc. which is
executed simultaneously hereto.
4. Assignment.
Barrick, if it completes Closing of the Initial Purchase Agreement,
shall have the right to transfer or assign the Option and the Right of First
Refusal granted hereunder to an entity controlled by Barrick, its Assignees and
Designees at any time thereafter during the term of this Agreement. Any other or
different type of transfer or assignment by Barrick of the rights granted by
reason of this Agreement shall be prohibited.
5. Permitted Transfers.
Notwithstanding anything contained herein to the contrary, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ shall be permitted to transfer his equity interest in Exber without
creating an Option Event or a Proposed Transfer if such transfer is made for
gaming requirements or for estate planning purposes or is made to persons who
would thereafter hold such equity interests in a fiduciary capacity
(collectively "Permitted Transfer").
a) The parties hereto agree that Barrick shall be provided written
notice by Exber of each and every Permitted Transfer within ten
(10) days of its occurrence. Such notice shall include the name of
the transferee, the number of shares and the percentage interest
transferred, the purpose of the Permitted Transfer and the
relationship of the transferee to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
b) It is further agreed by the parties hereto that each Permitted
Transferee shall take such equity interest subject to ▇▇▇▇▇▇▇'▇
Option and Right of First Refusal so that Barrick shall still have
its Right of First Refusal and its Option rights for the full 15
year term of this Agreement. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Exber represent
and warrant that each Permitted Transferee will be required to
acknowledge in writing that it is accepting the Permitted Transfer
of Exber equity interest from ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ subject to ▇▇▇▇▇▇▇'▇
Right of First Refusal and Option and that a copy of each such
acknowledgment will be delivered to Barrick simultaneously with the
notice of the Permitted Transfer as provided in Section 5. a)
hereof.
c) In the event one or more Permitted Transferees sell or transfer
their Exber equity interest to unaffiliated third parties then
Exber shall provide written notice to Barrick
- 132 -
of the sale or transfer to such third party within ten (10) days of
such sale or transfer. If sufficient equity interests in Exber are
sold or transferred to unaffiliated third parties which interests
collectively equal more than fifty-percent (50%) of the equity
interest ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ owned in Exber as of the Effective Date of
this Agreement (in one or more transactions), then such sale(s) or
transfers to unaffiliated third parties by the Permitted
Transferees shall also result in the happening of an Option Event.
In such a case, Barrick shall have the right to exercise its Option
to purchase the EC Property from Exber on the same terms and
conditions as provided in Section 2 hereof.
d) It is hereby acknowledged and agreed that in the event ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ does make Permitted Transfers of his equity interests in
Exber that ▇▇▇▇▇▇▇'▇ Option may still be exercised in the event of
▇▇▇▇ ▇. ▇▇▇▇▇▇▇'▇ death, regardless of any previous Permitted
Transfers.
6. Reorganization.
Notwithstanding anything herein to the contrary, Seller may reorganize
its share ownership and/or corporate structure by merger, spin-off, split-off,
split-up, distribution or dividend (cash, in-kind, stock), the formation of
subsidiaries or affiliates, or otherwise, to facilitate the sale for tax
planning, gaming, proceeds distribution to shareholders, or other purposes, so
long as Buyer's purchase of the Businesses, the El ▇▇▇▇▇▇ Hotel, or the Property
is not materially affected and the transferee takes subject to Buyer's rights
herein. Any reorganization that is taken in response to any gaming
authority/regulatory requirement, regulation or investigation shall be
permitted.
7. Authority and Consent.
a) ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ represents and warrants that he has the full legal
right, power and authority to execute this Agreement and to
contract for the transactions contemplated by the terms of this
Agreement;
b) The execution and delivery of this Agreement by Exber has been duly
authorized, and Exber has all the right, power and authority to
perform its obligations hereunder, including the approval of its
shareholders and board of directors;
c) Exber and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ specifically acknowledge and consent to
the sale and transfer of the EC Property to Barrick, its Assignees
or Designees upon the occurrence of the events described herein.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ also acknowledges and consents that in the event
Barrick exercises its Option that Barrick will be purchasing the EC
Property from Exber and not ▇▇▇▇ ▇. ▇▇▇▇▇▇▇'▇ equity interest
therein and that the proceeds from the sale of the EC Property will
be paid directly to Exber and not to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or any
transferee of his equity interests;
d) Exber represents and warrants that the EC Property is not currently
subject to any other option, right of first refusal, purchase
contract or any other agreement which grants to any third party any
right to acquire an interest, whether legal or equitable, in the EC
Property;
e) Exber represents and warrants that the execution and delivery of
this Agreement by them and the consummation of the transactions
contemplated hereby will not result in a default, or an event that,
with notice or lapse of time or both, would be a default, breach or
violation of any lease, license, promissory note, conditional sales
contract,
- 133 -
commitment, indenture, mortgage, deed of trust or other agreement,
instrument or contract to which Exber is a party, by which it is
bound, or result in the creation or imposition of any lien, charge
or encumbrance on any of the EC Property;
8. Miscellaneous Provisions.
a) The parties shall pay all their own expenses incurred in connection
with the preparation, negotiation and consummation of this
Agreement and the transactions contemplated herein.
b) This Agreement shall be binding on and inure to the benefit of and
be enforceable by the parties hereto and their respective heirs,
executors, representatives, successors and assigns.
c) All notices required hereunder shall be in writing and shall be
given by delivery, by mail ( registered or certified, postage
prepaid, return receipt requested), by overnight express delivery,
prepaid, with a signed receipt or by hand delivery to the
respective parties as follows:
If to Exber:
c/o ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, (▇▇▇ ▇▇▇▇▇)
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to ▇▇▇▇ ▇. ▇▇▇▇▇▇▇:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with copies as to all Seller Entities to:
Ike ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇. South, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Barrick:
▇▇▇▇▇▇▇ Corporation
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇
With copies to:
▇. ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
- 134 -
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP ▇▇▇▇▇▇▇ ▇. Crystal
2345 Grand, Suite 2000 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Chevy Chase, MD 20815
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
d) This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Nevada, without regard to
its principals of conflict of laws.
e) The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in
full force and effect.
f) None of the parties hereto nor their employees or representatives,
shall make any public disclosure, comment, statement or
communication of any sort regarding the transactions contemplated
in this Agreement nor any of the terms, conditions or other aspects
of the proposed transactions. Any announcement regarding the
transactions between the parties shall only be made at such time as
mutually agreed to between the parties and the parties shall
mutually agree on the content of any such announcement. No party,
however, shall be restrained, after consultation with the others,
from making such disclosure as it shall be advised by counsel it is
required by law (whether the laws of the United States or another
country) or by the applicable regulatory agencies to make.
g) This Agreement is subject to all applicable gaming laws and any
compliance, reporting requirements, consent or approvals required
under Nevada Law, by the Nevada Gaming Authorities, and under the
Gaming Control Act and rules, regulations or interpretations
thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first noted above.
EXBER: Exber, Inc., a Nevada corporation
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President
▇▇▇▇ ▇. ▇▇▇▇▇▇▇: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------
BARRICK: Barrick Corporation, a Nevada corporation
/s/ ▇▇▇▇▇▇▇ ▇. Crystal
----------------------
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: President and General Counsel
- 135 -
LIST OF EXHIBITS*
EXHIBIT A Business Premises
EXHIBIT B Coast Associated Equipment
LIST OF SCHEDULES*
SCHEDULE 2.2(a)(i) Legal Description of Real Property
SCHEDULE 2.2(a)(ii) Leased Fixtures
SCHEDULE 2.2(d) Water Permits
SCHEDULE 2.2(g) Trademarks, Tradenames, Ficticious Firm Names
SCHEDULE 2.2(k) Motor Vehicles
SCHEDULE 2.4(c) Excluded Computer Software/Hardware
SCHEDULE 2.4(d) Excluded Assets
SCHEDULE 2.4(k) Intra/Inter Company Liabilities and El ▇▇▇▇▇▇ Receivables
SCHEDULE 2.4(l) Schedule 2,3,4 & 5 of the LOI
SCHEDULE 2.4(o) Personal Property Retained by Seller
SCHEDULE 2.5 Option Agreement
SCHEDULE 3.1(a)(i) Assumed Contracts
SCHEDULE 3.1(a)(vi) Premises Leases
SCHEDULE 3.3 Assumed Contracts which Require Payment of More than $25,000
SCHEDULE 5.7(b)(iv) Inspection Period/Litigation Period/Litigation and Claims
SCHEDULE 6.1(l) All Personal Property Leased by Seller
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SCHEDULE 6.1(m) Infrastructure Disclosure
SCHEDULE 6.1(n) Hazardous Substance Disclosure
SCHEDULE 6.1(r) Litigation, Investigations
SCHEDULE 6.1(o) Litigation
SCHEDULE 6.1(q)(i) Environmental Study
SCHEDULE 6.1(q)(ii) Structural Defects
SCHEDULE 6.1(a)(iii) Building and Improvements
SCHEDULE 6.1(r) Trademark Infringement
SCHEDULE 6.1(r) Administrative Investigations
SCHEDULE 6.1(aa) Order having Material Adverse Effect
SCHEDULE 6.1(ff) Arbitrations/Grievance
SCHEDULE 6.1(hh) Employee Contracts
SCHEDULE 6.1(kk) Star Agreements
SCHEDULE 8.1(a)(i) Permitted Title Exceptions
SCHEDULE 8.1(a)(ii) Objected Exceptions
SCHEDULE 9.2(i) Added, Renewed/Extended Leases
SCHEDULE 10.11 Deposits under Leases
SCHEDULE 10.14 Estoppel Certificate Form
SCHEDULE 22.1(a) Employees Excluded From Being Hired
SCHEDULE 24 Memorandum
* Except for Schedule 2.5 to the Agreement of Purchase and Sale, the Exhibits
and Schedules are not filed as exhibits herewith. The Filer hereby agrees to
furnish supplementally a copy of any omitted Exhibits or Schedules upon the
request of the Commission.
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