Exhibit 10.1
EXECUTION COPY
TRANSITION SERVICES AGREEMENT
BY AND BETWEEN
MGM MIRAGE
AND
POSTER FINANCIAL GROUP, INC.
DATED AS OF OCTOBER 24, 2003
This TRANSITION SERVICES AGREEMENT
(this “Agreement”), dated as of October 24, 2003,
is by and between MGM MIRAGE, a Delaware corporation
(“Parent”), and Poster Financial Group, Inc., a Nevada
corporation (“Purchaser”), subject to the provisions of
Section 8.
WHEREAS, Purchaser, Parent, Mirage
Resorts, Incorporated, a Nevada corporation (“Seller”),
GNLV, CORP., a Nevada corporation (“GNLV”), GNL, CORP.,
a Nevada corporation (“GNL”), and Golden Nugget
Experience, LLC, a Nevada limited liability company
(“GNELLC”), are parties to that certain Stock Purchase
Agreement (the “Purchase Agreement”), dated as of
June 24, 2003, as amended from time to time, whereby, among
other things, Purchaser is purchasing all the issued and
outstanding Shares from Seller;
WHEREAS, the MGM Acquired Entities
have used certain services provided by Parent and its subsidiaries
and divisions (other than the MGM Acquired Entities, collectively,
the “MGM Group”) under the terms of a Management
Agreement in the case of (1) GNLV and GNELLC, effective as of
January 1, 1985, by and between Golden Nugget, Inc. (the
former name of Mirage Resorts, Incorporated) and GNLV (the
“GNLV Management Agreement”), and (2) GNL, effective as
of September 30, 1988, by and between Golden Nugget, Inc. (the
former name of Mirage Resorts, Incorporated) and GNL (the
“GNL Management Agreement” and together with the GNLV
Management Agreement, the “Management Agreements”) or
by third parties under contract to members of the MGM
Group;
WHEREAS, the parties have recognized
under Section 5.17 of the Purchase Agreement the existing
operational interdependencies among the MGM Group, on the one hand,
and the MGM Acquired Entities, on the other hand, and the parties
have agreed that it would be appropriate and in their respective
best interests that members of the MGM Group continue to provide
those services to the MGM Acquired Entities for a transitional
period, subject to the terms and conditions of this Agreement;
and
WHEREAS, in connection with
Section 5.17 of the Purchase Agreement and in light of the
termination of the Management Agreements upon consummation of the
Closing, Purchaser and the MGM Acquired Entities desire that the
MGM Group provide, or cause to be provided, to the MGM Acquired
Entities, and the MGM Group is willing to provide, or cause to be
provided, to the MGM Acquired Entities, the transition services set
forth in the Schedules attached hereto for a transitional period,
subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of
the foregoing recitals and the mutual covenants and agreements
contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as
follows:
1.
Agreement to Provide Transition
Services .
1.1
Agreement . Upon the terms and subject to the
conditions contained in this Agreement, the MGM Group hereby agrees
to provide, or cause to be provided, to the MGM Acquired Entities
the Transition Services (as defined herein) upon consummation of
the Closing
and for the transition period with respect to
the applicable Transition Service as set forth in
Section 1.4(b) (each a “Transition Period”), and
the MGM Acquired Entities agree to pay the Service Costs (as
defined herein) for such Transition Services as set forth herein
during the applicable Transition Period.
1.2
Transition Services
. In this Agreement, the term
“Transition Services” shall mean and refer to the (a)
Race and Sports Book Transition Services set forth on
Schedule A attached hereto, (b) Retail and Inventory
Management Transition Services set forth on Schedule B
attached hereto, (c) Marketing Transition Services set forth on
Schedule C attached hereto, (d) LaBrea Bakery Transition
Services set forth on Schedule D attached hereto, (e)
Horticulture Transition Services set forth on Schedule E
attached hereto, (f) Information System Services Transition
Services set forth on Schedule F attached hereto and (g)
Customer Databases Transition Services set forth on Schedule G
attached hereto (as such Schedules may be amended or modified from
time to time as provided herein).
1.3
Additional Services
. The parties have each
exerted their best efforts to identify each material service to be
provided by the MGM Group to the MGM Acquired Entities during the
Transition Period with respect to the applicable Transition
Services as set forth in Section 1.4 and to address such
services in this Agreement. However, the parties acknowledge
that there may be material services that they would have intended
to be included that have inadvertently been omitted from this
Agreement. The parties agree to cooperate and negotiate in
good faith using Commercially Reasonable Efforts in order to come
to an agreement regarding the continued provision of such material
services that have inadvertently been omitted from this Agreement,
on terms that are acceptable to the parties. Subject to
compliance by the MGM Group with the preceding sentence, Purchaser
and the MGM Acquired Entities acknowledge that they may not reach
an acceptable arrangement with the MGM Group to provide any
additional services. Notwithstanding anything in this
Section 1.3 to the contrary, the parties acknowledge and agree
that they have previously discussed and considered the list of
services set forth on Schedule H attached hereto and that none
of such services were inadvertently omitted from the Schedules to
this Agreement, and therefore, would not be eligible to be
considered as “additional” services; provided
that the foregoing shall not preclude the provision of any
service listed on Schedule H attached hereto solely to the
extent it is expressly included in the Transition
Services.
1.4
Term of Agreement
.
(a)
Unless terminated earlier pursuant
to Section 1.5, this Agreement will terminate and be of no
further force or effect immediately as of the time and date that
the last remaining Transition Period with respect to the applicable
Transition Service as set forth in Section 1.4(b), as any such
Transition Period shall have either expired or been terminated or
may have been extended pursuant to amendments hereto;
provided that upon termination or expiration of this
Agreement, (i) neither party shall be relieved of any liability for
any breach or nonfulfillment of any provision of this Agreement and
(ii) Section 2, Section 6, Section 7,
Section 11.4, Section 11.5, Section 11.11,
Section 11.12, Section 11.13, Section 11.18 and
Section 11.19 shall survive any termination or expiration of
this Agreement.
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(b)
The Transition Period for Race and
Sports Book Transition Services shall commence upon consummation of
the Closing and shall expire, unless otherwise set forth in
Schedule A, on the earlier to occur of (i) twelve (12) months
from the Closing Date and (ii) termination by Purchaser. The
Transition Period for Retail and Inventory Management Transition
Services shall commence upon consummation of the Closing and shall
expire on the earlier to occur of (i) nine (9) months from the
Closing Date and (ii) termination by Purchaser. The
Transition Period for Marketing Transition Services shall commence
upon consummation of the Closing and shall expire upon the
occurrence of a “Change of Control” under the terms of
the indenture governing the senior secured notes issued as part of
the Financing on or prior to the Closing Date. The Transition
Period for LaBrea Bakery Transition Services shall commence upon
consummation of the Closing and shall expire on the earlier to
occur of (i) nine (9) months from the Closing Date and (ii)
termination by Purchaser. The Transition Period for
Horticulture Transition Services shall commence upon consummation
of the Closing and shall expire on the earlier to occur of (i) nine
(9) months from the Closing Date and (ii) termination by
Purchaser. The Transition Period for Information System
Services Transition Services shall commence upon consummation of
the Closing and shall expire in accordance with the terms set forth
on Schedule F attached hereto. The Transition Period for
Customer Databases Transition Services shall commence upon
consummation of the Closing and shall expire in accordance with the
terms set forth on Schedule G attached hereto.
1.5
Termination or Phase-Out of
Transition Services .
(a)
Purchaser and the MGM Acquired
Entities shall have the unconditional right, in their sole and
absolute discretion, to direct in writing that any or all (or any
component service making up a part of a particular Transition
Service) of the Transition Services be terminated effective on a
date established by Purchaser or the MGM Acquired Entities (the
“Early Termination”) that is (i) at least ten Business
Days after the date Purchaser or the MGM Acquired Entities provided
notice of Early Termination and (ii) prior to the termination date
for such Transition Service specified for such Transition
Service. Any Early Termination shall be final, and the
amounts payable by the MGM Acquired Entities hereunder with respect
to such terminated Transition Service shall be appropriately
prorated in accordance with Section 2.2. Subject to
compliance with subsection (i) above and the preceding
sentence, Purchaser and the MGM Acquired Entities shall not be
subject to any Liability or Loss for the Early Termination.
In the event one or more, but less than all, of the Transition
Services (or any component service making up a part of a particular
Transition Service) is terminated or phased-out, this Agreement
will continue in full force and effect with respect to any of the
Transition Services (or any component service making up a part of a
particular Transition Service) not so discontinued, subject to the
applicable Transition Period for such Transition
Service.
(b)
This Agreement may be terminated as
follows: (i) by either party immediately in the event the other
party has been adjudicated bankrupt, has failed to vacate an
involuntary bankruptcy or reorganization petition within sixty (60)
days of the date of such filing, files such a petition on a
voluntary basis, fails to vacate the appointment of a receiver or
trustee for such party or for a substantial portion of its assets,
makes an assignment for the benefit of such party’s creditors
or ceases to do business as a going concern; (ii) by Purchaser and
the MGM Acquired Entities upon written notice to Parent in the
event that any member of the MGM Group breaches any material term
of this Agreement if such member of the MGM Group
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fails to remedy such breach within the cure
period set forth in Section 11.1; or (iii) by the MGM Group
upon written notice to Purchaser in the event that Purchaser and/or
the MGM Acquired Entities breaches any material term of this
Agreement if Purchaser and/or the MGM Acquired Entities fails to
remedy such breach within the cure period set forth in
Section 11.1.
(c)
Each party acknowledges that each
other party and their respective Affiliates are engaged in
businesses that are or may be subject to and exist because of
privileged licenses issued by Governmental Entities. If any
party or any parent, subsidiary or other Affiliate of any party is
directed to cease doing business with any other party by any
Governmental Entity, or if any party shall determine, in such
party’s reasonable and informed judgment, that any other
party or any of its officers, directors, key employees, agents or
representatives (i) is or might be engaged in, or is about to be
engaged in, any activity or (ii) was or is involved in any
relationship, either of which would or does jeopardize any other
party’s licenses, or those of a parent, subsidiary or other
Affiliate, or if any such license is threatened to be or is denied,
suspended or revoked, then this Agreement may be terminated by the
affected party, without further liability to any other party upon
written notice to the party causing such action to be taken;
provided that the terminating party shall be entitled
to receive all fees, credits and other amounts that have accrued or
otherwise become due but are unpaid at the time of
termination.
2.
Payment for Transition
Services .
2.1
Service Costs
. In consideration for the MGM
Group’s provision of the Transition Services, the MGM
Acquired Entities (on a basis apportioned by Purchaser) shall, and
Purchaser shall cause the MGM Acquired Entities to, reimburse the
member of the MGM Group specified on the invoice due for the costs
of providing the applicable Transition Service (the “Service
Costs”). The payment obligations of the MGM Acquired
Entities to the MGM Group are joint and several, notwithstanding
any apportionment by Purchaser. The Service Costs shall be
determined in accordance with the corresponding Schedule for
such Transition Service; provided that in no event
shall Service Costs include any cost, expense, fee, charge or other
amount (a) with respect to any item, service, property or other
matter for which the MGM Group is otherwise obligated to pay under
the Purchase Agreement or (b) relating to any obligation, covenant
or agreement of the MGM Group pursuant to the Purchase Agreement
for which the MGM Group is obligated to pay under the Purchase
Agreement.
2.2
Reimbursement of Service
Costs . Within
twenty (20) days after the end of each calendar month during the
Transition Period, Parent shall invoice Purchaser for Service
Costs; provided that any non-bad faith failure of
Parent to provide to Purchaser an invoice within said twenty (20)
day period shall not waive Parent’s right to thereafter
provide an invoice to Purchaser and Parent’s entitlement to
receive payment in respect thereof in accordance with the terms of
this Agreement. Such invoices shall set forth in reasonable
detail the Transition Services provided during such month and the
Service Costs payable by the MGM Acquired Entities therefor.
All invoices shall be paid not later than thirty (30) calendar days
following receipt by Purchaser of Parent’s invoice in
accordance with the written instructions provided by Parent to
Purchaser; provided that no such payment by Purchaser
or any of the MGM Acquired Entities shall be deemed to be a waiver
by Purchaser or any of the MGM Acquired Entities of its rights
under Section 2.3. Notwithstanding anything in this
Section 2.2 to the contrary, (a) Parent
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shall invoice on a weekly basis GNLV and GNL for
goods purchased for GNLV’s and GNL’s retail stores and
delivered to the GNLV and GNL retail stores or the MGM Group
corporate retail warehouse and (b) invoices for these amounts shall
be paid not later than ten (10) calendar days following receipt by
Purchaser of Parent’s invoice in accordance with the written
instructions provided by Parent to Purchaser; provided
that no such payment by Purchaser or any of the MGM Acquired
Entities shall be deemed to be a waiver by Purchaser or any of the
MGM Acquired Entities of its rights under Section 2.3.
In the event goods purchased for GNLV’s and GNL’s
retail stores are delivered to the MGM Group corporate retail
warehouse, unless instructed by management of GNLV or GNL, as the
case may be, to the contrary, such goods shall be promptly
delivered to the GNLV and GNL retail stores. The amount of
any Service Costs shall be prorated to the extent necessary on an
invoice to reflect the portion of the specified time period for
which Transition Services were actually rendered vis a vis
the applicable billing cycle time period. All amounts payable
by Purchaser and the MGM Acquired Entities for the Transition
Services rendered pursuant to this Agreement shall be remitted in
United States dollars.
2.3
Audits; Objections
. The members of the MGM Group
providing Transition Services shall keep records of the Transition
Services provided by or on their behalf and supporting
documentation of all costs incurred in providing, or causing to be
provided, the Transition Services. Subject to
Section 11.13 and applicable Gaming Laws, Purchaser and the
MGM Acquired Entities shall have the right, upon reasonable prior
written notice and at Purchaser’s and the MGM Acquired
Entities’ expense, to review the books and records of the MGM
Group solely with respect to the MGM Group’s obligations
under this Agreement and to confer with employees of the MGM Group
responsible for providing or supervising the Transition Services to
review the accuracy of any of the invoices provided to Purchaser
hereunder (during regular business hours and without unreasonably
disrupting the MGM Group’s normal operations). In the
event that Purchaser or any of the MGM Acquired Entities disputes
any such invoice or the amount of any such remittances, Purchaser
or any of the MGM Acquired Entities shall deliver a written
statement describing the dispute to Parent within thirty (30) days
following receipt of the disputed invoice. The statement
shall provide a reasonably detailed description of the disputed
items. Upon delivery of the written statement, Parent and
Purchaser and the applicable MGM Acquired Entity shall cooperate
and negotiate in good faith and use Commercially Reasonably Efforts
to resolve such disputed charges. If they are unable to
resolve such disputed charges within thirty (30) days of delivery
of the written statement, Purchaser or the applicable MGM Acquired
Entity may elect, by written notice to Parent within ten (10) days
following the end of such thirty (30) day period, to have an
Independent Accounting Firm (selected in accordance with
Section 2.5(b) of the Purchase Agreement) review all the
supporting information of the MGM Group as may be reasonably
requested by such Independent Accounting Firm to determine the
correctness of the disputed charges. The MGM Group shall give
the Independent Accounting Firm access at all reasonable times to
the books and records, employees and independent contractors of the
MGM Group responsible for providing or supervising the Transition
Services. The Independent Accounting Firm shall be instructed
to use every reasonable effort to perform its services within
thirty (30) days of its selection and, in any case, as promptly as
practicable after its selection. The determination of the
Independent Accounting Firm shall be conclusive and binding on the
parties. Any expenses relating to the engagement of the
Independent Accounting Firm shall be paid by Purchaser and Parent
in proportion to the percentage of the dollar value of the disputed
items prevailed upon by each
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Person. Except as set forth in the
previous sentence, each of Purchaser and Parent shall pay all
advisors’ fees, charges and expenses incurred by such Person
in connection with the dispute. If Purchaser or the MGM
Acquired Entities fails to make an election within the ten (10) day
period following the end of such thirty (30) day period, the MGM
Acquired Entities shall be liable for the full amount of such
disputed notice.
3.
Service Standards; Disclaimer of
Warranties; Scope of Services .
(a)
Except as otherwise specified in
this Agreement, as a general principle, the MGM Group shall, and
shall cause its independent contractors to, perform, or cause to be
performed, the Transition Services consistent with past
practice. Subject to the foregoing sentence and except as
otherwise set forth in this Agreement, the MGM Group shall not be
in breach of this Agreement or have any Liability of any nature
whatsoever to Purchaser and the MGM Acquired Entities in connection
with the performance of this Agreement, and Purchaser and the MGM
Acquired Entities shall be solely responsible for all losses,
damages, costs and expenses of whatever nature incurred by
Purchaser and the MGM Acquired Entities in connection with the
performance of this Agreement by the MGM Group, except to the
extent that such losses, damages, costs and expenses are
attributable to gross negligence, bad faith or willful misconduct
on the part of the MGM Group or any of their respective directors,
officers or employees.
(b)
EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, THERE ARE NO OTHER REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, MADE OR GIVEN BY EITHER PARTY HEREUNDER,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF ANY TRANSITION SERVICES PROVIDED
HEREUNDER.
4.
Force Majeure
. Any delays in or failure of
performance of the Transition Services shall not constitute a
default hereunder if and to the extent such delay or failure of
performance is caused by occurrences beyond the control of the
member of the MGM Group providing such Transition Service.
Parent shall (a) promptly notify Purchaser and the applicable
member of the MGM Acquired Entities in writing and furnish all
relevant information concerning the event of force majeure, (b) use
Commercially Reasonable Efforts to avoid or remove the cause of
nonperformance, (c) cause members of the MGM Group to
provide
