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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
February 6, 1995
CAESARS WORLD, INC.
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(Exact Name of Issuer as Specified
in its Charter)
Florida 1-5979 59-0773674
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation or Organization) Identification
Number)
1801 Century Park East, Suite 2600 Los Angeles, CA 90067
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(Address of Principal Executive Offices) (Zip Code)
(310) 552-2711
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(Registrant's telephone number, including area code)
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Item 1. Changes in Control of Registrant
At midnight on January 24, 1995, the cash tender offer by ITT Florida
Enterprises, Inc., a Florida corporation ("ITT Florida"), and a wholly owned
subsidiary of ITT Corporation, a Delaware corporation ("ITT"), for all of the
outstanding shares of common stock of the registrant expired and all shares
validly tendered pursuant to the tender offer were accepted by ITT Florida for
payment. According to Bankers Trust Company, the Depository, approximately
24,130,291 shares of common stock of the registrant representing 92.9% percent
of the registrant's outstanding common stock on a fully diluted basis, were
tendered. The cash tender offer price was $67.50 per share. ITT, as a result,
announced its intention to consummate the proposed merger of ITT Florida into
the registrant as soon as practicable without a vote of stockholders as
permitted under Florida law.
ITT Florida obtained all funds needed for the tender offer through a
capital contribution from ITT. ITT's principal source of funds was its
commercial paper program for which Goldman Sachs Money Markets, L. P. and Lehman
Brothers Inc. acted as placement agents. Such commercial paper bears interest
at market rates and have maturities not exceeding 270 days from the date of
issuance.
Certain arrangements with respect to the election of directors of the
registrant are described in the registrant's Schedule 14D-9, filed with the
Securities and Exchange Commission on December 23, 1994 under "The Merger
Agreement - Board Representation", which description is hereby incorporated
herein by reference. Pursuant to such arrangements, Messrs. Ball, Buchalter and
Lee resigned from the Board of Directors effective at the close of business on
January 25, 1995 and four designees of ITT, Messrs. Araskog, Bowman, Ward and
Engen were elected to the Board. Effective on or about February 11, 1995, two
additional designees of ITT, Messrs. Kapioltas and Weadock, will become members
of said Board.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: February 8, 1995 CAESARS WORLD, INC.
By /s/ PHILIP L. BALL
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Philip L. Ball
Senior Vice President, General
Counsel and Secretary
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit No. Exhibit Name Page No.
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2.1 Agreement and Plan of Merger,
Dated as of December 19, 1994,
among ITT, ITT Florida and the
Registrant.
2.2 Option Agreement, dated as
of December 19, 1994, among ITT,
ITT Florida and the Registrant
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Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
Dated as of December 19, 1994
Among
ITT CORPORATION,
ITT FLORIDA ENTERPRISES INC.
And
CAESARS WORLD, INC.
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TABLE OF CONTENTS
Page
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Parties and Recitals . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
THE OFFER
SECTION 1.01. The Offer . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Company Actions . . . . . . . . . . . . . . . 4
ARTICLE II
THE MERGER
SECTION 2.01. The Merger . . . . . . . . . . . . . . . . . 6
SECTION 2.02. Closing . . . . . . . . . . . . . . . . . . . 6
SECTION 2.03. Effective Time . . . . . . . . . . . . . . . 6
SECTION 2.04. Effects of the Merger . . . . . . . . . . . . 7
SECTION 2.05. Articles of Incorporation and
By-laws . . . . . . . . . . . . . . . . . 7
SECTION 2.06. Directors . . . . . . . . . . . . . . . . . . 7
SECTION 2.07. Officers . . . . . . . . . . . . . . . . . . 7
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 3.01. Effect on Capital Stock . . . . . . . . . . . 7
SECTION 3.02. Exchange of Certificates . . . . . . . . . . 9
ARTICLE IV
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2
Page
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REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Company 11
SECTION 4.02. Representations and Warranties of Parent and
Sub . . . . . . . . . . . . . . . . . . . 31
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. Conduct of Business . . . . . . . . . . . . . 35
SECTION 5.02. No Solicitation . . . . . . . . . . . . . . . 40
SECTION 5.03. New Jersey Trust . . . . . . . . . . . . . . 43
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Stockholder Meeting; Preparation of the Proxy
Statement . . . . . . . . . . . . . . . . 44
SECTION 6.02. Access to Information; Confidentiality . . . 45
SECTION 6.03. Reasonable Efforts; Notification . . . . . . 46
SECTION 6.04. Stock Options Plans . . . . . . . . . . . . . 48
SECTION 6.05. Indemnification and Insurance . . . . . . . . 49
SECTION 6.06. Directors . . . . . . . . . . . . . . . . . . 50
SECTION 6.07. Fees and Expenses . . . . . . . . . . . . . . 51
SECTION 6.08. Public Announcements . . . . . . . . . . . . 51
SECTION 6.09. Rights Agreements . . . . . . . . . . . . . . 52
SECTION 6.10. Benefit Plans . . . . . . . . . . . . . . . . 52
SECTION 6.11. Title Policies . . . . . . . . . . . . . . . 54
SECTION 6.12. Transfer Taxes . . . . . . . . . . . . . . . 54
SECTION 6.13. Regulatory Matters . . . . . . . . . . . . . 55
ARTICLE VII
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3
Page
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CONDITIONS PRECEDENT
SECTION 7.01. Conditions to Each Party's Obligation to
Effect the Merger . . . . . . . . . . . . 55
SECTION 7.02. Conditions to Obligations of Parent and Sub . 56
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination . . . . . . . . . . . . . . . . . 56
SECTION 8.02. Effect of Termination . . . . . . . . . . . . 57
SECTION 8.03. Amendment . . . . . . . . . . . . . . . . . . 58
SECTION 8.04. Extension; Waiver . . . . . . . . . . . . . . 58
SECTION 8.05. Procedure for Termination, Amendment,
Extension or Waiver . . . . . . . . . . . 58
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Nonsurvival of Representations . . . . . . . 59
SECTION 9.02. Notices . . . . . . . . . . . . . . . . . . . 59
SECTION 9.03. Definitions . . . . . . . . . . . . . . . . . 60
SECTION 9.04. Interpretation . . . . . . . . . . . . . . . 63
SECTION 9.05. Counterparts . . . . . . . . . . . . . . . . 63
SECTION 9.06. Entire Agreement; No Third-Party
Beneficiaries . . . . . . . . . . . . . . . 63
SECTION 9.07. Governing Law . . . . . . . . . . . . . . . . 64
SECTION 9.08. Assignment . . . . . . . . . . . . . . . . . 64
SECTION 9.09. Enforcement . . . . . . . . . . . . . . . . . 64
EXHIBIT A Conditions of the Offer
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AGREEMENT AND PLAN OF MERGER dated as of December 19, 1994,
among ITT CORPORATION, a Delaware corporation ("Parent"), ITT
FLORIDA ENTERPRISES INC., a Florida corporation ("Sub") and a
wholly owned subsidiary of Parent, and CAESARS WORLD, INC., a
Florida corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS in furtherance of such acquisition, Parent will cause Sub to
make a tender offer (as it may be amended from time to time as permitted under
this Agreement, the "Offer") to purchase all the issued and outstanding shares
of Common Stock, par value $.10 per share, of the Company (together with any
associated Rights (as hereinafter defined), the "Company Common Stock"), at a
price per share of Company Common Stock of $67.50 net to the seller in cash
(such price, the "Offer Price"), upon the terms and subject to the conditions
set forth in this Agreement; and the Board of Directors of the Company has
approved the Offer and is recommending that the Company's stockholders accept
the Offer;
WHEREAS the respective Boards of Directors of Parent, Sub and the
Company have approved the Offer and the Merger of Sub into the Company, as set
forth below (the "Merger"), upon the terms and subject to the conditions set
forth in this Agreement, whereby each issued and outstanding share of Company
Common Stock, other than shares owned directly or indirectly by Parent or the
Company and Dissenting Shares (as defined in Section 3.01(d)), will be converted
into the right to receive the price per share paid in the Offer;
WHEREAS Parent and Sub are unwilling to enter into this Agreement
unless the Company, contemporaneously with the execution and delivery of this
Agreement, enters into an Option Agreement (the "Option Agreement") among
Parent, Sub and the Company providing for, among other things, the grant by the
Company to Parent of the option under certain circumstances to purchase up to
5,000,000 newly issued shares of Company Common Stock, plus all shares of
Company Common Stock held in treasury; and the Board of Directors of the Company
has approved the execution and delivery of the Option Agreement which is being
executed contemporaneously with the execution hereof; and
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2
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
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3
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE OFFER
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4
SECTION 1.01. THE OFFER. (a) Subject to the provisions of this
Agreement, as promptly as practicable, but in no event later than five business
days after the public announcement of the Offer, Sub shall, and Parent shall
cause Sub to, commence the Offer. The obligation of Sub to, and of Parent to
cause Sub to, commence the Offer and accept for payment, and pay for, any shares
of Company Common Stock tendered pursuant to the Offer shall be subject to the
conditions set forth in Exhibit A (any of which may be waived in whole or in
part by Sub in its sole discretion) and to the terms and conditions of this
Agreement; PROVIDED, HOWEVER, that Sub shall not, without the Company's consent,
waive the Minimum Condition (as defined in Exhibit A). Sub expressly reserves
the right to modify the terms of the Offer, except that, without the consent of
the Company, Sub shall not (i) reduce the number of shares of Company Common
Stock to be purchased in the Offer, (ii) reduce the Offer Price, (iii) modify or
add to the conditions set forth in Exhibit A, (iv) except as provided in the
next sentence, extend the Offer, (v) change the form of consideration payable in
the Offer or (vi) amend any other term of the Offer in a manner adverse to the
holders of Company Common Stock. Notwithstanding the foregoing, Sub may, without
the consent of the Company, (i) extend the Offer beyond any scheduled expiration
date (the initial scheduled expiration date being 20 business days following
commencement of the Offer) for a period not to exceed 20 business days, if at
any scheduled expiration date of the Offer, any of the conditions to Sub's
obligation to accept for payment, and pay for, shares of Company Common Stock
shall not be satisfied or waived, until such time as such conditions are
satisfied or waived, (ii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer and (iii) extend the
Offer for an aggregate period of not more than 15 business days beyond the
latest expiration date that would otherwise be permitted under clause (i) or
(ii) of this sentence if there shall not have been tendered sufficient shares of
Company Common Stock so that the Merger could be effected as provided in the
last sentence of Section 6.01(a). Subject to the terms and conditions of the
Offer and this Agreement, Sub shall, and Parent shall cause Sub to, accept for
payment, and pay for, all shares of Company Common Stock validly tendered and
not withdrawn pursuant to the Offer that Sub becomes obligated to accept for
payment, and pay for, pursuant to the Offer as soon as practicable after
expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule 14D-1 and the
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5
documents included therein pursuant to which the Offer will be made, together
with any supplements or amendments thereto, the "Offer Documents"). Parent and
Sub agree that the Offer Documents shall comply as to form in all material
respects with the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations promulgated thereunder and, on the date
first published, sent or given to the Company's stockholders, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Parent or Sub with respect
to information supplied by the Company for inclusion or incorporation by
reference in the Offer Documents. Each of Parent, Sub and the Company agrees
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect, and each of Parent and Sub further agrees to
take all steps necessary to amend or supplement the Offer Documents and to cause
the Offer Documents as so amended or supplemented to be filed with the SEC and
to be disseminated to the Company's stockholders, in each case as and to the
extent required by applicable Federal securities laws. The Company and its
counsel shall be given a reasonable opportunity to review and comment upon the
Offer Documents and all amendments and supplements thereto prior to their filing
with the SEC or dissemination to stockholders of the Company. Parent and Sub
agree to provide the Company and its counsel any comments Parent, Sub or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments and shall provide the
Company and its counsel an opportunity to participate, including by way of
discussion with the SEC or its staff, in the response of Parent and/or Sub to
such comments.
(c) Parent shall provide or cause to be provided to Sub on a timely
basis the funds necessary to accept for payment, and pay for, any shares of
Company Common Stock that Sub accepts for payment, and becomes obligated to pay
for, pursuant to the Offer.
SECTION 1.02. COMPANY ACTIONS. (a) The Company hereby approves of and
consents to the Offer and represents that the Board of Directors of the Company,
at a meeting duly called and held, duly and unanimously by vote of all directors
adopted resolutions approving this Agreement, the Offer, the Merger and the
Option Agreement, determining that the terms of the Offer and the Merger are
fair to, and in the best interests of, the Company's stockholders and
recommending that the Company's stockholders approve and adopt this Agreement,
and accept the Offer and tender their shares pursuant to the Offer.
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6
The Company has been advised by each of its directors and by each executive
officer who as of the date hereof is aware of the transactions contemplated
hereby, that each such person either intends to tender pursuant to the Offer all
shares of Company Common Stock owned by such person or vote all shares of
Company Common Stock owned by such person in favor of the Merger, PROVIDED that
any director or executive officer shall be permitted to sell shares of Company
Common Stock in compliance with applicable law.
(b) Not later than the date the Offer Documents are filed with the SEC
or as shortly thereafter as is practicable, the Company shall file with the SEC
a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (such Schedule 14D-9, as amended from time to time, the "Schedule 14D-9")
containing the recommendation described in Section 1.02(a) and shall mail the
Schedule 14D-9 to the stockholders of the Company. The Schedule 14D-9 shall
comply as to form in all material respects with the Exchange Act and the rules
and regulations promulgated thereunder and, on the date filed with the SEC and
on the date first published, sent or given to the Company's stockholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by the Company with
respect to information supplied by Parent or Sub for inclusion or incorporation
by reference in the Schedule 14D-9. Each of the Company, Parent and Sub agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that such information shall have become false or misleading
in any material respect, and the Company further agrees to take all steps
necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule
14D-9 as so amended or supplemented to be filed with the SEC and disseminated to
the Company's stockholders, in each case as and to the extent required by
applicable Federal securities laws. Parent and its counsel shall be given a
reasonable opportunity to review and comment upon the Schedule 14D-9 and all
amendments and supplements thereto prior to their filing with the SEC or
dissemination to stockholders of the Company. The Company agrees to provide
Parent and its counsel with any comments the Company or its counsel may receive
from the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments and shall provide Parent and its counsel an opportunity
to participate, including by way of discussions with the SEC or its staff, in
the response of the Company to such comments.
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7
(c) In connection with the Offer, the Company shall cause its transfer
agent to furnish Sub promptly with mailing labels containing the names and
addresses of the record holders of Company Common Stock as of a recent date and
of those persons becoming record holders subsequent to such date, together with
copies of all lists of stockholders, security position listings and computer
files and all other information in the Company's possession or control regarding
the beneficial owners of Company Common Stock, and shall furnish to Sub such
information and assistance (including updated lists of stockholders, security
position listings and computer files) as Parent may reasonably request in
communicating the Offer to the Company's stockholders. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Merger, Parent and Sub and their agents shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger and, if this
Agreement shall be terminated, will, upon request, deliver, and will use their
best efforts to cause their agents to deliver, to the Company all copies of such
information then in their possession or control.
ARTICLE II
THE MERGER
SECTION 2.01. THE MERGER. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Florida Business
Corporation Act (the "FBCA"), Sub shall be merged with and into the Company at
the Effective Time (as hereinafter defined). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of the Company in accordance with the
FBCA. At the election of Parent, any direct or indirect wholly owned subsidiary
(as defined in Section 9.03) of Parent may be substituted for Sub as a
constituent corporation in the Merger. In such event, the parties agree to
execute an appropriate amendment to this Agreement in order to reflect the
foregoing.
SECTION 2.02. CLOSING. The closing of the Merger will take place at
10:00 a.m. on a date to be specified by the Parent or Sub, which may be on, but
shall be no later than the third business day after, the day on which there
shall have been satisfaction or waiver of the conditions set forth in Article
VII
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8
(the "Closing Date"), at the offices of Cravath, Swaine & Moore, Worldwide
Plaza, 825 Eighth Avenue, New York, N.Y. 10019, unless another date or place is
agreed to in writing by the parties hereto.
SECTION 2.03. EFFECTIVE TIME. On the Closing Date, or as soon as
practicable thereafter, the parties shall file articles of merger or other
appropriate documents (in any such case, the "Articles of Merger") executed in
accordance with the relevant provisions of the FBCA and shall make all other
filings or recordings required under the FBCA. The Merger shall become effective
at such time as the Articles of Merger are duly filed with the Florida
Department of State, or at such other later time as Sub and the Company shall
agree and specify in the Articles of Merger (the time the Merger becomes
effective being the "Effective Time").
SECTION 2.04. EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in Section 607.1106 of the FBCA.
SECTION 2.05. ARTICLES OF INCORPORATION AND BY-LAWS. (a) The Articles
of Incorporation of the Company, as in effect immediately prior to the Effective
Time of the Merger, shall become the Articles of Incorporation of the Surviving
Corporation after the Effective Time, and thereafter may be amended in
accordance with its terms and as provided by law and this Agreement.
(b) The By-laws of the Company as in effect on the Effective Time
shall become the By-laws of the Surviving Corporation.
SECTION 2.06. DIRECTORS. The directors of Sub immediately prior to the
Effective Time shall become the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 2.07. OFFICERS. The officers of the Company immediately prior
to the Effective Time shall become the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
<PAGE>
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 3.01. EFFECT ON CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or any shares of capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each share of the capital stock of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of Common
Stock, par value $.10 per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT OWNED STOCK. Each
share of Company Common Stock that is owned by the Company or by any
subsidiary of the Company and each share of Company Common Stock that is
owned by Parent, Sub or any other subsidiary of Parent shall automatically
be canceled and retired and shall cease to exist, and no consideration
shall be delivered in exchange therefor.
(c) CONVERSION OF COMMON STOCK. Subject to Section 3.01(d), each
issued and outstanding share of Company Common Stock (other than shares to
be canceled in accordance with Section 3.01(b)) shall be converted into the
right to receive from the Surviving Corporation in cash, without interest,
the price paid for each share of Company Common Stock in the Offer (the
"Merger Consideration"). As of the Effective Time, all such shares of
Company Common Stock shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of Company Common Stock shall
cease to have any rights with respect thereto, except the right to receive
the Merger Consideration, without interest.
(d) SHARES OF DISSENTING STOCKHOLDERS. Notwithstanding anything in
this Agreement to the contrary, any issued and outstanding shares of
Company Common Stock held by a person (a "Dissenting Stockholder") who
objects to the Merger and complies with all the provisions of Florida law
concerning the right of holders of Company Common Stock to dissent from the
Merger and require appraisal of their shares of Company Common Stock
("Dissenting Shares") shall not be converted as described in
Section 3.01(c) but shall become the right to receive such
<PAGE>
consideration as may be determined to be due to such Dissenting Stockholder
pursuant to the laws of the State of Florida. If, after the Effective Time,
such Dissenting Stockholder withdraws his demand for appraisal or fails to
perfect or otherwise loses his right of appraisal, in any case pursuant to
the FBCA, his shares of Company Common Stock shall be deemed to be
converted as of the Effective Time into the right to receive the Merger
Consideration, without interest. The Company shall give Parent (i) prompt
notice of any demands for appraisal of shares of Company Common Stock
received by the Company and (ii) the opportunity to participate in and
direct all negotiations and proceedings with respect to any such demands.
The Company shall not, without the prior written consent of Parent, make
any payment with respect to, or settle, offer to settle or otherwise
negotiate, any such demands.
SECTION 3.02. EXCHANGE OF CERTIFICATES. (a) PAYING AGENT. Prior to
the Effective Time, Parent shall designate a bank or trust company to act as
paying agent in the Merger (the "Paying Agent"), and, from time to time on,
prior to or after the Effective Time, Parent shall make available, or cause the
Surviving Corporation to make available, to the Paying Agent immediately
available funds in amounts and at the times necessary for the payment of the
Merger Consideration upon surrender of certificates representing Company Common
Stock as part of the Merger pursuant to Section 3.01, it being understood that
any and all interest earned on funds made available to the Paying Agent pursuant
to this Agreement shall be turned over to Parent.
(b) EXCHANGE PROCEDURE. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates")
whose shares were converted into the right to receive the Merger Consideration
pursuant to Section 3.01, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
such form and have such other provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by the Parent, together with such letter of transmittal, duly
executed, and such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor the amount of cash into which the shares of Company Common Stock
theretofore represented
<PAGE>
by such Certificate shall have been converted pursuant to Section 3.01, and the
Certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Company Common Stock which is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that such
tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 3.02, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
amount of cash, without interest, into which the shares of Company Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 3.01. No interest will be paid or will accrue on the cash payable
upon the surrender of any Certificate.
(c) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All cash
paid upon the surrender of Certificates in accordance with the terms of this
Article III shall be deemed to have been paid in full satisfaction of all rights
pertaining to the shares of Company Common Stock theretofore represented by such
Certificates, and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares of Company
Common Stock which were outstanding immediately prior to the Effective Time.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be cancelled and
exchanged as provided in this Article III, except as otherwise provided by law.
(d) NO LIABILITY. None of Parent, Sub, the Company or the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to Parent and Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of the Company
and each of its Significant Subsidiaries is a corporation or partnership
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has the requisite corporate or
partnership power and authority to carry on its business as now being
conducted. Each of the Company and its subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in
which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material adverse effect
on the Company. The Company has made available to Parent complete and
correct copies of the Amended and Restated Articles of Incorporation and
by-laws of the Corporation, in each case as amended to the date of this
Agreement, and will make available immediately following the date of this
Agreement the certificates of incorporation and by-laws or other
organizational documents of its subsidiaries, in each case as amended to
the date of this Agreement. The respective certificates of incorporation
and by-laws or other organizational documents of the subsidiaries of the
Company do not contain any provision limiting or otherwise restricting the
ability of the Company to control such subsidiaries. For purposes of this
Agreement, a "Significant Subsidiary" means any subsidiary of the Company
that (x) constitutes a significant subsidiary within the meaning of Rule 1-
02 of Regulation S-X of the SEC or (y) the acquisition of which would
require regulatory approval under any Gaming Law.
(b) SUBSIDIARIES. The list of subsidiaries of the Company filed by
the Company with its most recent Report on Form 10-K is a true and accurate
list of all the subsidiaries of the Company which are required to be set
forth therein. All the outstanding shares of capital stock of each
Significant Subsidiary are owned by the Company, by another wholly owned
subsidiary of the Company or by the Company and another wholly owned
subsidiary of the Company, free and clear of all liens.
<PAGE>
(c) CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 50,000,000 shares of Company Common Stock and 1,000,000 shares
of preferred stock, par value $.10 per share ("Company Preferred Stock").
At the close of business on December 13, 1994, (i) 25,120,963 shares of
Company Common Stock and no shares of Company Preferred Stock were issued
and outstanding, (ii) 1,354,538 shares of Company Common Stock were held by
the Company in its treasury, (iii) 774,926 shares of Company Common Stock
were reserved for issuance upon exercise of outstanding Stock Options (as
defined in Section 6.04), (iv) 89,341 shares of Company Common Stock were
reserved for issuance in respect of contingent shares of Company Common
Stock and (v) no shares of Company Common Stock and 250,000 shares of
Company Preferred Stock were reserved for issuance in connection with the
rights (the "Rights") to purchase shares of Company capital stock issued
pursuant to the Rights Agreement dated as of January 10, 1989 (as amended
from time to time, the "Rights Agreement"), between the Company and First
Chicago Trust Company of New York, as Rights Agent (the "Rights Agent").
Except as set forth above, as of the date of this Agreement, no shares of
capital stock or other voting securities of the Company were issued,
reserved for issuance or outstanding. There are no outstanding stock
appreciation rights which were not granted in tandem with a related Stock
Option, restricted stock grant or contingent stock grant and, other than as
may be contained in employee benefit plans, employment agreements,
merchandising incentive agreements, stock options and similar plans,
agreements and instruments, there are no other outstanding contractual
rights to which the Company is a party (other than Benefit Plans) the value
of which is derived from the financial performance of the Company or the
value of shares of Company Common Stock. All outstanding shares of capital
stock of the Company are, and all shares which may be issued will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any
matters on which stockholders of the Company may vote. Except as set forth
above, as of the date of this Agreement, there are no outstanding
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares
<PAGE>
of capital stock or other voting securities of the Company or of any of its
subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. Except to the
extent Paragraph 12 of Article III of the Company's Amended and Restated
Articles of Incorporation or a provision comparable to such Paragraph 12
under any Gaming Law could be construed as a contractual obligation or any
Stock Options contain a provision comparable to such Paragraph 12, or as
may be required by any restricted stock arrangement, stock appreciation
rights, tax withholding with respect to restricted and contingent stock,
and stock options, payment for the exercise of which is made in capital
stock of the Company, there are not any outstanding contractual obligations
of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries.
(d) AUTHORITY; NONCONTRAVENTION. The Company has the requisite
corporate power and authority to enter into this Agreement and, subject to
approval of this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock, to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of the Company, subject, in the case of this
Agreement, to approval of this Agreement by the holders of a majority of
the outstanding shares of Company Common Stock. This Agreement has been
duly executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding obligation of Parent and Sub, constitutes
the valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except that (i) such enforcement may
be subject to the matters set forth in the last sentence of Section 9.04
and to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and
(ii) the remedy of specific performance and injunctive relief may be
subject to equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought. The execution and delivery
of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement (including the changes in the composition of
the Board of Directors of the Company) and compliance with the provisions
of this Agreement will not, conflict with, or result in any violation of,
or default
<PAGE>
(with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or result in the
creation of any lien upon any of the properties or assets of the Company or
any of its subsidiaries under, (i) the Amended and Restated Articles of
Incorporation or by-laws of the Company or the comparable charter or
organizational documents of any of its subsidiaries, (ii) other than
contingent severance agreements, severance plans, employment agreements,
tax withholding rights, stock options and stock grant agreements and
subject to the governmental filings and other matters referred to in the
following sentence, any loan or credit agreement (except the Loan Agreement
dated as of August 21, 1992, among the Company, the banks named therein and
Bank of America National Trust and Savings Association, as Agent, as
amended), note, bond, mortgage, indenture (except the Senior Subordinated
Indenture dated August 15, 1992, between the Company and First Trust
National Association), lease or other agreement (other than understandings
and business arrangements relating to projects in Missouri and Windsor,
Canada), instrument, permit, concession, franchise or license applicable to
the Company or any of its subsidiaries or their respective properties or
assets (including all agreements described pursuant to Section 4.01(v)) or
(iii) subject to the governmental filings and other matters referred to in
the following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
subsidiaries or their respective properties or assets, other than, in the
case of clauses (ii) or (iii), any such conflicts, violations, defaults,
rights or liens that individually or in the aggregate would not (x) have a
material adverse effect on the Company, (y) impair in any material respect
the ability of the Company to perform its obligations under this Agreement
or (z) prevent or impede, in any material respect, the consummation of any
of the transactions contemplated by this Agreement. To the knowledge of
the Company, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal, state or local
government or any court, administrative or regulatory agency or commission
or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), is required by the Company or any of its
subsidiaries in connection with the execution and delivery of this
Agreement by the Company or the consummation by the Company of the
transactions contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form by the Company under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), (ii) the filing
with the SEC of (x) the Schedule 14D-9, (y) a
<PAGE>
proxy statement relating to any required approval by the Company's
stockholders of this Agreement (as amended or supplemented from time to
time, the "Proxy Statement") and (z) such reports under Section 13(a) of
the Exchange Act as may be required in connection with this Agreement and
the transactions contemplated by this Agreement, (iii) the filing of the
Articles of Merger with the Florida Department of State and appropriate
documents with the relevant authorities of other states in which the
Company is qualified to do business, (iv) the approval by (A) the New
Jersey Casino Control Commission under the New Jersey Casino Control Act
and the rules and regulations promulgated thereunder, (B) the Nevada State
Gaming Control Board and the Nevada Gaming Commission under the Nevada
Gaming Control Act and the rules and regulations promulgated thereunder,
(C) the Clark County Liquor and Gaming Licensing Board pursuant to the
Clark County, Nevada Code and the rules and regulations promulgated
thereunder, (D) the National Indian Gaming Commission under the Indian
Gaming Regulatory Act and the rules and regulations promulgated thereunder,
(E) the Ontario Gaming Control Commission under the Ontario Gaming Control
Act, 1992 and the rules and regulations promulgated thereunder, (F) the
Indiana Gaming Commission under Article 33, Title IV of the Official
Indiana Code, (G) the Missouri Gaming Commission under Mo. Rev. Stat.
SECTION 313.800-850 and the rules and regulations promulgated thereunder
and (H) the Agua Caliente Tribal Council, (v) as may be required by any
applicable state securities or "blue sky" laws, (vi) in connection with any
state or local tax which is attributable to the beneficial ownership of
real property of the Company or its subsidiaries, (vii) such immaterial
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or
required approval triggered by the Offer, the Merger or the transactions
contemplated by this Agreement, (viii) such immaterial filings, consents,
approvals, orders, registrations and declarations as may be required under
the laws of any foreign country in which the Company or any of its
subsidiaries conducts any business or owns any assets, and (ix) such other
consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made would not,
individually or in the aggregate, (x) have a material adverse effect on the
Company, (y) impair, in any material respect, the ability of the Company to
perform its obligations under this Agreement or (z) prevent or
significantly delay the consummation of the transactions contemplated by
this Agreement.
<PAGE>
(e) SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed all
required reports, proxy statements, forms, and other documents with the SEC
since July 31, 1993 (the "SEC Documents"). As of their respective dates,
(i) the SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933 (the "Securities Act"), or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and (ii) none of
the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Except to the extent that
information contained in any SEC Document has been revised or superseded by
a later-filed SEC Document filed and publicly available prior to the date
of this Agreement, none of the SEC Documents contains any untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the SEC Documents comply as
to form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto,
have been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the SEC Documents filed and publicly
available prior to the date of this Agreement, and except for liabilities
and obligations incurred in the ordinary course of business consistent with
past practice since the date of the most recent consolidated balance sheet
included in the SEC Documents filed and publicly available prior to the
date of this Agreement, neither the Company nor any of its subsidiaries has
any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance sheet of the Company
and its consolidated subsidiaries or in the notes thereto.
<PAGE>
(f) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by the Company expressly for inclusion or incorporation by
reference in (i) the Offer Documents or (ii) the information to be filed by
the Company in connection with the Offer pursuant to Rule 14f-1 promulgated
under the Exchange Act (the "Information Statement"), will, at the
respective times the Offer Documents and the Information Statement are
filed with the SEC and first published, sent or given to the Company's
stockholders, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Information Statement will comply as to
form in all material respects with the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made
by the Company with respect to statements made or incorporated by reference
therein based on information supplied by Parent or Sub for inclusion or
incorporation by reference therein.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
SEC Documents filed and publicly available prior to the date of this
Agreement or as set forth in Schedule 4.01(g), since July 31, 1994, the
Company and its subsidiaries have conducted their respective businesses
only in the ordinary course, and there has not been (i) any material
adverse change in the Company, (ii) any declaration, setting aside or
payment of any dividend or other distribution with respect to its capital
stock, (iii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any
other securities in respect of, in lieu of or in substitution for shares of
its capital stock, (iv) (x) any granting by the Company or any of its
subsidiaries to any officer of the Company or any of its subsidiaries of
any increase in compensation, except in the ordinary course of business
(including in connection with promotions) consistent with prior practice or
as was required under employment agreements in effect as of the date of the
most recent audited financial statements included in the SEC Docu-
<PAGE>
ments filed and publicly available prior to the date of this Agreement, (y)
any granting by the Company or any of its subsidiaries to any such officer
of any increase in severance or termination pay, except as part of a
standard employment package to any person promoted or hired (but not
including the five most senior officers), or as was required under
employment, severance or termination agreements in effect as of the date of
the most recent audited financial statements included in the SEC Documents
filed and publicly available prior to the date of this Agreement or as
disclosed in Schedule 4.01(g) or (z) except termination arrangements in the
ordinary course of business consistent with past practice with employees
other than any executive officer of the Company and except for the two
employment agreements referred to in Section 6.10(a), any entry by the
Company or any of its subsidiaries into any employment, severance or
termination agreement with any such officer, (v) any damage, destruction or
loss, whether or not covered by insurance, that has or reasonably could be
expected to have a material adverse effect on the Company or (vi) any
change in accounting methods, principles or practices by the Company
materially affecting its assets, liabilities or business, except insofar as
may have been required by a change in generally accepted accounting
principles.
(h) LITIGATION. Except as disclosed in the SEC Documents, there is
no suit, action or proceeding pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries that,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the Company, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any of its subsidiaries that,
individually or in the aggregate, could reasonably be expected to have such
an effect; it being understood that this representation shall not include
any litigation of the nature described in paragraph (a) of Exhibit A.
(i) ABSENCE OF CHANGES IN BENEFIT PLANS. Except as disclosed in
Schedule 4.01(i), Schedules 4.01(j)(i), (ii) or (iii), in the SEC Documents
or as otherwise expressly permitted hereunder, there has not been any
adoption or amendment in any material respect by the Company or any of its
subsidiaries of any Benefit Plan (as defined in Section 4.01(j) hereof)
since July 31, 1994. All employment, consulting, severance, termination or
indemnification agreements, arrangements or understandings between the
Company or any of its subsidiaries and any current or former officer or
director of the Company or any of its subsidiaries which are required to be
disclosed in the SEC Documents have been disclosed therein.
(j) ERISA COMPLIANCE. (i) As soon as practicable after the signing
of this Agreement, the Company will make available all "employee pension
benefit plans" (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (sometimes referred to
herein as "Pension Plans"), "employee welfare benefit
<PAGE>
plans" (as defined in Section 3(1) of ERISA) and all other plans,
arrangements or policies relating to stock options, stock purchases,
compensation, deferred compensation, severance, fringe benefits and other
employee benefits, in each case maintained, or contributed to, or required
to be maintained or contributed to, by the Company, any of its subsidiaries
or any other person or entity that, together with the Company, is treated
as a single employer under Section 414(b), (c), (m) or (o) of the Code
(each a "Commonly Controlled Entity") for the benefit of any current or
former employees, officers or directors (or any beneficiaries thereof) of
the Company or any of its subsidiaries (collectively, "Benefit Plans").
Certain Benefit Plans affecting officers and directors which are sponsored
by the Company are disclosed in Schedule 4.01(j)(i).
(ii) Each Benefit Plan sponsored by the Company or any subsidiary (a
"Company Benefit Plan") has been administered in all material respects in
accordance with its terms. Except as disclosed in Schedule 4.01(j)(ii),
the Company and all the Company Benefit Plans are all in compliance in all
material respects with applicable provisions of ERISA and the Code and all
other applicable laws. The most recent Form 5500 and summary plan
description for each Company Benefit Plan for which such documents are
required was complete and correct in all material respects. There are (or,
in the case of Benefit Plans that are multiemployer plans (as defined in
Section 4001(a)(3) of ERISA) (each, a "Multiemployer Plan"), there are to
the knowledge of the Company) no investigations by any governmental agency,
termination proceedings or other claims (except claims for benefits payable
in the normal operation of the Benefit Plans), suits or proceedings against
or involving any Benefit Plan or asserting any rights to or claims for
benefits under any Benefit Plan that could give rise to any material
liability, and, to the knowledge of the Company, there are not any facts
that could reasonably be expected to give rise to any material liability in
the event of any such investigation, claim, suit or proceeding. No
"prohibited transaction" (as defined in Section 4975 of the Code or Section
406 of ERISA) has occurred in respect of any Company Benefit Plan and, to
the knowledge of the Company, no such transaction has occurred between the
Company or any employee, officer or director thereof and any Multiemployer
Plan. The Company does not maintain any defined benefit pension plan
except the two Executive Security Plans. The Executive Security Plans are
not subject to the funding requirements of ERISA or the Code and are not
tax-qualified plans.
<PAGE>
(iii) Schedule 4.01(j)(iii) lists the Multiemployer Plans covering
employees of the Company or its subsidiaries and sets forth a list, for
each location at which such employees are or were covered by a
Multiemployer Plan, (y) of the number of covered employees, contribution
rate and hours from 1987 to the date hereof, in the case of New Jersey, and
(z) of the number of covered employees and aggregate pension expense from
1990 to the date hereof and aggregate pension expense for 1988 and 1989, in
the case of Nevada. The aggregate amount of withdrawal liability (as
defined in Section 4201 of ERISA) if each Commonly Controlled Entity were
to withdraw from each Multiemployer Plan would not exceed $25,000,000. To
the knowledge of the Company, no Commonly Controlled Entity has engaged in
a transaction described in Section 4069 of ERISA that could subject the
Company to liability at any time after the date hereof. To the knowledge
of the Company, no Commonly Controlled Entity has acted in a manner that
could, or failed to act so as to, result in fines, penalties, taxes or
related charges under (x) Section 502(c), (i) or (1) of ERISA, (y) Section
4071 of ERISA or (z) Chapter 43 of the Code.
(iv) To the knowledge of the Company, and except for collective
bargaining agreements during the respective terms thereof, and for the
Company's contingent severance agreements, employment agreements or
severance pay plan for corporate officers and corporate staff, there are no
understandings, agreements or undertakings, except pursuant to Section 6.10
hereof, that would prevent any Benefit Plan that is an employee welfare
benefit plan (including any such Benefit Plan covering retirees) from being
amended or terminated, on or at any time after the consummation of the
Offer, without such amendment or termination causing material liability to
the Company or any of its subsidiaries over that which is already accrued.
(v) To the knowledge of the Company, no Commonly Controlled Entity
has incurred any material liability, and no event has occurred that would
result in any material liability, to a pension plan subject to the funding
requirements of ERISA and the Code (other than for contributions not yet
due) or to the Pension Benefit Guaranty Corporation (other than for payment
of premiums not yet due) that has not been fully paid as of the date
hereof, provided that the foregoing has no application to Multiemployer
Plans.
<PAGE>
(vi) The information supplied to the actuary for use in preparing the
actuarial reports or valuations for the trusts under the Caesars World,
Inc. and Subsidiaries Benefit Trust Agreement and the Boardwalk Regency
Corporation Benefit Trust Agreement was complete and accurate in all
material respects. The Company has no reason to believe that any
conclusions expressed in those reports or valuations are incorrect. The
Company and certain of its subsidiaries have contributed to such trusts the
amounts required by the most recent actuarial calculation of liabilities
thereunder. As of July 31, 1994, the aggregate amount in such trusts was
$12,756,000.
(vii) Except as provided in the Company's severance pay plan, the two
employment agreements with Messrs. Gluck and Lanni, the contingent
severance agreements, and except for the vesting and accelerated
exercisability with respect to contingent or restricted stock agreements,
stock options and stock appreciation rights, no employee of the Company or
any of its subsidiaries will be entitled to any additional benefits or any
acceleration of the time of payment or vesting of any benefits under any
Benefit Plan as a result of the transactions contemplated by this
Agreement.
(viii) The only "postemployment benefits" (other than disability-
related benefits), as defined in Statement of Financial Accounting
Standards No. 112, and the only "postretirement benefits", as defined in
Statement of Financial Accounting Standards No. 106, which the Company is
obligated to provide are those described in its two employment agreements
and any such benefits which may be required by the Consolidated Ommibus
Budget Reconciliation Act ("COBRA").
(k) TAXES. (i) Each of the Company and each of its subsidiaries has
filed all Federal income tax returns and all other material tax returns and
reports required to be filed by it. To the knowledge of the Company, all
such returns are complete and correct in all material respects. To the
knowledge of the Company, each of the Company and each of its subsidiaries
has paid (or the Company has paid on its subsidiaries' behalf) all taxes
shown as due on such returns and all material taxes for which no return was
required to be filed, and the most recent financial statements contained in
the SEC Documents reflect an adequate reserve for all taxes payable by the
Company and its subsidiaries for all taxable periods and portions thereof
through the date of such financial statements, except in respect of certain
possible industry-wide issues
<PAGE>
pertaining to deductibility of complimentaries and the treatment of certain
discounts and customer bad debts, which issues are the subject of pending
IRS technical advice submissions.
(ii) Except with respect to the industry-wide issues specified in the
last sentence of Section 4.01(k)(i), no material deficiencies for any taxes
have been proposed, asserted or assessed against the Company or any of its
subsidiaries, which are not reserved for. The Federal income tax returns
of the Company and each of its subsidiaries consolidated in such returns
have been examined by and settled with the Internal Revenue Service for all
years through 1988 and all returns after 1988 are open and subject to
examination.
(iii) As used in this Agreement, "taxes" shall include all Federal,
state, local and foreign income, property, sales, excise and other taxes,
tariffs or governmental charges of any nature whatsoever.
(l) NO EXCESS PARACHUTE PAYMENTS. To the knowledge of the Company,
any amount that could be received (whether in cash or property or the
vesting of property) as a result of any of the transactions contemplated by
this Agreement by any employee, officer or director of the Company or any
of its affiliates who is a "disqualified individual" (as such term is
defined in proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation
arrangement or Benefit Plan currently in effect should not be characterized
as an "excess parachute payment" (as such term is defined in Section
280G(b)(1) of the Code and the proposed regulations thereunder).
(m) COMPLIANCE WITH APPLICABLE LAWS. (i) To the knowledge of the
Company, each of the Company and its subsidiaries has in effect all
Federal, state, local and foreign governmental approvals, authorizations,
certificates, filings, franchises, licenses, notices, permits and rights,
including all authorizations under Environmental Laws and Gaming Laws
("Permits"), necessary for it to own, lease or operate its properties and
assets and to carry on its business as now conducted other than such
Permits the absence of which would not, individually or in the aggregate,
have a material adverse effect on the Company, and there has occurred no
default under any such Permit other than such defaults which, individually
or in the aggregate, would not have a material adverse effect on the
Company. To the knowledge of the Company, except as disclosed
<PAGE>
in the SEC Documents filed and publicly available prior to the date of this
Agreement, the Company and its Subsidiaries are in compliance with all
applicable statutes, laws, ordinances, rules, orders and regulations of any
Governmental Entity, except for possible noncompliance which individually
or in the aggregate would not have a material adverse effect on the
Company. The preceding sentence of this Section 4.01(m)(i) does not apply
to matters specifically covered by Sections 4.01(j), 4.01(k) or 4.01(m)(ii)
through 4.01(m)(viii).
(ii) To the knowledge of the Company, each of the Company and its
subsidiaries is in compliance with all applicable Gaming Laws, except for
possible noncompliance which individually or in the aggregate would not
have a material adverse effect on the Company. The term "GAMING LAWS"
means any Federal, state, local or foreign statute, ordinance, rule,
regulation, permit, consent, approval, license, judgment, order, decree,
injunction or other authorization governing or relating to the current or
contemplated casino and gaming activities and operations of the Company,
including the New Jersey Casino Control Act and the rules and regulations
promulgated thereunder, the Nevada Gaming Control Act and the rules and
regulations promulgated thereunder, the Clark County, Nevada Code and the
rules and regulations promulgated thereunder, Article 33 of Title IV of the
Official Indiana Code and the rules and regulations promulgated thereunder,
the Indian Gaming Regulatory Act and the rules and regulations promulgated
thereunder, Mo. Rev. Stat. SECTION SECTION 313.800-.850 and the rules and
regulations promulgated thereunder and the Ontario Gaming Control Act, 1992
and the rules and regulations promulgated thereunder.
(iii) To the knowledge of the Company, neither the Company nor any
Significant Subsidiary of the Company nor any director or officer of the
Company or any Significant Subsidiary of the Company has received any
written claim, demand, notice, complaint, court order or administrative
order from any Governmental Entity in the past three years, asserting that
a license of it or them, as applicable, under any Gaming Laws should be
revoked or suspended other than in respect of a former marketing executive
of Boardwalk Regency whose license was revoked.
(iv) To the knowledge of the Company, each of the Company and its
subsidiaries is, and has been, and each of the Company's former
subsidiaries, while a subsidiary of the Company, was in compliance with all
applicable Environmental Laws, except for possible noncompliance
<PAGE>
which individually or in the aggregate would not have a material adverse
effect on the Company. The term "ENVIRONMENTAL LAWS" means any Federal,
state, local or foreign statute, ordinance, rule, regulation, permit,
consent, approval, license, judgment, order, decree, injunction or other
authorization, relating to: (A) Releases (as defined in 42 U.S.C. SECTION
9601(22)) or threatened Releases of Hazardous Material (as hereinafter
defined) into the environment or (B) the generation, treatment, storage,
disposal, use, handling, manufacturing, transportation or shipment of, or
exposure to, a Hazardous Material.
(v) To the knowledge of the Company, neither the Company nor any
subsidiary of the Company has received any written claim, demand, notice,
complaint, court order, administrative order or request for information
from any Governmental Entity or private party in the past three years,
alleging violation of, or asserting any noncompliance with or liability
under or potential liability under, any Environmental Laws which
individually or in the aggregate would reasonably be expected to have a
material adverse effect on the Company.
(vi) To the knowledge of the Company, during the period of ownership
or operation by the Company and its subsidiaries of any of their respective
current or previously owned or leased properties, there have been no
Releases of Hazardous Material in, on, under or affecting such properties
and none of the Company or its subsidiaries have disposed of any Hazardous
Material or any other substance in a manner that has led, or could
reasonably be anticipated to lead to a Release except in each case for
those which individually or in the aggregate are not reasonably likely to
have a material adverse effect on the Company. Prior to the period of
ownership or operation by the Company and its subsidiaries of any of their
respective current or previously owned or leased properties, to the
knowledge of the Company no Hazardous Material was generated, treated,
stored, disposed of, used, handled or manufactured at, or transported
shipped or disposed of from, such current or previously owned or leased
properties, and there were no Releases of Hazardous Material in, on, under
or affecting any such property or any surrounding site, except in each case
for those which individually or in the aggregate would not be reasonably
likely to have a material adverse effect on the Company. The term
"HAZARDOUS MATERIAL" means (1) hazardous substances (as defined in 42
U.S.C. SECTION 9601(14)), (2) petroleum, including crude oil and any
fractions thereof, (3) natural gas, synthetic gas and any mixtures thereof,
(4) asbestos and/or asbestos-containing material, (5) PCBs, or materials
<PAGE>
containing PCBs in excess of 50 ppm, and any material regulated as a
medical waste or infectious waste.
(vii) Schedule 4.01(m)(vii) identifies all environmental audits,
assessments or studies within the possession of the Company or any
Significant Subsidiary of the Company with respect to the facilities or
real property owned, leased or operated by the Company or any Significant
Subsidiary of the Company, which were conducted within the last five years.
As soon as practicable after the date of this Agreement, the Company will
furnish to Parent complete and correct copies of all such audits,
assessments and studies.
(viii) The transactions contemplated by this Agreement will not
require compliance with the New Jersey Industrial Site Recovery Act or
any similar state transfer law.
(n) STATE TAKEOVER STATUTES; CHARTER PROVISIONS. The Board of
Directors of the Company has approved the Offer, the Merger, this Agreement
and the Option Agreement and such approval is sufficient to render
inapplicable to the Offer, the Merger, this Agreement and the Option
Agreement and the other transactions contemplated by this Agreement and the
Option Agreement, the provisions of Section 607.0901 of the FBCA, the
provisions of Section 607.0902 of the FBCA and the provisions of
Paragraph A of Article XI of the Company's Amended and Restated Articles of
Incorporation.
(o) VOTING REQUIREMENTS. The affirmative vote of the holders of a
majority of all the shares of Company Common Stock entitled to be cast
approving this Agreement is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve this Agreement
and the transactions contemplated by this Agreement.
(p) RIGHTS AGREEMENT. The Company and the Board of Directors of the
Company have taken and will maintain in effect all necessary action to
(i) render the Rights Agreement inapplicable with respect to the Offer, the
Merger, the Option Agreement and the other transactions contemplated by
this Agreement and (ii) ensure that (y) neither Parent nor Sub nor any of
their Affiliates (as defined in the Rights Agreement) or Associates (as
defined in the Rights Agreement) is considered to be an Acquiring Person
(as defined in the Rights Agreement) or an Adverse Person (as defined in
the Rights Agreement) or an Unqualified Gaming Person
<PAGE>
Person (as defined in the Rights Agreement) and (z) a Distribution Date
(as defined in the Rights Agreement) does not and shall not occur by
reason of the announcement or consummation of the Offer, the Merger, the
Option Agreement or the consummation of any of the other transactions
contemplated by this Agreement. The Company has delivered to Parent a
complete and correct copy of the Rights Agreement as amended and
supplemented to the date of this Agreement.
(q) BROKERS. No broker, investment banker, financial advisor or
other person, other than Merrill Lynch & Co., the fees and expenses of
which will be paid by the Company, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company. The Company has provided Parent true
and correct copies of all agreements between Company and Merrill Lynch &
Co.
(r) OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Merrill Lynch & Co., to the effect that, as of the date of this
Agreement, the consideration to be received in the Offer and the Merger by
the Company's stockholders is fair to the Company's stockholders from a
financial point of view, and a complete and correct signed copy of such
opinion has been, or promptly upon receipt thereof will be, delivered to
Parent.
(s) TRADEMARKS, ETC. To the knowledge of the Company, the material
patents, trademarks (registered or unregistered), trade names, service
marks and copyrights and applications therefor owned, used or filed by or
licensed to the Company and its subsidiaries (collectively, "Intellectual
Property Rights") are sufficient to allow each of the Company and each of
its Significant Subsidiaries to conduct, and continue to conduct, its
business as currently conducted or as the Company proposes to conduct such
business. To the knowledge of the Company, each of the Company and each of
its Significant Subsidiaries owns or has sufficient unrestricted right to
use the Intellectual Property Rights in order to allow it to conduct, and
continue to conduct, its business as currently conducted or as the Company
proposes to conduct such business, and the consummation of the transactions
contemplated hereby will not alter or impair such ability in any respect
which individually or in the aggregate would be reasonably likely to have a
material adverse effect on the Company. To the knowledge of the Company,
neither the Company nor any of its
<PAGE>
Significant Subsidiaries has received any oral or written notice from any
other person pertaining to or challenging the right of the Company or any
of its Significant Subsidiaries to use any of the Intellectual Property
Rights, which challenge or other assertion, if upheld or successful,
individually or in the aggregate would be reasonably likely to have a
material adverse effect on the Company. To the knowledge of the Company,
no claims are pending by any person with respect to the ownership,
validity, enforceability or use of any such Intellectual Property Rights
challenging or questioning the validity or effectiveness of any of the
foregoing which claims would reasonably be expected to have a material
adverse effect on the Company. To the knowledge of the Company, neither
the Company nor any of its Significant Subsidiaries has made any claim of a
violation or infringement by others of its rights to or in connection with
the Intellectual Property Rights in any such case where such claims
(individually or in the aggregate) would reasonably be expected to have a
material adverse effect on the Company.
(t) TITLE TO PROPERTIES. To the knowledge of the Company, each of
the Company and each of its Significant Subsidiaries has sufficiently good
and valid title to, or an adequate leasehold interest in, its material
tangible properties and assets in order to allow it to conduct, and
continue to conduct, its business as currently conducted or as the Company
proposes to conduct such business. Such material tangible assets and
properties are sufficiently free of liens to allow each of the Company and
each of its subsidiaries to conduct, and continue to conduct, its business
as currently conducted, or as the Company proposes to conduct such business
and, to the knowledge of the Company, the consummation of the transactions
contemplated by this Agreement will not alter or impair such ability in any
respect which individually or in the aggregate would be reasonably likely
to have a material adverse effect on the Company. To the knowledge of the
Company, each of the Company and each of its subsidiaries enjoys peaceful
and undisturbed possession under all material leases, except for such
breaches of the right to peaceful and undisturbed possession that do not
materially interfere with the ability of the Company and its subsidiaries
to conduct its business as currently conducted. Schedule 4.01(t) sets
forth a complete list of all material real property and material interests
in real property owned in fee by the Company or one of its subsidiaries and
sets forth all material real property and interests in real property leased
by the Company or one of its subsidiaries as of the date hereof.
<PAGE>
(u) INSURANCE. To the knowledge of the Company, the Company and its
Significant Subsidiaries have obtained and maintained in full force and
effect insurance with responsible and reputable insurance companies or
associations in such amounts, on such terms and covering such risks,
including fire and other risks insured against by extended coverage, as is
reasonably prudent, and each has maintained in full force and effect public
liability insurance, insurance against claims for personal injury or death
or property damage occurring in connection with any of activities of the
Company or its Significant Subsidiaries or any of any properties owned,
occupied or controlled by the Company or its Significant Subsidiaries, in
such amount as reasonably deemed necessary by the Company or its
Significant Subsidiaries.
(v) CONTRACTS; DEBT INSTRUMENTS. Except as set forth in the SEC
Documents and as set forth in Schedule 4.01(v), there are no (i) agreements
of the Company or any of its subsidiaries containing an unexpired covenant
not to compete or similar restriction applying to the Company or any of its
subsidiaries, (ii) interest rate, currency or commodity hedging, swap or
similar derivative transactions to which the Company is a party or
(iii) other contracts or amendments thereto that would be required to be
filed as an exhibit to a Form 10-K filed by the Company with the SEC as of
the date of this Agreement. To the knowledge of the Company, each of the
agreements listed in Schedule 4.01(v) and the SEC Documents is a valid and
binding obligation of the Company or its subsidiary, as the case may be,
and, to the Company's knowledge, of each other party thereto, and each such
agreement is in full force and effect and is enforceable by the Company or
its subsidiary in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought
and except to the extent any covenant not to compete contained therein may
be unenforceable. To the knowledge of the Company, there are no existing
defaults (or circumstances or events that, with the giving of notice or
lapse of time or both would become defaults) of the Company or any of its
subsidiaries (or, to the knowledge of the Company, any other party thereto)
under any of the agreements set forth in the SEC Documents or agreements
listed in Schedule 4.01(v) except for defaults that have not
<PAGE>
and would not, individually or in the aggregate, have a material adverse
effect on the Company.
(w) LABOR RELATIONS. Except as disclosed in the SEC Documents, no
strike or other labor dispute involving the Company or any of its
subsidiaries is pending or, to the knowledge of the Company, threatened,
and, to the knowledge of the Company, there is no activity involving any
unorganized employees of the Company or any of its subsidiaries seeking to
certify a collective bargaining unit or engaging in any other organization
activity. Except as set forth in Schedule 4.01(w) and as disclosed in the
SEC Documents, since July 31, 1994, there has not been any adoption or
amendment in any material respect by the Company or any of its subsidiaries
of any collective bargaining agreement. Other than those filed as exhibits
to the SEC Documents, Schedule 4.01(w) lists all collective bargaining
agreements of the Company or any of its subsidiaries.
SECTION 4.02. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.
Parent and Sub represent and warrant to the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Parent and
each of its significant subsidiaries (as such term is defined in Rule 1-02
of Regulation S-X of the SEC) and Sub is a corporation or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which each is incorporated and has the requisite corporate
or partnership power and authority to carry on its business as now being
conducted. Each of Parent and Sub is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in the
aggregate) would not have a material adverse effect on Parent. Parent will
make available to the Company complete and correct copies of its
certificate of incorporation and by-laws and the articles of incorporation
and by-laws of Sub, in each case as amended to the date of this Agreement.
(b) AUTHORITY; NONCONTRAVENTION. Parent and Sub have the requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution
and delivery of this Agreement by Parent and Sub and the con-
<PAGE>
summation by Parent and Sub of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on
the part of Parent and Sub, as applicable. This Agreement has been duly
executed and delivered by Parent and Sub and, assuming this Agreement
constitutes the valid and binding obligation of the Company, constitutes a
valid and binding obligation of each such party, enforceable against each
such party in accordance with its terms, except that (i) such enforcement
may be subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) the remedy of specific performance and injunctive relief
may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought. The execution and
delivery of this Agreement do not, and the consummation of the transactions
contemplated by this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation or to loss of a material benefit under, or result in the
creation of any lien upon any of the properties or assets of Parent under,
(i) the certificate of incorporation or by-laws of Parent or Sub, (ii)
subject to the governmental filings and other matters referred to in the
following sentence, any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to Parent or (iii) subject to the
governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent or Sub or their respective properties or
assets, other than, in the case of clauses (ii) or (iii), any such
conflicts, violations, defaults, rights or liens that individually or in
the aggregate would not (x) have a material adverse effect on Parent,
(y) impair in any material respect the ability of Parent and Sub to perform
their respective obligations under this Agreement or (z) prevent or impede
the consummation of any of the transactions contemplated by this Agreement.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by Parent
or Sub in connection with the execution and delivery of this Agreement or
the consummation by Parent or Sub, as the case may be, of any of the
transactions contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form under the HSR Act, (ii) the filing
with the SEC of (x) the Offer Documents and (y) such reports under the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the filing of the
<PAGE>
Articles of Merger with the Florida Department of State and appropriate
documents with the relevant authorities of other states in which the
Company is qualified to do business, (iv) the approval by (A) the
New Jersey Casino Control Commission under the New Jersey Casino
Control Act and the regulations promulgated thereunder, (B) the Nevada
State Gaming Control Board and the Nevada Gaming Commission under the
Nevada Gaming Control Act and the regulations promulgated thereunder, (C)
the Clark County Liquor and Gaming Licensing Board pursuant to the Clark
County, Nevada Code and the rules and regulations promulgated thereunder,
(D) the National Indian Gaming Commission under the Indian Gaming
Regulatory Act and the rules and regulations promulgated thereunder, (E)
the Ontario Gaming Control Commission under the Ontario Gaming Control Act,
1992 and the rules and regulations promulgated thereunder, (F) the Indiana
Gaming Commission under Article 33, Title IV of the Official Indiana Code,
(G) the Missouri Gaming Commission under Mo. Rev. Stat. SECTION
313.800-850 and the rules and regulations promulgated thereunder and
(H) the Agua Caliente Tribal Council, (v) as may be required by an
applicable state securities or "blue sky" laws, (vi) in connection with any
state or local tax which is attributable in respect of the beneficial
ownership of real property of the Company or its subsidiaries, (vii) such
immaterial filings and immaterial consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Offer, the
Merger or the transactions contemplated by this Agreement, (viii) such
immaterial filings, consents, approvals, orders, registrations and
declarations as may be required under the laws of any foreign country in
which the Parent or any of its subsidiaries or the Company or any of its
subsidiaries conducts any business or owns any assets, and (ix) such other
consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made would not,
individually or in the aggregate, (x) have a material adverse effect on
Parent, (y) impair, in any material respect, the ability of Parent to
perform its obligations under this Agreement or (z) prevent or
significantly delay the consummation of the transactions contemplated by
this Agreement.
(c) INFORMATION SUPPLIED. None of the information supplied or to be
supplied by Parent or Sub expressly for inclusion or incorporation by
reference in the Schedule 14D-9, the Information Statement or the Proxy
Statement will, in the case of the Schedule 14D-9 and the Information
Statement, at the respective times the Schedule 14D-9 and the
<PAGE>
Information Statement are filed with the SEC and first published, sent or
given to the Company's stockholders or, in the case of the Proxy Statement,
on the date the Proxy Statement is first mailed to the Company's
stockholders and at the time of the meeting of the Company's stockholders
held to vote on approval and adoption of this Agreement, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
(d) BROKERS. No broker, investment banker, financial advisor or
other person, other than Bear, Stearns & Co. Inc. or a co-dealer manager
other than Bear, Stearns & Co. Inc., the fees and expenses of which will be
paid by Parent, is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf
of Parent or Sub.
(e) FINANCING. Parent has sufficient funds available to purchase all
the outstanding shares on a fully diluted basis of Company Common Stock
pursuant to the Offer and the Merger and to pay all fees and expenses
related to the transactions contemplated by this Agreement.
(f) INTERIM OPERATIONS OF SUB. Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby and has not engaged in
any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
(g) OWNERSHIP OF COMPANY COMMON STOCK. To the actual knowledge of
Parent, neither Parent nor any of its affiliates is the record owner of, or
has any beneficial interest in, any shares of Company Common Stock. This
Section 4.02(g) does not apply to any pension plan of Parent or any of its
affiliates and does not apply in respect of the general account at ITT
Hartford.
(h) PERMITS. To the actual knowledge of Parent, there is no fact or
circumstance which would reasonably be expected to prevent or materially delay
the obtaining of any consent or approval by Parent which is required to be
obtained by Parent in connection with this Agreement.
<PAGE>
34
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01. (a) CONDUCT OF BUSINESS. During the term of this
Agreement, except as specifically required by this Agreement, the Company shall
and shall cause its subsidiaries to carry on their respective businesses in the
ordinary course and use all reasonable efforts consistent with good business
judgment to preserve intact their current business organizations, keep available
the services of their current officers and employees and preserve their
relationships consistent with past practice with desirable customers, suppliers,
licensors, licensees, distributors and others having business dealings with them
to the end that their goodwill and ongoing businesses shall be unimpaired in all
material respects at the Effective Time. Except for transactions specifically
disclosed in the SEC Documents, without limiting the generality of the
foregoing, the Company shall not, and shall not permit any of its subsidiaries
to (without Parent's prior written consent, which consent may not be
unreasonably withheld):
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by any direct or indirect wholly owned subsidiary of the
Company to its parent, (B) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock or
(C) except as shall be required under currently existing terms of any
stock-based benefit plan, purchase, redeem or otherwise acquire or amend
(except in respect of the Rights as contemplated by Sections 4.01(p) and
6.09) any shares of capital stock of the Company or any of its subsidiaries
or any other securities thereof or any rights, warrants or options to
acquire any such shares or other securities (other than (x) redemptions,
purchases or other acquisitions required by applicable provisions under
Gaming Laws, (y) issuances or redemptions of capital stock of wholly-owned
subsidiaries occurring between the Company and any of its wholly-owned
subsidiaries or occurring between wholly-owned subsidiaries of the Company
and (z) issuances of capital stock or ownership interests in connection
with the organization of new entities for purposes of business development
and management activities as permitted by this Agreement);
<PAGE>
35
(ii) issue, deliver, sell, pledge or otherwise encumber or amend any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the
issuance of Company Common Stock upon the exercise of employee stock
options and contingent incentive plans (including with respect to
contingent shares of Company Common Stock) outstanding on the date of this
Agreement in accordance with their present terms and other than the
issuance of Company Common Stock pursuant to the Option Agreement);
(iii) amend its Amended and Restated Articles of Incorporation,
By-laws or other comparable charter or organizational documents;
(iv) acquire or agree to acquire (A) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or (B) any
assets that are material, individually or in the aggregate, to the Company
and its subsidiaries taken as a whole, except (x) purchases of inventory,
furnishings and equipment in the ordinary course of business consistent
with past practice or (y) expenditures consistent with the Company's
current capital budget previously provided to Parent; PROVIDED that
transactions of the type referenced in this subparagraph (iv) by the
Company and its subsidiaries shall be permitted (a) to the extent required
under existing agreements or, with respect to projects in Windsor, Canada,
understandings (collectively, "Current Commitments") and (b) in addition to
what is otherwise permitted in this subparagraph (iv), the aggregate amount
that the Company and its subsidiaries may spend or commit to spend in
respect of such transactions (other than Current Commitments) without being
able to cancel or withdraw such commitments absent material penalty or cost
to the Company and its subsidiaries shall not exceed in the aggregate
$35 million; and, PROVIDED FURTHER that any transaction specified by the
immediately preceding proviso shall not be so permitted if the Company
would not be able to enjoy the benefits in respect of the relevant assets,
business, corporation, partnership, joint venture, association or other
business organization or division after consummation of the Offer, the
Merger and the other transactions contemplated by this Agreement and the
Option Agreement or there would be required any additional consents,
approvals, orders or authorizations of, or registrations or filings with,
any Governmental Entity which would delay in any material respect the
consummation of the
<PAGE>
36
transactions contemplated by this Agreement and the Option Agreement; and,
PROVIDED FURTHER that, notwithstanding the foregoing limitations, the
Company may engage in any projects within that state of the United States
previously discussed by the parties after, to the extent permitted by law,
consultation between the Company and Parent;
(v) sell, lease, license, mortgage or otherwise encumber or subject to
any lien or otherwise dispose of any of its properties or assets, except
transactions in the ordinary course of business consistent with past
practice;
(vi) (A) other than (1) ordinary course working capital borrowings,
(2) Current Commitments, (3) projects approved prior to the date of this
Agreement by the Board of Directors of the Company, (4) specific projects
referred to in the capital budget of the Company previously provided to
Parent and (5) other incurrences of indebtedness which, in the aggregate,
do not exceed $10 million, incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of
the Company or any of its subsidiaries, guarantee any debt securities of
another person, enter into any "keep well" or other agreement to maintain
any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing or (B) other
than (v) to the Company or any direct or indirect wholly owned subsidiary
of the Company, (w) advances to employees, suppliers or customers in the
ordinary course of business consistent with past practice, (x) Current
Commitments, (y) projects approved prior to the date of this Agreement by
the Board of Directors of the Company and (z) specific projects referred to
in the capital budget of the Company previously provided to Parent, make
any loans, advances or capital contributions to, or investments in, any
other person;
(vii) make any material tax election or settle or compromise any
material tax liability;
(viii) pay, discharge, settle or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities reflected or
reserved against in, the most recent consolidated financial statements (or
the notes thereto) of
<PAGE>
37
the Company included in the SEC Documents filed and publicly available
prior to the date of this Agreement or incurred in the ordinary course of
business consistent with past practice, or, except in the ordinary course
of business consistent with past practice, waive the benefits of, or agree
to modify in any manner, any confidentiality, standstill or similar
agreement to which the Company or any of its subsidiaries is a party;
(ix) except as required to comply with applicable law, (A) adopt,
enter into, terminate or amend any Benefit Plan or other arrangement for
the benefit or welfare of any director, officer or current or former
employee, except as described in Section 6.10(e) hereof and except to the
extent necessary to coordinate any such benefit plans with the terms of
this Agreement (including the provisions of the employment agreements
referenced in the last sentence of Section 6.10(a)), (B) increase in any
manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee (except for normal increases or bonuses in
the ordinary course of business consistent with past practice to employees
other than directors, officers or senior management personnel and that, in
the aggregate, do not result in a significant increase in benefits or
compensation expense to the Company and its subsidiaries relative to the
level in effect prior to such action (but in no event shall the aggregate
amount of all such increases exceed 4% of the aggregate annualized
compensation expense of the Company and its subsidiaries reported in the
most recent audited financial statements of the Company included in the SEC
Documents)), (C) pay any benefit not provided for under any Benefit Plan,
(D) except as permitted in clause (B), grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or Benefit
Plan (including the grant of stock options, stock appreciation rights,
stock based or stock related awards, performance units or restricted stock,
or the removal of existing restrictions in any Benefit Plans or agreements
or awards made thereunder) or (E) except for the funding of rabbi trusts
for non-qualified retirement benefits to the extent previously approved by
the Board of Directors of the Company or any committee thereof, prior to
the date of this Agreement, take any action to fund or in any other way
secure the payment of compensation or benefits under any employee plan,
agreement, contract or arrangement or Benefit Plan other than in the
ordinary course of business consistent with past practice; PROVIDED,
HOWEVER, that the Company may take any action described in (A), (C) and (D)
above that does not involve the five most senior officers of the
<PAGE>
38
Company and that, taken together, has an aggregate economic cost to the
Company of less than $7,500,000.
(x) make any new capital expenditure or expenditures, other than
capital expenditures not to exceed, in the aggregate, the amounts provided
for capital expenditures (x) in respect of Current Commitments, (y) in
respect of projects approved prior to the date of this Agreement and (z) in
the capital budget of the Company provided to Parent;
(xi) except in the ordinary course of business and except as otherwise
permitted by this Agreement, modify, amend or terminate any contract or
agreement set forth in the SEC Documents to which the Company or any
subsidiary is a party or waive, release or assign any material rights or
claims; or
(xii) authorize any of, or commit or agree to take any of, the
foregoing actions except as otherwise permitted by this Agreement.
(b) OTHER ACTIONS. The Company shall not, and shall not permit
any of its subsidiaries to, take any action that would result in (i) any of its
representations and warranties set forth in this Agreement that are qualified as
to materiality becoming untrue, (ii) any of such representations and warranties
that are not so qualified becoming untrue in any material respect or (iii) any
of the conditions to the Offer set forth in Exhibit A not being satisfied
(subject to the Company's right to take action specifically permitted by
Section 5.02).
SECTION 5.02. NO SOLICITATION. (a) The Company shall not, nor shall
it permit any of its subsidiaries to, nor shall it authorize or permit any
officer, director or employee of, or any investment banker, attorney or other
advisor or representative of, the Company or any of its subsidiaries to,
(i) solicit or initiate, or encourage the submission of, any takeover proposal
or (ii) participate in any discussions or negotiations regarding, or furnish to
any person any information with respect to, or take any other action to
facilitate the making of any proposal that constitutes, or may reasonably be
expected to lead to, any takeover proposal; PROVIDED, HOWEVER, that, prior to
the acceptance for payment of shares of Company Common Stock pursuant to the
Offer, if in the opinion of the Board of Directors, after consultation with
counsel, such failure to act would be inconsistent with its fiduciary duties to
the Company's stockholders under applicable law, the Company may, in response to
an unsolicited takeover proposal, and subject to compliance with
Section 5.02(c), (A) furnish information with respect to the Company to any
person pursuant to a confidentiality agree-
<PAGE>
39
ment and (B) participate in negotiations regarding such takeover proposal.
Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in the preceding sentence by any director or executive
officer of the Company or any of its subsidiaries, whether or not such person is
purporting to act on behalf of the Company or any of its subsidiaries or
otherwise, shall be deemed to be a breach of this Section 5.02(a) by the
Company. For purposes of this Agreement, "takeover proposal" means any proposal
or offer from any person relating to any direct or indirect acquisition or
purchase of a material amount of assets of the Company or any of its
subsidiaries or of over 20% of any class of equity securities (other than
acquisitions of stock by institutional investors in the ordinary course of
business) of the Company or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 20% or more of any class of equity securities of the Company or any of
its subsidiaries or which would require approval under any Gaming Law, or any
merger, consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its subsidiaries other than the transactions contemplated by
this Agreement, or any other transaction the consummation of which would
reasonably be expected to impede, interfere with, prevent or materially delay
the Offer or the Merger or which would reasonably be expected to dilute
materially the benefits to Parent of the transactions contemplated hereby.
(b) Except as set forth in this Section 5.02(b), neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or modify,
or propose to withdraw or modify, in a manner adverse to Parent or Sub, the
approval or recommendation by such Board of Directors or any such committee of
the Offer, this Agreement or the Merger, (ii) approve or recommend, or propose
to approve or recommend, any takeover proposal or (iii) enter into any agreement
with respect to any takeover proposal. Notwithstanding the foregoing, in the
event prior to the time of acceptance for payment of shares of Company Common
Stock in the Offer if in the opinion of the Board of Directors, after
consultation with counsel, failure to do so would be inconsistent with its
fiduciary duties to the Company's stockholders under applicable law, the Board
of Directors may (subject to the terms of this and the following sentences)
withdraw or modify its approval or recommendation of the Offer, this Agreement
or the Merger, approve or recommend a competitive proposal, or enter into an
agreement with respect to a competitive proposal, in each case at any time after
the second business day following Parent's receipt of written notice (a "Notice
of Competitive Proposal") advising Parent that the Board of Directors has
received a competitive proposal, specifying the material terms and conditions of
such
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40
competitive proposal and identifying the person making such competitive
proposal; PROVIDED that the Company shall not enter into an agreement with
respect to a competitive proposal unless the Company shall have furnished Parent
with written notice no later than 12:00 noon two business days in advance of any
date that it intends to enter into such agreement. In addition, if the Company
proposes to enter into an agreement with respect to any takeover proposal, it
shall concurrently with entering into such agreement pay, or cause to be paid,
to Parent the Expenses (as defined in Section 6.07(b)) and the Termination Fee
(as defined in Section 6.07(b)). For purposes of this Agreement, a "competitive
proposal" means any bona fide take-over proposal to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more than
50% of the shares of Company Common Stock then outstanding or all or
substantially all the assets of the Company and otherwise on terms which the
Board of Directors of the Company determines in its good faith judgment to be
more favorable to the Company's stockholders than the Offer and the Merger
(taking into account any improvements to the Offer and the Merger proposed by
Parent).
(c) In addition to the obligations of the Company set forth in
paragraph (b), the Company shall advise Parent of any request for information or
of any takeover proposal, or any proposal with respect to any takeover proposal,
the material terms and conditions of such request or takeover proposal, and the
identity of the person making any such takeover proposal or inquiry. The
Company will keep Parent fully informed of the status and details (including
amendments or proposed amendments) of any such request, takeover proposal or
inquiry.
(d) Nothing contained in this Section 5.02 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure
to the Company's stockholders if, in the opinion of the Board of Directors of
the Company, after consultation with counsel, failure to so disclose would be
inconsistent with its fiduciary duties to the Company's stockholders under
applicable law; PROVIDED that the Company does not, except as permitted by
Section 5.02(b) withdraw or modify, or propose to withdraw or modify, its
position with respect to the Offer or the Merger or approve or recommend, or
propose to approve or recommend, a takeover proposal.
SECTION 5.03. NEW JERSEY TRUST. In connection with the application
for qualification and licensing by Parent with the New Jersey Casino Control
Commission pursuant to the New Jersey Casino Control Act and the
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41
rules and regulations promulgated thereunder, if requested by Parent, the
Company shall execute and deliver a trust agreement prepared by Parent and
reasonably acceptable to the Company and the New Jersey Casino Control
Commission and complying with the requirements of the New Jersey Casino Control
Act and the rules and regulations promulgated thereunder. Not later than the
Expiration Date of the Offer, if requested by Parent, the Company shall deposit
all shares of Caesars New Jersey, Inc. in trust with a trustee qualified by and
otherwise acceptable to the New Jersey Casino Control Commission pursuant to
such trust agreement, all for the purpose of permitting Parent and Sub to hold
directly (and not in trust) the shares of Company Common Stock currently owned
by Parent or its affiliates to be acquired pursuant to the Offer, the Option or
the Merger while Parent's application for qualification and licensing is pending
with the New Jersey Casino Control Commission.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. STOCKHOLDER MEETING; PREPARATION OF THE PROXY
STATEMENT. (a) The Company will, as soon as practicable following the
acceptance for payment of, and payment for, shares of Company Common Stock by
Sub pursuant to the Offer, duly call, give notice of, convene and hold a meeting
of the holders of the Company Common Stock (the "Stockholders Meeting") if such
meeting is required by applicable law for the purpose of approving this
Agreement and the transactions contemplated by this Agreement. Subject to the
provisions of Section 5.02(b), the Company will, through its Board of Directors,
recommend to its stockholders approval of this Agreement, the Merger and the
other transactions contemplated by this Agreement. At the Stockholders Meeting,
Parent shall cause all of the shares of Company Common Stock then actually or
beneficially owned by Parent, Sub or any of their subsidiaries to be voted in
favor of the Merger. Notwithstanding the foregoing, if Sub or any other
subsidiary of Parent shall acquire at least 80% of the outstanding shares of
Company Common Stock, the parties shall, at the request of Parent, take all
necessary and appropriate action to cause the Merger to become effective as soon
as practicable after the expiration of the Offer without a Stockholders Meeting
in accordance with Section 607.1104 and other applicable provisions of the FBCA.
<PAGE>
42
(b) The Company will, at Parent's request, as soon as practicable
following the expiration of the Offer, prepare and file a preliminary Proxy
Statement with the SEC and will use its best efforts to respond to any comments
of the SEC or its staff and to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after responding to all such
comments to the satisfaction of the staff. The Proxy Statement shall comply as
to form in all material respects with the Exchange Act and the rules and
regulations promulgated thereunder and the Proxy Statement, on the date first
mailed to the Company's stockholders and at the time of the Stockholders Meeting
held to vote on approval and adoption of this Agreement, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that no representation is made by the Company with respect to information
supplied by Parent or Sub for inclusion or incorporation by reference in the
Proxy Statement. The Company will notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and will supply Parent with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger. If
at any time prior to the Stockholders Meeting there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement, the
Company will promptly prepare and mail to its stockholders such an amendment or
supplement. The Company will not file or mail any Proxy Statement, or any
amendment or supplement thereto, to which Parent reasonably objects.
SECTION 6.02. ACCESS TO INFORMATION; CONFIDENTIALITY. Subject to
legal and contractual confidentiality obligations and the attorney-client
privilege, the Company shall afford to Parent, and to Parent's officers,
employees, accountants, counsel, financial advisers and other representatives,
reasonable access during normal business hours during the period prior to the
Effective Time to all the properties, books, contracts, commitments and records
of the Company and its subsidiaries and, during such period, the Company shall
furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed by it or its subsidiaries during such period
pursuant to the requirements of Federal or state securities laws and (b) all
other information concerning its or its subsidiaries' business, properties and
personnel as Parent may reasonably request. Except as otherwise agreed to by
the Company, unless and until Parent and Sub shall have purchased at least a
majority of the
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43
outstanding shares of Company Common Stock pursuant to the Offer, and
notwithstanding termination of this Agreement, Parent will keep, and will cause
its officers, employees, accountants, counsel, financial advisers and other
representatives and affiliates to keep, all Confidential Information (as defined
below) confidential and not to disclose any Confidential Information to any
person other than Parent's or Sub's directors, officers, employees, affiliates
or agents, and then only on a confidential basis; PROVIDED, HOWEVER, that Parent
or Sub may disclose Confidential Information (i) as required by law, rule,
regulation or judicial process, including as required to be disclosed in
connection with the Offer and the Merger, (ii) to its attorneys, accountants and
financial advisors or (iii) as requested or required by any Governmental Entity.
For purposes of this Agreement, "Confidential Information" shall include all
information about the Company which has been furnished by the Company to Parent
or Sub; PROVIDED, HOWEVER, that Confidential Information does not include
information which (x) is or becomes generally available to the public other than
as a result of a disclosure by Parent or Sub not permitted by this Agreement,
(y) was available to Parent or Sub on a non-confidential basis prior to its
disclosure to Parent or Sub by the Company or (z) becomes available to Parent or
Sub on a non-confidential basis from a person other than the Company who, to the
knowledge of Parent or Sub, as the case may be, is not otherwise bound by a
confidentiality agreement with the Company or is not otherwise prohibited from
transmitting the relevant information to Parent or Sub. Neither Parent nor any
of its affiliates will use any Confidential Information in any manner
detrimental to the Company or the shareholders of the Company and, in the event
of termination of this Agreement for any reason, Parent shall, and shall cause
Sub to, promptly return all Confidential Information to the Company. Until
Parent and Sub shall have purchased at least a majority of the outstanding
shares of Company Common Stock, the first sentence of this Section 6.02 shall
not obligate the Company to afford to Parent or Parent's officers, employees,
accountants, counsel, financial advisers and other representatives access to
(i) personnel of the Company's subsidiaries and (ii) competitively sensitive
information that could assist Parent in diverting business opportunities from
the Company, including customer information and identities, representatives
lists, customer solicitation methods and other similar information.
SECTION 6.03. REASONABLE EFFORTS; NOTIFICATION. (a) Upon the terms
and subject to the conditions set forth in this Agreement, each of the parties
agrees to use all reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the Offer and
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44
the Merger, and the other transactions contemplated by this Agreement, including
(i) the obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental Entities, if any)
and the taking of all reasonable steps as may be necessary to obtain an approval
or waiver from, or to avoid an action or proceeding by, any Governmental Entity
(including in respect of any Gaming Law), (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of any of the transactions
contemplated by this Agreement, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated or
reversed and (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry out
the purposes of, this Agreement. In connection with and without limiting the
foregoing, the Company and its Board of Directors shall (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Offer, the Merger, this Agreement or
any of the other transactions contemplated by this Agreement and (ii) if any
state takeover statute or similar statute or regulation becomes applicable to
the Offer, the Merger, this Agreement or the Option Agreement or any other
transaction contemplated by this Agreement or the Option Agreement, take all
action necessary to ensure that the Offer, the Merger and the other transactions
contemplated by this Agreement or the Option Agreement may be consummated as
promptly as practicable on the terms contemplated by this Agreement and the
Option Agreement and otherwise to minimize the effect of such statute or
regulation on the Offer, the Merger, this Agreement, the Option Agreement and
the other transactions contemplated by this Agreement and the Option Agreement.
(b) The Company shall give prompt notice to Parent of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect
(including in the case of representations or warranties by the Company, the
Company or Parent receiving knowledge of any fact, event or circumstance which
may cause any representation qualified as to the knowledge of the Company to be
or become untrue or inaccurate in any respect) or (ii) the failure by it to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement; PROVIDED,
HOWEVER, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement. The Company acknowledges that if after the
date
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45
of this Agreement the Company or Parent receives knowledge of any fact, event or
circumstance that would cause any representation or warranty that is conditioned
as to the knowledge of the Company to be or become untrue or inaccurate in any
respect, the receipt of such knowledge shall constitute a breach of the
representation or warranty that is so conditioned as of the date of such
receipt.
SECTION 6.04. STOCK OPTION PLANS. (a) As soon as practicable
following the date of this Agreement, the Board of Directors of the Company (or,
if appropriate, any committee administering the Stock Option Plans (as defined
below)) shall adopt such resolutions or use its best efforts to take such other
actions as are required to provide that (i) each outstanding stock option to
purchase shares of Company Common Stock (a "Stock Option") heretofore granted
under any stock option, stock appreciation rights or stock purchase plan,
program or arrangement or other option agreement or contingent stock grant plan
of the Company (collectively, the "Stock Option Plans") outstanding shall be
accelerated to be fully exercisable prior to the consummation of the Offer, and
the Company shall use its best efforts to assure that any such Stock Options
outstanding immediately prior to the consummation of the Offer (except options
granted to non-employee directors of the Company as of December 8, 1994) shall
be cancelled immediately prior to the consummation of the Offer in exchange for
an amount in cash, payable at the time of such cancellation, equal to the
product of (y) the number of shares of Company Common Stock subject to such
Stock Option immediately prior to the consummation of the Offer and (z) the
excess of the price per share to be paid in the Offer over the per share
exercise price of such Stock Option, (ii) each stock appreciation right ("SAR")
granted under the Stock Option Plans outstanding immediately prior to the
consummation of the Offer shall be cancelled immediately prior to the
consummation of the Offer in exchange for an amount of cash, payable at the time
of such cancellation, equal to the product of (y) the number of shares of
Company Common Stock covered by such SAR and (z) the excess of the price per
share to be paid in the Offer over the appreciation base per share of such SAR;
PROVIDED, HOWEVER, that no such cash payment shall be made with respect to any
SAR which is related to a Stock Option with respect to which such a cash payment
has been made and (iii) each share of Company Common Stock previously issued in
the form of grants of restricted stock or grants of contingent shares shall
fully vest in accordance with their respective terms. Any Stock Option or SAR
not cancelled in accordance with this paragraph (a) immediately prior to the
consummation of the Offer, shall be cancelled at the Effective Time in exchange
for an amount in cash, payable at the Effective Time, equal to the amount which
would have been paid had such Stock Option or SAR been
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46
cancelled immediately prior to the consummation of the Offer. A listing of all
outstanding Stock Options as of December 16, 1994, showing what portions of such
Stock Options are exercisable as of such date, the dates upon which such Stock
Options expire, and the exercise price of such Stock Options, is set forth in
Schedule 6.04.
(b) All Stock Option Plans shall terminate as of the Effective Time
and the provisions in any other Benefit Plan providing for the issuance,
transfer or grant of any capital stock of the Company or any interest in respect
of any capital stock of the Company shall be deleted as of the Effective Time,
and the Company shall use its best efforts to ensure that following the
Effective Time no holder of a Stock Option or any participant in any Stock
Option Plan shall have any right thereunder to acquire any capital stock of the
Company, Parent or the Surviving Corporation, except as provided in
Section 6.04(a).
(c) Parent and Sub agree that the Company, in its sole discretion,
may defer the lapsing of restrictions on some or all of the restricted shares of
Company Common Stock granted under the Company's employee stock plans which
might otherwise occur upon the consummation of the Offer to the day immediately
following the consummation of the Offer or to accelerate such restricted stock
to provide sufficient time for the tender thereof into the Offer.
SECTION 6.05. INDEMNIFICATION AND INSURANCE. (a) The
indemnification obligations set forth in the Company's Amended and Restated
Articles of Incorporation and by-laws on the date of this Agreement shall
survive the Merger and shall not be amended, repealed or otherwise modified for
a period of six years after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who on or prior to the
Effective Time were directors, officers, employees or agents of the Company (the
"Indemnified Parties").
(b) For six years from the Effective Time, the Surviving Corporation
shall, unless Parent agrees in writing to guarantee the indemnification
obligations set forth in Section 6.05(a), either (x) maintain in effect the
Company's current directors' and officers' liability insurance covering those
persons who are covered on the date of this Agreement by the Company's
directors' and officers' liability insurance policy (a copy of which will be
made available to Parent); PROVIDED, HOWEVER, that in no event shall the
Surviving Corporation be required to expend in any one year an amount in excess
of 150% of the annual premiums currently paid by the Company for such insurance
which the Company represents to be $795,000 for the twelve-month period ended
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47
March 17, 1995; and, PROVIDED, FURTHER, that if the annual premiums of such
insurance coverage exceed such amount, the Surviving Corporation shall be
obligated to obtain a policy with the greatest coverage available for a cost not
exceeding such amount or (y) cause the Parent's directors' and officers'
liability insurance then in effect to cover those persons who are covered on the
date of this Agreement by the Company's directors' and officers' liability
insurance policy with respect to those matters covered by the Company's
directors' and officers' liability policy.
(c) This Section 6.05 shall survive the consummation of the Merger at
the Effective Time, is intended to benefit the Company, Parent, the Surviving
Corporation and the Indemnified Parties, and shall be binding on all successors
and assigns of Parent and the Surviving Corporation.
SECTION 6.06. DIRECTORS. Promptly upon the acceptance for payment
of, and payment for, any shares of Company Common Stock by Sub pursuant to the
Offer, Sub shall be entitled to designate such number of directors on the Board
of Directors of the Company as will give Sub, subject to compliance with
Section 14(f) of the Exchange Act, control of a majority of such directors, and
the Company and its Board of Directors shall, at such time, take any and all
such action needed to cause Sub's designees to be appointed to the Company's
Board of Directors (including to cause directors to resign). Subject to
applicable law, the Company shall take all action requested by Parent which is
reasonably necessary to effect any such election, including mailing to its
stockholders the Information Statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and the
Company agrees to make such mailing with the mailing of the Schedule 14D-9 so
long as Sub shall have provided to the Company on a timely basis all information
required to be included in the Information Statement with respect to Sub's
designees.
SECTION 6.07. FEES AND EXPENSES. (a) Except as provided below, all
fees and expenses incurred in connection with the Offer, the Merger, this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such fees or expenses, whether or not the Offer or the Merger is
consummated.
(b) The Company shall pay, or cause to be paid, in same day funds to
Parent the sum of (x) all of Parent's reasonably documented out-of-pocket
expenses in an amount up to but not to exceed $10,000,000 (the "Expenses") and
(y) $50,000,000 (the "Termination Fee") upon demand if
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48
(i) Parent or Sub terminates this Agreement under Section 8.01(e); PROVIDED,
HOWEVER, that Parent shall be entitled to only the Expenses where Parent or Sub
terminates this Agreement under Section 8.01(e) as a result of the occurrence of
any event set forth in clause (i) of paragraph (d) of Exhibit A or, as it
relates to clause (i) of paragraph (d) of Exhibit A, clause (iii) of such
paragraph (d); PROVIDED FURTHER, HOWEVER, that, if the Agreement is terminated
as contemplated by the immediately preceding proviso and the Company
subsequently consummates or enters into an agreement relating to a competitive
proposal within 12 months of such termination, the Company shall also pay to
Parent the Termination Fee, (ii) the Company terminates this Agreement pursuant
to Section 8.01(f) or (iii) prior to any termination of this Agreement, a
takeover proposal shall have been made and within 12 months of such termination,
a transaction constituting a takeover proposal is consummated or the Company
enters into an agreement with respect to, or approves or recommends a takeover
proposal. The amount of Expenses so payable shall be the amount set forth in an
estimate delivered by Parent, subject to upward or downward adjustment (not to
be in excess of the amount set forth in clause (x) above) upon delivery of
reasonable documentation therefor.
SECTION 6.08. PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one hand,
and the Company, on the other hand, will consult with each other before issuing,
and provide each other the opportunity to review and comment upon, any press
release or other public statements with respect to the transactions contemplated
by this Agreement, including the Offer and the Merger, and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by applicable law, court process or by obligations
pursuant to any listing agreement with any national securities exchange or
national securities quotation system. The parties agree that the initial press
release to be issued with respect to the transactions contemplated by this
Agreement shall be in the form heretofore agreed to by the parties.
SECTION 6.09. RIGHTS AGREEMENT. The Board of Directors of the
Company shall take all further action (in addition to that referred to in
Section 4.01(p)) reasonably requested in writing by Parent in order to render
the Rights or any similar instrument inapplicable to the Offer, the Merger, the
Option Agreement and the other transactions contemplated by this Agreement.
Except as requested in writing by Parent, during the term of this Agreement, the
Board of Directors of the Company shall not (i) amend the Rights Agreement or
(ii) take any action with respect to, or make any determination under, the
Rights Agreement (including a redemption of the Rights) including any action to
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49
facilitate a takeover proposal; PROVIDED that any of such actions may be taken
simultaneously with entering into an agreement pursuant to Section 5.02(b).
SECTION 6.10. BENEFIT PLANS. (a) Parent shall cause the Surviving
Corporation to take such actions as are necessary so that, for a period of not
less than one year after the Effective Time, nonunion employees of the Company
and its subsidiaries who continue their employment after the Effective Time will
be provided employee compensation and other benefits which in the aggregate are
at least generally comparable to those provided to such employees as of the date
hereof; PROVIDED, that it is understood that after the Effective Time, subject
to the provisions of Section 6.10(d), (e) and (f) hereof and to the last
sentence of this Section 6.10(a), (x) neither Parent nor the Surviving
Corporation will have any obligation to issue or adopt any plans or arrangements
to provide for the issuance of shares of capital stock, warrants, options, stock
appreciation rights or other rights in respect of any shares of capital stock of
any entity or any securities convertible or exchangeable into such shares
pursuant to any such plan or program, (y) nothing herein shall require the
Surviving Corporation to maintain any particular plan or arrangement and
(z) nothing herein shall prevent or preclude the Surviving Corporation from
continuing any requirements for employee contributions under any employee
benefit plans in the same proportions as the employee-paid portion under such
plans constituted prior to the Effective Time. Parent, Sub and the Company
agree that, prior to the acquisition of shares of Company Common Stock pursuant
to the Offer, Parent and the Company will enter into revised employment
agreements with the Chief Executive Officer and President of the Company in the
respective forms of agreements set forth in Schedule 6.10(a) hereto.
(b) It is Parent's current intention that, following the first
anniversary of the Effective Time, Parent will provide employee compensation and
other benefits for employees of the Company and its subsidiaries which are at
least generally comparable in the aggregate to the employee compensation and
other benefits for other employees of Parent and its subsidiaries.
(c) Parent will cause the Surviving Corporation to recognize all
service credited to each such employee by the Company through the Effective Time
for purposes of eligibility (including for enhanced vacation) and vesting under
any employee benefit plan provided by the Surviving Corporation for the benefit
of such employees.
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(d) Nothing in this Section 6.10 is intended to cancel or modify any
obligations of the Company which by their terms and applicable law extend beyond
the Effective Time. It is understood, however, that Stock Options, stock
appreciation rights and restricted and contingent stock will be dealt with in
accordance with Section 3.01(c) hereof and Section 6.04 hereof.
(e) The Company's two Executive Security Plans shall remain in effect
until one year after the Effective Time (for all purposes, including, without
limitation, benefit accrual), but there shall be no obligation on the Parent,
Sub or the Surviving Corporation to add new participants to such plans following
the Effective Time. It is understood that the 1985 Executive Security Plan
provides an offset for the actuarial equivalent of amounts received from any
other pension plan adopted by the Company (which would include the Parent's tax-
qualified pension plan if it were adopted by the Company). It is agreed among
the parties that the Company may, in its discretion, amend such offset so that
it does not apply to the Company's 401(k) Retirement Savings Plan. This
Section 6.10(e) shall not be deemed to require any duplication of benefits
provided by such Executive Security Plans and any other pension plans.
(f) In calculating the annual bonus under the Company's Senior
Officers Combined Incentive Plan and Corporate Officers and Key Corporate
Personnel Plan for the current fiscal year of the Company, charges or equity
adjustments related to or arising from the transactions contemplated by this
Agreement, including with respect to the lapsing of restrictions on restricted
shares of Company Common Stock, shall not be taken into account in computing
"Plan Income" and "Plan Net Worth", as defined in such plans. This
Section 6.10(f) shall not be deemed to indicate any commitment to continuing
such plans beyond the Effective Time. The principles stated in the immediately
preceding sentence shall be applied equitably, as between the Company and the
Parent, with respect to both Plan Income and Plan Net Worth.
SECTION 6.11. TITLE POLICIES. The Company agrees that, prior to the
consummation of the Offer, it will use its reasonable efforts to cause such
officers of the Company and its Significant Subsidiaries, as Parent's or Sub's
Title Insurer may reasonably require, to execute such reasonable and customary
affidavits as shall permit such Title Insurer to issue an endorsement to its
title insurance policies insuring title to the real properties owned or leased
by the Company or any of its Significant Subsidiaries to the effect that the
Title Insurer will not claim as a defense under any such policy failure of
insured to disclose to the Title Insurer prior to the date of the relevant
policy any defects, liens,
<PAGE>
51
encumbrances or adverse claims not shown by public records and known to the
insured (but not known to Parent or Sub) prior to the Effective Time.
SECTION 6.12. TRANSFER TAXES. All liability for transfer or other
similar taxes arising out of or related to the sale of the Company Common Stock
to the Sub, or the consummation of any other transaction contemplated by this
Agreement, and due to the property owned by the Company or any of its
subsidiaries or affiliates ("Transfer Taxes") shall be borne by the Company, and
the Company shall file or cause to be filed all returns relating to such
Transfer Taxes which are due, and, to the extent appropriate or required by law,
the stockholders of the Company shall cooperate with respect to the filing of
such returns.
SECTION 6.13. REGULATORY MATTERS. In connection with subsection (i)
of the first sentence of Section 6.03(a), Parent shall, and shall cause its
subsidiaries to (and shall use its reasonable efforts to cause its affiliates
other than subsidiaries to), if it is necessary to obtain any regulatory
approval for this Agreement, disassociate themselves from any person or persons
deemed, or reasonably likely to be deemed, unacceptable by a Governmental Entity
with authority to administer Gaming Laws and, in the case of any such person who
is a nominee to serve as a director of Parent or any subsidiary of Parent,
Parent shall, and shall cause the relevant subsidiary or subsidiaries to,
replace any such director nominee with a suitable substitute nominee. In
connection with subsection (i) of the first sentence of Section 6.03(a), Parent
agrees that it shall use its reasonable efforts to cause the trust arrangements
described in either clause (iii)(B)(x) or (iii)(B)(y) of the first paragraph of
Exhibit A to be in full force and effect and further agrees that, if the
requisite approvals are obtained from the New Jersey Casino Control Commission,
it will place shares of Company Common Stock or shares of common stock of
Caesars New Jersey, Inc., as applicable, in trust as contemplated by such
clauses.
<PAGE>
52
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. If required by applicable law, this
Agreement shall have been approved and adopted by the affirmative vote of
the holders of a majority of all shares of Company Common Stock entitled to
be cast in accordance with applicable law and the Company's Amended and
Restated Articles of Incorporation; PROVIDED that Parent and Sub shall vote
all their shares of Company Common Stock in favor of the Merger.
(b) NO INJUNCTIONS OR RESTRAINTS. No statute, rule, regulation,
executive order, decree, temporary restraining order, preliminary or
permanent injunction or other order enacted, entered, promulgated, enforced
or issued by any Governmental Entity or other legal restraint or
prohibition preventing the consummation of the Merger or the transactions
contemplated thereby shall be in effect; PROVIDED, HOWEVER, that, in the
case of a decree, injunction or other order, each of the parties shall have
used reasonable efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any decree, injunction or
other order that may be entered.
(c) PURCHASE OF SHARES OF COMPANY COMMON STOCK. Sub shall have
previously accepted for payment and paid for shares of Company Common Stock
pursuant to the Offer.
SECTION 7.02. CONDITION TO OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are further subject to the
condition that all Stock Options and all SARs shall have been cancelled.
<PAGE>
53
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of matters
presented in connection with the Merger by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if (i) as a result of the failure,
occurrence or existence of any of the conditions set forth in Exhibit A to
this Agreement the Offer shall have terminated or expired in accordance
with its terms without Sub having accepted for payment any shares of
Company Common Stock pursuant to the Offer or (ii) Sub shall not have
accepted for payment any shares of Company Common Stock pursuant to the
Offer by June 19, 1995; PROVIDED, HOWEVER, that the right to terminate this
Agreement pursuant to this Section 8.01(b) shall not be available to either
party if its failure to perform any of its obligations under this Agreement
results in the failure, occurrence or existence of any such condition;
(c) by either Parent or the Company if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the acceptance
for payment of, or payment for, shares of Company Common Stock pursuant to
the Offer or the Merger and such order, decree or ruling or other action
shall have become final and nonappealable;
(d) by Parent or Sub prior to the purchase of shares of Company Common
Stock pursuant to the Offer in the event of a breach by the Company of any
representation, warranty, covenant or other agreement contained in this
Agreement which (A) would give rise to the failure of a condition set forth
in paragraph (e) or (f) of Exhibit A and (B) cannot be or has not been
cured within 20 days after the giving of written notice to the Company;
(e) by Parent or Sub if either Parent or Sub is entitled to terminate
the Offer as a result of the occurrence of any event set forth in
paragraph (d) of Exhibit A to this Agreement;
<PAGE>
54
(f) by the Company in connection with entering into a definitive
agreement in accordance with Section 5.02(b), provided it has complied with
all provisions thereof, including the notice provisions therein, and that
it makes simultaneous payment of the Expenses and the Termination Fee; or
(g) by the Company, if Sub or Parent shall have breached in any
material respect any of their respective representations, warranties,
covenants or other agreements contained in this Agreement, which failure to
perform is incapable of being cured or has not been cured within 20 days
after the giving of written notice to Parent or Sub, as applicable, except,
in any case, such failures which are not reasonably likely to affect
adversely Parent's or Sub's ability to complete the Offer or the Merger.
SECTION 8.02. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of Section 4.01(q), Section 4.02(d), the last four sentences of
Section 6.02, Section 6.07, this Section 8.02 and Article IX and except to the
extent that such termination results from the wilful and material breach by a
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
SECTION 8.03. AMENDMENT. This Agreement may be amended by the
parties at any time before or after any required approval of matters presented
in connection with the Merger by the stockholders of the Company; PROVIDED, HOW-
EVER, that after any such approval, there shall not be made any amendment that
by law requires further approval by such stockholders without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
SECTION 8.04. EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 8.03, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
<PAGE>
55
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
SECTION 8.05. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. A termination of this Agreement pursuant to Section 8.01, an amendment
of this Agreement pursuant to Section 8.03 or an extension or waiver pursuant to
Section 8.04 shall, in order to be effective, require in the case of Parent, Sub
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors; PROVIDED, HOWEVER, that in the event that Sub's
designees are appointed or elected to the Board of Directors of the Company as
provided in Section 6.06, after the acceptance for payment of shares of Company
Common Stock pursuant to the Offer and prior to the Effective Time, the
affirmative vote of a majority of the directors of the Company that were not
designated by Parent or Sub shall be required by the Company to (i) amend or
terminate this Agreement by the Company, (ii) exercise or waive any of the
Company's rights or remedies under this Agreement, (iii) extend the time for
performance of Parent's and Sub's respective obligations under this Agreement or
(iv) take any action to amend or otherwise modify the Company's Amended and
Restated Articles of Incorporation or By-laws.
<PAGE>
56
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. NONSURVIVAL OF REPRESENTATIONS. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time or, in the case of
the Company, shall survive the acceptance for payment of, and payment for,
shares of Company Common Stock by Sub pursuant to the Offer. This Section 9.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time of the Merger.
SECTION 9.02. NOTICES. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) if to Parent or Sub, to:
ITT Corporation
1330 Avenue of the Americas
New York, NY 10019
Facsimile: (212) 258-1037
Attention: Richard S. Ward, Esq.
with copies to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Facsimile: (212) 765-1072
Attention: Philip A. Gelston, Esq.
<PAGE>
57
(b) if to the Company, to
Caesars World, Inc.
1801 Century Park East
Los Angeles, California 90067
Facsimile: (310) 552-9254
Attention: Philip L. Ball, Esq.
with copies to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Facsimile: (212) 735-2000
Attention: Morris J. Kramer, Esq.
SECTION 9.03. DEFINITIONS. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person;
(b) "competitive proposal" has the meaning assigned thereto in
Section 5.02(b);
(c) "indebtedness" means, with respect to any person, without
duplication, (A) all obligations of such person for borrowed money, or with
respect to deposits or advances of any kind, (B) all obligations of such
person evidenced by bonds, debentures, notes or similar instruments,
(C) all obligations of such person upon which interest charges are
customarily paid (other than trade payables incurred in the ordinary course
of business), (D) all obligations of such person under conditional sale or
other title retention agreements relating to property purchased by such
person, (E) all obligations of such person issued or assumed as the
deferred purchase price of property or services (excluding obligations of
such person to creditors for raw materials, inventory, services and
supplies incurred in the ordinary course of such person's business),
(F) all lease obligations of such person capitalized on the books and
<PAGE>
58
records of such person, (G) all obligations of others secured by any lien
on property or assets owned or acquired by such person, whether or not the
obligations secured thereby have been assumed, (H) all obligations of such
person under interest rate, or currency or commodity hedging, swap or
similar derivative transactions (valued at the termination value thereof),
(I) all letters of credit issued for the account of such person (excluding
letters of credit issued for the benefit of suppliers or lessors to support
accounts payable to suppliers incurred in the ordinary course of business)
and (J) all guarantees and arrangements having the economic effect of a
guarantee of such person of any indebtedness of any other person.
(d) "knowledge" of the Company means, in each case in this Agreement,
any Schedule hereto or any certificate delivered pursuant hereto in which
the Company makes a representation or warranty based on the "knowledge" of
the Company, the Company represents and warrants only as to the actual
knowledge of the Chairman of the Board, the Chief Financial Officer, the
General Counsel and the President of the Company.
(e) "lien" means any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge or claim of any nature whatsoever of, on, or with respect to any
asset, property or property interest; PROVIDED, HOWEVER, that the term
"lien" shall not include (i) liens for water and sewer charges and current
taxes not yet due and payable or being contested in good faith,
(ii) mechanics', carriers', workers', repairers', materialmens',
warehousemens' and other similar liens arising or incurred in the ordinary
course of business or (iii) all liens approved in writing by the other
party hereto.
(f) "material adverse change" or "material adverse effect" means, when
used in connection with the Company or Parent, any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) that is materially adverse to the business,
properties, assets, financial condition or results of operations of such
party and its subsidiaries, taken as a whole, except that (i) fluctuations
in the earnings or financial condition of the Company during the period
from October 31, 1994 to consummation of the Offer that result from
winnings by high-wagering customers so long as the Company has been
operating on a basis consistent with its existing
<PAGE>
59
policies concerning extensions of credit and setting of gambling limits and
so long as the aggregate levels of wagering by high-wagering customers are
consistent with the past experience of the Company, (ii) any material
adverse effect resulting, directly or indirectly, from the prospective
ownership of Company Common Stock by Parent or its affiliates, or (iii) any
change which adversely affects the gaming industry in Nevada or the gaming
industry in New Jersey, shall not be deemed to be a "material adverse
change" or a "material adverse effect";
(g) "ordinary course of business", when used with respect to the
Company, in addition to its usual and customary meaning, shall be deemed to
include transactions in the ordinary course of business consistent with
prior practice pertaining to currently ongoing business development and
managerial activities, including activities conducted or proposed to be
conducted in the jurisdictions set forth in Schedule 9.03(g), so long as
the scope and nature of such business development and managerial activities
are consistent with the Company's past practice.
(h) "person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity;
(i) a "subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board
of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly
or indirectly by such first person; and
(j) "takeover proposal" has the meaning assigned thereto in
Section 5.02(a).
SECTION 9.04. INTERPRETATION. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The Option Agreement and the consummation of
the transactions contemplated by such Option Agreement are transactions
<PAGE>
60
contemplated by this Agreement. To the extent any restriction on the activities
of the Company or its subsidiaries under the terms of this Agreement, including
with respect to any negative pledge or other restriction on the ability of the
Company to dispose of stock of any Nevada subsidiary, requires prior approval
under any Gaming Law, such restriction shall be of no force or effect unless and
until such approval is obtained. If any provision of this Agreement is illegal
or unenforceable under any Gaming Law, such provision shall be void and of no
force or effect.
SECTION 9.05. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 9.06. ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This
Agreement and the Option Agreement constitute the entire agreements, and super-
sede all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of these agreements and, except for
the provisions of Article III, the last sentence of Section 6.10(a) and
Sections 6.04 and 6.05, are not intended to confer upon any person other than
the parties any rights or remedies hereunder.
SECTION 9.07. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ANY APPLICABLE CONFLICTS OF LAW, EXCEPT TO THE EXTENT THE FBCA SHALL
BE HELD TO GOVERN THE TERMS OF THE MERGER.
SECTION 9.08. ASSIGNMENT. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, except that Sub may assign, in
its sole discretion, any of or all its rights, interests and obligations under
this Agreement to Parent or to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations under
this Agreement. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
<PAGE>
61
SECTION 9.09. ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New York or California or in New York or California
state court, this being in addition to any other remedy to which they are
entitled at law or in equity. In addition, each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of any Federal court
located in the State of New York or California or any New York or California
state court in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a Federal or state court sitting in the State
of New York or California.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
ITT CORPORATION,
by
/S/ Richard S. Ward
--------------------------
Name: Richard S. Ward
Title: Executive V.P.,
General Counsel
ITT FLORIDA ENTERPRISES INC.,
by
/S/ Richard S. Ward
--------------------------
Name: Richard S. Ward
Title: Executive V.P.,
General Counsel
<PAGE>
62
CAESARS WORLD, INC.,
by
/S/ ROGER LEE
--------------------------
Name: Roger Lee
Title: Senior Vice
President, Finance
& Administration
<PAGE>
EXHIBIT A
CONDITIONS OF THE OFFER
<PAGE>
2
Notwithstanding any other term of the Offer or this Agreement, Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered shares of Company
Common Stock after the termination or withdrawal of the Offer), to pay for any
shares of Company Common Stock tendered pursuant to the Offer unless, (i) there
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer such number of shares of Company Common Stock which would constitute a
majority of the outstanding shares (determined on a fully diluted basis) of
Company Common Stock (the "Minimum Condition"), (ii) any waiting period under
the HSR Act applicable to the purchase of shares of Company Common Stock
pursuant to the Offer shall have expired or been terminated and (iii) (A) all
consents, approvals, orders or authorizations of, or registrations, declarations
or filings with, any Governmental Entity with jurisdiction in respect of Gaming
Laws (other than New Jersey) required or necessary in connection with the Offer,
the Merger and this Agreement and the transactions contemplated by this
Agreement (including the changes in the composition of the Board of Directors of
the Company) shall have been obtained and shall be in full force and effect and
(B) in the case of the New Jersey Casino Control Act and the rules and
regulations promulgated thereunder, either, at the option of Parent, (x) as
contemplated by Section 5.03, all shares of Caesars New Jersey, Inc. shall have
been deposited in trust with a trustee qualified and otherwise acceptable to the
New Jersey Casino Control Commission and the transactions and arrangements
contemplated by Section 5.03 shall be in full force and effect and, as a result,
neither Parent nor Sub will be required pursuant to the requirements of the New
Jersey Casino Control Act and the rules and regulations promulgated thereunder
to deposit or place in trust any of the shares of Company Common Stock currently
owned by Parent or its affiliates or to be acquired pursuant to the Offer or
(y) (1) the New Jersey Casino Control Commission shall have approved a form of
trust agreement in form and substance reasonably satisfactory to Parent
(including in respect of control by Parent of the Company and its subsidiaries)
in respect of a trust arrangement for the shares of Company Common Stock to be
acquired pursuant to the Offer and the Merger pending final qualification of
Parent to hold a casino license under the New Jersey Casino Control Act and the
rules and regulations thereunder, (2) a trustee qualified and otherwise
acceptable to the New Jersey Casino Control Commission and Parent in respect of
such trust arrangement for the shares of Company Common Stock to be acquired
pursuant to the Offer and the Merger shall have been appointed or designated and
(3) the directors of Sub shall have been qualified on a permanent or temporary
basis to serve as directors of a company (including the Company) that either
directly, or through its subsidiaries,
<PAGE>
3
holds a casino license under the New Jersey Casino Control Act and the rules and
regulations thereunder. Furthermore, notwithstanding any other term of the
Offer or this Agreement, Sub shall not be required to accept for payment or,
subject as aforesaid, to pay for any shares of Company Common Stock not
theretofore accepted for payment or paid for, and may terminate the Offer if, at
any time on or after the date of this Agreement and before the acceptance of
such shares for payment or the payment therefor, any of the following conditions
exists (other than as a result of any action or inaction of Parent or any of its
subsidiaries which constitutes a breach of this Agreement):
(a) there shall be instituted or pending any suit, action or
proceeding (in the case of a suit, action or proceeding by a person other
than a Governmental Entity, such suit, action or proceeding having a
substantial likelihood of success or, in the case of a suit, action or
proceeding by a Governmental Entity, such suit, action or proceeding having
a reasonable likelihood of success), (i) challenging the acquisition by
Parent or Sub of any shares of Company Common Stock under the Offer,
seeking to restrain or prohibit the making or consummation of the Offer or
the Merger, or seeking to obtain from the Company, Parent or Sub any
damages that are material in relation to the Company and its subsidiaries
taken as whole, (ii) seeking to prohibit or materially limit the ownership
or operation by the Company, Parent or any of their respective subsidiaries
of a material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a
whole, or to compel the Company or Parent to dispose of or hold separate
any material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken as a
whole, as a result of the Offer or any of the other transactions
contemplated by this Agreement, (iii) seeking to impose material
limitations on the ability of Parent or Sub to acquire or hold, or exercise
full rights of ownership of, any shares of Company Common Stock accepted
for payment pursuant to the Offer including, without limitation, the right
to vote such Company Common Stock on all matters properly presented to the
stockholders of the Company or (iv) seeking to prohibit Parent or any of
its subsidiaries from effectively controlling in any material respect the
business or operations of the Company and its subsidiaries, taken as a
whole;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
<PAGE>
4
Governmental Entity or court, other than the application to the Offer or
the Merger of applicable waiting periods under the HSR Act, that is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a)
above;
(c) there shall have occurred any material adverse change (or any
development that, insofar as reasonably can be foreseen, is reasonably
likely to result in any material adverse change) in the business,
properties, assets, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole, except that
(i) fluctuations in the earnings or financial condition of the Company
during the period from October 31, 1994 to consummation of the Offer that
result from winnings by high-wagering customers so long as the Company has
been operating on a basis consistent with its existing policies concerning
extensions of credit and setting of gambling limits and so long as
aggregate levels of wagering by high-wagering customers are consistent with
the past experience of the Company, (ii) any material adverse effect
resulting, directly or indirectly, from the prospective ownership of
Company Common Stock by Parent or its affiliates, or (iii) any change which
adversely affects the gaming industry in Nevada or the gaming industry in
New Jersey, shall not be deemed to be a material adverse change;
(d) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Parent or Sub its
approval or recommendation of the Offer, the Merger or this Agreement, or
approved or recommended any takeover proposal, (ii) the Company shall have
entered into any agreement with respect to any competitive proposal in
accordance with Section 5.02(b) of this Agreement or (iii) the Board of
Directors of the Company or any committee thereof shall have resolved to
take any of the foregoing actions;
(e) any of the representations and warranties of the Company set forth
in this Agreement that are qualified as to materiality shall not be true
and correct and any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case at the date of this Agreement and at the scheduled expiration of the
Offer;
<PAGE>
5
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under this Agreement;
(g) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities (excluding any coordinated
trading halt triggered solely as a result of a specified decrease in a
market index), (ii) any decline in the New York Stock Exchange Composite
Index by an amount in excess of 33% measured from the close of business on
December 16, 1994, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, (iv) any
limitation (whether or not mandatory) by any Governmental Entity on, or
other event that materially affects, the extension of credit by banks or
other lending institutions or (v) in case of any of the foregoing existing
on the date of this Agreement, material acceleration or worsening thereof;
(h) the Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of Sub and Parent
and may, subject to the terms of the Agreement, be waived by Sub and Parent in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent or Sub at any time to exercise any of the foregoing rights
shall not be deemed a waiver of any such right, the waiver of any such right
with respect to particular facts and circumstances shall not be deemed a waiver
with respect to any other facts and circumstances and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
<PAGE>
Exhibit 2.2
OPTION AGREEMENT dated as of December 19, 1994, by and among
ITT CORPORATION, a Delaware corporation ("Parent"), ITT FLORIDA
ENTERPRISES INC., a Florida corporation and a wholly owned
subsidiary of Parent ("Sub"), and CAESARS WORLD, INC., a Florida
corporation (the "Company").
WHEREAS Parent, Sub and the Company propose to enter into an Agreement
and Plan of Merger of even date herewith (the "Merger Agreement") providing for
the making of a cash tender offer (the "Offer") by the Sub for shares of Common
Stock, par value $.10 per share, of the Company (the "Common Stock") and the
merger of the Company and Sub; and
WHEREAS as a condition to their willingness to enter into the Merger
Agreement, Parent and Sub wish to have the option set forth herein to purchase,
under certain circumstances, shares of Common Stock from the Company.
NOW, THEREFORE, to implement the foregoing and in consideration of the
mutual agreements contained herein and for other consideration, the sufficiency
and receipt of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:
"AFFILIATE" has the meaning assigned to the term "affiliate" in the
Merger Agreement.
"CLOSING DATE" has the meaning assigned to such term in the Merger
Agreement.
"COMMON STOCK" has the meaning assigned to such term above.
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2
"EXERCISE CLOSING" has the meaning assigned to such term in
Section 2.02(b).
"EXPIRATION DATE" means the earliest of (i) the Closing Date and (ii)
the date the Merger Agreement is validly terminated by the Company pursuant to
Section 8.01(g) of the Merger Agreement due to a material breach by Parent or
Sub of their respective representations, warranties, covenants or other
agreements under the Merger Agreement.
"LIEN" has the meaning assigned to such term in the Merger Agreement.
"MERGER AGREEMENT" has the meaning assigned to such term above.
"OFFER" has the meaning assigned to such term in the Merger Agreement.
"OPTION" has the meaning set forth in Section 2.01.
"OPTION EXERCISE PERIOD" means the period commencing with the first
occurrence of a Trigger Event and ending with the Expiration Date.
"PERSON" has the meaning assigned to the term "person" in the Merger
Agreement.
"SHARES" has the meaning set forth in Section 2.01.
"SUBSIDIARY" has the meaning assigned to the term "subsidiary" in the
Merger Agreement.
"TRIGGER EVENT" means Parent, Sub or any other Affiliate of Parent
shall have accepted Shares for payment pursuant to the Offer.
SECTION 1.02. INTERPRETATION. The rules of interpretation set forth
in Section 9.04 of the Merger Agreement shall apply to this Agreement, and the
provisions thereof shall be deemed to be incorporated by reference herein.
<PAGE>
3
ARTICLE II
THE OPTION
SECTION 2.01. GRANT OF OPTION. The Company hereby grants to Sub an
irrevocable option (the "Option") to purchase, on the terms and subject to the
conditions set forth herein, up to 5,000,000 newly issued shares of Common
Stock, plus all shares of Common Stock held in treasury (collectively, the
"Shares"). All of such Shares will be duly authorized, validly issued, fully
paid and non-assessable and not subject to preemptive rights.
SECTION 2.02. EXERCISE OF OPTION. (a) The Option may be exercised
by Sub (or its designee, which designee must be Parent or a direct or indirect
wholly owned Subsidiary of Parent), in whole or in part, at any time, or from
time to time, during the Option Exercise Period.
(b) In order for Sub to exercise the Option, Sub shall give written
notice to the Company of such exercise, specifying the number of Shares to be
purchased (and the denominations of the share certificate or certificates to be
issued), whether Sub and/or a designee of Sub will be purchasing the Shares and
the place, time and date of the closing of such purchase (the "Exercise
Closing"), which date shall not be less than one business day nor more than ten
business days from the date on which such notice is delivered.
(c) At each Exercise Closing, the Company shall deliver to Sub (or
its designee) all of the Shares to be purchased by delivery of a certificate or
certificates evidencing such Shares in the denominations designated by Sub in
the notice required under Section 2.02(b).
SECTION 2.03. PURCHASE PRICE; PAYMENT. In the event Sub exercises
the Option, Sub (or, at Sub's option, its designee) shall, at the related
Exercise Closing, deliver by wire transfer to an account designated at least one
business day in advance of such Exercise Closing an amount equal to the product
of (x) $67.50 and (y) the number of Shares purchased at such closing.
SECTION 2.04. RESERVATION OF SHARES. The Company has reserved, and
will keep reserved, for issuance (in the case of newly issued Shares) and
delivery (in the case of treasury Shares) hereunder the maximum number of Shares
that would be issuable and deliverable, as the case may be, from time to time if
the Option were exercised in full, in each case free and clear of all liens.
<PAGE>
4
SECTION 2.05. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. In the
event of any change in the number (or conversion or exchange) of issued and
outstanding shares of Common Stock by reason of any stock dividend, split-up,
merger, recapitalization, combination, exchange of shares, spin-off or other
change in the corporate or capital structure of the Company which could have the
effect of diluting or otherwise diminishing Sub's rights hereunder (including
any issuance of Common Stock or other equity security of the Company at a price
below the fair value thereof), the number and kind of Shares subject to the
Option shall be appropriately adjusted so that Sub shall receive upon exercise
(or, if such a change occurs between exercise and the related Exercise Closing,
upon such Exercise Closing) of the Option the number and kind of Shares or other
securities or property that Sub would have received in respect of the Shares
that Sub is entitled to purchase upon exercise of the Option if the Option had
been exercised (or the purchase thereunder had been consummated, as the case may
be) immediately prior to such event. The rights of Sub under this Section shall
be in addition to, and shall in no way limit, its rights against the Company for
breach of the Merger Agreement.
ARTICLE III
GENERAL PROVISIONS
SECTION 3.01. FURTHER ASSURANCES. From time to time, at any of the
other parties' request and without further consideration, each party hereto
shall execute and deliver such additional documents, transfers, assignments,
endorsements, consents and other instruments and take all such further action as
may be necessary or desirable to consummate the transactions contemplated by
this Agreement, including to vest in Sub (or its designee hereunder) thereof
good title to any Shares purchased hereunder. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Option, and the transactions
contemplated by this Agreement.
SECTION 3.02. NOTICES. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally or sent by overnight courier (providing
<PAGE>
5
proof of delivery) to the parties at the following addresses (or at such other
address for a party and shall be specified by like notice):
(a) If to Parent or Sub, to:
ITT Corporation
1330 Avenue of the Americas
New York, New York 10019-5049
Facsimile: (212) 258-1037
Attention: Richard S. Ward, Esq.
with copies to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Facsimile: (212) 474-3700
Attention: Philip A. Gelston, Esq.
(b) If to the Company, to:
Caesars World, Inc.
1801 Century Park East
Los Angeles, California 90067
Facsimile: (310) 552-9254
Attention: Philip L. Ball, Esq.
with copies to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Facsimile: (212) 735-2000
Attention: Morris J. Kramer, Esq.
SECTION 3.03. AMENDMENTS; WAIVERS. (a) No provision of this
Agreement may be amended or waived unless such amendment or waiver is in writing
and signed, in the case of an amendment, by the parties hereto, or in the case
of a waiver, by the party against whom the waiver is to be effective.
<PAGE>
6
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 3.04. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 3.05. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement, the Merger Agreement and the agreements contemplated hereby and
thereby, constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of these agreements and, except for the provisions of Article III
of the Merger Agreement, the last sentence of Section 6.10(a) of the Merger
Agreement and Sections 6.04 and 6.05 of the Merger Agreement, are not intended
to confer upon any person other than the parties any rights or remedies
hereunder.
SECTION 3.06. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ANY APPLICABLE CONFLICTS OF LAW.
SECTION 3.07. ASSIGNMENT. Except as specifically provided herein
with respect to any designee of Sub exercising the Option, neither this
Agreement nor any of the rights, interests or obligations under this Agreement
shall be assigned, in whole or in part, by operation of law or otherwise by any
of the parties without the prior written consent of the other parties, except
that Sub may assign, in its sole discretion, any of or all its rights, interests
and obligations under this Agreement to Parent or to any direct or indirect
wholly owned Subsidiary of Parent, but no such assignment shall relieve Sub of
any of its obligations under this Agreement. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
SECTION 3.08. ENFORCEMENT. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement
<PAGE>
7
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of New York or California or in New York or
California state court, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of any Federal court
located in the State of New York or California or any New York or California
state court in the event any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions
<PAGE>
8
contemplated by this Agreement in any court other than a Federal or state
court sitting for the State of New York or California.
IN WITNESS WHEREOF, the Company, Parent and Sub have caused this
Agreement to be duly executed as of the day and year first above written.
ITT CORPORATION,
by
/s/ Richard S. Ward
-----------------------
Name: Richard S. Ward
Title: Executive V.P.,
General Counsel
ITT FLORIDA ENTERPRISES INC.,
by
/s/ Richard S. Ward
-----------------------
Name: Richard S. Ward
Title: Executive V.P.,
General Counsel
CAESARS WORLD, INC.,
by
/s/ Roger Lee
-----------------------
Name: Roger Lee
Title: Senior Vice
President, Finance
& Administration
