Opinion ID: 618830
Heading Depth: 1
Heading Rank: 8

Heading: The Sale Contract, Repurchase Agreement and Guaranty

Text: On September 6, 2007, HV and KPG entered into a real estate sale contract (the Sale Contract), pursuant to which KPG agreed to pay a total of $2.5 million to acquire HV's interest in the Subject Property. The Sale Contract also provided for two contingent payments from KPG to HV: (1) a $17.5 million payment ten days after the Lottery Gaming Facility Management Contract Award Date (Section 3.3 of the Sale Contract), the definition of which is discussed below; and (2) a $20 million payment on the earlier of (a) ten days after the date KPG commenced gaming operations on the Subject Property or (b) 30 months after the Lottery Gaming Facility Management Contract Award Date unless delayed due to any force majeure event (Section 3.4 of the Sale Contract). Section 1.11 of the Sale Contract defined the phrase Lottery Gaming Facility Management Contract Award Date in the following manner: As used herein, the term Lottery Gaming Facility Management Contract Award Date shall mean the date upon which Buyer [KPG] has obtained all final, unappealed and unappealable licensing under the Act and Buyer has received a fully executed Lottery Gaming Facility Management Contract between Buyer and the Kansas Gaming Authority for the Subject Property to be utilized for Gaming Operations and all appeals periods with respect to the Grant and execution of such Lottery Gaming Facility Management Contract have lapsed without an appeal there from having been taken or any appeal thereof having been resolved in favor of Buyer. Aplt.App., Vol. I at 178-79. Section 13 of the Sale Contract, entitled Buyer's Representations and Covenants, provided, in pertinent part, as follows: 13.1 Buyer [KPG] shall use good faith commercially reasonable efforts to be designated the Lottery Gaming Facility Manager for and enter into a Lottery Gaming Facility Management Contract with respect to the Southeast Gaming Zone. Without limitation, Buyer shall make a complete and timely application for such designation and with respect to the Subject Property to the Kansas Gaming Authority by no later than the date set by the Kansas Gaming Authority as the due date for such application (subject to extensions of time that may be granted by the Kansas Gaming Authority), and shall thereafter provide such further information requested by the Kansas Gaming Authority and respond to such inquiries of the Kansas Gaming Authority regarding the application. Upon such designation, Buyer shall diligently proceed to negotiate and execute a Lottery Gaming Facility Management Contract with respect to the Subject Property. If, despite compliance with the covenants contained in this Section 13.1, Buyer is not designated the manager of the Gaming Operations in the Southeast Gaming Zone and does not receive from the Kansas Gaming Authority a fully executed final, unappealed and unappealable Lottery Gaming Facility Management Contract reasonably acceptable to Buyer, Buyer's obligation to pay the Contingent Payment pursuant to Section 3.3 shall cease and be of no further force and effect. Buyer shall own the Subject Property free and clear, subject, however, to Seller's Purchase Option (as defined in Section 28 hereof) and Buyer shall have no further obligation to Seller whatsoever under this Agreement or otherwise. Id. at 186-87. Attached to the Sale Contract were a number of exhibits, including Exhibit E, which was a Repurchase Agreement entered into on the same date by KPG and HV. Id. at 217-18. The Repurchase Agreement, which cross-referenced certain provisions of the Sale Contract, afforded HV an option, exercisable for a period of ninety (90) days following receipt ... of a Notice of Termination ... from KPG ...,... to purchase the Subject Property from KPG ... on the terms set forth in th[e] [Repurchase] Agreement. Id. at 218. Exhibit D to the Sale Contract was a Guaranty signed by Penn National unconditionally guarantee[ing] the payment and performance of all [KPG's] obligations under the provisions of the [Sale] Contract with respect to the Contingent Payments as provided therein. Id. at 214.