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General Partnership Interest Purchase Agreement

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Sectors: Leisure and Entertainment
Governing Law: Texas, View Texas State Laws
Effective Date: April 01, 1997
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Exhibit 10.22


GENERAL PARTNERSHIP INTEREST PURCHASE AGREEMENT


THIS GENERAL PARTNERSHIP INTEREST PURCHASE AGREEMENT (this "AGREEMENT") is made as of the first day of April, 1997, by and between HWCC-AURORA MANAGEMENT, INC., an Illinois corporation (the "BUYER"), and PPI CORPORATION, a New Jersey corporation (the "SELLER").


RECITALS
--------


1. The Seller desires to sell, assign and transfer to the Buyer, and the Buyer desires to purchase and assume from the Seller, the general partnership interest of the Seller (the "GP INTEREST") in Pratt Management, L.P., a Delaware limited partnership (the "PARTNERSHIP").


2. The parties wish to set forth their agreement with respect to the purchase and sale of the GP Interest and other matters.


AGREEMENT
---------


NOW THEREFORE, in consideration of the foregoing and the mutual covenants and promises herein contained, the parties agree as follows:


1. PURCHASE, SALE, ASSIGNMENT AND ASSUMPTION OF THE GP INTEREST.
-------------------------------------------------------------


1.1 PURCHASE, SALE, ASSIGNMENT AND ASSUMPTION. Subject to the
------------------------------------------- terms and conditions hereof, at the Closing (as defined in Section 1.3 hereof) the Seller shall sell, assign, convey and otherwise transfer to the Buyer, and the Buyer shall purchase and assume from the Seller, all right, title, interest and obligations of Seller in, to and under the entire GP Interest, free and clear of any and all security interests, liens, claims, agreements, obligations and encumbrances of any nature whatsoever other than those specified in the Agreement of Limited Partnership of the Partnership dated as of February 17, 1994 (the "PARTNERSHIP AGREEMENT"), and the Seller agrees to cause the Partnership Agreement to be amended to admit the Buyer as a substituted general partner of the Partnership.


1.2 PURCHASE PRICE. In consideration of the sale, assignment and
---------------- transfer of the GP Interest pursuant to Section 1.1 hereof, the Buyer will pay to the Seller Eleven Million Seven Hundred Forty-Six Thousand Six-Hundred Sixty Four Dollars ($11,746,664) (the "PURCHASE PRICE"), to be paid by the Buyer to the Seller at the Closing (as defined below), as follows:


(A) the Buyer will issue to the Seller a promissory note in the form of Exhibit 1 attached hereto (the "NOTE"), in the principal amount of Three Million Eight Hundred Thousand Dollars ($3,800,000);


(B) the Buyer will assign to the Seller a portion of the outstanding principal amount of that certain PPI Funding Corp. 14 7/8% Secured Promissory Note due 2006 in the original principal amount of One Hundred Ten Million Six Hundred Thirty-Five Thousand Seven Hundred Thirty-Nine Dollars and Forty Cents ($110,635,739.40) the ("PPI FUNDING NOTE") equal to Thirteen Million Seven Hundred Fifty Thousand Dollars ($13,750,000), which, for purposes of the Agreement, will be deemed to have a discounted value of Seven Million Five Hundred Ninety-Six Thousand Six Hundred Sixty-Four Dollars ($7,596,664) as of December 31, 1996; and


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(C) the Buyer will assign to the Seller the right to receive accrued interest in the amount of $350,000 on certain notes receivable in the current aggregate unpaid principal amount of $6,750,000 (the "ACCRUED INTEREST ON NOTES RECEIVABLE") from Greate Bay Casino Corporation (fka Pratt Hotel Corporation), a Delaware corporation which directly owns 100% of the issued and outstanding common stock of the Seller.


1.3 CLOSING. The closing of the transactions contemplated hereby
------- (respectively, the "CLOSING" and the "TRANSACTIONS") shall be held simultaneously with the execution and delivery of this Agreement.


2. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
---------------------------------------------


The Seller, on its own behalf and on behalf of the Partnership, as applicable, represents and warrants to the Buyer, as of the date hereof, as set forth below. THE SELLER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, EXCEPT AS SET FORTH IN THIS SECTION 2.


2.1 AUTHORITY. The Seller possesses full corporate power and
--------- authority to execute and deliver this Agreement and to consummate the Transactions. This Agreement has been duly and validly executed and delivered by the Seller and constitutes the legal, valid and binding obligation of the Seller, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency or other similar laws from time to time in effect which affect the enforcement of creditors' rights generally and by general principles of equity.


2.2 NO VIOLATION. The execution and delivery of this Agreement by
------------ the Seller and the performance by it of the Transactions do not (A) violate any provision of the Certificate of Incorporation or By-laws of the Seller, or the Management Services Agreement, dated as of June 21, 1991, by and between Hollywood Casino-Aurora, Inc. (formerly known as Aurora Riverboats, Inc.) and the Partnership (assignee of the Seller, the successor by merger to Greate Bay Casino Corporation), as amended by that certain First Amendment to Management Services Agreement dated May 14, 1992 (as amended, the "AURORA MANAGEMENT CONTRACT"), or, to the Seller's knowledge, (B) violate any law or regulation of any United States federal, territorial, state or local governmental or regulatory agency or authority (an "AUTHORITY"), (C) require the consent or approval of any Authority which has not been obtained or (D) result in a breach of any provision of, or require the consent or approval of any third party which has not been obtained under, or result in the creation or imposition of any security interest, lien, claim or other encumbrance upon any portion of the assets of the Partnership pursuant to the terms of any contract or agreement to which the Seller or the Partnership is a party, which violation, breach or consent or approval (if not obtained), in the case of each of clause (B) and (C) above, would have a material adverse effect on the business, operations or financial condition of the Partnership or on the Transactions.


2.3 TITLE TO THE GP INTEREST.
-------------------------


(A) The Seller is the record and beneficial owner of and has good and valid title to the GP Interest, free and clear of any and all security interests, liens, claims, agreements, obligations and encumbrances of any nature whatsoever other than those specified in the Partnership Agreement, and the delivery by the Seller of the GP Interest to the Buyer conveys to the Buyer good and valid title to the GP Interest free and clear of all, and does not


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result in the Buyer being subject to any, security interests, liens, claims, agreements, obligations and encumbrances of any nature whatsoever, other than those specified in the Partnership Agreement.


(B) Except as set forth in the Partnership Agreement, neither the Seller has, nor shall the Buyer have immediately after the Closing, any obligation to make any capital contribution, loan or other payment or any other transfer of assets or services to the Partnership.


2.4 STRUCTURE OF THE PARTNERSHIP. The Partnership is comprised
---------------------------- solely of the following two (2) partners: (A) Pratt Casino Corporation, a Delaware corporation ("PCC"), which is the sole limited partner of the Partnership, and (B) the Seller, which is the sole general partner of the Partnership. No other person or entity has, or possesses any rights to acquire, any ownership or equity interest in the Partnership or its capital, profits or distributions.


3. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents
------------------------------------------- and warrants to the Seller that the Buyer possesses full corporate power and authority to execute and deliver this Agreement and to consummate the Transactions. This Agreement has been duly and validly executed and delivered by the Buyer and constitutes the legal, valid and binding obligation of the Buyer, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency or other similar laws from time to time in effect which affect the enforcement of creditors' rights generally and by general principles of equity. The execution and delivery of this Agreement by the Buyer and the performance by it of the Transactions do not violate the Articles of Incorporation or By-laws of the Buyer or, to the Buyer's knowledge, (A) violate any law or regulation of any Authority, or (B) result in a breach of any provision of, or require the consent or approval of any third party which has not been obtained under, the terms of any contract or agreement to which the Buyer is a party, or the consent or approval of any Authority, which violation, breach or consent or approval (if not obtained) would have a material adverse effect on the business, operations or financial condition of the Buyer or on the Transactions. THE BUYER MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, EXCEPT AS SET FORTH IN THIS SECTION 3.


4. CERTAIN COVENANTS.
------------------


4.1 BOOKS AND RECORDS.
------------------


(A) On reasonable notice at any time after the Closing, the Buyer shall permit representatives of the Seller full and free access at the Seller's expense, during normal business hours, to all correspondence, contracts, agreements and purchase and sale orders and other books and records of the Partnership relating to the operation of the business of the Partnership as the same may relate to the GP Interest on or prior to the Closing for purposes of inspection or copying. The Buyer shall cause all such materials to be preserved for at least six years after the Closing and shall not thereafter destroy or otherwise dispose of any such materials unless it shall have notified the Seller at least six months before such disposition and given the Seller the opportunity to remove and retain such materials.


(B) Without limiting the foregoing, the Buyer agrees that, at the Seller's expense, for a period of six years after the Closing, it will assist and cooperate with the Seller in collecting and assembling information relating to the operation of the business of the Partnership on or prior to the Closing that customarily has been provided or used in connection with the preparation of any and all tax returns, information returns or other reports required to be filed by the Seller or any affiliate of the Seller with any Authority and shall make available to the Seller the services of personnel reasonably necessary to enable the Seller or any affiliate of the Seller to prepare and file any and all tax returns, information returns or other reports required to


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be filed by the Seller or other affiliate of the Seller with any Authority and/or to respond to and conduct any and all tax audits or other tax determinations or proceedings.


4.2 CERTAIN COVENANTS OF THE PARTIES.


(A) FILINGS. Each of the Buyer and the Seller, on its own
------- behalf and on behalf of the Partnership, shall promptly take all such action as may, under applicable law, be necessary or appropriate for, and will promptly file and, if appropriate, use its best efforts to have declared effective or approved all documents and notifications with or to any Authority that are necessary or appropriate for the consummation of the Transactions, and each of the Buyer and the Seller shall promptly give the other party information requested by such other party pertaining to it and its affiliates that is reasonably necessary to enable such other party to take such actions and file in a timely manner all documents and notifications required to be so filed by applicable law.


(B) OTHER ACTIONS. Each of the Buyer and the Seller, on its
------------- own behalf and on behalf of the Partnership, shall use its reasonable best efforts to consummate the Transactions and make them effective as promptly as practicable, including, without limitation, (i) defending lawsuits or other proceedings challenging this Agreement or the consummation of any of the Transactions, (ii) using reasonable best efforts to lift any injunction or order adversely affecting this Agreement or the consummation of the Transactions or (iii) using reasonable best efforts to obtain any consents necessary for its performance of the Transactions.


(C) PRORATIONS. All taxable items of the Partnership that
---------- arise prior to or on the date of the Closing and are allocable to the General Partner of the Partnership pursuant to Section 4.2 of the Partnership Agreement shall be allocated to the Seller and those that arise after the date of the Closing and are so allocable to the General Partner shall be allocated to the Buyer based upon a closing-of-the-books method of accounting.


5. CLOSING DOCUMENTS.
-----------------


5.1 THE SELLER'S DOCUMENTS. At the Closing, the Seller will
---------------------- deliver or cause to be delivered to the Buyer:


(A) CERTIFICATE. A Certificate of the Secretary of the Seller
----------- certifying (i) copies of resolutions duly adopted by the Board of Directors of the Seller authorizing and approving the execution, delivery and performance of this Agreement and the other agreements and documents executed and delivered in connection herewith, (ii) that all partnership action necessary to approve the execution, delivery and performance of this Agreement, and the other agreements and documents executed and delivered by the Partnership in connection herewith, shall have been duly and validly taken and (iii) such other matters as the Buyer may reasonably request;


(B) ASSIGNMENT AND ASSUMPTION AGREEMENT AND AMENDMENT TO
---------------------------------------------------- PARTNERSHIP AGREEMENT. An Assignment and Assumption Agreement and Amendment - --------------------- to Partnership Agreement, providing for the sale, assignment and assumption of the GP Interest set forth in Section 1.1 above and the admission and substitution of the Buyer as the general partner of the Partnership, substantially in the form attached as Exhibit 2 hereto (the "ASSIGNMENT AND ASSUMPTION AND AMENDMENT AGREEMENT") executed by each of PCC and the Seller and such other


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documentation as shall be reasonably requested by the Buyer to evidence the valid assignment of the GP Interest and the admission and substitution of the Buyer as the general partner of the Partnership;


(C) AMENDMENTS TO PARTNERSHIP CERTIFICATE. A Certificate of
------------------------------------- Amendment to the Certificate of Limited Partnership of the Partnership, evidencing the substitution and admission of the Buyer as the general partner of the Partnership, substantially in the form attached as Exhibit 3 hereto, executed by each of PCC and the Seller; and


(D) REPLACEMENT NOTE. A new PPI Funding Note in the same
---------------- form as the PPI Funding Note and in an original principal amount equal to the outstanding principal amount of the PPI Funding Note as of the Closing Date minus Thirteen Million Seven Hundred Thousand Dollars ($13,750,000).


5.2 THE BUYER'S DOCUMENTS. At the Closing, the Buyer will deliver
--------------------- or cause to be delivered to the Seller:


(A) CERTIFICATE. A Certificate of the Secretary of the Buyer
----------- certifying (i) copies of resolutions duly adopted by the Board of Directors of the Buyer authorizing and approving the execution, delivery and performance of this Agreement, the Note and the other agreements and documents executed and delivered in connection herewith and (ii) such other matters as the Seller may reasonably request;


(B) ASSIGNMENT AND ASSUMPTION OF AGREEMENT AND AMENDMENT TO
------------------------------------------------------- PARTNERSHIP AGREEMENT. An Assignment and Assumption and Amendment Agreement, - --------------------- executed by the Buyer;


(C) THE NOTE. The Note, executed by the Buyer and payable to
-------- the order of the Seller;


(D) ASSIGNMENT OF PPI FUNDING NOTE. A partial assignment of
------------------------------ the PPI Funding Note, providing for the assignment of Thirteen Million Seven Hundred Fifty Thousand Dollars ($13,750,000) in outstanding principal amount of the PPI Funding Note;


(E) ASSIGNMENT OF ACCRUED INTEREST ON NOTES RECEIVABLE. An
-------------------------------------------------- assignment of the Accrued Interest on Notes Receivable;


(F) SECURITY AGREEMENT AND PLEDGE. A Security Agreement and
----------------------------- Pledge (the "Security Agreement") providing for the pledge of the GP Interest to the Seller as security for the payment of the Note, substantially in the form of Exhibit 4 hereto, executed by the Buyer;


(G) HCA ESTOPPEL LETTER. An estoppel letter executed by
------------------- Hollywood Casino-Aurora, Inc. ( "HCA") stating that the obligations of the Partnership required to be performed under the terms of the Aurora Management Contract prior to the Closing have been performed and that there is no existing breach or default by or on the part of the Partnership thereunder and setting forth the agreement of HCA respecting the giving of notices of default under the Aurora Management Contract and related matters, which estoppel letter shall be in form and substance reasonably satisfactory to the Seller; and


(H) HCC ESTOPPEL LETTER. An estoppel letter executed by
------------------- Hollywood Casino Corporation ("HCC") stating that the obligations, if any, of the Partnership


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required to be performed prior to the Closing under the terms of the Service Agreement by and between HCC and the Partnership to be entered into at or before the Closing have been performed and that there is no existing breach or default by or on the part of the Partnership thereunder and setting forth the agreement of HCC respecting the giving of notices of default under such Services Agreement and related matters, which estoppel letter shall be in form and substance reasonably satisfactory to the Seller.


6. SURVIVAL OF REPRESENTATIVES; INDEMNITIES.
----------------------------------------


(A) SURVIVAL. The representations and warranties contained
-------- in this Agreement shall survive the sale, assignment and transfer to the Buyer of the GP Interest hereunder and shall continue in full force and effect. The agreements and covenants contained in this Agreement shall survive in accordance with their terms.


(B) NO EFFECT ON LIABILITY. None of (i) the consummation of
---------------------- the Transactions, (ii) the delay or omission of any party to exercise any of its rights under this Agreement or (iii) any investigation or disclosure that any party makes, any notice that any party gives, or any knowledge that any party obtains as a result thereof, or otherwise, shall (x) affect the liability of the parties to one another for breaches of their covenants contained in this Agreement, (y) affect the liability of the parties to one another for misrepresentation under this Agreement, or (z) prevent any party from relying on the representations contained in this Agreement.


6.1 INDEMNITIES.
------------


(A) THE SELLER'S INDEMNITY.
----------------------


(1) The Seller agrees to indemnify and hold the Buyer harmless from and against any and all liabilities, damages, obligations, claims and expenses (including, without limitation, reasonable costs of investigation and reasonable defense and attorney's fees) (collectively "LOSSES") that the Buyer sustains or becomes subject to as a result of the breach of any of the warranties, representations, covenants or agreements of the Seller made herein less any amounts actually received by the Buyer or the Partnership in respect of such Losses under insurance policies; provided, however, that the Seller's
-------- ------- indemnity obligations hereunder shall not exceed the amount of the Purchase Price.


(2) The Buyer shall not have any right to offset against the Note for Losses indemnified pursuant to Section 6.1(A)(1).


(B) THE BUYER'S INDEMNITY. The Buyer agrees to indemnify
--------------------- and hold the Seller harmless from and against all Losses that it sustains or becomes subject to as a result of the breach of any of the warranties, representations, covenants or agreements of the Buyer made herein, as well as any claim made against the Seller arising out of the Aurora Management Agreement and relating to actions taken after the date of this Agreement, less any amounts actually received by the Seller in respect of such Loss under insurance policies.


(C) THIRD PARTY CLAIM. Promptly after receipt by the Buyer
----------------- or the Seller of notification of the assertion, or possible assertion, by a third party of any claim, action, suit, proceeding or demand with respect to which indemnification shall or may be claimed by the Buyer or the Seller pursuant to this Section 6 (the "THIRD PARTY CLAIM") (such recipient being referred to hereinafter as the "INDEMNITEE") the Indemnitee shall give written notice describing the Third Party Claim in reasonable detail (an "INDEMNITY NOTICE") to the other party (herein, the "INDEMNITOR"). Failure by the Indemnitee to send the Indemnity Notice shall not release the Indemnitor from its


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obligations hereunder except to the extent that the failure to send the Indemnity Notice prejudices the rights of the Indemnitor. The Indemnitor shall, at its option, have full authority to defend any such claim, action, suit, proceeding or demand, in the name of such Indemnitee or otherwise as the Indemnitor shall elect utilizing counsel reasonably acceptable to the Indemnitee, unless (i) the Indemnitee reasonably objects to such assumption on the ground that counsel for such Indemnitor cannot represent both the Indemnitee and the Indemnitor because such representation would be reasonably likely to result in a conflict of interest or because there may be defenses available to the Indemnitee that are not available to such Indemnitor, (ii) the Indemnitor is not capable (by reason of insufficient financial capacity, bankruptcy, receivership, liquidation, managerial deadlock, managerial neglect or similar events) of maintaining a reasonable defense of such action or proceeding, (iii) the action or proceeding seeks injunctive or other equitable relief against the Indemnitee, or (iv) the amount in controversy exceeds the amount for which the Indemnitor is liable under this Section 6.1. Neither the Indemnitor nor the Indemnitee shall adjust, compromise or settle any such claim, action, suit, proceeding or demand without the written consent of the other, which consent shall not be unreasonably withheld. As to any Third Party Claim the defense of which has been assumed by the Indemnitor, (i) the Indemnitee shall cooperate fully in such defense as and to the extent reasonably requested by the Indemnitor (such cooperation shall include the retention and, upon the Indemnitor's request, the provision to the Indemnitor of records and information that are reasonably relevant to such claim or demand and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder) and (ii) the Indemnitor shall not, subsequent to such assumption, be liable for any legal expenses incurred by the Indemnitee. In the event of any claim under this Section 6 for indemnification (whether or not in connection with a Third Party Claim), the Indemnitee shall promptly advise the Indemnitor in writing, in reasonable detail, of the amount and circumstances surrounding said claim (which notice shall also be deemed to be an Indemnity Notice).


(D) INDEMNITY EXCLUSIVE REMEDY. Other than with respect to
-------------------------- enforcement of its rights to receive payment of the Note and to enforce the Security Agreement and Pledge, the indemnity in this Section 6 shall be the exclusive remedy for any misrepresentation or breach of warranty or breach of any covenant or agreement in this Agreement.


7. FURTHER ASSURANCES AND COOPERATION. Following the Closing, the
---------------------------------- Seller and the Buyer shall each promptly execute, deliver and/or file such documents, and promptly take such other actions, as shall be reasonably requested by the other party to effectuate the Transactions.


8. GENERAL PROVISIONS.
-------------------


8.1 NOTICES. All notices and other communications hereunder
------- shall be in writing and shall be delivered personally (including express courier) or sent by telecopy (and promptly confirmed by mail) or sent by prepaid registered or certified mail (return receipt requested) to the parties at the following addresses:


(A) if to the Buyer, to


HWCC-Aurora Management, Inc.
Two Galleria Tower, Suite 2200
13455 Noel Road, LB 48
Dallas, Texas 75240
Attention: William D. Pratt
Telecopier: (972) 386-7411


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with a copy to:


Haynes and Boone, LLP
3100 NationsBank Plaza
901 Main Street
Dallas, Texas 75202-3789
Attention: William R. Hays, III
Telecopier: (214) 651-5940


(B) if to the Seller, to


P
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