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AMENDED AND RESTATED PURCHASE AGREEMENT
dated as of February 26, 1998
between
LONDON CLUBS NEVADA INC.,
LONDON CLUBS INTERNATIONAL, P.L.C.,
ALADDIN GAMING HOLDINGS, LLC,
ALADDIN GAMING, LLC,
ALADDIN HOLDINGS, LLC,
SOMMER ENTERPRISES, LLC
and
TRUST UNDER ARTICLE SIXTH U/W/O SIGMUND SOMMER
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TABLE OF CONTENTS
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ARTICLE I
Definitions
SECTION 1.1. Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Purchase and Sale of the Purchaser Shares
SECTION 2.1. Purchase and Sale of the Purchaser Shares. . . . . . . . . . . 14
SECTION 2.2. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.3. Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III
Representations and Warranties
of Gaming Holdings, Gaming, Holdings,
Sommer Enterprises and the Trust
SECTION 3.1. Organization and Good Standing. . . . . . . . . . . . . . . . 17
SECTION 3.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.3. Non-Contravention . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.4. Consents and Approvals. . . . . . . . . . . . . . . . . . . . 19
SECTION 3.5. Outstanding Shares. . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.6. Warranty. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.7. Title Matters . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.8. Compliance with Laws. . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.9. No Event of Default . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.10. Hazardous Substances. . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.11. Environmental and Soils Reports . . . . . . . . . . . . . . . 22
SECTION 3.12. Sommer Enterprises Interest . . . . . . . . . . . . . . . . . 22
SECTION 3.13. Holdings' Business. . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.14. Financial Statements. . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.15. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.16. Material Adverse Effect . . . . . . . . . . . . . . . . . . . 23
SECTION 3.17. Absence of Undisclosed Liabilities. . . . . . . . . . . . . . 23
Section 3.18. Assets of the Trust . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE IV
Representations and Warranties of
Gaming Holdings, Gaming, Sommer Enterprises and Holdings
SECTION 4.1. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.2. Material Contracts. . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.3. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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SECTION 4.4. Employees Benefit Plans; ERISA. . . . . . . . . . . . . . . . 25
SECTION 4.5. Aladdin Names . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.6. Brokers or Finders. . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V
Representations and Warranties of
the Purchaser and LCI Parent
SECTION 5.1. Organization and Good Standing. . . . . . . . . . . . . . . . 27
SECTION 5.2. Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.3. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.4. Non-contravention . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.5. Consents and Approvals. . . . . . . . . . . . . . . . . . . . 28
SECTION 5.6. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.7. Investment. . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.8. No Public Market. . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.9. Brokers and Finders . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.10. Material Adverse Effect . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI
Covenants
SECTION 6.1. Redevelopment Documents . . . . . . . . . . . . . . . . . . . 29
SECTION 6.2. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.3. Discount Notes and Warrants . . . . . . . . . . . . . . . . . 33
SECTION 6.4. Interests of Employees,
Officers and Consultants . . . . . . . . . . . . . . . . . . 33
SECTION 6.5. Information and Consultation. . . . . . . . . . . . . . . . . 34
SECTION 6.6. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.7. Second Hotel. . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.8. Gaming Matters. . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.9. Conveyance of Land And
Existing Improvements . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.10. JMJ Lease . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VII
Conditions To Closing
SECTION 7.1. Conditions to the Purchaser's
and LCI Parent's Obligations. . . . . . . . . . . . . . . . . 41
SECTION 7.2. Conditions to Gaming Holdings's,
Gaming's, Holdings', Sommer
Enterprises' and the
Trust's Obligations . . . . . . . . . . . . . . . . . . . . . 44
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ARTICLE VIII
Guarantee
SECTION 8.1. Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE IX
Termination
SECTION 9.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . 47
ARTICLE X
SURVIVAL; INDEMNIFICATION
SECTION 10.1. Survival; Remedy for Breach. . . . . . . . . . . . . . . . . 47
SECTION 10.2. Indemnification. . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.3. Aronow Indemnification . . . . . . . . . . . . . . . . . . . 48
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.2. No Third-Party Beneficiaries . . . . . . . . . . . . . . . . 49
SECTION 11.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.4. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 11.5. Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.6. Further Assurances . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.7. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 11.8. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 11.9. Consents and Approvals . . . . . . . . . . . . . . . . . . . 53
SECTION 11.10. Counterparts; Effectiveness. . . . . . . . . . . . . . . . . 53
SECTION 11.11. Construction . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 11.12. Severance. . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.13. Non-Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.14. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.15. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.16. Entirety of Agreement. . . . . . . . . . . . . . . . . . . . 55
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AMENDED AND RESTATED PURCHASE AGREEMENT
This AMENDED AND RESTATED PURCHASE AGREEMENT, dated as of February 26,
1998 is entered into and made by and between ALADDIN GAMING HOLDINGS, LLC, a
Nevada limited-liability company ("Gaming Holdings"), LONDON CLUBS NEVADA INC.,
a Nevada corporation (the "PURCHASER"), LONDON CLUBS INTERNATIONAL, P.L.C., a
public limited company organized under the laws of England and Wales ("LCI
PARENT"), ALADDIN GAMING, LLC, a Nevada limited-liability company ("Gaming"),
ALADDIN HOLDINGS, LLC, a Delaware limited liability company ("HOLDINGS"), SOMMER
ENTERPRISES, LLC, a Nevada limited liability company ("SOMMER ENTERPRISES") and
TRUST UNDER ARTICLE SIXTH U/W/O SIGMUND SOMMER(the "TRUST") as an amendment to
and restatement of the Purchase Agreement dated as of September 24, 1997 (and
subsequently amended on October 16, 1997, November 18, 1997 and December 1,
1997), among certain of the undersigned.
WHEREAS, subject to the terms and conditions set forth herein, the
Purchaser desires to purchase from Gaming Holdings, and Gaming Holdings desires
to issue and sell to the Purchaser, the Purchaser Shares (as defined
hereinafter).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions set forth in
this Agreement and intending to be legally bound, Gaming Holdings, the
Purchaser, LCI Parent, Gaming, Holdings, Sommer Enterprises and Trust agree as
follows:
ARTICLE I
Definitions
SECTION 1.1. DEFINED TERMS. As used in this Agreement, the following
terms have the meaning set forth below:
"ALADDIN ENTERPRISES" means Aladdin Gaming Enterprises, Inc., a Nevada
corporation, which will be a Member of Gaming Holdings on and after the Closing
Date.
"AFFILIATE" means, in respect of a specified Person, any Person who or
which is (a) directly or indi-
rectly controlling, controlled by or under common control with such specified
Person, or (b) any member, director, officer, manager, relative or spouse of
such specified Person. For the purposes of this definition, "CONTROL" means the
right to exercise, directly or indirectly, more than fifty percent of the voting
power of the stockholders, members or owners, and, with respect to any
individual, partnership, trust or other entity or association, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of the controlled entity, and "CONTROLLED" and
"CONTROLLING" shall have corresponding meanings.
"AFFIRMATIVE RESPONSE NOTICE" has the meaning set forth in Section
2.2.
"AGREEMENT" means this Amended and Restated Purchase Agreement.
"ALADDIN NAMES" has the meaning set forth in Section 4.5.
"AMENDED AND RESTATED ARTICLES" means the Amended and Restated
Articles of Organization of Gaming Holdings to be entered into on or prior to
the Closing.
"APPLICATIONS" has the meaning set forth in Section 6.5.
"APPROVALS" has the meaning set forth in Section 6.5.
"ARBITRATION PROVISION" has the meaning set forth in Section 6.7.
"ARTICLES OF ORGANIZATION" means the Articles of Organization of
Gaming Holdings filed with the Secretary of State of the State of Nevada on
December 1, 1997, as amended from time to time.
"BANK DEBT" means the portion of the Gaming Financing under a bank
credit facility, in the amount of $410 million.
"BANK LENDERS" has the meaning set forth in Section 6.2.
"BAZAAR" means Aladdin Bazaar, LLC, a Delaware limited liability
company.
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"BAZAAR FINANCING" means the bank financing, and/or high yield debt,
and/or such alternative financing as Bazaar shall enter into, in order for
Bazaar to finance the development of the Shopping Center and/or all or some of
the Parking.
"CERCLA" is defined in clause (a) of the definition of "Environmental
Laws".
"CERLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"CERTIFICATE OF SHARES" means a certificate of Gaming Holdings
representing Shares in Gaming Holdings.
"CLOSING" has the meaning set forth in Section 2.2.
"CLOSING DATE" has the meaning set forth in Section 2.2.
"CLOSING SCHEDULES" means Schedules to this Agreement in respect of
the representations and warranties of the parties to this Agreement made as of
the Closing Date.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"GAMING HOLDINGS CLOSING CERTIFICATE" has the meaning set forth in
Section 7.1.
"COMPLETION GUARANTIES" has the meaning set forth in Section 6.2.
"CONFIDENTIAL INFORMATION" has the meaning set forth in Section 11.4.
"CONSENTS" has the meaning set forth in Section 5.5.
"CONTRIBUTION AGREEMENT" has the meaning set forth in Section 6.2.
"DISCOUNT NOTES" means 13.5% senior discount notes, accreting to an
aggregate principal amount of $221.5 million at maturity, due 2010 to be issued
by Gaming Holdings and Aladdin Capital Corp. on or about the Closing Date.
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"DOLLARS" and "$" means the lawful currency of the United States of
America.
"EFFECTIVE DATE" means September 24, 1997.
"EMPLOYEE PLANS" has the meaning set forth in Section 4.4.
"ERISA" has the meaning set forth in Section 4.4.
"ENVIRONMENTAL LAWS" means any of:
(a) the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Section 9601, ET SEQ.) ("CERCLA");
(b) the Federal Water Pollution Control Act (33 U.S.C. Section 1251,
ET SEQ.) ("CLEAN WATER ACT" OR "CWA");
(c) the Resource Conservation and Recovery Act (42 U.S.C. Section
6901, ET SEQ.) ("RCRA");
(d) the Atomic Energy Act of 1954 (42 U.S.C. Section 2011, ET SEQ.);
(e) the Clean Air Act (42 U.S.C. Section 7401, ET SEQ.);
(f) the Emergency Planning and Community Right to Know (42 U.S.C.
Section 11001, ET SEQ.);
(g) the Federal Insecticide, Fungicide, and Rondenticide Act (7 U.S.C.
Section 136, ET SEQ.) ("FIFRA");
(h) the Oil Pollution Act of 1990 (P.L. 101-380, 104 Stat. 486);
(i) the Safe Drinking Water Act (42 U.S.C. Sections 300f, ET SEQ.)
("SDWA");
(j) the Surface Mining Control and Reclamation Act of 1974 (30 U.S.C.
Sections 1201, ET SEQ.);
4
(k) the Toxic Substances Control Act (15 U.S.C. Section 2601, ET
SEQ.);
(l) the Hazardous Material Transportation Act (49 U.S.C. Section 1801,
ET SEQ.) ("HMTA");
(m) the Uranium Mill Tailings Radiation Control Act of 1978 (42 U.S.C.
Section 7901, ET SEQ.) ("UMTRCA");
(n) the Occupational Safety and Health Act (29 U.S.C. Section 651, ET
SEQ.) ("OSHA");
(o) the Nevada Hazardous Material law (NRS Chapter 459);
(p) the Nevada Solid Waste/Disposal of Garbage or Sewage law (NRS
444.440 to 444.650, inclusive);
(q) the Nevada Water Controls/Pollution law (NRS Chapter 445A);
(r) the Nevada Air Pollution law (NRS Chapter 445B);
(s) the Nevada Cleanup of Discharged Petroleum law (NRS 590.700 to
590.920, inclusive);
(t) the Nevada Control of Asbestos law (NRS 618.750 to 618.850);
(u) the Nevada Appropriation of Public Waters law (NRS 533.324 to
533.4385, inclusive);
(v) the Nevada Artificial Water Body Development Permit law (NRS
502.390);
(w) the Nevada Protection of Endangered Species, Endangered Wildlife
Permit (NRS 503.585) and Endangered Flora Permit law (NRS 527.270); and
(x) all others Federal, state and local Legal Requirements which
govern Hazardous Substances, and the regulations adopted and publications
promulgated pursuant to such foregoing laws;
in each case as amended by an amendment thereto or succeeded by a successor law.
5
"ESCROW AGENT" has the meaning set forth in Section 2.2.
"ESCROW AGREEMENT" has the meaning set forth in Section 2.2.
"EXERCISE" means, in respect of any Warrants, the exercise of such
Warrants into shares in Aladdin Enterprises, and "EXERCISED" shall have a
corresponding meaning.
"FINANCIAL STATEMENTS" has the meaning set forth in Section 3.14.
"FIRST AVAILABLE PROCEEDS" shall mean any and all amounts available at
any time the payment of which is not restricted under the arrangements in
respect of the Bank Financing and the Discount Notes.
"FF&E LOAN" means the approximately $80 million loan to Gaming secured
by, and/or capital lease to Gaming of, certain of the furniture, fixtures and
equipment located in the Redevelopment.
"GAI" means GAI, LLC, a Nevada limited liability company.
"GAI CONSULTING AGREEMENT" means the Consulting Agreement, as amended
as of the date hereof, effective as of June 16, 1997, among Gaming Holdings,
Gaming, Holdings and GAI.
"GAMING FINANCING" means the Bank Debt, the Discount Notes and the
FF&E Loan.
"GAMING PROBLEM" means circumstances such that any Member or any
Affiliate of any Member may preclude or materially delay, impede or impair the
ability of Gaming to obtain or retain any licenses required by the Nevada Gaming
Authorities in connection with the transactions contemplated hereby, including
for the conduct of business of Gaming, or such as may result in the imposition
of significantly burdensome terms and conditions on any such license.
"GAMING PROBLEM PARTY" has the meaning set forth in Section 6.8.
"GOEGLEIN" means Richard J. Goeglein.
6
"GOEGLEIN EMPLOYMENT AND CONSULTING AGREEMENT" means the Employment
and Consulting Agreement, as amended on the date hereof, effective as of June
16, 1997, entered into by and among Gaming Holdings, Gaming, Holdings and
Goeglein.
"GOVERNMENTAL ENTITY" has the meaning set forth in Section 3.4.
"HAZARDOUS SUBSTANCES" means (statutory acronyms and abbreviations
having the meaning given them in the definition of "Environmental Laws")
substances defined as "hazardous substances," "pollutants" or "contaminants" in
Section 101 of the CERCLA; those substances defined as "hazardous waste,"
"hazardous materials" or "regulated substances" by the RCRA; those substances
designated as a "hazardous substance" pursuant to Section 311 of the CWA; those
substances defined as "hazardous materials" in Section 103 of the HMTA; those
substances regulated as a hazardous chemical substance or mixture or as an
imminently hazardous chemical substance or mixture pursuant to Sections 6 or 7
of the TSCA; those substances defined as "contaminants" by Section 1401 of the
SDWA, if present in excess of permissible levels; those substances regulated by
the Oil Pollution Act; those substances defined as a pesticide pursuant to
Section 2(u) of the FIFRA, those substances defined as a source, special nuclear
or by-product material by Section 11 of the AEA; those substances defined as
"residual radioactive material" by Section 101 of the UMTRCA; those substances
defined as "toxic materials" or "harmful physical agents" pursuant to Section 6
of the OSHA); those substances defined as hazardous wastes in 40 C.F.R. Part
261.3; those substances defined as hazardous waste constituents in 40 C.F.R.
Part 260.10, specifically including Appendices VII and VIII of Subpart D of 40
C.F.R. Part 261; those substances designated as hazardous substances in 40
C.F.R. Parts 116.4 and 302.4; those substances defined as hazardous substances
or hazardous materials in 49 C.F.R. Part 171.8; those substances regulated as
hazardous materials, hazardous substances or toxic substances in 40 C.F.R. Part
1910; those substances defined as hazardous materials, hazardous substances or
toxic substances in any other Environmental Laws; and those substances defined
as hazardous materials, hazardous substances or toxic substances in the
regulations adopted and publications promulgated pursuant to said laws, whether
or not such regulations or publications are specifically referenced herein.
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"INDEMNIFIED PARTIES" has the meaning set forth in Section 10.2.
"INDEMNIFYING PARTY" has the meaning set forth in Section 10.2.
"INTEREST" means the entire ownership interest in Gaming Holdings of a
Member holding Voting Shares at any particular time, including the right of such
Member to any and all benefits to which a Member may be entitled as provided
under the NRS and in the Operating Agreement.
"JMJ LEASE" means the Amended and Restated Lease Agreement dated
July 27, 1994 between BATCL-1991-1, Inc. and JMJ, Inc. in respect of the Land
And Existing Improvements.
"KEEP WELL AGREEMENT" has the meaning set forth in Section 6.2.
"LAND AND EXISTING IMPROVEMENTS" means the land and existing
improvements located on an approximately 35 acre site at 3667 Las Vegas
Boulevard South, Las Vegas, Nevada, as indicated on the site plans attached
hereto as Exhibit 1, and as more particularly described on Exhibit 1A.
"LAW" means any statute, law, judgment, writ, order, injunction,
decree, ordinance, rule or regulation of any Governmental Entity.
"LIABILITIES" has the meaning set forth in Section 3.17.
"LIEN" means any lien, encumbrance, security interest, charge, claim,
mortgage, pledge or restriction on transfer of any nature whatsoever.
"LOSS" has the meaning set forth in Section 10.2.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on assets,
liabilities, operations, intended operations, results of operations or financial
condition.
"MEMBER" means a Person who has been admitted to Gaming Holdings as a
member in accordance with the NRS and the Operating Agreement.
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"MUSIC HOLDINGS" means Aladdin Music Holdings, LLC, a Nevada limited
liability company.
"NEVADA ACT" means the Nevada State Gaming Control Act (NRS Ch. 463 et
seq) and the rules and regulations promulgated thereunder.
"NEVADA GAMING AUTHORITIES" means, collectively, the Nevada Gaming
Commission, the Nevada State Gaming Control Board and all other state and local
regulatory and licensing authorities in the State of Nevada.
"NOTE REGISTRATION RIGHTS AGREEMENT" means the Note Registration
Rights Agreement dated as of February 26, 1998 among Gaming Holdings, Aladdin
Capital Corp., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Credit Suisse
First Boston Corporation, CIBC Oppenheimer Corp. and Scotia Capital Markets
(USA) Inc.
"NRS" means the Nevada Revised Statutes, as amended from time to time.
"OPENING DATE" means the date of the opening of the Redevelopment,
currently expected to be in the first quarter of 2000.
"OPERATING AGREEMENT" means the Operating Agreement of Gaming
Holdings, to be dated as of the Closing Date (the Operating Agreement shall have
attached as an exhibit thereto a form of Shareholders and Registration Rights
Agreement to be entered into by the shareholders of a successor corporation to
Gaming Holdings or Gaming in certain circumstances).
"PARKING" means the multi-level parking structure and other parking
areas for approximately 4,000 motor vehicles to be developed by Bazaar and
Gaming as part of the Redevelopment.
"PERCENTAGE INTEREST" means, with respect to a particular Member, the
proportionate share (expressed as a percentage) of such Member's Interest in the
Voting Shares in Gaming Holdings, computed by dividing the number of Voting
Shares held by such Member by the total number of Voting Shares issued and
outstanding.
"PERMITTED ENCUMBRANCES" has the meaning ascribed thereto in Section
3.6.
9
"PERSON" means a natural person, any form of business or social
organization and any other nongovernmental legal entity, whether domestic or
foreign, including a corporation, partnership, association, trust,
unincorporated organization, estate or limited liability company.
"PROHIBITED TRANSFEREES" means (a) an owner, operator or manager of a
hotel or casino competitive with the existing Aladdin Hotel and Casino or the
Redeveloped Aladdin, (b) a non-profit or governmental entity, (c) a Person
primarily in the business of owning or operating a casino or other gambling
facility, (d) Focus 2000, or the then current owner(s) and/or lessee(s) of the
property at the north-east corner of Las Vegas Boulevard and Harmon Avenue, and
their Affiliates, (e) Bazaar, any member of Bazaar and the Affiliates of Bazaar
or any such member, (f) an owner or operator of a distillery, winery, brewery or
distributorship of alcoholic beverages, or (g) a Person that has been convicted
of a felony crime.
"PURCHASE PRICE" has the meaning set forth in Section 2.1.
"PURCHASER CLOSING CERTIFICATE" has the meaning set forth in Section
7.2.
"PURCHASER SHARES" means the Voting Shares to be sold to the Purchaser
under this Agreement representing twenty-five percent of the outstanding Voting
Shares of Gaming Holdings at the Closing.
"RECEIVING PARTY" has the meaning set forth in Section 11.4.
"REDEVELOPMENT" means:
(a) the redevelopment of the existing Aladdin hotel and casino to include
a total of approximately 2,600 rooms and approximately 116,000 square feet of
main casino space (the "Redeveloped Aladdin");
(b) the development of the Shopping Center and the Parking;
(c) the development of the Salle Privee Facilities within the Redeveloped
Aladdin; and
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(d) the construction, fitting out, furnishing, maintenance and operation
of all or any part of the foregoing.
"REDEVELOPMENT AGREEMENTS" means any and all material contracts and
agreements relating to the Redevelopment or any part thereof, but does not
include any sub-lease in respect of the Shopping Center made by Bazaar as
sub-landlord, except any such sub-lease to Gaming as sub-tenant, and does not
include the Salle Privee Agreement and the Operating Agreement.
"REDEVELOPMENT BUDGETS" means any and all budgets relating to the
Redevelopment, or any part thereof.
"REDEVELOPMENT DOCUMENTS" means the Redevelopment Agreements, the
Redevelopment Financing Agreements, the Redevelopment Budgets and the
Redevelopment Plans and Specifications, including the construction contract with
Fluor Daniel, Inc.
"REDEVELOPMENT FINANCING AGREEMENTS" means any and all material
contracts or agreements relating to the Gaming Financing or the Bazaar
Financing, including the FF&E Loan and related agreements, inter-creditor
agreements, attornment agreements and guarantees of payment, performance,
completion or cash flow, other than the Contribution Agreement, the Completion
Guaranties and the Keep Well Agreement.
"REDEVELOPMENT PLANS AND SPECIFICATIONS" means any and all plans and
any and all specifications relating to the Redevelopment or any part thereof.
"RELEASE" means a "release", as such term is defined in CERCLA.
"RESOLUTION AGREEMENT" has the meaning set forth in Section 2.2.
"SALLE PRIVEE AGREEMENT" means an agreement between the Purchaser, LCI
Parent and Gaming with respect to the construction, operation, maintenance and
marketing of the Salle Privee Facilities.
"SALLE PRIVEE FACILITIES" means facilities open to the public at
large, consisting of:
11
(a) a gaming facility, containing approximately 20 to 30 high limit tables
and approximately 100 high limit slot devices, located on the mezzanine level
directly above the main gaming floor of the Redeveloped Aladdin;
(b) a super-premium gourmet restaurant facility, located adjacent to and
as part of the gaming facility of the Salle Privee Facilities and containing a
separate kitchen, a bar, approximately 25 dining tables inside the restaurant,
as well as several additional dining tables located in a roof garden accessible
through the restaurant;
(c) an exclusive hospitality facility comprising approximately 25
double-module luxury suites, 5 triple-module suites, a concierge facility and
guest bar and lounge, to be located in the main tower of the Redeveloped
Aladdin;
(d) an entrance and reception area for guests of the Salle Privee
Facilities, offering secure and discrete access for arrivals and departures; and
(e) vertical and horizontal circulation infrastructure providing for
private elevator access to the hospitality facility and private corridor access
from the hospitality facility to the gaming facility of the Salle Privee
Facilities.
"SECOND HOTEL" means a second, separately themed hotel and casino on
the Second Hotel Parcel with approximately 1,000 rooms and approximately 50,000
square feet of casino space.
"SECOND HOTEL DOCUMENTS" has the meaning set forth in Section 6.5.
"SECOND HOTEL NOTICE" has the meaning set forth in Section 6.7.
"SECOND HOTEL PARCEL" means the approximately 4.7 acres of land which
is approximately the land indicated to be the Second Hotel Parcel on the site
plans attached hereto as Exhibit 1.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
12
"SHARE" represents a share of an Interest in Gaming Holdings as shall
be provided in the Operating Agreement.
"SHOPPING CENTER" means a themed entertainment shopping center
containing approximately 450,000 square feet of gross leasable area to be
developed by Bazaar as part of the Redevelopment.
"SHOPPING CENTER PARCEL" means the approximately 11.4 acres of land
which is approximately the land indicated to be the Shopping Center Parcel on
the site plans attached hereto as Exhibit 1, together with an elevated area or
areas to be determined in accordance with the Redevelopment Plans and
Specifications.
"TAX INDEMNITY AGREEMENT" has the meaning set forth in Section 6.2.
"THIRD PARTY" means a Person who is not an Affiliate of Gaming
Holdings, the Purchaser, LCI Parent, Gaming, the Trust or Holdings.
"THRESHOLD" has the meaning set forth in Section 10.2.
"TIMESHARE PARCEL" means the area which is approximately the area
indicated to be the Timeshare Parcel on the site plans attached hereto as
Exhibit 1.
"TITLE REPORT" has the meaning set forth in Section 3.7.
"UTILITY PARCEL" means the approximately 0.64 acres of land which is
approximately the land indicated to be the CoGen Parcel on the site plans
attached hereto as Exhibit 1.
"VOTING SHARES" means Shares which have full voting rights attached
thereto.
"WARRANTS" means warrants to be issued by Aladdin Enterprises on or
about the Closing Date in connection with the issuance of the Discount Notes to
purchase Class B non-voting common shares in the capital of Aladdin Enterprises.
"WARRANT REGISTRATION RIGHTS AGREEMENT" means the Warrant Registration
Rights Agreement dated as of
13
February 26, 1998 among Gaming Holdings, Aladdin Capital Corp., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Credit Suisse First Boston Corporation,
CIBC Oppenheimer Corp. and Scotia Capital Markets (USA) Inc.
ARTICLE II
PURCHASE AND SALE OF THE PURCHASER SHARES
SECTION 2.1. PURCHASE AND SALE OF THE PURCHASER SHARES. Upon the
terms and subject to the conditions of this Agreement Gaming Holdings agrees to
issue, sell and convey to the Purchaser, and the Purchaser agrees to purchase
from Gaming Holdings, the Purchaser Shares, free and clear of all Liens, for an
aggregate purchase price of $50,000,000 (the "PURCHASE PRICE").
SECTION 2.2. CLOSING. (a) When Gaming Holdings shall in good faith
believe that the conditions contained in Section 7.1 to the Purchaser's
obligations to effect the purchase and sale of the Purchaser Shares under this
Agreement are in such position either to be satisfied at the Closing, or, in
respect of those conditions (which shall be specifically identified in the
notice) that will not be satisfied, will be waived by the Purchaser at the
Closing, Gaming Holdings shall so notify the Purchaser.
(b) Upon receipt of such notice under Section 2.2(a) the Purchaser
shall have fifteen days to notify Gaming Holdings of its opinion as to whether
the conditions contained in Section 7.1 will be satisfied or waived by the
Purchaser at the Closing. Upon the failure of the Purchaser to deliver such a
notice within such fifteen day time period, time being of the essence, Gaming
Holdings may terminate this Agreement pursuant to Article IX. Any notice by the
Purchaser stating the Purchaser's opinion that the conditions will not be
satisfied or waived at the Closing shall identify the condition(s) the Purchaser
believes have not been satisfied or will not be waived by Purchaser and, for the
purposes of facilitating the good faith negotiations referred to below, shall
provide reasons for the Purchaser's opinion, which reasons shall not include in
respect of Sections 7.1(e) through (f) any Redevelopment Document approved
pursuant to Section 6.1 (except to the extent that the Purchaser makes a
subsequent determination to the contrary pursuant to Section 6.1(c) or
14
7.1(g)). Upon receipt of such notice from the Purchaser stating the Purchaser's
opinion that the conditions will not be satisfied or waived at the Closing,
Gaming Holdings and the Purchaser shall promptly enter into good faith
negotiations for an additional fifteen day period in an effort to reach
agreement (the "RESOLUTION AGREEMENT") to resolve each other's concerns. Any
Resolution Agreement shall be in writing and duly signed. Upon the failure of
Gaming Holdings and the Purchaser to reach such agreement within such additional
fifteen day period, Gaming Holdings and the Purchaser shall each have the right
within fifteen days after the expiration of such additional fifteen day period
to terminate this Agreement pursuant to Article IX.
(c) If the Purchaser notifies Gaming Holdings within the initial
fifteen day period, time being of the essence, of its opinion that the
conditions contained in Section 7.1 will be satisfied or waived at the Closing
(the "AFFIRMATIVE RESPONSE NOTICE") or if the Resolution Agreement is made, if
required by the Gaming Financing, at such time prior to the Closing as is
required by the Gaming Financing, the Purchaser shall pay $50,000,000 into
escrow with an escrow agent (the "ESCROW AGENT") pursuant to an Escrow Agreement
(the "ESCROW AGREEMENT"), which Escrow Agreement is to be negotiated and
mutually agreed between Gaming Holdings, the Escrow Agent and the Purchaser.
(d) Subject to the terms and conditions of this Agreement, the
purchase and sale of the Purchaser Shares (the "CLOSING") shall take place after
conclusion of the process set forth in Section 2.2(a) through (c) above at 10:00
a.m. at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third
Avenue, New York, New York 10022, (i) on the thirtieth business day after the
Affirmative Response Notice has been given, or (ii) on the tenth business day
after the date the Resolution Agreement is made, as the case may be (the
"CLOSING DATE"), unless another date or time is mutually agreed to in writing by
Gaming Holdings and the Purchaser or is required by the Gaming Financing.
SECTION 2.3. CLOSING DELIVERIES. At the Closing:
(a)the Purchaser shall deliver or cause to be delivered to Gaming
Holdings:
15
(i) $50,000,000 (delivered by the Purchaser or by the Escrow
Agent on behalf of the Purchaser pursuant to the terms of the Escrow
Agreement, as the case may be), apportioned between (A) and (B), below, as
the Purchaser may determine (subject to the requirements of the Gaming
Financing): (A) by wire transfer of immediately available funds to an
account designated in writing by Gaming Holdings, and (B) by delivery to
Gaming Holdings of an irrevocable letter of credit in favor of Gaming
Holdings and immediately callable by Gaming Holdings on demand in form and
substance and from a nationally recognized U.S. bank satisfactory to Gaming
Holdings;
(ii) a counterpart of the Operating Agreement, duly executed by
the Purchaser;
(iii) a counterpart of the Salle Privee Agreement, duly executed
by the Purchaser and LCI Parent;
(iv) a counterpart of the Contribution Agreement, duly executed
by LCI Parent;
(v) a counterpart of the Keep Well Agreement, duly executed by
LCI Parent;
(vi) a counterpart of the Completion Guaranties, duly executed
by LCI Parent;
(vii) a counterpart of the Tax Indemnity Agreement, duly executed
by the Purchaser and LCI Parent;
(viii) the Purchaser Closing Certificate; and
(ix)such other documents and certificates as shall be required to
satisfy the conditions to the obligations of Gaming Holdings set forth in
Section 7.2
(b) Gaming Holdings shall deliver or cause to be delivered to the
Purchaser:
(i) a Certificate of Shares in respect of the Purchaser Shares;
16
(ii) a counterpart of the Operating Agreement, duly executed by
the Members of Gaming Holdings other than the Purchaser;
(iii) a counterpart of the Salle Privee Agreement, duly executed
by Gaming Holdings;
(iv) a counterpart of the Contribution Agreement, duly executed
by Holdings and the Trust;
(v) a counterpart of the Keep Well Agreement, duly executed by
Holdings;
(vi) a counterpart of the Completion Guaranties, duly executed
by the Trust;
(vii) a counterpart of the Tax Indemnity Agreement, duly executed
by Holdings and the Trust;
(viii) Gaming Holdings Closing Certificate;
(ix)the Closing Schedules; and
(x) such other documents and certificates as shall be required
to satisfy the conditions to the obligations of the Purchaser set forth in
Section 7.1.
ARTICLE III
Representations and Warranties of
Gaming Holdings, Gaming, Holdings, Sommer Enterprises
and the Trust
-----------------------------------------------------
Gaming Holdings, Gaming, Holdings, Sommer Enterprises and the Trust
jointly and severally represent and warrant to the Purchaser and LCI Parent as
of the Effective Date and as of the Closing Date that:
SECTION 3.1. ORGANIZATION AND GOOD STANDING. (a) Each of Gaming
Holdings, Music Holdings, Gaming and Sommer Enterprises is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Nevada.
17
(b) Holdings is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(c) The Trust is a trust duly created under the will of Sigmund
Sommer, under the laws of the State of New York and is being validly
administered under the laws of the State of New York.
SECTION 3.2. AUTHORITY. Gaming Holdings, Gaming, Holdings, Sommer
Enterprises and the Trust have all requisite power and authority to enter into
this Agreement; the execution and delivery by Gaming Holdings, Gaming, Holdings,
Sommer Enterprises and the Trust of this Agreement and the consummation by
Gaming Holdings, Gaming, Holdings, Sommer Enterprises and the Trust of the
transactions contemplated hereby (including, as of the Closing Date, the
Operating Agreement, the Salle Privee Agreement, the Contribution Agreement and
the Tax Indemnity Agreement) have been duly authorized by all necessary
corporate and other action on the part of Gaming Holdings, Gaming, Holdings,
Sommer Enterprises and the Trust; and this Agreement has been duly and validly
executed and delivered by Gaming Holdings, Gaming, Holdings, Sommer Enterprises
and the Trust and constitutes and, as of the Closing Date, the Operating
Agreement, the Salle Privee Agreement, the Contribution Agreement and the Tax
Indemnity Agreement will constitute, (assuming the due and valid execution and
delivery thereof by the Purchaser and LCI Parent) the legal, valid and binding
obligation of Gaming Holdings, Gaming, Holdings, Sommer Enterprises and the
Trust, enforceable against Gaming Holdings, Gaming, Holdings, Sommer Enterprises
and the Trust in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and by general equitable principles.
SECTION 3.3. NON-CONTRAVENTION. Neither the execution, delivery and
performance by Gaming Holdings, Gaming, Holdings, Sommer Enterprises and the
Trust of this Agreement nor the consummation of the transactions contemplated
hereby by Gaming Holdings, Gaming, Holdings, Sommer Enterprises or the Trust
will (i) result in a breach of any of the terms or provisions of the Articles of
Organization or Operating Agreement of Gaming Holdings, Gaming, Holdings or
Sommer Enterprises, or the will
18
under which the Trust, was created, (ii) violate any applicable Law, or (iii)
result in a violation or breach of any of the terms, conditions or provisions of
any agreement to which Gaming Holdings, Gaming, Holdings, Sommer Enterprises or
the Trust is a party, except such violations or breaches which are not
reasonably likely to have a Material Adverse Effect on Gaming Holdings, Gaming,
Holdings, Sommer Enterprises or the Trust or materially and adversely affect any
of Gaming Holdings', Gaming's, Holdings', Sommer Enterprises' or the Trust's
obligations under this Agreement, or under any agreement to be entered into by
any of them pursuant hereto.
SECTION 3.4. CONSENTS AND APPROVALS. The execution and delivery by
Gaming Holdings, Gaming, Holdings, Sommer Enterprises and the Trust of this
Agreement and the consummation of the transactions contemplated hereby do not
require any filing by Gaming Holdings, Gaming, Holdings, Sommer Enterprises or
the Trust with, or approval or consent of any domestic or foreign governmental
or regulatory authority, agency or commission, including courts of competent
jurisdiction (each, a "GOVERNMENTAL ENTITY") which has not already been made or
obtained, except for (i) the filing of the Amended and Restated Articles with
the Secretary of State of the State of Nevada, (ii) such filings and approvals
as are required under the Nevada Act, and (iii) such filings, consents or
approvals that will have been made or obtained on or prior to the Closing Date
or the failure of which to make or obtain is not reasonably likely to have a
Material Adverse Effect on Gaming Holdings or Gaming or to materially and
adversely affect any of Gaming Holdings' or Gaming's obligations under this
Agreement.
SECTION 3.5. OUTSTANDING SHARES. (a) Subject to Gaming Holdings and
the Purchaser agreeing upon an alternate capital structure, immediately after
the Closing the only Members of Gaming Holdings and the outstanding Shares of
Gaming Holdings will be as set forth in Schedule 3.5 and all such Shares shall
be duly authorized and validly issued. Except as set forth on Schedule 3.5,
there are no rights of any kind or legal or equitable claims to memberships,
Interests or Shares in Gaming Holdings.
(b) At the Closing, the only members of Sommer Enterprises will be
Ronald Dictrow (who shall hold a 1.33 percent interest in the issued and
outstanding membership interests in Sommer Enterprises) and Holdings (which
19
shall hold a 98.67 percent interest in the issued and outstanding membership
interests in Sommer Enterprises) and except as set forth in Schedule 3.15 there
are no other rights of any kind or legal or equitable claims to memberships,
Interests or Shares in Sommer Enterprises.
(c) At the Closing, Holdings shall be a ninety-five percent owned
subsidiary of the Trust.
SECTION 3.6. WARRANTY. As of the Effective Date Holdings owns, and
as of the Closing Date Gaming shall own, indefeasible and insurable fee simple
title to the Land And Existing Improvements subject only to those matters set
forth on Schedule 3.6 (the "PERMITTED ENCUMBRANCES").
SECTION 3.7. TITLE MATTERS. Except as provided in Section 6.9 or as
disclosed in Schedule 3.6, neither Gaming Holdings nor Gaming nor Holdings nor
the Trust nor Sommer Enterprises has created or have knowledge of any unrecorded
or undisclosed documents or any Liens, leases, rights of possession, covenants,
conditions, easements, restrictions on use or claims affecting the Land And
Existing Improvements, or other matters which affect title to the Land And
Existing Improvements which are not disclosed on Schedule 3.6 (including the
Title Report attached thereto (the "TITLE REPORT")).
SECTION 3.8. COMPLIANCE WITH LAWS. Gaming Holdings, Gaming,
Holdings, Sommer Enterprises, the Trust, and the Land And Existing Improvements
are in material compliance with all Laws, including all building and zoning
ordinances and codes.
SECTION 3.9. NO EVENT OF DEFAULT. None of Gaming Holdings, Gaming,
the Trust, Sommer Enterprises or Holdings is in default in any material respect
beyond any applicable grace period under or with respect to any mortgage or any
other material agreement or instrument to which either Gaming Holdings, Gaming,
the Trust, Sommer Enterprises or Holdings is a party or by which any of Gaming
Holdings, Gaming, the Trust, Sommer Enterprises or Holdings or any part of the
Land And Existing Improvements is bound in any respect, nor has any event
occurred, nor does any state of circumstances exist, the existence of which,
with or without the passage of time or the giving of notice or both, would
constitute an event of default under such mortgage, agreement or instrument.
20
SECTION 3.10. HAZARDOUS SUBSTANCES. Except as otherwise disclosed in
the environmental reports described on Schedule 3.11:
(a) the Land And Existing Improvements and all existing uses and
conditions of the Land And Existing Improvements and the Redevelopment have
been, and continue to be, in material compliance with all Environmental Laws,
and neither Gaming Holdings, Gaming nor Holdings has received, and there are no
pending or threatended (i) claims, complaints, notices or requests for
information with respect to any alleged violation of any Environmental Law, or
(ii) complaints, notices or inquiries regarding potential liability under any
Environmental Law with respect to the Land And Existing Improvements or any
portion thereof or any use or condition thereof;
(b) there have been no Releases of Hazardous Substances at, or under
the Land And Existing Improvements by Gaming Holdings, Gaming or Holdings that
singly or in the aggregate, have, or may reasonably be expected to have, a
Material Adverse Effect on Gaming Holdings, Gaming or Holdings;
(c) Gaming Holdings, Gaming or Holdings have been issued and are in
material compliance with all permits, certificates, approvals, licenses and
other authorizations relating to environmental matters and necessary or
desireable for their businesses;
(d) no part of the Land And Existing Improvements now or previously
owned or leased by Gaming Holdings, Gaming or Holdings is listed or proposed for
listing (with respect to owned property only) on the National Priorities List
pursuant to CERCLA, on the CERCLIS or on any similar state list requiring
investigation or clean-up;
(e) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under the Land And Existing
Improvements now or previously owned or leased by Gaming Holdings, Gaming or
Holdings that, singly or in the aggregate, have, or may reasonably be expected
to have, a Material Adverse Effect on Gaming Holdings, Gaming or Holdings;
(f) neither Gaming Holdings, Gaming nor Holdings has directly
transported or directly arranged for
21
the transportation of any Hazardous Substances to any location which is listed
or proposed for listing on the National Priorities List pursuant to CERCLA, on
the CERLIS or on any similar state list or which is the subject of federal,
state or local enforcement actions or other investigations which may lead to
material claims against Gaming Holdings, Gaming or Holdings for any remedial
work, damage to natural resources or personal injury, including claims under
CERCLA;
(g) there are no polychlorinated biphenyls or friable asbestos on or
in the Land And Existing Improvements now or previously owned or leased by
Gaming Holdings, Gaming or Holdings that, singly or in the aggregate, have or
may reasonably be expected to have, a Material Adverse Effect on Gaming
Holdings, Gaming or Holdings; and
(h) no conditions exist at, on or under the Land And Existing
Improvements now or previously owned or leased by Gaming Holdings, Gaming or
Holdings which, with the passage of time, or the giving of notice or both, would
give rise to liability under any Environmental Law.
SECTION 3.11. ENVIRONMENTAL AND SOILS REPORTS. Schedule 3.11 sets
forth a complete list of all environmental, soils, seismic and geologic reports,
studies and certificates relating to the Land And Existing Improvements.
SECTION 3.12. SOMMER ENTERPRISES INTEREST. Sommer Enterprises owns,
free and clear of all encumbrances, its Interest in Gaming Holdings.
SECTION 3.13. HOLDINGS' BUSINESS. (a) Since its formation, the
business of Holdings has been to acquire the Land And Existing Improvements and
to engage in activities relating to the operation and development thereof,
including pursuant to the JMJ Lease, and in respect of the Redevelopment.
Except for the Land And Existing Improvements, (i) except as set forth in
item (i) on Schedule 3.13, Holdings has no material assets, and (ii) except as
set forth in item (ii) on Schedule 3.13, Holdings has no material liabilities.
SECTION 3.14. FINANCIAL STATEMENTS. (a) The unaudited consolidated
balance sheet of Gaming (with footnotes) and the related statements of income,
changes in Members' equity and cash flow previously delivered to
22
Purchaser were prepared in accordance with generally accepted accounting
principles applied on a consistent basis and present fairly, in all material
respects, the financial condition of Gaming as of the date thereof and the
results of their operations for the period indicated.
(b) A consolidated balance sheet of Gaming Holdings (with footnotes)
and the related statements of income, changes in Members' equity and cash flow
shall be prepared as of the last day of the last month ending prior to the
Closing and included in the Closing Schedules and shall be audited to the extent
that audited financials are required on or around the Closing Date by the Gaming
Financing.
(c) The financial statements referred to in Sections 3.14(a) and (b),
collectively, the "Financial Statements."
SECTION 3.15. LITIGATION. Except as disclosed in Schedule 3.15,
there is no action, suit, judgement, decree, charge, complaint, injunction,
investigation or proceeding pending or, to the best knowledge of Gaming
Holdings, Gaming, Holdings, Sommer Enterprises or the Trust, threatened against
Gaming Holdings, Gaming, Holdings, Sommer Enterprises, the Trust, Music Holdings
or Jack Sommer.
SECTION 3.16. MATERIAL ADVERSE EFFECT. Except as disclosed in
Schedule 3.16, since the date of this Agreement there has been no event,
occurrence, or development, and there is not any state of circumstances or facts
which has had or is likely to have, a Material Adverse Effect on Gaming
Holdings, Gaming, Holdings, Sommer Enterprises, Music Holdings or the Trust.
SECTION 3.17. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set
forth in Schedule 3.17, neither Gaming Holdings, Music Holdings nor Gaming has
any direct or indirect indebtedness, liability, claim, loss, damage, deficiency
or obligation, fixed or unfixed, choate or inchoate, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise (collectively,
the "LIABILITIES"), required under generally accepted accounting principles to
be reflected on a balance sheet (with footnotes) other than those Liabilities
fully and adequately reflected or reserved against on the Financial Statements.
Since the date of the latest Financial Statements, except as set forth in
23
Schedule 3.17, neither Gaming Holdings nor Gaming has incurred any Liabilities
required under generally accepted accounting principles to be reflected on a
balance sheet (with footnotes), other than such Liabilities as are incurred
after the Effective Date under, pursuant to or as contemplated in a
Redevelopment Document which has been approved by Purchaser pursuant to Section
6.1.
Section 3.18. ASSETS OF THE TRUST. The Trust is possessed of assets
free of encumbrances to an extent sufficient to meet its obligations under the
Completion Guaranties, the Contribution Agreement, the Tax Indemnity Agreement,
this Purchase Agreement and any guaranty obligations it may undertake in
connection with any financing relating to the Shopping Center or the Second
Hotel.
ARTICLE IV
Representations and Warranties of
GAMING HOLDINGS, GAMING, SOMMER ENTERPRISES AND HOLDINGS
Gaming Holdings, Gaming, Sommer Enterprises and Holdings jointly and
severally represent and warrant to the Purchaser and LCI Parent as of the
Effective Date and as of the Closing Date that:
SECTION 4.1. SUBSIDIARIES. Except as set forth in Schedule 4.1
(which sets forth the extent of ownership), Gaming Holdings and Gaming have no
subsidiaries, and Gaming Holdings and Gaming have no legal or equitable right or
obligation to acquire any interest of any kind in any other Person.
SECTION 4.2. MATERIAL CONTRACTS. Except as disclosed in Schedule
4.2, neither Gaming Holdings, Music Holdings nor Gaming is a party to or bound
by:
(i)any lease or sublease of real or personal property providing for
annual rentals of $100,000 or more;
(ii)any agreement for the purchase of goods, services, equipment or
other assets that provides for annual payments by Gaming Holdings or Gaming
of $100,000 or more;
24
(iii)any partnership, joint venture or other similar agreement or
arrangement;
(iv)any agreement relating to indebtedness (whether incurred, assumed,
guaranteed or secured by any asset) or indemnification, other than any such
agreement with an aggregate outstanding principal amount not exceeding
$100,000;
(v)any agreement with any Member, manager or officer of Gaming
Holdings, Music Holdings or Gaming or with any Affiliate of any such
Member, manager or officer; or
(vi)any other agreement, commitment, arrangement or plan that is
material to Gaming Holdings, Music Holdings or Gaming.
SECTION 4.3. EMPLOYEES. Except as set forth in Schedule 4.3, neither
Gaming Holdings, Music Holdings nor Gaming is a party to nor have they announced
or promulgated any agency, employment or consulting agreements or union
contracts. To the best knowledge of Gaming Holdings and Gaming each is in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours.
SECTION 4.4. EMPLOYEES BENEFIT PLANS; ERISA. Schedule 4.4 contains a
list of each bonus, deferred compensation, incentive compensation, severance or
termination pay, hospitalization or other medical, stock purchase, stock option,
pension, life or other insurance, supplemental unemployment benefit,
profit-sharing or retirement plan, agreement or arrangement, maintained for the
benefit of any employee or former employee of Gaming Holdings, Music Holdings or
Gaming (the "EMPLOYEE PLANS"). Except as set forth in Schedule 4.4:
(a) No liability under Section 502 (i) or Title IV of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or a tax under
Section 4975 of the Code, has been incurred by Gaming Holdings or Gaming with
respect to any Employee Plan established or maintained, or to which
contributions are or have been made by Gaming Holdings, Music Holdings or Gaming
which is an employee pension benefit plan (within the meaning of Section 3(2) of
ERISA). No Employee Plans of Gaming Holdings or Gaming are multiemployer plans
(as defined in
25
Section 3(37) of ERISA). No event has occurred, and no condition or set of
circumstances currently exists with respect to the Employee Plans which presents
a material risk of the occurrence of any event that might result in any
liability of Gaming Holdings, Music Holdings or Gaming under Section 502(i) of
ERISA, Title IV of ERISA or Section 4975 of the Code or other applicable Law.
(b) Each Employee Plan is in compliance with ERISA and all other
applicable Federal Laws and each Employee Plan that is intended to be qualified
under Section 401(a) of the Code is so qualified and Gaming Holdings and Gaming
know of no fact which has adversely affected or which will adversely affect the
qualified status of each Employee Plan.
SECTION 4.5. ALADDIN NAMES. Schedule 4.5 contains a true and
complete list of all trade names, trademarks, service marks, patents and
copyrights used in connection with the business of the Aladdin Hotel and Casino
(the "ALADDIN NAMES"). On the Closing Date, Gaming Holdings and Gaming shall
have the exclusive (subject to the rights of other Persons in respect of the
Redevelopment and the Land And Existing Developments as contemplated in this
Agreement or as contemplated under the JMJ Lease) right to use each registered
trademark and service mark listed on Schedule 4.5, and Gaming Holdings and
Gaming's use thereof does not infringe on any trademark, trade names, assumed
names, service marks, patents or copyrights or any other rights of any person or
entity.
SECTION 4.6. BROKERS OR FINDERS. Except as set forth in Schedule
4.2, neither Gaming Holdings, Music Holdings nor Gaming has employed any
investment banker, broker or finder or incurred any liability for any investment
banking fees, brokerage fees, commissions or finders' fees in connection with
the transactions contemplated by this Agreement, including the Gaming Financing
and the Bazaar Financing.
ARTICLE V
Representations and Warranties of
THE PURCHASER AND LCI PARENT
The Purchaser and LCI Parent jointly and severally represent and
warrant to Gaming Holdings, Gaming,
26
Holdings, Sommer Enterprises and the Trust as of the Effective Date and as of
the Closing Date that:
SECTION 5.1. ORGANIZATION AND GOOD STANDING. (a) The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of Nevada.
(b) LCI Parent is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation.
SECTION 5.2. PARENT. The Purchaser is an indirect wholly owned
subsidiary of LCI Parent.
SECTION 5.3. AUTHORITY. The Purchaser and LCI Parent have all
requisite power and authority to enter into this Agreement; the execution and
delivery by the Purchaser and LCI Parent of this Agreement and the consummation
by the Purchaser and LCI Parent of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Purchaser and LCI Parent; and this Agreement has been duly and validly executed
and delivered by the Purchaser and LCI Parent and constitutes (assuming the due
and valid execution and delivery of this Agreement by Gaming Holdings, Gaming,
the Trust, Holdings and Sommer Enterprises) the legal, valid and binding
obligation of the Purchaser and of LCI Parent enforceable against the Purchaser
and LCI Parent in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and by general equitable
principles.
SECTION 5.4. NON-CONTRAVENTION. Neither the execution, delivery and
performance by the Purchaser and LCI Parent of this Agreement nor the
consummation of the transactions contemplated hereby by the Purchaser and LCI
Parent will (i) violate the Articles of Organization of the Purchaser or the
Memorandum of Association and Articles of Association of LCI Parent,(ii) violate
any applicable Law, or (iii) result in a violation or breach of any of the
terms, conditions or provisions of any agreement to which the Purchaser or LCI
Parent is a party, except such violations or breaches which are not reasonably
likely to have material adverse effect on Gaming Holdings, Gaming, LCI Parent or
the Purchaser or any of the Purchaser's or LCI Parent's obligations under
27
this Agreement, or under any agreement to be entered into by either of them
pursuant hereto.
SECTION 5.5. CONSENTS AND APPROVALS. The execution and delivery by
the Purchaser and LCI Parent of this Agreement and the consummation of the
transactions contemplated hereby do not require any filing by the Purchaser or
LCI Parent with, or approval or consent of, any Governmental Entity which has
not already been made or obtained, except such filings and approvals as are
required under the Nevada Act, and except for such filings, consents or
approvals that will have been obtained on or prior to the Closing Date or the
failure of which to make or obtain is not reasonably likely to have a Material
Adverse Effect on Gaming Holdings or Gaming or to materially and adversely
affect any of the Purchaser's or LCI Parent's obligations under this Agreement.
SECTION 5.6. LITIGATION. There is no action, suit, judgement,
decree, charge, complaint, injunction, investigation or proceeding pending or,
to the best knowledge of the Purchaser or LCI Parent, threatened against the
Purchaser or LCI Parent.
SECTION 5.7. INVESTMENT. The Purchaser is acquiring the Purchaser
Shares for investment for its own account, not as a nominee or agent, and not
with the view to, or for resale in connection with, any distribution thereof in
violation of the Securities Act. The Purchaser understands that the Purchaser
Shares to be purchased have not been, and will not be, registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
the Purchaser's representations with respect thereto as expressed herein. The
Purchaser understands and acknowledges that the Purchaser Shares are subject to
restrictions on transfer pursuant to the terms of the Operating Agreement.
SECTION 5.8. NO PUBLIC MARKET. The Purchaser understands that no
public market now exists for any securities issued by Gaming Holdings, including
the Purchaser Shares, and that there can be no assurance that a public market
for such securities, including the Purchaser Shares, will develop in the future.
The Purchaser acknowledges that the Purchaser Shares must be held indefinitely
unless subsequently registered under the
28
Securities Act or unless an exemption from such registration is available. The
Purchaser is aware of the provisions of Rule 144 promulgated under the
Securities Act which permit limited resales of securities purchased in a private
placement, subject to the satisfaction of certain conditions, and that there can
be no assurance that Rule 144 will ever be available for any resale of the
Purchaser Shares.
SECTION 5.9. BROKERS AND FINDERS. Except for Oppenheimer & Co.,
Inc., neither the Purchaser nor LCI Parent have employed any investment banker,
broker or finder or incurred any liability for any investment banking fees,
brokerage fees, commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
SECTION 5.10. MATERIAL ADVERSE EFFECT. Since the date of this
Agreement, there has been no event, occurrence, or development, and there is not
any state of circumstances or facts which has had or is likely to have, a
Material Adverse Effect on the Purchaser or LCI Parent.
ARTICLE VI
COVENANTS
SECTION 6.1. REDEVELOPMENT DOCUMENTS. (a) When Gaming Holdings in
good faith believes that one or more of the Redevelopment Documents as to which
consultation and counseling has taken place pursuant to Section 6.5 is complete
and satisfactory, Gaming Holdings shall send a notice to the Purchaser to that
effect (a copy of the relevant Redevelopment Document(s) shall accompany such
notice and such notice shall make express reference to each Redevelopment
Document accompanying it). The Purchaser, in respect of each Redevelopment
Document included in such notice, within fifteen days after receipt by the
Purchaser of such notice, time being of the essence, in its sole discretion
shall either (i) approve such Redevelopment Document in that form, or (ii)
object to such Redevelopment Document and provide Gaming Holdings with written
reasons for its objection.
(b) If the Purchaser objects to a Redevelopment Document, or fails to
approve a Redevelopment Document within fifteen days of the Purchaser's notice
under
29
Section 6.1(a), time being of the essence, Gaming Holdings and the Purchaser
shall enter into good faith negotiations for an additional fifteen day period
and use commercially reasonable efforts to reach agreement to resolve each
other's concerns. Upon the failure of Gaming Holdings and the Purchaser to
reach such agreement within such additional fifteen day period, either Gaming
Holdings or the Purchaser may within fifteen days of the expiration of such
additional fifteen day period terminate this Agreement pursuant to Article IX.
(c) Any Redevelopment Documents approved by the Purchaser at any time
pursuant to this Section 6.1 shall be deemed to have been approved by the
Purchaser for the purposes of Sections 2.2 and 7.1, and no new approval shall be
required from the Purchaser, except to the extent that the Purchaser determines
(i) that any such Redevelopment Document is adversely affected by or adversely
affects any subsequent Redevelopment Document(s) presented to the Purchaser for
approval hereunder, or (ii) that the effect of any subsequently presented
Redevelopment Document or the Redevelopment Documents taken as a whole,
materially increase LCI Parent's potential liability under the Completion
Guaranties or the Keep Well Agreement above reasonably anticipated levels.
(d) Gaming Holdings, subject to prior consultation and counseling with
the Purchaser pursuant to Section 6.5, may submit amendments of or variations to
any or all of the Redevelopment Documents to the Purchaser at any time, whether
or not the Purchaser has previously approved such Redevelopment Documents, and
the procedures and provisions of Sections 6.1(a), (b) and (c) above shall apply.
(e) As of the date hereof the Purchaser has approved for all purposes
herein the documents set forth on Schedule 6.1.
SECTION 6.2. FINANCING. (a) Subject to the provisions hereinafter
set forth, LCI Parent, Holdings, the Trust and the Purchaser agree that they
shall use commercially reasonable efforts to assist Gaming and Gaming Holdings
to arrange the Gaming Financing, including (i) with respect to LCI Parent and
the Trust, to enter into (A) a joint and several guaranty of performance and
completion in connection with the Bank Debt, and (B) a joint and several
guaranty of performance and completion in favor of the holders of the Discount
Notes
30
and in favor of the Contingent Guarantor (as shall be defined therein)
(collectively, the "COMPLETION GUARANTIES"); (ii) with respect to LCI Parent and
Holdings, to enter into a Keep Well Agreement (the "KEEP WELL AGREEMENT") with
the providers of the Bank Debt (the "BANK LENDERS") under which Holdings and LCI
Parent shall jointly and severally covenant to make certain cash equity
contributions to Gaming in certain circumstances; (iii) with respect to LCI
Parent, Holdings and the Trust, to enter into a contribution agreement (the
"CONTRIBUTION AGREEMENT") pursuant to which (A) LCI Parent and the Trust shall
agree to be obligated, notwithstanding the joint and several obligations of LCI
Parent and the Trust stated in the Completion Guaranties, for such portion of
any liability incurred under the Completion Guaranties in the proportion of
twenty-five percent for LCI Parent and seventy-five percent for the Trust, and
(B) pursuant to which LCI Parent and Holdings shall agree to be obligated,
notwithstanding the joint and several obligations of LCI Parent and Holdings
stated in the Keep Well Agreement, for such portion of any liability incurred
under the Keep Well Agreement in the proportion of twenty-five percent for LCI
Parent and seventy-five percent for Holdings; and (iv) with respect to the
Purchaser, LCI Parent, the Trust and Holdings, to enter into a tax indemnity
agreement (the "Tax Indemnity Agreement") consistent with the terms of the
Agreement entered into by the Purchaser, LCI Parent, the Trust and Holdings,
dated as of January 29, 1998 pursuant to which the Trust and Holdings jointly
and severally shall agree to indemnify on an after tax basis the Purchaser and
LCI Parent, and each of them against various taxes, losses, costs or damages;
PROVIDED that the terms and conditions of each of the Completion Guaranties, the
Keep Well Agreement, the Contribution Agreement and the Tax Indemnity Agreement
are satisfactory to LCI Parent, Holdings and the Trust, each in its respective
sole discretion. In consideration of the foregoing, LCI Parent shall receive
(x) an initial fee of $2.65 million and (y) a fee accruing from the Closing Date
of one and one-half percent (1.5%) per annum of Gaming's average annual
indebtedness with respect to that portion of the Bank Debt which is supported
and enhanced by the Keep Well Agreement for each relevant twelve month period
(or part thereof) (which amount shall reflect the extent, if any, by which the
obligations under the Keep Well Agreement are reduced or eliminated under
certain circumstances over time), which (A) in respect of the fee accruing
during the period from the Closing Date to the Opening Date, shall be paid
following the Opening Date
31
out of First Available Proceeds and (B) in respect of the fee accruing during
the period from and after the Opening Date shall be payable annually in arrears
within thirty days after each twelve month anniversary of the Opening Date,
failing which Gaming Holdings shall pay such fee by issuing to LCI Series A
Preferred Shares in the capital of Gaming Holdings at the rate of one Series A
Preferred Share for each $100 which is not paid at the end of such thirty day
period.
(b) On or prior to the Closing, Gaming Holdings and Gaming shall enter
into all Redevelopment Documents comprising the Gaming Financing that have been
approved by the Purchaser pursuant to Section 6.1 or Section 2.2.
(c) Each of Holdings and the Purchaser agrees to pay, within thirty
days after receipt of a request therefor (together with reasonably detailed
documentation evidencing such costs), its pro rata share (i.e., seventy-five
percent for Holdings and twenty-five percent for the Purchaser) of all fees and
expenses paid or incurred in connection with the Gaming Financing to the extent
previously mutually approved in writing by the Purchaser and Holdings. Without
limiting the foregoing, the parties acknowledge and agree to pay their
respective shares of the commitment fee which is due upon execution of a
commitment letter in respect of the Bank Debt. All such payments shall become
obligations of Gaming (and shall be reimbursed as appropriate) as of the Closing
Date.
(d) Subject to the consummation of the Closing, Gaming shall pay (i)
the fees of Westwood Capital, LLC and HK Group, LLC, respectively, arising under
the agreements set forth in Schedule 4.2, and (ii) the fees of Oppenheimer & Co.
in connection with the transactions contemplated herein, and (iii) the legal
fees relating to the transactions contemplated herein. The parties acknowledge
that Gaming shall pay to the Trust (A) in consideration for certain expenses
incurred by the Trust prior to the Closing, $3 million at the Closing and
(B) after the Closing, amounts to reimburse the Trust for out-of-pocket expenses
relating to the Redevelopment, not to exceed $900,000.
(e) The parties agree to exercise reasonable diligent efforts to
coordinate the Gaming Financing and the Bazaar Financing, including facilitating
inter-creditor agreements and the delivery of attornment and
32
nondisturbance agreements; PROVIDED that the terms and conditions thereof are
satisfactory to each of the parties in their respective sole discretion.
SECTION 6.3. DISCOUNT NOTES AND WARRANTS. At the Closing, Gaming
shall issue the Discount Notes and Sommer Enterprises shall cause Aladdin
Enterprises to issue the Warrants.
SECTION 6.4. INTERESTS OF EMPLOYEES, OFFICERS AND CONSULTANTS. (a)
The parties acknowledge that in consideration for the contribution of certain
interests in Gaming, Gaming Holdings shall at the Closing (i) issue to Goeglein
an unvested Interest in Gaming Holdings equal to a two percent Percentage
Interest on the terms and conditions of the Goeglein Employment and Consulting
Agreement, (ii) issue to GAI an Interest in Gaming Holdings equal to a three
percent Percentage Interest, fully vested, on the terms and conditions of the
GAI Consulting Agreement and (iii) issue to various other officers and employees
of Gaming certain unvested Interests in Gaming Holdings on the terms and
conditions of various amended employment agreements disclosed in Schedule 4.3.
The parties further acknowledge that Goeglein, GAI and such other officers and
employees of Gaming will, pursuant to the Goeglein Employment and Consulting
Agreement and the GAI Consulting Agreement and the above-mentioned other amended
employment agreements with officers and employees of Gaming disclosed in
Schedule 4.3, respectively, each have the right to purchase additional
securities in certain circumstances to avoid dilution of their respective
Interests and/or put their Interests to Gaming Holdings in certain circumstances
and on certain terms and conditions.
(b) The capital structure of Gaming Holdings at the Closing shall
reflect that immediately after the Closing GAI shall have a three percent (3%)
Percentage Interest, and Sommer Enterprises' Interest shall be diluted to
accommodate such three percent interest of GAI and the Purchaser's Interest
shall not be diluted thereby. Subject to the consummation of the Closing, on
the Opening Date the Purchaser's Percentage Interest shall be decreased by 0.5%
and Sommer Enterprises' Percentage Interest shall be correspondingly increased
by 0.5%. Notwithstanding the foregoing, Goeglein's two percent (2%) Percentage
Interest (whether vested or unvested), GAI's three percent (3%) Percentage
Interest and the Interests of the other officers and employees of Gaming
33
referred to in Section 6.4(a) (whether vested or unvested) shall be subject to
dilution upon the Exercise of any Warrants.
(c) Gaming Holdings shall, on or prior to the Closing, ensure that the
Goeglein Employment and Consulting Agreement is amended to provide that a change
of control which occurs, pursuant to the provisions of the Operating Agreement,
in connection with defaults and/or calls under the Completion Guaranties, the
Keep Well Agreement or the Contribution Agreement, shall not be deemed a change
of control for purposes of the Goeglein Employment and Consulting Agreement.
SECTION 6.5. INFORMATION AND CONSULTATION. (a) Within ten days after
the Effective Date, Gaming shall endeavor to deliver to the Purchaser a copy of
all items set forth on the Schedules hereto the most recent drafts as at the
Effective Date of the Redevelopment Documents, to the extent that such
Redevelopment Documents exist, copies of all licenses, applications (other than
applications relating to the submissions to the Nevada Gaming Authorities),
permits and other approvals and notices from Governmental Entities relating to
the Redevelopment, or any part thereof (collectively "APPLICATIONS" and
"APPROVALS") and copies of all documents, deeds, proposals, letters of intent
and agreements relating to the construction, financing, fitting out and
furnishing, maintenance and operation of the Second Hotel, provided, however,
that to the extent that the Purchaser shall have elected to proceed pursuant to
Section 6.7(a)(iii), such documents and agreements shall be only those which
directly or indirectly affect the Redevelopment (the "SECOND HOTEL DOCUMENTS").
(b) From and after the Effective Date and until and including the
Closing Gaming shall:
(i) promptly and regularly consult and counsel with Purchaser
with respect to all material issues arising with respect to the Redevelopment
and any part thereof, the Redevelopment Documents, the Applications and
Approvals, and the Second Hotel Documents, as such issues arise and to the
extent such issues will be the subject of discussions or negotiations with third
parties, cooperate with Purchaser in developing Gaming's positions, and afford
the Purchaser the opportunity to attend meetings at which such issues will be
negotiated;
34
(ii) without limiting the foregoing, promptly consult and
counsel with the Purchaser with respect to the development of Redevelopment
Plans and Specifications, and the Redevelopment Budgets;
(iii) without limiting the foregoing, promptly and regularly
consult and counsel with the Purchaser with respect to any proposed material
commitment of Gaming Holdings, Music Holdings or Gaming with respect to the
Redevelopment or any part thereof; and
(iv) without limiting the foregoing, Gaming shall promptly
provide to the Purchaser the latest drafts of the Redevelopment Documents, the
Second Hotel Documents, and all Applications, Approvals and notices from
Governmental Entities, shall notify the Purchaser of, and invite representatives
of the Purchaser to attend, all of Gaming's project meetings, and upon
reasonable notice shall provide the Purchaser with access to all books, records
and key employees of Gaming, Gaming Holdings and Music Holdings.
SECTION 6.6. INSURANCE. From and after the Closing Gaming shall
maintain insurance in kind and amount reasonably necessary to protect against
the risks inherent or associated with the business of Gaming, including the
operations and marketing of the Salle Privee Facilities, which insurance, in
kind and amount, shall at all times comply with the requirements of the Gaming
Financing and shall include LCI Parent and the Purchaser as named insureds.
SECTION 6.7. SECOND HOTEL. (a) Subject to (i) the constituent draft
Redevelopment Documents in respect of the Second Hotel which have been provided
to LCI as of the date hereof being unchanged, (ii) an adequate and satisfactory
financing commitment being in place for the Second Hotel, (iii) there being no
use, directly or indirectly of the credit support and enhancement which LCI is
providing pursuant to Section 6.2 (including the Keep Well Agreement and
Completion Guaranties) and (iii) the terms of the Second Hotel venture being
satisfactory to Trizec Hahn Centres, Inc., Purchaser has agreed that Gaming will
proceed with the development of the Second Hotel through a partially owned
subsidiary of Music Holdings, PROVIDED that the material terms of the Second
Hotel Documents shall provide for the development of the Second Hotel without
utilizing, and shall specifically indemnify LCI Parent against the use
35
of, the credit support and enhancement which LCI Parent is providing pursuant to
Section 6.2 (including the Keep Well Agreement and Completion Guaranties).
(b) If Purchaser decides not to proceed with the Second Hotel venture
on the terms of Section 6.7(a) on the grounds of any of the matters listed in
clauses (i)-(iv) Gaming may propose by notice (the "SECOND HOTEL NOTICE") to the
Purchaser that Gaming proceed with the development of the Second Hotel at some
point during or subsequent to the Redevelopment, which Second Hotel Notice shall
contain the material terms of such proposed development (including the financing
thereof). The Purchaser shall notify Gaming, within thirty days after delivery
of the Second Hotel Notice, time being of the essence, as to which of the
following courses of action it shall pursue (the failure to so notify being
deemed to be the election of choice (iii) below):
(i) Gaming may proceed with the development of the Second Hotel
substantially in accordance with the Second Hotel Notice and utilizing the
Gaming Financing and the credit support and enhancement which LCI Parent is
providing pursuant to Section 6.2.
(ii)Gaming may proceed with the development of the Second Hotel
substantially in accordance with the Second Hotel Notice, provided that the
material terms shall provide for the development of the Second Hotel without
utilizing, and shall specifically indemnify LCI Parent against the use of, the
credit support and enhancement which LCI Parent is providing pursuant to Section
6.2 (including the Keep Well Agreement and Completion Guaranty).
(iii) Holdings shall have the right to cause Gaming to convey to
Holdings or an Affiliate thereof, or to a joint venture involving Holdings or an
Affiliate thereof, or to a third party, the Second Hotel Parcel, and such entity
shall thereafter have the right to develop the Second Hotel. In such event, the
Purchaser at Purchaser's election shall have the right to receive either (A)
cash equal to twenty-five percent (25%) of the independently assessed market
value of the Second Hotel Parcel or (B) twenty-five percent (25%) of the equity
interest of Holdings and its Affiliates in the entity which will own and develop
the Second Hotel.
36
(c) The Purchaser shall have the right to approve, such approval not
to be unreasonably withheld, matters relating to the Second Hotel to the extent
such matters directly or indirectly affect the Aladdin Redevelopment or Gaming
Holdings, Music Holdings or Gaming, including (if the Second Hotel proceeds as a
partially owned subsidiary of Music Holdings pursuant to Section 6.7(a)) any
proposed rights or remedies to be afforded to the Trust of any of its Affiliates
in connection with any completion guaranty or keep well obligations undertaken
by the Trust or any Affiliate of the Trust. Such reasonableness on the part of
the Purchaser shall include, without limitation, any potential detrimental
effect such Second Hotel (other than its mere existence, as to which the
Purchaser shall not have the right to object) may have on the financial risks of
the Purchaser or its Affiliates in connection with the Aladdin Redevelopment.
(d) Any dispute between the Purchaser and Gaming or Holdings in
connection with any determination pursuant to Section 6.7(c) shall be finally
settled through binding arbitration by a sole, disinterested arbitrator in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitrator shall be jointly selected by the Purchaser and
Holdings but, if the Purchaser and Holdings do not agree on an arbitrator within
thirty days after demand for arbitration is made, they shall request that the
arbitrator be designated by the American Arbitration Association. The award of
the arbitrator shall be final and conclusive upon the Purchaser, Gaming and
Holdings. Each party to the arbitration shall pay the compensation, costs, fees
and expenses of its own witnesses, experts and counsel. The compensation and
any costs and expenses of the arbitrator shall be borne equally by the Purchaser
and Gaming. Judgement upon the award rendered may be entered in any court
having jurisdiction thereof, which court may order appropriate relief at law or
equity. All proceedings relating to any such arbitration, and all testimony,
written submissions and award of the arbitrator therein, shall be private and
confidential as among the parties thereto, and shall not be disclosed to any
other Person, except as required by law and except as reasonably necessary to
prosecute or defend any judicial action to enforce, vacate or modify such
arbitration award.
37
SECTION 6.8. GAMING MATTERS. (a) The parties agree that from the
Effective Date they shall be subject to the provisions of the Nevada Act and to
the licensing and regulatory control of the Nevada Gaming Authorities. The
parties acknowledge that, in order for Gaming Holdings and Gaming to carry on
their business, Sommer Enterprises, Holdings, the Trust, the Purchaser, LCI
Parent and their Affiliates and respective employees, officers and directors may
be required to submit personal history and financial information to, and be
found suitable by, the Nevada Gaming Authorities and gaming authorities of other
jurisdictions. If required by the Nevada Gaming Authorities or gaming
authorities of other jurisdictions, Sommer Enterprises, Gaming Holdings,
Holdings, the Trust, the Purchaser and LCI Parent shall each, and shall cause
their respective Affiliates, employees, officers and directors to, (i) promptly
submit such personal history and financial history, (ii) cooperate in any
investigation and (iii) seek a finding of suitability. Sommer Enterprises,
Gaming Holdings, Holdings, the Trust, the Purchaser and LCI Parent each shall be
responsible for its own costs and expenses (i.e., the costs and expenses
incurred by them, their Affiliates and their respective principals/members and
employees, officers and directors) in connection with obtaining, attempting to
obtain or retaining a license in accordance with this Section 6.8.
(b) The parties acknowledge, understand and agree that, to the extent
that the prior approval of the Nevada Gaming Authorities is required pursuant to
the Nevada Act for the taking of any action under, or the operation and
effectiveness of, any provision of this Agreement, each of them will use
commercially reasonable efforts to obtain same.
(c) If Gaming Holdings or Purchaser shall determine prior to the
Closing Date, in good faith, based upon verifiable information and specific
provisions of the applicable gaming statutes and rules promulgated thereunder or
upon specific information received from the Nevada Gaming Authorities, that a
Gaming Problem exists in respect of either Sommer Enterprises, Gaming Holdings,
Gaming, Holdings, the Trust or their respective Affiliates (in the case of a
determination by the Purchaser) or the Purchaser, LCI Parent or their respective
Affiliates (in the case of a determination by Gaming Holdings), then Gaming
Holdings or the Purchaser, as the case may be, shall provide written notice to
the other such party (the "GAMING PROBLEM PARTY") requesting that the Gaming
Prob-
38
lem Party provide for the elimination of the Gaming Problem, and:
(i) (A) if the Gaming Problem is caused by directors, officers,
managers or trustees of the Gaming Problem Party, the Gaming Problem Party shall
terminate the employment of such Person and (B) if the Gaming Problem is caused
by a shareholder, partner, member or beneficiary of the Gaming Problem Party,
the Gaming Problem Party shall either purchase such Person's ownership or other
interest in the Gaming Problem Party or require such Person to transfer its
ownership or other interest in the Gaming Problem Party to a trust or other
entity (if any) that would eliminate the Gaming Problem; or
(ii) after providing the Gaming Problem Party with such written
notice and ninety days to eliminate such Gaming Problem, Gaming Holdings (where
the Purchaser or LCI Parent is the Gaming Problem Party) or the Purchaser (where
Sommer Enterprises, Gaming Holdings, Gaming, Holdings or the Trust is the Gaming
Problem Party) may elect to terminate this Agreement pursuant to Article IX,
without further liability hereunder (other than pursuant to Sections 6.2(c) and
11.4), if the Gaming Problem Party does not eliminate such Gaming Problem within
such ninety day period, time being of the essence.
SECTION 6.9. CONVEYANCE OF LAND AND EXISTING IMPROVEMENTS. (a) On or
prior to the Closing, simultaneously upon the fulfillment of the conditions set
forth in Section 7.2 hereof and the delivery of all items set forth in Section
2.3(a) hereof, the Trust and Holdings shall cause (i) the Land And Existing
Improvements to be conveyed to Gaming with title as warranted in this Agreement,
and (ii) to the extent permitted by law, all Applications and Approvals to be
assigned to Gaming.
(b) The parties agree that Gaming may (i) lease and/or convey the
Second Hotel Parcel to another entity pursuant to and subject to the
requirements of Section 6.7, (ii) subject to Gaming receiving the economic terms
set forth on Exhibit 2, lease and/or convey the Shopping Center Parcel to Bazaar
or an Affiliate of Bazaar, (iii) lease and/or convey the Utility Parcel to a
third party in consideration for such party's agreement to construct, maintain
and operate a cogeneration or central utility plant, and (iv) in the event that
Gaming, with the Purchaser's approval, shall decline to develop
39
the Timeshare Parcel, lease and/or convey the Timeshare Parcel to Sommer
Enterprises, an Affiliate of Sommer Enterprises or a Third Party in
consideration for the appraised market value, independently assessed, of the
Timeshare Parcel, and otherwise on terms and conditions reasonably approved by
the Purchaser and provided that the Purchaser shall have the right to approve
all documents, deeds, proposals, letters of intent and agreements, including
financing agreements, relating to the construction, fitting out, maintenance and
operation of the Utility Parcel or the Timeshare Parcel developments which,
directly or indirectly, affect the Redevelopment.
SECTION 6.10. JMJ LEASE. The parties agree that Holdings shall be
responsible for all payments made to JMJ, Inc. under the JMJ Lease, as a result
of the termination of the JMJ Lease, except that Gaming shall be responsible for
all payments required to be made in respect of the federal WARN statute. Gaming
shall have the benefit of the proceeds received from the sale of salvageable
equipment on the Land And Existing Improvements owned by Gaming Holdings,
Gaming, Holdings, Sommer Enterprises, the Trust and their respective Affiliates
after the termination of the JMJ Lease.
SECTION 6.11. FINANCIAL INFORMATION. (a) If, in connection with the
registration of the Discount Notes or Warrants under the Securities Act or the
Securities Exchange Act of 1934, as amended, a registration statement is, in the
reasonable opinion of counsel to Gaming Holdings, Aladdin Capital Corp. and
Aladdin Enterprises ("Issuers' Counsel") or the Securities and Exchange
Commission ("SEC"), required to contain financial statements and/or other
financial information of or concerning LCI Parent, then LCI Parent agrees to
provide to Gaming Holdings, Aladdin Capital Corp. and Aladdin Enterprises such
financial statements and/or financial information prepared and presented in the
manner required by Issuers' Counsel or the SEC, as applicable (including
reconciliation of such statements and information to United States generally
accepted accounting principles, if required) within a sufficient time period to
allow Gaming Holdings, Aladdin Capital Corp. and Aladdin Enterprises to comply
with their obligations under the Notes Registration Rights Agreement and the
Warrant Registration Rights Agreement within the time periods required
thereunder.
(b) In the event that financial statements and/or other financial
information of or concerning LCI
40
Parent as of any dates or periods which do not correspond with the dates or
periods when or in respect of which LCI Parent regularly prepares such
information, both Gaming Holdings and Gaming and LCI Parent shall use their best
endeavors to submit to the SEC that such dates or periods are impractical and to
persuade the SEC not to require such statements and/or information as of those
dates or periods.
(c) All costs and expenses in connection with any adaptation whether
as to dates, time periods or otherwise, or any reconciliation of LCI Parent
financial statements and/or financial information and any effort undertaken on
behalf of LCI Parent to persuade the SEC as aforesaid (including, without
limitation, the fees and expenses of counsel and of auditors or other advisors
or experts), shall be borne by Gaming Holdings or Gaming.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.1. CONDITIONS TO THE PURCHASER'S AND LCI PARENT'S
OBLIGATIONS. The obligation of the Purchaser and LCI Parent to consummate the
purchase of the Purchaser Shares and the other transactions contemplated hereby
is subject to the satisfaction (or waiver by the Purchaser or LCI Parent, in
their sole discretion) at or prior to the Closing of the following conditions:
(a) The representations and warranties of Gaming Holdings, Gaming,
Holdings, Sommer Enterprises and the Trust made in this Agreement shall be true
and correct in all material respects as of the Effective Date and as of the
Closing Date with the same effect as if made at and as of the Closing Date.
Gaming Holdings, Gaming, Holdings, Sommer Enterprises or the Trust shall have
performed in all material respects the agreements required to be performed by
Gaming Holdings, Gaming, Holdings, Sommer Enterprises or the Trust on or prior
to the Closing Date. Gaming Holdings shall have delivered to the Purchaser a
certificate of an officer of Gaming Holdings to the foregoing effect (the
"GAMING HOLDINGS CLOSING CERTIFICATE").
(b) No injunction or order of any Governmental Entity shall be in
effect as of the Closing Date, and no lawsuit, claim, arbitration, proceeding or
investigation shall be pending before any Governmental Entity as of the
41
Closing Date, and there shall be no outstanding judgment, order or decree of any
Governmental Entity, in each case, which would restrain or prohibit the issuance
and sale of the Purchaser Shares on the Closing Date or the consummation of any
of the other transactions contemplated by this Agreement or invalidate or
suspend any provision of this Agreement.
(c) Since the Effective Date, there shall have been no event,
occurrence, or development and there shall not be any state of circumstances or
facts (whether or not disclosed in the Closing Schedules or the Gaming Holdings
Closing Certificate) which has had or is likely to have a Material Adverse
Effect on Gaming Holdings, Gaming, Holdings, Sommer Enterprises or the Trust.
(d) Gaming shall have delivered to the Purchaser an opinion of counsel
to Gaming Holdings, Gaming, Holdings, Sommer Enterprises and the Trust in form
and substance satisfactory to the Purchaser.
(e) The Purchaser shall be satisfied, in its sole discretion, that all
Redevelopment Documents necessary for the timely completion of the construction,
furnishing and fitting out of the Redevelopment are in full force and effect and
all of such Redevelopment Documents shall have theretofore been presented to,
and approved by, the Purchaser in its sole discretion pursuant to Section 6.1 or
Section 2.2.
(f) Without limiting the foregoing, the Gaming Financing shall, on
terms and conditions satisfactory to the Purchaser in its sole discretion, have
been consummated and be in full force and effect, and with respect to Bazaar
Financing, a financing commitment shall be in full force and effect on terms and
conditions satisfactory to the Purchaser in its sole discretion to the extent
that such terms and conditions directly or indirectly affect the Redeveloped
Aladdin, Gaming Holdings or Gaming.
(g) The Purchaser shall be satisfied in its sole discretion that the
Redevelopment Documents taken as a whole do not materially increase LCI Parent's
liability under the Completion Guaranties or the Keep Well Agreement above
reasonably anticipated levels.
42
(h) A counterpart of each of the Operating Agreement, Salle Privee
Agreement and Contribution Agreement shall have been duly executed by the other
party or parties thereto, shall have been delivered to the Purchaser, and shall
be in full force and effect, assuming due and valid execution and delivery by
the Purchaser and LCI Parent of each such agreement to which they are a party.
(i) A counterpart of the Completion Guaranties and the Keep Well
Agreement containing terms and conditions satisfactory to LCI Parent in its sole
discretion shall have respectively been duly executed by Holdings and the Trust,
and Holdings, delivered to the Bank Lenders, and be in full force and effect,
assuming due and valid execution and delivery by LCI Parent.
(j) A counterpart of the Tax Indemnity Agreement shall have been duly
executed by the Trust and Holdings, shall have been delivered to LCI Parent and
the Purchaser and shall be in full force and effect, assuming due and valid
execution and delivery by the Purchaser and LLC Parent.
(k) If an Escrow Agreement is required by the Gaming Financing, a
counterpart of the Escrow Agreement with an Escrow Agent, and on terms and
conditions satisfactory to the Purchaser in its sole discretion, shall have been
duly executed by the other parties thereto, and a counterpart thereof shall have
been delivered to the Purchaser.
(l) An amendment to the Goeglein Employment and Consulting Agreement
providing that a change of control which occurs, pursuant to the provisions of
the Operating Agreement, in connection with defaults and/or calls under the
Completion Guaranties, the Keep Well Agreement or the Contribution Agreement,
shall not be deemed a change of control for purposes of the Goeglein Employment
and Consulting Agreement.
(m) An ALTA Policy of Title Insurance in the amount of at least $180
million insuring in favor of Gaming's title to the Land And Existing
Improvements as warranted in this Agreement and issued by a title insurer (and
if reinsured, reinsured by reinsurers) reasonably satisfactory to the Purchaser,
shall have been delivered to Gaming, and shall be in full force and effect.
43
(n) The Amended and Restated Articles shall have been entered into.
(o) The closing of the sale of the Discount Notes and Warrants shall
have taken place.
SECTION 7.2. CONDITIONS TO GAMING HOLDINGS'S, GAMING'S, HOLDINGS',
SOMMER ENTERPRISES' AND THE TRUST'S OBLIGATIONS. The obligation of Gaming
Holdings, Gaming, Holdings, Sommer Enterprises and the Trust to consummate the
issuance and sale of the Purchaser Shares and the other transactions
contemplated hereby is subject to the satisfaction (or waiver by Gaming
Holdings, Gaming, Holdings, Sommer Enterprises or the Trust, in their sole
discretion) at or prior to the Closing of the following conditions:
(a) The representations and warranties of the Purchaser and LCI Parent
made in this Agreement shall be true and correct in all material respects as of
the Effective Date and as of the Closing Date with the same effect as if made at
and as of the Closing Date. The Purchaser or LCI Parent shall have performed in
all material respects the agreements required to be performed by the Purchaser
or LCI Parent on or prior to the Closing Date. The Purchaser shall have
delivered to Gaming Holdings a certificate of an officer of the Purchaser to the
foregoing effect (the "PURCHASER CLOSING CERTIFICATE").
(b) No injunction or order of any Governmental Entity shall be in
effect as of the Closing Date, and no lawsuit, claim, arbitration, proceeding or
investigation shall be pending before any Governmental Entity as of the Closing
Date, and there shall be no outstanding judgment, order or decree of any
Governmental Entity, in each case, which would restrain or prohibit the issuance
and sale of the Purchaser Shares on the Closing Date or the consummation of any
of the other transactions contemplated by this Agreement or invalidate or
suspend any provision of this Agreement.
(c) Each of the Redevelopment Documents that, in Gaming Holdings'
opinion in its sole discretion, are necessary for the timely completion of the
construction, furnishing and fitting out of the Redevelopment shall have been
presented to and approved by the Purchaser pursuant to Section 6.1, and the
Redevelopment Agreements and the Redevelopment Financing Agreements shall have
44
been duly executed and delivered by the parties thereto and shall be in full
force and effect.
(d) Without limiting the foregoing, the Gaming Financing shall, on
terms and conditions satisfactory to Gaming Holdings in its sole discretion,
have been consummated and be in full force and effect, and with respect to the
Bazaar Financing, a financing commitment shall be in full force and effect on
the terms and conditions satisfactory to Gaming Holdings and Gaming in its sole
discretion.
(e) A counterpart of each of the Operating Agreement, Salle Privee
Agreement and Contribution Agreement shall have been duly executed by the other
party or parties thereto, shall have been delivered to Gaming Holdings, and
shall be in full force and effect, assuming due and valid execution and delivery
by Gaming, Holdings and the Trust of each such agreement to which they are a
party.
(f) A counterpart of each of the Completion Guaranties and the Keep
Well Agreement containing terms and conditions satisfactory to the Trust and
Holdings, respectively, in their sole discretion shall have been duly executed
by LCI Parent, delivered to the Bank Lenders, and be in full force and effect,
assuming due and valid execution and delivery by the Trust and Holdings,
respectively.
(g) If an Escrow Agreement is required by the Gaming Financing, a
counterpart of the Escrow Agreement with an Escrow Agent, and on terms and
conditions satisfactory to Gaming Holdings in its sole discretion, shall have
been duly executed by the other parties thereto, and a counterpart thereof shall
have been delivered to Gaming Holdings.
(h) The Purchaser shall have paid the Purchase Price to Gaming
Holdings, as provided in Section 2.3(a)(i).
(i) Since the Effective Date, there shall have been no event,
occurrence, development, state of circumstances or facts (whether or not
disclosed in the Purchaser Closing Certificate) which has had or is likely to
have a Material Adverse Effect on the Purchaser or LCI Parent.
45
(j) The Discount Notes and Warrants shall be issued and outstanding.
(k) The Purchaser shall have delivered to Gaming an opinion of counsel
to the Purchaser and LCI Parent in form and substance satisfactory to Gaming.
ARTICLE VIII
GUARANTEE
SECTION 8.1. GUARANTEE. LCI Parent hereby unconditionally and
irrevocably guarantees to Gaming Holdings the prompt and complete performance by
the Purchaser, when due, of the Purchaser's obligations under this Agreement.
ARTICLE IX
TERMINATION
SECTION 9.1. TERMINATION. This Agreement may be terminated at any
time prior to the Closing Date:
(a) by mutual agreement in writing of the Purchaser and Gaming
Holdings;
(b) by written notice given by Gaming Holdings or by Purchaser as
provided in Sections 2.2(b) and 6.1(b);
(c) by written notice by Gaming Holdings or Gaming if (i) LCI Parent
or the Purchaser fails to cure a Gaming Problem within the ninety day period
provided in Section 6.8(c)(ii), time being of the essence, or (ii) LCI Parent or
the Purchaser or any of their respective Affiliates or any of their respective
employees, officers or directors fails to make any filing or disclosure required
or requested by, or withdraws any filing or disclosure made to, the Nevada
Gaming Authorities;
(d) by written notice by the Purchaser if (i) Sommer Enterprises,
Gaming Holdings, Gaming, Holdings or the Trust fails to cure a Gaming Problem
within the ninety day period provided in Section 6.8(c)(ii), time being of the
essence, or (ii) Sommer Enterprises, Gaming Holdings, Gaming, Holdings or the
Trust or any of their
46
respective Affiliates or any of their respective employees, officers or
directors fails to make any filing or disclosure required or requested by, or
withdraws any filing or disclosure made to, the Nevada Gaming Authorities;
(e) by written notice given on or before March 6, 1998 by Gaming
Holdings or by the Purchaser if the Closing is not consummated on or before
March 3, 1998; or
(f) by written notice on or before March 6, 1998 by Gaming Holdings or
the Purchaser if the consents have not been received on or before March 3, 1998;
(g) by Gaming Holdings or the Purchaser by written notice if any
Governmental Entity will have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting any of the
transactions contemplated hereby and such order, decree, ruling or other action
will have become final and nonappealable; PROVIDED that the right to terminate
this Agreement pursuant to this Section 9.1(j) shall not be available to any
party whose failure to fulfill any of its obligations under this Agreement has
been the cause of such action by the Governmental Entity.
SECTION 9.2. EFFECT OF TERMINATION. Except for Sections 6.2(c) and
11.4 which shall remain in effect, upon termination pursuant to this Article IX,
this Agreement shall terminate and be void and have no effect, the transactions
contemplated hereby shall be abandoned, no party hereto shall have any liability
to any other party hereto, and the parties shall bear their own expenses,
including counsel fees.
ARTICLE X
SURVIVAL; INDEMNIFICATION
SECTION 10.1. SURVIVAL; REMEDY FOR BREACH. The representations and
warranties of the parties contained in this Agreement shall (except with respect
to the representations and warranties contained in Sections 3.5, 3.7, 3.10,
3.11, 3.12, 3.13, 3.16, 3.17, 3.18 and 5.10, which shall survive for a period of
three years after the Closing Date) survive the Closing for a period of one year
after the Closing Date, after which all representations and warranties made by
the parties herein
47
or pursuant hereto shall expire. Notwithstanding the foregoing, any
representation or warranty in respect of which indemnity may be sought under any
Section of this Agreement shall survive the time at which it would otherwise
terminate pursuant to this Agreement if notice of the breach of the
representation or warranty giving rise to such indemnity shall have been give to
the party against whom such indemnity may be sought, prior to such time. After
the Closing, the sole and exclusive remedy of any party for any incorrect
representation or warranty contained herein shall be the indemnities contained
in Section 10.2, provided that the foregoing shall not limit the right of the
parties to such equitable remedies as may be available.
SECTION 10.2. INDEMNIFICATION. Each party hereto (the "INDEMNIFYING
PARTY") hereby indemnifies each other party hereto (the "INDEMNIFIED PARTIES")
against and agrees to hold them harmless from any and all damage, loss,
liability and expense (including, without limitation, reasonable expenses of
investigation and attorneys' fees and expenses) ("LOSS"), incurred or suffered
by the Indemnified Parties arising out of or relating, directly or indirectly,
to any breach of any representation or warranty of the Indemnifying Party made
to such Indemnified Party which is contained in this Agreement. Notwithstanding
the foregoing, the Indemnifying Party shall not be liable under this Section
10.2 unless the aggregate amount of liability under this Section 10.2 to any
party or its Affiliates exceeds $1 million (the "THRESHOLD") whereupon such
Indemnified Party shall be entitled to indemnification hereunder for the
aggregate amount of such liability.
SECTION 10.3. ARONOW INDEMNIFICATION. Holdings and the Trust hereby
jointly and severally indemnify Gaming Holdings, Gaming, the Purchaser and LCI
Parent against and agree to hold them harmless from, all Loss incurred or
suffered by Gaming Holdings, Gaming, the Purchaser or LCI Parent arising out of
or relating, directly or indirectly, to (i) that certain litigation filed in the
Supreme Court of the State of New York, County of New York, Index No. 112618/95
entitled "Joseph Aronow, et al., vs. Jack Sommer, et al.," or any subsequent
claims made by the parties thereto; (ii) that certain litigation filed in the
Supreme Court of the State of New York, County of New York, Index No. 600301/97
entitled "Kanbar, et al. v. Aronow, et al.", or any subsequent claims made by
the parties thereto, or
48
(iii) that certain litigation filed in the Southern District of New York, Case
No. 88 CIV. 2537 (DAB), entitled "Sommer, et al. v. PMEC", or any subsequent
claims made by the parties thereto.
SECTION 10.4. ENVIRONMENTAL INDEMNITY. Notwithstanding any other
provision of this Agreement, the Trust hereby indemnifies and holds LCI Parent,
and any Affiliates of LCI Parent that are signatories to the Subsidiary
Guarantee to be delivered to the Bank Lenders in respect of the Bank Debt,
harmless from and against all Loss incurred or suffered by them or any of them
arising out of or relating directly or indirectly to the Environmental Indemnity
Agreement, Exhibit J-1 to the Credit Agreement entered into in respect of the
Bank Debt. Holdings and Sommer Enterprises hereby join in said indemnification.
This indemnification shall not be in duplication of any other indemnity
hereunder.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. ASSIGNMENT. This Agreement and the rights hereunder
shall not be assignable or transferable by any party hereto (by operation of law
or otherwise) without the prior written consent of the other parties hereto.
SECTION 11.2. NO THIRD-PARTY BENEFICIARIES. This Agreement is for
the sole benefit of the parties hereto and their permitted assigns and nothing
herein expressed or implied shall give or be construed to give to any person,
other than the parties hereto and such assigns, any legal or equitable rights
hereunder.
SECTION 11.3. EXPENSES. Except as otherwise provided in this
Agreement, all costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs or expenses.
SECTION 11.4. CONFIDENTIALITY. Each party shall treat as
confidential and not use or disseminate, other than as contemplated under or in
connection with this Agreement (including such use by or dissemination to their
advisors or counsel as may be reasonably necessary in the context of the
transactions contemplated under and in connection with this Agreement) all
documents and
49
information concerning this Agreement, the Redevelopment, the Salle Privee
Facilities, the transactions contemplated by this Agreement and Gaming Holdings
or Gaming which has been furnished to such party (the "RECEIVING PARTY") by any
of the other parties or their Affiliates (collectively, the "CONFIDENTIAL
INFORMATION"), except to the extent that such information can be shown to have
been (i) previously known on a non-confidential basis by the Receiving Party,
(ii) in the public domain through no fault of the Receiving Party or (iii)
previously or later acquired through sources other than such other party and its
Affiliates. The parties agree that upon the expiration or termination of this
Agreement (i) each party shall promptly return all written material containing
or reflecting Confidential Information, (ii) no party will retain any copies or
other reproductions in whole or part containing or reflecting any Confidential
Information and (iii) all documents, memos, notes and other writings prepared by
each party or its respective advisors containing or reflecting Confidential
Information shall be destroyed, and such destruction shall be certified in
writing to the other parties by an authorized officer of the destroying party
supervising such destruction.
SECTION 11.5. PUBLICITY. The parties agree that no public release,
announcement or other form of publicity concerning the purchase of the Purchaser
Shares by the Purchaser and the other transactions contemplated hereby shall be
issued by any party hereto without the prior written consent of the other
parties, except as such release or announcement may be required by a
Governmental Entity or by Law or the rules or regulations of any securities
exchange; PROVIDED, HOWEVER, in the event of a release or announcement by the
Purchaser pursuant to the immediately preceding clause, the Purchaser shall
provide Gaming Holdings with prompt prior notice of such request and cooperate
with Gaming Holdings with respect thereto.
SECTION 11.6. FURTHER ASSURANCES. Gaming Holdings, Gaming, Holdings
and the Trust shall use their reasonable efforts to obtain and to assist the
Purchaser and LCI Parent, and the Purchaser and LCI Parent shall use their
reasonable efforts to obtain and to assist Gaming Holdings, Gaming, Holdings and
the Trust, as the case may be, in obtaining promptly all necessary consents or
approvals from any Governmental Entity or any other Person for any exercise by
the Purchaser, Gaming Holdings, Gaming, Holdings, the Trust or the LCI Parent,
as
50
the case may be, of its rights under this Agreement and to take such other
actions as may reasonably be requested by the Purchaser, LCI Parent or Gaming
Holdings or Gaming, as the case may be, to effect the purpose of this Agreement.
SECTION 11.7. AMENDMENTS. The terms and provisions of this Agreement
may not be amended except by a written instrument signed by the parties hereto
making express reference to this Agreement and expressly stating that such
written instrument is an amendment of this Agreement.
SECTION 11.8. NOTICES. (a) All notices, consents and other
communications given under this Agreement shall be in writing and shall be
deemed to have been duly given and delivered (i) when delivered by hand or by
DHL or Federal Express or a courier of similar international standing to the
party for whom intended, (ii) five days after being deposited in any official
government post office in the United States of America or England, as the case
may be, enclosed in an airmail postage prepaid registered or certified envelope
addressed to, or (iii) when successfully transmitted by facsimile to, the party
for whom intended at the address or facsimile number for such party set forth
below, or to such other address or facsimile number as may be furnished by such
party by notice in the manner provided herein; PROVIDED, HOWEVER, that any
notice of change of address or facsimile number shall be effective only upon
receipt. All notices shall specifically state: (A) the provision (or
provisions) of this Agreement with respect to which such notice is given, and
(B) the relevant time period, if any, in which the party given such notice must
respond.
(b) Subject to Section 11.8(a), the addresses and facsimile members of
the parties for notices, consents and other communications given under this
Agreement shall be as follows:
(i) if to Gaming Holdings, Gaming, Sommer Enterprises, Holdings or the
Trust:
Aladdin Gaming, LLC
2810 West Charleston Boulevard
Suite 58
Las Vegas, Nevada 89102-1934
Telephone: 702-870-1234
Telecopier: 702-870-8733
51
Attention of Jack Sommer
with a copy to:
Sigmund Sommer Properties
280 Park Avenue
New York, New York 10017
Telephone: 212-661-0700
Telecopier: 212-661-0844
Attention of Ronald Dictrow
and
Schreck Morris
300 South Fourth Street
Suite 1200
Las Vegas, Nevada 89101
Telephone: 702-474-9400
Telecopier: 702-474-9422
Attention of Frank A. Schreck, Esq.
and
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Telephone: 212-735-3000
Telecopier: 212-735-2000
Attention of Wallace L. Schwartz, Esq.
(ii) if to the Purchaser or LCI Parent:
London Clubs International, plc
10 Brick Street
London W1Y 8HQ, England
Telephone: 011-44-171-518-0000
Telecopier: 011-44-171-493-6981
Attention of Linda M. Lillis
with a copy to:
Ohrenstein & Brown, LLP
230 Park Avenue
New York, New York 10169
Telephone: 212-682-4500
Telecopier: 212-557-0910
Attention of Peter J. Kiernan, Esq.
52
and
Lionel, Sawyer & Collins
300 South 4th Street
Suite 1700
Las Vegas, Nevada 89101
Telephone: 702-383-8888
Telecopier: 702-383-8845
Attention of P. Gregory Giordano, Esq.
SECTION 11.9. CONSENTS AND APPROVALS. Whenever in this Agreement
reference is made to the Purchaser being satisfied, to the Purchaser's
satisfaction, to the Purchaser's approval, or to Purchaser's consent (or any
similar reference), such satisfaction, approval or consent, as the case may be,
may for purposes of this Agreement be effective only if in writing, signed by
the Purchaser, making express reference to this Agreement and to the document,
state of facts or other matter involved, and expressly stating that it is an
approval, consent, or state of satisfaction or of being satisfied, as the case
may be. Any representation or warranty herein referring to Music Holdings
shall, to the extent that it relates to Music Holdings, be made only as of the
Closing Date and not as of the Effective Date.
SECTION 11.10. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in any number of counterparts, each of which shall be considered an
original, but all such counterparts shall together constitute but one and the
same contract.
SECTION 11.11. CONSTRUCTION. Definitions shall apply equally to both
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed
to be followed by the phrase "without limitation". Any references to any
agreement, instrument, statute or regulation is to it as amended and
supplemented from time to time (and in the case of statute or regulation, to any
successor provision). The table of contents, headings of Articles, Sections,
Schedules or other subdivisions have been inserted for convenience of reference
only and are not intended to be a part of or to affect the meaning of or
interpretation of this Agreement. Any reference to any Schedule in this
Agreement shall mean, as the case may
53
be, (a) in connection with a representation and warranty of any party as of the
Effective Date, the Schedules attached to this Agreement as of the Effective
Date, and (b) in connection with a representation and warranty of any party as
of the Closing Date, the Closing Schedules. If any parties' representations and
warranties under this Agreement are incorrect or untrue as of the Closing Date
by reason of any event, occurrence or development after the Effective Date, or
state of circumstances or facts arising after the Effective Date, same shall not
be an actionable breach of contract under this Agreement; PROVIDED that such
event, occurrence, development, state of circumstances or facts is disclosed in
the Purchaser Closing Certificate or the Gaming Holdings Closing Certificate, as
the case may be. Any representation or warranty herein referring to Music
Holdings shall, to the extent that it relates to Music Holdings, be made only as
of the Closing Date and not as of the Effective Date.
SECTION 11.12. SEVERANCE. Every provision of this Agreement is
intended to be severable. If any term or provision hereof is illegal or invalid
for any reason whatsoever, such term or provision shall be enforced to the
maximum extent permitted by law and, in any event, such illegality or invalidity
shall not affect the validity of the remainder of this Agreement.
SECTION 11.13. NON-WAIVER. No provision of this Agreement shall be
deemed to have been waived except if the giving of such waiver is contained in a
written notice given to the party claiming such waiver and signed by the party
giving such waiver and expressly making reference to this Agreement and the
matter being waived and expressly stating that it is a waiver. No such waiver
shall be deemed to be a waiver of any other or further obligation or liability
of the party or parties in whose favor the waiver was given.
SECTION 11.14. APPLICABLE LAW AND JURISDICTION. This Agreement and
the rights and obligations of the parties hereto shall be interpreted and
enforced in accordance with and governed by the laws of the State of New York
without regard to the conflict laws of that State. Except as otherwise
expressly provided with respect to arbitration pursuant to Section 6.7 of this
Agreement and the Arbitration Provision, any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby
54
shall only be brought in the United States District Court for the Southern
District of New York and each party hereto consents to the jurisdiction of the
United States District Court for the Southern District of New York, and each
party further agrees that service of any process, summons, notice or document by
U.S. registered mail to its respective address set forth in this Agreement shall
be effective service of process for any action brought against it in connection
with this Agreement in said court.
SECTION 11.15. REMEDIES. Except as otherwise expressly provided in
this Agreement, the rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law or equity.
SECTION 11.16. ENTIRETY OF AGREEMENT. This Agreement sets forth the
entire understanding of the parties with respect to the transactions
contemplated hereby, and merges and supersedes all prior and contemporaneous
understandings, representations and warranties with respect to such
transactions. Except as expressly set forth in this Agreement, none of the
parties hereto or thereto makes any representation or warranty to any other
party.
55
IN WITNESS WHEREOF, the parties hereto have duly executed this
Purchase Agreement as of the day and year first above written.
ALADDIN GAMING HOLDINGS, LLC
By: /s/ Jack Sommer
------------------------------
Name: Jack Sommer
Title: Chairman
ALADDIN GAMING, LLC
By: Aladdin Gaming Corp., its
Manager
By: /s/ Jack Sommer
-----------------------------------
Name: Jack Sommer
Title: Secretary
LONDON CLUBS NEVADA INC.
By: /s/ Linda Lillis
-----------------------------------
Name: Linda Lillis
Title: Assistant Secretary
LONDON CLUBS INTERNATIONAL, P.L.C.
By: /s/ Barry Hardy
-----------------------------------
Name: Barry Hardy
Title: Finance Director
56
ALADDIN HOLDINGS, LLC
By: Aladdin Management Corporation, its
Manager
By: /s/ Viola Sommer
------------------------------
Viola Sommer
President
By: /s/ Jack Sommer
------------------------------
Jack Sommer
Vice President
SOMMER ENTERPRISES, LLC
By: /s/ Jack Sommer
-----------------------------------
Name: Jack Sommer
Title: Chairman
TRUST UNDER ARTICLE SIXTH U/W/O
SIGMUND SOMMER
By: /s/ Viola Sommer
-----------------------------------
Viola Sommer, as trustee and not
individually
By: /s/ Jack Sommer
-----------------------------------
Jack Sommer, as trustee and not
individually
By: /s/ Eugene Landsberg
-----------------------------------
Eugene Landsberg, as trustee and
not individually
57
SCHEDULE 3.5
PROPOSED CAPITAL STRUCTURE IMMEDIATELY AFTER THE CLOSING
A. VOTING INTERESTS
PERSON PERCENTAGE INTEREST
Sommer Enterprises 47%
Aladdin Enterprises 25%
Purchaser 25%
GAI 3%
B. RIGHTS OR CLAIMS TO MEMBERSHIPS, INTERESTS OR SHARES
See Schedules 3.15 and 4.3.
SCHEDULE 3.6
PERMITTED ENCUMBRANCES
PERMITTED ENCUMBRANCES: Shall mean:
(i) Liens for impositions not yet due and payable or Liens which are
being diligently contested in good faith by appropriate proceedings promptly
instituted;
(ii) Statutory Liens of carriers, warehousemen, mechanics, materialmen
and other similar Liens arising by operation of law, which are incurred in the
ordinary course of business for sums which are being contested in good faith;
(iii) All immaterial easements, rights-of-way, restrictions and other
similar charges or non-monetary encumbrances against real property and other
agreements which do not materially and adversely affect (A) the ability of
Holdings, Gaming Holdings or Gaming to pay any of their obligations to any
Person as and when due, (B)the marketability of title to the Land And Existing
Improvements (C) the fair market value of the Land And Existing Improvements or
(D) the use or operation of the Land And Existing Improvements;
(iv) The leases, under lettings, concession agreements and licenses of
the Land And Existing Improvements or any part thereof, entered into by
Holdings, Gaming Holdings or Gaming set forth below (collectively, the
"LEASES"):
The JMJ Lease
(v) Those items set forth in the attached Title Report.
SCHEDULE 3.11
ENVIRONMENTAL AND SOILS REPORTS
1. Phase 1 Environmental Site Assessment dated July 25, 1994, prepared by
Western Technologies, Inc.
2. Asbestos Air Sampling Survey dated September 2, 1994, prepared by Converse
Environmental Consultants Southwest, Inc.
3. Phase 1 Environmental Site Assessment dated October 23, 1996, prepared by
Ninyo & Moore Geotechnical and Environmental Sciences Consultants.
4. Limited Soil and Groundwater Investigation dated March 25, 1997, prepared
by Converse Environmental Consultants Southwest, Inc.
SCHEDULE 3.13
HOLDINGS MATERIAL ASSETS AND LIABILITIES
ITEM (I): ASSETS
1. 98.67% interest in the issued and outstanding interests in Sommer
Enterprises.
2. Title to the Land And Existing Developments.
3. Rights under the JMJ Lease.
4. Rights under the this Agreement.
5. Rights under Aladdin Hotel & Casino Agreement, by and between County of
Clark, Holdings and Aladdin Management Corporation dated March 18, 1997.
ITEM (II): LIABILITIES
1. Obligations under JMJ Lease.
2. Obligations under this Agreement.
3. Obligations under Aladdin Hotel & Casino Agreement, by and between County
of Clark, Holdings and Aladdin Management Corporation dated March 18, 1997.
SCHEDULE 3.14
FINANCIAL STATEMENTS
Delivered in October, 1997.
SCHEDULE 3.15
LITIGATION
1. ARONOW, ET AL. V. SOMMER, ET AL.,
Index No. 112618/95 (New York Sup. Ct.)
In May 1995 the above-referenced action was commenced in the Supreme
Court of the State of New York, County of New York (the "Court"), against
defendants Jack Sommer, individually and as Trustee Under Article Sixth u/w/o
Sigmund Sommer (the "Trust"); Viola Sommer, individually and as Trustee of the
Trust; Eugene Landsberg, as Trustee of the Trust; and GW Vegas, L.L.C.
Plaintiffs allege, among other things, that a joint venture was formed between
plaintiffs and Jack Sommer to acquire and develop the Aladdin Hotel and Casino
in Las Vegas, Nevada. Plaintiffs' alleged causes of action include impressing a
constructive trust, breach of a joint venture agreement, breach of fiduciary
duty, misappropriation of an opportunity, unjust enrichment and an accounting.
Plaintiffs seek, among other things, to impress a constructive trust, an
accounting, compensatory damages of not less than $200 million and punitive
damages not less than $500 million.
Defendants moved to dismiss the complaint and, on May 20, 1996, the
Court granted in part and denied in part said motion. Plaintiffs have since
filed an Amended Complaint. Defendants have answered the Amended Complaint and
Jack Sommer, individually, has asserted a counterclaim for fraudulent
inducement. Subsequently, plaintiffs moved for partial summary judgment, to
dismiss the affirmative defenses and the individual counterclaim of Jack Sommer,
and for a preliminary injunction entitling them to advance notice of any
transfer or encumbrance of defendants' interest in the Aladdin. On February 18,
1997, the Court denied all of plaintiffs' motions, except the Court dismissed
two of defendants' affirmative defenses.
2. KANBAR, ET AL. V. ARONOW, ET AL.,
Index No. 600301/97 (New York Sup. Ct.)
In January 1997 the above-referenced action was filed in the Supreme
Court of the State of New York, County of New York, against, among others, Jack
Sommer, Viola Sommer and Eugene Landsberg, each individually and as Trustees of
the Trust (the "Trustees"). Plaintiffs allege that they were in a partnership
with Joseph Aronow which was formed to seek and develop business opportunities
with Jack Sommer. Plaintiffs, among other things, allege that they were
fraudulently induced into entering a settlement agreement with Jack Sommer
related to these very same issues involved in the lawsuit.
Plaintiffs seek against the Trustees, a constructive trust in the
Aladdin Hotel and Casino, declaratory judgment, damages not less than $20
million and punitive damages not less than $50 million. The Trustees have moved
to dismiss this action.
SCHEDULE 3.16
MATERIAL ADVERSE EFFECT
None.
SCHEDULE 3.17
LIABILITIES NOT REFLECTED ON FINANCIAL STATEMENTS
None.
SCHEDULE 4.1
SUBSIDIARIES
SCHEDULE 4.2
MATERIAL CONTRACTS
1. Letter Agreement dated December 23, 1996 between Westwood Capital, LLC
("WESTWOOD"), Trust Under Article Sixth u/w/o Sigmund Sommer ("TRUST"),
Holdings and Gaming under which the obligations, agreements, liabilities
and other commitments of the Trust pursuant to a Letter Agreement between
Westwood and Trust dated May 31, 1996 were assigned, conveyed and otherwise
transferred to Holdings, Gaming and other entities to be formed by the
Trust and Holdings in connection with the Redevelopment, jointly and
severally.
2. Letter Agreement dated September 11, 1996 between the Trust and HK Group,
LLC ("HK GROUP") under which the Trust agreed that a $2 million success fee
for the introduction of Gaming to the Purchaser would, subject to the terms
and conditions of such Letter Agreement, be paid by Gaming to HK Group.
3. See also Schedule 4.3.
SCHEDULE 4.3
EMPLOYEES
1. Goeglein Employment and Consulting Agreement.
2. GAI Consulting Agreement.
3. Employment Agreement dated as of July 1, 1997 between Gaming, Holdings and
James H. McKennon.
4. Employment Agreement dated as of July 1, 1997 between Gaming, Holdings and
Cornelius T. Klerk.
5. Employment Agreement dated as of July 1, 1997 between Gaming, Holdings and
Lee Galati.
6. Employment Agreement dated as of July 1, 1997 between Gaming, Holdings and
Jose A. Rueda.
SCHEDULE 4.4
EMPLOYEE BENEFIT PLANS; ERISA
None.
SCHEDULE 4.5
ALADDIN NAMES
1. Service Mark (Reg. No. 1,789,789), "Aladdin Hotel & Casino".
Registered August 24, 1993 for Hotel and Restaurant Services.
2. Service Mark (Reg. No. 1,781,854), "Aladdin".
Registered June 13, 1993 for Casino and Casino Entertainment Services.
3. Service Mark (Reg. No. 1,779,369) "Aladdin".
Registered June 29, 1993 for Hotel and Restaurant Services.
4. Service Mark (Reg. No. 1,781,855), "Aladdin".
Registered July 13, 1993 for Casino and Casino Entertainment Services.
SCHEDULE 6.1
REDEVELOPMENT AGREEMENTS APPROVED BY LCI
To be included in the Closing Schedules only.
EXHIBIT 2
ECONOMIC TERMS OF TRANSFER OF SHOPPING CENTER PARCEL
A subordinated and unsecured self-amortizing promissory note (or equivalent
lease terms) in the principal amount of $16,666,667, with an interest rate of
12% per annum and a maturity date 69 years from the Closing Date, and on other
terms and conditions customary for a subordinated and unsecured self-amortizing
promissory note.