EXHIBIT 10.18
BLUE DIAMOND SWAP AGREEMENT
DATED AS OF AUGUST 12, 1996
BY AND AMONG
BOOMTOWN, INC.,
BLUE DIAMOND HOTEL & CASINO, INC.,
HOLLYWOOD PARK, INC.,
EDWARD P. ROSKI, JR.,
IVAC
AND
MAJESTIC REALTY CO.
TABLE OF CONTENTS
PAGE
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1. DEFINITIONS AND RULES OF INTERPRETATION............................... 2
1.1 Definitions...................................................... 2
1.2 Rules of Interpretation.......................................... 7
2. TRANSFER OF ROSKI NOTES............................................... 8
2.1 Transfer of Roski Notes on the Exchange Date..................... 8
2.2 Excluded Assets.................................................. 8
2.3 No Liabilities Assumed; Excluded Liabilities..................... 8
3. TRANSFER OF BD INTEREST............................................... 8
3.1 Transfer of BD Interest on the Exchange Date..................... 8
3.2 Excluded Assets.................................................. 9
3.3 Liabilities Assumed.............................................. 9
4. CASH PAYMENT.......................................................... 9
5. EXCHANGE OF ASSETS.................................................... 9
5.1 Exchange Date.................................................... 9
5.2 Cash Payment; Proration.......................................... 10
5.3 Deliveries by BD Transferor...................................... 10
5.4 Deliveries by Roski.............................................. 11
5.5 Additional Undertakings by Roski................................. 12
5.6 Additional Undertakings by Boomtown, Blue Diamond,
Hollywood Park and BD Transferor................................. 13
6. REPRESENTATIONS AND WARRANTIES........................................ 14
6.1 Representations and Warranties of the Roski Entities............. 14
6.2 Representations and Warranties of Boomtown, Blue Diamond,
Hollywood Park and BD Transferor................................. 16
7. CONDITIONS PRECEDENT.................................................. 17
7.1 Conditions to Execution and Delivery of this Agreement
by Boomtown...................................................... 17
7.2 Conditions to Execution and Delivery of this Agreement
by Roski......................................................... 17
7.3 Conditions to Exchange by BD Transferor.......................... 17
7.4 Conditions to Exchange by Roski.................................. 18
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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8. INDEMNIFICATION....................................................... 19
8.1 Indemnification by the Roski Entities........................... 19
8.2 Indemnification by Boomtown, Blue Diamond and BD Transferor..... 20
8.3 Procedure....................................................... 20
9. ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES.................... 21
9.1 Approvals....................................................... 21
9.2 Consents, Authorizations and Waivers............................ 21
9.3 Transfer Taxes.................................................. 21
9.4 Additional Deliveries; Further Assurances....................... 21
9.5 Maintenance of Resort Business.................................. 22
9.6 Director's Insurance............................................ 22
10. TERMINATION.......................................................... 22
10.1 Termination.................................................... 22
10.2 Other Merger................................................... 22
11. MISCELLANEOUS........................................................ 23
11.1 Changes, Waivers, etc.......................................... 23
11.2 Payment of Fees and Expenses................................... 23
11.3 Notices........................................................ 23
11.4 Entire Agreement............................................... 24
11.5 Survival of Representations and Warranties, etc................ 24
11.6 Headings; References to Agreement.............................. 24
11.7 Choice of Law; Interpretation.................................. 24
11.8 Counterparts................................................... 24
11.9 Severability................................................... 24
11.10 Successors and Assigns......................................... 24
11.11 No third Party Beneficiaries................................... 24
11.12 Waiver of Jury Trial........................................... 25
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LIST OF EXHIBITS AND SCHEDULES
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EXHIBIT A RELEASE
EXHIBIT B ROSKI NOTE
EXHIBIT C TERMINATION AGREEMENT
SCHEDULE 1-A NOTES AND LEASES
SCHEDULE 1-B MAINTENANCE CONTRACTS
SCHEDULE 1-C OUTDOOR SIGNS
SCHEDULE 1-D LICENSE AND PROGRESSIVE SERVICE AGREEMENTS
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BLUE DIAMOND SWAP AGREEMENT
This Blue Diamond Swap Agreement (this "Agreement") is made as of the 12th
day of August, 1996 by and among Boomtown, Inc., a Delaware corporation
("Boomtown"), Blue Diamond Hotel & Casino, Inc., a Nevada corporation and a
wholly-owned subsidiary of Boomtown ("Blue Diamond"), Hollywood Park, Inc., a
Delaware corporation ("Hollywood Park"), Edward P. Roski, Jr., an individual
residing in the State of California ("Roski"), IVAC, a California general
partnership of which Roski is a partner ("IVAC") and Majestic Realty Co., a
California corporation ("Majestic").
WHEREAS, IVAC owns certain real property in Las Vegas, Nevada, on which a
resort consisting of a casino, hotel, restaurant, recreational vehicle park and
related facilities (as more fully defined below, the "Resort") is being operated
by Blue Diamond as Boomtown Las Vegas;
WHEREAS, Boomtown has advanced certain funds to IVAC to enable IVAC to
complete development and construction of the Resort, which advances are
evidenced by certain promissory notes issued by IVAC, which notes are governed
by loan agreements and secured by deeds of trust on the Resort site and certain
related property;
WHEREAS, Blue Diamond has entered into a lease with IVAC for the Resort
site, and has purchased and installed certain trade fixtures in the Resort;
WHEREAS, Hollywood Park intends to enter into a strategic combination (the
"Merger") with Boomtown pursuant to an Agreement and Plan of Merger dated as of
April 23, 1996 by and among Hollywood Park, Boomtown and HP Acquisition, Inc., a
Delaware corporation and a wholly-owned subsidiary of Hollywood Park (as amended
and in effect from time to time, the "Merger Agreement");
WHEREAS, subject to consummation of the Merger pursuant to the Merger
Agreement, Boomtown and Blue Diamond intend either (a) to effect any one or
combination of the following transfers of their respective interests in the
Resort (i) a transfer to a subsidiary of Boomtown (an "SPC") created for the
purpose and designated as an "Unrestricted Subsidiary" under the Boomtown
Indenture (as defined below), or (ii) as set forth in Section 3.1, any other
transfer which would achieve the result contemplated by this Agreement or (b) to
retain their respective interests in the Resort, for the purpose of entering
directly into the transactions contemplated by this Agreement;
WHEREAS, it is the intent of the parties hereto that, upon consummation of
the Merger pursuant to the Merger Agreement, subject to the terms and conditions
set forth in this Agreement, the holder of such interests in the Resort,
regardless of whether such holder is then Boomtown, Blue Diamond, Hollywood
Park, any designated Affiliate (as defined below) of Hollywood Park, any SPC or
other designated subsidiary of Boomtown or any combination
thereof (any such holder(s), "BD Transferor") would either exchange such
interests in the Resort for the Roski Notes (as defined below) or effect the
same result through a series of related transactions, and, in any such case,
Roski would exchange the Roski Notes for such interests in the Resort (such
exchange, however effected, the "Blue Diamond Swap");
NOW THEREFORE, in consideration of the foregoing premises, and for other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Boomtown, Blue Diamond, Hollywood Park, Roski, IVAC and Majestic
hereby agree as follows:
1. DEFINITIONS AND RULES OF INTERPRETATION
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1.1 Definitions. The following terms shall have the respective
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meaning set forth below, or in the Sections of this Agreement respectively
referred to below:
"Affiliate" of any person or entity organized as a corporation,
partnership, joint venture, business trust or other non-individual person, shall
mean (i) any person or entity which directly or indirectly owns fifty percent
(50%) or more of the stock, partnership or other beneficial interest of such
person or entity, (ii) any corporation, partnership or other entity of which
fifty percent (50%) or more of the stock, partnership or other beneficial
interest is owned directly or indirectly by such person or entity, and (iii) any
corporation, partnership or entity of which fifty percent (50%) or more of the
stock, partnership or other beneficial interest is owned directly or indirectly
by any person or entity that owns fifty percent (50%) or more of the stock,
partnership or other beneficial interest of such person or entity.
"Affiliate Loan Agreement" shall mean the Affiliate Loan Agreement
dated as of June 30, 1993, by and among IVAC, Majestic and Boomtown.
"Affiliate Note" shall mean the Affiliate Loan Note dated as of June
30, 1993, made by IVAC in favor of Boomtown.
"Affiliate Loan Deed of Trust" shall mean the Deed of Trust and
Assignment of Rents and Security Agreement dated as of June 30, 1993, by and
among IVAC, as trustor, Nevada Title Company, a Nevada corporation, as trustee
and Boomtown and Majestic as tenants in common, as beneficiaries.
"Approvals" shall mean all governmental approvals, consents, licenses,
findings of suitability, and permits, including without limitation, any
approvals of Gaming Authorities, as may be required to effect the Blue Diamond
Swap.
"Assumed Contracts" shall mean (i) the leases and notes identified on
Schedule 1-A hereto, (ii) the gift shop leases and the sports book agreement
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between Boomtown and Leroy's Horse and Sports Place, dated November 30, 1995,
(iii) the agreement for the family
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amusement center at the Resort, (iv) the maintenance contracts listed on
Schedule 1-B hereto, (v) the outdoor sign agreements listed on Schedule 1-C
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hereto, (vi) the license and progressive service agreements listed on
Schedule 1-D hereto and (vii) the agreements for entertainment at the Resort
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in effect on the Exchange Date.
"BD Interest" shall mean all of BD Transferor's right, title and
interest in and to (i) the Affiliate Note, the Bridge Note, the Affiliate Loan
Agreement, the Bridge Loan Agreement, the Purchase Option Agreement, the
Affiliate Loan Deed of Trust, the Bridge Loan Deed of Trust and the Purchase
Option Deed of Trust, (ii) the mortgage liens on, and other rights in, the
Resort site and related properties respectively conveyed in trust under the
Affiliate Loan Deed of Trust, the Bridge Loan Deed of Trust and the Purchase
Option Deed of Trust, (iii) the Blue Diamond Lease, the Assumed Contracts, the
FF&E and the Specified Assets and (iv) security systems, customer lists,
telephone numbers, books and records, user manuals, plans, surveys, liquor and
other licenses and inventories which are located at, or used principally in
connection with, the Resort; provided, however, that the BD Interest shall
include all interests of Boomtown and Blue Diamond in the foregoing as of the
Exchange Date.
"BD Transferor" shall have the meaning ascribed thereto in the
recitals hereto.
"Blue Diamond" shall have the meaning ascribed to such term in the
recitals hereto.
"Blue Diamond Lease" shall mean the Lease dated as of June 30, 1993,
as amended by a First Amendment to Lease dated as of November 10, 1993, by and
between IVAC as lessor and Blue Diamond as lessee, pursuant to which IVAC has
agreed to lease to Blue Diamond, and Blue Diamond has agreed to lease from IVAC,
the real property in Las Vegas, Nevada on which the Resort is situated.
"Blue Diamond Swap" shall have the meaning ascribed thereto in the
recitals hereto.
"Boomtown" shall have the meaning ascribed thereto in the preamble
hereto.
"Boomtown Indenture" shall mean the Indenture dated as of November 1,
1993, by and among Boomtown, Blue Diamond, certain of their Affiliates and the
Trustee.
"Bridge Loan Agreement" shall mean the Bridge Loan Agreement dated as
of June 30, 1993, by and between IVAC and Boomtown, as amended by an Amendment
No. 1 to Bridge Loan Agreement dated as of November 10, 1993.
"Bridge Note" shall mean the Amended and Restated Promissory Note
(Bridge) dated as of June 30, 1993, made by IVAC in favor of Boomtown.
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"Bridge Loan Deed of Trust" shall mean the Deed of Trust and
Assignment of Rents and Security Agreement dated as of June 30, 1993, by and
among IVAC, as trustor, Nevada Title Company, a Nevada corporation, as trustee
and Boomtown as beneficiary.
"Designated Roski Entity" shall mean an entity designated by Roski and
either (i) reasonably acceptable to Boomtown and Hollywood Park or (ii) the
obligations of which hereunder and under the Related Documents, including all
indemnities for which such Roski Entity is liable, shall have been
unconditionally guaranteed by Roski pursuant to the Roski Guaranty.
"Effective Date" shall mean the date of this Agreement.
"Employees" shall mean the employees of Boomtown, Blue Diamond or
their Affiliates employed at or in connection with the Resort exclusively and
not employed at other facilities.
"Exchange Date" shall mean the date on which the conditions precedent
specified in Sections 7.3 and 7.4 hereof have been satisfied or waived.
"FF&E" shall mean all trade fixtures, other fixtures and equipment
located at or used principally in connection with the Resort, including, in any
event, those assets (however characterized) listed on the fixed asset register
of Blue Diamond as of the Effective Date and those assets (however
characterized) leased or purchased under the leases and notes listed on Schedule
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1-A; provided, however, that FF&E shall be deemed to include any replacements of
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any such assets and any similar assets acquired for use at or principally in
connection with the Resort by Boomtown, Blue Diamond or BD Transferor during the
period from the Effective Date until the Exchange Date and shall be deemed to
exclude any such assets that no longer exist as of the Exchange Date due to
obsolescence or use in the ordinary course of business.
"Fixture Filings" shall mean the fixture filings with respect to the
Resort listed as of the Exchange Date on Schedule 1 to the Termination
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Agreement.
"GAAP" shall mean generally accepted accounting principles as in
effect on the relevant date of determination, consistently applied.
"Gaming Authority" shall mean the Nevada Gaming Commission, the Nevada
State Gaming Control Board, the Clark County Liquor and Gaming Licensing Board
and any other state, county or other governmental authority having
responsibility for, jurisdiction over, or regulatory authority, oversight or
supervisory responsibilities in respect of, any gaming related business operated
or contemplated to be operated at or in connection with the Resort.
"Gaming Law" shall mean all applicable provisions (i) the Nevada
Gaming Control Act and the statutes rules, and regulations promulgated
thereunder and (ii) all interpretations, decisions, judgments, orders and
decrees of any Gaming Authority.
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"Hollywood Park" shall have the meaning ascribed to such term in the
preamble hereto.
"IVAC" shall have the meaning ascribed to such term in the preamble
hereto.
"Majestic" shall have the meaning ascribed to such term in the
preamble hereto.
"Merger" shall have the meaning ascribed to such term in the recitals
hereto.
"Merger Agreement" shall have the meaning ascribed to such term in the
recitals hereto.
"Permitted Liens" shall mean (a) liens and encumbrances, including
rights of consent to assignment, arising under the Assumed Contracts in
accordance with the terms thereof, (b) restrictions imposed by Gaming Laws and
other applicable governmental authorities and (c) other encumbrances arising in
the ordinary course of business in connection with the operation of the Resort.
"Perishable Inventory" shall mean all liquor, beverages, foodstuff and
other consumable or perishable inventory purchased by Blue Diamond or any of its
Affiliates for consumption or use at the Resort, valued at cost on a FIFO basis.
"Purchase Option Agreement" shall mean the Purchase Option Agreement
dated as of June 30, 1993 by and among IVAC, Boomtown and Blue Diamond.
"Purchase Option Deed of Trust" shall mean the Deed of Trust and
Assignment of Rents and Security Agreement dated as of June 30, 1993, by and
among IVAC, as trustor, Nevada Title Company, a Nevada corporation, as trustee
and Blue Diamond, as beneficiary.
"Related Agreements" shall mean the Termination Agreement, the Roski
Notes, the Roski Guaranty, if applicable, the Release and all of the other
documents, instruments and agreements executed and delivered in connection with
any of the foregoing, and the transactions respectively contemplated hereby and
thereby.
"Release" shall mean the general release by each of (i) the Roski
Entities of BD Transferor, Boomtown, Blue Diamond and their respective
Affiliates of the obligations related to the Resort created by or contained in
the Blue Diamond Lease, the Assumed Contracts, the Specified Liabilities and all
obligations, liabilities and claims relating to the Resort arising or accruing
prior to the date on which Boomtown or Blue Diamond took possession of the
"Premises" (as defined in the Blue Diamond Lease) or arising or accruing on or
after the Exchange Date and (ii) BD Transferor, Boomtown and Blue Diamond of the
Roski Entities of all obligations, liabilities and claims arising under the
Affiliate Note, the Bridge Note, the Affiliate Loan Agreement, the Bridge Loan
Agreement, the Purchase Option Agreement, the Affiliate Loan Deed of Trust, the
Bridge Loan Deed of Trust and the Purchase Option Deed of Trust in substantially
the form of Exhibit A hereto.
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"Resort" shall mean the facility located at 3333 Blue Diamond Road,
Las Vegas, Nevada consisting of a casino, hotel, restaurant, recreational
vehicle park and related facilities, and all assets located at, used principally
in connection with, or arising principally from such facilities, including the
FF&E, the Specified Assets, certain rights under the Assumed Contracts, security
systems, customer lists, telephone numbers, books and records, user manuals,
plans, surveys, liquor and other licenses and inventories.
"Retained Employees" shall have the meaning ascribed thereto in
Section 5.6(a) of this Agreement.
"Roski" shall have the meaning ascribed to such term in the preamble
hereto.
"Roski Entities" shall mean collectively, Roski, IVAC (including
Edward P. Roski, Sr. as a general partner of IVAC) and Majestic.
"Roski Guaranty" shall mean a guaranty by Roski of the obligations of
the Designated Roski Entity hereunder and under the other Related Agreements to
which the Designated Roski Entity is a party, if required by Boomtown and
Hollywood Park, in form and substance satisfactory to Boomtown and Hollywood
Park.
"Roski Notes" shall mean (i) an unsecured promissory note made by the
Designated Roski Entity, in an initial principal amount of five million dollars
($5,000,000) having an interest rate equal to the Prime Rate, as announced by
Bank of America from time to time, plus one and one half percent (1.5%) per
annum and providing for annual principal payments of one million dollars
($1,000,000) plus accrued interest and maturing on the date that is five years
after the Exchange Date, in substantially the form of Exhibit B-1 hereto and
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(ii) an unsecured promissory note, made by the Designated Roski Entity, in an
initial principal amount of $3,464,287 having an interest rate equal to the
Prime Rate, as announced by Bank of American from time to time, plus one-half
percent (.5%) per annum and providing for a payment of all principal plus
accrued interest on the date that is three (3) years after the Exchange Date, in
substantially the form of Exhibit B-2 hereto.
"Roski Stock" shall mean 714,386 shares of the common stock of
Boomtown held, as of the Effective Date, by Roski, and all shares of the common
stock of Hollywood Park into which such Boomtown common stock had then
converted, or which Roski then had a right to receive in exchange for such
Boomtown common stock.
"Roski Stock Purchase Agreement" means an agreement of even date
herewith between Roski and Hollywood Park pursuant to which Roski is selling,
transferring and conveying the Roski Stock to Hollywood Park, and Hollywood Park
is purchasing and acquiring the Roski Stock for the Roski Stock Purchase Price.
"Roski Stock Purchase Price" shall mean a note to be issued by
Hollywood Park to Roski in the principal amount of $3,464,287 pursuant to the
Roski Purchase Agreement as consideration for the purchase of the Roski Stock.
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"SPC" shall have the meaning ascribed to such term in the preamble
hereto.
"Specified Assets" shall mean (i) prepaid deposits with utilities with
respect to the Resort, security deposits and any other prepaid expenses, (ii)
cash in the Resort, whether in machines, gaming tables, change stations, the
gaming control center or at the hotel front desk, the restaurant or the
recreational vehicle park, (iii) Perishable Inventory (iv) applicable property
tax refunds accrued prior to the Exchange Date and not included in the tax
proration contemplated by Section 5.2 and (v) all trade receivables and all
other liquid assets other than markers (i.e., receivables and other uncontingent
payment rights convertible into cash within 90 days after the respective
issuance dates thereof), in each case, accruing or arising through the last day
prior to the Exchange Date.
"Specified Liabilities" shall mean (i) trade payables, (ii) players
points (Players Club), (iii) progressive slot winnings liability as shown on
Boomtown's books and records, (iv) caribbean stud liability, (v) advance
deposits, (vi) outstanding tokens and (vii) pre-sold concerts, with respect to
the Resort, in each case, accruing or arising through the last day prior to the
Exchange Date.
"Termination Agreement" shall have the meaning ascribed to such term
in Section 5.3(a) hereof.
"Trustee" shall mean First Trust National Association, as trustee
under the Boomtown Indenture.
1.2 Rules of Interpretation
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(a) A reference to any document or agreement shall, unless
otherwise provided, include such document or agreement as amended, modified or
supplemented from time to time in accordance with its terms and, if applicable,
as permitted by this Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any applicable amendment
or modification to such law, or any applicable successor law.
(d) A reference to any person or entity includes its permitted
successors and permitted assignees.
(e) Accounting terms not otherwise defined herein have the
respective meanings assigned to them by GAAP applied on a consistent basis by
the accounting entity to which they refer.
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(f) The words "include," "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by GAAP,
which terms are defined in the Uniform Commercial Code as in effect in the State
of Nevada, shall have the respective meanings assigned to them therein.
(h) Reference to a particular "Section" refers to that section
of this Agreement unless otherwise indicated.
(i) The words "herein," "hereof," "hereunder" and words of
like import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
2. TRANSFER OF ROSKI NOTES.
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2.1 Transfer of Roski Notes on the Exchange Date. Subject to the
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terms and conditions of this Agreement, (i) the Designated Roski Entity agrees,
on the Exchange Date, to issue the Roski Notes to BD Transferor and (ii) BD
Transferor agrees, on the Exchange Date, to acquire and accept from Roski the
Roski Notes.
2.2 Excluded Assets. No other assets of the Roski Entities,
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except those specifically listed in Section 2.1 and the cash payments
respectively contemplated by Sections 3.1 and 5.2, if applicable, shall be
transferred or deemed to be transferred hereby.
2.3 No Liabilities Assumed; Excluded Liabilities. BD Transferor
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is not assuming and shall not be responsible for any liability or obligation of
any Roski Entity, any Specified Liabilities, any obligations under Assumed
Contracts accruing on or after the Exchange Date or any other claims or
liabilities with respect to the Resort arising or accruing on or after the
Exchange Date, or any liability or obligation arising from or relating to any of
the following:
(a) any costs or expenses, including, but not limited to,
legal fees, accounting fees, consulting, other finder, broker and financing
costs incurred by Roski or his Affiliates in connection with this Agreement or
the Related Agreements or the consummation of the transactions contemplated
hereby or thereby; or
(b) any taxes owed by any Roski Entity or assessed as a result
of or in connection with the transactions contemplated hereby, including,
without limitation, any income, property, sales, use or withholding taxes.
In no event shall Hollywood Park be deemed to have assumed, or
otherwise become liable for, any liability whatsoever of any Roski Entity
(regardless of whether Hollywood Park is designated as BD Transferor).
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3. TRANSFER OF BD INTEREST.
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3.1 Transfer of BD Interest on the Exchange Date. Subject to the
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terms and conditions of this Agreement, BD Transferor agrees, on the Exchange
Date, to transfer, convey, assign and deliver to Roski, or the Designated Roski
Entity, and Roski agrees to acquire, accept and assume (or cause the Designated
Roski Entity to acquire, accept and assume) from the BD Transferor, all right,
title and interest of BD Transferor in and to the BD Interest. The parties
intend that this exchange shall occur by means of a series of contemporaneous
steps as follows: (a) Boomtown and Blue Diamond would transfer the BD Interest
to the SPC, (b) the Designated Roski Entity would convey the Roski Notes and any
cash payments to be made hereunder to the SPC and assume the liabilities
described herein, (c) the SPC would transfer and convey the BD Interest to the
Designated Roski Entity as contemplated herein, subject to the Assumed Contracts
and (d) the SPC would transfer the Roski Notes and any cash payments to be made
hereunder to Boomtown. The parties acknowledge and agree that Boomtown and
Hollywood Park may mutually agree without the consent of Roski, to utilize a
structure other than the foregoing structure, to accomplish the objectives of
the parties set forth herein, provided that such structure is economically
equivalent to the contemplated structure set forth above. It is further
acknowledged that as part of such alternative structure, Boomtown and Hollywood
Park may require Roski to continue to own and hold the Roski Stock.
3.2 Excluded Assets. No other rights, interests or assets of BD
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Transferor or any of its Affiliates, except those specifically listed in Section
3.1 and the cash payment contemplated by Section 5.2, if applicable, shall be
transferred or deemed to be transferred hereby.
3.3 Liabilities Assumed. Upon and after the Exchange Date, the
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Designated Roski Entity shall be solely liable for the Specified Liabilities,
accrued liabilities relating to vacation, earned but unused under the Blue
Diamond employee benefits policy in effect as of the date hereof associated with
the employees hired by Roski pursuant to Section 5.5(F) and liabilities arising
under the Assumed Contracts and all other costs, expenses, claims, liabilities
and obligations of the Resort, of every kind and nature, in each case, arising
or accruing on or after the Exchange Date. The Designated Roski Entity shall
take such actions to assume the liabilities of the Resort accruing after the
Exchange Date under the Assumed Contracts as may be necessary to substitute the
Designated Roski Entity for BD Transferor or, as applicable, any of its
Affiliates, and/or shall relieve BD Transferor and its Affiliates of all
liability thereunder. Except for the Specified Liabilities, amounts accruing
under the Assumed Contracts on or after the Exchange Date and all of the other
costs, expenses, claims, liabilities and obligations arising on or after the
Exchange Date in connection with the Resort, the Designated Roski Entity will
not assume or otherwise become responsible for any liability or obligation of
Boomtown, Blue Diamond, Hollywood Park or any of their respective Affiliates, or
any other claims or liabilities whatsoever, including, any costs or expenses,
including, but not limited to, legal fees, accounting fees, consulting, other
finder, broker and financing costs incurred by Boomtown, Blue Diamond, Hollywood
Park, BD Transferor or any of their
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Affiliates in connection with this Agreement or the Related Agreements or the
consummation of the transactions contemplated hereby or thereby.
4. CASH PAYMENT. Subject to the terms and conditions of this Agreement,
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each of the parties agrees to make the cash payments respectively contemplated
to be made by such party in Sections 3.1 and 5.2, as applicable.
5. EXCHANGE OF ASSETS.
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5.1 Exchange Date. Subject to a restructuring in accordance with
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Section 3.1, on the Exchange Date, (a) BD Transferor shall transfer, convey,
assign and deliver to Roski, and Roski shall acquire, accept and assume from BD
Transferor, the BD Interest and (b) Roski shall deliver to BD Transferor, and BD
Transferor shall acquire and accept from Roski, the Roski Notes. Each party
shall deliver to the other such endorsements, assignments, releases and other
instruments as the other party shall reasonably request or as necessary to vest
in the other party valid and marketable title, free and clear of all liens or
encumbrances (except, with respect to the BD Interest, Permitted Liens) to the
BD Interest, in the case of Roski, and to the Roski Notes, in the case of BD
Transferor.
5.2 Cash Payment; Proration. On the Exchange Date, if the amount
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of Specified Assets is greater than the amount of Specified Liabilities as of
the Exchange Date, then Roski shall pay to BD Transferor an amount equal to the
amount of Specified Assets less the amount of Specified Liabilities. On the
Exchange Date, if the amount of Specified Liabilities is greater than the amount
of Specified Assets as of the Exchange Date, then BD Transferor shall pay to
Roski an amount equal to the amount of Specified Liabilities less the amount of
Specified Assets. In addition, all outstanding taxes, rent, utilities and
payments under the Assumed Contracts shall be pro rated as of the Exchange Date,
so that all such amounts accruing prior to the Exchange Date shall be for the
account of Blue Diamond or Boomtown and all such amounts accruing from and after
the Exchange Date shall be for the account of the applicable Roski Entity.
5.3 Deliveries by BD Transferor. On the Exchange Date, subject to
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the terms and conditions hereof, BD Transferor shall deliver to Roski each of
the following:
(a) a termination agreement in substantially the form of
Exhibit C hereto (the "Termination Agreement"), duly executed by BD Transferor,
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Boomtown and Blue Diamond terminating all of the respective rights and
obligations of BD Transferor and the Roski Entities under the Affiliate Note,
the Bridge Note, the Affiliate Loan Agreement, the Bridge Loan Agreement, the
Purchase Option Agreement, the Affiliate Loan Deed of Trust, the Bridge Loan
Deed of Trust, the Purchase Option Deed of Trust, the Blue Diamond Lease and all
or other documents relating to the Resort and the relationship among Boomtown,
Blue Diamond and any one or more of the Roski Entities, providing, inter alia,
for the acceptance by Roski of BD Transferor's transfer of the BD Interest in a
condition which complies with the terms of the Blue Diamond Lease and this
Agreement;
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(b) the Affiliate Note, marked canceled;
(c) the Bridge Note, marked canceled;
(d) a discharge of the Affiliate Loan Deed of Trust, in
recordable form;
(e) a discharge of the Bridge Loan Deed of Trust, in
recordable form;
(f) a discharge of the Purchase Option Deed of Trust, in
recordable form;
(g) a quitclaim deed, in recordable form, regarding the Resort
(including BD Transferor's interest under the Blue Diamond Lease and the
Purchase Option Agreement);
(h) a discharge in recordable form of the Construction and
Permanent Deed of Trust, Security Agreement and Fixture Filing with Assignment
of Rents dated as of November 10, 1993, among Blue Diamond, as trustor, Nevada
Title Company, as trustee, and the Trustee, as beneficiary;
(i) a discharge in recordable form of the Construction and
Permanent Deed of Trust, Security Agreement and Fixture Filing with Assignment
of Rents (Subordinated) dated as of November 10, 1993, among Blue Diamond, as
trustor, Nevada Title Company, as trustee, and Boomtown, as beneficiary;
(j) a termination in recordable form of the Collateral
Assignment of Deed of Trust dated as of November 10, 1993, between Boomtown and
the Trustee;
(k) UCC-3 termination statements, terminating the Fixture
Filings;
(l) the Release, duly executed by BD Transferor, Blue Diamond
and Boomtown;
(m) assignment agreements and any such other documents,
consents, authorizations and waivers as may be reasonably required by Roski,
lessors or other contracting parties, to assign all of BD Transferor's rights
and obligations under the Assumed Contracts;
(n) bills of sale for all personal property owned by BD
Transferor and included in the BD Interest;
(o) vehicle certificates of title and appropriate transfer
documents for all automobiles or other vehicles owned by BD Transferor and
included in the BD Interest;
-11-
(p) a list of all Employees employed at the Resort as of the
business day prior to the Exchange Date;
(q) an accounting of all cash on hand and Perishable Inventory
on the premises of the Resort on the business day prior to the Exchange Date;
and
(r) an accounting of Specified Assets and Specified
Liabilities.
5.4 Deliveries by Roski. On the Exchange Date, subject to the
-------------------
terms and conditions hereof, Roski shall deliver to BD Transferor each of the
following:
(a) the Termination Agreement, duly executed by Roski and each
other affected Roski Entity;
(b) the Roski Notes;
(c) the Release, duly executed by each affected Roski Entity;
and
(d) assumption agreements and other documents as may be
reasonably required by BD Transferor to cause Roski to assume the obligations of
BD Transferor under the Assumed Contracts.
5.5 Additional Undertakings by Roski. In addition to the transfer
--------------------------------
of the property listed in Section 2.1 and the deliveries listed in Section 5.4,
each applicable Roski Entity agrees as follows:
(a) Roski shall resign as a director of Boomtown, effective as
of the Exchange Date.
(b) Roski shall take such action as is necessary to cancel the
options on the stock of Boomtown received by Roski in connection with his
service as a director of Boomtown, effective as of the Exchange Date.
(c) From and after the Exchange Date, Roski shall maintain the
confidentiality of any non-public information pertaining to Boomtown, Blue
Diamond, Hollywood Park or BD Transferor acquired by him in his capacity as a
director of Boomtown; provided, however, that Roski shall not be obligated to
maintain the confidentiality of any information which is already in the public
domain through no act of Roski or which is required to be disclosed by court
order or applicable law.
(d) No Roski Entity shall use the name "Boomtown," or any
other trademark, trade name, service mark or similar property of Boomtown or any
of its Affiliates, after the 180th day following the Exchange Date, and no Roski
Entity shall at any time use the name "Hollywood Park" or any other trademark,
tradename, service mark or similar property of Hollywood Park or any of its
Affiliates, except by agreement with Hollywood Park or such
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Affiliates. So long as any Roski Entity uses the name "Boomtown", the Roski
Entities shall maintain the condition, service and operations of the Resort in
substantial conformity with those maintained by Blue Diamond and Boomtown prior
to the Exchange Date. The applicable Roski Entities and BD Transferor shall
enter into a trademark license agreement on the Exchange Date, including the
protections to Boomtown set forth in the Trademark License Agreement dated as of
June 30, 1993, by and between Boomtown and Blue Diamond.
(e) After the Exchange Date, the Roski Entities shall allow
the BD Transferor, its Affiliates and designees or appropriate governmental
agencies reasonable access to all books and records kept in connection with the
Resort prior to the Exchange Date, as reasonably requested by the BD Transferor
for legitimate business purposes. The parties will develop and follow a mutually
agreed upon retention policy with respect to the books and records of the
Resort.
(f) Prior to the Exchange Date, the Designated Roski Entity,
shall make offers of employment to substantially all of the Employees; provided,
however, that no Roski Entity shall attempt to solicit, or interfere in any
manner with, the employment of the Retained Employees.
(g) Each Roski Entity agrees, if Boomtown determines that it
is appropriate to solicit the consents to the Blue Diamond Swap from the holders
of the notes issued pursuant to the Boomtown Indenture, to cooperate as
reasonably requested by Boomtown in such consent solicitation and to cooperate
reasonably in any other actions which may be necessary to effect the
transactions contemplated hereby, regardless of the structure or form of the
Blue Diamond Swap; provided, that no Roski Entity shall be required to incur any
expense or liability in connection therewith.
(h) Roski or the Designated Roski Entity agrees to give such
notices as may be required by the Worker Adjustment and Retraining Notification
Act.
(i) The Designated Roski Entity, if not a party to this
Agreement, shall become a party to this Agreement.
5.6 Additional Undertakings by Boomtown, Blue Diamond, Hollywood
------------------------------------------------------------
Park and BD Transferor. In addition to the transfer of the property listed in
- ----------------------
Section 5.3, Boomtown, Blue Diamond, Hollywood Park and BD Transferor agree as
follows:
(a) Boomtown, Blue Diamond and the BD Transferor recognize
that the Designated Roski Entity will generally need to retain the services of
the Employees (other than the Retained Employees as defined below) in order to
operate the Resort in a businesslike and efficient manner following the Exchange
Date. Accordingly, Boomtown, Blue Diamond and BD Transferor agree not to
transfer any Employees from the Resort to their other operations after the
Effective Date and agree to terminate, as of the Exchange Date, all Employees.
Notwithstanding the foregoing, Boomtown, Blue Diamond or BD Transferor may
designate, by means of a written notice received by Roski within thirty (30)
days after the
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Effective Date, up to five (5) Employees as "Retained Employees" and Boomtown,
Blue Diamond and BD Transferor shall have the right to transfer the Retained
Employees from the Resort to their other operations and shall have no obligation
to terminate the Retained Employees. Following the Exchange Date, none of
Boomtown, Blue Diamond or BD Transferor, nor any of their Affiliates, shall
attempt to solicit from the Designated Roski Entity the Employees hired by the
Designated Roski Entity or otherwise interfere in their employment at the
Resort; provided that this Section 5.6 shall not be construed to restrain
Boomtown, Blue Diamond, BD Transferor or their Affiliates from hiring former
employees of the Designated Roski Entity.
(b) Boomtown, Blue Diamond, Hollywood Park and BD Transferor
shall maintain the confidentiality of any nonpublic information pertaining to
the Resort, including Resort-specific customer lists and other information
relating to patrons of the Resort; provided, however, that Boomtown, Blue
Diamond, Hollywood Park and BD Transferor shall not be obligated to maintain the
confidentiality of any information which is already in the public domain through
no act of Boomtown, Blue Diamond, Hollywood Park or BD Transferor or which is
required to be disclosed by court order or applicable law.
(c) Boomtown, Blue Diamond, and BD Transferor shall not extend
any Assumed Contract by a period of greater than one (1) year, or otherwise
amend any Assumed Contract, without obtaining the consent of Roski, which
consent shall not be unreasonably withheld.
(d) Boomtown, Blue Diamond, and BD Transferor agree to allow
Roski reasonable access to all books and records necessary to verify the amount
of Specified Assets and Specified Liabilities as of the Exchange Date, to
participate in taking a joint inventory with Roski of cash in the Resort, FF&E
and Perishable Inventory on the Exchange Date and to assist Roski in making a
general inspection of the Resort on the Exchange Date.
(e) If applicable, BD Transferor shall be designated by
Boomtown and Hollywood Park to facilitate, in Hollywood Park's and Boomtown's
judgment, the consummation of the Blue Diamond Swap. Once designated, if not a
party to this Agreement, Boomtown and Hollywood Park shall cause BD Transferor
to become a party to this Agreement.
(f) Boomtown, Blue Diamond and BD Transferor acknowledge the
need for Roski to obtain the information necessary to effect a smooth transition
of the operations of the Resort and agree to permit designees of the Roski
Entities access at reasonable times during customary business hours onto the
premises of the Resort; provided that no activities by such designees shall
materially interfere with the operations of the Resort.
(g) Blue Diamond agrees to change its name to a name not
including the words "Blue Diamond" prior to the Exchange Date so as to permit
the use of such a name
by Roski.
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(h) Boomtown and Hollywood Park shall take appropriate steps
to comply with the Boomtown Indenture so as to effect the transactions
contemplated hereby, by, at Boomtown and Hollywood Park's sole election, any of
the following means: (i) soliciting, commencing no later than 45 days prior to
the scheduled termination date of the Merger Agreement, as the same may be
extended from time to time, the consent of the holders of the notes issued
pursuant to the Boomtown Indenture to the Blue Diamond Swap or (ii) such other
means, utilizing such other transactional structure, as Boomtown and Hollywood
Park may devise, in compliance with the Boomtown Indenture (including without
limitation, effecting, prior to or contemporaneously with the Exchange Date, an
asset disposition from Boomtown and Blue Diamond to Hollywood Park or an
Affiliate of Hollywood Park, in compliance with the asset sale restrictions
contained in the Boomtown Indenture).
(i) Boomtown and Blue Diamond shall cooperate with the Roski
Entities in providing such notice to the employees of Blue Diamond as may be
required by the Worker Adjustment and Retraining Notification Act.
6. REPRESENTATIONS AND WARRANTIES
------------------------------
6.1 Representations and Warranties of the Roski Entities. Each
----------------------------------------------------
Roski Entity (except Edward P. Roski, Sr. and Roski hereby represents and
warrants on behalf of Edward P. Roski, Sr.) represents and warrants to BD
Transferor and its Affiliates, as of the Effective Date and the Exchange Date
(unless a specific date is referenced below), jointly and severally, as follows:
(a) Legal Capacity. Roski is an individual with capacity to
--------------
contract; he has all requisite power and authority and is entitled to carry on
his business as now being conducted, and to own, lease or operate his properties
in the places where his business is now conducted and where his properties are
now owned, leased or operated.
Each other Roski Entity (other than Edward P. Roski, Sr.)
is duly organized and validly existing under the laws of its jurisdiction of
organization. Such Roski Entity has all requisite power and authority to, and is
entitled to, carry on its business as now conducted and to own or lease its
properties as and in the places where such business is now conducted and such
properties are now owned, leased or operated. Such Roski Entity is qualified to
do business in all foreign jurisdictions in which it is required to be so
qualified, except where the failure to be so qualified would not have a material
adverse effect on the business or assets of such Roski Entity.
(b) Authorization, etc. Each Roski Entity has all requisite
------------------
power and full legal right to enter into this Agreement and the Related
Agreements to which such Roski Entity is a party and to consummate the
transactions contemplated hereby and thereby. This Agreement and each of the
Related Agreements to which such Roski Entity is a party have been duly executed
and delivered by and constitute the valid and binding obligations of such Roski
Entity, enforceable in accordance with their respective terms, except insofar as
the enforceability thereof may be limited by applicable bankruptcy, insolvency,
receivership,
-15-
reorganization, moratorium or other laws providing relief to debtors, or laws or
principles of equity generally.
(c) Execution, Delivery and Performance. Subject to
-----------------------------------
obtaining the Approvals, neither execution and delivery nor performance of this
Agreement or any of the Related Agreements to which any Roski Entity is a party
by such Roski Entity will, with or without the giving of notice or the passage
of time, or both, conflict with, result in a default, right to accelerate by any
other party to, require any consent not obtained prior to the Exchange Date with
respect to, or result in the creation of any lien, charge or encumbrance
pursuant to any provisions of any material indenture, bond, note, loan
agreement, guaranty, franchise, mortgage, deed of trust, lease or other
agreement by which such Roski Entity is bound or conflict with, result in a
default, right to accelerate by any other party to, or result in the creation of
any lien, charge or encumbrance pursuant to any law, ordinance, rule or
regulation, or any order, judgment, award or decree to which such Roski Entity
is a party or by which it or any part of the Roski Notes may be bound or
affected.
(d) Roski Notes etc. The Roski Notes will, on the Exchange
---------------
Date, be the valid and binding obligations of the Designated Roski Entity,
enforceable against the Designated Roski Entity in accordance with its terms.
The Roski Guaranty, if required by Boomtown and Hollywood Park, will be the
valid and binding obligation of Roski, enforceable against Roski in accordance
with its terms. No part of the Roski Notes on the Exchange Date will be subject
to any mortgage, deed of trust, pledge, lien, charge, security interest,
encumbrance, restriction, lease, license, easement, shop rights, covenants not
to sue, or adverse claim of any kind or nature, or other encumbrances of any
kind, rights of use or occupancy, or any other rights or privileges, other than
as set forth in the Related Agreements. In addition to the Roski Stock, 5,001
shares of Boomtown common stock held by Roski and the options to acquire
Boomtown common stock held by Roski in his capacity as a Boomtown director, as
of the Effective Date no Roski Entity owns any other securities of Boomtown or
any of its Affiliates, or rights (contingent or otherwise) to acquire securities
of Boomtown or any of its Affiliates.
(e) Representations Complete. There is no fact known to
------------------------
Roski which could reasonably be expected to affect in a materially adverse
manner, the enforceability of the Roski Notes or the ability of any Roski Entity
to carry out the transactions contemplated by this Agreement and the Related
Agreements or for the Designated Roski Entity to satisfy such Person's
obligations under the Roski Notes.
6.2 Representations and Warranties of Boomtown, Blue Diamond,
---------------------------------------------------------
Hollywood Park and BD Transferor. Each of Boomtown, Blue Diamond and BD
- --------------------------------
Transferor (other than Hollywood Park) jointly and severally represents and
warrants to the Roski Entities, and, with respect to Subsections 6.2(a)-(c),
Hollywood Park severally represents and warrants to the Roski Entities as to
itself, as of the Effective Date and the Exchange Date (unless a specific date
is referenced below), as follows:
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(a) Organization. Such entity is duly organized and validly
------------
existing under the laws of its jurisdiction of incorporation. Such entity has
all requisite power and authority to, and is entitled to, carry on its business
as now conducted and to own or lease its properties as and in the places where
such business is now conducted and such properties are now owned, leased or
operated. Such entity is qualified to do business in all foreign jurisdictions
in which it is required to be so qualified, except where the failure to be so
qualified would not have a material adverse effect on the business or assets of
such entity.
(b) Authorization, etc. Such entity has all requisite
------------------
corporate power and authority to enter into this Agreement and the Related
Agreements to which it is or is to become a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Related Agreements to which it is or is to become a party by
such entity and the consummation by such entity of the transactions contemplated
hereby and thereby have been duly authorized by all requisite action of such
entity. This Agreement has been, and the Related Agreements to which such entity
is or is to become a party have been or will be, duly executed and delivered by
and constitute the valid and binding obligations of such entity, enforceable in
accordance with their respective terms, except insofar as the enforceability
thereof may be limited by applicable bankruptcy, insolvency, receivership,
reorganization, moratorium or other laws providing relief for debtors or
principles of equity generally.
(c) Execution, Delivery and Performance. Subject to
-----------------------------------
obtaining the Approvals and compliance prior to the Exchange Date with the
Boomtown Indenture, neither execution and delivery nor performance of this
Agreement by such entity will, with or without the giving of notice or the
passage of time, or both, conflict with, result in a default, right to
accelerate by any other party to, or result in the creation of any lien, charge
or encumbrance pursuant to any provisions of such person's organizational
documents or by-laws or any material franchise, mortgage, deed of trust, lease,
license, agreement or understanding, or conflict with, result in a default,
right to accelerate by any other party to, or result in the creation of any
lien, charge or encumbrance pursuant to any law, ordinance, rule or regulation,
or any order, judgment, award or decree to which such entity is a party or by
which it may be bound or affected.
(d) Title to BD Interest. BD Transferor will on the Exchange
--------------------
Date, immediately prior to the transfer to Roski contemplated hereby, have valid
and marketable title to, and unrestrained right to transfer, all of the BD
Interest. No part of the BD Interest will, prior to such transfer on the
Exchange Date, be subject to any mortgage, deed of trust, pledge, lien, charge,
security interest, encumbrance, restriction, lease, license, easement, shop
rights, covenants not to sue, or adverse claim of any kind or nature, or other
encumbrances of any kind, rights of use or occupancy, or any other rights or
privileges other than Permitted Liens. BD Transferor makes no representation or
warranty as to any interest in the Resort owned by any Roski Entity prior to the
Exchange Date or the effect of any encumbrance created by any Roski Entity on
the Resort.
-17-
(e) Liabilities. Other than the Specified Liabilities and
-----------
the liabilities of Blue Diamond and Boomtown arising under the Boomtown
Indenture and the Blue Diamond Lease and certain related documents, the Assumed
Contracts constitute all of the indebtedness and lease obligations of Boomtown,
Blue Diamond, Hollywood Park and BD Transferor incurred in connection with the
Resort.
7. CONDITIONS PRECEDENT.
--------------------
7.1 Conditions to Execution and Delivery of this Agreement by
---------------------------------------------------------
Boomtown. This Agreement shall not take effect until Boomtown, Blue Diamond
- --------
and Hollywood Park shall have received an original or facsimile counterpart of
this Agreement, duly executed and delivered by the appropriate Roski Entities.
7.2 Conditions to Execution and Delivery of this Agreement by
---------------------------------------------------------
Roski. This Agreement shall not take effect until each of the Roski Entities
- -----
(excluding Edward P. Roski, Sr.) shall have received an original or facsimile
counterpart of this Agreement, duly executed and delivered by Boomtown, Blue
Diamond and Hollywood Park.
7.3 Conditions to Exchange by BD Transferor. The obligation of BD
---------------------------------------
Transferor to transfer to Roski the BD Interest in exchange for the Roski Notes
is subject to the satisfaction (or waiver by BD Transferor) of the conditions
set forth below:
(a) The representations and warranties made by the Roski
Entities in this Agreement and the Related Agreements shall be true and correct
in all material respects on and as of the Exchange Date with the same effect as
if made on and as of the Exchange Date, except as otherwise contemplated by this
Agreement and the Related Agreements. Each Roski Entity shall have performed and
complied with all agreements, covenants and conditions on the part of such Roski
Entity required to be performed or complied with on or prior to the Exchange
Date in all material respects.
(b) The execution, delivery and performance of this Agreement
and the Related Agreements and the consummation of the transactions contemplated
by this Agreement and the Related Agreements shall not violate any law, rule or
regulation applicable to BD Transferor, including without limitation, Gaming
Laws, federal and state securities laws or any order, decree or judgment of any
court or governmental body having competent jurisdiction, and no order shall
have been issued by a court of competent jurisdiction restraining, prohibiting
or rendering unlawful the execution, delivery and performance of this Agreement
or the Related Agreements or the consummation of the transactions contemplated
by this Agreement and the Related Agreements. No default or breach by any Roski
Entity shall have occurred and be continuing in respect of any document,
instrument or agreement comprising a part of the BD Interest, except as would
not be material after giving effect to the transactions contemplated hereby as
of the Exchange Date.
(c) All Approvals necessary to effect the transactions
hereunder and under the Related Agreements shall have been obtained and shall be
in full force and effect.
-18-
No Gaming Authority shall have indicated to the parties hereto that in, the
opinion of such Gaming Authority, any Approvals required for the consummation of
the transactions contemplated hereby are likely to be revoked or rejected. No
registration with any governmental authority or agency (except for filing and
recording of UCC statements and real estate documents) which has not been
effected shall be necessary to effect the transactions contemplated hereby.
(d) Roski shall have duly delivered each item listed in
Section 5.4.
(e) All of the conditions precedent to the Merger shall have
been satisfied or waived and the Merger shall have been consummated.
(f) The consummation of the transactions contemplated by this
Agreement and the Stock Purchase Agreement shall not, as a result of any changes
in tax law occurring after the Effective Date (including without limitation
statutory, regulatory, administrative or judicial changes) create a material
risk that the contemplated treatment of the Merger as a tax-free reorganization
would be impaired or adversely affected in the view of either Boomtown or
Hollywood Park, based upon advise of its respective tax counsel.
(g) Subject to a restructuring in accordance with Section 3.1,
the transactions contemplated by the Roski Stock Purchase Agreement, including
the sale and transfer of the Roski Stock to Hollywood Park, shall have been
consummated.
7.4 Conditions to Exchange by Roski. The obligation of Roski to
-------------------------------
transfer to BD Transferor the Roski Notes in exchange for the BD Interest
hereunder shall be subject to the satisfaction (or waiver by Roski) of the
conditions set forth below:
(a) The representations and warranties made by Boomtown, Blue
Diamond, Hollywood Park and BD Transferor in this Agreement and the Related
Agreements shall be true and correct in all material respects on and as of the
Exchange Date with the same effect as if made on and as of the Exchange Date,
except as otherwise contemplated by this Agreement and the Related Agreements.
Each of Boomtown, Blue Diamond, Hollywood Park and BD Transferor, as applicable,
shall have performed and complied with all agreements, covenants and conditions
on the part of such entity required to be performed or complied with on or prior
to the Exchange Date in all material respects.
(b) The execution, delivery and performance of this Agreement
and the Related Agreements and the consummation of the transactions contemplated
by this Agreement and the Related Agreements shall not violate any law, rule or
regulation applicable to the Roski Entities, including, without limitation,
Gaming Laws, federal and state securities laws, or any order, decree or judgment
of any court or governmental body having competent jurisdiction, and no order
shall have been issued by a court of competent jurisdiction restraining,
prohibiting or rendering unlawful the execution, delivery and performance of
this Agreement or the Related Agreements or the consummation of the transactions
contemplated by this Agreement and the Related Agreements. No default or breach
on the part of
-19-
Boomtown, Blue Diamond, Hollywood Park or BD Transferor shall have occurred and
be continuing in respect of any document, instrument or agreement comprising a
part of the BD Interest, except as would not be material after giving effect to
the transactions contemplated hereby as of the Exchange Date.
(c) All Approvals necessary to effect the transactions
contemplated hereby and by the Related Agreements and for the Designated Roski
Entity (or its designee) to operate the Resort shall have been obtained. No
Gaming Authority shall have indicated to the parties hereto that the opinion of
such Gaming Authority, any Approvals required for the consummation of the
transactions contemplated hereby are likely to be revoked or rejected. No
registration or filing with any governmental agency or authority (other than UCC
filings and recordings in the real estate records) which has not been effected
shall be necessary to effect the transaction contemplated hereby.
(d) BD Transferor shall have duly delivered each item listed
in Section 5.3 and any other documents of transfer Roski may reasonably request
to effect the transfer of the BD Interest.
8. INDEMNIFICATION.
---------------
8.1 Indemnification by the Roski Entities. The Roski Entities
-------------------------------------
party hereto jointly and severally agree to indemnify and hold harmless
Boomtown, Blue Diamond and BD Transferor and their respective Affiliates,
officers, directors, employees, agents and attorneys against all claims, losses,
liabilities, damages, deficiencies, costs and expenses, including reasonable
attorneys' fees and expenses of investigation incurred by any of them (a) as a
result of any inaccuracy of a representation or breach of any warranty by any
Roski Entity contained herein, in any Related Agreement delivered pursuant
hereto or in the Roski Stock Purchase Agreement by any Roski Entity, or any
failure by any Roski Entity to perform or comply with any covenant of such Roski
Entity contained herein, in any Related Agreement or in the Roski Stock Purchase
Agreement or any other document delivered by any Roski Entity pursuant hereto or
thereto, (b) related to any costs, expenses, claims, liabilities or obligations
incurred in connection with the Resort arising or accruing prior to the
"Original Term" of the Blue Diamond Lease (as defined therein) or arising or
accruing on or after the Exchange Date (including, but not limited to, any
costs, expenses, claims, liabilities or obligations arising in connection with
the Assumed Contracts or Hazardous Substances) or in connection with the
Specified Liabilities as of the Exchange Date, other than the consequences of
any act or omission by Boomtown, Blue Diamond or any of their respective
Affiliates, officers, directors, agents, employees or attorneys, (c) related to
any guaranties made by Boomtown, Blue Diamond or any of their Affiliates of any
obligations of IVAC or any of its Affiliates under construction or development
financing relating to the Resort or any bond or similar obligations with Clark
County, Nevada, or (d) as a result of acts or omissions of the Roski Entities,
including but not limited to acts or omissions related to the construction of
the Resort.
-20-
8.2 Indemnification by Boomtown, Blue Diamond and BD Transferor.
-----------------------------------------------------------
Boomtown, Blue Diamond and BD Transferor jointly and severally agree to
indemnify and hold harmless the Roski Entities and their respective Affiliates,
officers, directors, employees, agents and attorneys against all claims, losses,
liabilities, damages, deficiencies, costs and expenses, including reasonable
attorneys' fees and expenses of investigation incurred by any of them (a) as a
result of any inaccuracy of a representation or breach of any warranty by
Boomtown, Blue Diamond or BD Transferor contained herein or in any Related
Agreement delivered pursuant hereto by Boomtown, Blue Diamond or BD Transferor,
or any failure by Boomtown, Blue Diamond or BD Transferor to perform or comply
with any covenant of Boomtown, Blue Diamond or BD Transferor contained herein or
in any Related Agreement, or any such other document delivered by Boomtown, Blue
Diamond or BD Transferor pursuant hereto or thereto and (b) related to any
costs, expenses, claims, liabilities or obligations of the Resort both accruing
during the "Original Term" of the Blue Diamond Lease (as defined therein) and
arising or accruing prior to the Exchange Date (including, but not limited to,
any costs, expenses, claims, liabilities, or obligations arising in connection
with the Assumed Contracts or, except as set forth below, Hazardous Substances)
other than (i) the Specified Liabilities as of the Exchange Date, (ii)
obligations accruing under the Assumed Contracts on or after the Exchange Date
and (iii) the consequences of any act or omission by any of the Roski Entities
or any of their respective Affiliates, officers, directors, employees, agents or
attorneys. Notwithstanding the foregoing, (i) in no event shall the BD
Transferor (other than Blue Diamond and Boomtown) have any liability or
responsibility for any "Hazardous Substances" (as defined in the Blue Diamond
Lease) or any other environmental matters with respect to the Resort, (ii) in no
event shall the liability of Boomtown for any such Hazardous Substances or any
other environmental matters with respect to the Resort exceed the remaining
principal amount of the Note the form of which is attached hereto as Exhibit B-1
as of the date a claim for indemnity is made hereunder, and (iii) the extent of
the liability of Boomtown and Blue Diamond for all Hazardous Substances or other
environmental matters shall be limited to applicable law or to the extent of
liability under Blue Diamond's paragraph 6.2(c) of the Blue Diamond Lease. In
addition, from and after the Exchange Date, Boomtown shall continue at all times
to indemnify Roski with respect to his actions as a director of Boomtown to the
same extent as it is obligated to provide such indemnification immediately prior
to the Exchange Date. In no event shall the provisions of this section 8.2
subject Hollywood Park to any indemnity obligation or other liability,
contingent or otherwise, regardless of whether Hollywood Park is designated as
BD Transferor.
8.3 Procedure. Upon obtaining knowledge of the institution of any
---------
action, proceeding, or other event which could give rise to a claim of indemnity
pursuant to this Section 8, the party seeking indemnification (the "indemnified
party") shall promptly give written notice thereof to the other party (the
"indemnifying party"); provided, however, that the failure to give such notice
-------- -------
shall not relieve the indemnifying party of its obligations under this Section 8
unless it is materially prejudiced by such failure. Each party will cooperate
with the other in determining the validity of any such claim or assertion. If
such claim or demand relates to a claim or demand asserted by a third party, the
indemnifying party shall have the right at its expense to employ counsel
satisfactory to the indemnified party to defend such claim or demand and the
indemnified party shall have the right, but not the obligation, to
-21-
participate in the defense of any such claim or demand at its expense. Each
party agrees not to settle or compromise any such third party suit, claim or
proceeding without the prior written consent of the other, which consent shall
not be unreasonably withheld. The indemnified party shall make available to the
indemnifying party all records and other materials reasonably required by it in
contesting a claim or demand asserted by a third party against the indemnified
party and shall cooperate in the defense thereof.
9. ADDITIONAL COVENANTS AND AGREEMENTS OF THE PARTIES.
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9.1 Approvals. The parties agree to use their best efforts and to
---------
cooperate with each other to obtain the Approvals necessary to effect the
transactions hereunder.
9.2 Consents, Authorizations and Waivers. The parties agree to use
------------------------------------
their best efforts and to cooperate with each other to obtain, prior to the
Exchange Date, all consents, authorizations or waivers necessary to assign the
Assumed Contracts to the Designated Roski Entity. If the parties are unable to
obtain any consents, authorizations or waivers necessary to assign any of the
Assumed Contracts, the Designated Roski Entity shall indemnify the BD Transferor
against any claims or losses resulting from the failure to obtain such consents,
authorizations or waivers. The parties agree that any failure to so obtain such
consents, authorizations or waivers shall not prevent the parties from, or
relieve the parties from the obligation of, consummating the transactions
contemplated hereunder.
9.3 Transfer Taxes. The parties acknowledge and agree that all
--------------
transfer, stamp, recording and similar taxes assessed or otherwise payable by
reason of the conveyances contemplated hereby, or in connection with the Blue
Diamond Swap, shall be for the account of the Roski Entities. The parties agree
to cooperate with each other to the extent legally permitted to minimize any
such taxes and charges.
9.4 Additional Deliveries; Further Assurances. After the Effective
-----------------------------------------
Date, each party to this Agreement shall, at the request of the other, furnish,
execute, and deliver such documents, instruments, certificates, notices or other
further assurances as the requesting party shall reasonably request as necessary
or desirable to effect complete consummation of this Agreement, the Related
Agreements and the transactions contemplated hereby and thereby. After the
Exchange Date, Roski and its Affiliates shall, at the request of BD Transferor,
(a) execute and deliver and file or record, such further instruments of sale,
conveyance, transfer and assignment, and (b) take such other actions as BD
Transferor may reasonably request in order to effectuate the purposes hereof.
After the Exchange Date, BD Transferor and its Affiliates shall, at the request
of Roski, (a) take such further actions as may be reasonably necessary to vest
in the applicable Roski Entity title to the BD Interest, (b) execute and deliver
and file or record, such further instruments of sale, conveyance, transfer and
assignment, and (c) take such other actions, as Roski may reasonably request in
order effectively to sell, convey, transfer and assign the BD Interest to Roski
and otherwise to effectuate the purposes hereof.
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9.5 Maintenance of Resort Business. During the period from the
------------------------------
Effective Date until the Exchange Date, Boomtown, Blue Diamond and BD Transferor
(but not Hollywood Park, regardless of whether Hollywood Park is designated as
BD Transferor) agree to operate the Resort in all material respects in the
ordinary course of business at not less than the same standards of operation,
maintenance, services and advertising as are in effect as of the Effective Date
and agree to remain in compliance in all material respects with the Blue Diamond
Lease at all times. Without limiting the foregoing, from the Effective Date
until the Exchange Date Boomtown, Blue Diamond and BD Transferor agree not to
transfer from the Resort any material assets thereof.
9.6 Director's Insurance. Boomtown shall continue to provide
--------------------
insurance covering Roski with respect to his actions as a director of Boomtown,
to the extent that such insurance is provided for directors or former directors
of Boomtown, as set forth in the Merger Agreement.
10. TERMINATION.
-----------
10.1 Termination. If (a) the Exchange Date has not occurred prior
-----------
to or on June 30, 1997, or, if the Merger Agreement is extended, such later date
as may then be the scheduled termination date of the Merger Agreement, or such
later date as may have been agreed to by the parties in writing, or (b) the
Merger Agreement has terminated in accordance with its terms, then this
Agreement and the Related Agreements shall, on such date, automatically and
without further action by either party, terminate and have no further force and
effect. In addition, if any representation or warranty made by any party herein
or in any Related Agreement shall prove to have been false, inaccurate or
misleading in any material respect when made, then the party to whom such
representation or warranty is made may terminate this Agreement and the Related
Agreements by notice to the breaching party any time prior to the Exchange Date.
In the event that this Agreement shall terminate by reason of the material
falsity, inaccuracy or misleading character of any representation or warranty,
the party to whom such representation or warranty is made shall retain, both
before and after such termination, all rights and remedies available under
applicable law.
10.2 Other Merger. Notwithstanding any other provision of this
------------
Agreement, if Boomtown enters into a merger or similar transaction with any
person or entity other than Hollywood Park, the failure of the Merger to be
consummated shall not result in the termination of this Agreement or any of the
Related Agreements except as to Hollywood Park. Boomtown shall cause any such
person or entity with which it plans to enter into a merger or similar
transaction to become a party to this Agreement and the Related Agreements and
to assume the obligations of Hollywood Park hereunder and thereunder. Nothing in
this Agreement shall alter the rights or obligations of Hollywood Park and
Boomtown under the Merger Agreement.
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11. MISCELLANEOUS.
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11.1 Changes, Waivers, etc. Neither this Agreement nor any
---------------------
provision hereof may be changed, waived, discharged or terminated orally, except
by a statement in writing which references this Agreement and is signed by the
party against whom enforcement of the change, waiver, discharge or termination
is sought.
11.2 Payment of Fees and Expenses. Each of the parties hereto shall
----------------------------
pay its own respective fees and expenses incurred in connection herewith. In the
event of any litigation or other proceeding resulting from a dispute hereunder,
the legal fees, costs and expenses of the prevailing party shall be paid by the
losing party.
11.3 Notices. All notices, requests, consents and other
-------
communications required or permitted hereunder shall be in writing and shall be
delivered, or mailed first-class postage prepaid, registered or certified mail,
or delivered via overnight courier;
If to Hollywood Park: Hollywood Park, Inc.
1050 South Prairie Avenue
Inglewood, California 90301
Attention: Michael Finnigan
with copy to: Irell & Manella LLP
1800 Avenue of the Stars
Suite 900
Los Angeles, CA 90067
Attention: Al Segel, Esq.
If to Boomtown or Boomtown, Inc.
Blue Diamond: Interstate 80/Garson Road
Verdi, Nevada 89439
Attention: Timothy J. Parrott
with copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94306
Attention: John V. Roos, Esq.
If to any Roski Entity: Edward P. Roski, Jr.
Majestic Realty Co.
13191 Crossroads Parkway North
6th Floor
City of Industry, California 91746
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with a copy to: Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: David B. Rogers, Esq.
Such notices and other communications shall for all purposes of this Agreement
be treated as being effective or having been given on the date of delivery, if
delivered personally, one (1) day following the date of delivery, if delivered
by overnight courier or, if sent by mail, five (5) days thereafter.
11.4 Entire Agreement. This Agreement and the Related Agreements,
----------------
including the schedules and exhibits which are incorporated into and made an
integral part of this Agreement or any of the Related Agreements by reference,
set forth the entire understanding of the parties and supersede all prior
agreements of the parties with respect to the subject matter hereof and thereof.
11.5 Survival of Representations and Warranties, etc. All
-----------------------------------------------
representations and warranties contained herein shall survive the execution and
delivery of this Agreement.
11.6 Headings; References to Agreement. The headings of the
---------------------------------
sections of this Agreement have been inserted for convenience of reference only
and do not constitute a part of this Agreement. References herein to "this
Agreement" shall include all exhibits and schedules hereto.
11.7 Choice of Law; Interpretation. THIS AGREEMENT SHALL FOR ALL
-----------------------------
PURPOSES BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEVADA (WITHOUT REFERENCE TO CONFLICTS OF LAW).
11.8 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but which shall
together constitute but one and the same instrument. To make proof of this
Agreement, it shall only be necessary to produce one such counterpart.
11.9 Severability. To the extent any provision of this Agreement
------------
shall be invalid or unenforceable, it shall be considered deleted from this
Agreement and the remaining provisions of this Agreement shall be unaffected and
shall continue in full force and effect.
11.10 Successors and Assigns. This Agreement shall be binding upon
----------------------
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that neither party may assign its
rights or obligations hereunder other than to an Affiliate without the prior
written approval of the other party.
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11.11 No third Party Beneficiaries. This Agreement is not intended to
----------------------------
confer upon any person or entity other than each party hereto (and their
successors and assigns permitted hereby) any rights or remedies hereunder.
11.12 Waiver of Jury Trial. EACH PARTY HERETO KNOWINGLY, ABSOLUTELY
--------------------
AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS IT MAY OTHERWISE HAVE HAD TO A
TRIAL BY JURY WITH RESPECT TO OR IN CONNECTION WITH THIS AGREEMENT, THE RELATED
DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed and delivered as of the date and year first above written.
BOOMTOWN, INC.
By:
------------------------------- ------------------------
EDWARD P. ROSKI, JR.
Title:
----------------------------
BLUE DIAMOND HOTEL & CASINO, INC. IVAC
By: EDWARD P. ROSKI, JR.
its General Partner
By:
-------------------------------
------------------------
Title: EDWARD P. ROSKI, JR.
----------------------------
HOLLYWOOD PARK, INC. MAJESTIC REALTY CO.
By: By:
------------------------------- --------------------
Title: Title:
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