<PAGE>
EXHIBIT 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
dated July 12,
2004
By and Between
Legends Gaming, LLC
and
Barden Colorado Gaming, LLC
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S>
<C>
ARTICLE I
Definitions.........................................................................
1
1.01 Previously
Defined
Terms...........................................................
1
1.02 General
Definitions................................................................
1
1.03
Interpretation.....................................................................
15
1.04
Knowledge..........................................................................
15
1.05 Earnest
Money......................................................................
15
ARTICLE II Purchase and Sale, Purchase Price,
Allocation and Other Related Matters............
18
2.01 Purchase and
Sale..................................................................
18
2.02 Purchase
Price.....................................................................
18
2.03 Closing
Payment....................................................................
19
2.04 Closing Balance
Sheet..............................................................
20
2.05 Purchase Price
Settlement..........................................................
22
2.06 Assumed
Liabilities................................................................
22
2.07 Sales and
Transfer
Taxes...........................................................
25
2.08 Allocation of
Purchase
Price.......................................................
25
ARTICLE III Closing and Closing Date
Deliveries...............................................
26
3.01
Closing............................................................................
26
3.02 Closing
Deliveries by
Seller.......................................................
27
3.03 Closing
Deliveries by
Purchaser....................................................
29
3.04 Non-Compete and
Non-Solicitation Agreement.........................................
30
3.05
Cooperation........................................................................
30
ARTICLE IV Pre-Closing
Filings................................................................
31
4.01 HSR Act
Filing.....................................................................
31
4.02 Gaming
Authorities
Filings.........................................................
31
4.03 Other Government
Filings...........................................................
32
ARTICLE V Pre-Closing
Covenants...............................................................
32
5.01 Due Diligence
Review...............................................................
32
5.02 Maintenance of
Business and Notice of
Changes......................................
32
5.03 Pending
Closing....................................................................
33
5.04
Non-Solicitation...................................................................
36
5.05 2004 Capital
Expenditures..........................................................
36
5.06
Consents...........................................................................
36
5.07 Computer Systems
Conversion........................................................
37
ARTICLE VI Financial Statements; Other Prior
Deliveries and Pre-Closing Deliveries............
37
6.01 Pre-Signing
Deliveries.............................................................
37
6.02 Pre-Closing
Deliveries.............................................................
38
6.03 Financing
Commitment...............................................................
41
</TABLE>
i
<PAGE>
<TABLE>
<S>
<C>
ARTICLE VII Warranties and Representations of
Seller..........................................
41
7.01 Due
Incorporation..................................................................
42
7.02
Authority..........................................................................
42
7.03 No Violations
and
Consents.........................................................
42
7.04
Brokers............................................................................
44
7.05 Required
Assets....................................................................
44
7.06 Related Party
Transactions.........................................................
44
7.07 Title to
Purchased
Assets..........................................................
44
7.08 Condition of
Assets................................................................
45
7.09 Real
Estate........................................................................
45
7.10 Litigation and
Compliance with
Laws................................................
46
7.11 Intellectual
Property..............................................................
47
7.12
Contracts..........................................................................
48
7.13 Financial
Statements and Related
Matters...........................................
49
7.14 Changes Since
the Balance Sheet
Date...............................................
50
7.15
Insurance..........................................................................
52
7.16 Licenses and
Permits...............................................................
52
7.17 Environmental
Matters..............................................................
52
7.18 Employee Benefit
Plans and Employment Agreements...................................
56
7.19
Taxes..............................................................................
58
7.20
Complimentaries....................................................................
59
7.21 Customer
Database..................................................................
59
7.22 Bobtail Access
Agreement...........................................................
59
7.23 2004 Capital
Expenditures
Budget...................................................
59
7.24 Disclaimer of
Other Representations and
Representations............................
59
ARTICLE VIII Warranties and Representations of
Purchaser......................................
60
8.01 Due
Incorporation..................................................................
60
8.02
Authority..........................................................................
60
8.03 No
Violations......................................................................
60
8.04
Brokers............................................................................
61
8.05
Ownership..........................................................................
61
8.06 Gaming
Licensing; Financing
Commitment.............................................
62
8.07 Litigation and
Compliance with
Laws................................................
62
ARTICLE IX Conditions to Closing Applicable
to Purchaser......................................
62
9.01 No
Termination.....................................................................
62
9.02 Bring-Down of
Seller
Warranties....................................................
63
9.03 No Material
Adverse
Change.........................................................
63
9.04 Pending
Actions....................................................................
63
9.05 Consents and
Approvals.............................................................
64
9.06 HSR
Act............................................................................
64
9.07 All Necessary
Documents............................................................
64
9.08 Title
Policy.......................................................................
64
9.09 Lien
Releases......................................................................
65
9.10 Allocation
Agreement...............................................................
65
</TABLE>
ii
<PAGE>
<TABLE>
<S>
<C>
ARTICLE X Conditions to Closing Applicable
to Seller..........................................
65
10.01 No
Termination.....................................................................
65
10.02 Bring-Down of
Purchaser
Warranties.................................................
65
10.03 Pending
Actions....................................................................
66
10.04 HSR
Act............................................................................
66
10.05 Gaming
Authorities.................................................................
66
10.06 All Necessary
Documents............................................................
66
10.07 Allocation
Agreement...............................................................
66
ARTICLE XI
Termination........................................................................
67
11.01
Termination........................................................................
67
ARTICLE XII
Indemnification...................................................................
68
12.01 Seller's
Indemnification...........................................................
68
12.02 Purchaser
Indemnification..........................................................
69
12.03 Indemnification
Notice.............................................................
69
12.04 Indemnification
Procedure..........................................................
70
12.05 Survival of
Representations and
Warranties.........................................
71
12.06 Limitations on
Liability...........................................................
72
12.07 Inapplicability of
Limitations.....................................................
73
12.08 Environmental
Remediation Due to
Expansion.........................................
74
ARTICLE XIII
Confidentiality..................................................................
76
13.01 Confidentiality of
Materials.......................................................
76
ARTICLE XIV Employee
Matters..................................................................
76
14.01 Employees to be Hired
by Purchaser.................................................
76
14.02 Workers' Compensation
and Medical Claims...........................................
78
14.03 401(k)
Plan........................................................................
80
14.04 No Assumption of
Plans.............................................................
80
ARTICLE XV Certain Other
Agreements...........................................................
81
15.01 Post Closing Access to
Records.....................................................
81
15.02 Consents Not Obtained
at Closing...................................................
81
15.03 Bulk Sale Waiver and
Indemnity.....................................................
82
15.04
Website............................................................................
82
15.05 Construction - City of
Blackhawk...................................................
82
15.06 Storm Sewer
Easement...............................................................
83
15.07 Temporary
License..................................................................
85
15.08 Employment Records of
Transferred Employees........................................
85
ARTICLE XVI
Miscellaneous.....................................................................
85
16.01 Cost and
Expenses..................................................................
85
16.02 Entire
Agreement...................................................................
86
16.03
Counterparts.......................................................................
86
16.04 Assignment, Successors
and Assigns.................................................
86
16.05 Savings
Clause.....................................................................
87
</TABLE>
iii
<PAGE>
<TABLE>
<S>
<C>
16.06
Headings...........................................................................
87
16.07 Risk of
Loss.......................................................................
87
16.08 Governing
Law......................................................................
87
16.09 Press
Releases.....................................................................
87
16.10 U.S.
Dollars.......................................................................
88
16.11
Survival...........................................................................
88
16.12
Notices............................................................................
88
16.13 No Third-Party
Beneficiary.........................................................
89
</TABLE>
iv
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is made and entered into this 12th
day
of July, 2004 (this "Agreement") by and
between Legends Gaming, LLC, a Delaware
limited liability company ("Purchaser"),
and Barden Colorado Gaming, LLC, a
Colorado limited liability company
("Seller").
Recitals:
A. Seller owns and operates the Fitzgeralds-brand casino located
in
Black Hawk, Colorado (the "Casino").
B. Seller desires to sell its business and substantially all of
its
assets and properties and Purchaser desires
to acquire the business and
substantially all of the assets and
properties of Seller, on the terms and
subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the covenants and
agreements
hereinafter set forth, and other good and
valuable consideration, the receipt of
which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 Previously Defined Terms. Each term defined in the first
paragraph and Recitals shall have the
meaning set forth above whenever used
herein, unless otherwise expressly provided
or unless the context clearly
requires otherwise.
1.02 General Definitions. Whenever used herein, the following
terms
shall have the meanings set forth below
unless otherwise expressly provided or
unless the context clearly requires
otherwise:
"2004 Capex Adjustment" - See Section 2.02(b).
1
<PAGE>
"2004 Uncommitted Capital Expenditures Payments" shall mean the
lesser of (A) $250,000 and (B) 50% of the
sum of (x) the aggregate cash payments
made by Seller after the date hereof and
prior to December 31, 2004 for
Uncommitted Capital Expenditures plus (y)
the amount accrued for Uncommitted
Capital Expenditures as a Current Liability
on the Closing Balance Sheet.
"2004 Uncommitted Capital Expenditure Reduction" shall mean
$250,000
minus the sum of (x) 50% of the aggregate
cash payments made by Seller after the
date hereof and prior to December 31, 2004
for Uncommitted Capital Expenditures
plus (y) 50% of the amount accrued for
Uncommitted Capital Expenditures as a
Current Liability on the Closing Balance
Sheet.
"2005 Slot Expenditures" - See Section 2.02(c).
"Accounts Receivable" - See clause (ii) of the definition of
"Purchased Assets."
"Adjustment Report" - See Section 2.04(c).
"Adverse Consequences" shall mean all allegations, charges,
complaints, actions, suits, proceedings,
hearings, investigations, claims,
demands, Orders, damages, dues, penalties,
fines, costs, amounts paid in
settlement, Liabilities, Taxes, interest,
Liens, losses, expenses and fees,
including all reasonable accounting,
consultant and attorneys' fees and court
costs, costs of expert witnesses and other
expenses of litigation.
"Affiliate" shall mean a Person which, directly or indirectly,
is
controlled by, controls, or is under common
control with, another Person. As
used in the preceding sentence, "control"
shall mean and include, but not
necessarily be limited to, (i) the
ownership of more than 50% of the voting
securities or other voting interest of any
Person, or (ii) the possession,
directly or indirectly, of the power to
direct or cause the direction of the
management and
2
<PAGE>
policies of such Person, whether through
the ownership of voting securities, by
contract or otherwise.
"Appraised Assets" - See Section 2.08(a).
"Appurtenant Rights" - See clause (vi) of the definition of
"Purchased Assets."
"Associated Persons" shall mean William J. McEnery and G. Dan
Marshall.
"Assumed Liabilities" - See Section 2.06(a).
"Assumed Taxes" shall mean Black Hawk, Colorado gaming device
Taxes
and real and personal property Taxes
related to the Purchased Assets, in each
case, only to the extent such Taxes have
accrued on or prior to the Effective
Time (but are not yet due and payable) and
have been separately reserved for as
a Current Liability on the Closing Balance
Sheet.
"Balance Sheet" - See Section 6.01.
"Balance Sheet
Date" - See Section 6.01.
"Benefit Plans" - See Section 7.18(b).
"Bobtail Access Agreement" shall mean the Agreement dated
February
22, 1995 by and between 101 Main Street LLC
and the City of Black Hawk.
"Business" shall mean the business and operations conducted by
Seller at the Casino.
"Capital Expenditures Budget" shall mean the capital
expenditures
budget of Seller attached hereto as Exhibit
A-1.
"CERCLA" - See Section 7.17(a).
"Certain Warranty Sections" - shall mean Sections 7.02, 7.04,
7.07,
7.17 and 7.19.
"City" - See Section 15.05(a).
"Closing" - See Section 3.01(a).
3
<PAGE>
"Closing Balance Sheet" - See Section 2.04(a) and (e).
"Closing Date" - See Section 3.01(a).
"Closing Payment" - See Section 2.03(b).
"Code" shall mean the Internal Revenue Code of 1986, as amended,
and
the rules and regulations promulgated
thereunder.
"Commission" shall mean the Colorado Limited Gaming Control
Commission.
"Committed Capital Expenditures" - See Exhibit A-2 attached
hereto.
"Conditions Satisfaction Date" shall mean the date upon which
all
of the conditions precedent set forth in
Articles IX and X of this Agreement
are satisfied or waived by the appropriate
party hereto, subject to Sections
3.01(b) and Article XI of this
Agreement.
"Confidentiality Agreement"- See Section 13.01.
"Construction Approvals" - See Section 15.05(a).
"Current Assets" shall mean the current assets set forth on
Exhibit
B attached hereto.
"Current Liabilities" shall mean the current liabilities set
forth
on Exhibit C attached hereto.
"Date of the Notice of Claim" - See Section 12.04(c).
"Disclosure Schedule" shall mean the letter of even date
herewith
delivered to Purchaser from Seller pursuant
to Section 6.01(c) simultaneously
with the execution and delivery of this
Agreement.
"Division" shall mean the Colorado Division of Gaming.
"DOJ" shall mean the United States Department of Justice.
"Earnest Money" - See Section 1.05(a).
"Easement Costs" - See Section 15.06(b)(i).
"Effective Time" - See Section 3.01(a).
"Employee" - See Section 14.01(a).
4
<PAGE>
"ENVIRON" - See Section 12.08(c).
"Environmental Claim" means any and all liabilities, claims,
actions, proceedings, losses, costs,
damages (actual and consequential),
judgments, obligations, causes of action,
fines, penalties or expenses
(including without limitation attorneys'
and consultant fees) incurred by reason
of the presence, Release, threatened
Release, use, handling, treatment, storage,
disposal or transportation of Hazardous
Materials or related to a violation or
alleged violation of or liability or
alleged liability arising under
Environmental Laws.
"Environmental Condition" shall mean contamination of the Real
Property, including natural resources (e.g.
flora and fauna), soil, surface
water, ground water, any present or
potential drinking water supply, subsurface
strata, or ambient air, relating to, caused
by or arising out of the use,
handling, storage, treatment, recycling,
generation, transport, or Release of
Hazardous Material, on, under or from the
Real Property. With respect to
Environmental Claims by third parties,
Environmental Condition also includes the
exposure of persons or property to
Hazardous Material migrating from or
otherwise emanating from or located on the
Real Property.
"Environmental Laws" - See Section 7.17(h).
"ERISA"
shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules and
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to any Person, each
corporation, trade or business that is,
along with such Person, part of the
controlled group of corporations, trades or
businesses under common control
within the meaning of Sections 414(b) or
(c) of the Code.
"Escrow Agent" - See Section 1.05(a).
"Escrow Agreement" - See Section 1.05(a).
5
<PAGE>
"Estimated Purchase Price" - See Section 2.03(b).
"Expense Reimbursement Amount" - See Section 1.05(b).
"Extended Closing Date" - See Section 3.01(a)(y).
"Financial Statements" - See Section 6.01.
"Financing Commitment Letter" - See Section 6.03.
"FMLA" shall mean the Family and Medical Leave Act of 1993, as
amended.
"FTC" shall mean the United States Federal Trade Commission.
"GAAP" shall mean generally accepted accounting principals in
the
United States.
"Gaming Approval" shall mean when the Gaming Authorities have
approved the issuance to Purchaser of a
retail gaming license for the operation
of the Casino in substantially the same
manner and on substantially the same
terms as it currently is operated,
including findings of suitability for the Key
and Associated Persons of Purchaser.
"Gaming Authority" or "Gaming Authorities" shall mean the
Commission
and/or the Division, individually or
collectively.
"Governmental Authority" shall mean the government of the
United
States or any foreign country or any state
or political subdivision of any
thereof and any entity, body or authority
exercising executive, legislative,
judicial, regulatory or administrative
functions of or pertaining to government,
including the Gaming Authorities.
"Hazardous Material" - See Section 7.17(a).
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements
Act of 1976, as amended, and the rules and
regulations promulgated thereunder.
"Improvements" - See clause (vi) of the definition of
"Purchased
Assets."
"Indemnified Party" - See Section 12.03.
6
<PAGE>
"Indemnifying Party" - See Section 12.03.
"Indenture" shall mean that certain Indenture, dated October 7,
2003, by and among Star, The Majestic Star
Casino Capital Corp., and the Bank of
New York, as trustee.
"Independent Auditors" - See Section 2.04(d).
"Inventory" - See clause (iv) of the definition of "Purchased
Assets."
"Inventory Principles" - See Exhibit F.
"Investor Holdings" shall mean Majestic Investor Holdings, LLC,
a
Delaware limited liability company.
"IRS" shall mean the Internal Revenue Service.
"Key Persons" shall mean key persons pursuant to the rules and
regulations of the Gaming Authority.
"Knowledge" - See Section 1.04.
"Land" - See clause (vi) of the definition of "Purchased
Assets."
"Law" shall mean any law, statute, regulation, ordinance, rule,
order, decree, judgment, consent decree,
settlement agreement or governmental
requirement enacted, promulgated, entered
into, agreed, imposed or enforced by
any Governmental Authority.
"Liabilities" shall mean any obligation or liability (whether
known
or unknown, whether asserted or unasserted,
whether absolute or contingent,
whether accrued or unaccrued, whether
liquidated or unliquidated and whether due
or to become due), including any liability
for Taxes.
"License Agreement" - See Section 3.02(g).
"Licensed Items" - See Section 3.02(g).
7
<PAGE>
"Lien" shall mean any mortgage, lien, charge, restriction,
pledge,
security interest, option, lease or
sublease, claim, right of any third party,
easement, encroachment or encumbrance or
other charges or rights of others of
any kind or nature.
"Liquor Approval" shall mean when the appropriate Governmental
Authorities have approved the issuance or
transfer to Purchaser of a liquor
license for the service of alcoholic
beverages at the Casino in substantially
the same manner and on substantially the
same terms as such beverages are
currently served (other than the fact that
such approval may be a temporary
license).
"Loan and Security Agreement" shall mean that certain Loan and
Security Agreement dated October 7, 2003
between Star, certain of its
subsidiaries, the lenders set forth therein
and Wells Fargo Foothill, Inc.
"Material Adverse Change" shall mean a material adverse effect
on
the financial condition, business, assets,
liabilities or results of operations
or operations of Seller and the Casino,
taken as a whole, except any such effect
resulting from or arising in connection
with (i) this Agreement or the
transactions contemplated hereby or the
announcement thereof, (ii) changes in
circumstances or conditions affecting
casinos in general and not specifically
related to the Seller and the Casino, (iii)
changes in Colorado Laws relating to
casinos or changes in Colorado Tax Laws,
(iv) changes in general economic,
regulatory, or political conditions or in
financial markets in the United States
or (v) changes in GAAP.
"Material Contracts" - See Section 7.12(a).
"Mr. McEnery" - See Section 8.05.
"Negotiation Date" - See Section 2.08(a).
"Net Current Asset Calculation" - See Section 2.04(a).
8
<PAGE>
"Net Current Assets" shall mean the Current Assets minus the
Current
Liabilities.
"New Computer System" - See Section 5.07.
"Notice of Claim" - See Section 12.03.
"Order" shall mean any decree, order, judgment, writ, award,
injunction, stipulation or consent of or by
a Governmental Authority.
"Ordinary Course" shall mean the ordinary course of business of
Seller, consistent with past practice and
custom (including with respect to
quantity and frequency).
"PCBs" - See Section 7.17(a).
"Permitted Liens" shall mean: (i) Liens for current Taxes not
yet
due and payable; (ii) Liens imposed by law
and incurred in the Ordinary Course
for obligations not yet due to carriers,
warehousemen, laborers, materialmen and
the like which to the extent required by
GAAP will be reflected as Current
Liabilities on the Closing Balance Sheet;
(iii) Liens in respect of pledges or
deposits under workers' compensation laws
or similar legislation to the extent
such pledges or deposits are included in
the Purchased Assets; and (iv) minor
defects in title which do not, individually
or in the aggregate, interfere with
the use, transferability or value of the
property subject thereto.
"Permitted Real Estate Encumbrances" - See Section 6.02(a).
"Person" shall mean any natural person, corporation,
partnership,
limited liability company, joint venture,
trust, association or unincorporated
entity of any kind.
"Preliminary Balance Sheet" - See Section 2.03(a).
"Preliminary Net Current Asset Calculation" - See Section
2.03(a).
"Purchase Price" - See Section 2.02.
9
<PAGE>
"Purchased Assets" shall mean all assets, rights and properties
owned by Seller immediately prior to the
Effective Time, other than the Retained
Assets, whether or not carried and
reflected on the books of Seller, including
the following:
(i) Cash and cash equivalents;
(ii) All accounts, notes, contract or other receivables of
Seller
(collectively, "Accounts Receivable");
(iii) All deposits and advances, prepaid expenses and other
prepaid
items of
Seller (other than Retained Prepaids), to the extent that the
full
amount thereof is realizable by Purchaser after the Closing
("Purchased Prepaids");
(iv) All inventories of Seller, including all such inventories
of
cards,
chips, tokens, food, unopened liquor containers, merchandise,
marketing
materials (other than marketing materials relating to Star),
gaming
supplies and gaming device parts inventory ("Inventory");
(v) All tangible assets, including machinery, equipment
(including
gaming
equipment and devices), gaming tables, tools, spare parts,
vehicles, trucks, transportation
equipment, operating supplies, furniture
and office
equipment, fixtures, construction-in-progress, telephone
system,
telecopiers, photocopiers, computer hardware, computer software
and base
stock, of Seller;
(vi) All of Seller's right, title and interest in and to (A)
the
parcels of
land (the "Land") described in Section 7.09(a) of the
Disclosure
Schedule, together with all tenements, hereditaments,
privileges, easements and appurtenances in any way pertaining to
the Land
(the
"Appurtenant Rights"), and (B) all buildings, structures and
other
improvements, fixtures and appurtenances located on the Land
(the
"Improvements"); the
10
<PAGE>
Land, the
Appurtenant Rights and the Improvements are sometimes
hereinafter collectively called the "Real Property";
(vii) All of Seller's right, title and interest in, to or under
the
(A)
executory leases, contracts, agreements and commitments described
in
Section
7.12(a) of the Disclosure Schedule, (B) any executory leases,
contracts,
agreements and commitments of Seller which relate to the
Business
and are not required to be listed in the Disclosure Schedule
pursuant
to Section 7.12(a) of this Agreement; and (C) executory leases,
contracts,
agreements and commitments entered into by Seller after the
date
hereof in compliance with the terms and provisions of this
Agreement
and which
relate to the Business;
(viii) Seller's right, title and interest in and to the
following
intellectual property: trade names, trademarks, trademark
registrations,
trademark
applications, service marks, service mark registrations,
service
mark
applications; copyrights, copyright registrations, copyright
applications; patent rights (including issued patents,
applications,
divisions,
continuations and continuations-in-part, reissues, patents of
addition, utility models and
inventors' certificates); licenses with
respect to
any of the foregoing; trade secrets, proprietary manufacturing
information and know-how; inventions, inventors' notes, drawings
and
designs;
customer and vendor lists and the goodwill associated with any
of
the
foregoing, except as set forth in Sections 7.11(a) and 7.11(e) of
the
Disclosure
Schedule;
(ix) Any permits and licenses of Seller to the extent any of
the
same are
transferable or assignable to Purchaser;
11
<PAGE>
(x) All of Seller's files, papers, documents and records relating
to
the
Business, including credit and sales records comparative
statistical
information, financial statements, players lists and sales and
marketing
literature, books, advertising material, stationery, office
supplies,
forms,
catalogues, manuals, correspondence, Tax records relating to
the
Transferred Employees to the extent transferable under applicable
Law,
design
plans for improvements to the Casino and any other information
reduced to
writing relating to the Business of Seller;
(xi) All of Seller's interests in telephone and facsimile
numbers;
(xii) To the extent legally transferable, all of Seller's
right,
title and
interests to any manufacturer warranties with respect to any of
the
Purchased Assets;
(xiii) All other miscellaneous assets of Seller used in the
Business
wherever
located including, without limitation, players club lists
(other
than
players club lists of Seller's Affiliates) and design plans;
and
(xiv) The Business of Seller as a going concern.
"Purchased Prepaids" - See clause (iii) of the definition of
Purchased Assets.
"Purchaser Indemnified Persons" - See Section 12.01(a).
"Purchaser's 401(k) Plan" - See Section 14.03.
"Real Property" - See clause (vi) of definition of Purchased
Assets.
"Release" - See Section 7.17(c).
"Replacement Benefit Plans" - See Section 14.02(b).
"Retained Assets" shall mean the following:
(i) Subject to the License Agreement, all right, title and
interests
of
Investor Holdings to the name "Fitzgeralds Casino" and related logo
and
the other
trademarks and
12
<PAGE>
servicemarks licensed by Seller from Investor Holdings and set
forth in
Section
7.11(a) of the Disclosure Schedule, as well as all right, title
and
interests of Star to the trademarks and servicemarks licensed
by
Seller
from Star and set forth in Section 7.11(a) of the Disclosure
Schedule;
(ii)
The rights, assets and properties described in Section 1.02 of
the
Disclosure Schedule;
(iii) All Tax credits, Tax deposits, rights to Tax refunds and
prepaid
Taxes (except to the extent they are Assumed Taxes);
(iv) All
of Seller's right, title and interest in choses in action,
claims and
causes of action or rights of recovery or set-off of every kind
and
character, including under guarantees and indemnitees;
(v) Seller's company seal, minute books and equity record books,
the
general
ledgers, books of original entry, and other accounting records,
employment
records for employees, all Tax Returns and other Tax records
(except
for Tax records relating to the Transferred Employees, to the
extent
transferable under applicable Law), reports, data, files and
documents;
(vi) All Retained Prepaids;
(vii) All opened liquor containers; and
(viii) Seller's rights under this Agreement.
"Retained Liabilities" - See Section 2.06(b).
"Retained Prepaids" shall mean all deposits and advances,
prepaid
expenses and other prepaid items of Seller
set forth in Section 1.02, Item 6, of
the Disclosure Schedule.
"Settlement Date" - See Section 2.04(e).
13
<PAGE>
"Shared Expense Cap" - See Section 16.01(b).
"Star" shall mean The Majestic Star Casino, LLC, an Indiana
limited
liability company.
"Star 401(k) Plan" shall mean The Majestic Star Casino, LLC
Employees 401(k) Plan.
"Substances" - See Section 7.17(a).
"SWDA" - See Section 7.17(a).
"Target Number" - See Section 2.02(a).
"Taxes" shall mean all taxes, charges, fees, duties (including
custom duties), levies or other
assessments, including income, gross receipts,
net proceeds, capital gains, ad valorem,
turnover, real and personal property
(tangible and intangible), gaming, sales,
use, franchise, excise, value added,
stamp, leasing, lease, user, transfer,
fuel, excess profits, occupational,
interest equalization, windfall profits,
license, payroll, environmental,
capital stock, disability, severance,
withholding or employment taxes which are
imposed by any Governmental Authority, and
such term shall include any interest,
penalties or additions to tax attributable
thereto.
"Tax Return" shall mean any report, return or other information
required to be supplied to a Governmental
Authority in connection with any
Taxes.
"Threshold" - See Section 12.06(a).
"Title Report" - See Section 6.02(a).
"Transfer Taxes" - See Section 2.07.
"Transferred Employees" - See Section 14.01(a).
"Transition Services Agreement" - See Section 3.02(h).
14
<PAGE>
"Uncommitted Capital Expenditures"- See Exhibit D.
"Year-End Certificate" - See Section 3.01(b).
1.03
Interpretation. Unless the context of this Agreement otherwise
requires, (a) words of any gender shall be
deemed to include the other gender,
(b) words using the singular or plural
number shall also include the plural or
singular number, respectively, (c)
references to "hereof", "herein", "hereby"
and similar terms shall refer to this
entire Agreement, (d) all references in
this Agreement to Articles, Sections,
Schedules and Exhibits shall mean and
refer to Articles, Sections, Schedules and
Exhibits of this Agreement (unless
specifically provided otherwise), (e) all
references to statutes and related
regulations shall include all amendments of
the same and any successor or
replacement statutes and regulations, and
(f) references to any Person shall be
deemed to mean and include the successors
and permitted assigns of such Person
(or, in the case of a Governmental
Authority, Persons succeeding to the relevant
functions of such Person).
1.04 Knowledge. As used herein the term "knowledge" and similar
references shall have the same meaning and
shall mean the actual knowledge after
reasonable inquiry of Michael E. Kelly, Jon
S. Bennett, Cara L. Brown, Joe
Collins and Jim LeFresne as it relates to
Seller.
1.05 Earnest Money. (a) Simultaneously with the execution of
this
Agreement, (i) Purchaser and Seller have
entered into an escrow agreement in the
form of Exhibit E attached hereto and made
a part hereof ("Escrow Agreement")
with Mercantile National Bank of Indiana,
as escrow agent (the "Escrow Agent");
and (ii) Purchaser has delivered to the
Escrow Agent a good faith deposit in the
amount of $2,000,000 in cash (together
15
<PAGE>
with any earnings or interest thereon and
less any Easement Costs disbursed
pursuant to Section 15.06(b) hereof, the
"Earnest Money").
(b) In the event the purchase and sale contemplated by this
Agreement is terminated (i) by Seller
pursuant to Section 11.01(f) (provided,
Seller is not in breach or default under
the first sentence of Section 4.01 or
Section 5.04 of the Agreement), then Seller
shall be entitled to the Earnest
Money plus a payment from Purchaser equal
to the Easement Costs and the Escrow
Agent shall promptly deliver the Earnest
Money to Seller, or (ii) by Seller
pursuant to Sections 11.01(c) or (d)
(provided, in either case at the time of
such termination, all conditions to Closing
applicable to Purchaser set forth in
Article IX other than the condition set
forth in Section 9.05(b)(i) shall have
been satisfied) or Section 11.01(g), then
Seller shall be reimbursed from the
Earnest Money for its expenses (including
the time of personnel of Seller and
its Affiliates, and fees and expenses of
legal, accounting and other
professionals) incurred in connection with
the transactions contemplated hereby
in an aggregate amount not to exceed
$500,000 (the "Expense Reimbursement
Amount"); provided, that if as of the
termination date the Earnest Money is
insufficient to pay to Seller the full
amount of the Expense Reimbursement
Amount, then the Purchaser shall pay to
Seller the deficiency. The delivery of
Earnest Money, including the Expense
Reimbursement Amount portion thereof (and
if required pursuant to Section 1.05(b)(i)
hereof the Easement Costs), to Seller
pursuant to this Section 1.05 shall
constitute liquidated damages and shall be
paid in lieu of any additional legal
recourse for any damages, specific
performance or any other rights or remedies
available to Seller resulting
therefrom.
(c) Except as provided in Section 1.05(d), in the event this
Agreement is terminated for any reason
other than as set forth in Section
1.05(b), then Purchaser shall be entitled
to (i) the Earnest Money (less, in the
16
<PAGE>
case of a termination described in Section
1.05(b)(ii), the Expense
Reimbursement Amount) and the Escrow Agent
shall promptly deliver the Earnest
Money or, in the case of a termination
described in Section 1.05(b)(ii), the
relevant portion thereof to Purchaser; and
(ii) a payment from Seller for 50% of
the Easement Costs. The delivery of Earnest
Money or Expense Reimbursement
Amount (or 50% of the Easement Costs) to
Purchaser pursuant to this Section
1.05(c) shall, in the case of a breach by
Seller of Section 5.04 hereof, not in
any way limit any legal recourse for
damages, specific performance or any other
rights or remedies available to Purchaser
resulting therefrom, and in all other
cases, any legal recourse Purchaser may
have against Seller shall be limited to
money damages in the amount of $2,000,000
(Two Million U.S. Dollars) (excluding
the 50% of the Easement Costs paid by
Seller) which shall constitute liquidated
damages and shall be paid by Seller
promptly after termination of this Agreement
in lieu of any additional legal recourse
for any further damages, specific
performance or any other rights or remedies
available to Purchaser resulting
therefrom.
(d) Further, if this Agreement is terminated by Purchaser
pursuant
to Section 11.01(e) under circumstances
where (i) Seller shall have elected to
specify an Extended Closing Date pursuant
to Section 3.01(a)(y) and (ii) all
conditions to the obligations of Purchaser
set forth in Article IX shall have
either been satisfied or waived by
Purchaser, then the Earnest Money plus a
payment from Seller in the amount of any
Easement Costs disbursed pursuant to
Section 15.06(b) plus a payment from Seller
equal to $2,000,000 shall promptly
be paid to Purchaser which payment shall,
except in the case of a breach by
Seller of Section 5.04, constitute
liquidated damages in lieu of any additional
legal recourse for any further damages,
specific performance or any other
rights or remedies available to Purchaser
resulting therefrom. In the case of
any breach by Seller of Section 5.04
hereof, such payment to Purchaser shall not
in any way limit any legal recourse for
damages, specific performance or any
other rights or remedies available to
Purchaser resulting therefrom.
(e) Seller and Purchaser covenant and agree to furnish and
deliver
the appropriate instructions to the Escrow
Agent as required by the terms of
this Agreement and the Escrow
Agreement.
ARTICLE II
PURCHASE AND SALE, PURCHASE PRICE,
ALLOCATION AND OTHER RELATED MATTERS
2.01 Purchase and Sale. Upon the terms and subject to the
conditions
of this Agreement, at the Effective Time,
Seller shall sell, assign, convey,
transfer and deliver to Purchaser and
Purchaser shall acquire from Seller the
Purchased Assets, free and clear of any
Liens (other than Permitted Liens and
Permitted Real Estate Encumbrances).
17
<PAGE>
2.02 Purchase Price. The purchase price (the "Purchase Price")
payable by Purchaser for the Purchased
Assets shall be:
(a) $66,000,000 (Sixty-Six Million U.S. Dollars) and either (i)
minus the amount, if any, by which the Net
Current Assets as reflected on the
Closing Balance Sheet are less than $0
(Zero U.S. Dollars) ("Target Number") or
(ii) plus the amount, if any, by which the
Net Current Assets as reflected on
the Closing Balance Sheet are greater than
the Target Number;
(b) plus (i) the 2004 Uncommitted Capital Expenditure Payments
minus
(ii) the 2004 Uncommitted Capital
Expenditure Reduction, and minus (iii) the
amount, if any, by which $963,297 exceeds
the amount of Committed Capital
Expenditures that have been paid for in
cash by Seller from the date hereof
through December 31, 2004 or accrued as a
Current Liability on the Closing
Balance Sheet (any adjustment to be
calculated and made pursuant to this Section
2.02(b) being referred to herein as the
"2004 Capex Adjustment"); plus
(c) the amount, if any, of any capital expenditures for the
purchase
of slot machines, slot machine software or
upgrades to slot machines made by
Seller and paid for in cash by Seller
during the period from January 1, 2005 to
the Closing Date or accrued as a Current
Liability on the Closing Balance Sheet
up to a maximum amount equal to $125,000
times the number of whole calendar
months in such period (the $125,000 shall
be prorated for any partial month in
which Closing occurs) ("2005 Slot
Expenditures").
(d) At the Closing on the Closing Date and at the Effective
Time,
Purchaser shall assume, agree to perform,
and pay and discharge when due the
Assumed Liabilities.
2.03 Closing Payment. (a) At least five (5) business days prior
to
the Closing Date, Seller shall deliver to
Purchaser (i) the most recently
available unaudited balance sheet of
18
<PAGE>
Seller which shall not be older than sixty
(60) days prior to the Closing Date
("Preliminary Balance Sheet"), (ii) a
calculation of the Net Current Assets as
reflected on the Preliminary Balance Sheet
("Preliminary Net Current Asset
Calculation"), (iii) a calculation of the
2004 Capex Adjustment, with
accompanying supporting documentation and
(iv) a calculation of the 2005 Slot
Expenditures with accompanying supporting
documentation. Purchaser shall have
the right to review the Preliminary Balance
Sheet, Preliminary Net Current Asset
Calculation, the calculation of the 2004
Capex Adjustment and the calculation of
the 2005 Slot Expenditures, and Seller and
Purchaser shall negotiate in good
faith with respect to any disputes arising
therefrom.
(b) At the Closing, Purchaser shall pay to Seller an amount equal
to
$66 Million plus or minus any 2004 Capex
Adjustment plus the 2005 Slot
Expenditures, minus the Earnest Money plus
the aggregate Easement Costs and
either (i) minus the amount, if any, by
which the Net Current Assets as
reflected on the Preliminary Balance Sheet
are less than the Target Number or
(ii) plus the amount, if any, by which the
Net Current Assets as reflected on
the Preliminary Balance Sheet are greater
than the Target Number ("Closing
Payment"). The Closing Payment plus the
Earnest Money shall be the "Estimated
Purchase Price."
(c) Prior to the Closing, Purchaser and Seller shall direct the
Escrow Agent to deliver at the Closing the
Earnest Money to Seller.
(d) The Estimated Purchase Price shall be paid by wire transfer
of
immediately available federal funds for
credit to Seller to a bank account or
accounts designated by Seller in writing
prior to Closing.
2.04 Closing Balance Sheet. (a) Seller shall prepare and deliver
to
Purchaser within sixty (60) days after the
Closing Date (A) an unaudited balance
sheet of Seller based upon the Purchased
Assets and Assumed Liabilities as of
the close of business on the day
immediately
19
<PAGE>
preceding the Closing Date ("Closing
Balance Sheet") and in a manner consistent
with the principles used in the preparation
of the Balance Sheet; and (B) a
calculation of the Net Current Assets as
reflected on the Closing Balance Sheet
("Net Current Asset Calculation").
(b) The valuation of the Inventory shall be determined in
accordance
with the inventory principles set forth on
Exhibit F attached hereto ("Inventory
Principles").
(c) Within thirty (30) days after the Closing Balance Sheet and
the
Net Current Asset Calculation are delivered
to Purchaser pursuant to Section
2.04(a) hereof, Purchaser shall complete
its examination thereof and shall
deliver to Seller either (i) a written
acknowledgement accepting the Closing
Balance Sheet and the Net Current Asset
Calculation; or (ii) a written report
setting forth in reasonable detail any
proposed adjustments to the Closing
Balance Sheet and the Net Current Asset
Calculation ("Adjustment Report"). If
Purchaser fails to respond to Seller within
such thirty (30) day period,
Purchaser shall be deemed to have accepted
and agreed to the Closing Balance
Sheet and the Net Current Asset Calculation
as delivered pursuant to Section
2.04(a) hereof.
(d) In the event Seller and Purchaser fail to agree on any of
Purchaser's proposed adjustments contained
in the Adjustment Report within
thirty (30) days after Seller receives the
Adjustment Report, then Seller and
Purchaser mutually agree that the Denver,
Colorado office of Deloitte & Touche,
certified public accountants ("Independent
Auditors") shall make the final
determination with respect to the
correctness of the proposed adjustments in the
Adjustment Report in light of the terms and
provisions of this Agreement. Seller
and Purchaser shall direct the Independent
Auditors to make such decision within
forty-five (45) days after the Independent
Auditors have been retained. The
decision of the Independent Auditors shall
be final and
20
<PAGE>
binding on Seller and Purchaser. The costs
and expenses of the Independent
Auditors and their services rendered
pursuant to this Section 2.04(d) shall be
borne equally by Seller and Purchaser.
(e) The term "Closing Balance Sheet" as that term has been
hereinbefore and will be hereinafter used,
shall mean the Closing Balance Sheet
delivered pursuant to Section 2.04(a), as
adjusted, if at all, pursuant to this
Section 2.04. The date on which the Closing
Balance Sheet is finally determined
pursuant to this Section 2.04 shall
hereinafter be referred to as the
"Settlement Date."
(f) In connection with the preparation of the Closing Balance
Sheet
and the resolution of any disputes related
thereto, Seller and Purchaser shall
provide each other and their respective
accountants and auditors full access to
the relevant books, records, work papers,
employees, accountants and advisors,
of Purchaser or Seller and its relevant
Affiliates, and with the right to
observe any taking of physical inventory
and the preparation of the Closing
Balance Sheet.
2.05
Purchase Price Settlement. (a) In the event the Purchase Price
is (i) less than the Estimated Purchase
Price, then Seller shall pay to
Purchaser an amount equal to such
deficiency within five (5) days after the
Settlement Date; or (ii) greater than the
Estimated Purchase Price, then
Purchaser shall pay to Seller an amount
equal to such excess within five (5)
days after the Settlement Date, plus, in
either case, interest thereon and
payable from the Closing Date to the date
of payment at the prime rate as
published in The Wall Street Journal on the
Closing Date.
(b) Any payment required pursuant to Section 2.05(a) hereof shall
be
by certified check or cashier's check, or,
at the option of the recipient, by
the transfer of immediately
21
<PAGE>
available federal funds for credit to the
recipient, at a bank account
designated by such recipient in
writing.
2.06 Assumed Liabilities. (a) As additional consideration for
the
purchase of the Purchased Assets, Purchaser
shall, at the Effective Time,
assume, agree to perform, and pay and
discharge when due, only the following
Liabilities of Seller relating to the
Business ("Assumed Liabilities"):
(i) Assumed Taxes;
(ii) The Current Liabilities of Seller reflected or reserved
for on the
Closing Balance Sheet, but only to the extent of the monetary
amount of
such Liabilities so reflected;
(iii) The Liabilities of Seller arising on and after the
Effective
Time under (A) the personal property leases, contracts,
agreements
and commitments set forth in Section 7.12(a) of the Disclosure
Schedule;
(B) any personal property leases, contracts, agreements and
commitments which relate to the Business and are not required to be
listed
in the
Disclosure Schedule pursuant to Section 7.12(a) of this
Agreement;
and (C)
any personal property leases, contracts, agreements and
commitments entered into by Seller relating to the Business after
the date
hereof in
compliance with the terms and provisions of this Agreement;
provided,
however, Purchaser shall not assume any Liabilities of Seller
in
respect of
a breach of or default under any such leases, contracts,
agreements
or commitments;
(iv) Subject to Section 12.08, and subject to Purchaser's
indemnification rights for a breach of the representation or
warranty
contained
in Section
22
<PAGE>
7.17, any
Liability arising from any Environmental Claim or Environmental
Condition
of the Real Property;
(v) All Liabilities incurred by Purchaser arising out of or
related to
the ownership or operation of the Business or the Purchased
Assets on
and after the Effective Time, including all liability for
personal
injuries (including death) of patrons of the Casino occurring
on
or after
the Effective Time;
(vi) The Liabilities (except for Taxes) related to Transferred
Employees
as provided in Article XIV; and
(vii) All Liabilities for coupons for complimentaries issued
to patrons
prior to the Effective Time, including food, merchandise or
other
customary items; provided, such coupons were issued in
accordance
with
Section 5.03(v).
(b) Purchaser shall not assume or pay any, and Seller shall
continue
to be responsible for each Liability of
Seller whether or not relating to the
Business, not expressly assumed by
Purchaser in Section 2.06(a) ("Retained
Liabilities"). Specifically, without
limiting the foregoing, Purchaser shall not
assume:
23
<PAGE>
(i) any claim, action, suit or proceeding pending or
threatened
prior to the Effective Time, notwithstanding the disclosure
thereof in
the Disclosure Schedule, or any claim, action, suit or
proceeding
arising after the Effective Time resulting from (A) any claim,
action,
suit or proceeding pending or threatened prior to the Effective
Time, (B)
any other event occurring prior to the Effective Time, or (C)
Seller's
operation of the Business prior to the Effective Time;
(ii) any Liability arising out of or relating to the Retained
Assets;
(iii) any Liability for Taxes (including Taxes related to the
Business
or the Purchased Assets or the Transferred Employees) other
than
Assumed
Taxes;
(iv) any Liability arising from claims, proceedings or causes
of action
resulting from property damage or personal injuries (including
death)
relating to the Business occurring prior to the Effective Time;
(v) except as provided in Article XIV, any Liability relating
to any
employee of Seller arising from a claim which was incurred prior
to
the
Effective Time (including for vacation, holiday and sick pay
earned,
bonus,
payroll, employment and withholding Taxes accrued but not yet
paid,
or other
compensation or benefits), except to the extent of the monetary
amount of
any such Liabilities so reflected as a Current Liability on the
Closing
Balance Sheet;
(vi) any Liability under any Benefit Plans or benefit plans of
any of
Seller's ERISA Affiliates, except to the extent of the monetary
amount of
any such Liabilities so reflected as a Current Liability on the
Closing
Balance Sheet; and
(vii) any Liability arising under or relating to any change of
control
provision in any lease, contract, agreement or commitment,
including
any employment
24
<PAGE>
agreement,
in each case whether or not any such lease, contract, agreement
or
commitment is being assigned to Purchaser hereunder.
2.07 Sales and Transfer Taxes. Any and all transfer, sales,
purchase, use, value added, excise, stamp,
documentary or similar taxes imposed
on, or that result from, the transfer of
any of the Purchased Assets ("Transfer
Taxes") shall be paid in accordance with
Section 16.01(b).
2.08 Allocation of Purchase Price.
(a) The parties agree that the Purchase Price shall be
allocated
among the Purchased Assets for federal
income tax reporting purposes in
accordance with this Section 2.08. After
the date hereof, Seller and Purchaser
shall negotiate in good faith a mutually
acceptable allocation of the Purchase
Price on a class (or component thereof) by
class basis using the classes
designated by the Code. In the event that
within seventy-five (75) days after
the date hereof or such earlier date as
Seller and Purchaser agree (such date is
hereafter referred to as the "Negotiation
Date"), Seller and Purchaser have not
agreed to an allocation of the Purchase
Price to any class or component thereof,
then Purchaser and Seller shall agree upon
a qualified independent appraiser
with experience in the gaming industry to
perform an appraisal of those classes
or components of the Purchased Assets
(other than the Current Assets and Current
Liabilities reflected on the Closing
Balance Sheet) ("Appraised Assets"). In the
event that Seller and Purchaser cannot
agree upon an appraisal firm within
fifteen (15) days of the Negotiation Date,
then Seller and Purchaser shall each
submit the name of two appraisal firms and
Joe Collins shall pick a name out of
a hat, which shall serve as the appraisal
company. The appraisal company shall
be instructed to complete their appraisal
of the Appraised Assets within thirty
(30) days of appointment. Each party shall
be entitled to one meeting with the
appraiser to state its
25
<PAGE>
position and submit materials relative to
the appraisal. The determination of
the appraisal shall be binding on Seller
and Purchaser for purposes of the
allocation of the Purchase Price. Seller
and Purchaser shall split the costs of
the fees and expenses of the appraisal
firm.
(b) Each party agrees to complete IRS Form 8594 consistently
with
such allocation and to cooperate with the
other party in the preparation of Form
8594 and to furnish the other party with a
copy of such form prepared in draft
form, within a reasonable period before the
filing due date of such form.
Neither Seller nor Purchaser shall file any
tax return or take a position with a
tax authority that is inconsistent with
such allocation.
ARTICLE III
CLOSING AND CLOSING DATE DELIVERIES
3.01 Closing.
(a) The term "Closing" as used herein shall refer to the actual
conveyance, transfer, assignment and
delivery of the Purchased Assets to
Purchaser in exchange for the Estimated
Purchase Price delivered to Seller
pursuant to Section 2.03(b) of this
Agreement. The Closing shall take place at
the offices of Winston & Strawn LLP, 35
West Wacker Drive, Chicago, Illinois
60601, at 10:00 a.m. local time on the
latest of (x) the fifth business day
after the Conditions Satisfaction Date, (y)
such date after the Conditions
Satisfaction Date and prior to May 1, 2005
as specified by Seller within two
business days of the Conditions
Satisfaction Date (the "Extended Closing Date")
and (z) at such other place and time or on
such other date as is mutually agreed
to in writing by Seller and Purchaser
("Closing Date"). The Closing shall be
deemed to be effective as of 8:00 AM (MST)
on the next business day following
the Closing Date (the "Effective
Time").
(b) It is the parties' hereto intention to consummate the
transactions contemplated hereby on or
prior to December 31, 2004. In the event
that at December 31, 2004 Gaming Approval
has not been obtained, but (i) the
licensing investigation is in process; (ii)
Purchaser
26
<PAGE>
has (A) filed its retail gaming license
application, and caused the filing of
the applications for the Associated Persons
within thirty (30) following the
date hereof, (B) complied or is complying
in good faith with the requests and
directives of the Gaming Authorities, and
(C) not been advised by the Gaming
Authorities that Gaming Approval is not
likely to be obtained; and (iii)
Purchaser has delivered to Seller a
certificate of the Secretary or Assistant
Secretary of Purchaser certifying as to
subsections (i) and (ii) of this Section
3.01(b) ("Year-End Certificate"), then the
Closing Date shall be the date which
is the fifth business day following the
date upon which all of the conditions
precedent set forth in Articles IX and X of
this Agreement are satisfied or
waived by the appropriate party hereto,
subject to Article XI of this Agreement.
3.02 Closing Deliveries by Seller. At the Closing, Seller shall
deliver to Purchaser:
(a) A special warranty deed conveying valid title to the Real
Property, subject only to the Permitted
Liens and Permitted Real Estate
Encumbrances;
(b) All such warranty bills of sale, lease assignments,
trademark
assignments and contract assignments and
other documents and instruments of
sale, assignment, conveyance and transfer,
as Purchaser may reasonably deem
necessary or desirable to the extent
consistent with this Agreement;
(c)
A certificate of the Secretary or an Assistant Secretary of
Seller certifying as to: (i) the
Certificate of Formation of Seller, as
certified by the Secretary of State of the
jurisdiction of incorporation of
Seller not earlier than ten (10) days prior
to the Closing Date; (ii) the
operating agreement of Seller; (iii)
resolutions of the Board of Managers (or
the equivalent) of Seller authorizing and
approving the execution, delivery and
performance by Seller of this Agreement and
any agreements, instruments,
certificates or other documents executed by
Seller
27
<PAGE>
pursuant to this Agreement; and (iv) the
incumbency and signatures of the
officers, managers or members of Seller
executing this Agreement and any
agreements, instruments, certificates or
other documents executed by Seller
pursuant to this Agreement;
(d) A certificate, dated the Closing Date, executed by the
appropriate officers, managers or members
of Seller, required by Section 9.02;
(e) The opinion of Dykema Gossett PLLC, as counsel to Investor
Holdings, dated the Closing Date, to the
effect that the execution, delivery and
performance by Investor Holdings of the
License Agreement does not conflict with
the terms of the Indenture or related
collateral documents or the Loan and
Security Agreement or related collateral
documents and no consent of the Bank of
New York is required under the Indenture or
related collateral documents or
Wells Fargo Foothill, Inc. under the Loan
and Security Agreement or related
collateral documents to execute, deliver or
perform the License Agreement.
(f) The consents, authorizations and approvals of the
Governmental
Authorities and other Persons set forth in
the Disclosure Schedule pursuant to
Section 7.03(b);
(g) A License Agreement executed by Investor Holdings pursuant
to
which Investor Holdings shall grant
Purchaser and its permitted successors and
assigns a perpetual license to use solely
at the Casino in Black Hawk, Colorado
all trademarks and servicemarks that the
Casino currently licenses from Investor
Holdings, including the trade name
"Fitzgeralds," "Fitz Club" and any related
logo with respect thereto ("Licensed
Items") and certain other rights with
respect to such trade name set forth
therein, such agreement to be in
substantially the form attached hereto as
Exhibit G ("License Agreement");
28
<PAGE>
(h) a Transition Services Agreement executed by Star or its
Affiliates, as appropriate, ("Transition
Services Agreement"), such agreement to
be in substantially the form attached
hereto as Exhibit H;
(i) a properly executed certificate of non-foreign status from
Seller (and, if Seller is a disregarded
entity for federal income tax purposes,
from the appropriate indirect or direct
owner of Seller that is not a
disregarded entity for federal income tax
purposes) in a form reasonably
acceptable to Purchaser; and
(j) Such other documents as Purchaser may reasonably request to
carry out the purposes of this Agreement,
including the documents to be
delivered pursuant to Article IX.
3.03 Closing Deliveries by Purchaser. At the Closing, Purchaser
shall deliver to Seller:
(a) The Closing
Payment to be delivered by Purchaser pursuant to
Section 2.03(b);
(b) A certificate of the Secretary or an Assistant Secretary of
Purchaser certifying as to: (i) the
Certificate of Formation of Purchaser, as
certified by the Secretary of State of the
jurisdiction of incorporation of
Purchaser not earlier than ten (10) days
prior to the Closing Date; (ii) the
operating agreement of Purchaser; (iii)
resolutions of the Board of Managers of
Purchaser authorizing and approving the
execution, delivery and performance by
Purchaser of this Agreement and any
agreements, instruments, certificates or
other documents executed by Purchaser
pursuant to this Agreement; and (iv) the
incumbency and signatures of the officers,
managers or members of Purchaser
executing this Agreement and any
agreements, instruments, certificates or other
documents executed by Purchaser pursuant to
this Agreement;
29
<PAGE>
(c) The certificate, dated the Closing Date, executed by the
appropriate officers, managers or members
of Purchaser, required by Section
10.02;
(d) An assumption agreement executed by Purchaser reflecting
the
assumption of the liabilities set forth in
Section 2.06(a), in such form as is
reasonably satisfactory to Seller;
(e) The License Agreement executed by Purchaser;
(f) The Transition Services Agreement executed by Purchaser;
and
(g) Such other documents as Seller may reasonably request to
carry
out the purposes of this Agreement,
including the documents to be delivered
pursuant to Article X.
3.04 Non-Compete and Non-Solicitation Agreement. At the
Closing,
Purchaser, Seller, and Star shall enter
into the Non-Compete and
Non-Solicitation Agreement attached hereto
as Exhibit I.
3.05 Cooperation. Each of Seller and Purchaser shall, on request,
on
and after the Closing Date, cooperate with
one another by furnishing any
additional information, executing and
delivering any additional documents and/or
instruments and doing any and all such
other things, including causing its
auditors and relevant advisors to take such
action as may be reasonably required
by the parties to consummate or otherwise
implement the transactions
contemplated by this Agreement or as
otherwise is contemplated hereby.
ARTICLE IV
PRE-CLOSING FILINGS
4.01 HSR Act Filing. Within thirty (30) days after the execution
of
this Agreement, the "ultimate parent
entity" of Seller and Purchaser shall each
file with DOJ and FTC the pre-merger
notification form required pursuant to the
HSR Act with respect to the transactions
contemplated hereby, together with a
request for early termination of the
waiting period. The parties hereto covenant
and agree with each other that with respect
to such filing
30
<PAGE>
each shall: (a) promptly file any
information or documents requested by the FTC
or DOJ; and (b) furnish each other with any
correspondence from or to, and
notify each other of any other
communications with, the FTC or DOJ which relates
to the transactions contemplated hereunder,
and to the extent practicable, to
permit the other to participate in any
conferences with the FTC or DOJ. The
filing fee required by the HSR Act shall be
paid in accordance with Section
16.01(b).
4.02 Gaming Authorities Filings. As soon as reasonably
practicable
after the date of this Agreement, but in
any event prior to the date thirty (30)
days following the date hereof, Purchaser
and the Associated Persons shall
complete and file all necessary
applications with the Gaming Authorities, for
purposes of obtaining the Gaming Approval
and consummating the transactions
described herein as expeditiously as
possible. Purchaser and the Associated
Persons shall (a) keep the Seller
reasonably informed if Purchaser becomes aware
of any difficulties or delays in obtaining
Gaming Approval; and (b) notify the
Seller of any hearings held by the Gaming
Authorities with respect to the Gaming
Approvals. Any filing fees of the Gaming
Authorities and other expenses related
to obtaining Gaming Approval shall be paid
solely by Purchaser.
4.03 Other Government Filings. Seller and Purchaser covenant
and
agree with each other to (a) promptly file,
or cause to be promptly filed, with
any other Governmental Authorities all such
notices, applications or other
documents as may be necessary to consummate
the transactions contemplated hereby
and (b) thereafter diligently pursue all
consents or approvals from any such
Governmental Authorities as may be
necessary to consummate the transactions
contemplated hereby.
ARTICLE V
PRE-CLOSING COVENANTS
31
<PAGE>
5.01 Due Diligence Review. Seller shall, after reasonable
notice,
during normal business hours prior to the
Closing, unless otherwise prohibited
by law, make the properties, assets, books
and records pertaining to the
Business available for examination,
inspection, investigation and review by
Purchaser and its lenders, agents and
representatives. Purchaser agrees to be
responsible for any breach of the
confidentiality provisions of Article XIII by
its lenders, agents and representatives. No
such examination, inspection,
investigation or review by Purchaser or its
lenders, agents or representatives
shall in any way affect, diminish or
terminate any of the representations,
warranties or covenants of Seller expressed
in this Agreement.
5.02 Maintenance of Business and Notice of Changes. (a) During
the
period from the date of execution of this
Agreement through Closing, Seller
agrees (i) to carry on its business in the
Ordinary Course, subject to changes
in Law; and (ii) to consult with Purchaser
regarding all significant
developments, transactions and proposals
relating to the business or operations
of Seller.
(b) Seller shall give Purchaser prompt notice of any and all
Material Adverse Changes which may occur
between the date hereof and the Closing
Date.
5.03 Pending Closing. Without limiting the generality of
Section
5.02(a), pending the Closing, Seller shall,
unless Seller obtains Purchaser's
prior written consent which will not be
unreasonably withheld or delayed:
(a) not purchase, sell, lease, mortgage, pledge or otherwise
acquire
or dispose of any properties or assets of
or in connection with the Business,
except for inventory purchased, sold,
leased or otherwise acquired or disposed
of in the Ordinary Course;
32
<PAGE>
(b) not suffer or permit the creation of any Lien (other than
Permitted Liens and Permitted Real Estate
Encumbrances) upon any of the
Purchased Assets other than in the Ordinary
Course;
(c) not increase or otherwise change the rate or nature of the
compensation (including wages, salaries,
bonuses and benefits under pension,
profit sharing, deferred compensation and
similar plans or programs) which is
paid or payable to any employee of Seller,
except (i) in the Ordinary Course or
(ii) pursuant to existing plans or
agreements disclosed in Sections 7.18(a) or
7.18(e) of the Disclosure Schedule;
(d) keep all equipment and machinery (including, without
limitation,
gaming equipment and devices) used in the
operation of the Business in good
working order and repair, except ordinary
wear and tear, and replace any of it
which shall be lost, stolen or destroyed
and replace or repair any of it which
is no longer in working order if currently
used in the operation of the
Business;
(e) not enter into, or become obligated under, any lease,
contract,
agreement or commitment with respect to the
Business, except for (i) any lease,
contract, agreement or commitment (A)
having a term of one (1) year or less, (B)
involving either a payment by or to Seller
or the Business of less than $120,000
per annum, and (C) entered into in the
Ordinary Course, or (ii) any contract,
agreement or commitment to (A) make an
Uncommitted Capital Expenditure or 2005
Capital Expenditure pursuant to the terms
of this Agreement; or (B) correct the
matter disclosed in Section 7.14(c) of the
Disclosure Schedule;
(f) not enter into any agreement with the City regarding the
Bobtail
storm sewer easement without Purchaser's
consent;
33
<PAGE>
(g) not change, amend, terminate or otherwise modify any
Material
Contract to which Seller is a party;
(h) maintain in full force and effect with respect to the
Business
policies of insurance of the same type,
character and coverage as the policies
currently carried and described in Section
7.15 of the Disclosure Schedule;
(i) except as disclosed in the Disclosure Schedule, pursuant to
existing plans or agreements disclosed in
Sections 7.18(a) or 7.18(e) of the
Disclosure Schedule, or in the Ordinary
Course, not make, or commit to make, any
payment, contribution or award under or
enter into any bonus, pension, profit
sharing, deferred compensation or similar
plan, program or trust;
(j) refrain from doing any act or omitting to do any act, or
permitting any act or omission to act,
which will cause a breach of any Material
Contract;
(k) not make any material changes in its accounting systems,
policies, principles or practices, unless
required under GAAP or pursuant to
Laws;
(l) not make any loans, advances or capital contributions to,
or
investments in, any other Person, other
than reimbursements for business
expenses to employees pursuant to Seller
policy;
(m) not authorize or make any capital expenditures in excess of
(i)
Uncommitted
