EXHIBIT 10.1
Hollywood Park
Executive Offices
March 19, 1996
Timothy J. Parrott
Chairman and CEO
Boomtown, Inc.
I-80 at Boomtown Exit
Verdi, NV 89439
Dear Mr. Parrott:
This letter of intent sets forth the basic terms and conditions relating
to the strategic combination of Boomtown, Inc. ("Boomtown") and Hollywood Park,
Inc. ("HPI") pursuant to a statutory merger (the "Merger") in which a wholly
owned subsidiary of HPI would be merged with and into Boomtown as a result of
which Boomtown would become a wholly owned subsidiary of HPI. The parties
intend that the Merger would qualify as a tax-free reorganization under Section
368 of the Internal Revenue Code of 1986, as amended.
1. Merger Exchange Ratio.
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Each share of Boomtown Common Stock would be converted into .625 of a
share of HPI Common Stock (the "Exchange Ratio").
2. Board Representation and Executive Committee.
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Four members of Boomtown's Board of Directors would be added to HPI's
Board of Directors and such former Boomtown directors would be nominated
by HPI for re-election to the Board for at least the first three annual
stockholders meetings following the Merger. HPI's Board would have no
more than eleven representatives during such three-year period (except
in the event that the holders of HPI Preferred Stock exercise their
right to nominate up to two nominees on the Board). The Executive
Committee would be comprised of five persons, two of whom would be
nominated by Boomtown. The initial Boomtown representatives shall be
Timothy Parrott and Richard Goeglein. In the event either or both of
Messrs. Parrott or Goeglein are unable to serve on the Executive
Committee, the remaining Boomtown representatives on the Board shall
select the new Boomtown representatives to the Executive Committee. The
officers of Boomtown would
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Timothy J. Parrott
March 19, 1996
continue as such pursuant to mutually agreeable amended and restated
employment agreements.
3. Merger Agreement.
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The Merger Agreement would contain representations, warranties and other
provisions customary in transactions of this type. All representations,
warranties, covenants and indemnities would terminate on the effective
date of the Merger, except as expressly provided to the contrary (e.g.
Board representation and the like).
4. Options.
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The Merger Agreement would provide that all outstanding Boomtown options
would be converted into options to acquire HPI Common Stock such that
(i) the exercise price of each option would be equal to Boomtown's per
share market price on the date preceding the announcement of the Merger
divided by the Exchange Ratio, and (ii) the shares subject to each
option would be equal to the number of shares immediately prior to the
Merger multiplied by the Exchange Ratio. The Merger Agreement would
also provide that all outstanding HPI options would be repriced such
that the exercise price of each option would be equal to HPI's per share
market price on the date preceding the announcement of the Merger.
5. Securities Law Matters.
----------------------
The HPI Common Stock to be issued in the Merger would be registered on a
Form S-4 registration statement and listed on the NASDAQ National Market
System.
6. Conditions.
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Consummation of the Merger would be subject to the satisfaction of the
following conditions, among others:
(a) the negotiation and execution of a definitive merger agreement,
containing representations, warranties, covenants, conditions and
indemnification provisions customary for transactions of this nature and
which are satisfactory in form and substance to both parties;
(b) the obtaining of all required governmental and regulatory consents
or approvals with respect to the Merger (including without limitation
the Hart/Scott/Rodino Act) and the licensing of HPI's
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Timothy J. Parrott
March 19, 1996
executive officers with the Gaming Commissions in Nevada, Mississippi,
Louisiana, Indiana (if required) and any other required jurisdiction;
(c) approval of the definitive Merger Agreement by the Board of
Directors and stockholders of both Boomtown and HPI and receipt of
"fairness" opinions from the respective investment bankers representing
Boomtown and HPI;
(d) there being no legislation adopted (or having a reasonable
likelihood of being adopted) in California that would prohibit the
ownership of the combined company;
(e) the availability of sufficient financing to fund the repurchase of
Boomtown's outstanding debentures if put to Boomtown by the holders
thereof in accordance with the terms of Boomtown's Indenture and to fund
up to a mutually agreeable dollar amount for future gaming projects;
(f) no material adverse change in the business, financial condition,
results of operations or properties of either party after the execution
of a definitive agreement; and
(g) the execution by Boomtown of the amended and restated employment
agreements with the officers of Boomtown (Boomtown's condition only).
7. No Shop.
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The Merger Agreement would contain reciprocal "no shop" provisions
subject to each Board's fiduciary duty and would provide for a breakup
fee of $5 million payable by either Boomtown or HPI under certain
limited circumstances (including termination by Boomtown upon receipt by
Boomtown of a superior offer).
8. Closing.
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The parties intend to work diligently and in good faith toward the
negotiation and execution of a definitive merger agreement. Execution
of any definitive agreement would be subject, among other things, to the
satisfactory completion of legal, accounting and business due diligence
by both Boomtown and HPI in their sole discretion. Following execution
of a definitive
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Timothy J. Parrott
March 19, 1996
agreement, if any, the parties would work toward consummation of the
transactions by December 31, 1996, but in no event later than June 30,
1997.
9. Publicity.
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HPI and Boomtown will issue a joint press release relating to the terms
of this letter of intent and shall cooperate in conjunction with any
other public disclosure of the matters contemplated hereby. The parties
acknowledge that they are bound by the terms of a Confidentiality
Agreement executed by them, dated February 27, 1996.
10. Expenses.
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Each party will be responsible for its own expenses in connection with
all matters relating to the transaction. If for any reason this
proposed transaction shall not be consummated, neither party will be
responsible for any of the other's expenses except as provided in the
definitive merger agreement. Each party will indemnify, defend and hold
harmless the other against the claims of any brokers or finders claiming
by, through or under the indemnifying party.
11. Binding Nature.
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Except for matters set forth in paragraphs 9 (publicity,
confidentiality), 10 (expenses, brokers) and this paragraph 11, this
letter does not create and will not be deemed to be a binding, legal
obligation among the parties for any reason but merely represents the
present good faith intention of the parties.
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Timothy J. Parrott
March 19, 1996
12. Counterparts.
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This letter of intent may be executed in counterparts.
Your signature below shall confirm your agreement with the foregoing
letter of intent.
Very truly yours,
HOLLYWOOD PARK, INC.
By: /s/ G. Michael Finnigan
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Name: G. Michael Finnigan
Title: Chief Financial Officer
AGREED TO AND ACCEPTED THIS
19th day of March, 1996
BOOMTOWN, INC.
By: /s/ Timothy J. Parrott
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Name: Timothy J. Parrott
Title: Chairman and Chief Executive Officer
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