EFTA00724705.pdf

Execution Version ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into th as of the 13 day of October, 2010 by and among RIH ACQUISITIONS NJ, LLC, a New Jersey limited liability company and RIH PROPCO NJ, LLC, a New Jersey limited liability company (collectively, "Seller"), and NEW NUGGET GAMING, LLC, a New Jersey limited liability company ("Buyer"). Seller and Buyer are sometimes referred to herein individually as a "Party", and collectively as the "Parties". RECITALS A. Seller is the owner of certain real estate and business assets used in connection with the operation of that certain casino hotel complex in Atlantic City, New Jersey known as the Atlantic City Hilton (the "AC Hilton"). B. Seller wishes to sell and Buyer wishes to buy those assets owned by Seller and used in connection with the operation of the AC Hilton in accordance with the terms and conditions set forth herein. AGREEMENTS In consideration of the covenants and agreements contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Recitals Incorporated. All Recitals to this Agreement are fully incorporated herein and made a part hereof. 2. Sale and Transfer of the Assets to Buyer. 2.1 Subject to the terms and conditions of this Agreement, on the Closing Date (as hereinafter defined) Seller will sell, transfer, assign and convey to Buyer, and Buyer shall purchase and accept from Seller, all of Seller's right, title and interest in and to all of the assets of Seller used in connection with the operation of the AC Hilton, including, without limitation, the following real and personal property, but excluding the Excluded Assets, as that term is defined in Section 2.2 (collectively hereinafter referred to as the "Assets"), free and clear of all liens, claims and encumbrances, except for those liens, claims and encumbrances set forth on Schedule 2.1(a)-2 (with respect to the Property) and Permitted Encumbrances. (a) Real Property. Those certain parcels of real property, as more fully described on Schedule 2.1(a)-1 attached hereto (the "Property"), by recordable deeds (the "Deeds"), in the form attached hereto as Exhibit A, subject only to the matters set forth on Schedule 2.1(a)-2 attached hereto, including, without limitation, all right, title and interest in and to all easements, rights (including without limitation air space and riparian rights), privileges, and appurtenances to the Property relating thereto and all streets, alleys and other public ways adjacent thereto, and all buildings, fixtures, structures and improvements situated on the Property and the real property covered by the Ground Leases. EFTA00724705 5879704.14 (b) Ground Leases. Those certain leases for real property used in connection with the operation of the AC Hilton under which Seller is the ground "tenant" or "lessee" with respect thereto, which leases are listed on the Schedule 2.1(b)-1 attached hereto (the "Ground Leases"), by assignment of leases (the "Assignment of Leases (Tenant or Lessee Interests)") in the form attached hereto as Exhibit B. (c) Personal Property. All of Seller's right, title, and interest in and to all of the fixtures and personal property used in connection with the operation of the AC Hilton, wherever located, including but not limited to all furniture, fixtures, equipment and inventory, as more fully described on Schedule 2.1(c) attached hereto (sometimes collectively referred to herein as "Personal Property") by warranty bill of sale (the "Bill of Sale") in the form attached hereto as Exhibit C. (d) Accounts Receivable. All accounts receivable, including, without limitation, all rebates and refunds owing to Seller as of the Closing Date with respect to periods ending on or prior to the Closing Date ("Accounts Receivable"), by assignment (the "Assignment of Accounts Receivable") in the form attached hereto as Exhibit D. (e) Assigned Contracts. Those agreements, contracts, licenses, leases, instruments, notes, bonds, obligations, mortgages, indentures, guarantees, purchase orders, letters of credit or other legally binding commitment of Seller relating to the ownership and operation of the AC Hilton and the Assets, each as amended or modified through the date hereof, as set forth on Schedule 2.1(e) ("Assigned Contracts"), by assignment (the "Assignment of Contracts") in the form attached hereto as Exhibit E. (0 Leases. All of Seller's right, title, and interest in and to those certain leases under which Seller is the landlord or lessor, including without limitation those leases listed on Schedule 2.1(f) attached hereto (sometimes collectively referred to herein as the "Leases"), by assignment of leases (the "Assignment of Leases (Non-Recordable Leases)") in the form attached hereto as Exhibit F, including all security deposits, if any, paid by each tenant under the Leases and held or controlled by Seller as of the Closing Date (collectively, the "Security Deposits"). (g) Licenses, Permits and Other Property. To the extent permitted by law, all of Seller's right, title and interest in and to all licenses and permits relating to the operation of the AC Hilton, including without limitation, those certain licenses, permits, and other property listed on Schedule 2.1(g) attached hereto (sometimes collectively referred to herein as "Licenses, Permits and Other Property") by assignment (the "Assignment of Licenses and Permits and Other Property") in the form attached hereto as Exhibit G. (h) Intangibles. All of Seller's right, title and interest in and to all of the trademarks, trade names, servicemarks, copyrights and any applications therefor, domain names, website content and other intangible property used or useful in connection with the operation of the AC Hilton, in Seller's possession or control but excluding the AC Hilton IP (as defined below) (sometimes collectively referred to herein as "Intangibles"), by assignment of intangible property (the "Assignment of Intangibles") in the form attached hereto as Exhibit H. 2 EFTA00724706 5879704.14 (i) AC Hilton Intellectual Property. Subject to receiving the requisite consents from Hilton Inns (as defined below) Seller's right to use the "Atlantic City Hilton" and "Hilton" name and marks (including, all trademarks, servicemarks, logos and copyrights related thereto) and other intellectual property rights (the "AC Hilton IP") and all other rights of Seller under that certain License Agreement between Seller and RIH Acquisitions NJ, LLC and Hilton Inns, Inc. ("Hilton Inns"), dated as of April 26, 2005 (the "Hilton License Agreement"), as amended by that certain Mutual Termination Agreement between RIH Acquisitions NJ, LLC and HLT Existing Franchise Holding LLC, successor-in-interest to Hilton Inns, dated as of July 30, 2010 (the "Hilton Termination Agreement"), copies of which are attached hereto as Exhibit I, by assignment of license agreement (the "Assignment of License Agreement") in the form attached hereto as Exhibit J. (j) Cash and Cash Equivalents. Cash or cash equivalents owned by Seller or otherwise located at the AC Hilton (including, without limitation, the cash in the slot machines, at the gaming tables and in the cashiers' cages on the casino floor of the AC Hilton, those amounts on deposit with banks or other financial institutions, and any other cash or cash equivalents used in connection with the operation of the AC Hilton, wherever located), in an aggregate amount which does not exceed EIGHT MILLION DOLLARS ($8,000,000). For the avoidance of doubt, any and all cash and cash equivalents owned by Seller in an aggregate amount which exceeds EIGHT MILLION DOLLARS ($8,000,000) shall not be transferred to Buyer and shall remain the property of Seller after the Closing (the "Excluded Cash"). (k) Books and Records. All files, books and records, whether in hard copy, electronic or otherwise, of Seller relating to the ownership and operation of the AC Hilton and the Assets, including without limitation, customer and supplier files, equipment and property maintenance records, warranty information, specifications and drawings, and correspondence with federal, state and local governmental agencies. (1) Claims. All of Seller's claims, refunds, causes of action, chosen in action, rights of recovery and rights of setoff of any kind relating to the AC Hilton. (m) Other Assets. All other assets, properties, and rights of every kind related to the ownership and operation of the AC Hilton, known or unknown, fixed or unfixed, tangible or intangible, accrued, absolute, contingent or otherwise. 2.2 Excluded Assets. Notwithstanding anything to the contrary contained in Section 2.1 or elsewhere in this Agreement, Seller shall not sell, assign, transfer, convey or deliver to Buyer, and Buyer shall not purchase, acquire, assume and accept, and the Assets shall not include, any of Seller's right, title and interest in and to the following assets of Seller (collectively, the "Excluded Assets"), which shall remain the property of Seller after the Closing: (a) All rights of Seller relating to Seller's business interruption claim against Lexington Insurance Company, the ACE Group and Lloyd's, and all proceeds heretofore or hereafter paid to Seller in respect thereof, including all amounts with respect thereto held or received by U.S. Bank, National Association, as Trustee for the Benefit of the Holders of.. Morgan Chase Commercial Mortgage Securities Corp., Commercial Mortgage Pass-Through 3 EFTA00724707 5879704.14 Certificates, Series 2007-FL1, and for the Holders of the Non-Trust Partition Interests (the "Lender"); (b) All rights of Seller relating to Seller's casualty loss claim against Lexington Insurance Company, The ACE Group and Lloyd's arising out of the damage to multiple restaurants at the AC Hilton caused by a drain pipe failure during a thunderstorm in late August 2009 (the "Casualty") ands all proceeds thereof payable on or after the date of this Agreement; (c) all claims against third parties relating to the Excluded Assets, whether choate or inchoate, known or unknown, contingent or non-contingent; (d) all Contracts that are not Assigned Contracts (collectively, the "Excluded Contracts"); (e) the Excluded Cash; and (f) any amounts for which Seller shall be reimbursed, or any tax refunds to which Seller is entitled, pursuant to Section 12.3(b). 2.3 Assumption of Liabilities. Except as specifically provided in Section 2.4, effective as of the Closing Date, Buyer shall assume, agree to pay and discharge when due all of the obligations and liabilities of Seller arising from or related to the AC Hilton with respect to periods prior to the Closing (collectively, the "Assumed Liabilities"), which include but are not limited to: (a) all liabilities of Seller under each of the Ground Leases and each of the Leases, to the extent such liabilities arise or accrue after the Closing Date, excluding any liabilities arising as a result of any breach by Seller occurring prior to the Closing Date; (b) all liabilities of Seller under the Assigned Contracts, including accounts payable and excluding any liabilities arising as a result of any breach by Seller occurring prior to the Closing Date of such Assigned Contract; (c) all liabilities of Seller under Environmental Laws relating to the Assets or the AC Hilton; (d) except for transfer taxes and other transfer fees for which Seller may be responsible under Section 12.3, all liabilities of Seller for any taxes that relate to or arise from the operation of the AC Hilton or the ownership of the Assets with respect to taxable periods (or portions thereof) beginning after the Closing Date (except for any taxes imposed upon Seller or any member of Seller); (e) all liabilities of Seller arising under Seller's employee benefit plans to the extent set forth on Schedule 2.3(e): (1) all liabilities of Seller with respect to employees of the AC Hilton for payroll, wages, and payroll related taxes; 4 EFTA00724708 5879704.14 (g) all liabilities of Seller to Seller's customers; and all accounts payable of Seller existing at the Closing Date. 2.4 Excluded Liabilities. Buyer shall not assume or be liable for, and Buyer shall not be obligated to pay, perform or otherwise discharge any of the following obligations or liabilities of Seller (collectively, the "Excluded Liabilities"): (a) any obligation or liabilities of Seller to the extent relating to any Excluded Assets; (b) all liabilities for any taxes (A) that may be imposed by any Governmental Body on the ownership, sale, operation or use of the AC Hilton or the Assets for taxable periods or portions thereof ending on or prior to the Closing Date, (B) that relate to or arise from the AC Hilton or the Assets with respect to taxable periods (or portions thereof) ending on or prior to the Closing Date, or (C) imposed on Seller or any member of Seller; and (c) all liabilities of Seller (including all brokers and attorneys fees) to the extent arising from the execution, delivery or performance of this Agreement, including any transfer taxes for which Seller may be responsible under Section 12.3. 3. Regulatory Approvals. 3.1 Buyer acknowledges and understands that the Assets being purchased hereunder and the business operation of the AC Hilton are subject to intensive regulatory oversight by the New Jersey Casino Control Commission ("CCC") and the New Jersey Division of Gaming Enforcement ("DGE"). The CCC and DGE are sometimes hereafter referred to individually as a "Gaming Authority" or collectively as the "Gaming Authorities". Buyer shall use its best efforts to promptly take, or cause to be taken, all appropriate action and do or cause to be done all things necessary, proper or advisable under applicable law in order for Buyer to fulfill and perform its obligations with respect to this Agreement and in particular with respect to obtaining the Gaming Authorities' approval of this transaction and Buyer's licensure by the Gaming Authorities, so as to permit the closing of Buyer's purchase of the Assets hereunder on or before December 31, 2010. 3.2 If necessary, Buyer shall file, as promptly as practicable, but in no event later than fifteen (15) days from the date hereof, any required petition for declaratory rulings ("Declaratory Rulings") from the CCC relating to required applications for Interim Casino Authorization ("ICA") pursuant to New Jersey Statutes Annotated 5:12-95.12, et seq. 3.3 Buyer shall, as promptly as possible, but in no event later than (i) fifteen (15) days from the date of issuance of any Declaratory Ruling by the CCC, or (ii) if Buyer has not filed for Declaratory Ruling under Section 3.2 above, then within thirty (30) days of the date hereof ((i) or (ii), as applicable, the "ICA Filing Deadline"), file a completed application for, and a petition seeking ICA ("ICA Petition") from the CCC which ICA shall permit the consummation of this transaction and the ownership of the Assets by Buyer. The Declaratory Ruling and the ICA are hereinafter sometimes individually referred to as the "Gaming Approval" and collectively referred to as the "Gaming Approvals". 5 EFTA00724709 5879704.14 3.4 Buyer will notify Seller of receipt of all comments or requests from any Gaming Authority that relate to the Gaming Approvals, and will supply Seller with copies of all correspondence (other than to the extent of privileged or, in the good faith determination of Buyer, confidential, personal information) between Buyer or any of its representatives and Gaming Authorities with respect to the Gaming Approvals. Buyer agrees to promptly advise Seller upon receiving any communication from any Gaming Authority that causes Buyer to believe that there is a reasonable likelihood that any Gaming Approval required from the Gaming Authorities will not be obtained within the timeframe set forth in this Agreement or that receipt of any such approval will be materially delayed. Seller shall reasonably cooperate in connection with Buyer's efforts to obtain the Gaming Approvals, including, without limitation, in connection with any filing or submission and with any investigation or other inquiry. 3.5 In the event that (a) either (i) the ICA is not issued, or (ii) Buyer withdraws the ICA Petition, in each case prior to December 31, 2010, or (b) the application and ICA Petition are denied by the Gaming Authorities in a final non-appealable order (each of such events being herein called a "Termination Event"), either Seller or Buyer may terminate this Agreement in accordance with Section 16.1(f). 4. Purchase Price. 4.1 As consideration for the sale, assignment, transfer, conveyance and delivery of the Assets by Seller to Buyer and the assumption by Buyer of the Assumed Liabilities, Buyer shall pay to Seller as follows the aggregate purchase price (the "Purchase Price") of (a) if, and only if, the Closing occurs on or before November 30, 2010 ("Early Closing Deadline"), the sum of FORTY SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($47,500,000), or (b) if the Closing occurs after November 30, 2010 and on or before December 31, 2010 ("Late Closing Deadline"), the sum of (i) FIFTY MILLION DOLLARS ($50,000,000). (a) Deposit. A deposit in the amount of TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000; the "Deposit") to be paid, upon the execution and delivery of this Agreement by all parties hereto, by Buyer to and held by McCarter & English, LLP, as escrow agent ("Escrow Agent"), in accordance with the terms and conditions of an Escrow Agreement, in the form attached hereto as Exhibit K ("Escrow Agreement") to be entered into by and among the Escrow Agent, Buyer and Seller upon the execution and delivery of this Agreement by all parties hereto. The refundability and non- refundability of the Deposit, and all interest accrued thereon, shall be as provided in Section 16.3. The Deposit is to be held by the Escrow Agent, in accordance with the terms of the Escrow Agreement, in an interest-bearing account with all interest thereon accruing to the benefit of Buyer pursuant to the terms of the Escrow Agreement. At the Closing, unless otherwise provided herein, Escrow Agent shall (i) deliver to Seller, as a credit against the Purchase Price, the Deposit and (ii) deliver to Buyer all interest accrued on the Deposit, in each case in accordance with the terms of the Escrow Agreement. (b) Closing Payment. The balance of the Purchase Price (after credit for the Deposit amount paid by the Escrow Agent in accordance with Section 4.1(a)) shall be paid to Lender (as directed by Seller prior to Closing) in cash or other same day funds at the 6 EFTA00724710 5879704.14 Closing in accordance with Exhibit F of that certain Settlement Agreement, dated as of the date hereof, by among Seller, certain of Seller's affiliates, and Lender. 5. Due Diligence Period. 5.1 Due Diligence. For a period of ten (10) business days after the date of this Agreement (with such period expiring at 5:00 p.m. on the (10'h) business day following the date of this Agreement) (the "Due Diligence Period"), Buyer shall, subject to Section 5.2 hereof, have the right to conduct such inspections and investigations of the Assets and business of Seller related to the ownership and operation of the AC Hilton, as Buyer deems necessary, including but not limited to environmental, structural and engineering inspections. 5.2 Access to Information and the Property. Upon reasonable prior notice by Buyer to Seller, during the Due Diligence Period, Seller shall provide Buyer and its representatives with reasonable access, during normal business hours, to the Assets, the general manager and other senior managers of the AC Hilton and the financial books and records of Seller relating to the Assets and the ownership and operation of the AC Hilton, to the extent reasonably requested by Buyer in connection with the Buyer's due diligence investigation of the Assets and the AC Hilton. 6. Confidentiality. Contemporaneously with the execution of this Agreement, Buyer and Seller shall each execute and deliver to each other a confidentiality agreement ("Confidentiality Agreement") in the form attached hereto as Exhibit L. 7. Closing. Subject to the terms and conditions of this Agreement, unless terminated prior thereto in accordance with the terms hereof, the Closing of the transactions contemplated herein shall be held on a date and time as specified by Buyer in writing to Seller at least ten (10) days prior to the specified date, which specified date ("Closing Date") shall be no later than the earlier of (i) December 31, 2010, or (ii) ten (10) calendar days after the satisfaction or waiver of the conditions set forth below in Section 13.1 and Section 13.2 (other than those conditions intended to be satisfied or waived at the Closing). The Closing shall take place at the offices of Wolff & Samson PC, One Boland Drive, West Orange, New Jersey at 10:30 a.m. local time, or at such other time or place as mutually agreed. 8. Assumption of Liabilities. On the Closing Date, Buyer shall assume only the Assumed Liabilities. Except for the Assumed Liabilities, Seller shall retain and Buyer is not, and shall not be deemed to be, assuming, liable or responsible for, or taking the Assets subject to, any liabilities of Seller or its affiliates, of any kind or nature whatsoever, whether known or unknown, fixed or contingent. 9. Seller's Representations. Warranties and Covenants. As used in this Section 9, references to "Seller's knowledge" and "knowledge of Seller" shall mean the actual knowledge of each of the individuals set forth on Schedule 9. Except, with respect to any representations and warranties set forth in this Section 9, with respect to any facts, circumstances or events known to Nicholas L. Ribis, Seller represents, warrants and covenants to Buyer as follows: 7 EFTA00724711 5879704.14 9.1 Title to Property. Except as set forth on Schedule 9.1-A attached hereto, Seller holds fee simple title to the Property, free and clear of all liens, claims and encumbrances (other than Permitted Encumbrances). Seller shall convey to Buyer at Closing marketable fee simple title to the Property, free and clear of all liens, claims and encumbrances, other than Permitted Encumbrances and except as set forth on Schedule 9.1-B attached hereto. 9.2 Ground Leases. Seller is, pursuant to the Ground Leases, the sole ground tenant of the real property described in the Ground Leases and shall transfer to Buyer at Closing all of its leasehold interest in such Ground Leases, free and clear of all liens, claims and encumbrances, other than Permitted Encumbrances. 9.3 Liens. Except as set forth on Schedule 9.3 attached hereto, Seller has not previously sold, transferred, assigned, pledged or encumbered by lien (either voluntarily or involuntarily) any of its right, title, and interest in and to the Personal Property, Accounts Receivable, Assigned Contracts, Intangibles and other Assets and holds good and valid title to the Personal Property, Accounts Receivable, Assigned Contracts, Intangibles and other Assets, free and clear of all liens, claims and encumbrances (other than Permitted Encumbrances). 9.4 Existence and Powers; No Conflict. Seller is a limited liability company, validly existing and in good standing under the laws of the State of New Jersey, has the power and authority to own or lease its properties and to carry on its business as now being conducted, and has all requisite power and authority to enter into, deliver and perform this Agreement and the other agreements contemplated hereby. The execution, delivery, and performance of this Agreement and the other agreements contemplated hereby by Seller have been duly and validly authorized, and, subject to the receipt of all required approvals contemplated by this Agreement, no other action is required with respect thereto. Assuming the due execution and delivery by Buyer of this Agreement and the other agreements contemplated hereby, this Agreement and the other agreements contemplated hereby constitute the legal, valid, and binding obligation of Seller, enforceable against Seller in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforcement of creditors' rights in general and subject to general principles of equity. Neither execution and delivery of this Agreement or the other agreements contemplated hereby by Seller, nor the compliance by Seller with the respective terms hereof and thereof: (i) will breach any laws, rules or regulations; (ii) will conflict with, result in a breach of or constitute a default (or an event which, with notice or lapse of time, or both, would become a default) under, any of the terms, conditions or provisions of, any judgment, order, arbitration, injunction, decree or ruling of any court or governmental authority to which Seller or any Asset is subject, Seller's governing documents, or any contract, commitment, arrangement, or agreement to which Seller is party or by which Seller or any of the Assets may be bound, other than, in the case of (i) and (ii) above, as would not reasonably be expected to have a Material Adverse Effect. 9.5 Security Deposits. All Security Deposits held by, or under the control of, Seller, as of the date of this Agreement, are set forth on Schedule 9.5, attached hereto. 9.6 Leases. With respect to the Leases: (i) the Leases are the only leases or other agreements for use, occupancy or possession presently in force with respect to all or any portion of the Property or the real property subject to the Ground Leases, except for non- 8 EFTA00724712 5879704.14 possessory rights of transient guests of the AC Hilton; (ii) the information set forth on the rent roll ("Rent Roll") attached as Schedule 9.6-A hereto is, in all material respects, true, complete and correct; (iii) the Leases are all presently in full force and effect, have not been modified, supplemented or amended, and are the entire agreement between the Assignor and the "lessees" or "tenants" thereunder; (iv) there are no rentals which have been paid under any of the Leases more than one (1) month in advance; (v) there are no options in favor of the "lessees" or "tenants" under any of the Leases to purchase all or any portion of the Property or any interest in the Ground Leases except as may be set forth in each Lease; (vi) there are no leasing, rental, brokerage or other commissions, charges or fees payable with respect to, and no options in favor of the "lessees" or "tenants" to renew or extend the term of, any of the Leases, except as maybe set forth in the Leases; (vii) except as may be set forth in each Lease, the Leases contain no restrictions on the assignment thereof by the "landlord" or "lessor" thereunder and no consent(s) is required for the assignment set forth herein; and (viii) no security deposits or equivalent have been paid or deposited with respect to any of the Leases, except as expressly set forth on Schedule 9.6-B attached hereto. 9.7 Environmental Compliance and Condition. To Seller's knowledge, (a) Seller has complied in all material respects with, and is not in material violation of, any federal, state or local law, statute, legislation, ordinance, code, rule, regulation, decree, award, order, permit, franchise, consent or authorization of, any governmental authority (collectively, "Legal Requirements") in any way applicable to or governing air and water quality, soil and subsurface strata, the generation, transport, storage, treatment, handling, release, discharge and disposal of solid wastes or hazardous wastes, hazardous substances, toxic substances or pollutants, or any other Legal Requirements relating to the environment or human safety or health (collectively, "Environmental Laws"), and (b) Seller has, in all material respects, complied with, and possesses all material permits required in connection with, all Environmental Laws pertaining to the ownership, use and operation of the real property owned, leased or operated by Seller and the conduct of Seller's business. 9.8 Insurance Claims. Except as set forth on Schedule 9.8, there are no insurance claims pending against or in favor of Seller which pertain to ownership, operation, use, maintenance or leasing of the Assets. Prior to the Closing, Seller shall have the right to deliver an updated Schedule 9.8 and the matters set forth on such updated Schedule 9.8 shall be deemed disclosed for purposes of determining satisfaction of the condition set forth in Section 13.2(a). 9.9 Litigation. Except as set forth on Schedule 9.9 attached hereto, as of the date of this Agreement, there are no actions, judgments, suits, proceedings, arbitrations, investigations or inquiries pending or, to the knowledge of Seller, threatened against or affecting Seller or the Assets or questioning the validity of any actions taken in connection with the implementation of the provisions of this Agreement, at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, agency, court or instrumentality, domestic or foreign, in each case, other than as would not reasonably be expected to result in a Material Adverse Effect. There are no material judgments, decrees, injunctions, or orders of any Governmental Entity or arbitrator outstanding against Seller or the Assets. To Seller's knowledge, except as set forth on Schedule 9.9 attached hereto, Seller has complied, in all material reaspects, with all applicable statutes and regulations of all governmental authorities and agencies having jurisdiction over Seller. 9 EFTA00724713 5879704.14 9.10 Conduct of the Business. Prior to the Closing, Seller shall operate and conduct the business of the AC Hilton in the ordinary course of business and in accordance with the operating budget set forth on Schedule 9.10 attached hereto, including, without limitation, with respect to the approval of any operating budget, and shall not, without the prior written consent of Buyer (provided, nothing in this Agreement shall restrict Seller from making any payments contemplated by the Hilton Termination Agreement): (a) distribute, set aside, or otherwise withdraw, any cash or cash equivalents owned by Seller relating to the AC Hilton or otherwise located at the AC Hilton, including without limitation, any cash, negotiable instruments, or other cash equivalents located in operating accounts held by Seller, cages, vaults, drop boxes, slot machines and other gaming devices, cash on hand for any petty cash fund and cashiers' banks, coins and slot hoppers, carousels, or otherwise, or any money stored on deposit belonging to, and stored in an account for, any person (in each case, other than Excluded Cash), other than disbursements in the ordinary course of business to employees, customers and third parties, and at the Closing, there shall be no less than the minimum amount of all such funds described in this Section 9.10(a) as required by applicable law, rules and regulations; (b) make any sale, assignment, transfer, abandonment or other conveyance of any material portion of the Assets; or (c) fail to keep in full force and effect insurance with respect to the Assets, the Property, the real property subject to the Ground Leases and the AC Hilton or any operations thereof. 9.11 Consents. Seller shall use its commercially reasonable efforts to obtain, at its no cost and expense to Seller (other than immaterial administrative costs), all third party consents required in connection with the transaction contemplated by this Agreement. 9.12 Accrued Payroll. As of the date of this Agreement, Seller has no accrued liabilities with respect to employees of the AC Hilton for payroll, wages, and payroll related taxes, except with respect to bonuses and accrued liabilities with respect to the period commencing on the day immediately following the last day of the last payroll period ended prior to the date hereof through and including the date hereof. 9.13 Assignment of Contracts and Warranties. At the Closing and effective as of the Closing Date, Seller shall assign to Buyer all its rights under the Assigned Contracts. Notwithstanding the foregoing, no Assigned Contract shall be assigned contrary to law or the terms of such Assigned Contract and, with respect to Assigned Contracts that cannot be assigned to Buyer at the Closing Date, the performance obligations of Seller thereunder shall, unless not permitted by such Assigned Contract, be deemed to be subleased or subcontracted to Buyer until such Assigned Contract has been assigned; provided, Buyer acknowledges that the Hilton License Agreement may not be assigned, subleased or subcontracted without the prior consent of Hilton Inns. Buyer shall use commercially reasonable efforts to assist Seller in obtaining any necessary consents to such subleases and subcontracts. Seller shall use commercially reasonable efforts to obtain all necessary consents and Buyer shall take all necessary actions to perform and complete all Assigned Contracts in accordance with their terms if neither assignment, subleasing 10 EFTA00724714 5879704.14 nor subcontracting is permitted by the other party, and Seller shall, as promptly as practicable, pay over to Buyer any amounts received by Seller after the Closing Date as a result of performance by Buyer of any such Assigned Contracts. 9.14 Further Assurances. Seller shall execute and deliver all such further conveyances, assignments, confirmations, satisfactions, instruments of further assurance, approvals, consents, title affidavits and other instruments and documents as may be reasonably necessary or requested by Buyer, expedient or proper in order to complete any and all conveyances, transfers, sales and assignments contemplated herein. 10. Buyer's Representations. Warranties and Covenants. As used in this Section 10, references to "Buyer's knowledge" and "knowledge of Buyer" shall mean the actual knowledge of each of the members and managers (and the members and managers of each of the foregoing) of Buyer. Buyer represents, warrants and covenants to Seller as follows: 10.1 License Qualifications. Except as set forth in Schedule 10.1 neither Buyer, nor any of its officers, directors, principals or affiliates which may reasonably be considered in the process of determining the suitability of Buyer (any such Persons, the "Licensing Affiliates") has ever been denied, or had revoked, a gaming license by a Governmental Entity or Gaming Authority. Buyer and each of its Licensing Affiliates which are licensed (collectively, the "Licensed Parties") are in good standing in each of the jurisdictions in which the Licensed Parties owns or operates gaming facilities. There are no facts, which if known to the regulators under the Gaming Laws, would (a) be reasonably likely to result in the denial, revocation, limitation or suspension of a gaming license or (b) result in a negative outcome to any finding of suitability proceedings currently pending, or under the suitability proceedings necessary for the consummation of this Agreement. 10.2 Existence and Powers; No Conflict. Buyer is validly existing and in good standing under the laws of the State of New Jersey, has the power and authority to own or lease its properties and to carry on business as now being conducted, and has all requisite power and authority to enter into, deliver and perform this Agreement and the other agreements contemplated hereby. The execution, delivery, and performance of this Agreement and the other agreements contemplated hereby by Buyer have been duly and validly authorized, and no other action is required with respect thereto. Assuming the due execution and delivery by Seller of this Agreement and the other agreements contemplated hereby, this Agreement and the other agreements contemplated hereby constitute the legal, valid, and binding obligation of Buyer, enforceable against Buyer in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforcement of creditors' rights in general and subject to general principles of equity. Neither execution and delivery of this Agreement or the other agreements contemplated hereby by Buyer, nor the compliance by Buyer with the respective terms hereof and thereof: (i) will, to Buyer's knowledge, breach any laws, rules or regulations; (ii) will conflict with, result in a breach of or constitute a default (or an event which, with notice or lapse of time, or both, would become a default) under, any of the terms, conditions or provisions of, any judgment, order, arbitration, injunction, decree or ruling of any court or governmental authority to which Buyer is subject, Buyer's governing documents, or any contract, commitment, arrangement, or agreement to which Buyer is party or by which Buyer may be bound. II EFTA00724715 5879704.14 10.3 Disclosure. No representation or warranty made by Buyer in this Agreement (including the Schedules hereto) and no statement made in any certificate or document furnished or to be furnished by Buyer in connection with the transactions contemplated by this Agreement contains or will contain as of the date made and as of the Closing Date any untrue statement of a material fact or omits or will omit to state any material fact necessary to make such representation, warranty or statement not misleading to Seller. 10.4 Litigation. Except as set forth on Schedule 10.4 attached hereto, there are no actions, judgments, suits, proceedings, arbitrations, investigations or inquiries pending or, to the knowledge of Buyer, threatened against or affecting Buyer or questioning the validity of any action taken in connection with the implementation of the provisions of this Agreement, at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, agency, court or instrumentality, domestic or foreign. There are no material judgments, decrees, injunctions, or orders of any governmental entity or arbitrator outstanding against Buyer. Buyer does not know or have reasonable grounds to know of any factors or circumstances which might be the basis of any action, suit or proceeding; and, to Buyer's knowledge, except as set forth on Schedule 10.4 attached hereto, Buyer has complied with all applicable statutes and regulations of all governmental authorities and agencies having jurisdiction over Buyer. 10.5 Financial Condition. As of the date hereof, Buyer has, and at Closing Buyer will have, sufficient cash and cash equivalents on hand to complete the purchase of the Assets without third-party financing and has provided evidence of such financial condition to Seller. 10.6 Brokers. Neither Buyer nor any of its representatives have employed any broker, financial advisor or finder or incurred any liability for any brokerage fees, commissions or finder's fees in connection with the transaction contemplated by this Agreement, except as set forth on Schedule 10.6 and the fees and expenses of which will be paid by Buyer. 10.7 Compliance with Gaming Laws. (a) Each of the Licensed Parties, and to Buyer's knowledge, each of the Licensed Parties' directors, officers, key employees and Persons performing management functions similar to officers and partners hold all permits, registrations, findings of suitability, licenses, variances, exemptions, certificates of occupancy, orders and approvals of all governmental entities under the Gaming Laws necessary to conduct the business and operations of the Licensed Parties, each of which is in full force and effect in all material respects (the "Buyer Permits") and no event has occurred which permits, or upon the giving of notice or passage of time or both would permit, revocation, non-renewal, modification, suspension, limitation or termination of any Buyer Permit that currently is in effect the loss of which either, individually or in the aggregate, would be reasonably likely to materially impair or delay the Closing. Each of the Licensed Parties, and to the knowledge of Buyer, each of the Licensed Parties' directors, officers, key employees and Persons performing management functions similar to officers and partners are in compliance with the terms of Buyer Permits, except for such failures to comply, which singly or in the aggregate, would, individually or in the aggregate, be reasonably likely to materially impair or delay the Closing. Neither Buyer nor any of its 12 EFTA00724716 5879704.14 Licensing Affiliates has received notice of any investigation or review by any Governmental Entity under any Gaming Law with respect to Buyer or any of its Licensing Affiliates that is pending, and, to the knowledge of Buyer, no investigation or review is threatened, nor has any Governmental Entity indicated any intention to conduct the same. (b) Except as set forth in Schedule 10.7(b), no Licensed Parties, and no director, officer, key employee or partner of the Licensed Parties has received any written claim, demand, notice, complaint, court order or administrative order from any Governmental Entity in the past three (3) years under, or relating to any violation or possible violation of any Gaming Laws which did or would be reasonably likely to result in fines or penalties of Fifty Thousand Dollars ($50,000) or more. To the knowledge of Buyer, there are no facts, which if known to the regulators under the Gaming Laws could reasonably be expected to result in the revocation, limitation or suspension of a material license, finding of suitability, registration, permit or approval of the Licensed Parties, or any of their officers, directors, key employees or Persons performing management functions similar to an officer or partner, or limited partner under any Gaming Laws. No Licensed Parties, and no officer, director, key employee or person performing management function similar to an officer or partner of the Licensed Parties, has suffered a suspension or revocation of any Buyer Permit held under the Gaming Laws. 10.8 Reservations: Loyalty Program: Guests. (a) Reservations. Buyer will honor the terms and rates of all pre- Closing reservations (in accordance with their terms) made in the ordinary course of business at the Property by guests or customers, including advance reservation cash deposits, for rooms or services confirmed by Seller for dates after the Closing Date. Seller may continue to accept reservations for periods after the Closing in the ordinary course of business in operating the Property. Buyer recognizes that such reservations may include discounts or other benefits, including, without limitation, benefits extended under the Resorts Destination Casino Club program, or any other frequent player or casino awards programs, group discounts, other discounts or requirements that food, beverage or other benefits be delivered by Buyer to the guest(s) holding such reservations. Buyer will honor all room allocation agreements and banquet facility and service agreements which have been granted to groups, persons or other customers for periods after the Closing Date at the rates and terms provided in such agreements; provided that such agreements were made in the ordinary course of business. Buyer agrees that Seller cannot make and has not made any representation or warranty that any party holding a reservation or agreement for rooms, facilities or services will utilize such reservation or honor such agreement. Buyer, by the execution of this Agreement, solely assumes the risk of non- utilization of reservations and non-performance of such agreements from and after the Closing. (b) Frequent Player Award Programs. Buyer agrees to honor all awards extended prior to the Closing Date by Seller or their Affiliated Casinos to members of the Resorts Destination Casino Club or any other frequent player award program on terms consistent with Seller's or its Affiliated Casinos' past practice in the ordinary course of business or Seller's nationwide programs, and Buyer authorizes Seller to extend such awards that expire after the Closing Date in the ordinary course of business. 13 EFTA00724717 5879704.14 10.9 Conduct of Buyer. Prior to the Closing, Buyer shall, and shall use commercially reasonable efforts to cause its members, managers, employees, advisors and representatives to, refrain from taking any action to cause, directly or indirectly, Seller to be in breach any of Seller's representations, warranties or covenants set forth in Section 9 hereof. 10.10 Financing. Buyer shall use its best efforts to obtain the financing contemplated by (i) that certain letter, dated as of October 1, 2010, provided by Empire State Capital Advisors Group LLC, and (ii) that certain letter, dated October 6, 2010, true and complete copies of which have been provided to Seller (collectively, the "Financing Commitment"), including using its best efforts to (i) maintain such Financing Commitment and negotiate definitive agreements with respect thereto, (ii) satisfy on a timely basis all conditions applicable to Buyer in such definitive agreements, and (iii) comply with all obligations under such Financing Commitment. Buyer shall use its best efforts to cause the Persons providing such financing to fund the financing required to consummate the transactions contemplated by this Agreement on the Closing Date (including taking enforcement action to cause such Persons to provide such financing). Buyer shall not agree to any amendments or modifications to, or grant any waivers of, any condition or other material provision under the Financing Commitment without the prior consent of Selle