OPTION AGREEMENT
This Agreement (the "Agreement") is made as of the 29th day of
November, 1995 by and among The Claridge Hotel and Casino Corporation, a New
York corporation (the "Buyer"), The Claridge at Park Place, Incorporated, a New
Jersey corporation and a wholly-owned subsidiary of Buyer ("CPPI"), Philip J.
Dion, as Trustee (the "Seller") for Valley of the Sun United Way (the "United
Way") under an Irrevocable Trust, dated April 2, 1990 (the "Trust Instrument"),
and Atlantic City Boardwalk Associates, L.P., a New Jersey limited partnership
(the "Partnership"). As used below, the term the "Claridge Entities" means
Buyer, CPPI and the Partnership.
WHEREAS, as more particularly described in Section 6 of the
Restructuring Agreement, dated October 27, 1988 (the "Restructuring Agreement"),
among the Claridge Entities, Del Webb Corporation ("Webb") and certain other
parties, Webb had an interest equal to $20 million plus interest from December
1, 1988 at the rate of 15% per annum compounded quarterly (the "Webb Payment");
and
WHEREAS, on April 2, 1990, Webb transferred the Webb Payment to the
Seller; and
WHEREAS, upon the terms and subject to the conditions set forth herein,
the Buyer desires to have the option to purchase and accept from the Seller, and
the Seller desires to grant to Buyer such option and, upon the exercise thereof
and the Purchase Closing (defined below) and the other matters provided for
below, to sell, assign and transfer to the Buyer, all of its right, title and
interest in and to the Webb Payment.
NOW THEREFORE, in consideration of the foregoing and the
representations, warranties and covenants set forth herein and other good and
valuable consideration, the parties hereto agree as follows:
ARTICLE I
THE OPTION
1.1 The Option. The Seller hereby grants to the Buyer an option (the
"Option"), to purchase the Webb Payment on the terms and conditions set forth in
this Agreement, which Option may be exercised by the Buyer's delivering notice
to the Seller, in the form of Exhibit 1.1 hereto, any time after the Option
Closing (as hereinafter defined) and prior to December 31, 1997.
1.2 Option Closing. The closing of the Option (the "Option Closing")
shall occur at 10:00 A.M. on the date which is five Business Days after the
later of (a) the date on which Buyer gives Seller written notice that the
conditions set forth in Section 1.3(a) hereof have been satisfied or waived, and
(b) the date on which Seller gives Buyer written notice that the conditions set
forth in Section 1.3(b) hereof have been satisfied or waived, or such other date
as the parties may agree (the "Option Closing Date"), at the offices of Rogers &
Wells, 200 Park Avenue, New York, New York 10166. At the Option Closing, the
Seller and the Buyer shall deliver to each other confirmation of the
effectiveness of the Option in the form of Exhibit 1.2 hereto and the Buyer
shall deliver to the Seller the option price (the "Option Price") in the amount
of ONE MILLION DOLLARS ($1,000,000), payable by certified or official bank
check.
1.3 Conditions to Option Closing.
(a) The Option Closing shall not occur unless the Buyer, in its sole
discretion, is satisfied that each of the following conditions has been
fulfilled (or waived by Buyer):
(i) Representations and Warranties. The representations and
warranties contained in Article IV of this Agreement shall be true and correct
in all material respects on and as of the Option Closing with the same force and
effect as if they had been made on the date of the Option Closing.
(ii) Performance. The Seller shall have performed and complied
fully with all agreements and conditions contained in this Agreement to be
performed or complied with by it at or before the Option Closing.
(iii) Consent of Parties to Restructuring Agreement. The
parties to the Restructuring Agreement, other than Robert K. Swanson, Everett L.
Mangam, T. Edward Plant and First Fidelity Bank, National Association, New
Jersey, shall have consented to the sale of the Webb Payment by the Seller to
the Buyer pursuant to this Agreement, pursuant to a consent in the form of
Exhibit 1.3A hereto (and each party to the Restructuring Agreement that is also
a party to this Agreement hereby so consents).
(iv) Opinions of Counsel. Buyer shall have received opinions
of Levine, Staller, Sklar, Chan, Brodsky & Donnolly, P.A., New Jersey counsel to
the Seller, Gibson, Dunn & Crutcher, New York counsel to the Seller and of
Arizona counsel to the Seller each in form and substance satisfactory to the
Buyer in its sole discretion.
(v) Webb Assurance. The Buyer shall have received from Webb a
duly executed assurance from Webb in the form of Exhibit 1.3C that Webb does not
have any claim to the Webb Payment.
(b) The Option Closing shall not occur unless the Seller, in Seller's
sole discretion, is satisfied that each of the following conditions has been
satisfied (or waived by Seller):
(i) Representations and Warranties. The representations and
warranties contained in Articles V and V-A of this Agreement shall be true and
correct in all material respects on and as of the Option Closing with the same
force and effect as if they had been made on the date of the Option Closing.
(ii) Performance. The Buyer shall have performed and complied
fully with all agreements and conditions contained in this Agreement to be
performed or complied with by it at or before the Option Closing.
(iii) Certification. The Buyer shall have provided the Seller
with a certificate confirming the matters set forth in clauses (i) and (ii) of
this subsection (b) in the form of Exhibit 1.3D.
(iv) Consents and Approvals. All permits, consents,
authorizations and approvals of, registrations, qualifications, designations,
declarations or filings with, or notices to, and all licenses and permits of
(each an "Approval"), any person or entity or any federal or state governmental
authority (including, without limitation, the New Jersey Casino Control
Commission ("CCC") and the Division of Gaming Enforcement) that Seller
determines are necessary or appropriate to be obtained, made or submitted by or
on behalf of the Seller in connection with the execution, delivery or
performance of this Agreement and the sale, assignment and transfer of the Webb
Payment to the Buyer and the other transactions contemplated hereby shall have
been duly obtained, made or submitted and, if required, shall be effective on
and as of the Option Closing.
(v) Approval by United Way; Fairness Opinions. The Seller
shall have received from the United Way such approval of, indemnification with
respect to and opinions of counsel with respect to this Agreement and the
transactions contemplated hereby as the Seller believes are necessary,
appropriate or desirable. The Seller or the United Way shall have received such
fairness opinions, if any, as each believes are necessary, appropriate or
desirable in connection with this Agreement and the transactions contemplated
hereby.
(vi) Regulatory Approval and Other Action. The Seller shall
have received from the CCC and any other New Jersey gaming authorities as may be
appropriate such Approvals of the distribution by the Seller, upon receipt, of
the proceeds to be received by the Seller from the payment of the Option Price
and the sale of the Webb Payment (including payments under Section 3.2(c)
hereof) pursuant to this Agreement to the United Way as the Seller may deem
necessary or appropriate. The Trust Instrument shall have been reformed, or the
Seller shall have otherwise received such Approvals as the Seller feels are
appropriate to permit the Seller to distribute to the United Way, upon receipt,
the proceeds of the payment of the Option Price and the sale of the Webb Payment
to the Buyer (including payments under Section 3.2(c) hereof) pursuant to this
Agreement (i) including by appropriately licensing the United Way or (ii)
notwithstanding that the United Way is not licensed by the CCC.
(vii) Opinions of Counsel. Seller shall have received opinions
of Rogers & Wells and Frank Bellis, Esq., counsel to the Buyer, in the forms
attached in Exhibit 1.3E and Exhibit 1.3F, respectively.
(viii) Financial Statements and Comfort. Seller shall have
received (A) audited financial statements of Buyer as of Buyer's most recently
completed fiscal year and (B) any publicly available unaudited financial
statements of Buyer for any period subsequent to the period covered by such
audited financial statements, in each case showing that Buyer has shareholders'
equity of at least $2,000,000, together with a letter from KPMG Peat Marwick LLP
("Peat Marwick") covering the matters set forth in Exhibit 1.3G. If any portion
of the funds used to pay the Option Price is being directly or indirectly
provided by the Partnership (including, without limitation, through abatement of
lease payments), Seller shall also have received (A) audited financial
statements of the Partnership as of the Partnership's most recently completed
fiscal year and (B) any unaudited financial statements of the Partnership for
any period subsequent to the period covered by such audited financial statements
that have been provided by the Partnership to its limited partners, in each case
showing that the Partnership has a partners' equity of at least $2,000,000,
together with a letter from Peat Marwick covering the matters set forth in
Exhibit 1.3G(2). At the time of the Option Closing, Buyer shall be deemed to
represent, without any further documents being required to be delivered by
Buyer, that, immediately prior to payment of the Option Price, (i) it has a
shareholders' equity of at least $2,000,000 determined in accordance with
generally accepted accounting principles ("GAAP") consistently applied, (ii) it
is not insolvent, (iii) after the payment of the Option Price or the
transactions to be effected in connection therewith, it will not be rendered so
insolvent, (iv) it is not then engaged in a business or transaction (or about to
engage a business or transaction ) for which its capital remaining after payment
of the Option Price and completion of the transaction to be effected in
connection therewith will be unreasonably small and (v) it does not intend to
incur, or believe it will incur, debts beyond its ability to pay as the debts
mature.
(c) "Business Day". For purposes of this Agreement, "Business
Day" means a day upon which banks are open for business in New York city.
ARTICLE II
PURCHASE TERMS
2.1 Sale, Assignment and Transfer of Webb Payment. At the Purchase
Closing described in Section 2.3, the Seller will deliver to the Escrow Agent
(as hereinafter defined) an instrument of assignment in the form of Exhibit 2.1
hereto providing for the sale, assignment and transfer to the Buyer (or its
assignee) of all of Seller's rights, title, and interest in and to the Webb
Payment (the "Assignment Instrument"), and the Buyer (or its assignee) will
deliver to the Escrow Agent a certified or official bank check in the amount of
the Purchase Price set forth in Section 2.2 hereof (as to Section 2.2(z), only
to the extent due at the time of the Purchase Closing). Notwithstanding such
delivery of the Assignment Instrument and check to the Escrow Agent, the sale,
assignment and transfer of the Webb Payment to the Buyer shall not be deemed to
occur unless and until the Escrow Agent makes delivery of such instrument and
the Purchase Price pursuant to Section 4(a) of the Escrow Agreement (as
hereinafter defined). It is understood and agreed that if such delivery of the
Assignment Instrument by the Escrow Agent referred to below is to occur, (i)
within 15 days after the Purchase Closing, Buyer and/or the Partnership shall
pay to the Distributing Trust (as such term is defined in the Restructuring
Agreement) the amount required by Section 4(a) of the Escrow Agreement (defined
below); (ii) based on the Purchase Price being $10,000,000 and, as the Seller
and Buyer believe, 83.89644% in interest of investors being Releasing Investors,
the amount to be so paid to the Distributing Trust for payment to Releasing
Investors would be $7,226,001; and (iii) the amount to be so paid to
Distributing Trust will increase if interest is owed by Buyer on the Purchase
Price under Section 2.2(y) hereof, with the increase being an amount equal to
72.26001% of the interest. If for any reason the amounts to be paid to the
Distributing Trust are not so paid, the sale, assignment and transfer of the
Webb Payment to Buyer shall not be deemed to have occurred and Seller will not
have released or waived any rights in and to the Webb Payment.
2.2 Purchase Price. The purchase price (the "Purchase Price") to be
paid by the Buyer at the Purchase Closing for the Webb Payment will be TEN
MILLION DOLLARS ($10,000,000), plus any additional amounts as may then be owing
pursuant to Section 3.2(c) hereof, in each case payable by certified or official
bank check; provided, however, that, if the Purchase Price is being paid after
December 31, 1996, the Purchase Price shall be the sum of (x) TEN MILLION
DOLLARS ($10,000,000) plus (y) an amount equal to interest on TEN MILLION
DOLLARS ($10,000,000) at the annual rate of 10% for the period from January 1,
1997 to the date of Payment of the Purchase Price to Seller by the Escrow Agent
plus (z) any additional amount then payable pursuant to Section 3.2(c) hereof.
2.3 The Purchase Closing. The Purchase Closing (the "Purchase Closing")
of the purchase and sale of the Webb Payment will take place at the offices of
Rogers & Wells, 200 Park Avenue, New York, New York 10166, at 10:00 A.M., New
York City time, on the date which is ten Business Days after the Buyer gives the
Seller notice of the exercise of the Option pursuant to Section 1.1 hereof, or
such other date as the parties hereto may agree in writing (the "Closing Date").
Exercise of the Option will be irrevocable and will obligate Buyer to deliver
the Purchase Price to the Escrow Agent as provided in Section 2.1.
2.4 Escrow Agent. The Buyer and Seller hereby appoint IBJ Schroder Bank
and Trust Company to act as escrow agent (the "Escrow Agent") pursuant to an
Escrow Agreement in the form of Exhibit 2.4 hereto (the "Escrow Agreement") with
respect to the deliveries to be made pursuant to Section 2.1 hereof.
ARTICLE III
RELEASE BY SELLER; FURTHER PAYMENTS TO SELLER
3.1 Release and Waiver of Rights. The Seller in his capacity as Trustee
with respect to the Trust, agrees that, upon the occurrence of all of (i) the
Purchase Closing, (ii) the payment to the Distributing Trust of the amount
contemplated to be paid to it by the third sentence of Section 2.1 of this
Agreement and Section 4(a) of the Escrow Agreement and (iii) delivery of the
Purchase Price (except, as to the portion of the Purchase Price referred to in
Section 2.2(z), to the extent not then due) to Seller by the Escrow Agent, it
will have irrevocably released and waived any and all rights in and to the Webb
Payment.
3.2 Further Payments to Seller. If the Purchase Closing occurs:
(a) The Buyer and CPPI agree for the benefit of the Seller and
the United Way that neither the Buyer nor, except for distributions and payments
to Buyer, CPPI shall make any distributions or payment to any of its
shareholders as such until those persons who are Releasing Investors (as that
term is defined in the Restructuring Agreement) have received from the
Distributing Trust referred to below an amount equal to that amount that
Releasing Investors would have received had the Buyer not purchased the Webb
Payment. The parties agree that, as of October 31, 1995, the amount that would
have been required to be received by Releasing Investors to satisfy the
preceding sentence is approximately $40,000,000, and that such amount will
increase thereafter until paid. The parties recognize that, under the "provided"
clause of the first sentence of Section 6(a) of the Restructuring Agreement the
Buyer and CPPI are permitted to engage in certain transactions (being a sale by
Buyer of the stock of CPPI or a sale by CPPI of substantially all of its assets)
that may result in the Releasing Investors receiving in the aggregate an amount
that is less than the amount referred to in the preceding sentence (including
interest compounded quarterly on that amount) without the Buyer or CPPI having
any further obligation to make any payment to Releasing Investors.
(b) The Partnership agrees for the benefit of the Seller and
the United Way that the Partnership will not make any distributions or payment
to any of its limited partners as such until those persons who are Releasing
Investors have received from the Distributing Trust an amount equal to that
amount that Releasing Investors would have received had the Buyer not purchased
the Webb Payment. The parties recognize that, under the "provided" clause of the
first sentence of Section 6(a) of the Restructuring Agreement, the Partnership
is permitted to engage in a sale of substantially all of its assets that may
result in the Releasing Investors receiving in the aggregate an amount that is
less than the approximately $40,000,000 amount referred to in Section 3.2(a)
(including interest compounded quarterly on that amount) without the Partnership
having any further obligation to make any payment to Releasing Investors.
(c) If amounts received or required to be received by the
Distributing Trust for distribution to Releasing Investors (including the amount
provided for in Section 4(a) of the Escrow Agreement) equals or exceeds
$20,000,000, as additional consideration for the purchase of the Webb Payment,
the Claridge Entity making the distribution (the Buyer and CPPI jointly and
severally if one of them is making or is required to make the distribution)
shall pay to the Seller, at the same time that the Distributing Trust receives
or should have received an amount which, when aggregated with amounts previously
received or required to have been paid to the Distributing Trust for
distribution to Releasing Investors, exceeds $20,000,000, as to the excess and
at each time thereafter that the Distributing Trust receives or should have
received amounts for distribution to Releasing Investors, an amount equal to
17.65% times such portion of such amount received by or so required to have been
paid to the Distributing Trust as, when aggregated with prior such amounts
received by or so required to have been paid to the Distributing Trust, exceeds
$20,000,000; provided, however, that the total amount to be paid to the Seller
under this Section 3.2 shall not exceed $10,000,000.
(d) For purposes of Section 3.2(c) hereof, if any amount
received or required to be received by the Distributing Trust for distribution
to Releasing Investors is in a form other than cash, such amount shall be valued
in the following manner:
(i) if any such amount consists of marketable
securities, then such amount shall be valued based on the average price at which
such security traded on the first Business Day after the day upon which any
Releasing Investor received such security from the Distributing Trust; or
(ii) if such amount consists or is expected to
consist of something other than marketable securities, then such amount shall be
valued either (A) at such value as is placed on such amount by mutual agreement
of the Buyer and the Seller, or (B) if no such agreement is reached within 20
Business Days prior to the date such amount is expected to be distributed, at
such value as is determined by the Designated Investment Banking Firm described
below, one-half of the reasonable fees of which shall be paid by each of the
Claridge Entity making the distribution (the "Relevant Claridge Entity") and the
Seller. If it is anticipated that the Distributing Trust will make a
distribution of an amount which consists of something other than marketable
securities, the Claridge Entity that expects to make such distribution shall so
notify the Seller of the date of such expected distribution at least 30 business
days prior thereto. If the Relevant Claridge Entity and the Seller are unable to
reach agreement on the value of the amount to be so distributed within 20
Business Days prior to the expected distribution date, the Relevant Claridge
Entity shall send to the Seller notice of the Relevant Claridge Entity's
investment banking firm. Within 5 business days after such notice, the Seller
shall notify the Relevant Claridge Entity of the Seller's investment banking
firm. The Relevant Claridge Entity's investment banking firm and, if the Seller
has so designated its investment banking firm, its investment banking firm shall
jointly designate a third investment banking firm, which shall determine the
value of the amount to be so distributed (the "Designated Investment Banking
Firm"). The Designated Investment Banking Firm shall make its determination
regarding the valuation of such amount within 5 business days after its
designation, and its decision shall be conclusive.
(e) Within 120 days of the end of each 12-month period ended
December 31, commencing December 31, 1995, each Claridge Entity will deliver to
the Seller and the United Way (i) such financial statements for the 12 months
ended such December 31, certified by the independent public accountants for such
Claridge Entity (provided that this requirement shall be satisfied as to CPPI,
as long as CCPI is wholly-owned by Buyer, by delivery of such financial
statements of the Buyer), (ii) a certification signed by the Chief Executive
Officer and Chief Financial Officer (or comparable officers or the general
partners, if applicable) of each Claridge Entity, in the form of Exhibit 3.2(e),
as to the distributions made and required to be made to the Distributing Trust
during such 12-month period and (iii) to the extent not then prohibited by the
American Institute of Certified Public Accountants, a letter from the
independent public accountants that certified each such financial statement to
the effect that, during the course of their audit and otherwise, nothing came to
their attention to indicate that the statements in the certificates referred to
in clause (ii) of this Section 3.2(e) are inaccurate in any respect or, if they
are inaccurate, specifying each inaccuracy.
(f) If (i) any amount required to be paid to the Seller by a
Claridge Entity pursuant to Section 3.2(c) is not paid when due and is not paid,
with interest at 15% per annum (but not in excess of the maximum amount
permitted by applicable law) from the date due, by 125 days after the 12 months
ended December 31 in which payment was due and (ii) there is no bona fide
dispute regarding the amount, if any, due, between the Seller and the Claridge
Entity which the Seller believes is required to pay such amount, then the entire
amount due on the Webb Payment, as if it had not been acquired by Buyer, and the
corresponding amount due to Releasing Investors, will be immediately due and
payable to Seller and the Releasing Investors. For the purpose of Section
3.2(f), a dispute by a Claridge Entity will not be deemed bona fide unless it
has substantial basis in fact and (i) to the extent the dispute is based on
legal interpretation or a question of law, at the outset of the dispute the then
primary outside counsel to the Claridge Entity renders an opinion to the Seller
that the position of the Claridge Entity is based on significant legal authority
and (ii) to the extent the dispute is based on a question of accounting or
calculation, at the outset of the dispute the then independent public
accountants for the Claridge Entity delivers to the Seller a letter to the
effect that the calculation of the Claridge Entity is correct and, if a question
of accounting is involved, that the accounting treatment is in accordance with
generally accepted accounting principles consistently applied by such Claridge
Entity.
(g) If, in addition to the Option Price, any amounts would be
due on the Webb Payment prior to the Purchase Closing, those amounts shall be
paid and shall not reduce the amounts otherwise payable to Seller under this
Agreement.
3.3 Releases. If the Buyer solicits from its shareholders, or the
Partnership solicits from its limited partners, any release, consent, waiver or
other acknowledgment with respect to the transactions contemplated by this
Agreement, the Buyer and/or Partnership, as the case may be, agrees that such
release, consent, waiver or other acknowledgment shall, by its terms, also be
for the benefit of the Seller and the United Way.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as follows, except as
listed in Exhibit 4.1:
4.1 Authorization. The Seller has all the power and authority necessary
to enable it to execute and deliver this Agreement, and to carry out the
transactions contemplated by this Agreement. The Seller has taken all actions,
if any, necessary to authorize the execution, delivery and performance by Seller
of this Agreement.
4.2 Binding Agreement. This Agreement is the legal, valid and binding
agreement of the Seller, enforceable against the Seller in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency or
other similar laws of general application affecting the enforcement of
creditors' rights or by general principles of equity limiting the availability
of equitable remedies.
4.3 Title to the Webb Payment. The Seller has not transferred or
conveyed any of its right, title and interest in and to the Webb Payment, and,
assuming that the transfer of the Webb Payment from Webb to the Seller is legal,
valid and enforceable, holds the Webb Payment free and clear of any and all
security interests, liens, charges, encumbrances or adverse interests
whatsoever. Assuming that the transfer of the Webb Payment from Webb to the
Seller is legal, valid and enforceable, when the Buyer acquires the Webb Payment
as contemplated by this Agreement, the Buyer will receive the Webb Payment and
all rights, title and interest in and to the Webb Payment free and clear of any
security interests, liens, charges, encumbrances or claims of other persons,
other than those resulting from acts of the Buyer.
4.4 Compliance with Instruments and Law. Upon receipt of the consents
or taking of the actions contemplated by Sections 1.3(b)(iv), (v) and (vi)
hereof, neither the execution and delivery of this Agreement by the Seller nor
the consummation of the transactions contemplated by this Agreement will (i)
violate any provision of the Trust Instrument or (ii) violate, result in a
breach of, or constitute a default under or conflict with any provision of any
agreement or instrument to which the Seller is a party or by which the Seller is
bound, or any provision of any applicable local, state or federal law or any
order, judgment, writ, decree, statute, rule or regulation of any court or
governmental agency having jurisdiction over the Seller.
4.5 Consents and Approvals. Upon receipt of the consents or taking of
the actions contemplated by Sections 1.3(b)(iv), (v) and (vi) hereof, no
permits, consents, approvals or authorizations of, registrations,
qualifications, designations, declarations or filings with, or notices to any
person or entity or any federal or state governmental authority are required to
be obtained, made or submitted by or on behalf of the Seller in connection with
the execution, delivery or performance of this Agreement, or the consummation of
the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND CPPI
The Buyer and CPPI jointly and severally represent and warrant to and,
as to Section 5.6, agree with the Seller as follows:
5.1 Authorization. The Buyer and CPPI each have all the power and
authority necessary to enable each of them to execute and deliver this Agreement
and to carry out the transactions contemplated by this Agreement. The Buyer and
CPPI have each taken all corporate and other actions necessary to authorize the
execution, delivery and performance of this Agreement.
5.2 Corporate Status. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York.
CPPI is a corporation duly organized, validly existing and in good standing
under the laws of the State of New Jersey. CPPI is a wholly-owned subsidiary of
the Buyer.
5.3 Binding Agreement. This Agreement is a legal, valid and binding
agreement of the Buyer and CPPI, enforceable against each of the Buyer and CPPI
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other similar laws of general application affecting
the enforcement of creditors' rights or by general principles of equity limiting
the availability of equitable remedies.
5.4 Compliance with Instruments and Law. Neither the execution and
delivery of this Agreement by the Buyer or CPPI nor the consummation of the
transactions contemplated by this Agreement will (i) violate any provision of
their respective certificates or articles of incorporation, bylaws or other
charter or organizational documents, or (ii) violate, result in a breach of, or
constitute a default under or conflict with any provision of any agreement or
instrument to which the Buyer or CPPI is a party or by which the Buyer or CPPI
(or any of their respective assets) is bound, or any provision of any applicable
local, state or federal law or any order, judgment, writ, decree, statute, rule
or regulation of any court or governmental agency having jurisdiction over the
Buyer or CPPI (or any of their respective assets).
5.5 Consents and Approvals. No permits, consents, approvals and
authorizations of, registrations, qualifications, designations, declarations or
filings with, or notices to any person or entity or any federal or state
governmental authority (other than the CCC or the New Jersey Division of Gaming
Enforcement) are required to be obtained, made or submitted by or on behalf of
the Buyer in connection with the execution, delivery or performance of this
Agreement, or the consummation of the transactions contemplated hereby.
5.6 No Effect on Rights of Releasing Investors. Neither the purchase of
the Webb Payment by the Buyer, nor any action taken by the Buyer with respect to
the Webb Payment following such purchase will result in the Releasing Investors
receiving less, in their capacities as Releasing Investors, than they would have
received had such purchase not occurred or such action not been taken, except to
the extent that payment of the Option Price will diminish the assets of the
Buyer.
5.7 Pending Transactions. Except as set forth in Exhibit 5.7, as of the
date hereof, neither the Buyer nor CPPI has entered into any contract,
agreement, letter of intent or other written understanding or arrangement
regarding any transaction that would result in one or more of the Claridge
Entities making or being required to make any distribution to the Distributing
Trust.
ARTICLE V-A
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP
The Partnership represents and warrants to and, as to Section 5A.6,
agrees with the Seller as follows:
5A.1 Authorization. The Partnership has all the power and authority
necessary to enable it to execute and deliver this Agreement, and to carry out
the transactions contemplated by this Agreement. The Partnership has taken all
partnership actions necessary to authorize the execution, delivery and
performance by it of this Agreement.
5A.2 Status. The Partnership is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of New Jersey.
5A.3 Binding Agreement. This Agreement is a legal, valid and binding
agreement of the Partnership, enforceable against the Partnership in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency or other similar laws of general application affecting the
enforcement of creditors' rights or by general principles of equity limiting the
availability of equitable remedies.
5A.4 Compliance with Instruments and Law. Neither the execution and
delivery of this Agreement by the Partnership nor the consummation of the
transactions contemplated by this Agreement will (i) violate any provision of
its Agreement of Limited Partnership or other organizational documents of the
Partnership, or (ii) violate, result in a breach of, or constitute a default
under or conflict with any provision of any agreement or instrument to which the
Partnership is a party or by which the Partnership (or any of its assets) is
bound, or any provision of any applicable local, state or federal law or any
order, judgment, writ, decree, statute, rule or regulation of any court or
governmental agency having jurisdiction over the Partnership (or any of its
assets).
5A.5 Consents and Approvals. No permits, consents, approvals and
authorizations of, registrations, qualifications, designations, declarations or
filings with, or notices to any person or entity or any federal or state
governmental authority (other than the CCC and the Division of Gaming
Enforcement) are required to be obtained, made or submitted by or on behalf of
the Partnership in connection with the execution, delivery or performance of
this Agreement, or the consummation of the transactions contemplated hereby.
5A.6 No Effect on Rights of Releasing Investors. No action taken by the
Partnership with respect to the Webb Payment following the purchase of the Webb
Payment by the Buyer will result in the Releasing Investors receiving less, in
their capacities as Releasing Investors, than they would have received had such
purchase not occurred or such action not been taken, except to the extent that
payment of the Option Price will diminish the assets of the Buyer.
5A.7 Pending Transactions. Except as set forth in Exhibit 5.7, as of
the date hereof, the Partnership has not entered into any contract, agreement,
letter of intent or other written understanding or arrangement regarding any
transaction that would result in one or more of the Claridge Entities making or
being required to make any distribution to the Distributing Trust.
ARTICLE VI
CONDITIONS OF SELLER'S OBLIGATIONS AT PURCHASE CLOSING
The obligation of the Seller to deliver the Assignment Instrument to
the Escrow Agent pursuant to Section 2.1 hereof and to thereupon or thereafter
sell, assign and transfer the Webb Payment to the Buyer is subject to the
fulfillment to its satisfaction prior to or at the Purchase Closing of each of
the following conditions:
6.1 Opinions of Counsel. Seller shall have received opinions of Rogers
& Wells and Frank Bellis, Esq., counsel to the Buyer, in the forms attached
hereto as Exhibits 6.1A and 6.1B.
6.2 Financial Statements and Comfort. Seller shall have received (i)
audited financial statements of Buyer as of Buyer's most recent completed fiscal
year and unaudited financial statements of Buyer for and at the end of the last
quarter end for which financial information as to Buyer is publicly available,
each showing that Buyer has shareholders' equity greater than $2,000,000, (ii)
pro forma balance sheets of Buyer at such year end and quarter end giving effect
to the purchase of the Webb Payment, the concomitant payment to Releasing
Investors and the transactions to be effected in connection with both, all using
the accounting treatment proposed to be used by Buyer for financial reporting
purposes and each showing a shareholders' equity of Buyer, after giving effect
to the foregoing transactions, greater than $2,000,000, and (iii) letters from
Peat Marwick (including a letter with respect to such pro forma balance sheet)
covering the matters set forth in Exhibit 6.2 and consistent with the greater
than $2,000,000 number in clauses (i) and (ii) of this sentence. If any portion
of the funds used to pay the portion of the Purchase Price being paid at the
Purchase Closing or to make the concomitant payment to Releasing Investors is
being directly or indirectly provided by the Partnership (including, without
limitation, through abatement of lease payments), Seller shall also have
received (i) audited financial statements of the Partnership as of the
Partnership's most recently completed fiscal year and unaudited financial
statements of the Partnership for and at the end of the last quarter end for
which financial information as to the Partnership has been made available to its
limited partners, each showing that the Partnership has a partners' equity
greater than $2,000,000, (ii) pro forma balance sheets of the Partnership at
such year end and quarter end giving effect to the purchase of the Webb Payment,
the concomitant payment to Releasing Investors and the transactions to be
effected in connection with both, in each case as to the Partnership and with
respect to the funds being directly or indirectly so provided by the
Partnership, all using the accounting treatment proposed to be used by the
Partnership for financial reporting purposes and showing a partners' equity of
the Partnership, after giving effect to the foregoing transactions, greater than
$2,000,000, and (iii) letters from Peat Marwick (including a letter with respect
to such pro forma balance sheet) covering the matters set forth in Exhibit
6.2(2) and consistent with the greater than $2,000,000 number in clauses (i) and
(ii) of this sentence. The Buyer and the Partnership will each use their best
efforts to cause Peat Marwick to deliver the comfort letter that is Exhibit 6.2,
with Procedure C and Item 5 furnished as a part thereof; if any portion of the
funds used to pay the portion of the Purchase Price being paid at the Purchase
Closing or to make the concomitant payment to Releasing Investors is being
directly or indirectly provided by the Partnership (including, without
limitation, through abatement of lease payments), the Buyer and the Partnership
will use their best efforts to cause Peat Marwick to deliver the comfort letter
that is provided for in Exhibit 6.2(2), with the comparable Procedure and Item
furnished; and the Buyer and the Partnership will make available to Seller and
his representatives all information Seller reasonably requests so that Seller
can deliver to Peat Marwick the request for a comfort letter referred to in the
Note in Exhibit 6.2 and, if applicable, Exhibit 6.2(2). At the time of the
Purchase Closing and the purchase of the Webb Payment, Buyer shall be deemed to
represent, without any further documents being required to be delivered by
Buyer, that: (A) immediately prior to payment of the Purchase Price to Seller
and completion of the transactions to be effected in connection with the
purchase by Buyer of the Webb Payment (including, without limitation, making
required payments to Releasing Investors), (i) it has a shareholders' equity of
at least $2,000,000 determined in accordance with the generally accepted
accounting principles ("GAAP"), consistently applied, (ii) it is not insolvent,
(iii) after the payment of the Purchase Price, the purchase by Buyer of the Webb
Payment and completion of the transactions to be effected in connection
therewith (including, without limitation, making required payments to Releasing
Investors), it will not be rendered so insolvent, (iv) it is not engaged in a
business or transaction (or about to engage a business or transaction) for which
its capital remaining after payment of the Purchase Price, the purchase by Buyer
of the Webb Payment and completion of the transactions to be effected in
connection therewith (including, without limitation, making required payments to
Releasing Investors) will be unreasonably small and (v) it does not intend to
incur, or believe it will incur, debts beyond its ability to pay as the debts
mature; and (B) immediately after payment of the Purchase Price, the purchase by
Buyer of the Webb Payment and completion of the transactions to be effected in
connection therewith (including, without limitation, making required payments to
Releasing Investors), it will have a shareholders' equity or partners' equity,
as the case may be, of at least $2,000,000.
6.3 Certification. Seller shall have received a certificate from
Buyer and in the form attached hereto as Exhibit 6.3.
6.4 Expense Reimbursement. Buyer shall have delivered to Seller
a certified or bank check in payment of the expense reimbursement provided for
in Section 9.5 hereof.
6.5 Escrow Agreement. The Escrow Agreement shall have been executed and
delivered by the parties thereto and Buyer shall have deposited in the Escrow
Account the Purchase Price or portion thereof required to be deposited in the
Escrow Account by Section 2.1 of this Agreement and in the form it is so
required to be deposited.
ARTICLE VII
TERMINATION
7.1 Termination.
(a) This Agreement may be terminated at any time prior to the
Option Closing:
(i) by mutual written consent of the Seller and
the Buyer; or
(ii) by the Buyer or the Seller by written notice
to the other if, without fault of the
terminating party, the Option Closing shall
not have occurred on or before January 31,
1996; or
(b) This Agreement shall terminate automatically, as to
matters occurring after December 31, 1997, without the need for either party to
take any action, if the Option Closing shall have occurred, but the notice of
exercise of the Option is not given pursuant to Section 1.1 hereof on or before
December 31, 1997, no matter what the reason for such notice not having been
given on or before such date.
7.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement shall forthwith become null
and void as to matters occurring thereafter and no party hereto (or any of their
respective shareholders, partners, beneficiaries, directors, officers or
employers) shall have any liability or further obligation to any other party
hereto as to matters occurring thereafter, except as provided in Article VIII.
Nothing contained in this Section shall relieve any party from liability for any
breach of this Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnity by the Seller. The Seller agrees to indemnify the Buyer,
the general partners of the Partnership and the Partnership on demand against,
and hold each such party harmless from, all losses, judgments, amounts paid in
settlement of actions or claims, liabilities, taxes, costs, damages and expenses
(including, but not limited to, reasonable attorneys' fees and disbursements) as
incurred, accruing from or resulting by reason of any inaccuracies of any of the
representations or warranties of the Seller in this Agreement or the breach or
non-performance by the Seller of any of the covenants or agreements made or to
be performed by the Seller pursuant to this Agreement or any claim by a third
party that, if sustained, would constitute such a breach or non-performance.
8.2 Indemnity by the Buyer. The Buyer and CPPI jointly and severally
agree to indemnify the Seller, the United Way, each director, officer and
employee of the United Way and each of the Released Parties (as such term is
defined in the Release and Settlement Agreement executed by Releasing
Investors), including but not limited to Del Webb Corporation and Del E. Webb
New Jersey, Inc., but other than the Claridge Entities (each person so entitled
to indemnification, a "Seller Indemnified Party"), on demand, against, and hold
each Seller Indemnified Party harmless from, all losses, judgments, amounts paid
in settlement of actions or claims, liabilities, taxes, cost, damages and
expenses (including but not limited to reasonable attorneys' fees and
disbursements) as incurred, (i) accruing from or resulting by reason of any
inaccuracy of any of the representations or warranties of the Buyer or CPPI in
this Agreement or the breach or non-performance by the Buyer or CPPI of any of
the covenants or agreements made or to be performed by the Buyer or CPPI
pursuant to this Agreement or any claim by a third party that, if sustained,
would constitute such a breach or non-performance, or (ii) arising from any
action or proceeding challenging the validity of this Agreement or claiming
damages arising from this Agreement commenced by any person in that person's
capacity as a Releasing Investor.
8.3 Indemnity by the Partnership. The Partnership agrees to indemnify
each of the Seller Indemnified Parties, on demand, against, and hold the Seller
Indemnified Party harmless from, all losses, judgments, amounts paid in
settlement of actions or claims, liabilities, taxes, cost, damages and expenses
(including but not limited to reasonable attorneys' fees and disbursements) as
incurred, (i) accruing from or resulting by reason of any inaccuracy of any of
the representations or warranties of the Partnership in this Agreement or the
breach or non-performance by the Partnership of any of the covenants or
agreements made or to be performed by the Partnership pursuant to this Agreement
or any claim by a third party that, if sustained, would constitute such an
accuracy breach or non-performance, or (ii) arising from any action or
proceeding challenging the validity of this Agreement or claiming damages
arising from this Agreement commenced by any person in that person's capacity as
a Releasing Investor.
8.4 Procedure for Indemnification. Promptly after receipt by any of
Buyer, the Partnership or a Seller Indemnified Party (each being an "indemnified
party") under Section 8.1, Section 8.2 or Section 8.3 above of notice of
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such Section, within
10 days of obtaining actual knowledge thereof, notify the indemnifying party in
writing of the commencement thereof, enclosing a copy of all papers served, but
the omission so to notify the indemnifying party shall not relieve it from any
liability that it may have to any indemnified party otherwise than under such
Section or do so if and to the extent the indemnifying party is not prejudiced
by such omission to so notify. In case any such action shall be brought against
any indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in, and, to the extent that it shall wish, by delivering written notice to the
indemnified party promptly after receiving notice of the commencement of the
action from the indemnified party, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party), and, after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not, except as
provided below, be liable to such indemnified party under such Section for any
legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. The indemnified party will have the right to employ its own
counsel in any such action, but the fees and expenses of such counsel will be at
the expense of such indemnified party unless (1) the employment of counsel by
the indemnified party has been authorized in writing by the indemnifying party,
(2) the indemnified party has been advised by counsel that there are legal
defenses available to it or other indemnified parties that are different from or
in addition to those available to the indemnifying party and which could result
in a conflict in defending the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (3) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees and expenses of such counsel will be at
the expense of the indemnifying party or parties. All such fees and expenses
will be reimbursed promptly as they are incurred. An indemnifying party will not
be liable for any settlement of any action or claim effected without its written
consent (which consent will not be unreasonably withheld) or, in connection with
any proceeding or related proceeding in the same jurisdiction and except as
provided in the second preceding sentence, for the fees and expenses of more
than one separate counsel for all indemnified parties.
8.5 Survival. The indemnification provided for in this Article VIII
will survive the Option Closing, the Purchase Closing, the completion of the
sale of the Webb Payment to the Buyer, the payment in full of the Purchase Price
and any investigation made by any party hereto.
ARTICLE IX
MISCELLANEOUS
9.1 Entire Agreement. This Agreement, including the exhibits hereto,
constitutes the entire agreement between the parties hereto with respect to the
matters covered hereby, and no party shall be liable or bound to the other under
this Agreement in any manner by any warranties, representations or covenants
except as specifically set forth herein.
9.2 Assignment. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors, however such succession is effected and whether or not such
succession is permitted by this Agreement (including any succession that may
occur by sale of securities or assets, assignment, merger, reverse merger,
consolidation, operation of law or, without limitation, otherwise), provided
that no such succession will relieve any party of its obligations under this
Agreement. Neither this Agreement, nor any of the rights or obligations
hereunder, may be assigned by any party to this Agreement without the written
consent of the other parties hereto (other than CPPI). Nothing in this Section
9.2 shall preclude the distribution or payment of amounts received by the Seller
hereunder, including to the United Way.
9.3 Titles and Subtitles. The titles and subtitles used in this
Agreement are for convenience only and are not to be considered in construing
this Agreement.
9.4 Notices and Other Communications. Any notice or other communication
required or permitted to be given under this Agreement must be in writing and
will be deemed effective when delivered in person or sent by facsimile, cable,
telegram or telex, or by overnight delivery service or by registered or
certified mail, postage prepaid, return receipt requested, to the following
addresses:
If to the Buyer or CPPI, to:
The Claridge Hotel and Casino Corporation
Boardwalk & Park Place
Atlantic City, New Jersey 08401
Attention: Frank A. Bellis, Jr., Esq.
Telephone: (609) 340-3400
Telecopier: (609) 340-3589
With a copy to:
Rogers & Wells
200 Park Avenue
New York, New York 10166
Attention: Leonard B. Mackey, Jr., Esq.
Telephone: (212) 878-8489
Telecopier: (212) 878-8375
If to the Seller to Seller:
c/o Del Webb Corporation
6001 N. 24th Street
Phoenix, Arizona 85016
Attention: Philip J. Dion
Telephone: (602) 808-8000
Telecopier: (602) 808-8097
With copies to:
Robertson C. Jones, Esq.
Del Webb Corporation
6001 N. 24th Street
Phoenix, Arizona 85016
Telephone: (602) 808-8009
Telecopier: (602) 808-8097
Gibson, Dunn & Crutcher
33 South Grand Avenue
Los Angeles, California 90071
Attention: Steven A. Meiers, Esq.
Telephone: (213) 229-7356
Telecopier: (213) 229-7520
Levine, Staller, Sklar, Chan,
Brodsky & Donnolly, P.A.
3030 Atlantic Avenue
Atlantic City, New Jersey 08401-6380
Attention: John M. Donnolly, P.C.
Telephone: (609) 347-1300
Telecopier: (609) 345-2473
If to the Partnership:
Atlantic City Boardwalk Associates, L.P.
2880 W. Meade Avenue
Suite 204
Las Vegas, Nevada 89102
Attention: Anthony C. Atchley
Telephone: (702) 253-7662
Telecopier: (702) 253-7663
With a copy to:
Lowenstein, Sandler, Kohl, Fisher & Boylan, P.A.
65 Livingston Avenue
Roseland, New Jersey 07068
Attention: Peter H. Ehrenberg
Telephone: (201) 992-8700
Telecopier: (201) 992-5820
The parties to this Agreement may change the address to which notices or other
communications are to be sent by a notice to the other given as provided in this
Section 9.4.
9.5 Expenses. Each party to this Agreement shall bear its own expenses
incurred in connection with the negotiation, preparation, execution and
consummation of this Agreement, including the fees, expenses and disbursements
of its respective legal counsel incurred in connection herewith; provided,
however, that the Buyer shall, upon presentation of appropriate invoices
therefor, reimburse the Seller, at the time of the Purchase Closing, for any
reasonable expense incurred by the Seller, up to an aggregate of $125,000, for
legal, investment banking or other services provided to the Seller by third
parties in connection with the Seller's negotiating the terms of and entering
into this Agreement since January 1, 1993. However, if the purchase of the Webb
Payment by Buyer occurs, then Buyer will pay all amounts Webb would be obligated
to pay under the Restructuring Agreement as fees and expenses of the trustee
under the Distributing Trust.
If any proceeding is brought for the enforcement of this
Agreement or because of an alleged dispute, breach or default in connection with
any of the provisions of this Agreement, the successful or prevailing party or
parties shall be entitled to recover from the unsuccessful party or parties all
costs and expenses, including reasonable attorneys' fees and disbursements,
incurred in connection with such proceeding, in addition to any other relief to
which it or they may be entitled.
9.6 Forum. Except as otherwise provided in Section 3.2(d)(ii), the sole
forum for resolving disputes under or relating to this Agreement will be New
York state courts and federal courts located in New York City and related
appellate courts. The parties agree to the jurisdiction of those courts and to
such venue for the purposes of this Agreement.
9.7 Survival of Representations and Warranties. The representations,
warranties, covenants and agreements of the Buyer, CPPI, the Seller and the
Partnership contained in or made pursuant to this Agreement shall survive the
Option Closing, the Purchase Closing, the completion of the sale of the Webb
Payment to the Buyer, the payment in full of the Purchase Price and any
investigation made by any party.
9.8 Amendment and Waiver. Any provision of this Agreement may be
amended and the observance of any term hereof may be waived (either
prospectively or retroactively and either generally or in a particular instance)
only by a document in writing signed by the parties to this Agreement who are
entitled to the benefit thereof.
9.9 Governing Law. This Agreement will be governed by, and construed
under, the laws of the State of New York.
9.10 Counterparts. Except as provided in Section 9.11, this Agreement
may be executed in two or more counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same agreement.
9.11 New Jersey Casino Control Act. Notwithstanding anything to the
contrary contained in this Agreement, this Agreement shall be deemed to include
all provisions required by the New Jersey Casino Control Act (the "Act"), and
shall be conditioned upon the approval of the CCC. To the extent that anything
in this Agreement is inconsistent with the Act, the provisions of the Act shall
govern. All provisions of the Act, to the extent required by law to be included
in this Agreement, are incorporated by reference as if fully restated in this
Agreement.
9.12 No Personal Liability. Each of the parties hereto hereby
acknowledges that (i) none of the General Partners of the Partnership shall have
any personal liability or other obligation with respect to any agreement or
obligation of the Partnership under this Agreement, any such liability or
obligation being payable solely out of any assets the Partnership may from time
to time have available therefor, and (ii) Philip J. Dion shall have no personal
liability or other obligation with respect to any agreement or obligation of the
Seller under this Agreement, any such liability or obligation being payable
solely out of any assets the Seller (e.g., the Trust created by the Trust
Instrument) may from time to time have available therefor, it being understood
that payments received by Seller pursuant to this Agreement are intended to be
paid promptly by Seller to the United Way.
9.13 Time of the Essence. Time is of the essence in this Agreement
and each of its provisions.
9.14 Third Party Beneficiaries. The only third party beneficiaries
of this Agreement are the United Way, the Seller Indemnified Parties, including
in their capacities as such and, as applicable, otherwise, Philip J. Dion,
Anthony Atchley and Gerald C. Heetland.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the date first above written.
THE CLARIDGE HOTEL AND CASINO CORPORATION
By: _____________________________
Name:
Title:
THE CLARIDGE AT PARK PLACE, INCORPORATED
By:_____________________________
Name:
Title:
---------------------------------
PHILIP J. DION, as Trustee for
VALLEY OF THE SUN UNITED WAY
ATLANTIC CITY BOARDWALK ASSOCIATES, L.P.
By: _____________________________
Name: Anthony C. Atchley
Title: General Partner
By: _____________________________
Name: Gerald C. Heetland
Title: General Partner