EXHIBIT 10.49
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AGREEMENT FOR PURCHASE AND SALE OF ASSETS (the "Agreement") is
executed and delivered as of February 24, 2000, between JERRY SIMMS ("Buyer");
and PINNACLE ENTERTAINMENT, INC. (formerly known as Hollywood Park, Inc.), a
Delaware corporation ("Seller").
RECITALS
A. Seller, through its wholly owned subsidiary, Turf Paradise, Inc., an
Arizona corporation ("Company"), operates the Turf Paradise Race Track in
Phoenix, Arizona and certain off-track wagering facilities related thereto (the
"Business").
B. Buyer desires to purchase and acquire substantially all of Seller's
(or Company's) assets, properties and contractual rights used in connection with
the Business and to assume certain liabilities in connection therewith, and
Seller desires to sell such assets, properties and contractual rights to Buyer,
on the terms and conditions set forth herein.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. Capitalized terms shall have meanings
assigned to them in EXHIBIT 1.1.
ARTICLE 2
DESCRIPTION OF ASSETS
2.1 DESCRIPTION OF ASSETS. Upon the terms and subject to the conditions
set forth in this Agreement, and subject to the exclusions set forth in Section
2.2, Seller shall, on the Closing Date, sell to Buyer the following assets,
properties and contractual rights (the "Assets"), free and clear of all
Encumbrances other than Permitted Encumbrances:
2.1.1 the real property described on SCHEDULE 2.1.1 and all of
Seller's and Company's interest, if any, in all easements, rights, interests and
appurtenances thereto (the "Real Property").
2.1.2 all buildings, structures, fixtures and other improvements
located upon the Real Property, including the horse racing track and related
facilities and including the heating, ventilation, air conditioning, elevator
and escalator equipment, if any, within the Real Property (the "Improvements")
2.1.3 all equipment and machinery located on the Real Property
and/or used by Company for and in the Business which is owned and leased by
Seller or Company,
including motor vehicles, all telephone and communication equipment, all audio
equipment, all video equipment and all computer hardware (the "Equipment"),
including that listed on SCHEDULE 2.1.3, with such schedule listing all lease
agreements with respect to any leased Equipment.
2.1.4 all furniture, furnishings, decorative items, tools, and
other tangible personal property (other than Equipment and Inventory and
Supplies) which is owned or leased by Seller or Company and located on the Real
Property or used by Company in the Business (the "Other Tangible Personal
Property"), including that described on SCHEDULE 2.1.4.
2.1.5 all inventories and supplies of any type required to be used
by Company in its operation of the Business existing as of the Closing Date (the
"Inventory and Supplies").
2.1.6 subject to obtaining any required consents to the transfer
to Buyer, all contractual rights of Seller or Company required for the operation
of the Business, including service agreements, supply agreements, employment
agreements, all agreements relating to all off-track wagering facilities,
wherever located worldwide, and all rights with respect thereto, any collective
bargaining agreements, any leases with Seller as lessee, all leases (including
with respect to the 147-space recreational vehicle park located on the Real
Property) in which Seller is lessor, warranty agreements and any other
agreements of Seller relating to the Business or the Real Property,
Improvements, Equipment, Inventory and Supplies, Other Tangible Personal
Property, Permits, Systems, the Intellectual Property Rights and other Assets
(the "Contracts and Agreements"). A complete listing of the Contracts and
Agreements is attached hereto as SCHEDULE 2.1.6, which SCHEDULE 2.1.6 denotes
each of the Contracts and Agreements which is material to the operation of the
Business ("Material Contracts and Agreements").
2.1.7 all of Seller's and Company's interest in all transferable
permits, licenses, franchises, consents and approvals of every kind (including
liquor licenses and permits for the operation of the off-track wagering
facilities) required to be used by Seller or Company to operate the Business
including, without limitation, all liquor licenses and permits, restaurant
licenses, gaming licenses and permits and licenses and permits relating to the
off-track wagering facilities (the "Permits"), attached as SCHEDULE 2.1.7 is a
list of all such permits and licenses whether or not transferable;
2.1.8 all transferable manual and automated computer, billing and
accounting systems and components thereof, including all assignable software and
programs required to be used by Company in the Business and owned by Seller or
Company (the "Systems"); attached as SCHEDULE 2.1.8 is a list of such systems
whether or not transferable.
2.1.9 all of the goodwill of the Business;
2.1.10 all the right, title and interest of Seller or Company in,
to and under all trademarks, trade names, service marks, copyrights and all
applications, registrations, renewals and other rights relating to the foregoing
(whether or not any registration or filing
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has been made with respect thereto) required to be used by Company for the
operation of the Business, including the name "Turf Paradise" (the "Intellectual
Property Rights");
2.1.11 all of Seller's or Company's interest, if any, in and
control of the Horsemen's Account.
2.1.12 all of the other transferable assets, properties and
contractual rights required for the operation of the Business by Company and
owned or leased by or licensed to Seller or Company.
2.2 EXCLUDED ASSETS. There shall be excluded from the Assets the
following which are not being sold to Buyer pursuant to this Agreement (the
"Excluded Assets"):
2.2.1 except as provided in Section 3.3.2, cash and cash
equivalents, including but not limited to bank accounts, temporary cash
investments, payroll accounts, and petty cash banks;
2.2.2 all Accounts Receivable of Seller or Company;
2.2.3 any accounts payable of Seller or Company and any
contractual obligations of Seller or Company other than the Assumed Liabilities
or those otherwise specifically assumed by Buyer pursuant to this Agreement;
2.2.4 rights to or claims for refunds of taxes and other
governmental charges to the extent attributable to any time or periods ending on
or prior to the Closing Date and the benefit of net operating loss
carry-forwards or other credits of Seller or Company, whether or not
attributable to the Business;
2.2.5 claims or rights against third parties, except those arising
with respect to events or breaches occurring after the Closing Date under the
Contracts and Agreements; provided however, that any rights of indemnification,
contribution or reimbursement that may exist under the Contracts and Agreements
in respect of liabilities or obligations retained by Seller hereunder shall be
Excluded Assets;
2.2.6 all insurance policies and rights and receivables thereunder
including but not limited to rights in any cancellation value as of the Closing
Date;
2.2.7 proprietary business information, records and policies that
relate generally to Seller or any Affiliate of Seller and are not required for
the operation of the Business, including but not limited to management
procedures and guidelines, proprietary financial reporting formats, accounting
procedures, personnel records relating to or containing performance reviews or
similar evaluations, instructions, organization manuals and strategic plans;
2.2.8 all real property and other rights pertinent thereto and
real property improvements owned or leased by Seller and its subsidiaries other
than the Real Property and Improvements;
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2.2.9 all other assets of Seller and its subsidiaries (other than
Company) not specifically included in the Assets including, but not limited to,
(a) assets which are not located on the Real Property and (b) all of Seller's
right, title and interest in and to that certain Investment Agreement dated July
30, 1997, between ODS Technologies and Seller, as amended;
2.2.10 Seller's corporate charter, taxpayer and other
identification numbers, seals, minute books and stock transfer books and
Seller's ownership of stock in its various subsidiaries;
2.2.11 the rights of Seller and its subsidiaries under any
Contract or Agreement regarding any (a) non transferable license for computer
software (so long as such non-transferable licenses which are used in the
operation of the Business as conducted on the date of this Agreement are listed
on SCHEDULE 2.2.11) and other Intellectual Property Rights (so long as such
non-transferable Intellectual Property Rights which are used in the operation of
the Business as conducted on the date of this Agreement are listed on SCHEDULE
2.2.11) and (b) any Contract or Agreement that requires the consent of a party
thereto to the assignment thereof and for which such consent has not been
obtained prior to the Closing;
2.2.12 All non transferable Permits and all governmental business
licenses, permits and equivalent documents used by Seller in the operation of
its businesses other than the Business;
2.2.13 other than the Intellectual Property Rights, all trademark
and service mark registrations and applications and trade name license
agreements to which Seller or any of its subsidiaries is a party, except as
required in the operation of the Business, trade secrets (including customer
lists and customer databases) except as required in the operation of the
Business, copyrights, patents, licenses, know hows, and other proprietary
intellectual property rights as are necessary in connection with the businesses
of Seller and its subsidiaries, except as required in the operation of the
Business, and computer software owned or licensed by Seller and its
subsidiaries, except as required in the operation of the Business during the
last five (5) years and as may be transferable; and
2.2.14 All prepaid items and deposits paid by Seller and its
subsidiaries, other than those transferred for the benefit of Buyer pursuant to
the transfer of the Contracts and Agreements, including without limitation,
prepaid insurance.
ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE AND ASSUMPTION OF LIABILITIES. Buyer shall at the
Closing assume and become responsible for the Assumed Liabilities defined in
Section 13.2 and, subject to adjustment pursuant to Section 3.3, pay to Seller
$53,000,000 (the "Purchase Price") for the Assets. The Purchase Price shall be
payable as follows:
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3.1.1 $250,000 cash or certified funds as "Earnest Money" to be
deposited with First American Title Insurance Company, Phoenix, Arizona as
"Escrow Agent", and delivered to Seller at the Closing.
3.1.2 $52,750,000 cash or certified funds at the Closing.
3.2 EARNEST MONEY. The Earnest Money shall be deposited by Escrow Agent
in an interest bearing account with interest to be accrued for the benefit of
the party entitled to the Earnest Money hereunder and the term "Earnest Money"
shall include such interest. Buyer shall promptly provide Escrow Agent with a
completed W-9 form.
3.3 PURCHASE PRICE ADJUSTMENT.
3.3.1 DAILY CASH. The Purchase Price shall be increased, at the
Closing, on a dollar-for-dollar basis, by the amount (approximately $680,000) of
cash to be retained in the Business and acquired by Buyer hereunder, which
represents the beginning daily cash on hand in the off-track wagering facilities
and in the concessions.
3.3.2 CONDITION OF ASSETS. The Purchase Price may be reduced, at
Seller's option, as provided in Section 4.2.3.
3.4 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Assets as follows:
Real Property $ 28,000,000.00
Equipment $ 5,000,000.00
Improvements $ 8,500,000.00
Goodwill and Intellectual Property $ 8,327,000.00
Covenant not to Compete $ 3,000,000.00
Inventory and Supplies $ 108,000.00
Liquor License $ 65,000.00
Each of the parties agrees to report the Transactions for Tax purposes
in accordance with such allocation of the Purchase Price. The parties agree to
adjust the amounts set forth above to account for any change in the book value
of the Inventory and Supplies between the date of this Agreement and the
Closing. Buyer shall also furnish Seller with a form of reseller certificate
that complies with the requirements of applicable state taxation laws.
3.5 PRE-CLOSING TICKET CLAIMS. Buyer, subsequent to Closing, shall pay
the holders of those winning parimutuel tickets for races held prior to the
Closing which have not been redeemed as of Closing, but Seller shall immediately
reimburse Buyer for the amounts paid by Buyer with respect thereto.
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ARTICLE 4
SELLER DELIVERIES, REVIEW PERIOD, LICENSING CONTINGENCY
4.1 SELLER DELIVERIES. Within five days of the execution of this
Agreement (or with respect to Section 4.1.1 immediately upon the same becoming
available) Seller shall deliver (or make available as provided in Sections 4.1.4
and 4.1.5 subject to the conditions in Section 4.5) the following to Buyer:
4.1.1 At Seller's expense, a title commitment prepared by the
Escrow Agent or its affiliated title insurer (the "Title Company") with respect
to the Real Property and legible (if available) copies of all exceptions to
title appearing in such report (the "Title Report").
4.1.2 The latest survey, if any, in the possession of Seller or
Company relating to the Real Property and Improvements or such portions thereof
as may be contained in any such survey, with Buyer, at its cost, to obtain any
update thereof or a new survey of the Real Property and Improvements and provide
a copy thereof to Seller.
4.1.3 Copies of all the Contracts and Agreements listed on
SCHEDULE 2.1.6.
4.1.4 Audited financial statements for the Business for the fiscal
years 1997 and 1998 and, as soon as available, for fiscal year 1999, plus
unaudited financial statements for fiscal year 1999 and year-to-date financial
statements for the Business through the month of January, 2000 (the "Financial
Statements"), with the back-up reports, documents and materials relating to such
Financial Statements to be assembled by Seller for review by Buyer at the
Business location.
4.1.5 Copies of all plans, specifications and engineering drawings
in Seller's possession relating to the Improvements and Equipment, all material
written warranties in Seller's, or Company's possession relating to the
Improvements, Equipment and Other Tangible Personal Property and all maintenance
records in Seller's or Company's possession with respect thereto (with the
foregoing to be assembled and made available at the Business, in lieu of being
delivered to Buyer).
4.1.6 Copies of all environmental reports or assessments in
Seller's, or Company's possession or under Seller's or Company's control
relating to the Real Property, Improvements or any of the other Assets.
4.1.7 A list of all Employees of Company together with a statement
of the wages, salaries and benefits paid or owing to each, including all
obligations of any type owed to any Employee.
4.1.8 Copies of all the Permits listed on SCHEDULE 2.1.7.
4.1.9 All trademark, trade name, and copyright registration
numbers and copies of pending applications, filings and other documentation with
respect to the Intellectual Property Rights.
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4.1.10 Copies of documents describing all health plans, medical
plans, dental plans, cafeteria health plans, flexible spending plans, vacation
policies, sick pay policies, bonus policies and other similar plans and policies
maintained by Seller or Company with respect to Employees. If any Employees of
the Business are covered by a Plan maintained or sponsored by Seller or Company,
or to which Seller or Company is obligated to contribute, a copy of the Plan, if
a formal document exists.
4.1.11 A Rent Roll with respect to the recreational vehicle park
on the Real Property listing each tenant by name and specifying the rent and
other charges paid by each, the commencement and termination date of each lease,
the amount of any security deposit and the amount of any delinquent payments.
4.1.12 All documents in Seller's or Company's possession with
respect to the zoning at the Property, including any applications of Seller or
Company for obtaining any rezoning or zoning variances with respect to any of
the Real Property.
4.1.13 Copies of all insurance policies carried by Company for the
Business and the Assets as listed on SCHEDULE 4.1.13 and an accurate list of all
insurance loss runs and workers' compensation claims in Company's possession for
up to the past three policy years, and a complete and correct copy of Company's
most recent filing with the state agency responsible for administering, handling
or overseeing unemployment claims.
If any of the items specified in this Section 4.1 is not timely
delivered (or made available, as the case may be) and such item is material to
the operation of the Business, and there is less than ten (10) business days
remaining in the Review Period, the Review Period may be extended so that there
are ten (10) business days remaining in the extended Review Period, by Buyer
providing Seller written notice of such extension within two business days after
Buyer's receipt of such material item.
4.2 REVIEW PERIOD. Subject to the provision of Section 4.5, Buyer shall
have a time period expiring ninety (90) days from the date of this Agreement to
conduct its review and inspection of the Assets and the documents and
instruments delivered pursuant to this Agreement or provided for Buyer's
inspection pursuant to this Agreement and to determine, in its sole discretion,
the feasibility and desirability of acquiring the Assets pursuant to the terms
hereof (the "Review Period"). During the Review Period, Buyer shall be permitted
to examine and seek information from Employees of the Business provided that
Buyer shall first notify Randy Fozzard ("Fozzard"), Seller's representative, and
Seller may designate Fozzard or another representative to be present during such
examination or inquiry by Buyer, provided that Seller shall not unreasonably
delay Buyer's examination or inquiry. In addition, during the Review Period,
Buyer shall take steps necessary for satisfaction of the Licensing Contingency
(defined in Section 4.3). Buyer may, at any time within the Review Period, elect
to terminate or continue this Agreement by written notice to Seller and Escrow
Agent prior to the end of the Review Period and if Buyer fails to provide such
notice, Buyer shall be deemed to terminate this Agreement. In the event Buyer
provides a conditional notice to continue this Agreement, such notice shall be
deemed a notice of termination unless Seller provides written notice to Buyer
within five (5) business days, of Seller's acceptance, in its sole discretion,
of such conditions. In the event of termination pursuant to
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this Section 4.2,all but $100 of the Earnest Money shall be returned to Buyer
with such $100 to be retained by Seller as consideration for this Agreement.
4.2.1 CONDITION OF ASSETS. In the event Buyer discovers that the
Real Property, Improvements, Equipment or Other Tangible Personal Property is
not in "Operating Condition", Buyer shall immediately so advise Seller in
writing and shall promptly provide Seller a copy of any report, study or written
opinion of Buyer's independent expert ("Buyer's Expert") describing the defect
in the Operating Condition and the estimated cost to repair such defect
(collectively, "Defect Notice"). If Seller receives the Defect Notice prior to
the date sixty (60) days after the date of this Agreement, Seller shall evaluate
the Defect Notice and may engage an expert ("Seller's Expert") to give an
opinion on whether or not such Asset is in Operating Condition, and if not in
Operating Condition, Seller's estimate of the cost to repair such defect
("Seller's Response"). Seller shall provide a copy of Seller's Response to Buyer
within 20 days of receipt of the Defect Notice. If thereafter Buyer and Seller
do not agree on whether such Asset is in Operating Condition or if they do agree
that such Asset is not in Operating Condition, but cannot agree on the cost of
repair, Buyer's Expert and Sellers' Expert shall select a third expert ("Neutral
Expert") who shall determine, as the case may be, (a) whether such Asset is in
Operating Condition; and/or (b) if such Asset is not in Operating Condition, the
cost to repair such Asset so it is in Operating Condition.
4.2.2 OPERATING CONDITION. "Operating Condition" shall mean that
the Asset is operable for the purposes for which it is intended to be used in
the normal operation of the Business, as has been the Company's practice during
the one-year period prior to the date of this Agreement, without regard to
whether the Asset in question has outlived its useful life. Buyer represents and
warrants that as of the date of this Agreement, Buyer is aware of certain facts
relating to the condition of the Assets as described in SCHEDULE 4.2.2, and none
of those facts is a defect in the Operating Condition. Seller has disclosed to
Buyer certain facts relating to the condition of the Assets as described in
SCHEDULE 7.6.2, which Seller does not believe constitute defects in the
Operating Condition of the Assets; however, Seller acknowledges that Buyer has
reserved its rights to determine whether or not such Assets are in Operating
Condition during the Review Period, as provided herein.
4.2.3 REMEDY. In the event any Asset is determined, pursuant to
Section 4.2.1, not to be in Operating Condition and the cost to repair such
Asset(s) exceeds $25,000 in the aggregate, (a) such Asset(s) shall either be
repaired by Seller to Operating Condition or, at Seller's option, replaced (with
comparable new or used equipment in Operating Condition) or (b) at Seller's
option, Buyer shall receive a credit against the Purchase Price for the cost of
repair or replacement (in order to cause such Asset(s) to be in Operating
Condition as determined pursuant to Section 4.2.1), in excess of $25,000. If
Seller elects to repair or replace such Assets(s), the Closing shall not be
delayed for such repair or replacement and Seller shall use commercially
reasonable efforts to complete such repair or replacement within a reasonable
period of time following Closing. Notwithstanding the foregoing, or anything
herein to the contrary, Seller shall have no obligation to repair any Asset, or
to give Buyer a credit against the Purchase Price, if the aggregate cost to
repair such Assets would exceed $2,650,000; in such event, Buyer's sole remedy
shall be to terminate this Agreement as provided in Section 4.2. Notwithstanding
the foregoing, if Seller does not receive a Defect Notice prior to the date
sixty (60) days after the date of this
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Agreement and prior to Buyer giving a Closing Notice, Seller shall have no
obligation to remedy the condition of the Assets pursuant to this Section 4.2.3
or otherwise.
4.3 LICENSING CONTINGENCY. Buyer's acquisition of the Assets is
contingent upon the transfer at the Closing to Buyer or the issuance to Buyer at
Closing of all "Material Permits," consisting of the liquor licenses, restaurant
licenses, gaming licenses, gaming permits, licenses and permits relating to the
off-track wagering facilities and other Permits used in the operation of the
Assets or Business without which the Business could not be operated as it has
been operated by Company as of the date of this Agreement (the "Licensing
Contingency"). Buyer shall be entitled, during the Review Period, to determine
to its satisfaction that the Licensing Contingency will be satisfied at the
Closing (i.e., that the Material Permits can be obtained by Buyer as of the
Closing). In the event Buyer is not so satisfied within the Review Period, Buyer
may continue to pursue the Licensing Contingency for a period of 30 days after
expiration of the Review Period, provided that Buyer has not previously
terminated this Agreement and that Buyer provides written notice to Seller and
Escrow Agent prior to the end of the Review Period of Buyer's election to pursue
the Licensing Contingency for an additional thirty days. Buyer shall not
thereafter have any further right to terminate this Agreement under the
provisions of Section 4.2. If during such additional thirty days, the Licensing
Contingency is not satisfied, Buyer may terminate this Agreement only by written
notice to Seller and Escrow Agent prior to the end of such additional thirty
days that in Buyer's good faith judgment, the Licensing Contingency cannot be
satisfied by the Closing. In the event of such termination all but $100 of the
Earnest Money shall be returned to Buyer which $100 shall be retained by Seller
as consideration for this Agreement. Buyer's failure to timely provide such
notice of termination shall be a waiver of Buyer's right to terminate this
Agreement pursuant to the provisions of this Section 4.3.
4.4 TERMINATION. In the event of any termination of this Agreement
pursuant to the provisions of this Article 4, the parties shall have no further
rights or liabilities or obligations hereunder except for any provisions hereof
which by their terms specifically survive termination of this Agreement.
4.5 ACCESS TO REAL PROPERTY. Buyer and its representative shall have
the right to enter the Real Property during the Review Period upon the following
terms and conditions. Buyer may conduct any inspections or investigations during
business hours provided that Buyer shall not interfere with the operations of
the Business. Seller shall be entitled to a copy of any final (or most recent
draft if not finalized) reports, studies or assessments regarding the physical
or environmental condition of the Real Property or Improvements or other Assets,
without any cost or expense to Seller. Buyer shall always obtain Seller's
express prior permission to enter the Real Property and Seller shall at all
times have a right to have its representative present, provided that Seller
shall not unreasonably delay Buyer's access. Without Seller's prior written
consent, which shall not be unreasonably withheld or delayed, Buyer shall not be
entitled or permitted to perform or cause to be performed any invasive actions
or drilling of the Real Property, Improvements, Equipment or Systems. Buyer
shall indemnify, defend and hold Seller and Company harmless from and against
any Losses which directly or indirectly arise out of Buyer's activities at the
Real Property or the Business before Closing, including without limitation any
costs, expenses and reasonable attorneys' fees incurred by Seller in connection
with defending against or clearing Seller's or
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Company's title to the Real Property of such claims, liens, Actions or
obligations. The foregoing indemnity shall survive the expiration or termination
of this Agreement and the Closing. Buyer covenants that it shall have and shall
determine that its agents and consultants who come on to the Real Property have
workers compensation insurance with satisfactory limits of coverage and
commercial general liability insurance with limits of not less than $2 million
for personal injury including bodily injury and death and property damage.
4.6 TITLE REVIEW. Prior the end of the Review Period, Buyer shall, at
its cost, provide the Title Company and Seller with a current ALTA Survey
sufficient to issue the Title Policy and determine in its sole discretion
whether the endorsements that Buyer desires to be issued in connection with the
Title Policy as described in Section 5.4 will be issued to Buyer's satisfaction.
In the event Buyer gives its unconditional notice of continuation of the
Agreement prior to the end of the Review Period as provided in Section 4.2, such
notice shall be a waiver of Buyer's right to require such endorsements, unless
prior to the end of the Review Period, Buyer has provided Seller with a written
acknowledgment from the Title Company confirming that such endorsements will be
issued by the Title Company as part of the Title Policy.
ARTICLE 5
CLOSING
5.1 TIME AND PLACE OF CLOSING. Unless otherwise agreed to by the
parties, the Transactions shall be closed within 30 days following the
completion of the Review Period or the thirty day extension period provided for
in Section 4.3 for satisfying the Licensing Contingency, if timely elected,
whichever is later but no later than five (5) months from the date of this
Agreement (the "Closing"), at the offices of Escrow Agent at 10:00 a.m. Phoenix
Arizona Time. The date on which the Closing occurs is referred to as the
"Closing Date." Buyer may, at Buyer's option and even though the Review Period,
including any extension of the Review Period for satisfaction of the Licensing
Contingency, has not expired, elect to close the Transactions at any time (on a
business day) by giving written notice ("Closing Notice") to Seller and Escrow
Agent at least fourteen (14) days prior to Buyer's designated date for Closing,
and the Closing Notice shall be deemed to be Buyer's unconditional notice,
pursuant to Section 4.2, of Buyer's election to continue this Agreement and
Buyer's waiver of any rights to have Seller remedy any defect in the Operating
Condition of the Assets, unless prior to Buyer giving the Closing Notice, Seller
has received Buyer's Defect Notice relating thereto, pursuant to Section 4.2.1.
5.2 DELIVERIES BY SELLER. At the Closing, Seller shall deliver to
Buyer, all duly executed:
5.2.1 the Deed in the form attached as EXHIBIT 5.2.1(A) conveying
the Real Property and Improvements to Buyer and a General Conveyance, Assignment
and Bill of Sale in the form of EXHIBIT 5.2.1(B) (the "Bill of Sale");
5.2.2 certified copies of resolutions of the Executive Committee
of the Board of Directors of Seller authorizing the execution of this Agreement,
the sale of the
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Assets to Buyer, and the consummation of the Transactions, along with the bylaws
and an incumbency certificate of Seller, and a resolution of the Board of
Directors of Company authorizing the transfer of the Assets to the Seller.
5.2.3 an opinion of counsel for Seller and Company in
substantially the form of EXHIBIT 5.2.3;
5.2.4 a Covenant not to Compete Agreement for Seller in the form
of EXHIBIT 5.2.4 (the "Noncompetition Agreement");
5.2.5 a closing certificate in the form of EXHIBIT 5.2.5 signed by
a duly authorized officer of Seller;
5.2.6 all original, executed Consents which Seller has obtained
prior to Closing;
5.2.7 a marked-up bringdown of the Title Report evidencing the
Title Company's commitment to issue the Title Policy;
5.2.8 a Certificate in the form of EXHIBIT 5.2.8 stating, under
penalty of perjury, that Seller is not a "foreign person" as defined under the
Code or other appropriate evidence that Buyer is not required to withhold Taxes
under Section 1445(a) of the Code;
5.2.9 copies of all documents conveying (or having the legal
effect of conveying) all of the Assets owned, leased or licensed by Company from
Company to Seller prior to Closing, including, without limitation, the
conveyance of any transferable Material Permits from Company to Seller, if such
transfer is necessary in order for Buyer to obtain such Material Permit, and all
Consents of Governmental Authorities obtained in connection therewith; and
5.2.10 any instruments necessary to transfer to Buyer any of
Seller's or Company's interest in and control of the Horsemen's Account.
5.2.11 such other documents or instruments as Escrow Agent or
Buyer may reasonably request.
5.3 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver to Seller,
all duly executed (where applicable):
5.3.1 the portion of the Purchase Price set forth in Section
3.1.2, as adjusted pursuant to Section 3.3;
5.3.2 the Bill of Sale;
5.3.3 an opinion of counsel for Buyer in substantially the form of
EXHIBIT 5.3.3;
5.3.4 the Non-Competition Agreement;
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5.3.5 a closing certificate in the form of EXHIBIT 5.3.5;
5.3.6 certified copies of resolutions of the appropriate governing
body of Buyer authorizing the execution of this Agreement, the purchase of the
Assets by Buyer and the consummation of the Transactions, along with a copy of
Buyer's Certificate of Limited Partnership and Agreement of Limited Partnership
or any other applicable governing documents;
5.3.7 In the case where the original Buyer's rights under this
Agreement are assigned in accordance with and not in violation of this
Agreement, an original assignment document executed by the original Buyer and
the transferee, reflecting the assignment of all the Buyer's right, title and
interest in this Agreement, pursuant to the provisions of Section 17.1;
5.3.8 copies of any and all consents, waivers or approvals
obtained from governmental authorities or other third parties with respect to
the transfer of the Assets, the consummation of the Transactions or the
operation of the Business by Buyer, including but not limited to evidence of the
satisfaction of the Licensing Contingency; and
5.3.9 such other documents or instruments as Escrow Agent or
Seller may reasonably request.
5.4 TITLE POLICY. Subject to the provisions of Section 4.6, Seller
shall cause the Title Company to furnish to Buyer an ALTA extended Owner's
Policy of Title Insurance in an amount equal to the portion of the Purchase
Price allocated to the Real Property and Improvements as determined pursuant to
Section 3.4, insuring marketable fee simple title to the Real Property subject
only to Permitted Encumbrances (a) through (e) (the "Title Policy"), including,
at Buyer's cost, (a) an endorsement insuring Buyer that there are no violations
of any restrictive covenants, conditions or restrictions affecting the Real
Property; (b) an endorsement insuring there are no encroachments by any
improvement onto the Real Property, any easements, or any building lines or
setbacks affecting the Real Property, or onto any adjacent property other than
those shown on the Survey; (c) if applicable, survey, patent, and water rights
endorsements; (d) an access endorsement insuring that the Real Property has
direct access to a public road or highway; (e) an endorsement that all parcels
of the Property form one contiguous parcel; (f) a zoning endorsement and (g) any
other endorsements that Buyer shall reasonably request.
5.5 INTENTIONALLY OMITTED.
5.6 PRORATIONS.
5.6.1 TAXES AND RENT. The parties shall prorate and apportion, on
a calendar year basis, as of the close of business on the Closing Date, the real
estate taxes and assessments, both general and special, for the Real Property
and personal property taxes based upon the last available tax statement. Seller
shall be responsible for all such taxes and assessments relating to periods
prior to and including the Closing Date and Buyer shall be responsible for all
such taxes and assessments relating to periods after the Closing Date. In the
event that the actual property taxes payable are not ascertainable as of the
Closing Date, then the parties will prorate such taxes on the basis of the
latest available tax bill and will
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make such post-closing adjustment as may be necessary when the actual taxes are
determined. With respect to the leases of spaces in the recreational vehicle
park located upon the Real Property, the parties shall prorate rent, rent taxes
and any other amounts due under the applicable lease. Seller shall receive all
rent for periods prior to and through the Closing Date and Buyer shall receive
all rent for the periods after the Closing Date. If rents relating to the period
prior to and through the Closing Date are received by Buyer, Buyer shall
promptly remit them to Seller.
5.6.2 UTILITIES. All utilities including gas, water, sewer,
electricity, telephone and other utilities supplied to the real property and
used in the Business shall be prorated as of the Closing Date, with Seller being
responsible for the period prior to and including the Closing Date and Buyer
being responsible for the period after the Closing Date. To the extent possible,
Buyer and Seller will make arrangements for all utilities serving the Business
or any of the Assets to be transferred to Buyer's name as of Closing, any
transfer fees shall be shared equally by Buyer and Seller, and Seller shall
receive any deposits or a credit at Closing for an amount equal to such
deposits. All meters shall be read as of the Closing Date.
5.6.3 PREPAID REVENUES AND EXPENSES. Prior to the Closing Date,
Seller shall prepare and deliver to Buyer a calculation of the income and
expense prorations for the Business based on a balance sheet of the relevant
items (the "Closing Balance Sheet") dated as of the last day of the month
immediately preceding the month in which the Closing occurs. The Closing Balance
Sheet shall be prepared in accordance with generally accepted accounting
principles consistently applied and shall reflect Seller's good faith and fair
estimate of the specific data as of the date indicated. The Closing Balance
Sheet shall be used to make a proration of income and expense items on the
Closing Date. If requested by Buyer, Seller shall also deliver the supporting
schedules for such calculation. Seller shall be deemed the owner of the Business
and the Assets for purpose of such prorations through the Closing Date. Any
prepaid revenues relating to the period after the Closing Date shall be credited
to Buyer.
5.6.4 OTHER PRORATIONS AND ADJUSTMENTS. In addition to the
prorations and adjustments provided elsewhere in the Agreement, at the Closing
Buyer and Seller shall prorate all amounts due under the Contracts and
Agreements not dealt with elsewhere in this Agreement so that Seller shall be
responsible for amounts prorated through the Closing Date and Buyer shall be
responsible for all amounts after the Closing Date. Seller shall pay the
standard coverage portion of the premium for the Title Policy and Buyer shall
pay the balance including the cost of the extended ALTA coverage, the survey and
endorsements. Each party shall pay one-half of the fees of Escrow Agent and
other Closing costs not specified herein shall be allocated in the customary
manner in Maricopa County, Arizona, as determined by Escrow Agent.
5.6.5 POST-CLOSING REPRORATION. Promptly after the Closing Date,
Seller will prepare and within sixty (60) days after the Closing Date deliver to
Buyer a calculation of the final income and expenses of the Business based on a
balance sheet of the relevant items as of the Closing Date (the "Final Balance
Sheet") together with any supporting schedules for such calculations as
requested by Buyer. Seller shall pay Buyer an amount equal to the decrease, if
any, between the net amount reflected on the Final Balance Sheet as
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compared with that reflected on the Closing Balance Sheet or Buyer shall pay
Seller an amount equal to the increase, if any, between the net amount reflected
on the Final Balance Sheet as compared to that reflected on the Closing Balance
Sheet. Any such payment shall be made by wire transfer or certified or bank
cashier's check within ten days after delivery of the Final Balance Sheet.
5.6.6 HIRED EMPLOYEE WAGES. Pursuant to Section 10.2.3, Buyer
shall receive a credit in the amount of all accrued bonuses, all earned but
unused vacation and all Social Security Taxes, Medicare Taxes, FICA, and payroll
expenses in respect of the same.
5.6.7 DISPUTE. If Buyer in good faith reasonably disputes any
amount specified on the Closing Balance Sheet or the Final Balance Sheet, Buyer
shall in the case of the Closing Balance Sheet, prior to Closing and in the case
of the Final Balance Sheet, within five (5) business days following receipt of
the Final Balance Sheet, give Seller notice of its objection to the Closing
Balance Sheet or Final Balance Sheet, as the case may be, specifying in
reasonable detail the nature and extent of the objection. If the parties are
unable to resolve the dispute within fifteen (15) business days after Buyer's
receipt of the Final Balance Sheet, then the issues in dispute will be submitted
for resolution to a "Big Five" Accounting firm mutually acceptable to Buyer and
Seller ("Accounting Firm"). If the issues in dispute are submitted to the
Accounting Firm for resolution, each party will furnish to the Accounting Firm
such workpapers and other documents and information relating to the disputed
issues as the Accounting Firm may request and are available to that party (or
its independent public accountants), and will be afforded the opportunity to
present to the Accounting Firm any material relating to the determination and to
discuss the determination with the Accounting Firm. The Accounting Firm shall
make the final determination of the Closing Balance Sheet and Final Balance
Sheet, as the case may be, and such determination will be binding and conclusive
on the parties, and Seller and Buyer will each bear fifty percent (50%) of the
fees of the Accounting Firm for such determination.
5.7 TAX COMPLIANCE CERTIFICATE. Seller shall obtain, prior to Closing
(and as a condition to Closing) pursuant to Arizona Revised Statutes ss.
42-1110B, a certificate from the Arizona Department of Revenue that Seller has
paid all sales taxes due under Titles 42 and 43 of the Arizona Revised Statutes
and provide the same to Buyer.
ARTICLE 6
CERTAIN COVENANTS
6.1 FURTHER ASSURANCE. From time to time from and after the date of
this Agreement and without further consideration, the parties to this Agreement
shall each deliver or cause to be delivered to any other party, at such times
and places as shall reasonably be requested, such additional instruments as any
of the others may reasonably request for the purpose of carrying out this
Agreement and the Transactions. Buyer and Seller agree, without further
consideration, to cooperate and to use reasonable efforts to have their
respective officers and employees cooperate from and after the date of this
Agreement in connection with obtaining all necessary permits and approvals and
in connection with any actions, proceedings, arrangements or disputes of any
nature with respect to matters pertaining to all periods before Closing.
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6.2 TRANSITION. Seller shall not take any action that is designed or
intended to have the effect of (a) discouraging any customer or business
associate of Company from maintaining the same business relationships with Buyer
after the Closing that such customer or business associate maintained with
Company before the Closing, or (b) interfering with Buyer's operation of the
Business after the Closing. Seller shall refer all customer inquiries relating
to the Business to Buyer from and after the Closing. Further, Seller agrees that
for a period of 90 days following the Closing Date, it will, without additional
consideration, consult with Buyer for the orderly transition of the operations
of the Business from Seller to Buyer. Seller shall not, for a period of 24
months after Closing, hire or attempt to hire any Hired Employee (excluding any
Hired Employee who has not been employed in the Business for three months or
more) without the prior written consent of Buyer.
6.3 CONTACT WITH GOVERNMENT OFFICIALS. Seller shall use its reasonable
commercial efforts to cooperate with Buyer in making contact with (a) the
appropriate Governmental Authorities and officials having information about or
jurisdiction over Seller, the Business, or the Assets, including with respect to
Permits, to assist Buyer in completing its regulatory evaluation of the Business
and the Assets and securing any consents necessary with respect to the Permits
or in securing new permits; and (b) the other parties under the Contracts and
Agreements to secure any Consents necessary with respect thereto. Seller shall
use its reasonable commercial efforts to obtain all Consents necessary with
respect to the Contracts and Agreements before the Closing.
6.4 CONSUMMATION OF TRANSACTIONS. Buyer shall use its reasonable
commercial efforts to take all actions necessary to consummate the Transactions,
including but not limited to obtaining satisfaction of the Licensing Contingency
(as described in Section 4.3), making all regulatory filings, and assisting
Seller in obtaining any Consents.
6.5 EXCHANGE COOPERATION. Buyer and Seller each acknowledge that the
other may transfer or acquire certain of the Assets as part of a tax-deferred
exchange pursuant to Section 1031 of the Internal Revenue Code, and that either
party has the right to restructure all or a part of the within Transaction as
provided in Internal Revenue Code ss. 1031 as a concurrent or delayed
(non-simultaneous) tax deferred exchange for its benefit. Each party agrees to
cooperate, and if requested by the other, to accommodate the other in any such
exchange, provided that (i) such cooperation and/or accommodation shall be at no
further cost or liability to the other party and such exchanging party shall
hereby indemnify the other in connection therewith; and (ii) the restructuring
of the within Transaction shall not prevent nor delay the Closing beyond the
Closing Date. Either party, in electing to structure the sale as an exchange,
shall have the right to substitute another entity or person, who will be such
party's accommodator in such party's place and stead. Buyer and Seller
acknowledge and agree that such substitution will not relieve the herein named
Buyer and Seller of any liability or obligation hereunder, and each shall have
the right to look solely to said herein named Buyer and Seller, as the case may
be, with respect to the obligations of such party under this Agreement.
6.5.1 LOT SPLIT. In the event Buyer desires to modify the legal
description of the Real Property in order to divide the existing parcels to
create the parcels described in SCHEDULE 6.5.1 Seller agrees to cooperate with
Buyer, at Buyer's expense, in preparing and processing a lot split application
provided that Seller shall not incur any liability or expense
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therefor or arising therefrom and that, prior to Closing, the Real Property
shall not become subject to any requirements or impositions resulting therefrom
without Seller's prior written consent, which may be withheld in Seller's sole
discretion. Notwithstanding any provisions of this Agreement, if Buyer's
investigations or inquiries with Governmental Authorities in connection with a
proposed lot split result in any notice of violation, Seller shall have no
obligation or liability therefor.
6.6 TAX COOPERATION. After the Closing, the parties shall, and shall
cause their respective Affiliates to, cooperate with each other in the
preparation of all tax returns and shall provide, or cause to be provided, to
such other party any records and other information reasonably requested by such
party in connection therewith as well as access to, and the cooperation of, the
auditors of such other party and its Affiliates. After the Closing, the parties
shall, and shall cause their respective Affiliates to, cooperate with the other
party in connection with any tax investigation, tax audit or other tax
proceeding relating to the Business, including Buyer making its employees
available to testify on the behalf of Seller or Company in connection with any
such investigation, audit or other proceeding. Any information obtained pursuant
to this Section relating to taxes shall be kept confidential by the other party.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that the statements contained
in this Article 7, except as set forth in the Disclosure Schedules, are correct
and complete as of the date of this Agreement. The representations and
warranties contained in this Article 7 shall survive Closing for the period
described in Section 14.1.
Wherever a representation or warranty in this Agreement is qualified as
having been made "to the best of Seller's knowledge," or based on the knowledge
of Seller such phrase or equivalent phrase shall mean the actual knowledge
(without any duty to investigate or inquire) of R.D. Hubbard, G. Michael
Finnigan, Randy Fozzard and Carl Edward Prince.
7.1 ORGANIZATION; AUTHORITY; NAME.
7.1.1 Seller and Company is each a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation. Company is, and at Closing, Seller will be, duly authorized,
qualified and licensed under all applicable Laws, regulations, ordinances and
orders of public authorities to carry on the Business in the places and in the
manner as presently conducted, except for where the failure to be so authorized,
qualified or licensed would not have a Material Adverse Effect.
7.1.2 Seller has the full legal right, power and authority to
enter into this Agreement and to consummate the Transactions, subject to
obtaining the Consents. All corporate action of Seller necessary to approve the
Transactions has been taken.
7.2 NO CONFLICT. The execution, delivery and performance of this
Agreement by Seller and the consummation of the Transactions do not and will
not: (a) violate, conflict with or result in the breach of any provision of
Seller's Certificate of Incorporation or
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Bylaws; (b) provided that (i) all Consents to the transfer of the Permits are
obtained, as described in SCHEDULE 7.15.1, (ii) all Material Permits are
obtained by Buyer and (iii) all requirements under the Hart-Scott-Rodino Act, if
applicable, are complied with, conflict with or violate any Law or Governmental
Order applicable to the Assets, the Business, or Seller, or any of their
respective assets, properties or businesses which conflict or violation would
have a Material Adverse Effect; or (c) except as set forth in SCHEDULE 7.2(C) or
SCHEDULE 7.15.1, conflict with, result in any breach of, constitute a default
(or event which with the giving of notice or lapse of time would become a
default) which would have a Material Adverse Effect under, require any Consent
which if not obtained would have a Material Adverse Effect under, or give to any
other Person any rights of termination, amendment, acceleration, suspension,
revocation or cancellation which would have a Material Adverse Effect of, or
result in the creation of any Encumbrance on the Assets which would have a
Material Adverse Effect pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, sublease, license, permit, authorization, franchise
or other instrument or arrangement relating to the Business to which Seller or
Company is a party or by which any of the Assets are bound.
7.3 FINANCIAL STATEMENTS; BOOKS AND RECORDS. The Financial Statements:
(a) were prepared in accordance with Company's books of account and other
financial records; (b) present fairly in all material respects the Business'
financial condition and results of operations and cash flows as of the dates
thereof or for the periods covered thereby, subject in the case of the unaudited
Financial Statements to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, have a Material Adverse
Effect); and (c) have been prepared in accordance with generally accepted
accounting principles consistently applied, except, (1) in the case of the
unaudited Financial Statements, for the lack of explanatory footnote disclosures
and (2) no income Taxes have been reflected thereon.
7.4 INVENTORIES AND SUPPLIES. The Inventories and Supplies are in good
and usable condition and are suitable and usable for the purposes for which they
are intended in the Business, in all material respects.
7.5 INTELLECTUAL PROPERTY RIGHTS.
7.5.1 SCHEDULE 7.5.1 sets forth: (a) all registrations for
Intellectual Property Rights and all pending registrations and applications
therefor, that Seller or Company has owned, used or licensed in connection with
the operation of the Business during the last five (5) years, indicating which
are owned and which are licensed; (b) all contracts, agreements or other
arrangements under which Seller has granted, or is obligated to grant, rights to
others to use, reproduce, market or exploit any Intellectual Property Rights;
and (c) all names, assumed or otherwise, under which Seller has conducted the
Business in the last three (3) years.
7.5.2 To the best of Seller's knowledge, Seller is not infringing
upon or otherwise acting adversely to the right or claimed right, of any Person
under or with respect to any Intellectual Property Rights which would have a
Material Adverse Effect, nor has Seller received written notice of any such
claim which has not been resolved.
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7.6 TANGIBLE PERSONAL PROPERTY.
7.6.1 SCHEDULE 2.1.3 is a complete and accurate list in all
material respects of all Equipment required in the operation of the Business and
SCHEDULE 2.1.4 is a complete and accurate list in all material respects of all
Other Tangible Personal Property required in the operation of the Business.
7.6.2 Except as provided on SCHEDULE 4.2.2 and SCHEDULE 7.6.2, the
Equipment, Other Tangible Personal Property and other of the Assets constituting
tangible personal property which are used in the operation of the Business (and
excluding such items as non-operating motor vehicles not currently used in the
Business and other items of Equipment which have been replaced and are no longer
used in the Business) are in Operating Condition.
7.6.3 Company or Seller either owns all of the Assets constituting
tangible personal property or leases them under an agreement, which lease
agreement is indicated on SCHEDULE 2.1.6. Seller has not: (a) received any
written notice of cancellation or termination under such lease; or (b) received
any written notice of a breach or default under such lease, which breach or
default has not been cured. To the best of Seller's knowledge, neither Seller
nor any other party to such lease, is in breach or default in any material
respect, and no event has occurred that, with notice or lapse of time would
constitute such a material breach or default or permit termination, modification
or acceleration under such lease.
7.7 REAL PROPERTY.
7.7.1 SCHEDULE 2.1.1 sets forth a complete and accurate legal
description of the Real Property. At Closing, Seller will have good and
marketable fee simple title to the Real Property free and clear of any and all
Encumbrances, other than Permitted Encumbrances and other Encumbrances that do
not adversely affect the use of such Real Property in the Business.
7.7.2 Except as provided on SCHEDULE 4.2.2 and SCHEDULE 7.6.2, the
Real Property and Improvements are in Operating Condition.
7.7.3 Company presently enjoys peaceful and quiet possession of
the Real Property and Improvements and to the best of Seller's knowledge, there
is no condemnation or eminent domain proceeding pending or threatened against
any of the Real Property or Improvements.
7.7.4 To the best of Seller's knowledge, except for Laws, the
Permitted Encumbrances, the matters disclosed in this Agreement and the
Disclosure Schedules, there are no unrecorded contracts, leases or other
agreements affecting the title, occupancy or development of the Real Property
and Improvements, and no Person has any right of first refusal, option or the
right to acquire all or any part of the Real Property.
7.7.5 Seller is not a "foreign person" as the term is defined in
Section 1445 of the Code.
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7.8 CONTRACTS.
7.8.1 SCHEDULE 2.1.6 is a complete and accurate list of the
Contracts and Agreements as of the date of this Agreement, true and complete
copies of which will be made available to Buyer under Section 4.1.3. None of the
Contracts and Agreements listed on SCHEDULE 2.1.6 has been amended, except as
provided in SCHEDULE 2.1.6. To the best of Seller's knowledge, all Contracts and
Agreements are in full force and effect and are valid, binding and enforceable
against the respective parties thereto in accordance with their respective
terms, and to the best of Seller's knowledge, Seller is not in default in, nor
has there occurred an event or condition (other than Seller's execution and
delivery of or performance under this Agreement) which, with the passage of time
or the giving of notice, would constitute a default with regard to the payment
or performance of any obligation under any Contract or Agreement, which default
would have a Material Adverse Effect.
7.8.2 Except as set forth on SCHEDULE 7.2(C), none of the Material
Contracts and Agreements requires the Consent of any Person for such Contract
and Agreement to be assigned to Buyer under this Agreement.
7.9 INSURANCE POLICIES. All insurance policies described in SCHEDULE
4.1.13 are in full force and effect and shall remain (or be replaced by similar
coverage) in full force and effect through the Closing Date.
7.10 EMPLOYEES; EMPLOYEE BENEFITS. SCHEDULE 7.10 is a complete and
accurate list of all Employees, their date of hire and their rate of
compensation as of the date of this Agreement (including a breakdown of the
portion thereof attributable to salary, bonus and other compensation,
respectively). Neither Seller nor Company maintains a Plan with respect to the
Employees except as disclosed on SCHEDULE 7.10 (a true, correct and complete
copy of which is to be delivered to Buyer as required under Section 4.1.10) and
to the best of Seller's knowledge, Seller and Company are in compliance with all
Laws with respect to such Plans.
7.11 LABOR MATTERS. No collective bargaining or other labor union
contracts apply to Company's Employees. To the best of Seller's knowledge, there
are no union organized activities with respect to the Business undertaken during
the prior five years.
7.12 COMPLIANCE WITH LAW. Except as disclosed in SCHEDULE 7.12 and
SCHEDULE 7.15.2, (a) to the best of Seller's knowledge, Company has conducted
and continues to conduct the Business in accordance with and in compliance with
all applicable Laws, Permits and Governmental Orders in effect on the date of
this Agreement, (b) there is no violation of any applicable Law, Permit or
Governmental Order in effect on the date of this Agreement which will result in
a Governmental Authority ordering (i) that horse racing cease at the Real
Property within one (1) year after the Closing, or (ii) that such violation be
cured as a condition to such Governmental Authority not requiring that horse
racing cease at the Real Property within one (1) year after the Closing, and (c)
neither Seller nor Company has received any current written citation or written
notice that (1) Seller or Company is under investigation or (2) subject to other
form of Action relating to the Assets or the Business with respect to any
applicable Law. Notwithstanding the foregoing, Seller shall have no liability
hereunder if a Governmental Authority shall require that horse racing cease
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at the Property, conditionally or unconditionally, if such requirement is a
result of Buyer's or any other Person's operation of the Business or the Real
Property in a manner other than as operated by Company or Seller within the year
prior to the Closing. To the best of Seller's knowledge, all Employees required
to hold licenses or permits for the operation of the Business are so licensed or
permitted and qualified to hold such licenses.
7.13 TAXES. Seller (i) has filed or will file in true and correct form
all Tax returns required to be filed by it, and (ii) has timely paid or has made
appropriate provision for on its balance sheet (in accordance with generally
accepted accounting principles) all material Taxes whether or not shown to be
due on or with respect to such Tax returns or claimed to be due from it by any
governmental authority with respect to any liability for Taxes, except in the
case of clauses (i) or (ii) for failures which would not reasonably be expected
to result in a Material Adverse Effect. There are no Tax liens upon any of the
Assets, except for current taxes not yet due.
7.14 LITIGATION. Except as set forth on SCHEDULE 7.14, no Action as to
which legal process has been served on Seller or Company is pending and, to the
best of Seller's knowledge, no Action has been threatened against Seller or
Company relating to the Assets or the Business, at law or in equity, which is
reasonably likely to result in a Material Adverse Effect. Also listed on
SCHEDULE 7.14 are all instances where Seller or Company is the plaintiff, or
complaining or moving party, in any Action related to the Assets or the
Business.
7.15 PERMITS; HAZARDOUS MATERIALS.
7.15.1 SCHEDULE 7.15.1 identifies all Material Permits that will
require the Consent of any Governmental Authority to consummate the
Transactions. To the best of Seller's knowledge, Company currently holds all
Permits, including Environmental Permits, necessary for the current use,
occupancy and operation of each Asset and the conduct of the Business, and all
such Permits are in full force and effect, except where the failure to have such
Permit in full force and effect would not have a Material Adverse Effect.
Neither Seller nor Company has received any written notice from any Governmental
Authority revoking, canceling, rescinding, materially modifying or refusing to
renew any Material Permit or providing written notice of violations under any
Environmental Law which notice has not been satisfactorily resolved.
7.15.2 Except as disclosed on SCHEDULE 7.15.2, to the best of
Seller's knowledge, there have been no Releases into the Environment or onto or
under the Real Property or any other real property now or in the past owned,
leased or used by Seller of any Hazardous Materials in violation of any law,
rule or regulation. Except as disclosed on SCHEDULE 7.15.2, no Encumbrance has
been imposed against Seller or any of the Assets under any Environmental Law
and, to the best of Seller's knowledge, no facts or circumstances exist which
could reasonably be expected to give rise to the imposition of any such
Encumbrance. Except as disclosed on SCHEDULE 7.15.2, to the best of Seller's
knowledge, no portion of the Real Property is listed on the CERCLIS list or the
National Priorities List of Hazardous Waste Sites. Seller has not received
written notice that it is listed as a potentially responsible party with respect
to the Assets or Business or as a result of the operation of the Assets or
Business under any Environmental Law.
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7.15.3 Except as disclosed on SCHEDULE 7.15.2, to the best of
Seller's knowledge, any underground or above-ground storage tanks, and piping
associated with such tanks, containing Hazardous Materials, petroleum products
or wastes or other hazardous substances regulated by 40 CFR 280 or other
Environmental Law located on the Real Property now or in the past owned, leased
or used by Seller or Company, have been used and maintained in material
compliance with all Environmental Laws. To the best of Seller's knowledge,
SCHEDULE 7.15.2 also designates the location of each underground and above
ground storage tank and the location of documentation concerning each such tank.
7.16 TOTALITY OF ASSETS. Except as disclosed in SCHEDULE 7.16,
Company has, and at the Closing Seller will have, good and marketable title to
the Assets, or, in the case of leased or subleased Assets, valid and subsisting
leasehold interests in all such Assets, free and clear of all Encumbrances other
than Encumbrances which will be removed at Closing, Permitted Encumbrances and
other Encumbrances that do not adversely affect the use of such Assets in the
Business. The Assets (other than the Excluded Assets) constitute all the assets
and rights forming a part of, used in or held for use in the conduct of, the
Business.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants that the statements contained in this
Article 8: (a) are correct and complete as of the date of this Agreement; and
(b) will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this Article 8). The representations and warranties contained in this
Article 8 shall survive Closing for the period described in Section 14.1.
8.1 AUTHORITY. Buyer has the full legal right, power and authority to
enter into this Agreement and to consummate the Transactions. All action of
Buyer necessary to approve the Transactions has been taken.
8.2 GOVERNMENTAL CONSENTS AND APPROVALS. Except for Hart-Scott-Rodino
Act approval, if applicable, the execution, delivery and performance of this
Agreement by Buyer do not and will not require any Consent or other action by,
filing with, or notification to, any Governmental Authority.
8.3 BINDING AGREEMENT. Buyer has duly executed and delivered this
Agreement, and (assuming due authorization, execution and delivery by Seller)
this Agreement constitutes a legal, valid and binding obligation of Buyer
enforceable against Buyer in accordance with its terms.
8.4 EFFECT OF AGREEMENT. The execution, delivery and performance by
Buyer of this Agreement, and the consummation by it of the Transactions, will
not violate any governing documents of Buyer or any law, regulation, order,
judgment, award or decree of any Governmental Authority or any material
indenture, material agreement or other material instrument to which Buyer is a
party, or by which Buyer or its properties or assets are bound, or conflict
with, result in a breach of or constitute (with due notice or lapse of time or
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both) a default under, any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge, security interest or
encumbrance of any nature whatsoever upon any of the properties or assets of
Buyer, except to the extent the effect of any such violation, breach or default
will not be materially adverse to Buyer's ability to fulfill its obligations
under this Agreement.
8.5 FINANCING. Buyer has $25 million (through cash on hand and/or
existing credit arrangements) committed as equity and has an acceptable proposal
dated February 10, 2000 from Bank One Arizona N.A. to provide sufficient
financing to consummate the Transactions. Buyer agrees to accept the Bank One
financing proposal if Buyer does not accept any other financing proposal
sufficient to consummate the Transactions. This Agreement and Buyer's
obligations hereunder are not contingent upon Buyer obtaining financing.
8.6 INVESTIGATION OF THE ASSETS AND BUSINESS. Except as expressly
provided in this Agreement, Buyer is purchasing the Assets without any
warranties, representations or guaranties, either express or implied, from or on
behalf of Seller, including, but in no way limited to, any warranty of
condition, merchantability, habitability or fitness for a particular use or
purpose, marketability, prospects for future development or compliance with Law,
and Buyer hereby expressly waives any implied warranties or representations
relating to the Assets or any matter affecting the Assets or the Business other
than those expressly provided in this Agreement. Buyer has heretofore undertaken
and will as of the Closing Date have made all such inquiries and investigations
regarding the Assets and all matters relating thereto and to the Business as
Buyer deems necessary or appropriate under the circumstances, without waiving,
except as otherwise provided in this Agreement, its right to rely on the
representations and warranties of Seller expressly set forth in this Agreement.
All material prepared by third parties and delivered to Buyer by Seller,
Company, the agents of either, or any other Person acting for or on behalf of
Seller, whether in the form of maps, surveys, reports, studies, and all other
review matters have been furnished by Seller to Buyer solely as a courtesy, and
neither Seller nor its agents has verified the accuracy of such information or
the qualifications of the Persons preparing such information.
8.7 LICENSING. Buyer knows of no facts, which, if known to any
applicable regulator, including but not limited to the Arizona Racing
Commission, Arizona Gaming Commission and Nevada Gaming Board, could reasonably
be expected to disqualify Buyer (or any of its officers, directors,
shareholders, partners, members, employees or other personnel, that may be
required to be licensed) from licensing under any applicable Law, including but
not limited to Arizona and Nevada gaming and/or racing laws, or which would
prevent or materially delay the grant of licenses or approvals which are the
subject of the Licensing Contingency or necessary for Buyer to consummate the
Transactions. Buyer knows of no reason why Buyer (or any of its officers,
directors, shareholders, partners, members, employees or other personnel, that
may be required to be licensed) would be denied any license or approval
necessary to consummate the Transactions or of any reason why such licensing or
approval would be materially delayed.
8.8 CONDITION OF ASSETS. Except as set forth in SCHEDULE 4.4.2,
SCHEDULE 7.12, SCHEDULE 7.6.2 and SCHEDULE 7.15.2, Buyer knows of no fact or
circumstance which would
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make the representations and warranties in Section 7.6.2, Section 7.7.2 and
Section 7.12 untrue or incorrect.
ARTICLE 9
COVENANTS OF SELLER BEFORE CLOSING
9.1 ACCESS TO LAND AND RECORDS. Between the date of this Agreement and
the Closing Date, subject to Buyer's compliance with the terms and conditions
set forth in Section 4.5, Seller shall: (a) at reasonable times and upon
reasonable notice, grant Buyer and its representatives access to the Real
Property (including for the purpose of performing testing, inspections and other
procedures considered desirable by Buyer), the Assets and the books and records
of Company, (b) furnish Buyer with such additional financial and operating data
and other information as to the Assets and the Business as Buyer may reasonably
request, including audited financial statements for the Business as they become
available in the ordinary course of the Business, (c) if to Seller's knowledge,
there exists a fact or circumstance which would make a representation or
warranty of Seller in this Agreement untrue at the Closing, promptly give notice
of such fact or circumstance to Buyer; and (d) cooperate with Buyer and its
representatives in the preparation of any documents or other material which may
be required by any Governmental Authority in connection with the consummation of
the Transactions.
9.2 ACTIVITIES OF SELLER BEFORE CLOSING. Until the Closing, Seller
shall:
9.2.1 maintain the Assets in all material respects in the same
working order and condition (ordinary wear and tear excepted), subject to the
provisions of Section 17.17, as the Assets are in as of the date of this
Agreement;
9.2.2 timely perform all of its obligations under the Contracts
and Agreements;
9.2.3 keep in full force and effect present (or reasonably
comparable) insurance policies, bonds, letters of credit or other insurance
coverage for the Real Property, Improvements, other Assets and the operation of
the Business;
9.2.4 use its commercially reasonable efforts consistent with its
past practices to preserve intact the Assets, subject to the provisions of
Section 17.17, and to keep available the services of its Employees and maintain
good relationships with suppliers, customers and others having business
relationships with Company;
9.2.5 cooperate with Buyer to promptly prepare the necessary
documents so that the Transactions may be closed on or before the Closing Date;
9.2.6 maintain the amounts of Inventory and Supplies, consistent
with the prior practices of Seller with respect to inventory and supplies
maintained during periods when the Business is running (i.e. during the time of
year when races are held at the Turf Paradise facility).
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9.2.7 provide reasonable assistance to Buyer to provide for an
orderly transfer of the Assets from Seller to Buyer, without incurring any
liability by reason thereof.
9.2.8 Otherwise conduct Business as it is currently being
conducted and consistent with past practices.
9.3 PROHIBITED ACTIVITIES BEFORE CLOSING. Until the Closing, Seller
shall not, other than in the ordinary course of operation of the Business,
without the prior written consent of Buyer:
9.3.1 cause any new Encumbrance upon any Asset which will not be
released at Closing;
9.3.2 breach, amend or terminate any of its material Contracts and
Agreements in any material manner or fail to maintain the Business, the Assets
or the quality of customer service consistent with past practice which failure
would have a Material Adverse Effect; or
9.3.3 enter into any transaction outside the ordinary course of
the Business or otherwise prohibited under this Agreement.
9.4 STANDSTILL AGREEMENT. Seller shall not, directly or indirectly,
solicit offers for the Real Property or the Business (including the Assets in
the aggregate). In the event Seller receives an unsolicited offer, Seller may
indicate that it will not respond to such offer because of the existence of this
Agreement.
ARTICLE 10
ADDITIONAL AGREEMENTS OF PARTIES
10.1 HART-SCOTT-RODINO ACT. If applicable, each of Buyer and Seller
undertake and agree to file as soon as practicable, and in any event within 15
days after the date of this Agreement, a Notification and Report Form with the
United States Federal Trade Commission (the "FTC") and the Antitrust Division of
the United States Department of Justice (the "DOJ") that complies with the
provisions of the Hart-Scott Rodino Act. Each of Buyer and Seller shall respond
as promptly as practicable to any requests received from the FTC or the DOJ for
additional information or documentation and to all inquiries and requests
received from any state attorney general or other Governmental Authority in
connection with antitrust matters.
10.2 EMPLOYMENT MATTERS.
10.2.1 OFFERS OF EMPLOYMENT. Buyer agrees that it will offer
employment to all active Employees, and all Employees on approved leaves of
absence of 90 days or less, currently working exclusively for the Business on
the Closing Date. Subject to applicable Law, such employment by Buyer for each
Hired Employee will be at will, with rights of termination at any time without
cause. Each Hired Employee shall be a new employee of Buyer, with no
continuation of the prior employment relationship with Seller and with no
assumption by Buyer of any promises, agreements, contracts or policies of Seller
relating to
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Employees; in particular, Buyer shall not be obligated to provide or maintain
any employee benefit plans or programs whatsoever. Notwithstanding the preceding
sentence, Buyer agrees, for one year following the Closing Date, to provide a
group health Plan (within the meaning of Section 4980B(f)(2)(B)(iv)(I))
("Buyer's Medical Plan") and a profit sharing Plan qualified under Sections
401(a) and 401(k) of the Code ("Buyer's 401(k) Plan"), both containing such
terms and provisions as Buyer may determine in its sole discretion, except as
provided herein. Each Hired Employee's period of service with Seller or Company
shall be counted for purposes of determining eligibility for and vesting of
benefits under Buyer's 401(k) Plan, as if such period of service had been with
Buyer. Each Hired Employee's service with Seller or Company shall also be
credited toward any waiting period under Buyer's Medical Plan, as if such
service had been with Buyer. As of the Closing Date, or as soon as practicable
thereafter, Seller shall make all required contributions to Seller's 40l(k)
Investment Plan and all other Plans sponsored or maintained by Seller ("Seller's
401(k) Plans") for the Employees for all periods before the Closing Date. Buyer
shall allow, after the Closing Date, a "direct rollover" (but no "plan to plan
transfer") of Hired Employee accounts (including loans to participants) from
Seller's 401(k) Plans to Buyer's 401(k) Plan, within a reasonable period after
Seller provides assurances and documentation to Buyer's reasonable satisfaction
that Seller's 401(k) Plans are qualified under Section 401(a) of the Code, that
the amounts to be direct rollovers are "eligible rollover distributions," within
the meaning of the Code, and that the participant loans to be directly rolled
over comply in form and operation with the Code, ERISA, and the terms of
Seller's 401(k) Plans. Seller shall be responsible for offering COBRA
continuation coverage for Seller's current and former Employees who are entitled
to elect such coverage, subject to the foregoing regarding Buyer providing
Buyer's Medical Plan for Hired Employees.
10.2.2 PERSONNEL RECORDS. After the expiration of the Review
Period and any thirty day extension of the Licensing Contingency period as
provided in Section 4.3 but prior to the Closing Date, Buyer and Seller shall
issue a joint letter notifying all Employees that Buyer is purchasing the
Business and intends to make offers of employment to all Employees. The letter
may indicate, at Buyer's request, that all Employees interested in being
eligible to receive an employment offer from Buyer must consent to the release
of his or her personnel and other employment related files to Buyer prior to
Closing. Prior to Closing, Seller shall transfer to Buyer personnel and other
employment related records of each Employee who has consented to the transfer of
such records. Notwithstanding the foregoing, Buyer shall not have access to
personnel and other employment related records of Seller or Company relating to
individual performance or evaluation records, medical histories or other
information which in Seller's or Company's reasonably good faith opinion is
prohibited by Law. Buyer shall have no obligation under this Agreement to make
an offer of employment to any Employee who does not consent to the release of
his or her personnel and other employment related files to Buyer prior to
Closing. Prior to the Closing Date, Seller shall transfer to Buyer compensation
and service history of each Hired Employee.
10.2.3 PAYMENT OF ACCRUED WAGES, BONUS AND EXPENSES. Seller or
Company shall pay all accrued but unpaid wages (and all Social Security Taxes,
Medicare Taxes, FICA and payroll expenses relating thereto) and earned but
unused vacation, in each case as of the Closing Date, to any Employee who does
not accept Buyer's offer of employment. To the extent any Hired Employee has
accrued but unpaid wages as of the Closing Date, Seller or Company shall pay to
such Hired Employee such amounts as such
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Hired Employee is entitled to receive as of the Closing Date, and shall pay all
Social Security Taxes, Medicare Taxes, FICA, and payroll expenses in respect of
such wages. To the extent any Hired Employee has accrued bonuses or earned but
unused vacation as of the Closing Date, Seller shall pay to Buyer (in the form
of a proration pursuant to Section 5.6.6) the collective amount of such accrued
bonuses (and the amount of Social Security Taxes, Medicare Taxes, FICA and
payroll expenses with respect thereto) and earned but unused vacation.
10.3 POST-CLOSING. If additional assets or rights owned by Seller or
Company forming a part of, used primarily in, intended to be used primarily in,
or necessary in the conduct of, the Business, other than Excluded Assets, are
identified post-Closing as not having been adequately transferred to Buyer,
Seller shall promptly transfer and assign to Buyer such assets or rights without
additional consideration. Similarly, if, after the Closing Date, Excluded
Assets, including, but not limited to, proprietary information of Seller, shall
remain on the Real Property, then Buyer shall take reasonable efforts to deliver
such Excluded Assets to Seller at the expense of Seller and, so long as such
information shall remain on the Real Property, Buyer shall exercise the same
reasonable degree of care with respect thereto as it does with respect to its
own property.
ARTICLE 11
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the
completion and satisfaction, on or before the Closing Date of the following
conditions (unless and to the extent waived by Seller):
11.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Buyer contained in Article 8 of this Agreement shall be accurate on and as of
the Closing Date. The Closing shall not result in the waiver of any claim on a
representation or warranty made by Buyer hereunder, unless prior to Closing,
Seller had knowledge that such representation or warranty was incorrect or
untrue.
11.2 COVENANTS. Buyer shall have duly complied with or performed each
of the material covenants of this Agreement to be complied with or performed by
Buyer on or before the Closing Date.
11.3 NO ADVERSE INJUNCTION. No injunction (preliminary, temporary or
permanent) shall have been issued by a Governmental Authority restraining or
prohibiting any of the Transactions.
11.4 GOVERNMENTAL APPROVALS. Buyer and Seller shall have obtained all
Consents of Governmental Authorities required for consummation of the
Transactions, including but not limited to those required under the
Hart-Scott-Rodino Act, if applicable, and Buyer shall have obtained all Material
Permits and all applicable waiting periods shall have expired.
11.5 MATERIAL CONSENTS. The Consents for the Material Contracts and
Agreements shall have been obtained.
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11.6 CLOSING DELIVERIES. Buyer shall have timely delivered (if required
to be delivered before the Closing) or shall be prepared to deliver the items
set forth in Section 5.3.
ARTICLE 12
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to the
completion and satisfaction on or before the Closing Date of the following
conditions (unless and to the extent waived by Buyer):
12.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller contained in Article 7 (other than Sections 7.6.2 and 7.7.2, which
shall expire at the expiration of the Review Period) of this Agreement shall be
accurate on and as of the Closing Date (except where such representation and
warranty is made as of a date specifically set forth therein), except where the
failure to be accurate relates to matters which could not reasonably be expected
to have a Material Adverse Effect. Except as provided otherwise in this
Agreement, the Closing shall not result in the waiver of any claim on a
representation or warranty made by Seller hereunder, unless prior to Closing,
Buyer had knowledge that such representation or warranty was incorrect or
untrue.
12.2 COVENANTS. Seller shall have duly complied with or performed in
all material respects each of the material covenants of this Agreement to be
complied with or performed by Seller on or before the Closing Date.
12.3 NO ADVERSE INJUNCTION. No injunction (preliminary, temporary or
permanent) shall have been issued by a Governmental Authority restraining or
prohibiting any of the Transactions.
12.4 NO ADVERSE CHANGE OR MATERIAL ADVERSE EFFECT. No change in the
results of operations, financial condition of the Business shall have occurred
since the date hereof which would have a Material Adverse Effect. Company shall
not have suffered any loss or damage to any of the Assets, which loss or damage
would result in a Material Adverse Effect or would materially impair Buyer's
ability to operate the Business after the Closing Date.
12.5 PERMITS, ETC. The Licensing Contingency shall have been satisfied.
12.6 GOVERNMENTAL APPROVALS. Seller and Buyer shall have received all
Consents of Governmental Authorities required for consummation of the
Transactions, including but not limited to those required under the
Hart-Scott-Rodino Act, if applicable, and all waiting periods shall have
expired.
12.7 MATERIAL CONSENTS. The Consents for the Material Contracts and
Agreements shall have been obtained.
12.8 TITLE POLICY. The Title Company shall be in a position to issue
the Title Policy, and such endorsements as Buyer may have obtained pursuant to
Section 4.6.
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12.9 ENCUMBRANCES. No Encumbrance or encroachment whatsoever shall be
of record as of the Closing,except for Permitted Encumbrances.
ARTICLE 13
LIABILITIES
13.1 NON-ASSUMPTION OF LIABILITIES. Except for the Assumed Liabilities
and as explicitly set forth in this Agreement, Buyer shall not, by the execution
and performance of this Agreement or otherwise (including under theories of
successor liability), assume, become responsible for or incur any Liability of
any nature of Seller or any other Person, including any Liability arising out of
or relating to: (a) any occurrence or circumstance (whether known or unknown)
which occurs or exists before the Closing Date and which constitutes, or which
by the lapse of time or giving notice would constitute, a breach or default
under any lease, contract, or other instrument or agreement (whether written or
oral) including the Permits and the Contracts and Agreements; (b) injury to or
death of any Person or damage to or destruction of any property, subject to the
provisions of Section 17.17, occurring before the Closing Date, whether based on
negligence, breach of warranty, or any other theory, against which Seller
indemnifies Buyer pursuant to Section 14.2; (c) violation of the requirements of
any applicable Law or Governmental Authority or of the rights of any third
Person, including any requirements relating to the reporting and payment of
Taxes, against which Seller indemnifies Buyer pursuant to Section 14.2; (d) the
Release of Hazardous Materials by the Company occurring prior to the Closing
Date, against which Seller indemnifies Buyer pursuant to Section 14.2.1; (e) any
Liabilities arising prior to the Closing Date under any agreement or arrangement
between Seller and the Employees of Seller or any labor or collective bargaining
unit representing any such Employees; (f) any Plan of Seller; (g) any severance
pay obligation of Seller or of any Plan or any other fringe benefit program
maintained or sponsored by Seller or to which Seller contributes or any
contributions, benefits or Liabilities therefor or any Liability for the
withdrawal or partial withdrawal from or termination of any such Plan or program
by Seller; (h) any obligations related to any of the Excluded Assets; (i) any
Liability resulting from non-compliance with any applicable plant-closing or
bulk sales Laws; and (j) any Liabilities of Seller not specifically assumed by
Buyer under this Agreement.
13.2 ASSUMPTION OF LIABILITIES. On the terms and subject to the
conditions set forth in this Agreement, at the Closing Buyer shall assume and
become responsible for all of the following liabilities and obligations whether
absolute, contingent, accrued or otherwise (the "Assumed Liabilities") (a) any
and all liabilities, obligations and commitments arising or occurring on or
after the Closing Date under the transferred Permits and Contracts and
Agreements; (b) all Liabilities and Obligations arising out of events or
transactions on or after the Closing in connection with the operation of the
Business by Buyer; (c) any and all liabilities, obligations and commitments of
Seller or Company specifically undertaken by Buyer pursuant to any other
provision of this Agreement, including but not limited to Section 3.5; (d) any
and all obligations of the lessor arising under the leases relating to the
recreational vehicle park arising or relating to events or for performance on or
after the Closing; (e) all liabilities arising as a consequence of the physical,
seismic or environmental condition of the Assets (other than the Excluded
Assets) on and after the Closing Date, except to the extent that Seller is
obligated to indemnify Buyer therefor or otherwise is liable
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with respect thereto under Section 14.2 or 14.2.1 of this Agreement; (f) accrued
liabilities relating to accrued bonuses and earned but unused vacation of
Company's Employee benefits policy in effect as of the date hereof associated
with the Employees of Company who accept Buyer's offer of employment as provided
in Section 10.2.1 ("Hired Employees") and related Social Security Taxes,
Medicare Taxes, FICA and payroll expenses, provided that Seller or Company has
paid such bonuses, vacation pay and payroll expenses to Buyer pursuant to
Section 10.2.3.
ARTICLE 14
INDEMNIFICATION
14.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties set forth in Section 7.6.2 and Section 7.7.2
shall expire at the end of the Review Period, without regard to any extension
for the Licensing Contingency. Any representation or warranty of Seller or Buyer
which the other party has knowledge is incorrect or untrue prior to the Closing,
shall expire upon Closing. The other representations and warranties set forth in
Article 7 and Article 8 in this Agreement shall survive the Closing for one (1)
year and shall then expire. Upon the expiration of a representation or warranty
which expires after the Closing pursuant to this Section 14.1, unless written
notice of a claim based on such representation or warranty specifying in
reasonable detail the facts on which the claim is based shall have been
delivered to the Indemnifying Party prior to the expiration of such
representation or warranty, such representation or warranty shall be deemed to
be of no further force or effect, as if never made, and no action may be brought
based on the same, whether for breach of contract, tort or under any other legal
or equitable theory.
14.2 INDEMNIFICATION BY SELLER. Subject to the terms and conditions of
this Article 14, Seller agrees to indemnify, defend (as to third party claims
only), protect and hold harmless Buyer, its partners, officers, directors,
divisions, subdivisions, Affiliates, shareholders, agents, employees, successors
and permitted assigns at all times from and after the Closing Date from and
against any and all Liabilities, claims, damages, Actions, demands, assessments,
adjustments, penalties, losses, costs and expenses whatsoever (including court
costs, reasonable attorneys' fees and expenses of investigation), whether
equitable or legal, matured or contingent, known or unknown, foreseen or
unforeseen, ordinary or extraordinary, patent or latent ("Losses"), that arise
as a result of or incident to: (a) any Action with respect to the Business
pending or overtly threatened against Seller or Company to the extent arising
from or based on an injury or damage occurring before the Closing Date; (b) any
breach of, misrepresentation in, untruth in or inaccuracy in the representations
and warranties by Seller set forth in this Agreement or in the Disclosure
Schedules, provided that such representation or warranty survives the Closing as
provided in Section 14.1; (c) nonperformance of any agreement or covenant on the
part of Seller made in this Agreement or in any other document delivered
pursuant to this Agreement in consummation of the Transactions, including the
Noncompetition Agreement; or (d) any of the excluded Liabilities set forth in
Section 13.1. The foregoing indemnification obligations shall not extend to
Seller's indemnification of Buyer for Losses or Actions relating to or
associated with Environmental Laws or Hazardous Substances, which shall be
governed exclusively by Section 14.2.1. Notwithstanding anything to the contrary
contained herein,
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Seller shall not be in breach of any representation or warranty made in this
Agreement, if prior to Closing, Buyer had knowledge that such representation or
warranty was incorrect or untrue.
14.2.1 INDEMNIFICATION BY SELLER FOR ENVIRONMENTAL ACTIONS.
Subject to the terms and conditions of this Article 14, Seller agrees to
indemnify, defend (as to third party claims only), protect and hold harmless
Buyer, its partners, officers, directors, divisions, subdivisions, Affiliates,
shareholders, agents, employees, successors and permitted assigns at all times
from and after the Closing Date from and against any and all Actions asserted by
any Governmental Authority or third party (including court costs, reasonable
attorneys' fees, reasonable environmental consultant fees and expenses of
investigation), whether equitable or legal, matured or contingent, known or
unknown, foreseen or unforeseen, ordinary or extraordinary, patent or latent
that arise as a result of or incident to: (a) any Release of Hazardous Material
by Seller occurring before the Closing Date and (b) any violation of any
Environmental Law in effect as of the date hereof, occurring before the Closing
Date, provided, however, that Seller's indemnification of Buyer pursuant to this
Section 14.2.1 shall not extend to any Losses or Actions that result from any
voluntary act, omission, transaction or agreement of Buyer or any subsequent
owner of the Real Property, including any such actions in furtherance of
discontinuance of horse racing operations, or a material construction project,
or a material change in the nature of the use of the Real Property or
Improvements, or the implementation of a material new or different use of the
Real Property or Improvements, other than a Loss or an Action which arose out of
a violation described in clause (b) above which, notwithstanding Buyer's
actions, would have been such a violation based on Seller's operation of the
Real Property prior to Closing.
14.3 INDEMNIFICATION BY BUYER. Subject to the terms and conditions of
this Article 14, Buyer agrees that it will indemnify, defend (as to third party
claims only), protect and hold harmless Seller, Company and their respective
partners, officers, directors, divisions, subdivisions, Affiliates,
shareholders, agents, employees, successors and assigns at all times from and
after the Closing Date from and against all Losses that arise as a result of or
incident to: (a) any breach of, misrepresentation in, untruth in or inaccuracy
in the representations and warranties by Buyer set forth in this Agreement
provided that such representation or warranty survives the Closing as provided
in Section 14.1; (b) nonperformance of any agreement or covenant on the part of
Buyer made in this Agreement (subject to Section 15.2 below) or in any other
document delivered pursuant to this Agreement in consummation of the
Transactions; (c) the failure of Buyer to pay, perform and discharge when due
the Assumed Liabilities; and (d) the conduct of the Business after the Closing.
The foregoing indemnification obligations shall not extend to Buyer's
indemnification of Seller for Losses or Actions relating to or associated with
Environmental Laws or Hazardous Substances, which shall be governed exclusively
by Section 14.3.1. Notwithstanding anything to the contrary contained herein,
Buyer shall not be in breach of any representation or warranty made in this
Agreement, if prior to Closing, Seller had knowledge that such representation or
warranty was incorrect or untrue.
14.3.1 INDEMNIFICATION BY BUYER FOR ENVIRONMENTAL ACTIONS. Subject
to the terms and conditions of this Article 14, Buyer agrees to indemnify,
defend (as to third party claims only), protect and hold harmless Seller, its
partners, officers, directors, divisions, subdivisions, Affiliates,
shareholders, agents, employees, successors and permitted assigns
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at all times from and after the Closing Date from and against any and all
Actions asserted by any Governmental Authority or third party (including court
costs, reasonable attorneys' fees, reasonable environmental consultant fees and
expenses of investigation), whether equitable or legal, matured or contingent,
known or unknown, foreseen or unforeseen, ordinary or extraordinary, patent or
latent that arise as a result of or incident to: (a) any Release of Hazardous
Material by Buyer occurring after the Closing Date; (b) any violation of any
Environmental Law occurring after the Closing Date; (c) the seismic, structural
and other physical condition of the Real Property and the Assets, except to the
extent Seller is obligated to indemnify Buyer therefor pursuant to Section 14.2
or 14.2.1; and (d) any actual, alleged or proposed requirement or necessity that
building or construction materials or equipment lawfully present at the Real
Property or Improvements as of the Closing Date (including without limitation
asbestos containing materials and lead based paint) be removed, abated or
mitigated.
14.4 INDEMNIFICATION THRESHOLD AND LIMIT. No claim for indemnification
under Section 14.2(b) or Section 14.3(a) hereof will be made by either party
hereunder unless the aggregate of all Losses incurred by any such party
otherwise indemnified against hereunder exceeds $250,000 (the "Threshold") and
only to the extent of any such Losses in excess of the Threshold, provided
however, in the case of a claim for indemnification based upon the breach of a
representation or warranty which is qualified or limited based upon materiality
or Material Adverse Effect, there shall be no Threshold applicable to such
claim. Notwithstanding any other provisions of this Agreement, the obligations
of Seller under the indemnity provisions set forth in Section 14.2(b) and
Section 14.2.1 hereof, shall not exceed, in the aggregate, $2,650,000, except
that there shall be no limit in the case of Seller's fraud or intentional breach
of this Agreement. Notwithstanding any other provisions of this Agreement,
Seller's sole obligation and Buyer's sole remedy with respect to a breach, if
any, of the representations and warranties in Section 7.6.2 and Section 7.7.2
are set forth in Section 4.2.3.
14.5 SUBROGATION. If the Indemnifying Party makes any payment under
this Article 14 in respect of any Losses, the Indemnifying Party shall be
subrogated, to the extent of such payment, to the rights of the Indemnified
Party against any insurer or third party with respect to such Losses; provided,
however, that the Indemnifying Party shall not have any rights of subrogation
with respect to the other party hereto or any of its Affiliates or any of its or
its Affiliates' officers, directors, agents or employees.
14.6 CONDITIONS OF INDEMNIFICATION AS TO THIRD PARTY CLAIMS. The
respective obligations and liabilities of the Indemnifying Party to the
Indemnified Party under this Article 14 relating to third party claims shall be
subject to the following terms and conditions:
14.6.1 NOTICE. Within 15 days after receipt of notice of
commencement of any action or the assertion of any claim by a third party (but
in any event at least ten days preceding the date on which an answer or other
pleading must be served in order to prevent a judgment by default in favor of
the party asserting the claim), the Indemnified Party shall give the
Indemnifying Party written notice thereof together with a copy of such claim,
process or other legal pleading, and the Indemnifying Party shall have the right
to undertake the defense thereof by representatives of its own choosing that are
reasonably satisfactory to
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the Indemnified Party. Notwithstanding the Indemnifying Party's undertaking of
such defense, the Indemnified Party shall have the right to engage its own
counsel, at its own expense, and participate in the defense of the claim;
provided, however, that the Indemnifying Party shall retain the right in its
sole and absolute discretion to make all decisions with respect to the defense,
settlement or compromise of such claim, provided that the Indemnifying Party
remains liable for any payments due under any such settlement or compromise.
14.6.2 FAILURE TO ASSUME DEFENSE. If the Indemnifying Party, by
the fifteenth day after receipt of notice of any such claim (or, if earlier, by
the fifth day preceding the day on which an answer or other pleading must be
served in order to prevent judgment by default in favor of the person asserting
such claim), does not elect to defend against such claim, the Indemnified Party
will (upon further notice to the Indemnifying Party) have the right to undertake
the defense, compromise or settlement of such claim on behalf of and for the
account and risk of the Indemnifying Party; provided, however, that the
Indemnified Party shall not settle or compromise such claim without the
Indemnifying Party's consent, which consent shall not be unreasonably withheld;
and provided further that, the Indemnifying Party shall have the right to assume
the defense of such claim with counsel of its own choosing at any time prior to
settlement, compromise or final determination thereof.
14.6.3 CLAIM ADVERSE TO INDEMNIFYING PARTY. Notwithstanding
anything to the contrary in this Section 14.6, if there is a reasonable
probability that a claim may materially adversely affect the Indemnifying Party
other than as a result of money damages or other money payments, the
Indemnifying Party shall have the right, at its own cost and expense, to
compromise or settle such claim, but the Indemnifying Party shall not, without
the prior written consent of the Indemnified Party, settle or compromise any
claim or consent to the entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
Indemnified Party a release from all liability in respect of such claim.
14.6.4 COOPERATION. In connection with any such indemnification,
the Indemnified Party will cooperate in all reasonable requests of the
Indemnifying Party.
14.7 REMEDIES EXCLUSIVE. Except as specifically provided elsewhere in
this Agreement, including but not limited to the provisions of Section 15.1 and
Section 15.2, the remedies provided in this Article 14 shall be the exclusive
remedy (whether at law or in equity). None of either party's (or their
Affiliates") officers, employees, agents, stockholders, consultants, investment
bankers, legal advisers or representatives shall have any personal liability or
obligation to the other party (or its Affiliates) in connection with the
Transactions contemplated by this Agreement or in respect of any statement,
representation, warranty or assurance of any kind made by such party, its
representatives or any other person.
14.8 DAMAGES. Notwithstanding anything to the contrary elsewhere in
this Agreement or any other Transaction document, no party (or its Affiliates)
shall, be liable to the other party (or its Affiliates) for any consequential
damages, including, but not limited to, loss of revenue or income, cost of
capital, or loss of business reputation or opportunity
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relating to the breach or alleged breach of this Agreement, other than in the
case of fraud or intentional breach of this Agreement. Each party agrees that it
will not seek punitive damages as to any matter under, relating to or arising
out of the Transactions, other than for fraud or intentional breach of this
Agreement.
ARTICLE 15
TERMINATION OF AGREEMENT / REMEDIES
15.1 TERMINATION BY BUYER / REMEDIES OF BUYER. Buyer, by notice in the
manner provided in Section 17.6 on or before the Closing Date, may terminate
this Agreement if any of the conditions set forth in Article 12 shall not have
been satisfied on the Closing Date (other than as a result of Buyer's actions or
omissions) or in the event of a material breach by Seller of any of the
agreements or covenants in this Agreement, and such failure of a condition or
material breach shall not have been cured within ten (10) business days after
written notice to Seller of Buyer's intention to terminate this Agreement
pursuant to this Section 15.1 and specifying the unsatisfied condition; or if
such cure cannot be effected within such ten business day period, then such
extended period of time reasonably necessary to cure, but not more than 30 days,
provided that Seller promptly commences the cure and diligently pursues its
completion. In the event of such a termination, the Earnest Money shall be
returned to Buyer. In addition to or in lieu of such termination, in the event
of a breach of this Agreement by Seller, subject to the limitations contained in
this Agreement, Buyer may pursue all remedies available at law and equity,
including, without limitation, specific performance.
15.2 TERMINATION BY SELLER / REMEDIES OF SELLER. Seller, by notice in
the manner provided in Section 17.6 on or before the Closing Date, may terminate
this Agreement if any of the conditions set forth in Article 11 shall not have
been satisfied on the Closing Date (other than as a result of Seller's actions
or omissions) or in the event of a material breach by Buyer of any of the
agreements or covenants in this Agreement, and such failure of a condition or
material breach shall not have been cured within ten business days after written
notice to Buyer of Seller's intention to terminate this Agreement pursuant to
this Section 15.1 and specifying the unsatisfied condition; or if such cure
cannot be effected within such ten business day period, then such extended
period of time reasonably necessary to cure, but not more than 30 days, provided
that Buyer promptly commences the cure and diligently pursues its completion. IN
THE EVENT OF SUCH A TERMINATION, BUYER AND SELLER AGREE THAT IT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX ACTUAL DAMAGES, AND THAT THE EARNEST
MONEY PAID BY BUYER PLUS ACCRUED INTEREST THEREON ("LIQUIDATED DAMAGES") IS A
REASONABLE ESTIMATE OF SELLER'S DAMAGES IN SUCH EVENT. RECEIPT OF SAID
LIQUIDATED DAMAGES SHALL BE SELLER'S SOLE AND EXCLUSIVE REMEDY IN THE EVENT
CLOSING DOES NOT OCCUR AS PROVIDED IN THIS SECTION 15.2. SELLER AND BUYER
ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THIS SECTION
AND BY THEIR INITIALS IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS. IN NO
EVENT SHALL SELLER'S ACCEPTANCE OF THE LIQUIDATED DAMAGES BE A
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LIMIT OF ANY KIND ON BUYER'S INDEMNITY AND DEFENSE OBLIGATIONS IN THIS
AGREEMENT.
----------------- ----------------
Seller's Initials Buyer's Initials
ARTICLE 16
ANNOUNCEMENTS AND NONDISCLOSURE OF
CONFIDENTIAL INFORMATION
16.1 ANNOUNCEMENTS. Each party agrees not to make, nor cause to be
made, any news releases or other public announcements pertaining to the
Transactions without first consulting the other party and attempting to
formulate a mutually satisfactory arrangement for such disclosure, and in any
case will not make an announcement thereafter without the consent of the other,
which consent shall not be unreasonably withheld, unless and to the extent it
believes in good faith that disclosure is required by applicable law or by
obligations pursuant to any rules of or listing agreement with any national
securities exchange or the Nasdaq National Market System. The commencement of
litigation relating to this Agreement or any proceedings in connection therewith
shall not be deemed a violation of this Section 16.1.
16.2 CONFIDENTIALITY - SELLER. Seller acknowledges that it has had and
may in the future have access to certain confidential information of Company and
of the Business, including operational policies and methods, marketing plans,
and other confidential information with respect to Buyer, Seller, Company, the
Assets or the Business (the "Buyer Confidential Information"), that will as of
the Closing be valuable, special and unique assets of Buyer. Seller agrees, at
all times from and after the Closing, to, and shall cause their Affiliates,
officers, directors, employees and agents to: (a) treat and hold as confidential
(and not disclose or provide access to any Person to or use) any Buyer
Confidential Information; (b) if Seller, or any such Affiliate, officer,
director, employee or agent becomes legally compelled to disclose any such Buyer
Confidential Information, provide Buyer with prompt written notice of such
requirement so that Buyer may seek a protective order or other remedy; and (c)
promptly furnish (prior to, at, or as soon as practicable after the Closing) to
Buyer any and all copies (in whatever form or medium) of all such Buyer
Confidential Information then in the possession of Seller, or any such
Affiliate, officer, director, employee or agent and destroy any additional
copies then in their possession of such information and of analyses,
compilations, studies or other documents prepared, in whole or in part, on the
basis thereof. This Section 16.2, however, shall not apply to: (i) any
information that, at the time of disclosure, is available publicly and not as a
result of a disclosure in breach of this Agreement by Seller or Company, or any
of their Affiliates, officers, directors, employees or agents; (ii) any
information which is or relates to an Excluded Asset or relates to the
Liabilities retained by Seller under this Agreement (iii) any disclosure made by
Seller or Company that it believes in good faith is required by Law or by
obligation pursuant to any rules of or listing agreement with any national
securities exchange or the Nasdaq National Market System; or (iv) any disclosure
in litigation relating
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to this Agreement or any proceeding in connection therewith. Seller acknowledges
and agrees that Buyer's remedies at Law for any breach or threatened breach of
this Section 16.2 are inadequate, and that in addition to such remedies, Buyer
shall be entitled to equitable relief, including injunctive relief and specific
performance, in the event of any such breach or threatened breach without the
need to demonstrate that monetary damages are inadequate.
16.3 CONFIDENTIALITY - BUYER. Buyer acknowledges that it may have
access to certain confidential information of Seller, Company and of the
Business, including operational policies and methods, marketing plans, and other
confidential information with respect to Seller, Company, the Assets or the
Business (the "Seller Confidential Information"), that are valuable, special and
unique assets of Seller and Company. Buyer agrees, at all times before and after
the Closing, to, and shall cause its Affiliates, officers, directors, employees
and agents to: (a) treat and hold as confidential (and not disclose or provide
access to any Person to or use) any Seller Confidential Information; (b) if
Buyer, or any such Affiliate, officer, director, employee or agent becomes
legally compelled to disclose any such Seller Confidential Information, provide
Seller with prompt written notice of such requirement so that Seller may seek a
protective order or other remedy; and (c) if the Closing does not occur,
promptly furnish to Seller any and all copies (in whatever form or medium) of
all such Seller Confidential Information then in the possession of Buyer, or any
such Affiliate, officer, director, employee or agent and destroy any additional
copies then in their possession of such information and of analyses,
compilations, studies or other documents prepared, in whole or in part, on the
basis thereof. This Section 16.3, however, shall not apply to: (i) any
information that, at the time of disclosure, is available publicly and not as a
result of a disclosure in breach of this Agreement by Buyer, or any of its
Affiliates, officers, directors, employees or agents; (ii) any disclosure
(together with an admonishment to the recipient to observe the provisions of
this Section 16.3) reasonably necessary to Buyer's consummation of the
Transactions; (iii) any disclosure made by Buyer that it believes in good faith
is required by Law; (iv) any disclosure in litigation relating to this Agreement
or any proceeding in connection therewith; or (v) any disclosure made by Buyer
after Closing which relates only to the Assets acquired by Buyer and does not
relate to any operational policies or methods, marketing plans or other Seller
Confidential Information relating to the Excluded Assets or other assets
retained by Seller after Closing.. Buyer acknowledges and agrees that Seller's
or Company's remedies at Law for any breach or threatened breach of this Section
16.3 are inadequate, and that in addition to such remedies, Seller shall be
entitled to equitable relief, including injunctive relief and specific
performance, in the event of any such breach or threatened breach without the
need to demonstrate that monetary damages are inadequate.
16.4 CONFIDENTIALITY - GENERAL. If the Transactions are not
consummated, each party shall treat all information obtained in its
investigation of another party or any Affiliate thereof, and not otherwise known
to them or already in the public domain, as confidential and shall return to
such other party or Affiliate all copies made by it or its representatives of
Confidential Information provided by such other party or Affiliate.
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ARTICLE 17
GENERAL PROVISIONS
17.1 ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred without the express written consent of Seller and Buyer (which may
be granted or withheld in the sole and absolute discretion of Seller or Buyer);
provided, however, that Buyer may assign this Agreement to one or more
Pre-Approved Assignees, provided that (a) Buyer discloses the identity of such
Person to Seller, (b) the transfer to such Transferee will not impair any
Consent obtained hereunder or require any other Consent (or if it does, Buyer
shall be deemed to have waived the condition, if any, that such Consent be
obtained prior to Closing), (c) Buyer does not receive (directly or indirectly)
any compensation for such assignment, other than the transferee's agreement to
assume Buyer's obligations hereunder and reimbursement of the Earnest Money, and
(d) Buyer provides Seller and Escrow Agent at least fourteen (14) days prior to
the Closing, written notice of such assignment and a copy of all documentation
evidencing such assignment and required by Section 5.3.5. In the event Buyer
elects to assign its rights hereunder to more than one assignee, subject to the
provisions of this Section 17.1, such that there will be more than one Person
acquiring the Assets as Buyer hereunder (individually, "Transferee"), each
Transferee shall be a Buyer hereunder, shall be subject to all of the terms and
conditions of this Agreement, shall be imputed with all of the knowledge of
Buyer, shall assume all of the obligations of Buyer hereunder relating to the
Asset(s) being acquired by Transferee at the Closing, and shall only have the
rights of Buyer hereunder as they relate solely to the Asset(s) being acquired
by Transferee at the Closing.
17.2 BINDING EFFECT; NO THIRD PARTY BENEFICIARIES. This Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns. Nothing in this Agreement is intended to or shall confer upon
any other Person, including any employee or former employee of Seller, any legal
or equitable right, benefit or remedy of any nature whatsoever, including any
rights of employment for any specified period.
17.3 AMENDMENT. This Agreement may not be amended except by a written
instrument executed by each party to this Agreement.
17.4 ENTIRE AGREEMENT. This Agreement (together with the other
agreements contemplated by this Agreement) is the final, complete and exclusive
statement of the agreement among the parties with relation to the subject matter
of this Agreement. There are no oral representations, understandings or
agreements covering the same subject matter as this Agreement. This Agreement
supersedes and cannot be varied, contradicted or supplemented by evidence of,
any prior or contemporaneous discussions, correspondence, or oral or written
agreements or arrangements of any kind. The Exhibits and Disclosure Schedules
attached to this Agreement shall be a part hereof and all terms used therein
which are not defined therein shall have the meanings ascribed to them in this
Agreement.
17.5 COUNTERPARTS. This Agreement may be executed in two or more
original or facsimile counterparts, each of which shall be deemed an original
and all of which together shall constitute but one and the same instrument.
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17.6 NOTICES. All notices or other communications required or permitted
under this Agreement shall be in writing and may be given by depositing the same
in the United States mail, addressed to the party to be notified, postage
prepaid and registered or certified with return receipt requested, by overnight
courier or by delivering the same in person to such party, addressed as follows:
If to Seller, addressed to it at:
Pinnacle Entertainment, Inc.
4400 MacArthur Boulevard, Suite 380
Newport Beach, CA 92660
Attn: G. Michael Finnigan
With a copy to:
Irell & Manella, LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067
Attn: Sandra G. Kanengiser
If to Buyer, addressed to:
Jerry Simms
5344 North 31st Place
Phoenix, AZ 85016
with a copy to:
Fennemore Craig, P.C.
3003 North Central Avenue
Suite 2600
Phoenix, AZ 85012
Attn: Ronald L. Ballard
Notice shall be deemed given and effective the day personally delivered, the
next business day after being sent by overnight courier, subject to signature
verification, and three business days after the deposit in the U.S. mail of a
writing addressed and sent as provided above or when actually received, if
earlier. Any party may change the address for notice by notifying the other
parties of such change in accordance with this Section.
17.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Arizona, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Arizona or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Arizona.
17.8 WAIVER. At any time before the Closing, Buyer may by written
notice to Seller (a) extend the time for the performance of any of the
obligations or other acts of Seller, (b) waive any inaccuracies in the
representations and warranties of Seller contained
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in this Agreement or (c) waive compliance with any of the agreements or
conditions of the Seller contained in this Agreement. At any time before the
Closing, Seller may (by written notice to Buyer) (a) extend the time of
performance of any of the obligations or other acts of Buyer, (b) waive any
inaccuracies in the representations and warranties of Buyer contained in this
Agreement or (c) waive compliance with any of the agreements or conditions of
Buyer contained in this Agreement. Except as provided otherwise in this
Agreement, no delay of or omission in the exercise of any right, power or remedy
accruing to any party as a result of any breach or default by any other party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
or in any similar breach or default occurring later. No waiver of any single
breach or default shall be deemed a waiver of any other breach or default
occurring before or after that waiver.
17.9 SEVERABILITY. If any provision of this Agreement shall be invalid,
illegal or unenforceable, it shall, to the extent possible, be modified in such
manner as to be valid, legal and enforceable but so as most nearly to retain the
intent of the parties. If such modification is not possible, such provision
shall be severed from this Agreement. In either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
17.10 CONSTRUCTION. The headings in this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any of its provisions. The parties have participated
jointly in negotiating and drafting this Agreement. If a question of
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 provision of this
Agreement.
17.11 ATTORNEYS' FEES. If any legal action or any other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the provisions
of this Agreement, the prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
17.12 EXPENSES OF TRANSACTION; RELIANCE ON ADVISORS. Whether or not the
Transactions are consummated: (a) Buyer will pay the fees, expenses and
disbursements of Buyer and its advisors, consultants, experts and
representatives incurred in connection with this Agreement and the Transactions;
and (b) Seller will pay the fees, expenses and disbursements of Seller, and its
advisors, consultants, experts and representatives incurred in connection with
this Agreement and the Transactions.
17.13 NO BROKERS. Seller represents and warrants to Buyer and Buyer
represents and warrants to Seller that the warranting party has had no dealings
with any broker, agent or other Person so as to entitle such Person to a
commission or fee in connection with the Transactions. If for any reason a
commission or fee becomes or is claimed to be due with respect to dealings by
Buyer, Buyer shall indemnify and hold harmless Seller from all Losses relating
to such claim. If for any reason a commission or fee becomes or is claimed
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to be due with respect to dealings by Seller, Seller shall indemnify and hold
harmless Buyer from all Losses relating to such claim.
17.14 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
17.15 BULK TRANSFER LAWS. Buyer hereby waives compliance by Seller with
any applicable bulk transfer laws, including, without limitation, the bulk
transfer provisions of the Uniform Commercial Code of any state, or any similar
statute, with respect to the transaction contemplated by this Agreement;
provided, however, that Seller hereby indemnifies Buyer against any Losses that
Buyer may incur that Buyer would not have incurred if Seller had complied with
such bulk sales laws.
17.16 DISCLOSURE/REPRESENTATIONS AND WARRANTIES. Notwithstanding
anything in this Agreement to the contrary, the disclosure of any information on
any schedule to this Agreement shall be deemed to constitute the disclosure of
such information on all other schedules to this Agreement applicable to such
information so long as it is reasonably apparent that such disclosure would
apply to such other schedules. At any time and from time to time prior to the
Closing, Buyer or Seller may amend or supplement any of the schedules delivered
by them in connection with this Agreement to reflect any matters arising between
the date of this Agreement and the Closing Date and any applicable
representation or warranty shall be deemed modified ab initio by such amendment
or supplement, provided however if such amendment or supplement discloses a
matter which would reasonably be expected to result in a Material Adverse
Effect, then such disclosure shall be deemed to cause a failure of the Closing
condition which would not have been satisfied without such amendment or
supplement; however, there shall be no breach of the corresponding
representation or warranty or covenant, unless the failure to disclose such
matter in the initial schedule was intentional. Notwithstanding the foregoing,
no such amendment or supplement shall relieve Seller of its obligations, if any,
pursuant to Sections 4.2.1 and 4.2.3, relating to the Operable Condition of the
Assets.
17.17 RISK OF LOSS. The risk of any loss, damage, impairment,
confiscation or condemnation of the Assets, or any part thereof (an "Asset
Loss"), shall be upon the Seller at all times prior to the Closing. In the event
of any such Asset Loss, the proceeds of, or any claim for any loss payable
under, Seller's insurance policies, or any judgment or award with respect
thereto shall be payable to Seller, as the case may be. Thereafter, and subject
to the next sentence, Seller shall either (i) repair, replace (with comparable
used equipment) or restore any Asset (other than Excluded Assets) as soon as
possible after the Asset Loss, in which case the Closing, at Seller's option,
may be extended for such period of time as is reasonably necessary to complete
such repair, replacement or restoration, or (ii) if insurance proceeds are
sufficient to repair, replace or restore the Asset (other than Excluded Assets),
pay such proceeds to Buyer (it being understood that the cost for comparable
used replacement equipment ("Replacement Cost") shall be "sufficient"). If
Seller fails to either repair, replace or restore any Asset (other than Excluded
Assets) or pay over the Replacement Cost for any Asset Loss and the amount of
any uncured, uninsured Asset Loss exceeds $2,650,000, Buyer may terminate this
Agreement without any liability on the part of either Buyer or Seller, except as
otherwise provided herein.
[SIGNATURES APPEAR ON NEXT PAGE]
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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
BUYER:
/s/ Jerry Simms
--------------------------------
JERRY SIMMS
SELLER:
PINNACLE ENTERTAINMENT, INC.
By: /s/ G. Michael Finnigan
-----------------------------
G. Michael Finnigan,
President
Realty Investment Group, Inc.
Authorized Signatory
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INDEX OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit 1.1 Definitions
Exhibit 5.2.1(a) Deed
Exhibit 5.2.1(b) General Conveyance, Assignment and Bill of Sale
Exhibit 5.2.3 Form of Opinion of Seller's Counsel
Exhibit 5.2.4 Covenant Not to Compete Agreement
Exhibit 5.2.5 Seller's Closing Certificate
Exhibit 5.2.8 Non-Foreign Certification
Exhibit 5.3.3 Form of Opinion of Buyer's Counsel
Exhibit 5.3.5 Buyer's Closing Certificate
SCHEDULES
Schedule 2.1.1 Legal Description of the Real Property
Schedule 2.1.3 List of Equipment
Schedule 2.1.4 List of Other Tangible Personal Property
Schedule 2.1.6 List of Contracts and Agreements and Material
Contracts and Agreements
Schedule 2.1.7 List of Permits and Material Permits
Schedule 2.1.8 List of Systems
Schedule 2.2.11 List of Non-transferable Licenses and Intellectual
Property Rights
Schedule 4.1.13 List of Insurance Policies
Schedule 4.2.2 Condition of Certain Assets Known to Buyer
Schedule 6.5.1 Descriptions of Lot Split Parcels
Schedule 7.2(c) List of Any Contracts and Agreements
Which Cannot Be Transferred Without Consent
Schedule 7.5.1 List of All Registrations and Pending Registrations
and Applications for Intellectual Property Rights,
and Names Used in Conducting the Business
Schedule 7.6.2 Seller Disclosure of Condition of Certain Assets
Schedule 7.10 List of Employees and Plans
Schedule 7.12 Compliance with Laws
Schedule 7.14 List of Litigation and Proceedings
Schedule 7.15.1 Consents Required for Material Permits
Schedule 7.15.2 Environmental Disclosure
Schedule 7.16 List of Exceptions to Good and Marketable Title to
the Assets
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EXHIBIT 1.1
"ACCOUNTING FIRM" has the meaning specified in Section 5.6.7.
"ACCOUNTS RECEIVABLE" means all contracts receivable, accounts
receivable, notes receivable and other amounts receivable whether or not related
to the operation of the Business.
"ACTION" means any claim, action, suit, formal or informal, arbitration
or mediation, inquiry, proceeding or investigation by or before any Governmental
Authority or private authority.
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person. The term "control" as used in the preceding sentence includes the
ownership of 5% or more of the equity interests in any Person.
"AGREEMENT" means this Purchase and Sale of Assets Agreement among
Buyer and Seller (including the Exhibits and the Disclosure Schedules), and all
amendments to this Agreement made in accordance with Section 17.3.
"ASSET LOSS" has the meaning specified in Section 17.17.
"ASSUMED LIABILITIES" has the meaning specified in Section 13.2.
"BILL OF SALE" has the meaning specified in Section 5.2.1
"BUSINESS" has the meaning specified in Recital A.
"BUYER" has the meaning specified in the introductory paragraph of the
Agreement.
"BUYER CONFIDENTIAL INFORMATION" has the meaning specified in Section
16.1.
"BUYER'S EXPERT" has the meaning specified in Section 4.2.1.
"BUYER'S MEDICAL PLAN" has the meaning specified in Section 10.2.1.
"BUYER'S 401(K) PLAN" has the meaning specified in Section 10.2.1.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended as of the date of this Agreement.
"CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System, as updated through the date of this Agreement.
"CLOSING" and "CLOSING DATE" have the meanings specified in Section
5.1.
"CLOSING BALANCE SHEET" has the meaning specified in Section 5.6.3.
1
"CLOSING NOTICE" has the meaning specified in Section 5.1.
"COBRA" means the requirements of Section 4980 B of the Code and
Sections 601 through 608 of ERISA.
"CODE" means the Internal Revenue Code of 1986.
"COMPANY" has the meaning specified in Recital A.
"CONSENTS" means those authorizations, consents, waivers, orders,
approvals and clearances of Governmental Authorities and officials and other
Persons which are necessary for the sale and transfer to Buyer of the Assets or
the consummation of the Transactions (including the continuation of the
Contracts and Agreements).
"CONTRACTS AND AGREEMENTS" has the meaning specified in Section 2.1.6.
"DEFECT NOTICE" has the meaning specified in Section 4.2.1.
"DISCLOSURE SCHEDULES" means the Schedules which are attached to the
Agreement.
"DOJ" has the meaning specified in Section 10.2.
"EARNEST MONEY" has the meaning specified in Section 3.1.1.
"EMPLOYEES" means any current employee employed by Seller or Company
exclusively in connection with the operation of the Business.
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including Environmental and Tax liens), charge, judgment, encumbrance, adverse
claim, preferential arrangement, or restriction of any kind, including any
restriction (other than those imposed by Law) on the use, transfer, receipt of
income or other exercise of any attributes of ownership.
"ENVIRONMENT" or "ENVIRONMENTAL" means matters relating to surface
waters, groundwaters, soil, subsurface strata and ambient air.
"ENVIRONMENTAL LAWS" means any Law and any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, relating to the Environment, health, safety or Hazardous
Materials, including CERCLA; the Resource Conservation and Recovery Act; the
Hazardous Materials Transportation Act; the Clean Water Act; the Toxic
Substances Control Act; the Clean Air Act; the Safe Drinking Water Act; the
Atomic Energy Act; the Federal Insecticide, Fungicide and Rodenticide Act; and
the Federal Food, Drug and Cosmetic Act; and the state or local equivalents of
these laws.
"ENVIRONMENTAL PERMITS" means all Permits and identification numbers
required under any applicable Environmental Law.
"EQUIPMENT" has the meaning specified in Section 2.13.
2
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ESCROW AGENT" has the meaning specified in Section 3.1.1.
"EXCLUDED ASSETS" has the meaning specified in Section 2.2.
"FINAL BALANCE SHEET" has the meaning specified in Section 5.6.5.
"FINANCIAL STATEMENTS" has the meanings specified in Section 4.1.4.
"FTC" has the meaning specified in Section 10.2.
"GOVERNMENTAL AUTHORITY" means the FTC or the DOJ or any other United
States federal, state or local or any foreign government, governmental,
regulatory or administrative authority, agency or commission or any court,
tribunal, or judicial or arbitral body.
"GOVERNMENTAL ORDER" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"HART-SCOTT-RODINO ACT" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"HAZARDOUS MATERIALS" means: (a) petroleum and petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that contain
polychlorinated biphenyls, and radon gas; or (b) any other chemicals, materials
or substances defined as or included in the definition of "hazardous materials,"
"hazardous wastes," "hazardous substances," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic wastes," "toxic
pollutants," "contaminants," "pollutants," "infectious wastes," "medical
wastes," "radioactive wastes," "sewage sludges" or words of similar import under
any applicable Environmental Law.
"HIRED EMPLOYEES" has the meaning specified in Section 13.2(f).
"HORSEMEN'S ACCOUNT" means that certain trust account for the payment
of purse amounts, known as "The Horsemen at Turf Paradise Account" or the
horsemen's bookkeeper account.
"INTELLECTUAL PROPERTY RIGHTS" has the meaning specified in Section
2.1.10.
"INVENTORY AND SUPPLIES" has the meaning specified in Section 2.1.5.
"IRS" means the Internal Revenue Service of the United States.
"LAW" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, Governmental Order, requirement or rule of
common law, including any Environmental Law.
"LIABILITIES" means all debts, liabilities and obligations, whether
legal or equitable, accrued or fixed, absolute or contingent, matured or
unmatured, determined or determinable,
3
foreseen or unforeseen, ordinary or extraordinary, patent or latent, including
those arising under any Law (including any Environmental Law) or Action and
those arising under any contract, agreement, arrangement, commitment or
undertaking.
"LICENSING CONTINGENCY" has the meaning specified in Section 4.3.
"LOSSES" has the meaning specified in Section 14.2.
"MATERIAL ADVERSE EFFECT" means any circumstance, change in, or effect
on, the Assets or the Business that, individually or in the aggregate with any
other circumstances, changes in, or effects thereon: (i) is or could reasonably
be expected to be materially adverse to the Assets or to the business, financial
condition, or Liabilities (including contingent Liabilities), or results of
operations of the Business; or (ii) could reasonably be expected to materially
adversely affect the ability of Buyer to use the Assets or operate the Business
in the manner in which they are currently used or operated by Seller or Company.
"MATERIAL CONTRACTS AND AGREEMENTS" has the meaning specified in
Section 2.1.6.
"MATERIAL PERMITS" has the meaning specified in Section 4.3.
"NEUTRAL EXPERT" has the meaning specified in Section 4.2.1.
"NONCOMPETITION AGREEMENT" has the meaning specified in Section 5.2.4.
"OPERATING CONDITION" has the meaning specified in Section 4.2.2.
"PERMITS" has the meaning specified in Section 2.1.7.
"PERMITTED ENCUMBRANCES" on the Real Property and Improvements means
(a) zoning and land use ordinances and regulations and conditional use permits,
if any; (b) real estate Taxes and assessments, both general and special, which
are a lien but are not yet due and payable at the Closing Date; (c) easements,
covenants, conditions, reservations, restrictions of record and all other
matters shown in the Title Report; (d) the leases and rights of possession of
the occupants of the recreational vehicle park; (e) matters created by or with
the written consent of Buyer; (f) matters which would be reflected in a current
survey; and (g) matters affecting title which would be disclosed by physical
inspection of the Real Property. Permitted Encumbrances on the other Assets
shall mean liens disclosed in this Agreement or the Disclosure Schedules, liens
for Taxes not yet due, imperfections in title, if any, not material in amount
and which do not materially interfere with the conduct of the Business or use of
the Assets.
"PERSON" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization, Governmental
Authority or other entity.
"PLAN" means: (i) any employee benefit plan, employee welfare benefit
plan, employee benefit pension plan, multi-employer plan or multiple-employer
welfare arrangement (within the meaning of Section 3 of ERISA) and all bonus,
stock option, stock purchase, restricted stock, incentive, deferred
compensation, retiree medical, dental or life
4
insurance, supplemental retirement, severance or other benefit plans, programs
or arrangements, and all employment, termination, severance, "golden parachute"
or other contracts or agreements, formal or informal, legally binding or not,
with respect to which Seller or Buyer, as the case may be, is a party, with
respect to which Seller or Buyer, as the case may be, has or could have any
obligation (whether primary or secondary) or which are maintained, contributed
to or sponsored by Seller or Buyer, as the case may be, or any member of its
controlled group of organizations within the meaning of Section 414 of the Code
for the benefit of any current or former employee, officer or director of Seller
or Buyer, as the case may be, ; and (ii) each employee benefit plan for which
Seller or Buyer, as the case may be, could incur Liability under Section 4069 of
ERISA if such plan were terminated, or under Section 4212(c) of ERISA, or in
respect of which Seller or Buyer, as the case may be, remains secondarily liable
under Section 4204 of ERISA.
"PRE-APPROVED ASSIGNEE" means any Person who is, or will be at Closing,
licensed and approved for all Permits required for that Person to own and
operate the Assets being acquired by such Person and is (a) in the case of a
proposed Transferee of the Business (other than the recreational vehicle park)
and related Assets a limited partnership of which the general partner is an
entity in which Jerry Simms owns fifty percent (50%) or more of the ownership
and voting interests; or (b) in the case of any other proposed Transferee of a
portion of the Real Property and related Improvements (but not any portion of
the horse racing or off-track wagering business or related Assets), Ronald Simms
and/or his spouse or an entity of which Ronald Simms and/or his spouse or Jerry
Simms owns 50% or more of the ownership and voting interests.
"PURCHASE PRICE" has the meaning specified in Section 3.1.
"REAL PROPERTY" has the meaning specified in Section 2.1.1.
"RELEASE" means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing or otherwise
releasing into, upon or under any land, water or air or otherwise entering into
the Environment.
"REMEDIATION" or "REMEDIATE" means actions to respond to, investigate,
clean-up, move, and otherwise remediate Hazardous Materials.
"REPLACEMENT COST" has the meaning specified in Section 17.17.
"SELLER" has the meaning specified in the introductory paragraph of the
Agreement.
"SELLER CONFIDENTIAL INFORMATION" has the meaning specified in Section
16.3.
"SELLER'S EXPERT" has the meaning specified in Section 4.2.1.
"SELLER'S 401(K) PLANS" has the meaning specified in Section 10.2.1.
"SELLER'S RESPONSE" has the meaning specified in Section 4.2.1.
"TAX" or "TAXES" means any and all taxes, fees, levies, duties,
tariffs, imposts, and other charges of any kind (together with any and all
interest, penalties, additions to tax and
5
additional amounts imposed with respect thereto) imposed by any Governmental
Authority or taxing authority, including: taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
property, minimum, alternative minimum, estimated, sales, use, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation, or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added, or gains taxes; license,
registration and documentation fees; and customs duties, tariffs, and similar
charges.
"THRESHOLD" has the meaning specified in Section 14.4.
"TITLE COMPANY," "TITLE POLICY" and "TITLE REPORT" have the meanings
specified in Section 4.1.1 and 5.4.
"TO THE BEST OF SELLER'S KNOWLEDGE" or "to Seller's knowledge" or
similar variations thereof have the meaning specified in Article 7.
"TRANSACTIONS" means the transactions contemplated by this Agreement.
"TRANSFEREE" has the meaning specified in Section 17.1.
6
EXHIBIT 5.2.1(a)
WHEN RECORDED MAIL TO:
______________________
______________________
______________________
______________________
SPECIAL WARRANTY DEED
FOR THE CONSIDERATION OF Ten Dollars ($10.00) and other valuable
consideration, Pinnacle Entertainment, Inc., a Delaware corporation ("Grantor"),
does hereby convey to _____________________, a(n) _______________________
("Grantee"), the following real property located in Maricopa County, Arizona:
See Exhibit "A" attached hereto and incorporated herein by
this reference.
Including all of Grantor's right, title and interest, if any, in and to
all tenements, hereditaments, easements, rights-of-way, appurtenances, passages,
water rights, water courses, riparian rights, drainage rights and mineral and
other rights thereon or in any way appertaining thereto, including all of the
right, title and interest of Grantor in and to all public and private streets,
roads, avenues, alleys, passageways (before and after vacation thereof) in front
of or abutting said real property or any portion thereof.
Subject to those matters set forth in Exhibit "B" attached hereto and
made a part hereof, Grantor warrants the title to the real property against all
persons claiming through Grantor.
Dated: __________________
PINNACLE ENTERTAINMENT, INC.,
a Delaware corporation
By ____________________________
Its ___________________________
1 of 2
STATE OF ___________________ )
)SS:
COUNTY OF _________________ )
On _________________________ before me, ___________________________, a
Notary Public in and for said County and State, personally appeared
__________________ ______________________________, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person whose name
is subscribed to the within instrument and acknowledged to me that he executed
the same in his authorized capacity, and that by his signature on the instrument
the entities upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal
--------------------------------
Notary Public
My commission expires:
[SEAL]
2 of 2
EXHIBIT 5.2.1(B)
GENERAL CONVEYANCE, ASSIGNMENT AND BILL OF SALE
("BILL OF SALE")
Effective as of ________, Pinnacle Entertainment, Inc., a Delaware
corporation ("Grantor"), for good and valuable consideration and pursuant to
that certain Agreement for Purchase and Sale of Assets dated as of ________ (the
"Purchase Agreement"), among Grantor and Jerry Simms, an individual, and
assigned by Jerry Simms to ______________, a(n) ________ ________ ("Grantee"),
hereby sells, assigns, transfers, conveys and delivers to Grantee all of
Grantor's right, title and interest in all of the "Assets" (other than the
"Excluded Assets") to have and to hold such Assets (other than the Excluded
Assets) unto Grantee and its successors and assigns forever.
Grantee, in consideration of this assignment, hereby assumes and
undertakes to discharge all of the Assumed Liabilities, except as otherwise set
forth in the Purchase Agreement.
Grantor and Grantee agree to execute and deliver at the request of the
other, such further instruments and shall take or cause to be taken such other
or further actions as shall reasonably be requested for purposes of carrying out
the within assignment and assumption.
This Bill of Sale is delivered pursuant to Section 5.2.1 of the
Purchase Agreement and shall be construed consistently with the Purchase
Agreement. Capitalized terms used in this instrument shall have the meanings
given them in the Purchase Agreement.
This Bill of Sale may be executed in one or more counterparts and by
facsimile, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Grantor has executed and delivered this General
Conveyance, Assignment and Bill of Sale effective as of the date first above
written.
GRANTOR:
_____________________________
By:__________________________
Name:________________________
Its:_________________________
GRANTEE:
_____________________________
By:__________________________
Name:________________________
Its:_________________________
EXHIBIT 5.2.3
OPINION OF SELLER'S COUNSEL
____________________ [date]
_____________________________
_____________________________
_____________________________
Ladies and Gentlemen:
We have acted as counsel to Pinnacle Entertainment, Inc., a Delaware
corporation (the "Seller"), in connection with the sale by Seller of certain of
its assets to ____________________________ ("Purchaser"), pursuant to that
certain Agreement for Purchase and Sale of Assets dated as of ______________, by
and between Seller and Jerry Simms, an individual, and assigned by Jerry Simms
to ______________, a(n) ________ ________ (the "Purchase Agreement"). Turf
Paradise, Inc., formerly an Arizona corporation ("TPI"), was a wholly-owned
subsidiary of Seller prior to the merger of TPI with and into Seller on
______________. This opinion letter is furnished to you pursuant to Section
5.2.3 of the Purchase Agreement. Capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Purchase Agreement.
For purposes of rendering this opinion, we have examined such questions
of law and fact as we deemed relevant. We have also assumed that the Purchase
Agreement and Transaction Documents (as hereinafter defined) have been duly
authorized, executed and delivered by, and constitute valid, binding and
enforceable obligations of, Purchaser, that all signatories of Purchaser are
duly authorized, that Purchaser is duly organized and validly existing and/or
has the power and authority to execute, deliver and perform the Transaction
Documents to the extent that Purchaser is a party thereto, that all of the
signature and acknowledgements of all parties to the Transaction Documents are
genuine, that all of the Transaction Documents submitted to us as executed
counterparts are authentic and that all of the Transaction Documents submitted
to us as copies conform to the executed originals of such documents. As to
various questions of fact relevant to this opinion, we have been furnished with,
and have relied without independent verification upon, the representations and
warranties of the Seller contained in the Transaction Documents, including the
Purchase Agreement, the certificates of good standing issued by the Secretaries
of State of Delaware and Arizona with respect to the existence, good standing
and qualification to transact business of the entities referenced therein,
certificates of ownership and merger issued by the Secretaries of the State of
Delaware and the State of Arizona relating to the merger of TPI with and into
Seller, and a certificate provided to us by an officer of Seller. We have also
assumed the absence of any agreement or understanding that would modify,
supplement or amend any of the documents reviewed by us.
We do not express any opinion as to any laws other than the laws of the
State of California, and, to the extent applicable, the laws of the United
States of America and the General Corporation Law of the State of Delaware.
Certain Transaction Documents (defined below) and the Purchase Agreement provide
that each is to be governed by the laws of the State of Arizona and it is our
understanding that Purchaser is relying on the advice of its own counsel with
respect to all matters of Arizona law. Further, we have not examined the
question of what law would govern the interpretation or enforcement of the
Purchase Agreement and our opinion is based on the assumption that the internal
laws of the State of Arizona would govern the provisions of such agreement and
the transactions contemplated thereby, and that the result of the application of
Arizona law will not be contrary to a fundamental policy of the law of any other
state with which the parties may be in contact in connection with the
transactions contemplated thereby and that the laws of the State of Arizona are
identical in all respects to the laws of the State of California.
Based upon the foregoing and on the assumptions herein set forth, and
subject to the limitations, qualifications and exceptions set forth herein, we
are of the opinion that:
1. Seller is a corporation incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to carry on its business as now conducted. Seller is duly
qualified to transact business in the State of Arizona.
2. The execution, delivery and performance by Seller of the Purchase
Agreement and any other instruments and agreements executed and delivered by
Seller to Purchaser pursuant to the Purchase Agreement (the "Transaction
Documents") and the consummation by Seller of the transactions contemplated
thereby (the "Transactions") are within Seller's corporate powers, have been
duly authorized by all necessary action on the part of Seller and do not
contravene the provisions of the certificate of incorporation or bylaws of the
Seller. The Purchase Agreement and the Transaction Documents have been duly and
validly executed by Seller.
3. Each of the Purchase Agreement and the Transaction Documents (other
than the Covenant Not To Compete Agreement, as to which we express no opinion)
is the legal, valid and binding obligation of the Seller, enforceable against
the Seller in accordance with its terms, except as may be limited by the effect
of bankruptcy, insolvency, reorganization, moratorium and other laws and court
decisions or other legal or equitable principles relating to, limiting or
affecting the enforcement of creditors' rights generally including, without
limitation, preferences and fraudulent conveyances and distributions by a
corporation to its stockholders, and subject to the discretion of any court of
competent jurisdiction in awarding equitable remedies (regardless of whether
considered in a proceeding in equity or at law), including, but not limited to,
specific performance or injunctive relief.
4. The merger of TPI with and into Seller is effective and as a result
of the merger, all property, real, personal and mixed, of TPI has become vested
in Seller.
This opinion is rendered as of the date hereof, and we undertake no
obligations to update this opinion in respect of any changes of circumstances,
events, laws or judicial decisions. This opinion is rendered to you solely for
your benefit in connection with the
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transactions contemplated above. This opinion may not be relied upon by any
other person for any purpose.
Very truly yours,
Irell & Manella LLP
-3-
EXHIBIT 5.2.4
COVENANT NOT TO COMPETE AGREEMENT
THIS COVENANT NOT TO COMPETE AGREEMENT (the "Agreement") is made and
entered into as of ________, by and among Pinnacle Entertainment, Inc., a
Delaware corporation ("Seller") and _______________, a ________ ________
("Buyer").
RECITALS
A. Seller and Buyer are parties to that certain Agreement for
Purchase and Sale of Assets (the "Purchase Agreement") dated
as of ________, among Seller and Jerry Simms, an individual,
and assigned by Jerry Simms to ______________, a(n)
___________ ("Buyer"), which provides for the sale of certain
of the assets used in that certain parimutuel race track
business known as Turf Paradise Race Track, located at 1501 W.
Ball Road, Phoenix, Maricopa County, Arizona (the "Track"),
including those assets related to off-track wagering
facilities.
B. To induce Buyer to enter into the Purchase Agreement, Seller
has agreed to forego certain rights to compete with Buyer, on
the terms and subject to the conditions set forth in this
Agreement.
C. All capitalized terms not otherwise defined herein shall have
the meanings assigned them in the Purchase Agreement.
ACCORDINGLY, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
1. NONCOMPETE DEFINITIONS. For purposes of this Agreement, the terms
listed below shall have the following meanings:
(a) "Area" means the area within a 100-mile radius from the
Track.
(b) "Time Period" means the period beginning as of the
effective date of this Agreement and ending five years thereafter; provided,
however, that if a court of competent jurisdiction determines that such period
is unenforceable, Time Period shall mean the period beginning as of the date of
this Agreement and ending four years thereafter; provided, however, that if a
court of competent jurisdiction determines that such period is unenforceable,
Time Period shall mean the period beginning as of the date of this Agreement and
ending three years thereafter; provided, however, that if a court of competent
jurisdiction determines that such period is unenforceable, Time Period shall
mean the period beginning as of the date of this Agreement and ending two years
thereafter; provided, however, that if a court of competent jurisdiction
determines that such period is unenforceable, Time Period shall mean the period
beginning as of the date of this Agreement and ending one year thereafter, or
such other period as the court shall determine to be reasonable. The Time Period
shall be extended by the number of days in any period in which Seller is in
default or breach of this Agreement.
2. PAYMENT. The consideration for Seller entering into this Agreement
is a portion of the Purchase Price described in and payable under the Purchase
Agreement.
3. COVENANTS. Seller covenants and agrees that, during the Time Period,
it shall not, directly or indirectly, for or otherwise on behalf of or in
conjunction with any Person:
(a) NONCOMPETITION. Engage or have any interest, direct or
indirect, in a thoroughbred racetrack or related off-track wagering business
located within the Area.
(b) NONSOLICITATION OF EMPLOYEES. For a period of 24 months
from the effective date of this Agreement, hire, employ, solicit, or otherwise
encourage or entice to leave their employment with Buyer, any of Buyer's
employees who were formerly Employees of Seller (excluding any former Employee
who has not been employed by Buyer for three months or more).
4. ENFORCEABILITY. Seller represents and warrants to and covenants with
Buyer as follows:
(a) The covenants in this Agreement are reasonably necessary
for the protection of the interests of Buyer, are reasonable as to duration,
scope and territory, and are not unreasonably restrictive of Seller.
(b) If Seller breaches any covenants set forth in this
Agreement, such breach could cause irreparable harm to Buyer and, in the event
of such breach, Buyer shall be entitled, in addition to monetary damages and to
any other remedies available to Buyer under this Agreement and at law, to
equitable relief, including injunctive relief.
(c) Notwithstanding subsection (a), should any court of
competent jurisdiction determine that any covenants in this Agreement are
unreasonable as to duration, scope, or territory, the covenants shall be
enforceable as provided in this Agreement with respect to the maximum duration,
scope and territory as the court determines to be reasonable.
5. ASSIGNMENT; BINDING EFFECT; AMENDMENT. This Agreement and the rights
of the parties under it may not be assigned (except by operation of law and
except that they may be assigned by Buyer or to any successor of Buyer to the
Business without the consent of Seller) and shall be binding upon and shall
inure to the benefit of the parties. This Agreement constitutes a valid and
binding agreement of the parties enforceable in accordance with its terms and
may be modified or amended only by a written instrument executed by each party.
6. ENTIRE AGREEMENT. This Agreement and any documents referred to
herein or executed contemporaneously herewith, constitute the final, complete
and exclusive statement of the agreement among the parties with relation to the
subject matter of this Agreement. There are no oral representations,
understandings or agreements covering the same subject matter as this Agreement.
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7. COUNTERPARTS. This Agreement may be executed in two or more original
or facsimile counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
8. NOTICES. All notices or other communications required or permitted
under this Agreement shall be in writing and may be given by depositing the same
in United States mail, addressed to the party to be notified, postage prepaid
and registered or certified with return receipt requested, by overnight courier
or by delivering the same in person to such party, addressed as follows:
(a) If to Seller, addressed to it at:
Pinnacle Entertainment, Inc.
Realty Investment Group, Inc.
4400 MacArthur Boulevard, Suite 380
Newport Beach, CA 92660
Attn.: G. Michael Finnigan
and a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, CA 90067-4276
Attn.: Sandra G. Kanengiser
(b) If to Buyer, addressed to it at:
---------------------
and a copy to:
Fennemore Craig, P.C.
3003 North Central Avenue
Suite 2600
Phoenix, AZ 85012
Attn: Ronald L. Ballard
Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier, subject to signature verification, and
three business days after the deposit in the U.S. mail of a writing addressed
and sent as above or when actually received, if earlier. Any party may change
the address for notice by notifying the other party of such change in accordance
with this Section.
9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Arizona, without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Arizona or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Arizona.
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10. NO WAIVER. No delay of or omission in the exercise of any right,
power or remedy accruing to any party as a result of any breach or default by
any other party under this Agreement shall impair any such right, power or
remedy, nor shall it be construed as a waiver of or acquiescence in any such
breach or default, or of or in any similar breach or default occurring later. No
waiver of any single breach or default shall be deemed a waiver of any other
breach or default occurring before or after that waiver.
11. SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, it shall, to the extent possible, be modified
in such manner as to be valid, legal and enforceable but so as most nearly to
retain the intent of the parties. If such modification is not possible, such
provision shall be severed from this Agreement. In either case the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not in any way be affected or impaired thereby.
12. CONSTRUCTION. The headings in this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any of its provisions. The parties have participated
jointly in the negotiation and drafting of this Agreement. If a question of
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 provision of this
Agreement. The word "include" or "including" means include or including, without
limitation.
13. ATTORNEYS' FEES. If any legal action or any other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any provision of this
Agreement, the prevailing party or parties shall be entitled to recover
reasonable attorneys' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be entitled.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
SELLER:
___________________________
By: _______________________
Name:______________________
Title:_____________________
BUYER:
___________________________
By: _______________________
Name:______________________
Title:_____________________
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EXHIBIT 5.2.5
SELLER'S CLOSING CERTIFICATE
This Certificate is executed and delivered by the undersigned in his
capacity as an officer of Pinnacle Entertainment, Inc., a Delaware corporation
("Seller") pursuant to Sections 12.1 and 12.2 of that certain Agreement for
Purchase and Sale of Assets (the "Agreement") dated as of ________, among Seller
and Jerry Simms, an individual, and assigned by Jerry Simms to ______________,
a(n) ___________ ("Buyer").
The undersigned officer of Seller, in his capacity as such, hereby
certifies that:
i) Seller has performed in all material respects its
material covenants contained in the Agreement required to be performed on or
before the Closing.
ii) The representations and warranties of Seller set
forth in Article 7 of the Agreement (other than Sections 7.6.2 and 7.7.2, which
have expired), as amended, if amended as provided in Section 17.16, are accurate
as of the date hereof (except where such representation or warranty was made as
of a date specifically set forth therein), except where the failure to be
accurate relates to matters which could not reasonably be expected to have a
Material Adverse Effect.
Capitalized terms used in this Certificate but not otherwise defined
herein shall have the meanings assigned to them in the Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
this ___ day of ________, ____.
Seller:
______________________________
By: __________________________
Name:_________________________
Title:________________________
EXHIBIT 5.2.8
NON-FOREIGN CERTIFICATION
The undersigned, as authorized agent of Pinnacle Entertainment, Inc., a Delaware
corporation ("Transferor"), certifies that:
Section 1445 of the Internal Revenue Code provides that a transferee of a U.S.
real property interest must withhold tax if the transferor is a foreign person.
To inform ______________, a(n) ________ ________ ("Transferee"), that
withholding of tax is not required upon the disposition of Transferor's interest
in the real property described on Exhibit "A" attached hereto and by this
reference included herein, the undersigned hereby certifies as follows:
1. Transferor is not a non-resident alien, foreign corporation,
foreign partnership, foreign trust, foreign estate, or other
foreign person within the meaning of ss.1445 and [ss.7701] of
the Internal Revenue Code and the treasury regulations
promulgated thereunder;
2. Transferor's U.S. taxpayer identification number is:_______;.
3. Transferor's business address is:___________________________.
Transferor understands that this certification may be disclosed to the Internal
Revenue Service by Transferee and that any false statement contained herein
could be punished by fine, imprisonment, or both.
Under penalties of perjury Transferor declares that it has examined this
Affidavit and to the best of its knowledge and belief this certification is
true, correct and complete. The undersigned agent declares that he has the
authority to sign this document on behalf of Transferor.
_______________________,
a(n) __________________
By: _________________________
Name:________________________
Its:_________________________
EXHIBIT 5.3.3
OPINION OF BUYER'S COUNSEL
[TO BE DELIVERED FOR AND ADAPTED TO EACH BUYER ENTITY AT CLOSING.]
____________________ [date]
____________________________
____________________________
____________________________
Ladies and Gentlemen:
We have acted as counsel to _____________________________, an Arizona
limited partnership (the "Buyer"), in connection with the purchase by Buyer of
certain assets of Pinnacle Entertainment, Inc., a Delaware corporation (the
"Seller"), pursuant to that certain Agreement for Purchase and Sale of Assets
dated as of ______________, by and between Seller and Jerry Simms, an
individual, and assigned by Jerry Simms to the Buyer (the "Purchase Agreement").
This opinion letter is furnished to you pursuant to Section 5.3.3 of the
Purchase Agreement. Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Purchase Agreement.
For purposes of rendering this opinion, we have examined such questions
of law and fact as we deemed relevant. We have also assumed that the Purchase
Agreement and Transaction Documents (as hereinafter defined) have been duly
authorized, executed and delivered by, and constitute valid, binding and
enforceable obligations of, Seller, that all signatories of Seller are duly
authorized, that Seller is duly organized and validly existing and/or has the
power and authority to execute, deliver and perform the Transaction Documents to
the extent that Seller is a party thereto, that all of the signature and
acknowledgements of all parties to the Transaction Documents are genuine, that
all of the Transaction Documents submitted to us as executed counterparts are
authentic and that all of the Transaction Documents submitted to us as copies
conform to the executed originals of such documents. As to various questions of
fact relevant to this opinion, we have been furnished with, and have relied
without independent verification upon, the representations and warranties of the
Buyer contained in the Transaction Documents, including the Purchase Agreement,
the certificates of good standing issued by the Secretary of State of Arizona
with respect to the existence, good standing and qualification to transact
business of the entities referenced therein and a certificate provided to us by
[an officer of the general partner] of the Buyer. We have also assumed the
absence of any agreement or understanding that would modify, supplement or amend
any of the documents reviewed by us.
We do not express any opinion as to any laws other than the laws of the
State of Arizona and the laws of the United States of America.
Based upon the foregoing and on the assumptions herein set forth, and
subject to the limitations, qualifications and exceptions set forth herein, we
are of the opinion that:
1. The Buyer is a limited partnership formed, validly existing and in
good standing under the laws of the State of Arizona and has all requisite power
and authority to carry on its business as now conducted, and is duly qualified
to transact business in the State of Arizona.
2. The execution, delivery and performance by the Buyer of the Purchase
Agreement and any other instruments and agreements executed and delivered by the
Buyer to Seller pursuant to the Purchase Agreement (the "Transaction Documents")
and the consummation by the Buyer of the transactions contemplated thereby (the
"Transactions"), including but not limited to the assumption by Buyer of the
Assumed Liabilities pursuant to the Purchase Agreement, are within the Buyer's
partnership powers, have been duly authorized by all necessary action of the
partners of Buyer and do not contravene the provisions of the certificate of
limited partnership or the limited partnership agreement of the Buyer. The
Purchase Agreement and the Transaction Documents have been duly and validly
executed by the Buyer.
3. Each of the Transaction Documents is the legal, valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with its
terms, except as may be limited by the effect of bankruptcy, insolvency,
reorganization, moratorium and other laws and court decisions or other legal or
equitable principles relating to, limiting or affecting the enforcement of
creditors' rights generally including, without limitation, preferences and
fraudulent conveyances, and subject to the discretion of any court of competent
jurisdiction in awarding equitable remedies (regardless of whether considered in
a proceeding in equity or at law), including, but not limited to, specific
performance or injunctive relief.
4. The consummation of the Transactions does not require any filing
with any Governmental Authority pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (15 U.S.C.ss.18a), as amended.
This opinion is rendered as of the date hereof, and we undertake no
obligations to update this opinion in respect of any changes of circumstances,
events, laws or judicial decisions. This opinion is rendered to you solely for
your benefit in connection with the transactions contemplated above. This
opinion may not be relied upon by any other person for any purpose.
Very truly yours,
Fennemore Craig, P.C.
-2-
EXHIBIT 5.3.5
BUYER'S CLOSING CERTIFICATE
This Certificate is executed and delivered by the undersigned in his
capacity as ____________________ of ________________________, a
_____________________ ("Buyer") pursuant to Sections 11.1 and 11.2 of that
certain Agreement for Purchase and Sale of Assets (the "Agreement") dated as of
________, among Pinnacle Entertainment, Inc., a Delaware corporation, and Jerry
Simms, an individual, and assigned by Jerry Simms to ______________, a(n)
___________ ("Buyer").
The undersigned [officer] of Buyer, in his capacity as such, hereby
certifies that:
i) Buyer has performed in all material respects its
material covenants contained in the Agreement required to be performed on or
before the Closing.
ii) The representations and warranties of Buyer set forth
in Article 8 of the Agreement, as amended, if amended as provided in Section
17.16, are true and correct in all material respects on and as of the date
hereof (except where such representation or warranty was made as of a date
specifically set forth therein).
Capitalized terms used in this Certificate but not otherwise defined
herein shall have the meanings assigned to them in the Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
this ___ day of ________, ____.
Buyer:
____________________________________
By:_________________________________
Name:_______________________________
Title:______________________________