Exhibit 2.1
STOCK PURCHASE AGREEMENT
BY AND AMONG
BARRICK-GNL, LLC,
AS BUYER
POSTER FINANCIAL GROUP, INC.,
AS SELLER
AND
GNL, CORP.
NOVEMBER 8, 2004
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS
.............................................................5
2. PURCHASE AND SALE OF TARGET
SHARES.......................................5
2.1 BASIC
TRANSACTION..................................................5
2.2 PURCHASE
PRICE.....................................................5
2.3 ESTIMATED
PURCHASE PRICE...........................................5
2.4 POST-CLOSING
WORKING CAPITAL ADJUSTMENT PROCEDURES ................5
2.5 POST-CLOSING
WORKING CAPITAL ADJUSTMENT............................6
2.6
DEPOSIT............................................................6
2.7 PURCHASE
PRICE ALLOCATION..........................................6
3. REPRESENTATIONS AND WARRANTIES OF SELLER
AND TARGET......................7
3.1 ORGANIZATION
OF SELLER.............................................7
3.2
AUTHORIZATION OF TRANSACTION BY
SELLER.............................7
3.3
NONCONTRAVENTION -
SELLER..........................................7
3.4 BROKERS'
FEES......................................................8
3.5
ORGANIZATION, QUALIFICATION, AND CORPORATE POWER OF TARGET
........8
3.6
CAPITALIZATION OF
TARGET...........................................8
3.7 TARGET
SHARES......................................................8
3.8
NONCONTRAVENTION -
TARGET..........................................8
3.9 FINANCIAL
STATEMENTS...............................................9
3.10 EVENTS
SUBSEQUENT TO MOST RECENT FISCAL YEAR END..................9
3.11 UNDISCLOSED
LIABILITIES..........................................11
3.12 LEGAL
COMPLIANCE.................................................11
3.13 TAX
MATTERS......................................................12
3.14 TITLE TO
ASSETS..................................................13
3.15 REAL
PROPERTY....................................................13
3.16
INTELLECTUAL
PROPERTY............................................14
3.17 TANGIBLE
ASSETS..................................................16
3.18 INVENTORY
AND SUPPLIES...........................................16
3.19
CONTRACTS........................................................16
3.20 NOTES AND
ACCOUNTS RECEIVABLE....................................18
3.21 POWERS OF
ATTORNEY...............................................18
3.22
INSURANCE........................................................18
3.23
LITIGATION.......................................................18
3.24
EMPLOYEES........................................................19
3.25 EMPLOYEE
BENEFITS................................................19
3.26
GUARANTIES.......................................................21
3.27
ENVIRONMENTAL, HEALTH, AND SAFETY MATTERS
.......................21
3.28 REWARD
PROGRAMS..................................................22
3.29
SUPPLIERS........................................................22
3.30 CERTAIN
BUSINESS RELATIONSHIPS...................................23
3.31 SUFFICIENCY
OF ASSETS............................................23
3.32
DISCLOSURE.......................................................23
4. REPRESENTATIONS AND WARRANTIES OF
BUYER.................................23
4.1 ORGANIZATION
OF BUYER.............................................23
4.2
AUTHORIZATION OF
TRANSACTION......................................23
4.3
NONCONTRAVENTION..................................................24
4.4 BROKERS'
FEES.....................................................24
4.5
FINANCING.........................................................24
4.6
LICENSING.........................................................24
4.7
LITIGATION........................................................24
4.8 INVESTMENT
INTENT.................................................25
5. PRE-CLOSING
COVENANTS...................................................25
5.1
GENERAL...........................................................25
5.2 NOTICES AND
CONSENTS..............................................25
5.3 OPERATION OF
BUSINESS.............................................25
5.4 PRESERVATION
OF BUSINESS..........................................25
5.5 FULL
ACCESS.......................................................25
5.6 CONFIDENTIAL
AGREEMENTS...........................................25
5.7 NOTICE OF
DEVELOPMENTS............................................25
5.8
EXCLUSIVITY.......................................................26
5.9
CONFIDENTIALITY...................................................26
5.10 BULLHEAD,
ARIZONA FACILITY.......................................26
5.11 AMENDMENTS,
RELEASES AND TERMINATIONS............................26
5.12 SELLER
MASTER AGREEMENTS AND OTHER SHARED AGREEMENTS ............26
5.13 DISCLOSURE
SCHEDULE UPDATES......................................27
5.14 LICENSE
AGREEMENT, TRANSITION SERVICES AGREEMENT AND
EMPLOYEE/BENEFITS
TRANSITION.....................................27
5.15
GOVERNMENTAL
APPROVALS...........................................27
5.16
PUBLICITY........................................................28
6. POST-CLOSING
COVENANTS..................................................28
6.1
GENERAL...........................................................28
6.2 LITIGATION
SUPPORT................................................28
6.3 INSURANCE
MATTERS; D&O INDEMNITIES................................29
6.4
TRANSITION........................................................30
6.5
CONFIDENTIALITY...................................................30
6.6 COVENANT NOT
TO COMPETE...........................................30
6.7
NONSOLICITATION...................................................30
7. CONDITIONS TO OBLIGATION TO
CLOSE.......................................31
7.1 CONDITIONS
TO OBLIGATION OF BUYER.................................31
7.2 CONDITIONS
TO OBLIGATION OF SELLER................................31
8.
CLOSING.................................................................32
8.1 THE
CLOSING.......................................................32
8.2 ACTIONS
TAKEN AT CLOSING..........................................32
8.3 DELIVERIES
AT THE CLOSING.........................................32
9. REMEDIES FOR BREACHES OF THIS
AGREEMENT.................................34
9.1 SURVIVAL OF
REPRESENTATIONS AND WARRANTIES........................34
9.2 WAIVER OF
CLAIMS AGAINST TARGET...................................34
9.3
INDEMNIFICATION PROVISIONS FOR BENEFIT OF
BUYER...................34
9.4
INDEMNIFICATION PROVISIONS FOR BENEFIT OF
SELLER..................34
9.5 LIMITS ON
INDEMNIFICATION.........................................35
9.6 MATTERS
INVOLVING THIRD PARTIES...................................35
10. TAX
MATTERS............................................................36
10.1 TRANSFER
TAXES...................................................36
10.2
COOPERATION......................................................36
10.3 WAGE
REPORTING...................................................37
11.
TERMINATION............................................................37
11.1 TERMINATION
OF AGREEMENT.........................................37
11.2 EFFECT OF
TERMINATION............................................38
12.
MISCELLANEOUS..........................................................38
12.1 NO
THIRD-PARTY
BENEFICIARIES.....................................38
12.2 ENTIRE
AGREEMENT.................................................38
12.3 SUCCESSION
AND ASSIGNMENT........................................38
12.4
COUNTERPARTY.....................................................38
12.5
HEADINGS.........................................................38
12.6
NOTICES..........................................................39
12.7 GOVERNING
LAW....................................................39
12.8 AMENDMENTS
AND WAIVERS...........................................39
12.9
SEVERABILITY.....................................................39
12.10
EXPENSES........................................................40
12.11
CONSTRUCTION....................................................40
12.12
INCORPORATION OF EXHIBITS AND
SCHEDULES.........................40
12.13 SUBMISSION
TO JURISDICTION......................................40
<PAGE>
EXHIBITS
--------
Exhibit A Defined
Terms
Exhibit B Escrow
Agreement
Exhibit C License
Agreement
Exhibit D Sample Working
Capital and Methodology
Exhibit E Transition
Services Agreement
DISCLOSURE SCHEDULES
--------------------
Schedule 3.2
Authorization of Transaction by Seller
Schedule 3.3
Noncontravention - Seller
Schedule 3.5
Organization, Qualification and Corporate Power of Target
Schedule 3.6
Capitalization - Target
Schedule 3.7
Target Shares
Schedule 3.8
Noncontravention - Target
Schedule 3.9
Financial Statements
Schedule 3.10
Events Subsequent to Most Recent Fiscal Year End
Schedule 3.13(a) Tax
Matters
Schedule 3.13(c) Tax
Issues
Schedule 3.14
Title to Assets
Schedule 3.15
Real Property
Schedule 3.15(a) Real
Property Exceptions
Schedule 3.15(a)(v) Leases, Subleases, Etc.
Schedule 3.16(a)
Intellectual Property
Schedule 3.16(b)
Intellectual Property Infringement
Schedule 3.16(c) Licensed
Intellectual Property
Schedule 3.17(a) Location
of Tangible Assets
Schedule 3.17(b) Certain
Tangible Assets
Schedule 3.19(a) Certain
Contracts
Schedule 3.19(b) Seller
Master Agreements
Schedule 3.20
Notes and Accounts Receivable
Schedule 3.21
Powers of Attorney
Schedule 3.22
Insurance
Schedule 3.23
Litigation
Schedule 3.24(a)
Employees
Schedule 3.24(b) Workers'
Compensation
Schedule 3.25(a) Employee
Benefits
Schedule 3.25(c)
Multiemployer Plans
Schedule 3.26
Guarantees
Schedule 3.27(b)
Environmental Approvals
Schedule 3.27(d)
Environmental Condition Exceptions
Schedule 3.28
Reward Programs
Schedule 3.29
Suppliers
Schedule 3.30
Certain Business Relationships
Schedule 3.31
Sufficiency of Assets
Schedule 4.2
Authorization of Transaction by Buyer
Schedule 4.3
Noncontravention - Buyer
Schedule 5.11
Amendments, Releases and Terminations
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into
as
of November 8, 2004, by and among
BARRICK-GNL, LLC, a Nevada limited liability
company ("Buyer"), POSTER FINANCIAL GROUP,
INC., a Nevada corporation
("Seller"), and GNL, CORP., a Nevada
corporation and a wholly-owned subsidiary
of Seller ("Target"). Buyer, Seller and
Target are referred to collectively
herein as the "Parties."
BACKGROUND
Seller owns own all of the outstanding capital stock of Target.
This Agreement contemplates a transaction in which Buyer will
purchase from Seller, and Seller will sell
to Buyer, all of the outstanding
capital stock of Target in return for
cash.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration
of the representations, warranties,
and covenants herein contained, the Parties
agree as follows.
AGREEMENT
1. DEFINITIONS
Capitalized terms used herein shall have the meaning set forth
on
Exhibit A hereto.
2. PURCHASE AND SALE OF TARGET SHARES
2.1 Basic Transaction. On and subject to the terms and conditions
of
this Agreement, Buyer agrees to purchase
from Seller, and Seller agrees to
sell to Buyer, all of the Target Shares for
the consideration specified in
this Section 2.
2.2 Purchase Price. The purchase price for the Target Shares
(the
"Purchase Price") shall be Thirty One
Million Dollars ($31,000,000) plus the
dollar value of the Closing Date Working
Capital, estimated as provided in
Section 2.3 and adjusted post-Closing as
provided in Section 2.4 (as adjusted
post-Closing, the "Final Purchase Price");
provided, however, that if no
adjustment to the Estimated Purchase Price
is made pursuant to Section 2.4
post-Closing, then the Estimated Purchase
Price shall be the Final Purchase
Price for purposes of this Agreement.
2.3 Estimated Purchase Price.
(a) Not later than two (2) days prior to the Closing Date, Buyer
and
Seller shall prepare a statement of the
estimated Closing Date Working Capital
of Target (the "Estimated Working
Capital"). The Estimated Working Capital
shall be prepared using the Methodology,
consistent with the Sample Working
Capital.
(b) The estimate of the Purchase Price for Closing (the
"Estimated
Purchase Price") shall be equal to Thirty
One Million Dollars ($31,000,000)
plus the Estimated Working Capital.
2.4 Post-Closing Working Capital Adjustment Procedures.
(a) Not later than sixty (60) days after the Closing Date, Buyer
will
prepare and deliver to Seller a statement
of Working Capital as of 12:01 a.m.
Laughlin, Nevada local time on the Closing
Date (the "Closing Date Working
Capital"), which shall be prepared using
the Methodology, consistent with the
Sample Working Capital and the Estimated
Working Capital. Seller shall have
thirty (30) days following delivery of
Buyer's calculation of the Closing Date
Working Capital to give Buyer written
notice of any objection thereto (which
notice must contain a statement of the
basis of Buyer's objection). In the
event that Seller does not object to
Buyer's calculation of the Closing Date
Working Capital, then such calculation will
be used in calculating the
adjustment to the Purchase Price hereunder.
If Seller gives such notice of
objection, then the Parties shall cooperate
in good faith to resolve the
issues for a period of no greater than
fifteen (15) days from the date of
Seller's objection. If any issues remain
unresolved at the end of such fifteen
(15) day period, then the disputed issues
will be submitted to the Accountants
for resolution and final determination of
the Closing Date Working Capital.
(b) If the Closing Date Working Capital issues in dispute are
submitted to the Accountants for resolution
and final determination: (i) each
Party will furnish to the Accountants such
workpapers and other documents and
information relating to the disputed issues
as the Accountants may reasonably
request and are available to that Party or
its accountants; (ii) each Party
will be afforded the opportunity to present
to the Accountants any material
relating to such determination, and to
discuss such determination with the
Accountants; (iii) the Accountants will be
instructed to use all reasonable
efforts to complete their review and
determination within thirty (30) days of
submission of the dispute by Buyer and
Seller; (iv) each of Buyer and Seller
will, and will instruct their accounts,
employees and advisors to, cooperate
with each other and the Accountants in such
manner as may be reasonably
necessary for the Accounts to complete such
review and determination within
such thirty (30) day time frame; (v) the
determination by the Accountants, as
set forth in a notice delivered to both
parties by the Accountants, will be
binding and conclusive on the parties; and
(vi) the party that is
mathematically the furthest from the
Accountant's final determination shall be
solely responsible for the fees and costs
of the Accountants in connection with
such determination;
2.5 Post-Closing Working Capital Adjustment. Within five (5)
business
days after any final determination of the
Closing Date Working Capital under
Section 2.4:
(a) if the Closing Date Working Capital is less than Estimated
Working Capital, Seller shall deliver to
Buyer, by wire transfer of
immediately available funds to an account
designated by Buyer in writing, the
amount of such deficiency; and
(b) if the Closing Date Working Capital is greater than
Estimated
Working Capital, Buyer shall deliver to
Seller, by wire transfer of
immediately available funds to an account
designated by Seller in writing, the
amount of such excess.
2.6 Deposit. On the date of this Agreement, Buyer has deposited
the
amount of One Million Dollars ($1,000,000)
into the Escrow Account with the
Escrow Agent, all pursuant to the terms and
conditions of the Escrow Agreement
of even date herewith by and among Buyer,
Seller and the Escrow Agent, which
is attached hereto as Exhibit B (the
"Escrow Agreement"). Funds in the Escrow
Account will be disbursed in accordance
with the terms of the Escrow
Agreement.
2.7 Purchase Price Allocation. As described in Section 3.13,
Target
is a Qualified Subchapter S-Corporation
Subsidiary (a "QSSS") under the Code
and, as a result, the sale of the Target
Shares will be treated as a sale of
the assets of Target for federal income tax
purposes. As a result, Buyer and
Seller must prepare and file an allocation
of the Purchase Price among the
assets of Target in accordance with the
provisions of Section 1060 of the
Code, and the regulations promulgated
thereunder. Prior to Closing, Buyer and
Seller shall agree to a proforma allocation
of an estimated Purchase Price,
based on Target's financial statements as
of mutually agreed upon fiscal
month-end date of Target. Within sixty (60)
days after determination of the
Final Purchase Price, Buyer shall adjust
such proforma allocation based on the
Final Purchase Price and Target's financial
statements as of the Closing Date,
and shall deliver such allocation to Seller
in writing. Buyer and Seller agree
to use commercially reasonable efforts to
agree upon both the proforma
allocation of such estimated Purchase Price
and the final allocation of the
Final Purchase Price, and to use such final
allocation in reporting the
transactions contemplated by this Agreement
for federal income tax purposes.
In the event that Buyer and Seller fail to
agree on such final allocation
within thirty (30) days of Buyer's delivery
of the proposed allocation to
Seller, despite their commercially
reasonable efforts to do so, Buyer and
Seller shall submit the matter to the
Accountants for determination in
accordance with the dispute resolution
procedures set forth in Section 2.4(b)
concerning any Working Capital
adjustment.
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND TARGET
Seller and Target jointly and severally represent and warrant
to
Buyer that the statements contained in this
Section 3 are correct and complete
as of the date of this Agreement and will
be correct and complete as of the
Closing Date, except as set forth in the
disclosure schedules delivered by
Seller to Buyer on the date hereof (the
"Disclosure Schedules"). Any matter
disclosed in one Disclosure Schedule shall
be deemed disclosed only in
connection with the specific provisions of
the Agreement to which it is
referenced or cross-referenced. The
Disclosure Schedules are arranged in
paragraphs corresponding to the lettered
and numbered paragraphs contained in
this Section 3.
3.1 Organization of Seller. Seller is duly organized, validly
existing, and in good standing under the
Laws of the State of Nevada.
3.2 Authorization of Transaction by Seller. Except as set forth
on
Schedule 3.2, Seller has full corporate
power and authority to execute and
deliver this Agreement and to perform his
or its obligations hereunder. Except
as set forth on Schedule 3.2 and except for
(i) Governmental Approvals
relating to compliance with Gaming Laws,
Gaming Licenses or Liquor Licenses,
(ii) Governmental Approvals relating to
compliance with state securities Laws
and (iii) Governmental Approvals as may be
required under any Environmental,
Health and Safety Requirements pertaining
to any notification, disclosure or
required approval triggered by the Closing
or the transactions contemplated by
this Agreement, Seller need not give any
notice to, make any filing with, or
obtain any authorization, consent, or
approval of any government or
governmental agency in order to consummate
the transactions contemplated by
this Agreement. This Agreement constitutes
the valid and binding obligation of
Seller, enforceable against Seller in
accordance with its terms and conditions
except as such enforceability may be
limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent
conveyance or other similar Laws now or
hereafter in effect relating to creditors'
rights generally and (ii) general
principles of equity (regardless of whether
enforcement is considered in a
proceeding at Law or in equity).
3.3 Noncontravention - Seller. Except as set forth on Schedule
3.3
and except in connection with Gaming Laws,
Gaming Licenses or Liquor Licenses,
neither the execution and the delivery of
this Agreement, nor the consummation
of the transactions contemplated hereby,
will violate any Law or Governmental
Order of any Governmental Entity to which
Seller is subject. Except as set
forth on Schedule 3.3, neither the
execution and the delivery of this
Agreement by Seller, nor the consummation
of the transactions contemplated
hereby, will violate any or any provision
of Seller's charter or bylaws or
conflict with, result in a breach of,
constitute a default under, result in
the acceleration of, create in any party
the right to accelerate, terminate,
modify or cancel any material agreement,
contract, lease, license, instrument,
or other arrangement to which Seller is a
party or by which Seller is bound or
to which any of Seller's assets is
subject.
3.4 Brokers' Fees. Neither Seller nor Target has any Liability
or
obligation to pay any fees or commissions
to any broker, finder, or agent with
respect to the transactions contemplated by
this Agreement.
3.5 Organization, Qualification, and Corporate Power of Target.
Target is a corporation duly organized,
validly existing, and in good standing
under the Laws of the State of Nevada, and
is duly authorized to conduct
business and is in good standing under the
Laws of each jurisdiction where
such qualification is required. Target has
full corporate power and authority
necessary to carry on its businesses and to
own and use the properties owned
and used by it. Schedule 3.5 lists the
current directors and officers of
Target. Seller has delivered to Buyer
correct and complete copies of the
charter and bylaws of Target (each as
amended to date). The minute books
(containing the records of meetings of the
stockholders, the board of
directors, and any committees of the board
of directors), the stock
certificate books, and the stock record
books of Target are correct and
complete. Target is not in default under or
in violation of any provision of
its charter or bylaws. Target has no
Subsidiaries.
3.6 Capitalization of Target. The authorized capital stock of
Target
consists solely of 2,500 Target Shares, of
which 100 Target Shares are issued
and outstanding. All of the issued and
outstanding Target Shares have been
duly authorized, are validly issued, fully
paid and nonassessable. There are
no outstanding or authorized options,
warrants, purchase rights, subscription
rights, conversion rights, exchange rights,
or other contracts or commitments
that could require Target to issue, sell,
or otherwise cause to become
outstanding any of its capital stock. There
are no outstanding or authorized
stock appreciation, phantom stock, profit
participation, or similar rights
with respect to Target. Except as set forth
on Schedule 3.6, there are no
voting trusts, proxies, or other agreements
or understandings with respect to
the voting of the capital stock of Target.
There are no outstanding or
authorized bonds, debentures, notes or
other interests or securities of Target
having voting rights, or which are
convertible into or exchangeable for equity
securities of Target, voting or
otherwise.
3.7 Target Shares. Except as set forth on Schedule 3.7, Seller
holds
of record and owns beneficially all of the
issued and outstanding Target
Shares, free and clear of any restrictions
on transfer (other than
restrictions under the Gaming Laws, the
Securities Act and state securities
Laws), Taxes, Security Interests, options,
warrants, purchase rights,
contracts, commitments, equities, claims,
and demands. Seller is not a party
to any option, warrant, purchase right, or
other contract or commitment that
could require Seller to sell, transfer, or
otherwise dispose of any capital
stock of Target (other than this
Agreement). Seller is not a party to any
voting trust, proxy, or other agreement or
understanding with respect to the
voting of any capital stock of Target.
3.8 Noncontravention - Target. Except as set forth on Schedule
3.8,
neither the execution and the delivery of
this Agreement, nor the consummation
of the transactions contemplated hereby,
will (i) violate any Law or
Governmental Order of any Governmental
Entity to which Target or its assets is
subject, or any provision of the charter or
bylaws of Target, or (ii) conflict
with, result in a breach of, constitute a
default under, result in the
acceleration of, create in any party the
right to accelerate, terminate,
modify, or cancel any agreement, contract,
lease, license, instrument, or
other arrangement to which Target is a
party or by which it is bound or to
which any of its assets is subject (or
result in the imposition of any
Security Interest upon any of its assets).
Except as set forth on Schedule 3.8
and except for (i) Governmental Approvals
relating to compliance with Gaming
Laws, Gaming Licenses or Liquor Licenses,
(ii) Governmental Approvals relating
to compliance with state securities Laws
and (iii) Governmental Approvals as
may be required under any Environmental,
Health and Safety Requirements
pertaining to any notification, disclosure
or required approval triggered by
the Closing or the transactions
contemplated by this Agreement, Target is not
required to give any notice to, make any
filing with, or obtain any
authorization, consent, or approval of any
Governmental Entity in order for
the Parties to consummate the transactions
contemplated by this Agreement.
3.9 Financial Statements. Attached to Schedule 3.9 are the
following
financial statements relating to Target
(collectively, the "Financial
Statements") (which shall be updated by
Seller and Target with respect to each
fiscal month end occurring between the
Signing Date and the Closing Date,
subject to the time needed to produce
fiscal month end statements consistent
with Target's past practice): (i) audited
combined balance sheets and
statements of operations and changes in
division equity, and cash flow as of
and for the fiscal years ended December 31,
2001, December 31, 2002 and
December 31, 2003 (the "Most Recent Fiscal
Year End") for Target; and (ii)
unaudited balance sheets as at September
30, 2004 and statements of operations
and cash flow (the "Interim Financial
Statements") as of and for the period
from January 23, 2004, to September 30,
2004 (the date of the last fiscal
month end Interim Financial Statements
hereunder is the "Most Recent Fiscal
Month End") for Target on a basis combined
with related companies. The
Financial Statements (including the notes
thereto) have been prepared in
accordance with GAAP applied on a
consistent basis throughout the periods
covered thereby, present fairly the
financial condition of Target as of such
dates and the results of operations of
Target for such periods, are true,
correct and complete, and are consistent
with the books and records of Target
(which books and records are correct and
complete); provided, however, that
the Most Recent Financial Statements are
subject to normal year-end
adjustments (which will not be material,
individually or in the aggregate) and
lack footnotes and other presentation
items.
3.10 Events Subsequent to Most Recent Fiscal Year End. Except
as
disclosed on Schedule 3.10, since the Most
Recent Fiscal Year End, the
business and assets of Target have been
operated only in the Ordinary Course
of Business, there has been no material
adverse change in the assets,
business, financial condition, operations
or results of operations of Target,
and to the Knowledge of Seller and Target,
there has been no event, fact or
circumstance which would reasonably be
expected to have a material adverse
effect on the future operation of the
business of Target if conducted in the
same manner as presently conducted, whether
insured or not. Except as set
forth on Schedule 3.10 (which shall be
separated according to each of the
subsections below, to the extent a
Disclosure Schedule is required), and
except for matters undertaken in connection
with the Acquisition, since the
Most Recent Fiscal Year End:
(a) Target has not sold, leased, transferred, or assigned any of
its
assets, tangible or intangible, in the
Ordinary Course of Business;
(b) Target has not entered into any agreement, contract, lease,
or
license (or series of related agreements,
contracts, leases, and licenses)
either involving more than $25,000 or
outside the Ordinary Course of Business;
(c) no party (including Target) has accelerated, terminated,
modified, or cancelled any agreement,
contract, lease, or license (or series
of related agreements, contracts, leases,
and licenses) involving more than
$25,000 to which Target is a party or by
which any of them is bound;
(d) Target has not imposed any Security Interest upon any of
its
assets, tangible or intangible;
(e) Target has not made any capital expenditure (or series of
related
capital expenditures) either involving more
than $100,000 or outside the
Ordinary Course of Business;
(f) Target has not made any capital investment in, any loan to,
or
any acquisition of the securities or assets
of, any other Person (or series of
related capital investments, loans, and
acquisitions);
(g) Target has not issued any note, bond, or other debt security
or
created, incurred, assumed, or guaranteed
any indebtedness for borrowed money
or capitalized lease obligation either
involving more than $25,000 singly or
$100,000 in the aggregate;
(h) Target has not delayed or postponed the payment of accounts
payable and other Liabilities outside the
Ordinary Course of Business;
(i) Target has not cancelled, compromised, waived, or released
any
right or claim (or series of related rights
and claims) either involving more
than $25,000 or outside the Ordinary Course
of Business;
(j) Target has not granted any license or sublicense of any
rights
under or with respect to any Intellectual
Property;
(k) there has been no change made or authorized in the charter
or
bylaws of any of Target;
(l) Target has not issued, sold, or otherwise disposed of any of
its
capital stock, or granted any options,
warrants, or other rights to purchase or
obtain (including upon conversion,
exchange, or exercise) any of its capital
stock;
(m) Target has not declared, set aside, or paid any dividend or
made
any distribution with respect to its
capital stock (whether in cash or in kind)
or redeemed, purchased, or otherwise
acquired any of its capital stock;
(n) Target has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to
its property in excess of $50,000, per
occurrence or in the aggregate;
(o) Target has not made any loan to, or entered into any other
transaction with, any of its directors,
officers, and employees outside the
Ordinary Course of Business;
(p) Target has not entered into any employment contract or
collective
bargaining agreement, written or oral, or
modified the terms of any existing
such contract or agreement;
(q) Target has not granted any increase in the base compensation
of
any of its directors, officers, and
employees outside the Ordinary Course of
Business;
(r) Target has not adopted, amended, modified, or terminated, to
any
material extent any bonus, profit-sharing,
incentive, severance, or other plan,
contract, or commitment for the benefit of
any of its directors, officers, and
employees (or taken any such action with
respect to any other Employee Benefit
Plan);
(s) Target has not made any other material change in employment
terms
for any of its directors, officers, and
employees outside the Ordinary Course
of Business;
(t) Target has not made or pledged to make any charitable or
other
capital contribution outside the Ordinary
Course of Business; and
(u) Target has not committed to do any of the foregoing.
3.11 Undisclosed Liabilities. Except as disclosed on Schedule
3.16(b),
Target has no Liability (and to the
Knowledge of Seller and Target, there is no
Basis for any present or future action,
suit, proceeding, hearing,
investigation, charge, complaint, claim, or
demand against any of them giving
rise to any Liability), except for (i)
Liabilities set forth on the face of the
Interim Balance Sheet (rather than in any
notes thereto), (ii) Liabilities
which have arisen after the Most Recent
Fiscal Month End in the Ordinary Course
of Business (none of which results from,
arises out of, relates to, is in the
nature of, or was caused by any material
breach of contract, material breach of
warranty, tort, infringement, or material
violation of Law) and (iii) other
Liabilities which will not have a material
adverse effect on the business,
financial condition, operations or results
of operations of Target, or on the
future operation of the business of Target
if conducted in the same manner as
presently conducted.
3.12 Legal Compliance. Target and its Affiliates have, and to
the
Knowledge of Seller and Target the
predecessors of Target have, complied at all
times with all applicable Laws,
Governmental Approvals and Governmental Orders,
including without limitation the Gaming
Laws, Gaming Licenses and Liquor
Licenses. No action, suit, proceeding,
hearing, investigation, charge,
complaint, claim, demand, or notice has
been filed or commenced against Target
alleging any failure so to comply, and
neither Seller nor Target has Knowledge
of any such threatened action, suit,
proceeding, hearing, investigation,
charge, complaint, claim or demand. Without
limiting the generality of the
foregoing:
(a) Target has and will, immediately prior to Closing have, in
full
force and effect, all Governmental
Approvals necessary for it to own and
operate its assets, properties and
businesses as now conducted. No action,
suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or
notice has been filed or commenced against
Target relating to the revocation,
suspension, conditioning or failure of
renewal of such Governmental Approvals,
and neither Seller nor Target has Knowledge
of any such threatened action,
suit, proceeding, hearing, investigation,
charge, complaint, claim or demand.
(b) Target has maintained and will at all times prior to
Closing
maintain reserves for working capital,
capital improvements, replacements and
contingencies to the extent, and in the
amounts, required by Gaming Laws,
including any cash reserve requirements
thereunder in the Ordinary Course of
Business, consistent with past practice (so
long as such Ordinary Course of
Business and past practice is consistent
with the minimum requirements of Law).
(c) From and after the Acquisition Target has never, and to the
Knowledge of Seller prior to the
Acquisition Target has never: (i) applied for
a casino, racing or other Gaming License,
or a Liquor License, which was
denied; (ii) experienced any revocation or
failure to renew or maintain any
such license; or (iii) withdrawn or not
applied for any such license or renewal
after being informed (orally or in writing)
that issuance or renewal of such
license would be denied if applied for.
(d) Target has delivered to Buyer, and will provide Buyer with,
subject to applicable Laws, reasonable
access to, copies of all correspondence
with the Nevada Gaming Authorities relating
to Target's compliance with the
Gaming Laws and the rules and regulations
of the Nevada Gaming Authorities and
the terms of its Gaming License. Neither
Seller nor Target has Knowledge of any
threatened action, suit, proceeding,
hearing, investigation, charge, complaint,
claim or demand relating to the revocation,
suspension, conditioning or failure
of renewal of any such Gaming License, or
relating to disciplinary action
against Target or any director, officer,
employee or stockholder of Target.
(e) Seller and the respective directors, officers, employees
and
stockholders of Seller and Target has and
will have, immediately prior to
Closing, in full force and effect, all
Governmental Approvals necessary for
Seller to own the Target Shares. No action,
suit, proceeding, hearing,
investigation, charge, complaint, claim,
demand, or notice has been filed or
commenced against Seller and the respective
directors, officers, employees and
stockholders of Seller and Target relating
to the revocation, suspension,
conditioning or failure of renewal of such
Governmental Approvals, and neither
Seller nor Target has Knowledge of any such
threatened action, suit,
proceeding, hearing, investigation, charge,
complaint, claim or demand.
(f) Neither Target, Seller nor any of their respective
directors,
officers, employees or stockholders has
received any claim, demand, notice,
complaint or order relating to any
violation of Gaming Laws in connection with
the operation of Target's businesses. There
are no facts relating to the
operation of Target's businesses that, if
known to the Nevada Gaming
Authorities, would result in the
revocation, suspension, conditioning or
failure of renewal of any Governmental
Approvals of Target, Seller or any of
their respective directors, officers,
employees or stockholders.
(g) Neither Target, Seller nor, to the Knowledge of Target and
Seller,
any of their respective directors,
officers, employees or stockholders has made
any payments to any Person in connection
with Target's business or assets,
which violate applicable Laws.
3.13 Tax Matters.
(a) Except as
set forth on Schedule 3.13(a), all Tax Returns required
to be filed by Target or its Affiliates, as
applicable, on or prior to Closing
Date have been properly completed and filed
on a timely basis, and all such Tax
Returns were correct and complete in all
respects. All Taxes previously due and
owing from or by Target (whether or not
shown on any Tax Return) have been
paid. Target is not currently the
beneficiary of any extension of time within
which to file any Tax Return. There are no
ongoing or scheduled audits or
investigations relating to any Taxes or Tax
Returns of Target. Target has
withheld and paid all Taxes required to
have been withheld and paid in
connection with amounts paid or owing to
any employee, independent contractor,
creditor, stockholder, or other third
party.
(b) With respect to all Taxes imposed on Target by, or for
which
Target is or could be liable to, taxing
authorities which relate to taxable
periods or portions of periods ending on or
before the Closing Date, all such
amounts required to be paid to taxing
authorities or others on or before the
Closing Date have been or shall paid or
adequately reflected on the Interim
Financial Statements.
(c) Except as set forth on Schedule 3.13(c), no issues have
been
raised (or are currently pending) by any
taxing authority in connection with
any Tax Return of Target, and no waivers of
statutes of limitation with respect
to any such Tax Returns have been given by
Seller, Target or its Affiliates, as
applicable, that have not expired or been
revoked and no waivers of statute of
limitations have been requested from
Target. Since January 23, 2004, no claim
has ever been made by a taxing authority in
a jurisdiction where Target does
not file Tax Returns that it is or may be
subject to taxation by that
jurisdiction. Neither Seller nor Target
expects any taxing authority to assess
any additional Taxes for any period for
which Tax Returns have been filed.
There is no dispute or claim concerning any
Tax Liability of Target either (A)
claimed or raised by any taxing authority
in writing or (B) as to which Seller
or Target has Knowledge.
(d) Target has not made any payments, is not obligated to make
any
payments, and is not a party to any
agreement that under certain circumstances
could obligate it to make any payments that
will not be deductible under Code
ss.280G. Target has disclosed on its
federal income Tax Returns all positions
taken therein that could give rise to a
substantial understatement of federal
income Tax within the meaning of Code
ss.6662. Target is not currently a party
to any Tax allocation or sharing agreement,
and all of Target's Liabilities
under previous Tax allocation or sharing
agreements have been fully terminated
and released. Target has no Liability for
the Taxes of any Person (other than
Target) under GNL Stock Purchase Agreement
13 Reg. ss.1.1502-6 (or any similar
provision of state, local, or foreign law),
as a transferee or successor, by
contract, or otherwise.
(e) There are no Security Interests for Taxes (other than for
current
Taxes not yet due and payable and taxes
being contested pursuant to appropriate
proceedings for which adequate reserves
have been established) on any of the
assets of Target.
(f) Target is a QSSS under the Code.
(g) Neither Seller nor Target is a person other than a United
States
person within the meaning of the Code.
3.14 Title to Assets. Except as set forth on Schedule 3.14, Target
has
good and marketable title to, or a valid
leasehold interest in, the properties
and assets used by it, located on the Real
Property, or shown on the Interim
Balance Sheet or acquired after the date
thereof, free and clear of all
Security Interests, except for properties
and assets disposed of in the
Ordinary Course of Business since the date
of the Interim Balance Sheet.
3.15 Real Property.
(a) Schedule 3.15 lists and describes briefly all real property
that
Target owns, excluding the Bullhead
Facility. With respect to the Real
Property, except as set forth on Schedule
3.15(a):
(i) Target has good, marketable and indefeasible fee title to
the parcel of real property, free and clear of any Security
Interest,
easement, covenant, or other restriction, except for installments
of
special assessments not yet delinquent and recorded easements,
covenants, and other restrictions which do not impair the current
use,
occupancy, or value, or the marketability of title, of the Real
Property;
(ii) there are no pending or, to the Knowledge of Seller and
Target, threatened condemnation proceedings, lawsuits, or
administrative actions relating to the Real Property or other
matters
adversely affecting the current use, occupancy, or value of the
Real
Property;
(iii) the buildings and improvements located on the Real
Property are located within the boundary lines of the Real
Property,
are not in violation
of applicable setback requirements, zoning Laws
and ordinances (and none of the properties or buildings or
improvements thereon are subject to "permitted non-conforming use"
or
"permitted nonconforming structure" classifications), and do
not
encroach on any easement which may burden the Real Property, and
the
Real Property does not serve any adjoining property for any
purpose
inconsistent with the use of the Real Property, and the Real
Property
is not located within any flood plain or subject to any similar
type
restriction for which any permits or licenses necessary to the
use
thereof have not been obtained;
(iv) all facilities located on the Real Property have
received all Governmental Approvals required in connection with
the
ownership or operation thereof and have been operated and
maintained
in accordance with applicable Laws, rules, and regulations,
including
without limitation as may be applicable to the operation of
hotels,
restaurants, casinos and businesses generally;
(v) except as disclosed on Schedule 3.15(a)(v) and other than
those with respect to guests, customers and invitees of the
hotel,
casino and restaurant operations located on the Real Property in
the
Ordinary Course of Business, there are no leases, subleases,
licenses,
concessions, or other agreements, written or oral, granting to
any
party or parties the right of use or occupancy of any portion of
the
Real Property;
(vi) there are no outstanding options or rights of first
refusal to purchase the Real Property, or any portion thereof
or
interest therein;
(vii) other than those with respect to guests, customers and
invitees of the hotel, casino and restaurant operations located on
the
Real Property in the Ordinary Course of Business, and other
than
tenants under any leases disclosed in Schedule 3.15(a)(v) who are
in
possession of space to which they are entitled, there are no
parties
other than Target in possession of the Real Property;
(viii) all facilities located on the Real Property are
supplied with utilities and other services necessary for the
operation
of such facilities, including gas, electricity, water,
telephone,
sanitary sewer, and storm sewer, all of which services are adequate
in
accordance with their current use and all applicable Laws,
ordinances,
rules, and regulations and are provided via public roads or via
permanent, irrevocable, appurtenant easements benefitting the
Real
Property; and
(ix) the Real Property abuts on and has direct vehicular
access to a public road, or has access to a public road via a
permanent, irrevocable, appurtenant easement benefitting the parcel
of
real property, and access to the property is provided by paved
public
right-of-way with adequate curb cuts available.
(b) There is no real property leased or subleased to Target in
connection with the operation of its
assets, properties and businesses.
3.16 Intellectual Property.
(a) Target owns or has the right to use pursuant to license,
sublicense, agreement, or permission all
Intellectual Property necessary for
the operation of the businesses of Target
as presently conducted, all of which
are listed and described on Schedule
3.16(a). Except with respect to the
Intellectual Property which is the subject
of the License Agreement (the
"Excluded IP"), each item of Intellectual
Property owned or used by Target
immediately prior to the Closing hereunder
will be owned or available for use
by Target on substantially similar terms
and conditions immediately subsequent
to the Closing hereunder. Target has taken
all necessary action to maintain and
protect each item of Intellectual Property
that it owns or uses.
(b) Except as set forth on Schedule 3.16(b), Target has not
interfered
with, infringed upon, misappropriated, or
otherwise come into conflict with any
Intellectual Property rights of third
parties, and neither Seller nor Target
have ever received or has any Knowledge of
any charge, complaint, claim,
demand, or notice alleging any such
interference, infringement,
misappropriation, or violation (including
any claim that any of Target must
license or refrain from using any
Intellectual Property rights of any third
party). To the Knowledge of Seller and
Target, no third party has interfered
with, infringed upon, misappropriated, or
otherwise come into conflict with any
Intellectual Property rights of Target.
(c) Schedule 3.16(c) identifies each item of Intellectual
Property
that any third party owns and that Target
uses pursuant to license, sublicense,
agreement, or permission. Seller has
delivered to Buyer correct and complete
copies of all such licenses, sublicenses,
agreements, and permissions (as
amended to date). With respect to each item
of Intellectual Property required
to be identified in Schedule 3.16(c):
(i) the license, sublicense, agreement, or permission
covering the item is the legal, valid and binding obligation of
Target, and, to the Knowledge of Seller and Target (which
Knowledge
shall not include, for purposes of this subsection, any requirement
of
investigation other than an internal investigation of Seller
and
Target), the legal, valid and binding obligation of the other
parties
thereto, and is in full force and effect;
(ii) except with respect to the Excluded IP, the license,
sublicense, agreement, or permission will continue to be legal,
valid
and binding obligation of Target, and, to the Knowledge of Seller
and
Target (which Knowledge shall not include, for purposes of this
subsection, any requirement of investigation other than an
internal
investigation of Seller and Target), any, the legal, valid and
binding
obligation of the other parties thereto, and in full force and
effect
on substantially similar terms following the consummation of
the
transactions contemplated hereby;
(iii) except as set forth in Section 3.16(b), Target is not
in breach or default the license, sublicense, agreement, or
permission, and no event has occurred which with notice or lapse
of
time would constitute a breach or default or permit
termination,
modification, or acceleration thereunder;
(iv) no other party to the license, sublicense, agreement, or
permission is in material breach or default thereunder, and no
event
has occurred which with notice or lapse of time would constitute
a
material breach or default or permit termination, modification,
or
acceleration thereunder;
(v) Target
has not repudiated any provision of the license,
sublicense, agreement, or permission;
(vi) to the Knowledge of Seller and Target (which Knowledge
shall not include, for purposes of this subsection, any requirement
of
investigation other than an internal investigation of Seller
and
Target), no other party to the license, sublicense, agreement,
or
permission has repudiated any provision thereof;
(vii) with respect to each sublicense, the representations
and warranties set forth in subsections (i) through (iv) above
are
true and correct with respect to the underlying license;
(viii) to the Knowledge of Seller and Target, the underlying
items of Intellectual Property are not subject to any
outstanding
injunction, judgment, order, decree, ruling, or charge;
(ix) to the Knowledge of Seller and Target, no action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
or
demand is pending or threatened which challenges the legality,
validity, or enforceability of the underlying item of
Intellectual
Property; and
(x) Target has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or
permission.
(d) With respect to all trade secrets and confidential business
information included within Target's
Intellectual Property, such as the "Golden
Nugget Laughlin Customer Information"
referenced on Schedule 3.16(a), Target
has the absolute right to use such trade
secrets and confidential business
information, and the documentation relating
to such trade secret and
confidential business information is
current, accurate and sufficient in detail
and content to identify and explain it and
to allow its full and proper use
without reliance on the knowledge or memory
of any individual.
(e) Use by Target of the Intellectual Property listed and described
on
Schedule 3.16(a) in a manner consistent
with the operation of the businesses of
Target as presently conducted will not,
except as disclosed on Schedule
3.16(b), interfere with, infringe upon,
misappropriate, or otherwise come into
conflict with, any Intellectual Property
rights of third parties. Except as
disclosed on Schedule 3.16(b), and to the
Knowledge of Seller and Target, use
by Target of the Intellectual Property
listed and described on Schedule 3.16(c)
does not and will not interfere with,
infringe upon, misappropriate, or
otherwise come into conflict with, any
Intellectual Property rights of third
parties as a result of the continued
operation of its businesses as presently
conducted.
3.17 Tangible Assets.
(a) Target owns or leases all buildings, machinery, equipment,
and
other tangible assets necessary for the
conduct of its businesses as presently
conducted. Each such tangible asset is free
from defects (patent and latent),
has been maintained in accordance with
normal industry practice, is in good and
safe operating condition and repair
(subject to normal wear and tear which
would not negate the foregoing statement
regarding condition and repair), and
is suitable for the purposes for which it
presently is used. Except as
disclosed on Schedule 3.17(a), all such
tangible assets are located at the Real
Property.
(b) Schedule 3.17(b) sets forth (i) each owned tangible asset
(other
than inventory and supplies) having an
acquisition cost of $50,000 or greater,
or which has an acquisition cost of less
than $50,000 but which is material to
the business and operations of Target; (ii)
each leased tangible asset having a
lease cost of $25,000 per year or which has
a yearly lease cost of less than
$25,000 but which is material to the
business and operations of Target; and
(iii) each live gaming device, each
electronic gaming device and each item of
gaming-related equipment.
3.18 Inventory and Supplies. Target maintains and currently
possesses
sufficient items of inventory and supplies
for the normal operation of its
business in the Ordinary Course of
Business. To the Knowledge of Seller and
Target, no such items of inventory and
supplies are obsolete, damaged, or
defective, subject only to the reserve for
inventory writedown set forth on the
face of the Interim Balance Sheet (rather
than in any notes thereto) and as
adjusted for the passage of time through
the Closing Date consistent with the
past practice of Target.
3.19 Contracts.
(a) Schedule 3.19(a) lists the following contracts and other
agreements to which Target is a party
(separated according to each of the
subsections below, to the extent a
Disclosure Schedule is required):
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for
lease
payments in excess of $25,000 per annum or is otherwise material
to
the business and operations of Target;
(ii) any agreement (or group of related agreements) for the
purchase or sale of inventory, commodities, supplies, products,
or
other personal property, or for the GNL Stock Purchase Agreement
17
furnishing or receipt of services, the performance of which
will
extend over a period of more than one year, involving consideration
in
excess of $10,000 or is otherwise material to the business and
operations of Target;
(iii) any agreement concerning a partnership or joint
venture;
(iv) any agreement (or group of related agreements) under
which Target has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease
obligation,
in excess of $100,000 or under which it has imposed a Security
Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any
agreement with Seller and its Affiliates;
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan
or
arrangement for the benefit of its current or former directors,
officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, parttime, consulting, or other basis providing
annual
compensation in excess of $50,000 or providing severance
benefits;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside
the
Ordinary Course of Business;
(xi) any agreement under which the consequences of a default
or termination could have a material adverse effect on the
business,
financial condition, operations or results of operations of Target,
or
which would reasonably be expected to have a material adverse
effect
on the future operation of the business of Target if conducted in
the
same manner as presently conducted, and which is not otherwise
disclosed to Buyer in a Disclosure Schedule; or
(xii) any other agreement (or group of related agreements)
the performance of which involves consideration in excess of
$25,000
or is otherwise material to Target and which is not otherwise
disclosed to Buyer in a Disclosure Schedule.
(b) Schedule 3.19(b) identifies all corporate-level contracts
and
agreements of Seller or any Affiliate of
Seller to which Target is a party or
under which Target receives goods, services
or benefits or is otherwise
obligated, and under which contract or
agreement Target will no longer be a
party or receive goods, services, or
benefits after Closing (each, a "Seller
Master Agreement").
(c) Seller has delivered to Buyer a correct and complete copy of
each
written agreement listed in Schedule
3.19(a) and a written summary setting
forth the terms and conditions of each oral
agreement referred to in Schedule
3.19(a). With respect to each such
agreement which is listed or required to be
listed on Schedule 3.19(a): (i) the
agreement is the legal, valid and binding
obligation of Target and is in full force
and effect; (ii) to the Knowledge of
Seller and Target (which Knowledge shall
not include, for purposes of this
subsection, any requirement of
investigation other than an internal
investigation of Seller and Target), the
agreement is the legal, valid and
binding obligation of the other parties
thereto; (iii) the agreement will
continue to be the legal, valid and binding
obligation of Target, and in full
force and effect on identical terms
following the consummation of the
transactions contemplated hereby; (iv) to
the Knowledge of Seller and Target
(which Knowledge shall not include, for
purposes of this subsection, any
requirement of investigation other than an
internal investigation of Seller and
Target), the agreement will continue to be
the legal, valid and binding
obligation of the other parties thereto
following the consummation of the
transactions contemplated hereby; (v) no
party is in material breach or
default, and no event has occurred which
with notice or lapse of time would
constitute a material breach or default, or
permit termination, modification,
or acceleration, under the agreement; (vi)
Target has not repudiated any
provision of the agreement; and (vii) to
the Knowledge of Seller and Target
(which Knowledge shall not include, for
purposes of this subsection, any
requirement of investigation other than an
internal investigation of Seller and
Target), no other party has repudiated any
provision of the agreement.
3.20 Notes and Accounts Receivable. All notes and accounts
receivable
of Target are reflected properly on its
books and records, are valid
receivables subject to no setoffs or
counterclaims, are current and
collectible, and will be collected in
accordance with their terms at their
recorded amounts, subject only to the
reserve for bad debts set forth on the
face of the Interim Balance Sheet (rather
than in any notes thereto) as
adjusted for the passage of time through
the Closing Date in accordance with
the past practice of Target. Schedule 3.20
sets forth a list and aging of all
accounts and notes receivable of Target, as
of the Most Recent Fiscal Month
End.
3.21 Powers of Attorney. Except as set forth on Schedule 3.21,
there
are no outstanding powers of attorney
executed on behalf of Target.
3.22 Insurance.
(a) Schedule 3.22 sets forth a list and description of each
insurance
policy (including policies providing
property, casualty, liability, and
workers' compensation coverage and bond and
surety arrangements) to which
Target is a party, a named insured, or
otherwise the beneficiary of coverage,
which description includes (i) the identity
of the insurer and any insurance
agent for such policy, (ii) the name of the
policyholder, and the name of each
covered insured; (iii) the policy number
and the period of coverage; and (iv)
the scope (including an indication of
whether the coverage was on a claims
made, occurrence, or other basis) and
amount of coverage. Schedule 3.22 also
describes any self-insurance arrangements
affecting Target.
(b) With respect to each such insurance policy: (i) the policy is
in
full force and effect; (ii) neither Target
nor any other party to the policy is
in breach or default (including with
respect to the payment of premiums or the
giving of notices), and no event has
occurred which, with notice or the lapse
of time, would constitute such a breach or
default, or permit termination,
modification, or acceleration, under the
policy; and (iii) to the Knowledge of
Seller and Target, no party to the policy
has repudiated any provision thereof.
3.23 Litigation. Schedule 3.23 sets forth each instance in
which
Target (i) is subject to any outstanding
Governmental Order or (ii) is a party
to or, to the Knowledge of Seller and
Target, is threatened to be made a party
to any action, suit, proceeding, hearing,
or investigation of, in, or before
any Governmental Entity or before any
arbitrator. Except as disclosed on
Schedule 3.23, all of the actions, suits,
proceedings, hearings, and
investigations have arisen in the Ordinary
Course of Business and none of the
actions, suits, proceedings, hearings, and
investigations set forth in Schedule
3.23 would reasonably be expected,
individually or in the aggregate, to have a
material adverse effect on the assets,
business, financial condition,
operations or results of operations of
Target, or the future operation of the
business of Target if conducted in the same
manner as presently conducted.
Except as disclosed on Schedule 3.16(b),
neither Seller nor Target has any
Knowledge of any Basis for any specific
action, suit, proceeding, hearing, or
investigation which may be brought or
threatened against Target and which would
reasonably be expected, individually or in
the aggregate, to have a material
adverse effect on the assets, business,
financial condition, operations or
results of operations of Target, or the
future operation of the business of
Target if conducted in the same manner as
presently conducted.
3.24 Employees.
(a) Schedule 3.24(a)(i) sets forth the name, position and
current
annual compensation of all current
employees of Target, together with the date
and amount of the last compensation
increase for each such person. Except as
set forth on Schedule 3.24(a)(i), all
employees of Target are employees at
will. Except as set forth on Schedule
3.24(a)(ii), no executive, key employee,
or group of employees has given notice of
intent to terminate employment with
Target, and to the Knowledge of Seller and
Target, no executive, key employee,
or group of employees has any plans to
terminate employment with Target.
Schedule 3.24(a)(iii) lists those employees
who are absent from work on short
or long-term disability leave or leave
under the Family and Medical Leave Act
of 1993 or has notified the Company of his
or her intent to take such leave.
There have been no actual or threatened
labor disputes or work stoppages within
the last three years, and, to the Knowledge
of Seller and Target, none are
expected. None of Target's employees are
represented by a union and, to the
Knowledge of Seller and Target, no union
organizing activities have
