PARTNERSHIP INTEREST PURCHASE AGREEMENT
BY AND AMONG
ANDERSON PARK, INC.,
CONSECO HPLP, L.L.C.
PEGASUS GROUP, INC. AND
HOOSIER PARK, L.P.
DECEMBER 20, 1995
January 31, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITION AND CONSTRUCTION................................... 1
Section 1.01. Definitions.......................................... 1
Section 1.02. Headings............................................. 4
Section 1.03. Construction......................................... 4
ARTICLE II. TERMS OF PURCHASE OF PARTNERSHIP INTEREST..................... 4
Section 2.01. Purchase of Partnership Interest..................... 4
Section 2.02. Purchase Price....................................... 5
Section 2.03. Transfer Taxes and Costs ............................ 5
Section 2.04. Conseco Option ...................................... 5
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF API......................... 6
Section 3.01. Organization and Power of HPLP....................... 7
Section 3.02. Ownership Interest................................... 7
Section 3.03. Corporate Organization............................... 7
Section 3.04. Authorization........................................ 7
Section 3.05. No Conflict or Violation............................. 7
Section 3.06. Approvals and Consents............................... 8
Section 3.07. Financial Statements................................. 8
Section 3.08. Brokers' or Finders' Fees............................ 8
Section 3.09. Absence of Undisclosed Liabilities .................. 8
Section 3.10. Tax Matters.......................................... 8
Section 3.11. Compliance; Governmental Authorization .............. 9
Section 3.12. Title to Property.................................... 9
Section 3.13. Contracts, Agreements, and Commitments............... 10
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PEGASUS..................... 10
Section 4.01. Ownership Interest................................... 10
Section 4.02. Corporate Organization............................... 10
Section 4.03. Authorization........................................ 10
Section 4.04. No Conflict or Violation............................. 11
Section 4.05. Approvals and Consents............................... 11
Section 4.06. Brokers' or Finders' Fees............................ 11
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF CONSECO..................... 11
Section 5.01. Corporate Organization............................... 11
Section 5.02. Authorization........................................ 11
Section 5.03. No Conflict or Violation............................. 12
Section 5.04. Approvals and Consents............................... 12
Section 5.05. Brokers' or Finders' Fees............................ 12
Section 5.06. Investment Intent.................................... 12
(i)
January 31, 1996
PAGE
ARTICLE VI. COVENANTS OF HPLP............................................. 13
Section 6.01. Actions Before the Closing Date...................... 13
Section 6.02. Actions at the Closing............................... 13
ARTICLE VII. COVENANTS OF API.............................................. 13
Section 7.01. Actions Before the Closing........................... 13
Section 7.02. Actions at the Closing............................... 14
Section 7.03. Confidentiality...................................... 14
ARTICLE VIII. COVENANTS OF PEGASUS.......................................... 15
Section 8.01. Actions Before the Closing........................... 15
Section 8.02. Waiver and Consent................................... 15
Section 8.03. Actions at the Closing............................... 15
Section 8.04. Confidentiality.......................................16
ARTICLE IX. COVENANTS OF CONSECO.......................................... 16
Section 9.01. Actions Before the Closing........................... 16
Section 9.02. Actions at the Closing............................... 17
Section 9.03. Consents............................................. 17
Section 9.04. Confidentiality...................................... 17
ARTICLE X. CONDITIONS TO OBLIGATIONS..................................... 17
Section 10.01. Conseco.............................................. 17
Section 10.02. API.................................................. 18
ARTICLE XI. CLOSING....................................................... 18
Section 11.01. Closing.............................................. 18
Section 11.02. Documents to be Delivered by API..................... 18
Section 11.03. Documents to be Delivered by Conseco................. 19
Section 11.04. Documents to be Delivered by Pegasus................. 20
ARTICLE XII. TERMINATION................................................... 20
Section 12.01. Conditions of Termination............................ 20
Section 12.02. Effect of Termination................................ 21
ARTICLE XIII. INDEMNIFICATION................................................21
Section 13.01. Indemnification by API................................21
Section 13.02. Indemnification by Conseco............................21
Section 13.03. Indemnification by Pegasus............................21
Section 13.04. Indemnification by HPLP...............................21
Section 13.05. Procedure.............................................22
Section 13.06. Limitations on Indemnification........................22
(ii)
January 31, 1996
PAGE
ARTICLE XIV. MISCELLANEOUS..................................................23
Section 14.01. Public Announcements..................................23
Section 14.02. Expenses..............................................23
Section 14.03. Survival of Representations...........................23
Section 14.04. Notices...............................................23
Section 14.05. Severability..........................................25
Section 14.06. Entire Agreement......................................25
Section 14.07. Amendments; Waivers...................................25
Section 14.08. Parties in Interest...................................25
Section 14.09. Successors and Assigns................................25
Section 14.10. Governing Law; Jurisdiction...........................25
Section 14.11. Counterparts..........................................26
Section 14.12. Schedule Update.......................................26
(iii)
January 31, 1996
PARTNERSHIP INTEREST PURCHASE AGREEMENT
THIS PARTNERSHIP INTEREST PURCHASE AGREEMENT (this "Agreement") is made
and entered into as of this 20th day of December, 1995, by and among Anderson
Park, Inc., an Indiana corporation ("API") in its corporate capacity and in its
capacity as general partner of Hoosier Park, L.P., Conseco HPLP, L.L.C., an
Indiana limited liability company ("Conseco"), Pegasus Group, Inc., an Indiana
corporation ("Pegasus") and Hoosier Park, L.P., an Indiana limited partnership
("HPLP").
W I T N E S S E T H :
WHEREAS, API and Pegasus are the only partners in HPLP;
WHEREAS, Conseco desires to purchase a portion of API's partnership
interest in HPLP and API desires to sell to Conseco a portion of its partnership
interest in HPLP; and
WHEREAS, Pegasus desires to consent to waive and waive certain rights it
has in connection with the consummation of the sale of the portion of
partnership interest by API to Conseco.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
DEFINITION AND CONSTRUCTION
SECTION 1.01. DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings indicated below (the definitions to be applicable
to both the singular and the plural form of the terms defined, where either such
form is used in this Agreement):
"Additional HPLP Debt Interest" has the meaning set forth in SECTION
2.04 of this Agreement.
"Additional Partnership Interest" has the meaning set forth in
SECTION 2.04 of this Agreement.
"Amended and Restated HPLP Limited Partnership Agreement" means the
Amended and Restated HPLP Agreement of Limited Partnership by and among API,
Conseco and Pegasus dated as of the Closing Date substantially in the form of
EXHIBIT B.
"Amended and Restated Management Agreement" means the Amended and
Restated Management Agreement by and between CDMC and HPLP dated as of the
Closing Date substantially in the form of EXHIBIT D.
January 31, 1996
1
"Amended Trademark License Agreement" means the Amended Trademark
License Agreement by and between CDI and the Partnership dated as of the Closing
Date substantially in the form of Exhibit F.
"API" means Anderson Park, Inc., an Indiana corporation.
"API Pledge Agreement" means the API Pledge Agreement by and between API
and CDMC dated August 30, 1994.
"Bill of Sale and Assignment" means the Bill of Sale and Assignment
Agreement by and between API and Conseco dated as of the Closing Date
substantially in the form of EXHIBIT A.
"Board" means the City of Anderson, Indiana, Park and Recreation
Board.
"CDI" means Churchill Downs Incorporated, a Kentucky corporation.
"CDMC" means Churchill Downs Management Company, a Kentucky
corporation.
"Claims" has the meaning set forth in SECTION 13.01 of this
Agreement.
"Closing" has the meaning set forth in SECTION 11.01 of this
Agreement.
"Closing Date" has the meaning set forth in SECTION 11.01 of this
Agreement.
"Conseco" shall mean Conseco HPLP, L.L.C., an Indiana limited liability
company.
"Conseco, Inc." means Conseco, Inc., an Indiana corporation.
"Conseco Option" has the meaning set forth in SECTION 2.04 of
this Agreement.
"Conseco Pledge Agreement" means the Conseco Pledge Agreement by and
between Conseco and CDMC dated as of the Closing Date substantially in the form
of EXHIBIT G.
"Financial Advisory Agreement" means the Financial Advisory Agreement by
and between CDMC and Conseco substantially in the form of Exhibit E.
"Financial Statements" has the meaning set forth in SECTION 3.07
of this Agreement.
"Financing Document" shall mean the Financing Document by and between
API and Conseco dated as of the Closing Date substantially in the form of
EXHIBIT C.
January 31, 1996
2
"HPLP" means Hoosier Park, L.P., an Indiana limited partnership.
"HPLP Debt" means the total principal amount of the debt outstanding
owed from HPLP to CDMC as of the Closing Date and thereafter owed to CDMC and
Conseco, including accrued but unpaid interest, but excluding working capital
debt, and including management fees which are accrued and unpaid as of the
Closing Date for the purchase of the Initial Partnership Interest, but excluding
management fees which accrue thereafter.
"HPLP Debt Interest" has the meaning set forth in SECTION 2.01 of
this Agreement.
"HPLP Limited Partnership Agreement" means the Hoosier Park, L.P.
Agreement of Limited Partnership by and between API and Pegasus dated
August 30, 1994.
"Income Taxes" shall mean any income, gross receipts, gains, net worth,
surplus, franchise or withholding taxes (including interest, penalties or other
additions to Tax) imposed by a Tax Authority.
"Indemnified Party" has the meaning set forth in SECTION 13.05 of
this Agreement.
"Indemnifying Party" has the meaning set forth in SECTION 13.05
of this Agreement.
"Initial HPLP Debt Interest" has the meaning set forth in SECTION 2.01
of this Agreement.
"Initial Partnership Interest" has the meaning set forth in
SECTION 2.01 of this Agreement.
"Material Adverse Effect" when used in reference to a Person or Persons,
shall mean a material adverse effect on the business, assets, liabilities,
operations, results of operations or financial condition of the Person or
Persons.
"Omnibus Agreement" means the Omnibus Agreement by and among CDMC, API,
Pegasus and Roderick J. Ratcliff dated August 30, 1994.
"Option Closing" has the meaning set forth in SECTION 2.04 of
this Agreement.
"Option Price" has the meaning set forth in SECTION 2.04 of this
Agreement.
"Partnership Interest" has the meaning set forth in SECTION 2.01
of this Agreement.
"Pegasus" means Pegasus Group, Inc., an Indiana corporation, and
includes Roderick J. Ratcliff, the sole shareholder of Pegasus Group, Inc.
January 31, 1996
3
"Pegasus Pledge Agreement" means the Pegasus Pledge Agreement by and
between Pegasus and CDMC dated August 30, 1994.
"Person" means any individual, corporation, partnership, limited
liability company, association, trust, organization or other entity.
"Purchase Price" has the meaning set forth in SECTION 2.02 of
this Agreement.
"Tax Authority" shall mean a foreign or United States federal, state or
local government authority having jurisdiction over the assessment,
determination, collection or imposition of any Tax, as the context requires.
"Tax and Taxes" shall mean all taxes, charges, fees, levies or other
assessments, including without limitation, all net income, gross income, gross
receipts, sales, use, value added, ad valorem, transfer, franchise, profits,
license, withholding, payroll, employment, windfall profit, alternative or add
on minimum, excise, estimated, severance, stamp, occupation, property or other
taxes, customs, duties, fees, assessments, or charges of any kind whatsoever,
all pari-mutuel wagering, satellite facility and attendance and similar taxes,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any Tax Authority with respect thereto.
SECTION 1.02. HEADINGS. The subject headings of the sections
and articles of this Agreement are included for purposes of
convenience only, and shall not affect the construction or
interpretation of any of its provisions.
SECTION 1.03. CONSTRUCTION. The parties have participated jointly in the
negotiation and drafting of this Agreement, and, in the event of an ambiguity or
a question of intent or a need for interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
ARTICLE II.
TERMS OF PURCHASE OF PARTNERSHIP INTEREST
SECTION 2.01. PURCHASE OF PARTNERSHIP INTEREST. Upon and subject to the
terms and conditions set forth in this Agreement, at the Closing Conseco shall
purchase from API, and API shall transfer, assign, set over and deliver to
Conseco ten percent (10%) of the total outstanding ownership interests in HPLP,
including the liabilities associated therewith, (the "Initial Partnership
Interest", and together with the Additional Partnership Interest, the
"Partnership Interest"), and in connection therewith to also acquire from CDMC a
ten percent (10%) interest in the HPLP Debt (the "Initial HPLP Debt Interest").
January 31, 1996
4
SECTION 2.02. PURCHASE PRICE. The purchase price for the Initial
Partnership Interest shall be Two Hundred Eighteen Thousand Dollars ($218,000)
and the purchase price for the Initial HPLP Debt Interest shall be an amount
equal to ten percent (10%) of the HPLP Debt at the Closing (collectively, the
"Purchase Price"). Conseco shall pay the Purchase Price at the Closing to API
either by a certified or bank cashier's check or by a wire transfer of
immediately available funds. The exact amount of the Purchase Price shall be
determined provisionally by the parties at the Closing, subject to such
adjustments as are mutually agreed to by the parties within thirty (30) days
after the Closing.
SECTION 2.03. TRANSFER TAXES AND COSTS. All Taxes (other than Income
Taxes and taxes on, relating to or measured by income or gains), stamp duties,
notarial, registration and recording fees and similar Taxes resulting from or
relating to the sale and transfer of the Partnership Interest to Conseco shall
be borne by Conseco.
SECTION 2.04. CONSECO OPTION. For the period from the Closing Date to
and including December 31, 1998, API hereby grants to Conseco and Conseco shall
have the non-assignable option (the "Conseco Option") to acquire from API
forty-seven percent (47%) of the total outstanding ownership interests in HPLP,
including the liabilities associated therewith (the "Additional Partnership
Interest"), to become the sole general partner of HPLP in place of API, and in
connection therewith, to also acquire from CDMC an additional interest in the
HPLP Debt (the "Additional HPLP Debt Interest"). The purchase price for the
Additional Partnership Interest and the Additional HPLP Debt Interest
(collectively, the "Option Price") shall be Twenty-Two Million One Hundred
Fifty-Six Thousand Dollars ($22,156,000). The Conseco Option may be exercised by
written notice from Conseco to API at any time on or before December 31, 1998.
Conseco shall pay the Option Price to API and CDMC at the closing of such
transaction (the "Option Closing") either by certified or bankers cashier check
or by wire transfer of immediately available funds. At the Option Closing, API
shall provide to Conseco a certificate executed by the President of API
certifying that (i) the representations and warranties of API set forth in this
Agreement are true and correct as of the date of such closing, except that the
representations and warranties set forth in SECTIONS 3.07 AND 3.09 AND SECTION
3.02 of this Agreement shall be remade with respect to the most recent audited
financial statements of HPLP and ownership interests in the Partnership,
respectively,, (ii) the Schedules to this Agreement have been updated to the
date of such closing and delivered to Conseco and (iii) all of the covenants,
conditions and obligations required by this Agreement to be performed by API and
HPLP shall have been and will be performed and complied with as of the date of
the Option Closing and thereafter, as the case may be. At the Option Closing,
API shall execute and deliver to Conseco (i) a duly executed Bill of Sale and
Assignment, substantially in the form of Exhibit A hereto, for the Additional
Partnership Interest, (ii) appropriate documentation for Conseco to replace API
as the sole general partner of the Partnership and otherwise effectuate the
transactions, (iii) updated Schedules to this Agreement and (iv) copies of all
consents and approvals required to be obtained to effectuate the transactions.
At the Option Closing, Conseco shall provide to API a Certificate executed by
the managing member of Conseco, certifying that (i) the representations and
warranties of Conseco set forth in this Agreement are true and correct as of the
January 31, 1996
5
date of such closing, (ii) all of the covenants, conditions and obligations
required by this Agreement to be performed by Conseco shall have been and will
be performed and complied with as of the date of the Option Closing and,
thereafter, as the case may be, and (iii) execute and deliver to API a Financing
Document, substantially in the form of Exhibit C hereto, for the Additional HPLP
Debt Interest.
At the Option Closing the Option Price shall be allocated between the
Additional Partnership Interest and the Additional HPLP Debt Interest as
follows:
(a) if the principal amount of the HPLP Debt on the date of the
Option Closing is equal to or more than Twenty-Eight Million Seven
Hundred Thousand Dollars ($28,700,000), Six Million Two Hundred
Twenty-Two Thousand Dollars ($6,222,000) of the Option Price shall be
allocated as the purchase price of the Additional Partnership Interest
and Fifteen Million Nine Hundred Thirty-Four Thousand Dollars
($15,934,000) of the Option Price shall be allocated to the purchase of
an equivalent principal amount of the HPLP Debt then owed to CDMC; or
(b) if the principal amount of the HPLP Debt on the date of the
Option Closing is less than Twenty-Eight Million Seven Hundred Thousand
Dollars ($28,700,000), an amount of the Option Price equal to Fifty-Five
and Fifty-Two One Hundredths Percent (55.52%) of the HPLP Debt shall
first be allocated to the purchase of an equivalent principal amount of
the HPLP Debt then owed to CDMC, and the balance of the Option Price
shall be allocated to the purchase of the Additional Partnership
Interest.
The Conseco Option shall terminate and shall not be exercisable upon the
(i) Bankruptcy (as such term is defined in the Amended and Restated HPLP
Partnership Agreement) of Conseco or, (ii) transfer of interest in Conseco which
would cause the ownership of more than 50% of all the ownership interest and
voting rights of Conseco to change to another Person, other than a direct or
indirect wholly-owned subsidiary of Conseco, Inc.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF API
As a material inducement to Conseco and Pegasus to enter into this
Agreement and to consummate the transactions contemplated hereby, API, both in
its capacity as the General Partner of HPLP and in its corporate capacity,
represents and warrants to Conseco that:
January 31, 1996
6
SECTION 3.01. ORGANIZATION AND POWER OF HPLP. HPLP is a limited
partnership duly organized, validly existing, and in existence under the laws of
the State of Indiana, for which all reports required to be filed with the
Indiana Secretary of State have been filed, and for which no articles of
dissolution have been filed with the Indiana Secretary of State. HPLP has all
requisite power and authority to carry on its business as it is now being
conducted.
SECTION 3.02. OWNERSHIP INTEREST. HPLP is owned eighty-seven percent
(87%) by API and thirteen percent (13%) by Pegasus. There are no other holders
of any ownership interest in HPLP. There are no outstanding subscriptions,
options, warrants, contracts, commitments, convertible securities or other
agreements or arrangements of any character or nature whatsoever under which API
or HPLP is or may become obligated to issue, assign or transfer any ownership
interest in HPLP, except as provided in the API Pledge Agreement and the HPLP
Limited Partnership Agreement.
SECTION 3.03. CORPORATE ORGANIZATION. API is a corporation validly
existing under the laws of the State of Indiana, for which all reports required
to be filed with the Indiana Secretary of State have been filed, and for which
no articles of dissolution have been filed with the Indiana Secretary of State,
and has all requisite corporate power and authority to own its properties and
assets and to conduct its business as now conducted.
SECTION 3.04. AUTHORIZATION. As of the Closing Date, API has all
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the performance of API's obligations hereunder have been duly
authorized by all necessary action on the part of API, subject to obtaining
approval of the Board of Directors of CDMC and CDI which will be obtained prior
to Closing, and no other corporate proceedings on the part of API are necessary
to authorize the execution, delivery and performance. This Agreement has been
duly executed and delivered by API and constitutes API's valid and binding
obligation, enforceable against API in accordance with its terms.
SECTION 3.05. NO CONFLICT OR VIOLATION. The sale of the Partnership
Interest from API to Conseco will not (a) conflict or breach any provision of
the HPLP Limited Partnership Agreement or the Amended and Restated HPLP Limited
Partnership Agreement, except for such conflict or breach as to which requisite
waivers or consents have been obtained prior to Closing; (b) conflict or breach
with any provision of the articles of incorporation, bylaws or other governing
documents of API; (c) conflict, breach or result in a default (or give rise to
any right of termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, lien, bond, mortgage, indenture, license,
lease, agreement, consent order, or other instrument or obligation to which HPLP
or API is a party, or by which HPLP or API or any of their assets or properties
may be bound, which conflict, breach or default would have a Material Adverse
Effect on HPLP or API, except for such conflict, breach, or default as to which
requisite waivers or consents have been obtained prior to Closing; or (d)
violate any judgment, order, writ, injunction, or decree of any court,
administrative agency, or governmental or
January 31, 1996
7
regulatory authority applicable to HPLP or API or any of their assets
or properties.
SECTION 3.06. APPROVALS AND CONSENTS. Except as set forth in SCHEDULE
3.06, the execution, delivery and performance of this Agreement by HPLP and API
does not require HPLP or API to obtain the consent or approval of, or to make
any filing with, any governmental or regulatory authority, or other Person
except such consents, approvals or filings that have been obtained or made as of
the Closing Date or the failure to obtain or file would not have a Material
Adverse Effect on HPLP or API. API further represents that, except as set forth
in Schedule 3.06, it is not a party to any agreement and it has no knowledge of
any fact or circumstance which would prevent the Indiana Horse Racing Commission
or the Board from approving the transfer and purchase of the Partnership
Interest from API to a duly qualified transferee.
SECTION 3.07. FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 3.07 are
true, complete and correct copies of (i) the audited financial statements of
HPLP for the period from September 1, 1994 through December 31, 1994 and (ii)
the unaudited financial statements of HPLP for the period from January 1, 1995,
through September 30, 1995 (the "Financial Statements"). The 1994 Financial
Statements were prepared in accordance with generally accepted accounting
principles and present fairly the financial position, results of operations and
cash flows of HPLP as of and for the period presented.
SECTION 3.08. BROKERS' OR FINDERS' FEES. No agent, investment banker,
Person or firm acting on behalf of HPLP or API is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated hereby.
SECTION 3.09. ABSENCE OF UNDISCLOSED LIABILITIES. Except as reflected in
the Financial Statements or as set forth in SCHEDULE 3.09, HPLP has no financial
obligations, liabilities or accrued obligations of a type which would be
disclosed or reserved for in financial statements prepared in accordance with
generally accepted accounting principles.
SECTION 3.10. TAX MATTERS. Except as set forth in SCHEDULE
3.10:
(a) all applicable federal, state, local and foreign tax returns
and tax reports required to be filed by HPLP have been filed with the
appropriate governmental agencies and all jurisdictions in which such
returns and reports are required to be filed, and all of such returns
and reports are true, correct and complete in all material respects;
January 31, 1996
8
(b) all applicable federal, state, local and foreign income,
profits, franchise, sales or use, occupation, property, excise, payroll,
and other taxes (including interest and penalties) due from HPLP have
been fully paid;
(c) no federal, state, local, or foreign income tax or franchise
tax returns of or in respect of HPLP, to the best of HPLP's knowledge,
have been examined by the Internal Revenue Service or any state, local,
or foreign taxing authority;
(d) no pending issues have been brought to HPLP's attention by
the Internal Revenue Service or any state, local, or foreign taxing
authority with respect to any tax return, report, election, or filing,
or any tax matter of HPLP, and API knows of no unpaid assessment or of
any basis or assessment by any of such taxing authorities; and
(e) HPLP has established adequate reserves for all current taxes
and all other governmental charges which are not currently due and
payable, which reserves are adequately reflected in the Financial
Statements.
SECTION 3.11. COMPLIANCE; GOVERNMENTAL AUTHORIZATION. Except as
set forth in SCHEDULE 3.11, HPLP
(a) has complied in all material respects with all laws,
regulations, ordinances, and orders (including, without limitation,
those relating to environmental protection, conservation, occupational
safety and health, and equal employment opportunity) which have any
material application to its business, assets or properties, and has not
received any claims, charges, or investigations, or threats of claims,
charges, or investigations of HPLP to comply therewith;
(b) has all federal, state, local and foreign governmental
licenses and permits necessary for conducting its business and such
licenses and permits are in full force and effect, no material
violations have been recorded in respect of any such licenses or
permits, and no proceeding is pending or, to the best of API's
knowledge, threatened to revoke or limit any such license or permit; and
(c) is in material compliance with all orders, writs,
injunctions and decrees applicable to it or any of its
operations, assets or properties.
SECTION 3.12. TITLE TO PROPERTY. HPLP has good and marketable title to
all of its assets and properties (or interests therein), real or personal,
tangible or intangible, which it owns or leases, free and clear of all
mortgages, liens, pledges, charges, security interests, or encumbrances except:
(a) as set forth in SCHEDULE 3.12; and
January 31, 1996
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(b) liens for real and personal property taxes not yet due
and payable.
SECTION 3.13. CONTRACTS, AGREEMENTS, AND COMMITMENTS. Except for the
contracts, agreements and commitments set forth in SCHEDULE 3.13, (true and
complete copies of which have been provided to or made available to Conseco)
HPLP is not a party to, or bound by any written or oral contract, agreement or
commitment which involves the payment or potential payment per annum by or to
HPLP of more than $50,000 individually or $100,000 in the aggregate (with
respect to contracts relating to the same general subject matter) or that are
otherwise material to the business, operations, assets or property of HPLP. Each
contract disclosed or required to be disclosed in SCHEDULE 3.13 is in full force
and effect and constitutes a valid and binding obligation of HPLP in accordance
with its terms and neither API nor, to the knowledge of API, any other party to
such contract, has violated, breached or defaulted under such contract, unless
such violation, breach or default has been cured or waived, or, with or without
notice or lapse of time or both, would be in violation or breach of or default
under any such contract.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PEGASUS
As a material inducement to API and Conseco to enter into this Agreement
and to consummate the transactions contemplated hereby, Pegasus represents and
warrants to API and Conseco that:
SECTION 4.01. OWNERSHIP INTEREST. Pegasus owns a thirteen percent (13%)
interest in HPLP and is a limited partner of HPLP. There are no outstanding
subscriptions, options, warrants, contracts, commitments, convertible securities
or other agreements or arrangements of any character or nature whatsoever under
which Pegasus is or may become obligated to issue, assign or transfer any
ownership interest in HPLP, except the Pegasus Pledge Agreement, the HPLP
Limited Partnership Agreement and the Omnibus Agreement.
SECTION 4.02. CORPORATE ORGANIZATION. Pegasus is a corporation duly
organized, validly existing, and in existence under the laws of the State of
Indiana, for which all reports required to be filed with the Indiana Secretary
of State have been filed, and for which no articles of dissolution have been
filed with the Indiana Secretary of State, and has all requisite corporate power
and authority to own its properties and assets and to conduct its business as
now conducted. Roderick J. Ratcliff owns all of the outstanding shares of
Pegasus. There are no outstanding, asserted or unasserted claims of any former
shareholder of Pegasus against Pegasus, API, CDMC or CDI.
SECTION 4.03. AUTHORIZATION. Pegasus has all requisite
corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of
this Agreement and performance of Pegasus' obligations hereunder have
January 31, 1996
10
been duly authorized by all necessary action on the part of Pegasus, and no
other corporate proceedings on the part of Pegasus are necessary to authorize
the execution, delivery and performance. This Agreement has been duly executed
and delivered by Pegasus and constitutes Pegasus' valid and binding obligation
enforceable against Pegasus in accordance with its terms.
SECTION 4.04. NO CONFLICT OR VIOLATION. The performance of Pegasus'
obligations hereunder will not (a) conflict or breach any provision of the
articles of incorporation, bylaws or other governing documents of Pegasus; (b)
conflict, breach or result in default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, lien, bond, mortgage, indenture, license, lease, agreement, consent
order, or other instrument or obligation to which Pegasus is a party, or by
which Pegasus or its assets or properties may be bound; or (c) violate any
judgment, order, writ, injunction, or decree of any court, administrative
agency, or governmental or regulatory authority applicable to Pegasus or any of
its assets or properties.
SECTION 4.05. APPROVALS AND CONSENTS. The execution, delivery and
performance of this Agreement does not require Pegasus to obtain the approval or
consent of, or to make any filing with, any government, governmental body or
agency, or other Person.
SECTION 4.06. BROKERS' OR FINDERS' FEES. No agent, investment banker,
Person or firm acting on behalf of Pegasus is or will be entitled to any
broker's or finder's fee or any other commission or service fee in connection
with any of the transactions contemplated hereby.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF CONSECO
As a material inducement to API and Pegasus to enter into this Agreement
and to consummate the transactions contemplated hereby, Conseco represents and
warrants to API and Pegasus that:
SECTION 5.01. CORPORATE ORGANIZATION. Conseco is a limited liability
company duly organized, validly existing, and in existence under the laws of the
State of Indiana, for which all reports required to be filed with the Indiana
Secretary of State have been filed, and for which no articles of dissolution
have been filed with the Indiana Secretary of State, and has all requisite
corporate power and authority to own its properties and assets and to conduct
its business as now conducted.
SECTION 5.02. AUTHORIZATION. Conseco has all requisite
corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of
this Agreement and the performance of Conseco's obligations hereunder
have been duly authorized by all necessary action on the part of
January 31, 1996
11
Conseco, and no other corporate proceedings on the part of Conseco are necessary
to authorize the execution, delivery and performance. This Agreement has been
duly executed and delivered by Conseco and constitutes Conseco's valid and
binding obligation, enforceable against Conseco in accordance with its terms.
SECTION 5.03. NO CONFLICT OR VIOLATION. The purchase of the Partnership
Interest from API by Conseco will not (a) conflict or breach with any provision
of the articles of incorporation, bylaws or other governing documents of
Conseco; (b) conflict, breach or result in a default (or give rise to any right
of termination, cancellation or acceleration) under any of the terms, conditions
or provisions of any note, lien, bond, mortgage, indenture, license, lease,
agreement, consent order, or other instrument or obligation to which Conseco is
a party, or by which Conseco or any of its assets or properties may be found,
except for such conflict, breach of default as to which requisite waivers or
consents have been obtained prior to Closing; or (c) violate any judgment,
order, writ, injunction, or decree of any court, administrative agency, or
governmental or regulatory authority applicable to Conseco or any of its assets
or properties.
SECTION 5.04. APPROVALS AND CONSENTS. The execution, delivery and
performance of this Agreement by Conseco does not require Conseco to obtain the
consent or approval of, or to make any filing with, any governmental regulatory
authority or other person except (a) as set forth in SCHEDULE 5.04. Conseco
further represents that it has no knowledge of any fact or circumstance which
would permit the Indiana Horse Racing Commission or the Board to disapprove the
transfer and purchase of the Partnership Interest from API to Conseco.
SECTION 5.05. BROKERS' OR FINDERS' FEES. No agent, investment banker,
Person or firm acting on behalf of Conseco is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated hereby.
SECTION 5.06. INVESTMENT INTENT. The Partnership Interest is being
purchased for investment purposes only and not with a view to distribution
thereof, and will not be sold except after compliance with all applicable terms
of the Amended and Restated HPLP Limited Partnership Agreement. Conseco accepts
in full all risks of investment in HPLP, recognizing that an investment in HPLP
is speculative and may result in a loss of its entire investment. Conseco
acknowledges that the transferability of the Partnership Interest is severely
limited and that Conseco must continue to bear the economic risk of this
investment for an indefinite period as the Partnership Interest has not been
registered under the Securities Act of 1933, as amended, or any state securities
laws and therefore cannot be offered or sold unless it is subsequently so
registered or an exemption from such registration is available. Conseco has had
a full and complete opportunity to investigate all material facts, inspect
documents and question personnel in all matters relating to the Partnership and
its business.
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12
ARTICLE VI.
COVENANTS OF HPLP
SECTION 6.01. ACTIONS BEFORE THE CLOSING DATE. From the date
hereof until the Closing Date:
(a) HPLP shall conduct its business in the ordinary course
consistent with past practice and shall not do any other act that would
cause any representation or warranty of API, either as General Partner
or in its corporate capacity, or Pegasus in this Agreement to be or
become untrue in any material respect.
(b) HPLP shall afford to Conseco, and to the accountants, counsel
and representatives of Conseco, full and complete access, upon
reasonable notice and during normal business hours prior to the Closing
Date (or earlier termination of this Agreement pursuant to Article XI)
to (i) all books and records relating to HPLP's business and (ii) HPLP's
business and operations thereof. HPLP shall also, during that period and
upon the preceding terms, make its personnel, counsel, and independent
accountants available to discuss with Conseco and its accountants,
counsel, and representatives those aspects of the HPLP's business that
Conseco, its accountants, or counsel may deem necessary or desirable.
(c) Upon the terms and subject to the conditions of this
Agreement, HPLP shall use its best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things
necessary, proper, or advisable, consistent with applicable law, to
consummate and make effective the transactions contemplated hereby.
SECTION 6.02. ACTIONS AT THE CLOSING. At the Closing, HPLP shall record
the transfer of the Partnership Interest to Conseco from API in its partnership
books.
ARTICLE VII.
COVENANTS OF API
SECTION 7.01. ACTIONS BEFORE THE CLOSING. From the date hereof
until and including the Closing Date:
(a) API shall not do any act that would (i) cause any of its
representations or warrants in this Agreement to be or become untrue in
any material respect, or (ii) cause any of HPLP's covenants in this
Agreement to be violated.
(b) Upon the terms and subject to the conditions of this
Agreement, API shall use its best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary,
proper, or advisable, consistent with applicable law,
January 31, 1996
13
to consummate and make effective the transactions contemplated hereby,
including action necessary to obtain all consents, waivers,
authorizations, and approvals of all governmental and regulatory
authorities, and of all other Persons required to be obtained or made by
API or HPLP in connection with its execution, delivery, and performance
of this Agreement. The expenses, including attorneys' fees, required in
connection with approvals required of the Indiana Horse Racing
Commission and the Board for the sale of API's Partnership Interest to
Conseco, shall be borne by HPLP. The fees for the background
investigation of Conseco required to be paid to the Indiana Horse Racing
Commission in connection with such approvals shall be paid by Conseco.
The expenses, including filing fees and attorneys' fees, for the
requisite approvals of the Indiana Alcoholic Beverage Commission for the
changes in ownership of permits held by HPLP for the sale of alcoholic
beverages at the horse racetrack and satellite wagering facilities,
shall be borne by HPLP.
(c) API shall promptly deliver to Conseco and Pegasus any
information concerning events subsequent to the date of this Agreement,
up and through the Closing Date, which is necessary to supplement the
representations and warranties of API contained herein in order that the
information contained in this Agreement is true and correct in all
material respects.
SECTION 7.02. ACTIONS AT THE CLOSING. At the Closing, API shall deliver
all of the documents listed in SECTION 11.02 of this Agreement.
SECTION 7.03. CONFIDENTIALITY. API (a) shall not directly or indirectly
use, for its own benefit or otherwise, or disclose to any other Person any of
the information acquired from Conseco or its representatives pursuant to this
Agreement or in connection with the transactions contemplated hereby, except to
the extent that such information (i) is or becomes generally available to the
trade or the public other than as a result of a disclosure by API or its
representatives, (ii) was available to API prior to disclosure to API by
Conseco, or its representatives, (iii) becomes available to API from a source
other than Conseco or its representatives, which source was not itself bound by
a confidentiality agreement with Conseco or its representatives, or (iv) is
required to be disclosed by law or order of a court or governmental body, and
(b) if the Closing hereunder shall not occur, shall return to Conseco all
documents and copies thereof delivered to API by Conseco or its representatives
hereunder or in connection herewith.
January 31, 1996
14
ARTICLE VIII.
COVENANTS OF PEGASUS
SECTION 8.01. ACTIONS BEFORE THE CLOSING. From the date hereof
until and including the Closing Date:
(a) Pegasus shall not do any act that would cause any of its
representations or warrants in this Agreement to be or become untrue in
any material respect.
(b) Upon the terms and subject to the conditions of this
Agreement, Pegasus shall use its best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things
necessary, proper, or advisable, consistent with applicable law, to
consummate and make effective the transactions contemplated hereby.
(c) Pegasus shall promptly deliver to Conseco and API any
information concerning events subsequent to the date of this Agreement
which is necessary to supplement the representations and warranties of
Pegasus contained herein in order that the information contained in this
Agreement is true and correct in all material respects.
SECTION 8.02. WAIVER AND CONSENT. Effective as of the date hereof,
Pegasus releases permanently and waives its co-sale right contained in ARTICLE
IX of the HPLP Limited Partnership Agreement with respect to the sale by API to
Conseco of the Partnership Interest to be sold to Conseco at the Closing and the
sale, if any, by API of the Additional Partnership Interest to Conseco pursuant
to the Conseco Option. Effective as of the Closing, Pegasus (a) releases and
permanently waives the restrictions contained in Section 11(b) of the Omnibus
Agreement on transfers of ownership interest in the Partnership by CDMC; (b)
terminates Section 19 of the Omnibus Agreement; and (c) consents to the
execution of the Amended and Restated Management Agreement, the Amended
Trademark License Agreement, the Financial Advisory Agreement, and the Financing
Document, to the change of the General Partner upon the exercise of the Conseco
Option and continuation of the Partnership pursuant to Article VIII of the HPLP
Limited Partnership Agreement, and to all other actions required to consummate
the transactions contemplated by this Agreement which require consent pursuant
to the HPLP Limited Partnership Agreement.
SECTION 8.03. ACTIONS AT THE CLOSING. At the Closing:
(a) Pegasus shall deliver all of the documents listed in
SECTION 11.04 of this Agreement; and
(b) Roderick J. Ratcliff shall resign from the Board of Directors
of API and thereafter Pegasus shall not be entitled to any seat on the
Board of Directors of API, or its successors, notwithstanding SECTION 10
of the Omnibus Agreement, and releases and waives any claims, whether
asserted or not, and waives any rights it may have in the future to
representation on the Board of Directors of API.
January 31, 1996
15
SECTION 8.04. CONFIDENTIALITY. Pegasus (a) shall not directly or
indirectly use, for its own benefit or otherwise, or disclose to any other
Person any of the information acquired from HPLP, API, Conseco or any of their
representatives pursuant to this Agreement or in connection with the
transactions contemplated hereby, except to the extent that such information (i)
is or becomes generally available to the trade or the public other than as a
result of a disclosure by Pegasus or its representatives, (ii) was available to
Pegasus prior to disclosure to Pegasus by HPLP, API, Conseco or any of their
representatives, (iii) becomes available to Pegasus from a source other than
HPLP, API, Conseco or any of their representatives, which source was not itself
bound by a confidentiality agreement with HPLP, API, Conseco or any of their
representatives, or (iv) is required to be disclosed by law or order of a court
or governmental body, and (b) if the Closing hereunder shall not occur, shall
return to HPLP all documents and copies thereof delivered to Pegasus by HPLP,
API or either of their representatives hereunder or in connection herewith and
return to Conseco all documents and copies thereof delivered to Pegasus by
Conseco or its representatives hereunder or in connection therewith.
ARTICLE IX.
COVENANTS OF CONSECO
SECTION 9.01. ACTIONS BEFORE THE CLOSING. From the date hereof
until and including the Closing Date:
(a) Conseco shall not do any act that would cause any of its
representations or warrants in this Agreement to be or become untrue in
any material respect.
(b) Upon the terms and subject to the conditions of this
Agreement, Conseco shall use its best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things
necessary, proper, or advisable, consistent with applicable law, to
consummate and make effective the transactions contemplated hereby,
including action necessary to obtain all consents, waivers,
authorizations, and approvals of all governmental and regulatory
authorities, and of all other Persons required to be obtained or made by
Conseco in connection with its execution, delivery, and performance of
this Agreement, and Conseco shall provide to the Indiana Horse Racing
Commission or, if the Conseco Option has been exercised, to the Board
or, if appropriate, to API or CDMC, or their representatives, all
information required by the Indiana Horse Racing Commission or the Board
for the approval of the sale of API's Partnership Interest to Conseco.
(c) Conseco shall promptly deliver to API and Pegasus any
information concerning events subsequent to the date of this Agreement
which is necessary to supplement the representations and warranties of
Conseco contained herein in order that the information contained in this
Agreement is true and correct in all material respects.
January 31, 1996
16
SECTION 9.02. ACTIONS AT THE CLOSING. At the Closing,
(a) Conseco shall deliver all of the documents listed in
SECTION 11.03 of this Agreement;
(b) Conseco shall execute and deliver to CDMC the Conseco
Pledge Agreement.
SECTION 9.03. CONSENTS. Conseco consents to the execution of
the Amended and Restated Management Agreement and the Amended
Trademark License Agreement.
SECTION 9.04. CONFIDENTIALITY. Conseco (a) shall not directly or
indirectly use, for its own benefit or otherwise, or disclose to any other
Person any of the information acquired from HPLP, API or either of their
representatives pursuant to this Agreement or in connection with the
transactions contemplated hereby, except to the extent that such information
(i) is or becomes generally available to the trade or the public other than as a
result of a disclosure by Conseco or its representatives, (ii) was available to
Conseco prior to disclosure to Conseco by HPLP, API or either of their
representatives, (iii) becomes available to Conseco from a source other than
HPLP, API or either of their representatives, which source was not itself bound
by a confidentiality agreement with HPLP, API or either of their
representatives, or (iv) is required to be disclosed by law or order of a court
or governmental body, and (b) if the Closing hereunder shall not occur, shall
return to HPLP all documents and copies thereof delivered to Conseco by HPLP,
API or either or their representatives hereunder or in connection herewith.
ARTICLE X.
CONDITIONS TO OBLIGATIONS
SECTION 10.01. CONSECO. Conseco's obligation to consummate the
transactions at the Closing as contemplated by ARTICLE XI of this
Agreement is subject to the satisfaction or waiver by Conseco of each
of the following conditions:
(a) The representations and warranties of API and Pegasus
set forth above shall be true and correct on the Closing Date;
(b) API, HPLP and Pegasus shall have performed and complied
with all covenants, conditions and obligations required by this
Agreement;
(c) Conseco shall have received the documents listed in
SECTIONS 11.02 and 11.04 of this Agreement;
(d) CDMC shall have released the Initial Partnership
Interest from the API Pledge Agreement; and
January 31, 1996
17
(e) the Board of Directors of each of API, CDMC and CDI shall
have approved this Agreement and the transactions contemplated hereby on
or before December 21, 1995 and API shall have obtained all other
consents and approvals required to be obtained pursuant to SECTION 7.01
of this Agreement.
SECTION 10.02. API. API's obligation to consummate the
transactions at the Closing as contemplated by ARTICLE XI of this
Agreement is subject to the satisfaction or waiver by API of each of
the following conditions:
(a) The representations and warranties of Conseco and
Pegasus set forth above shall be true and correct on the Closing
Date;
(b) Conseco and Pegasus shall have performed and complied
with all covenants, conditions and obligations required by this
Agreement;
(c) API shall have received the documents listed in
SECTIONS 11.03 and 11.04 of this Agreement; and
(e) The Board of Directors of each of API, CDMC and CDI shall
have approved this Agreement and the transactions contemplated hereby
and API shall have obtained all other consents and approvals required to
be obtained pursuant to SECTION 7.01 of this Agreement.
ARTICLE XI.
CLOSING
SECTION 11.01. CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Ice Miller
Donadio & Ryan, One American Square, Indianapolis, Indiana 46282-0002, or at
such other place as may be mutually agreed upon in writing by API and Conseco,
within five (5) days after fulfillment of (a) all the conditions set forth in
SECTION 10.01 of this Agreement that have not been waived in writing by Conseco,
and (b) all the conditions set forth in SECTION 10.02 of this Agreement that
have not been waived in writing by API, or at such other time as may be mutually
agreed upon in writing by API and Conseco (the "Closing Date"). All proceedings
to be taken and all documents to be executed and delivered at the Closing shall
be deemed to have been taken and executed simultaneously, and no proceedings
shall be deemed taken nor any documents executed or delivered until all have
been taken, executed or delivered.
SECTION 11.02. DOCUMENTS TO BE DELIVERED BY API. At the Closing, API
shall deliver, or shall cause to be delivered, to Conseco the following:
(a) A duly executed Bill of Sale and Assignment
substantially in the form of EXHIBIT A;
January 31, 1996
18
(b) Certificates of the Secretary or an Assistant Secretary of
each of API, CDMC and CDI, dated the Closing Date, setting forth the
resolutions of the Boards of Directors of each of API, CDMC and CDI,
respectively, which authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby,
and certifying that such resolutions have not been amended or rescinded
and are in full force and effect;
(c) Copies of all consents and approvals required to be
obtained pursuant to SECTION 7.01(B) of this Agreement, including the
consent of the Indiana Horse Racing Commission and, if the Conseco
Option has been exercised, of the Board.
(d) A duly executed Amended and Restated HPLP Limited
Partnership Agreement substantially in the form of EXHIBIT B;
(e) A duly executed Financing Document substantially in the
form of EXHIBIT C;
(f) The Amended and Restated Management Agreement duly
executed by CDMC substantially in the form of EXHIBIT D;
(g) The Financial Advisory Agreement duly executed by CDMC
substantially in the form of Exhibit E.
(h) A duly executed Amended Trademark License Agreement
substantially in the form of Exhibit F.
(i) Such other documents, instruments or agreements as may be
reasonably requested by Conseco to effectuate the transactions
contemplated by this Agreement.
SECTION 11.03. DOCUMENTS TO BE DELIVERED BY CONSECO. At the Closing,
Conseco shall deliver, or shall cause to be delivered, to API the following:
(a) A certified or bank cashier's check made payable to API in
the amount of the Purchase Price or evidence reasonably satisfactory to
API of a wire transfer of funds to the account designated by API in an
amount equal to the Purchase Price;
(b) A certificate of the Secretary or an Assistant Secretary
of Conseco, Inc. and Conseco, dated the Closing Date, setting forth a
copy of the resolutions of the Investment Committee of the Board of
Directors of Conseco, Inc. and of Conseco, respectively, which authorize
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and certifying that such resolutions
have not been amended or rescinded and are in full force and effect;
(c) Copies of all consents and approvals required to be
obtained pursuant to SECTION 9.01(B) of this Agreement;
January 31, 1996
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(d) A duly executed Amended and Restated HPLP Limited
Partnership Agreement substantially in the form of EXHIBIT B;
(e) A duly executed Financing Document substantially in the
form of EXHIBIT C;
(f) A duly executed Financial Advisory Agreement
substantially in the form of EXHIBIT E;
(g) A duly executed Conseco Pledge Agreement substantially
in the form of EXHIBIT G;
(h) Such other documents, instruments or agreements as may be
reasonably requested by API to effectuate the transactions contemplated
by this Agreement.
SECTION 11.04. DOCUMENTS TO BE DELIVERED BY PEGASUS. At the Closing,
Pegasus shall deliver or cause to be delivered, to both Conseco and API the
following:
(a) A certificate of the Secretary or an Assistant Secretary
of Pegasus, dated the Closing Date, setting forth a copy of the
resolutions of the Board of Directors of Pegasus which authorize the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and certifying that such resolutions
have not been amended or rescinded and are in full force and effect;
(b) A duly executed resignation of Roderick J. Ratcliff
from the Board of Directors of API;
(c) A duly executed Amended and Restated Limited HPLP
Partnership Agreement substantially in the form of EXHIBIT B;
(d) Such other documents, instruments or agreements as may be
reasonably requested by either API or Conseco to effectuate the
transactions contemplated by this Agreement.
ARTICLE XII.
TERMINATION
SECTION 12.01. CONDITIONS OF TERMINATION.
(a) Notwithstanding anything to the contrary contained herein,
this Agreement may be terminated, and the transactions contemplated
hereby may be abandoned, at any time before the Closing, by mutual
consent of API and Conseco.
(b) API, Conseco and Pegasus have agreed, pursuant to SECTIONS
7.01(B), 8.01(B) AND 9.01(B) of this Agreement, to use their best
efforts to take, or to cause to be taken, all actions necessary to
effectuate the Closing. This Agreement shall terminate if the Closing in
Section 11.01 has not occurred on or before April 1, 1996; provided,
that, if the parties are
January 31, 1996
20
diligently proceeding with fulfilling all of the conditions for Closing
and the inability to deliver the consents and approvals required by
SECTION 11.02(C) and SECTION 11.03(C) are beyond the control of either
API or Conseco, then this Agreement shall be extended until May 31,
1996; and, provided further that, after the execution of this Agreement,
API, Conseco and Pegasus each agree to provide to either API or Conseco,
as the case may be, within ten (10) days after a request, all
information necessary to file for, and complete, the applications for
the consents and approvals required for the Closing, and a failure to do
so shall be good cause for not extending this Agreement after April 1,
1996.
SECTION 12.02. EFFECT OF TERMINATION. In the event of termination
pursuant to SECTION 12.01 of this Agreement, this Agreement shall terminate and
have no further effect, with no liability on the part of any party hereto, other
than liability arising out of a breach by that party of any covenant or
agreement contained herein.
ARTICLE XIII.
INDEMNIFICATION
SECTION 13.01. INDEMNIFICATION BY API. After the Closing and subject to
the provisions of SECTION 13.06 of this Agreement, API and CDMC shall indemnify
and hold harmless Conseco and its successors and their respective shareholders,
officers, directors and agents from and against any and all damages, losses,
obligations, liabilities, claims, encumbrances, penalties, costs and expenses,
including reasonable attorneys' fees, (each a "Claim") arising from or relating
to any misrepresentation, breach of warranty or nonfulfillment of any of the
covenants and agreements of API in this Agreement.
SECTION 13.02. INDEMNIFICATION BY CONSECO. After the Closing, and
subject to the provisions of SECTION 13.06 of this Agreement, Conseco shall
indemnify and hold harmless API, CDMC and HPLP and its successors and their
respective shareholders, officers, directors and agents from and against any and
all Claims arising from or relating to any misrepresentation, breach of warranty
or nonfulfillment of any of the covenants and agreements of Conseco in this
Agreement.
SECTION 13.03. INDEMNIFICATION BY PEGASUS. After the Closing, Pegasus
shall indemnify and hold harmless API, CDMC, CDI and Conseco and their
successors and their respective shareholders, officers, directors and agents
from and against any and all Claims arising from or relating to any
misrepresentation, breach of warranty or nonfulfillment of any of the covenants
and agreements of Pegasus in this Agreement.
SECTION 13.04. INDEMNIFICATION BY HPLP. After the Closing, HPLP shall
indemnify and hold harmless API, Conseco and Pegasus and their successors and
their respective shareholders, officers, directors and agents from and against
any and all Claims arising from or relating to any nonfulfillment of any of the
covenants and agreements of HPLP in this Agreement.
January 31, 1996
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SECTION 13.05. PROCEDURE.
(a) Promptly (and in any event within 15 days after the service
of any citation or summons) after acquiring knowledge of any Claim for
which one of the parties hereto (the "Indemnified Party") may seek
indemnification against another party (the "Indemnifying Party")
pursuant to this ARTICLE XIII, the Indemnified Party shall give written
notice thereof to the Indemnifying Party. Failure to provide notice
shall not relieve the Indemnifying Party of its obligations under this
ARTICLE XIII, except to the extent that the Indemnifying Party
demonstrates actual damage caused by that failure. The Indemnifying
Party shall have the right to assume the defense of any Claim with
counsel reasonably acceptable to the Indemnified Party upon delivery of
notice to that effect to the Indemnified Party. If the Indemnifying
Party, after written notice from the Indemnified Party, fails to take
timely action to defend the action resulting from the Claim, the
Indemnified Party shall have the right to defend the action resulting
from the Claim by counsel of its own choosing, but at the cost and
expense of the Indemnifying Party. The Indemnified Party shall have the
right to settle or compromise any Claim against it, and, as the case may
be, recover from the Indemnifying Party any amount paid in settlement or
compromise thereof, if it has given written notice thereof to the
Indemnifying Party and the Indemnifying Party has failed to take timely
action to defend the same. The Indemnifying Party shall have the right
to settle or compromise any claim against the Indemnified Party without
the consent of the Indemnified Party provided that the terms of the
settlement or compromise provide for the unconditional release of the
Indemnified Party and require the payment of monetary damages only.
(b) Upon its receipt of any amount paid by the Indemnifying
Party pursuant to this Article XIII, the Indemnified Party shall
deliver to the Indemnifying Party such documents as it may reasonably
request assigning to the Indemnifying Party any and all rights, to the
extent indemnified, that the Indemnified Party may have against third
parties with respect to the Claim for which indemnification is being
received.
SECTION 13.06. LIMITATIONS ON INDEMNIFICATION. Notwithstanding any other
provision of this Agreement, no party hereto shall be required to pay an
indemnification payment to the Indemnified Party with respect to any Claim or
Claims if the payment of such indemnification amount would cause the aggregate
amount paid by such Indemnifying Party pursuant to this Article XIII to exceed
the purchase price for the Initial Partnership Interest with respect to claims
asserted within one year after the Closing and if the Conseco Option is
exercised, the purchase price of the Additional Partnership Interest with
respect to Claims asserted within one year after the Option Closing.
January 31, 1996
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ARTICLE XIV.
MISCELLANEOUS
SECTION 14.01. PUBLIC ANNOUNCEMENTS. No party shall make any press
release or public announcement concerning this transaction prior to or after the
Closing Date, except as expressly permitted by the other parties, or except as
required by law, regulation or order of a governmental authority.
SECTION 14.02. EXPENSES. Except as otherwise provided herein, each of
the parties hereto shall pay its own expenses in connection with this Agreement
and the transactions contemplated hereby, including, without limitation, any
legal and accounting fees, whether or not the transactions contemplated hereby
are consummated.
SECTION 14.03. SURVIVAL OF REPRESENTATIONS. All representations,
warranties and covenants contained in this Agreement shall be continuous and
shall survive for a period of one (1) year after the Closing Date and the Option
Closing Date, as the case may be.
SECTION 14.04. NOTICES. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given (a) on the date of service if served personally on the
party to whom notice is to be given, (b) on the day of transmission if sent via
facsimile transmission to the facsimile number given below, provided that
telephonic confirmation of receipt is obtained promptly after completion of
transmission, (c) on the day after delivery to a nationally recognized overnight
courier service or the Express Mail service maintained by the United States
Postal Service, or (d) on the fifth (5th) day after mailing, if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and addressed as follows:
If to Conseco, to: Conseco HPLP, L.L.C.
11825 North Pennsylvania Street
P.O. Box 1911
Carmel, Indiana 46032
Attention: Lawrence W. Inlow
Executive Vice President
Tel. No. (317) 817-6163
Fax No. (317) 817-6327
With a copy to: Conseco, Inc.
745 Fifth Avenue, Suite 2700
New York, New York 10151
Attention: Ngaire E. Cuneo
Executive Vice President
Tel. No. (212) 644-1299
Fax No. (212) 980-6122
which copy shall not constitute notice for the purposes of this
Agreement.
January 31, 1996
23
If to API, to: Anderson Park, Inc.
700 Central Avenue
Louisville, KY 40208
Attention: Jeffrey M. Smith
Tel. No. (502) 636-4419
Fax No. (502) 633-4439
With a copy to: Churchill Downs, Inc.
700 Central Avenue
Louisville, Kentucky 40208
Attention: Alexander M. Waldrop
Tel. No.: (502) 636-4419
Fax No.: (502) 636-4439
which copy shall not constitute notice for the purposes of this
Agreement.
If to Pegasus, to: Pegasus Group, Inc.
134 West State Street
West Lafayette, Indiana 47906
Attention: Roderick J. Ratcliff
Tel. No. (317) 743-5988
Fax No. (317) 743-6073
With a copy to: Sommer & Barnard
4000 Bank One Tower
111 Monument Circle
Indianapolis, Indiana 46244-0363
Attention: Robert J. Hicks
Tel. No. (317) 630-4000
Fax No. (317) 236-9802
which copy shall not constitute notice for the purposes of this
Agreement.
If to HPLP, to: Hoosier Park, L.P.
700 Central Avenue
Louisville, Kentucky 40208
Attention: Jeffrey M. Smith
Tel. No. (502) 636-4421
Fax No. (502) 636-4577
With a copy to: Hoosier Park, L.P.
702 Central Avenue
Louisville, Kentucky 40208
Attention: Alexander M. Waldrop
Tel. No. (502) 636-4419
Fax No. (502) 636-4439
which copy shall not constitute notice for the purposes of this
Agreement.
January 31, 1996
24
Any party may change its address for the purpose of this SECTION 14.04
by giving the other parties written notice of its new address in the manner set
forth above.
SECTION 14.05. SEVERABILITY. If any provision of this Agreement is
declared by any court or other governmental body to be null, void, or
unenforceable, this Agreement shall be construed so that the provision at issue
shall survive to the extent it is not so declared and that all of the other
provisions of this Agreement shall remain in full force and effect.
SECTION 14.06. ENTIRE AGREEMENT. This Agreement contains the entire
understanding among the parties hereto with respect to the transactions
contemplated hereby and supersedes and replaces all prior and contemporaneous
agreements and understandings, oral or written, with regard to those
transactions. All exhibits and schedules hereto are expressly made a part of
this Agreement as fully as though completely set forth herein.
SECTION 14.07. AMENDMENTS; WAIVERS. This Agreement may be amended or
modified, and any of the terms, covenants, representations, warranties, or
conditions hereof may be waived, only by a written instrument executed by the
parties hereto, or in the case of a waiver, by the party waiving compliance. Any
waiver by any party of any condition, or of the breach of any provision, term,
covenant, representation, or warranty contained in this Agreement, in any one or
more instances, shall not be deemed to be or construed as a further or
continuing waiver of any condition or of the breach of any other provision,
term, covenant, representation, or warranty of this Agreement.
SECTION 14.08. PARTIES IN INTEREST. Nothing in this Agreement is
intended to confer any rights or remedies, under or by reason of this Agreement
on any Person other than Conseco, API, Pegasus, HPLP, CDMC and CDI and their
respective successors and permitted assigns.
SECTION 14.09. SUCCESSORS AND ASSIGNS. No party hereto shall assign or
delegate this Agreement or any rights or obligations hereunder without the prior
written consent of the other parties hereto, and any attempted assignment or
delegation without prior written consent shall be void and of no force or
effect, except that Conseco has the right to assign all or a portion of the
Partnership Interest to another direct or indirect wholly-owned subsidiary of
Conseco, Inc. and API has the right to assign all or a portion of its interests
in the Partnership to another direct or indirect wholly-owned subsidiary of CDI.
SECTION 14.10. GOVERNING LAW; JURISDICTION. This Agreement shall be
construed and enforced in accordance with, and governed by, the laws of the
State of Indiana (without giving effect to the principles of conflicts of laws
thereof). The parties hereto irrevocably agree and consent to the exclusive
jurisdiction of the courts of the State of Indiana and the federal courts of the
United States, sitting in Indianapolis, Indiana, for the adjudication of any
matters arising under or in connection with this Agreement.
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SECTION 14.11. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original,
but all of which shall together constitute the same instrument.
SECTION 14.12. SCHEDULE UPDATE. From the date hereof to the Closing
Date, API shall have the right to revise and update any of the schedules hereto
and such updates shall be deemed accepted by Conseco, unless within fifteen (15)
days of notice of any such revision and update (including a copy of the revised
schedule marked to show changes) Conseco objects in writing to such revised and
updated schedule.
IN WITNESS WHEREOF, the parties hereto have executed, or caused to be
executed by their duly authorized representatives, this Agreement as of the date
first above written.
ANDERSON PARK, INC.
By: ---------------------------
Jeffrey M. Smith, President
CONSECO HPLP, L.L.C.
By: CONSECO, INC., its
Managing Member
By: /s/Lawrence W. Inlow
----------------------------
Lawrence W. Inlow, Executive
Vice President
PEGASUS GROUP, INC.
By: /s/Roderick J. Ratcliff
----------------------------
Roderick J. Ratcliff, President
HOOSIER PARK, L.P.,
By: ANDERSON PARK, INC.,
its General Partner
By: /s/Jeffrey M. Smith
----------------------------
Jeffrey M. Smith, President
26