<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
SCHEDULE 13D
(RULE 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934/1/
BOARDWALK CASINO, INC.
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(Name of Issuer)
COMMON STOCK, $.001 PAR VALUE
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(Title of Class of Securities)
096612 10 6
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(CUSIP Number)
Daniel R. Lee
Mirage Resorts, Incorporated
3400 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Tel: (702) 791-7111
With a copy to: With a copy to:
--------------- ---------------
Peter C. Walsh, Esq. C. Kevin McGeehan, Esq.
Mirage Resorts, Incorporated Irell & Manella LLP
3260 South Industrial Road 1800 Avenue of the Stars,
Las Vegas, Nevada 89109 Suite 900
Tel: (702) 792-4868 Los Angeles, California 90067
Tel: (310) 277-1010
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
December 22, 1997
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Note. Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
(Continued on following pages)
(Page 1 of 11 Pages)
- ----------------------------
/1/ The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
- -----------------------
CUSIP NO. 096612 10 6 SCHEDULE 13D
- -----------------------
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NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MIRAGE RESORTS, INCORPORATED
IRS IDENTIFICATION NO. 88-0058016
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
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SEC USE ONLY
3
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SOURCE OF FUNDS*
4
BK
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
5 ITEMS 2(d) or 2(e) [_]
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CITIZENSHIP OR PLACE OF ORGANIZATION
6
NEVADA
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SOLE VOTING POWER
7
NUMBER OF 1,000
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
3,821,429
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 3,822,429
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
n/a
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,822,429**
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
53.2%
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TYPE OF REPORTING PERSON*
14
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
** The filing of this Schedule 13D shall not be construed as an admission that
the reporting person is, for the purposes of Section 13(d) or 13(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
beneficial owner of any securities covered by this Schedule 13D except the
1,000 shares of Common Stock (as defined herein) that the reporting person
previously acquired.
2
<PAGE>
This Schedule 13D (the "Statement") is being filed as an original filing
with the Securities and Exchange Commission (the "Commission") by Mirage
Resorts, Incorporated, a Nevada corporation ("Parent"), in connection with
agreements to purchase common stock, $.001 par value per share (the "Common
Stock"), of Boardwalk Casino, Inc., a Nevada corporation (the "Company"), and
certain related voting arrangements, entered into in connection with that
certain Agreement and Plan of Merger (the "Merger Agreement") dated December 22,
1997 among Parent, Mirage Acquisition Sub, Inc., a Nevada corporation and wholly
owned subsidiary of Parent ("Merger Sub"), and the Company, providing for the
proposed merger of Merger Sub with and into the Company, with the Company
remaining as the surviving corporation and becoming a wholly-owned subsidiary of
Parent (the "Merger"). Concurrently with the execution of the Merger Agreement,
(i) Parent entered into agreements with Avis P. Jansen, individually, as
executrix of the Estate of Norbert W. Jansen, as Trustee for the Jansen Family
Trust and as president of Holiday Gifts, Inc., a Nevada corporation
(collectively, "Jansen"), pursuant to which, among other things, Parent has
agreed to purchase 2,750,000 shares of Common Stock and 600 shares of Series A
6% Non-Voting Cumulative Preferred Shares of the Company (the "Preferred Stock")
owned by Jansen and an affiliate of Parent agreed to purchase a parcel of land
located at 3734 Las Vegas Boulevard South (the "Land") owned by Jansen and
leased to the Company (collectively, the "Jansen Agreements"), and (ii) Parent
entered into an agreement with Diversified Opportunities Group Ltd., an Ohio
limited liability company ("Diversified"), Jacobs Entertainment Nevada, Inc, a
Nevada corporation ("Jacobs Entertainment"), and Jeffrey P. Jacobs, an
individual ("Jacobs") (Diversified, Jacobs Entertainment and Jacobs are
collectively referred to as the "Jacobs Sellers"), pursuant to which, among
other things, Parent has agreed to purchase 1,071,429 shares of Common Stock, a
$5 Million Subordinated Note (the "Note") and 2,650 shares of
Preferred Stock owned by the Jacobs Sellers (the "Jacobs Agreement" and
collectively with the Jansen Agreements, the "Stockholder Agreements"). Based
on information contained in the Company's filings with the Commission, Mrs.
Jansen is the Chairman of the Board of Directors and Vice President of the
Company and Mr. Jacobs is a director of the Company. Based on representations
made in the Stockholder Agreements, Jansen and the Jacobs Sellers (collectively,
the "Selling Stockholders") beneficially own, and have agreed to sell under the
Stockholder Agreements, an aggregate of 3,821,429 shares of Common Stock, or
approximately 53.2% of the total outstanding shares of Common Stock, based on
the total number of shares of Common Stock represented by the Company in the
Merger Agreement to have been outstanding as of December 22, 1997.
ITEM 1. SECURITY AND ISSUER.
This Statement relates to shares of Common Stock. The Company's principal
executive offices are located at 3750 Las Vegas Boulevard South, Las Vegas,
Nevada 89109.
3
<PAGE>
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (c) and (f)
This Statement is being filed by Mirage Resorts, Incorporated, a Nevada
corporation whose principal office is located at 3400 Las Vegas Boulevard South,
Las Vegas, Nevada 89109. Parent's principal business is, through subsidiaries,
the ownership and operation of hotel-casino resorts in Nevada and other gaming
jurisdictions.
The name, citizenship, business address, and present principal occupation
of each of the directors and executive officers of Parent are set forth in
Exhibit 1 which is incorporated herein by reference.
- ---------
(d) and (e)
Neither Parent nor, to the best knowledge of Parent, any director or
executive officer of Parent listed on Exhibit 1 hereto, has been, during the
---------
last five years, (a) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (b) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As of the date of this Statement, Parent has not paid any funds or other
consideration for purchases of Common Stock owned by the Selling Stockholders or
in connection with the Merger. As described in Item 4 below, Parent's purchase
of the Note and the shares of Preferred Stock owned by the Jacobs Sellers is
scheduled to close on January 5, 1998.
If the Merger is consummated, the total amount required (i) to purchase the
shares of Common Stock owned by the Selling Stockholders pursuant to the
Stockholder Agreements and (ii) to pay the merger consideration to the Company's
remaining stockholders and pay transaction-related fees and expenses is
estimated to be approximately $36 million. In addition, pursuant to the
Stockholder Agreements, Parent is purchasing shares of Preferred Stock, the
Note, and the Land, among other things, as described in Item 4. Funds for all
such purchases are expected to be obtained from Parent's $1.75 billion credit
facility from a group of commercial banks.
ITEM 4. PURPOSE OF TRANSACTION.
The purpose of the transactions described in this Statement is to acquire
the entire equity interest of the Company pursuant to the Stockholder Agreements
and the Merger Agreement. There can be no assurance, however, that the proposed
transactions will be consummated or as to the timing thereof.
4
<PAGE>
Pursuant to the Merger Agreement, and subject to the conditions set forth
therein (including approval by stockholders of the Company), at the effective
time of the Merger (the "Effective Time"), (i) Merger Sub will be merged with
and into the Company and the separate corporate existence of Merger Sub shall
thereupon cease, with the Company remaining as the surviving corporation (the
"Surviving Corporation") and becoming a wholly-owned subsidiary of Parent, (ii)
the directors and officers of Merger Sub will become the directors and officers
of the Company in its capacity as the Surviving Corporation, in each case until
their respective successors are elected or appointed and qualified, (iii) except
for shares of Common Stock as to which dissenters' rights are perfected or which
are owned by the Company, Parent or Merger Sub, each share of the Common Stock
issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive $5.00 in cash, payable to the holder
thereof, without interest (the "Merger Consideration"), (iv) all shares of
preferred stock of the Company, including without limitation the Preferred
Stock, which are outstanding at the Effective Time shall remain outstanding and
shall not be affected by the Merger, (v) each share of Merger Sub's common stock
issued and outstanding immediately prior to the Effective Time shall be
converted into and become 71,795 fully paid and nonassessable shares of common
stock of the Surviving Corporation, and (vi) the articles of incorporation and
bylaws of the Company, as in effect immediately prior to the Effective Time,
shall be the articles of incorporation and bylaws of the Surviving Corporation
until thereafter amended as provided by such articles of incorporation or
bylaws or by applicable law. Upon consummation of the Merger, the registration
of the Common Stock under the Exchange Act will be terminated, and the Common
Stock will cease to be reported and listed on The Nasdaq Stock Market, Inc. and
the Pacific Exchange.
Pursuant to the Jansen Agreements, and subject to the terms and conditions
set forth therein, Parent has agreed: (i) to purchase 2,750,000 shares of Common
Stock owned by the Trust, which includes 1,734,620 shares as to which Jansen has
granted a purchase option to Diversified or its nominee pursuant to that certain
Option and Proxy Agreement dated September 24, 1996 among the Company,
Diversified and Norbert W. Jansen ("Mr. Jansen"), individually and as trustee of
the Trust (as amended by that certain Memorandum of Understanding (the
"Memorandum") dated as of October 29, 1997 among the Company, Diversified,
Jacobs Entertainment or its nominee and Jansen (the "Option Agreement")), at a
purchase price of $5.00 per share in cash for a total aggregate purchase price
of $13,750,000; (ii) to purchase 600 shares of Preferred Stock for an aggregate
purchase price of $600,000, plus any accumulated but unpaid dividends on the
Preferred Stock as of the date of payment; and (iii) to purchase, through its
subsidiary Restaurant Ventures of Nevada, Inc., a Nevada corporation
("Properties Corporation"), the Land pursuant to an Agreement of Purchase and
Sale and Joint Escrow Instructions (the "Land Agreement") for a purchase price
of $7,382,380. In exchange for a payment from Parent of $268,000 and as further
consideration to Parent under the Jansen Agreements, Jansen agreed to amend the
term of that certain lease agreement between Mr. Jansen, in his individual
capacity and as trustee of the Trust, and the Company, effective as of October
1, 1996, which permits Holiday Gifts, Inc. (a corporation controlled by Jansen)
to operate a gift shop upon the Company's premises, to a month-to-month
arrangement and to make certain other modifications thereto. The closing of the
transactions contemplated by the Jansen Agreements shall take place
substantially concurrently with the closing of the Merger.
5
<PAGE>
Pursuant to the Jacobs Agreement, and subject to the terms and conditions
set forth therein, Parent has agreed: (i) to purchase 1,071,429 shares of Common
Stock owned by the Jacobs Sellers at a purchase price of $5.00 per share in cash
for a total aggregate purchase price of $5,357,145; (ii) to purchase 2,650
shares of Preferred Stock owned by the Jacobs Sellers for a total aggregate
purchase price of $2,650,000, plus any accrued and accumulated but unpaid
dividends on the Preferred Stock as of the date of payment; (iii) to purchase
the Note for the purchase price of $5,000,000, plus accrued but unpaid interest
on the Note to the date of payment; and (iv) to pay the Jacobs Sellers a total
of $3,735,000 in consideration for, among other things, the termination and
release of any and all of their rights, title and interest which they may have
under or pursuant to the Option Agreement, the Memorandum and that certain
Purchase Agreement dated as of September 24, 1996, by and among the Company,
Diversified, and Mr. Jansen, in his individual capacity and as trustee for the
Trust. The closing of the transactions contemplated by the Jacobs Agreement
shall take place substantially concurrently with the closing of the Merger,
except that the purchases of the 2,650 shares of Preferred Stock and the Note
described in (ii) and (iii) above are scheduled to take place on January 5,
1998.
Pursuant to the Stockholder Agreements, each of the Selling Stockholders
has agreed (for as long as the Merger Agreement is in effect), that at any
meeting of the holders of Common Stock, however called, or in connection with
any written consent of the holders of Common Stock, such Selling Stockholder
shall vote (or cause to be voted) the shares of Common Stock owned by them, (a)
in favor of the Merger, the execution and delivery by the Company of the Merger
Agreement and the approval of the terms thereof and each of the other actions
contemplated by the Merger Agreement and its respective Stockholder Agreement
and any actions required in furtherance thereof; (b) against any action or
agreement that would result in a breach in any respect of any covenant,
representation or warranty or any other obligation or agreement of the Company
under the Merger Agreement or its respective Stockholder Agreement; and (c)
except as otherwise agreed to in writing in advance by Parent, against any of
the following actions or agreements (other than the Merger Agreement or the
transactions contemplated thereby): (i) any action or agreement that is
intended, or might reasonably be expected, to impede, interfere with, delay,
postpone or attempt to discourage or adversely affect the Merger and the
transactions contemplated by its respective Stockholder Agreement and the Merger
Agreement; (ii) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company and any of its
subsidiaries; (iii) a sale, lease or transfer of a material amount of assets of
the Company and any of its subsidiaries or a reorganization, recapitalization,
dissolution or liquidation of the Company or any of its subsidiaries; (iv) any
change in the management or Board of Directors of the Company; (v) any change in
the present capitalization or dividend policy of the Company; (vi) any amendment
of the Company's articles of incorporation or bylaws; or (vii) any other
material change in the Company's corporate structure or business.
In addition, the Selling Stockholders have each granted an irrevocable
proxy to Parent to vote their shares of Common Stock in the manner described
above if the Selling Stockholders fail to do so.
6
<PAGE>
Moreover, pursuant to the Stockholder Agreements, the Selling Stockholders
may not offer for sale, sell, transfer, tender, pledge, encumber, assign, or
otherwise dispose of, or grant any voting rights or proxies with respect to, any
of their shares of Common Stock or Preferred Stock.
The foregoing summaries of the Merger Agreement and the Stockholder
Agreements do not purport to be complete and are qualified in their entirety by
reference to the Merger Agreement, the Jansen Agreements (including the Land
Agreement) and the Jacobs Agreement, copies of which are filed with this
Statement as Exhibits 2, 3, 4 and 5, respectively, to this Statement. Reference
---------- - - -
is made to such agreements for complete descriptions of the terms and provisions
thereof and the agreements of the parties thereunder. All capitalized terms
used herein and not otherwise defined shall have the meaning ascribed in the
Merger Agreement and the Stockholder Agreements.
Other than as set forth above, Parent has no plans or proposals which would
relate to or would result in any of the actions specified in clauses (a) through
(j) of Item 4 of the SEC's standard form of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Parent is the beneficial owner of 1,000 shares of Common Stock which
it acquired previously (the "Owned Shares"). Parent may be deemed to be the
beneficial owner of an additional 3,821,429 shares of Common Stock (the "Selling
Stockholder Shares"), which are held by the Selling Stockholders and are subject
to the voting and other provisions of the Stockholder Agreements. The Selling
Stockholder Shares constitute approximately 53.2% of the outstanding shares of
Common Stock based on the total number of 7,179,429 shares of Common Stock
represented by the Company in the Merger Agreement to have been outstanding as
of December 22, 1997. To the best knowledge of Parent, no director or executive
officer of Parent is the beneficial owner of any shares of Common Stock.
(b) Parent has sole voting power with respect to the Owned Shares. Parent
has shared voting power with the Selling Stockholders with respect to all of the
Selling Stockholder Shares with respect to certain matters relating to the
Merger as described in Item 4 above. Parent has sole dispositive power over the
Owned Shares and, pursuant and subject to the Stockholder Agreements, the
Selling Stockholder Shares. Set forth below is the Item 2 information with
respect to each Selling Stockholder:
(1) Jansen:
The following information is derived from the Company's definitive
Proxy Statement relating to the September 24, 1997 Meeting of Shareholders:
Avis P. Jansen, a citizen of the United States, in her individual
capacity and as executrix of the Estate of Norbert W. Jansen and as Trustee for
the Jansen Family Trust, has her principal business address at 3750 Las Vegas
Boulevard South, Las Vegas, Nevada 89109. Mrs. Jansen is currently the Chairman
of the Board of Directors and
7
<PAGE>
Vice President of the Company. Since 1971, Mrs. Jansen has served as the
president, secretary and treasurer of Holiday Gifts, Inc., the former operator
of the Company's casino.
To the best knowledge of Parent, Mrs. Jansen has not been, during the
last five years, (a) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (b) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
(2) The Jacobs Sellers:
The following information was derived solely from the Schedule 13D
dated October 3, 1996 filed by Diversified, as amended ("Diversified's Schedule
13D"):
The principal business of Diversified is developing and acquiring
investments in the gaming industry and managing, supervising, selling or
otherwise disposing of such investments and engaging in activities incidental or
ancillary thereto. The address of Diversified's principal business and office
is 1231 Main Avenue, Cleveland, Ohio 44113.
There are two members of Diversified: (i) Gary L. Bryenton and Jacobs,
as trustees under the Opportunities Trust Agreement dated February 1, 1996 (the
"Trust") and (ii) Jacobs Entertainment Ltd., an Ohio limited liability company
("JEL"). JEL is the Manager of Diversified. Jacobs and Jacobs Entertainment
are the members of JEL and Jacobs is the Manager of JEL. Both the Trust and JEL
were formed primarily to hold their interest in Diversified. The address of the
Trust's principal business and office is c/o Baker & Hostetler, Gary L.
Bryenton, 3200 National City Center, Cleveland, Ohio 44144, and the address of
JEL's principal business and office is 1231 Main Avenue, Cleveland, Ohio 44113.
To the best knowledge of Parent, none of Diversified, the Trust, JEL
or Jacobs has been, during the last five years, (a) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (b) a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(c) Other than the transactions described in Item 4 above which have
prompted the filing of this Schedule 13D, to the best knowledge of Parent,
neither Parent nor any of its directors or executive officers has effected any
transaction in Common Stock during the past 60 days.
8
<PAGE>
(d) To the best knowledge of Parent, no other person has the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, the Selling Stockholder Shares or the Owned Shares.
(e) Inapplicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The second through seventh paragraphs of Parent's response to Item 4 of
this Statement are hereby incorporated by reference herein.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Directors and Executive Officers of Mirage Resorts, Incorporated
2. Agreement and Plan of Merger, dated December 22, 1997, by and among
Mirage Resorts, Incorporated, Mirage Acquisition Sub, Inc. and
Boardwalk Casino, Inc.
3. Agreement, dated December 22, 1997, by and between Mirage Resorts,
Incorporated and Avis P. Jansen, individually, as executrix of the
Estate of Norbert W. Jansen and as Trustee for the Jansen Family Trust
under an Agreement dated July 14, 1993.
4. Agreement of Purchase and Sale and Joint Escrow Instructions, dated as
of December 22, 1997, by and between Restaurant Ventures of Nevada,
Inc., and Avis P. Jansen, as sole trustee of the Jansen Family Trust
under an agreement dated July 14, 1993.
5. Agreement, dated December 22, 1997, by and among Mirage Resorts,
Incorporated, on the one hand, and Diversified Opportunities Group
Ltd., Jacobs Entertainment Nevada, Inc. and Jeffrey P. Jacobs, on the
other.
6. Amended and Restated Loan Agreement, dated as of March 7, 1997, among
Mirage Resorts, Incorporated, the Banks named therein, BancAmerica
Securities, Inc., CIBC Wood Gundy Securities Corp., J.P. Morgan
Securities Inc. and Societe Generale, as Co-Arrangers, Bankers Trust
Company, The Bank of New York, The Bank of Nova Scotia, Commerzbank
Aktiengesellschaft, Credit Lyonnais, The Long-Term Credit Bank of
Japan, Ltd., Los Angeles Agency, PNC Bank, National Association and
Westdeutsche Landesbank Girozentrale, as Co-Agents, Bank of America
National Trust and Savings Association, as Administrative Agent, and
Morgan Guaranty Trust Company of New York, as Documentation Agent
(without
9
<PAGE>
schedules or exhibits). (Incorporated by reference from Exhibit
10(ggg) to Parent's Form 10-K for the year ended December 31, 1996).
7. Amendment No. 1 to Amended and Restated Loan Agreement, dated as of
September 19, 1997, among Mirage Resorts, Incorporated, the Banks, Co-
Arrangers, Co-Agents and Documentation Agent referred to therein, and
Bank of America National Trust and Savings Association, as
Administrative Agent. (Incorporated by reference from Exhibit 10.9 to
Parent's Form 10-Q for the quarter ended September 30, 1997).
10
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
MIRAGE RESORTS, INCORPORATED
Dated: December 29, 1997 By: /s/ Daniel R. Lee
----------------------
Daniel R. Lee,
Senior Vice President-Finance and Development,
Chief Financial Officer and Treasurer
11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- -----------
<S> <C> <C>
1. Directors and Executive Officers of Mirage Resorts, Incorporated
2. Agreement and Plan of Merger, dated December 22, 1997, by and
among Mirage Resorts, Incorporated, Mirage Acquisition Sub, Inc.
and Boardwalk Casino, Inc.
3. Agreement, dated December 22, 1997, by and between Mirage
Resorts, Incorporated and Avis P. Jansen, individually, as
executrix of the Estate of Norbert W. Jansen and as Trustee for
the Jansen Family Trust under an Agreement dated July 14, 1993.
4. Agreement of Purchase and Sale and Joint Escrow Instructions,
dated as of December 22, 1997, by and between Restaurant Ventures
of Nevada, Inc., and Avis P. Jansen, as sole trustee of the
Jansen Family Trust under an agreement dated July 14, 1993.
5. Agreement, dated December 22, 1997, by and among Mirage Resorts,
Incorporated, on the one hand, and Diversified Opportunities
Group Ltd., Jacobs Entertainment Nevada, Inc. and Jeffrey P.
Jacobs, on the other.
6. Amended and Restated Loan Agreement, dated as of March 7, 1997,
among Mirage Resorts, Incorporated, the Banks named therein,
BancAmerica Securities, Inc., CIBC Wood Gundy Securities Corp.,
J.P. Morgan Securities Inc. and Societe Generale, as Co-
Arrangers, Bankers Trust Company, The Bank of New York, The Bank
of Nova Scotia, Commerzbank Aktiengesellschaft, Credit Lyonnais,
The Long-Term Credit Bank of Japan, Ltd., Los Angeles Agency, PNC
Bank, National Association and Westdeutsche Landesbank
Girozentrale, as Co-Agents, Bank of America National Trust and
Savings Association, as Administrative Agent, and Morgan Guaranty
Trust Company of New York, as Documentation Agent
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ----------- -----------
<S> <C> <C>
(without schedules or exhibits). (Incorporated by reference from
Exhibit 10(ggg) to Parent's Form 10-K for the year ended December
31, 1996).
7. Amendment No. 1 to Amended and Restated Loan Agreement, dated as
of September 19, 1997, among Mirage Resorts, Incorporated, the
Banks, Co-Arrangers, Co-Agents and Documentation Agent referred
to therein, and Bank of America National Trust and Savings
Association, as Administrative Agent. (Incorporated by reference
from Exhibit 10.9 to Parent's Form 10-Q for the quarter ended
September 30, 1997).
</TABLE>
<PAGE>
EXHIBIT 1
<TABLE>
<CAPTION>
Directors' and Executive
Officers' Business Addresses Principal Occupation
- -----------------------------------------------------------------------------------------
<S> <C>
Stephen A. Wynn Chairman of the Board of Directors, President
3400 Las Vegas Boulevard South and Chief Executive Officer of Parent
Las Vegas, Nevada 89109
Ronald M. Popeil Director of Parent; President of RONCO,
1292 Monte Cielo Drive Inc., a corporation involved primarily in the
Beverly Hills, California 90210 production and marketing of consumer
products
Elaine P. Wynn Director of Parent; Secretary, Treasurer and
3400 Las Vegas Boulevard South Trustee of Golden Nugget Scholarship Fund,
Las Vegas, Nevada 89109 Inc.
Richard D. Bronson Director of Parent; President of New City
1771 Post Road East, Suite 330 Development, a division of Parent responsible
Westport, Connecticut 06880 for certain corporate development activities
outside of Nevada
Melvin B. Wolzinger Director of Parent; General Partner in W.W.
1901 North Rancho Drive Investment Co., a real estate holding company
Las Vegas, Nevada 89106 in Las Vegas, Nevada
Daniel B. Wayson Director of Parent; Principal of Wayson
816 Coachway Drive Properties, Inc, a real estate development and
Annapolis, Maryland 21401 holding company
George J. Mason Director of Parent; Senior Managing Director
1999 Avenue of the Stars, of Bear, Stearns & Co. Inc., an investment
33rd Floor banking firm
Los Angeles, California 90067
Barry A. Shier Executive Vice President - Marketing and
129 East Fremont Street Hotel Operations of Parent; Chief Executive
Las Vegas, Nevada 89101 Officer of GNLV, CORP., a subsidiary of
Parent
Bruce A. Levin Vice President, General Counsel and
3400 Las Vegas Boulevard South Secretary of Parent
Las Vegas, Nevada 89109
Daniel R. Lee Senior Vice President -- Finance and
3400 Las Vegas Boulevard South Development, Chief Financial Officer and
Las Vegas, Nevada 89109 Treasurer of Parent
Frank P. Visconti President -- Retail Division of Parent
3400 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Thomas L. Sheer Senior Vice President -- Government and
3400 Las Vegas Boulevard South External Affairs of Parent
Las Vegas, Nevada 89109
James E. Pettis Vice President -- Risk Management of Parent
3260 South Industrial Road
Las Vegas, Nevada 89109
James M. Powers Vice President -- Corporate Security of Parent
3260 South Industrial Road
Las Vegas, Nevada 89109
</TABLE>
<PAGE>
EXHIBIT 2
AGREEMENT AND PLAN
OF MERGER
DATED
DECEMBER 22, 1997
AMONG
MIRAGE RESORTS, INCORPORATED
MIRAGE ACQUISITION SUB, INC.
AND
BOARDWALK CASINO, INC.
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TABLE OF CONTENTS
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ARTICLE I THE MERGER................................................ 2
1.1 The Merger................................................ 2
1.2 Effective Time............................................ 2
1.3 Closing................................................... 3
1.4 Directors and Officers of the Surviving Corporation....... 3
1.5 Stockholders' Meeting..................................... 3
ARTICLE II CONVERSION OF SHARES........................................... 4
2.1 Conversion of Capital Stock............................... 4
2.2 Exchange of Certificates.................................. 5
ARTICLE III [Intentionally Omitted]....................................... 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
COMPANY............................................................ 6
4.1 Organization and Qualification............................ 6
4.2 Capitalization of the Company............................. 7
4.3 Power and Authority....................................... 8
4.4 Board Recommendations; Anti-takeover Provisions........... 9
4.5 Compliance................................................ 10
4.6 Consents and Approvals; No Violation...................... 11
4.7 Assignment of MOU......................................... 12
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4.8 SEC Reports; Financial Statements, Absence of
Undisclosed Liabilities................................... 13
4.9 Absence of Certain Changes................................ 14
4.10 Company Proxy Statement................................... 15
4.11 Absence of Litigation..................................... 15
4.12 Taxes..................................................... 15
4.13 Employee Benefits......................................... 16
4.14 Intellectual Property..................................... 19
4.15 Material Contracts........................................ 20
4.16 Insurance................................................. 20
4.17 Labor Matters............................................. 21
4.18 Real Property............................................. 21
4.19 Environmental Matters..................................... 24
4.20 Representations Complete.................................. 26
4.21 Disclosure Schedule....................................... 26
ARTICLE V REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB.............................................. 26
5.1 Organization.............................................. 26
5.2 Authority Relative to this Agreement...................... 27
5.3 Consent and Approvals; No Violation....................... 27
5.4 Information Supplied...................................... 28
5.5 Merger Sub's Operations................................... 28
5.6 Capitalization............................................ 28
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5.7 Financing................................................. 28
ARTICLE VI CONDUCT OF BUSINESS BY THE COMPANY
PRIOR TO EFFECTIVE DATE............................................ 28
6.1 Ordinary Course........................................... 28
6.2 Dividends; Changes in Stock............................... 29
6.3 Issuance, Repurchase or Repricing of Securities........... 29
6.4 Governing Documents; Board of Directors................... 29
6.5 No Dispositions........................................... 29
6.6 Indebtedness.............................................. 29
6.7 Employees and Affiliates.................................. 29
6.8 Benefit Plans............................................. 30
6.9 Taxes..................................................... 30
6.10 Consultation and Cooperation.............................. 30
6.11 Additional Matters........................................ 31
6.12 Consent to Stockholder Agreements and Release............. 31
ARTICLE VII ADDITIONAL COVENANTS.......................................... 32
7.1 No Solicitation........................................... 32
7.2 Access to Information; Confidentiality.................... 34
7.3 HSR Act................................................... 35
7.4 Consents and Approvals.................................... 35
7.5 Closing of Stockholder Agreements;
Parent Obligation to Effect Merger Once
Stockholder Agreements Fully Consummated.................. 36
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7.6 Notification of Certain Matters........................... 36
7.7 Additional Actions........................................ 37
7.8 Interference with Transactions............................ 37
7.9 Publicity................................................. 37
7.10 Opinion of Company Counsel................................ 38
7.11 Resignation of Directors.................................. 38
7.12 Parent Consent to Merger.................................. 38
7.13 Parent Consent to Deferral of March
Interest Payment on First Mortgage Notes.................. 38
ARTICLE VIII CONDITIONS................................................... 38
8.1 Conditions to each Party's Merger Obligations to Effect the
to Effect the Merger...................................... 38
8.2 Conditions to Obligations of Parent and Merger Sub
to Effect the Merger...................................... 39
ARTICLE IX TERMINATION.................................................... 41
9.1 Termination............................................... 41
9.2 Effect of Termination..................................... 42
ARTICLE X GENERAL PROVISIONS.............................................. 43
10.1 Fees and Expenses......................................... 43
10.2 Amendment and Modification................................ 44
10.3 Nonsurvival of Representations and Warranties............. 44
10.4 Notices................................................... 44
10.5 Definitions; Interpretation............................... 45
10.6 Specific Performance...................................... 46
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10.7 Counterparts.............................................. 46
10.8 Entire Agreement; No Third Party Beneficiaries............ 46
10.9 No Control of the Company by Parent Under Gaming
Laws...................................................... 46
10.10 Severability.............................................. 46
10.11 Governing Law............................................. 46
10.12 Assignment................................................ 46
10.13 No Prior Agreements....................................... 47
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT") is entered into on
December 22, 1997, by and among Mirage Resorts, Incorporated, a Nevada
corporation, located at 3400 Las Vegas Boulevard South, Las Vegas, Nevada 89109
("PARENT"), Mirage Acquisition Sub, Inc, a Nevada corporation and wholly-owned
subsidiary of Parent, located at 3400 Las Vegas Boulevard South, Las Vegas,
Nevada 89109 ("MERGER SUB"), and Boardwalk Casino, Inc., a Nevada corporation,
located at 3750 Las Vegas Boulevard South, Las Vegas, Nevada 89109 (the
"COMPANY").
RECITALS
WHEREAS, Parent and the Board of Directors of Merger Sub have determined
that it is advisable and in the best interests of Parent and Merger Sub to
engage in a transaction whereby Parent will acquire the Company on the terms and
subject to the conditions set forth herein; and
WHEREAS, the Board of Directors of the Company has determined that it is
advisable and in the best interests of the Company and its stockholders to
engage in a transaction whereby Parent will acquire the Company on the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, as an inducement to Parent to acquire the Company, and as a
condition to Parent's willingness to enter into this Agreement, concurrently
with the execution and delivery of this Agreement, Jeffrey P. Jacobs and certain
of his affiliates (collectively "JACOBS"), and Avis Jansen, on behalf of
herself, the Estate of Norbert W. Jansen and the Jansen Family Trust
(collectively, "JANSEN"), have each executed agreements with Parent, dated the
date hereof (collectively, the "STOCKHOLDER AGREEMENTS") pursuant to which
Jacobs and Jansen (individually, a "SELLING STOCKHOLDER"; and collectively, the
"SELLING STOCKHOLDERS") have agreed, among other things, to sell to Parent or
Merger Sub all of their shares of common stock, par value $.001 per share, of
the Company (hereinafter referred to as either the "SHARES" or the "COMPANY
COMMON STOCK") and the Company's 6% Non-Voting Cumulative Preferred Shares,
Series A (the "PREFERRED SHARES"), and, pursuant to the Stockholder Agreements
with Jansen, the parties have agreed to certain amendments to the lease
agreement pursuant to which Jansen operates a gift shop upon the Company's
premises and that Parent will purchase from Jansen, and Jansen will sell to
Parent, certain real estate currently leased to the Company; and
WHEREAS, Parent and the respective Boards of Directors of Merger Sub and
the Company have approved the merger (the "MERGER") of Merger Sub into the
Company, upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of Company Common Stock not
owned directly or indirectly by Parent or the Company, except shares of Company
Common Stock held by persons
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who object to the Merger and comply with all the provisions of Nevada law
concerning the rights, if any, of holders of Company Common Stock to dissent
from the Merger and demand appraisal of their shares of Company Common Stock
(each, a "DISSENTING STOCKHOLDER"), will be converted into the right to receive
$5.00 per share in cash.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger.
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(a) Subject to the terms and conditions of this Agreement, and
pursuant to Section 92A.250 of the Nevada Revised Statutes ("NRS"), at the
Effective Time (as defined in Section 1.2) the Company and Merger Sub shall
consummate the Merger pursuant to which (i) Merger Sub shall be merged with and
into the Company and the separate corporate existence of Merger Sub shall
thereupon cease, (ii) the Company shall be the successor or surviving
corporation in the Merger (the "SURVIVING CORPORATION") and shall continue to be
governed by the laws of the State of Nevada, and (iii) the separate corporate
existence of the Company with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger.
(b) Pursuant to the Merger, (i) the articles of incorporation of the
Company, as in effect immediately prior to the Effective Time, shall be the
articles of incorporation of the Surviving Corporation until thereafter amended
as provided by applicable law and such articles of incorporation, and (ii) the
bylaws of the Company, as in effect immediately prior to the Effective Time,
shall be the bylaws of the Surviving Corporation until thereafter amended as
provided by law, the articles of incorporation and such bylaws.
(c) The Merger shall have the effects set forth in the NRS (including
without limitation Section 92A.250 thereof). Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation. As of the Effective Time, the Company shall become a
wholly-owned subsidiary of Parent.
1.2 Effective Time. On the date of Closing (as defined in Section 1.3) as
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soon as practicable following the satisfaction or waiver of the conditions set
forth in Article (or on such other date as Parent and the Company may agree)
the parties shall cause articles of merger or other appropriate documents (in
any such case, the "ARTICLES OF MERGER") to be executed and filed with the
Secretary of State of the State of Nevada in accordance with the provisions of
Chapter 92A of the NRS, and make all other filings and recordings required by
the NRS in connection with the Merger. The Merger shall
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become effective at the time and on the date on which the Articles of Merger
have been duly filed with the Secretary of State of the State of Nevada or such
later time as is agreed upon by the parties and specified in the Articles of
Merger, and such time is hereinafter referred to as the "EFFECTIVE TIME."
1.3 Closing. The Closing of the Merger (the "CLOSING") will take place at
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9:00 a.m., Las Vegas time, on a date to be specified by the parties, which shall
be no later than the second business day after satisfaction or waiver of all of
the conditions set forth in Article hereof (the "CLOSING DATE"), at the offices
of Jones Vargas, at 3773 Howard Hughes Parkway, 3rd Floor, Las Vegas, Nevada,
unless another date or place is agreed to in writing by the parties hereto.
1.4 Directors and Officers of the Surviving Corporation. The directors
---------------------------------------------------
and officers of Merger Sub at the Effective Time shall, from and after the
Effective Time, be the directors and officers, respectively, of the Surviving
Corporation until their successors shall have been duly elected or appointed or
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's articles of incorporation and bylaws.
1.5 Stockholders' Meeting.
---------------------
(a) The Company, acting through its Board of Directors, shall, in
accordance with applicable law:
(i) take all action necessary, in accordance with applicable
law and its articles of incorporation and bylaws, to duly call, give notice,
convene and hold a special meeting of the holders of Company Common Stock (the
"SPECIAL MEETING") as promptly as practicable for the purpose of considering and
taking action upon this Agreement;
(ii) prepare and file with the United States Securities and
Exchange Commission (the "SEC") a preliminary proxy or information statement
relating to the Merger and this Agreement and use its reasonable efforts (x) to
obtain and furnish the information required to be included by the SEC in the
Company Proxy Statement (as defined below) and, after consultation with Parent,
to respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive proxy or
information statement (the "COMPANY PROXY STATEMENT") to be mailed to its
stockholders and (y) to obtain the necessary approval of the Merger and approval
and adoption of this Agreement by its stockholders; and
(iii) include in the Company Proxy Statement the recommendation
of the Board of Directors that stockholders of the Company vote in favor of the
approval of the Merger and the approval and adoption of this Agreement.
(b) Parent and Merger Sub agree that they shall, and shall cause any
permitted assignee of each of them to, vote all Shares then owned by any of them
which
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are entitled to vote in favor of the approval of the Merger and the approval and
adoption of this Agreement.
ARTICLE II
CONVERSION OF SHARES
2.1 Conversion of Capital Stock. As of the Effective Time, by virtue of
---------------------------
the Merger and without any action on the part of the holders of any share of
Company Common Stock or common stock, no par value, of Merger Sub (the "MERGER
SUB COMMON STOCK"):
(a) Merger Sub Common Stock. Each issued and outstanding share of
-----------------------
Merger Sub Common Stock shall be converted into and become 71,795 fully paid and
nonassessable shares of common stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All
-----------------------------------------------------
shares of Company Common Stock that are owned by the Company as treasury stock
and any shares of Company Common Stock owned by Parent, Merger Sub or any other
direct or indirect wholly-owned subsidiary of Parent shall be canceled and
retired and shall cease to exist and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Shares. Each issued and outstanding share of
--------------------
Company Common Stock (other than shares to be canceled in accordance with
Section 2.1(b) and, if applicable, Shares held by Dissenting Stockholders as
described in Section 2.1(e)) shall be converted into the right to receive $5.00
in cash, payable to the holder thereof, without interest (the "MERGER
CONSIDERATION"), upon surrender of the certificate formerly representing such
share of Company Common Stock in the manner provided in Section 2.2. All such
shares of Company Common Stock, when so converted, 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 shall cease
to have any rights with respect thereto, except the right to receive the Merger
Consideration therefor upon the surrender of such certificate in accordance with
Section 2.2, without interest.
(d) Company Preferred Stock. All shares of preferred stock of the
-----------------------
Company, including without limitation the Preferred Shares, which are
outstanding at the Effective Time shall remain outstanding and shall not be
affected by the Merger.
(e) Shares of Dissenting Stockholders. Notwithstanding anything in
---------------------------------
this Agreement to the contrary, in the event that holders of Shares are
determined to have rights pursuant to Section 92A.380 of the NRS, any issued and
outstanding shares of Company Common Stock held by a Dissenting Stockholder
shall not be converted as described in Section 2.1(c) but shall become the right
to receive such consideration as may be determined to be due to such Dissenting
Stockholder pursuant to the laws of the State of Nevada; provided, however, that
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the shares of Company Common Stock
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outstanding immediately prior to the Effective Time and held by a Dissenting
Stockholder who shall, after the Effective Time, fail to perfect his right to
appraisal, withdraw his demand for appraisal or lose his right of appraisal, in
any case pursuant to Sections 92A.390 through 92A.440 of the NRS, shall be
deemed to be converted as of the Effective Time into the right to receive the
Merger Consideration. The Company shall give Parent (i) prompt notice of any
written demands for appraisal of shares of Company Common Stock received by the
Company and (ii) the opportunity to direct all negotiations and proceedings with
respect to any such demands. Prior to the Effective Time, the Company shall not,
without the prior written consent of Parent, voluntarily make any payment with
respect to, or settle, offer to settle or otherwise negotiate, any such demands.
2.2 Exchange of Certificates.
------------------------
(a) Paying Agent. Parent shall designate a bank or trust company to
------------
act as agent for the holders of shares of Company Common Stock in connection
with the Merger (the "PAYING AGENT") to receive the funds to which holders of
shares of Company Common Stock shall become entitled pursuant to Section 2.1(c).
Such funds shall be invested by the Paying Agent as directed by Parent or the
Surviving Corporation.
(b) Exchange Procedures. 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 pursuant to Section 2.1 into the right to receive
the Merger Consideration (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 and the Company may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for payment of 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 Parent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration for each share of Company
Common Stock formerly represented by such Certificate and the Certificate so
surrendered shall forthwith be canceled. If payment of the Merger Consideration
is to be made to a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the person requesting such payment shall have
paid any transfer and other taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 2.2.
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(c) Transfer Books; No Further Ownership Rights in Company Common
-------------------------------------------------------------
Stock. At the Effective Time, the stock transfer books of the Company shall be
- -----
closed and thereafter there shall be no further registration of transfers of
shares of Company Common Stock on the records of the Company. From and after
the Effective Time, the holders of Certificates evidencing ownership of shares
of Company Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares, except as otherwise
provided for herein or by applicable law. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following six
---------------------------------
months after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying Agent
and which have not been disbursed to holders of Certificates, and thereafter
such holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
ARTICLE III
[INTENTIONALLY OMITTED]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as follows:
4.1 Organization and Qualification.
------------------------------
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, and
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
(b) The Company is duly qualified or licensed and in good standing to
do business in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification or
licensing necessary, and to perform all of its obligations under any contract
under which the Company (A) has or may acquire any rights, (B) has or may become
subject to any obligation or liability or
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(C) is or may, or any of the assets used or owned by it are or may, become
bound, except where the failure to be so duly qualified or licensed and in good
standing or to effect such performance would not, individually or in the
aggregate, have a Company Material Adverse Effect. When used in this Agreement,
the term "COMPANY MATERIAL ADVERSE EFFECT" means any change or effect that would
(i) be materially adverse to the business, assets (tangible or intangible),
results of operations, liabilities or financial condition of the Company, or
(ii) impair the ability of the Company to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby.
(c) The Company has heretofore furnished or made available to Parent
complete and correct copies of the Company's articles of incorporation and
bylaws, each as amended to the date hereof, and all of such articles of
incorporation, bylaws and equivalent organizational documents are in full force
and effect. The Company is not in violation of any of the provisions of the
Company's articles of incorporation or bylaws.
4.2 Capitalization of the Company.
-----------------------------
(a) The authorized capital stock of the Company consists of (i)
50,000,000 shares of Company Common Stock, of which 7,179,429 shares are
currently issued and outstanding and (ii) 15,000,000 shares of preferred stock,
$.001 par value, of which 3,250 Preferred Shares are currently issued and
outstanding. All outstanding shares of capital stock of the Company have been
validly issued, and are fully paid, nonassessable and free of preemptive rights.
Set forth in Schedule 4.2(a) are all outstanding options, warrants, or other
---------------
rights to purchase capital stock of the Company from the Company. Except as set
forth above or in Schedule 4.2(a), there are outstanding (A) no shares of
---------------
capital stock or other voting securities of the Company, (B) no securities of
the Company convertible into or exchangeable for shares of capital stock or
voting securities of the Company, (C) no options, subscriptions, warrants,
convertible securities, calls or other rights to acquire from the Company, and
no obligation of the Company to issue, deliver or sell, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of the Company, and (D) no equity equivalents,
performance shares, interests in the ownership or earnings of the Company or
other similar rights issued by the Company (the items referred to in clauses
(A)-(D) are referred to herein as "COMPANY SECURITIES"). Except as set forth on
Schedule 4.2(a) hereto, (i) there are no outstanding obligations of the Company
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to repurchase, redeem or otherwise acquire any Company Securities, (ii) no
agreement or other document grants or imposes on any shares of the Company
Common Stock any right, preference, privilege or restriction with respect to the
transactions contemplated hereby (including without limitation any rights of
first refusal), other than the right to dissent from the Merger as provided in
Section 2.1(e) above and (iii) there are no bonds, debentures, notes or other
indebtedness having general voting rights (or convertible into securities having
such rights) of the Company issued and outstanding.
(b) The Company has no subsidiaries. Except for portfolio securities
with an aggregate fair market value not in excess of $50,000, the Company has
not made, directly or indirectly, any material investment or ownership interest
in (including without
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limitation any ownership of capital stock or other equity securities), advance
to or purchase or guaranty of any obligations of, any entity, nor is the Company
subject to any obligation or requirement to provide funds for or make any
investment (in the form of a loan, capital contribution or otherwise) in any
entity. For purposes of this Agreement, "SUBSIDIARY" shall mean, with respect to
any party, any corporation or other organization, whether incorporated or
unincorporated, of which (x) at least a majority of the securities or other
interests having by their terms voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries, or by such party and
one or more of its subsidiaries, or (y) such party or any other subsidiary of
such party is a general partner (excluding such partnerships where such party or
any subsidiary of such party do not have a majority of the voting interest in
such partnership).
(c) All issued and outstanding warrants, options and other rights to
acquire Company Securities (other than the stock options outstanding under the
Company's 1994 Stock Compensation Plan or the Company's Outside Directors Stock
Option Plan (each, a "COMPENSATION OPTION")), will, as of or prior to the
Effective Time, terminate or will thereafter constitute only the right to
receive the excess, if any, of the per share Merger Consideration over the per
share exercise price of such warrant, option or such other right, multiplied by
the number of shares for which such warrant or option is exercisable immediately
prior to the Effective Time (the "OPTION/WARRANT SPREAD"), without obligation of
any other payment. The termination of all Compensation Options will be governed
by the termination provisions contained in the Company's 1994 Stock Compensation
Plan or the Company's Outside Directors Stock Option Plan attached to Schedule
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4.2(a), as applicable.
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4.3 Power and Authority.
-------------------
(a) The Company has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Company's Board of Directors. This Agreement has been duly and validly executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable against it in accordance with its terms, except (a) as such
enforcement may be subject to bankruptcy, insolvency or similar laws now or
hereafter in effect relating to creditors rights generally (collectively, the
"BANKRUPTCY EXCEPTIONS"), and (b) as the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(b) Except for the action contemplated by Section 1.5 hereof, the
Board of Directors of the Company has duly and validly approved and taken all
corporate action required to be taken by the Board of Directors for the
consummation by the Company of the transactions to which it is a party
contemplated by this Agreement, including the
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Merger and the acquisition of Shares pursuant to the Merger, the Stockholder
Agreements and any Other Transactions.
4.4 Board Recommendations; Anti-takeover Provisions.
-----------------------------------------------
(a) The Company's Board of Directors, at a meeting duly held on
December 18, 1997 has (i) declared that as of such date it has not considered or
acted on any proposed agreement, arrangement, or understanding with Parent or
any other party with respect to the transactions contemplated by the Stockholder
Agreements and this Agreement, (ii) duly and validly taken all action necessary
to: (A) amend the Company's Bylaws in such a manner as is necessary to ensure
that the provisions of Sections 78.378 through 78.3793, inclusive, of the NRS do
not apply to the Company (and the provision of the Bylaws effecting the
foregoing shall be referred to as the "CONTROL SHARE OPT-OUT BYLAW"); and (B)
ensure that the prohibitions contained in Sections 78.411 through 78.444,
inclusive, of the NRS applicable to "combinations" (as defined in Section
78.416) would not apply to substantially contemporaneous purchasing by Parent
and/or its affiliates of (a) all of the outstanding voting shares of the Company
from the Selling Stockholders and (b) all the remaining outstanding voting
shares of the Company from the remaining stockholders, as contemplated by this
Agreement; and (iii) has received a written legal opinion, dated the date
hereof, of Jones Vargas, counsel to the Company, addressed to the Company,
Parent and Merger Sub, satisfactory in form and substance to Parent and its
counsel, to the effect described in clause (ii) above as to matters of Nevada
law.
(b) The Company's Board of Directors, at a meeting duly held on
December 22, 1997 has duly and validly: (i) determined that each of the Merger
and the transactions contemplated thereby is fair to and in the best interests
of the Company's stockholders; (ii) approved and adopted this Agreement and the
transactions contemplated hereby (including without limitation (x) the
acquisition of the Company by Parent or any of its affiliates, and any purchase
of Shares in connection therewith, by means of this Agreement, the Merger, the
Stockholder Agreements and/or any other transactions conducted to effectuate the
acquisition of the Company by Parent or its affiliates in accordance with this
Agreement ("OTHER TRANSACTIONS") and (y) any other transactions contemplated
hereby and by the foregoing clause (x)); (iii) resolved to recommend that the
stockholders of the Company approve and adopt this Agreement and the Merger;
(iii) resolved not to alter, amend, repeal, modify or otherwise restrict the
effect of the Control Share Opt-Out Bylaw for a period of not less than fourteen
(14) days following the date of such December 22, 1997 Board of Directors
meeting; and (iv) has received an opinion from its financial advisor that the
Merger Consideration is fair to the Company's stockholders from a financial
point of view.
4.5 Compliance.
----------
(a) Except as set forth in Schedule 4.5(a), since January 1, 1994,
---------------
the Company and its affiliates, officers, directors, agents and employees have
been and are in compliance with (i) all applicable laws, rules, statutes,
orders, ordinances and regulations
-9-
<PAGE>
of foreign, Federal, state and local governmental authorities applicable to the
businesses conducted by the Company, and neither the Company nor any of its
affiliates, is aware of any claim of violation, or of any actual violation, of
any such laws, rules, statutes, orders, ordinances and regulations, by the
Company, except where such failure or violation (whether actual or claimed)
would not have a Company Material Adverse Effect and (ii) all applicable
federal, state, local or foreign statutes, ordinances, rules, regulations,
permits, consents, approvals, licenses, judgments, orders, decrees, injunctions
or other authorizations governing or relating to the Company's current or
contemplated casino, liquor related activities and gaming activities and
operations, including, without limitation, the Nevada Gaming Control Act, as
amended (the "NEVADA ACT"), and the rules and regulations promulgated
thereunder, or applicable to the properties owned or leased and used by the
Company (collectively, "GAMING LAWS"). None of the Company or any employee,
officer, director or stockholder or any affiliate thereof, has received any
written claim, demand, notice, complaint, court order or administrative order
from any governmental authority since January 1, 1994, asserting that a license
of the Company or of any such employee, officer, director or stockholder or
affiliate thereof, as applicable, under any Gaming Laws should be revoked or
suspended or that any such party is not in full compliance with such license
(with respect to such employee, officer, director or stockholder or affiliate
thereof, to the extent that such revocation or suspension or non-compliance
might result in the revocation or suspension of the Company's license).
(b) Except as set forth in Schedule 4.5(b), since January 1, 1994,
---------------
the Company has possessed and currently possesses, and is current on all fees
with regard to, all franchises, certificates, licenses, permits and other
authorizations from any governmental authorities and all patents, trademarks,
service marks, trade names, copyrights, licenses and other rights that are
necessary to the Company for the present ownership, maintenance and operation of
its business, properties and assets (including without limitation all gaming and
liquor licenses), except where the failure to possess such franchises,
certificates, licenses, permits, and other authorizations, patents, trademarks,
service marks, trade names, copyrights, licenses and other rights (other than
those required to be obtained from the Nevada Gaming Commission (the "GAMING
COMMISSION"), the Nevada State Gaming Control Board (the "CONTROL BOARD"), the
Clark County Liquor and Gaming Licensing Board (the "CCB"), and the City of Las
Vegas ("LAS VEGAS") (the Gaming Commission, the Control Board, the CCB, and Las
Vegas are collectively referred to as the "GAMING AUTHORITIES"), including
approvals under the Gaming Laws) would not have a Company Material Adverse
Effect; and the Company is not in violation of any thereof, except where such
violation would not have a Company Material Adverse Effect.
(c) Except as set forth in Schedule 4.5(c), since January 1, 1994,
---------------
the Company has not violated (with or without notice or lapse of time) any
applicable provisions of (i) any laws, rules, statutes, orders, ordinances or
regulations, or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise, or other instrument or obligations to which
the Company is a party or by which the Company or any of its properties are
bound or affected, except as will not have a Company Material Adverse Effect.
-10-
<PAGE>
(d) Except as set forth in Schedule 4.5(d), since January 1, 1994:
---------------
(i) the Company is, and has been, in full compliance with all of the terms and
requirements of each award, decision, injunction, judgment, order, ruling,
subpoena, or verdict (each, an "ORDER") entered, issued, made, or rendered by
any court, administrative agency, or other governmental entity, officer or
authority or by any arbitrator to which it, or any of the assets owned or used
by it, is or has been subject, and (ii) no event has occurred or circumstance
exists that may constitute or result in (with or without notice or lapse of
time) a violation of or failure to comply with any term or requirement of any
Order to which the Company, or any of the assets owned or used by the Company,
is subject, except where such non-compliance, violation or failure to comply
would not have a Company Material Adverse Effect.
(e) Except as set forth in Schedule 4.5(e), the Company has not
---------------
received, at any time since January 1, 1994, any notice or other communication
(whether oral or written) regarding any actual, alleged, possible, or potential
violation of, or failure to comply with, any term or requirement of any Order to
which the Company, or any of the assets owned or used by the Company, is or has
been subject, except as would not have a Company Material Adverse Effect.
(f) Except as set forth on Schedule 4.5(f), no investigation or
---------------
review by any government entity, officer or authority, including without
limitation any investigation or review by Gaming Authorities or relating to
compliance with Gaming Laws, with respect to the Company is pending or, to the
knowledge of the Company, threatened, nor has any government entity, officer or
authority indicated an intention to conduct the same.
4.6 Consents and Approvals; No Violation. The execution and delivery of
------------------------------------
this Agreement do not, and the consummation of the transactions contemplated
hereby and the performance by the Company of its obligations hereunder will not:
(a) subject to the obtaining of any requisite approvals of the
Company's stockholders as contemplated by Section 15 hereof, conflict with or
violate any provision of the Company's articles of incorporation or bylaws;
(b) require any consent, approval, order, authorization or permit of,
or registration, filing or notification to, any governmental or regulatory
authority or agency (a "GOVERNMENTAL ENTITY"), 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, as amended (the "HSR ACT"), (ii) the
filing with the SEC of (x) the Company Proxy Statement relating to the approval
and adoption by the Company's stockholders of the Merger and this Agreement, if
such approval and adoption is required by law, and (y) such reports under
Sections 13 and 16 of the Securities Exchange Act of 1934, as amended ("EXCHANGE
ACT"), as may be required in connection with this Agreement, the Stockholder
Agreements and the transactions contemplated hereby and thereby, (iii) obtaining
all necessary approvals under applicable Gaming Laws, including those required
by the Gaming Authorities, (iv) the filing of the Articles of Merger with the
Secretary of
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<PAGE>
State of the State of Nevada, and (v) such additional actions or filings which,
if not taken or made, would not, individually or in the aggregate, have a
Company Material Adverse Effect;
(c) except as disclosed on Schedule 4.6(c), result in any conflict
---------------
with or violation of or the breach of or constitute a default (with notice or
lapse of time or both) under, or give rise to any right of termination,
cancellation or acceleration or guaranteed payments under or to a loss of a
material benefit under, any of the terms, conditions or provisions of any note,
bond, indenture, lease, mortgage, license, franchise, agreement or other
instrument or obligation to which the Company is a party or by which the Company
or any of its properties or assets may be bound, except for such conflicts,
violations, breaches, defaults, or rights of termination, cancellation or
acceleration, or losses as to which requisite waivers or consents have been
obtained or will be obtained prior to the Effective Time or which, individually
or in the aggregate, would not result in a Company Material Adverse Effect;
(d) violate the provisions of any order, writ, injunction, judgment,
decree, statute, rule or regulation applicable to the Company, in such a manner
as to result in a Company Material Adverse Effect; or
(e) result in the creation of any lien, charge or encumbrance upon
any shares of capital stock, properties or assets of the Company under any
agreement or instrument to which the Company is a party or by which the Company
is bound.
4.7 Assignment of MOU. The Company has consented (and hereby reaffirms
-----------------
such consent) to the termination and release of any rights and obligations of
the Company under that certain Memorandum of Understanding, dated October 29,
1997 between, among others, the Company and Jacobs, Jacobs Entertainment Nevada,
Inc. and Diversified Opportunities Group Ltd.
4.8 SEC Reports; Financial Statements, Absence of Undisclosed Liabilities.
---------------------------------------------------------------------
(a) The Company has filed all forms, reports and documents required
to be filed with the SEC since February 11, 1994. The Company has made available
to Parent, in the form filed with the SEC, the Company's (i) Annual Reports on
Form 10-KSB for the fiscal years ended September 30, 1996, 1995 and 1994, (ii)
all Quarterly Reports on Form 10-QSB filed by the Company with the SEC since
February 11, 1994, (iii) all proxy statements relating to meetings of the
Company's stockholders since February 11, 1994 and (iv) all Current Reports on
Form 8-K and registration statements and other forms, reports and documents,
filed by the Company with the SEC since February 11, 1994 (collectively and as
amended, the "SEC REPORTS"). As of their respective dates, the SEC Reports
complied in all material respects with all applicable requirements of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder, and the Exchange Act, as the case may be, each as in effect on the
dates such SEC Reports were filed. As of their respective dates, none of the SEC
Reports, including, without limitation, any financial statements or schedules
included
-12-
<PAGE>
therein, 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. The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company included in the SEC
Reports fairly present, in all material respects, in conformity with GAAP (as
defined below) applied on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of the Company as of the
dates thereof and its consolidated results of operations and cash flows for the
periods then ended (subject to normal year-end adjustments in the case of any
unaudited interim financial statements). The Company has heretofore made
available or promptly will make available to Parent a complete and correct copy
of any amendments or modifications, which are required to be filed with the SEC
but have not yet been filed with the SEC, to the SEC Reports. As used in this
Agreement, "GAAP" means United States generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession in the United States as in effect on the date hereof.
(b) Except as set forth in Schedule 4.8(b) hereto, the Company has no
---------------
liabilities of any nature (whether accrued, absolute, contingent or otherwise),
except for (i) liabilities set forth in the balance sheet of the Company dated
September 30, 1997 or on the notes thereto, contained in the Company's draft
Annual Report on Form 10-KSB for the fiscal year ended September 30, 1997
attached to Schedule 4.8(b) (the "DRAFT SEPTEMBER 30, 1997 FORM 10-KSB") (which
---------------
balance sheet is subject to normal year end adjustments which individually or in
the aggregate will not be material) (the "DRAFT SEPTEMBER 30, 1997 BALANCE
SHEET"), (ii) liabilities incurred in the ordinary course of business consistent
with past practice since September 30, 1997 and (iii) liabilities to financial
advisors in connection with the transactions contemplated by this Agreement
which, in the aggregate, do not and will not exceed $600,000.
4.9 Absence of Certain Changes. Since October 1, 1996, except as set
--------------------------
forth in Schedule 4.9 hereto or as disclosed in the SEC Reports since that date
------------
or as disclosed in the Draft September 30, 1997 Form 10-KSB, the Company has
conducted its business only in the ordinary course, and there has not been (i)
any declaration, setting aside or payment of any dividend or other distribution
with respect to its capital stock, (ii) any incurrence, assumption or guarantees
by the Company of any indebtedness for borrowed money other than in the ordinary
course of business, (iii) any making of any loan, advance or capital
contributions to, or investments in, any other person, (iv) 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, (v) (x) any granting by
the Company to any officer of the Company of any increase in compensation,
except in the ordinary course of business consistent with past 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 Reports filed and
publicly available prior to the date of this Agreement, (y) any granting by the
Company 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,
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
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<PAGE>
Reports filed and publicly available prior to the date of this Agreement 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, any entry by the Company into any employment, severance or termination
agreement with any such officer, (vi) any damage, destruction or loss, whether
or not covered by insurance, that would be expected to have a Company Material
Adverse Effect, (vii) any transaction or commitment made, or any contract or
agreement entered into, by the Company relating to its assets or business
(including without limitation the acquisition or disposition of any assets), or
any relinquishment by the Company of any contractual or other right, in either
case, material to the Company, other than transactions and commitments in the
ordinary course of business and those contemplated by this Agreement, (viii) 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 GAAP, (ix) any transaction, payment or commitment made,
or any contract or agreement entered into, by the Company with or to any
affiliate of the Company; (x) any transaction, payment or commitment made, or
any contract or agreement entered into, by the Company relating to the Merger or
the transactions contemplated by this Agreement or the negotiation thereof
(including without limitation obligations to pay any agent, broker, investment
banker, financial advisor or other firm or person any brokers' or finders' fee
or any other commission or similar fee) other than the obligations to the
Company's advisors described in Section 48(b)(iii) above, or (xi) any other
event, development or change which is reasonably likely to have a Company
Material Adverse Effect.
4.10 Company Proxy Statement. The Company Proxy Statement, including any
-----------------------
amendments or supplements thereto, shall not, at the time filed with the SEC, as
of the date mailed to the Company's stockholders or at the time of the Special
Meeting, 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. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to any information provided by Parent or Merger Sub
specifically for use in the Company Proxy Statement. The Company Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act.
4.11 Absence of Litigation. Except as disclosed in Schedule 4.11 hereto,
--------------------- -------------
since January 1, 1997, there has not been any action, suit, claim, investigation
or proceeding pending against, or to the knowledge of the Company, threatened
against, the Company or any of its directors or officers (in their capacities as
such) or properties, before any court or arbitrator or any administrative,
regulatory or governmental body, or any agency or official which, individually
or in the aggregate, if decided adversely, would have a Company Material Adverse
Effect. Except as disclosed in Schedule 4.11 hereto, since
-------------
-14-
<PAGE>
January 1, 1997, there has not been any action, suit, claim, investigation or
proceeding pending against, or to the knowledge of the Company, threatened
against, the Company or any of its directors or officers (in their capacities as
such) or properties, before any court or arbitrator or any administrative,
regulatory or governmental body, or any agency or official which (i) challenges
or seeks to prevent, enjoin, alter or delay the Merger or any of the other
transactions contemplated hereby or (ii) alleges any criminal action or
inaction. Except as disclosed in Schedule 4.11 hereto, since January 1, 1997,
-------------
neither the Company nor any of its properties has been subject to any order,
writ, judgment, injunction, decree, determination or award having, or which
would have a Company Material Adverse Effect or which would prevent or delay the
consummation of the transactions contemplated hereby.
4.12 Taxes. Except as set forth in Schedule 4.12 hereto:
----- -------------
(a) the Company has filed or sent, all material returns, material
declarations and reports and information returns and statements required to be
filed or sent by or relating to the Company relating to any Taxes (as defined
herein) with respect to any material income, properties or operations of the
Company (collectively, "RETURNS"); (b) as of the time of filing, the Returns
correctly reflected in all material respects the facts regarding the income,
business, assets, operations, activities and status of the Company and any other
material information required to be shown therein; (c) the Company has timely
paid or made provision for all material Taxes that have been shown as due and
payable on the Returns that have been filed; (d) the Company has made or will
make provision for all material Taxes payable for any periods that end before
the Effective Time for which no Returns have yet been filed and for any periods
that begin before the Effective Time and end after the Effective Time to the
extent such Taxes are attributable to the portion of any such period ending at
the Effective Time; (e) the charges, accruals and reserves for Taxes reflected
on the books of the Company are adequate under GAAP to cover the Tax liabilities
accruing or payable by the Company; (f) the Company is not delinquent in the
payment of any material Taxes and has requested any extension of time within
which to file or send any material Return (other than extensions granted to the
Company for the filing of its Returns as set forth in Schedule 4.12), which
-------------
Return has not since been filed or sent; (g) no material deficiency for any
Taxes has been proposed, asserted or assessed in writing against the Company
other than those Taxes being contested in good faith by appropriate proceedings
and set forth in Schedule 4.12 (which shall set forth the nature of the
-------------
proceeding, the type of return, the deficiencies proposed, asserted or assessed
and the amount thereof, and the taxable year in question); (h) the Company has
not granted any extension of the limitation period applicable to any material
Tax claims other than those Taxes being contested in good faith by appropriate
proceedings; and (i) the Company is not subject to liability for Taxes of any
person (other than the Company).
For purposes of this Agreement, "TAX" or "TAXES" means all Federal, state,
local and foreign taxes, and other assessments of a similar nature (whether
imposed directly or through withholding), including any interest, additions to
tax, or penalties applicable thereto, imposed by any Tax Authority. "TAX
AUTHORITY" means the Internal Revenue
-15-
<PAGE>
Service and any other domestic or foreign governmental authority responsible for
the administration of any Taxes.
4.13 Employee Benefits.
-----------------
(a) Existence of Plans. For purposes of this Agreement, the term
------------------
"PLANS" shall mean (i) all "EMPLOYEE BENEFIT PLANS" (as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), of which the Company or any member of the same controlled group of
businesses as the Company within the meaning of Section 4001(a)(14) of ERISA (an
"ERISA AFFILIATE") is or ever was a sponsor or participating employer or as to
which the Company or any of its ERISA Affiliates makes contributions or is
required to make contributions and (ii) any similar employment, severance or
other arrangement or policy of the Company or of any of its ERISA Affiliates
(whether written or oral) providing for insurance coverage (including self-
insured arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits or retirement benefits, or for profit
sharing, deferred compensation, bonuses, stock options, stock appreciation or
other forms of incentive compensation or post-retirement insurance, compensation
or benefits. Except as is disclosed on Schedule 4.13, (i) neither the Company
-------------
nor any of its ERISA Affiliates maintains or sponsors (or ever maintained or
sponsored), or makes or is required to make contributions to, any Plans, (ii)
none of the Plans is or was a "multi-employer plan", as defined in Section 3(37)
of ERISA, (iii) none of the Plans is or was a "defined benefit pension plan"
within the meaning of Section 3(35) of ERISA, (iv) none of the Plans provides or
provided post-retirement medical or health benefits, (v) none of the Plans is or
was a "welfare benefit fund," as defined in Section 419(e) of the Internal
Revenue Code of 1986, as amended ("CODE"), or an organization described in
Sections 501(c)(9) or 501(c)(20) of the Code, (vi) neither the Company nor any
of its ERISA Affiliates is or was a party to any collective bargaining
agreement, and (vii) neither the Company nor any of its ERISA Affiliates has
announced or otherwise made any commitment to create or amend any Plan.
Notwithstanding any statement or indication in this Agreement to the contrary,
there are no Plans (a) as to which Parent or Merger Sub will be required to make
any contributions or with respect to which Parent or Merger Sub shall have any
obligation or liability whatsoever, whether on behalf of any of the current
employees of the Company or on behalf of any other Person, after the Closing, or
(b) which Parent or Merger Sub will not be able to terminate immediately after
the Closing in accordance with their terms and ERISA. With respect to each of
such Plans, at the Closing there will be no unrecorded liabilities with respect
to the establishment, implementation, operation, administration or termination
of any such Plan, or the termination of the participation in any such Plan by
the Company or any of its ERISA Affiliates. The Company has delivered/will
deliver within five business days of the date hereof to Parent true and complete
copies of: (i) each of the Plans and any related funding agreements thereto
(including insurance contracts) including all amendments, all of which are
legally valid and binding and in full force and effect and there are no defaults
thereunder, (ii) the currently effective Summary Plan Description pertaining to
each of the Plans, (iii) the three most recent annual reports for each of the
Plans (including all relevant schedules), (iv) the most recently filed PBGC Form
1 (if
-16-
<PAGE>
applicable), (v) the most recent Internal Revenue Service determination letter
for each Plan which is intended to constitute a qualified plan under Section 401
of the Code and each amendment to each of the foregoing documents, and (vi) for
each funded Plan, financial statements consisting of (A) the consolidated
statement of assets and liabilities of such Plan as of its most recent valuation
date, and (B) the statement of changes in fund balance and in financial position
or the statement of changes in net assets available for benefits under such Plan
for the most recently-ended plan year, which such financial statements shall
fairly present the financial condition and the results of operations of such
Plan in accordance with GAAP as of such dates.
(b) Present Value of Benefits. The present value of all accrued
-------------------------
benefits under any Plans subject to Title IV of ERISA shall not, as of the
Closing Date, exceed the value of the assets of such Plans allocated to such
accrued benefits, based upon the applicable provisions of the Code and ERISA,
and each such Plan shall be capable of being terminated as of the Closing Date
in a "standard termination" under Section 4041(b) of ERISA. With respect to
each Plan that is subject to Title IV of ERISA, (i) no amount is due or owing
from the Company or any of its ERISA Affiliates to the Pension Benefit Guaranty
Corporation or to any "multi-employer Plan" as defined in Section 3(37) of ERISA
on account of any withdrawal therefrom and (ii) no such Plan has been terminated
other than in accordance with ERISA or at a time when the plan was not
sufficiently funded. The transactions contemplated hereunder, including without
limitation the termination of the Plans at or prior to the Closing, shall not
result in any material such withdrawal or other liability under any applicable
Laws.
(c) Penalties; Reportable Events. Neither the Company nor any of its
----------------------------
ERISA Affiliates is subject to any material liability, tax or penalty whatsoever
to any Person or agency whomsoever as a result of engaging in a prohibited
transaction under ERISA or the Code, and neither the Company nor any of its
ERISA Affiliates has any knowledge of any circumstances which reasonably might
result in any material liability, tax or penalty, including, but not limited to,
a penalty under Section 502 of ERISA, as a result of a breach of any duty under
ERISA or under other Laws. Each Plan which is required to comply with the
provisions of Section 4980B of the Code has complied in all material respects.
No event has occurred which could subject any Plan to material tax liability
under Section 511 of the Code. None of the Plans subject to Title IV of ERISA
has, since September 2, 1974, been completely or partially terminated nor has
there been any "reportable event", as such term is defined in Section 4043(b) of
ERISA, with respect to any of the Plans since the effective date of ERISA nor
has any notice of intent to terminate been filed or given with respect to any
such Plan. There has been no (i) withdrawal by the Company or any of its ERISA
Affiliates that is a substantial employer from a single-employer plan which is a
Plan and which has two or more contributing sponsors at least two of whom are
not under common control, as referred to in Section 4063(b) of ERISA, or (ii)
cessation by the Company or any of its respective ERISA Affiliates of operations
at a facility causing more than 20% of Plan participants to be separated from
employment, as referred to in Section 4062(f) of ERISA. Neither the Company nor
any of its ERISA Affiliates, nor any other organization of which any of
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<PAGE>
them are a successor or parent corporation as defined in Section 4069(b) of
ERISA, have engaged in any transaction described in Section 4069(a) of ERISA.
(d) Deficiencies; Qualification. None of the Plans nor any trust
---------------------------
created thereunder has incurred any "accumulated funding deficiency" as such
term is defined in Section 412 of the Code, whether or not waived, since the
effective date of such Section 412, and no condition has occurred or exists
which by the passage of time could be expected to result in an accumulated
funding deficiency as of the last day of the current plan year of any such Plan.
Furthermore, neither the Company nor any of its respective ERISA Affiliates has
any unfunded liability under ERISA in respect of any of the Plans. Each of the
Plans which is intended to be a qualified plan under Section 401(a) of the Code
has received a favorable determination letter from the Internal Revenue Service,
and has been operated in accordance with its terms and with the provisions of
the Code. All of the Plans have been administered and maintained in substantial
compliance with ERISA, the Code and all other applicable Laws. All
contributions required to be made to each of the Plans under the terms of that
Plan, ERISA, the Code or any other applicable Laws have been timely made. Each
Plan intended to meet the requirements for tax-favored treatment under
Subchapter B of Chapter 1 of the Code meets such requirements. There are no
liens against the property of the Company (including the Transferred Assets) or
any of its ERISA Affiliates under Section 412(n) of the Code or Sections 302(f)
or 4068 of ERISA. The Financial Statements properly reflect all material
amounts required to be accrued as liabilities to date under each of the Plans.
There is no contract, agreement or benefit arrangement covering any employee of
the Company which, individually or collectively, could give rise to the payment
of any amount which would constitute an "excess parachute payment" (as defined
in Section 280G of the Code). The execution and performance of this Agreement
will not (i) result in any obligation or liability (with respect to accrued
benefits or otherwise) of Parent or Merger Sub or any subsidiary of Parent to
the PBGC, any Plan, or any present or former employee of the Company, (ii) be a
trigger event under any Plan that will result in any material payment (whether
of severance pay or otherwise) becoming due to any present or former employee,
officer, director, stockholder, contractor, or consultant, or any of their
dependents, or (iii) accelerate the time of payment or vesting, or increase the
amount, of compensation due to any employee, officer, director, stockholder,
contractor, or consultant of the Company. With respect to any insurance policy
which provides, or has provided, funding for benefits under any Plan, (A) there
is and will be no material liability of the Company or Parent or Merger Sub in
the nature of a retroactive or retrospective rate adjustment, loss sharing
arrangement, or actual or contingent liability as of the Closing Date, nor would
there be any such liability if such insurance policy were terminated as of the
Closing Date, and (B) no insurance company issuing any such policy is in
receivership, conservatorship, bankruptcy, liquidation, or similar proceeding,
and, to the knowledge of the Company, no such proceedings with respect to any
insurer are imminent.
(e) Litigation. Other than routine claims for benefits under the
----------
Plans, there are no pending, or, to the best knowledge of the Company,
threatened, investigations, proceedings, claims, lawsuits, disputes, actions,
audits or controversies
-18-
<PAGE>
involving the Plans, or the fiduciaries, administrators, or trustees of any of
the Plans or the Company or any of its ERISA Affiliates as the employer or
sponsor under any Plan, with any of the Internal Revenue Service, the Department
of Labor, the Pension Benefit Guaranty Corporation, any participant in or
beneficiary of any Plan or any other Person whomsoever. The Company knows of no
reasonable basis for any such claim, lawsuit, audit, dispute, action or
controversy.
4.14 Intellectual Property. Except as disclosed in the SEC Reports filed
---------------------
prior to the date of this Agreement or as set forth in Schedule 4.14 hereto, the
-------------
Company owns, or is licensed or has the right to use (in each case, free and
clear of any security interests, liens, claims, pledges, charges, voting
agreements or other encumbrances of any nature whatsoever (collectively,
"LIENS"), all Intellectual Property (as defined below) used in or necessary for
the conduct of its business substantially as currently conducted; to the
knowledge of the Company, the use of any Intellectual Property by the Company
does not infringe on or otherwise violate the rights of any person; and, to the
knowledge of the Company, no person is challenging, infringing on or otherwise
violating any right of the Company with respect to any Intellectual Property
owned by and/or licensed to the Company, except in each case for such
infringements or failures to own or be licensed as would not, individually or in
the aggregate, have a Company Material Adverse Effect. For purposes of this
Agreement, "INTELLECTUAL PROPERTY" means trademarks, service marks, brand names,
certification marks, trade dress, assumed names, trade names and other
indications of origin, the goodwill associated with the foregoing and any
registration in any jurisdiction of, and applications in any jurisdiction to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas, whether
patentable or not in any jurisdiction; patents, applications for patents
(including without limitation divisions, continuations, continuations in part
and renewal applications), and any renewals, extensions or reissues thereof, in
any jurisdiction; non-public information, trade secrets and confidential
information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; writings and other works, whether copyrightable or not in
any jurisdiction; registrations or applications for registration of copyrights
in any jurisdiction, and any renewals or extensions thereof; and any similar
intellectual property or proprietary rights. The Company has received no notice
from Holiday Inns Franchising, Inc. ("HIFI"), alleging any current or uncured
grounds for termination of the Company's License Agreement with HIFI, and the
Company has no knowledge of any currently-existing or anticipated grounds for
such termination other than HIFI's contractual right under the License Agreement
to approve a change of control of the Company.
4.15 Material Contracts. Except as set forth in Schedule 4.15 hereto,
------------------ -------------
there are no (i) agreements of the Company containing an unexpired covenant not
to compete or similar restriction applying to the Company, (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 and have not been filed as an exhibit to the Company's
Annual Report on Form 10-KSB for the fiscal year ended September 30, 1996 (the
"1996 FORM 10-KSB") and to the Company's SEC Reports filed subsequent thereto
and prior to the date of this Agreement (collectively,
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<PAGE>
along with agreements or contracts or amendments thereto filed as exhibits to
the 1996 Form 10-KSB and to such subsequently filed SEC Reports, the "MATERIAL
CONTRACTS"). Assuming each Material Contract constitutes a valid and binding
obligation of each other party thereto, each Material Contract is a valid and
binding obligation of the Company. To the Company's knowledge, each Material
Contract is a valid and binding obligation of each other party thereto, and each
such Material Contract is in full force and effect and is enforceable by the
Company in accordance with its terms, except as such enforcement may be limited
by the Bankruptcy Exceptions and subject to the general principles of equity.
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, to
the knowledge of the Company, any other party thereto) under any of the Material
Contracts except for defaults that would not, individually or in the aggregate,
have a Company Material Adverse Effect.
4.16 Insurance. The Company has 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 consistent with
industry practice for companies (i) engaged in similar businesses and (ii) of at
least similar size to that of the Company, and has maintained in full force and
effect public liability insurance, insuring against claims for personal injury
or death or property damage occurring in connection with any of the activities
of the Company or any of the properties owned, occupied or controlled by the
Company, in such amount as reasonably deemed necessary by the Company. Schedule
--------
4.16 hereto sets forth a complete and correct list of all material insurance
- ----
policies (including a brief summary of the nature and terms thereof and any
amounts paid or payable to the Company) providing coverage in favor of the
Company or any of its properties. Each such policy is in full force and effect,
no notice of termination, cancellation or reservation of rights has been
received with respect to any such policy, there is no default with respect to
any provision contained in any such policy, and there has not been any failure
to give any notice or present any claim under any such policy in a timely
fashion or in the manner or detail required by any such policy, except for any
such failures to be in full force and effect, any such terminations,
cancellations, reservations or defaults, or any such failures to give notice or
present claims which would not, individually or in the aggregate, have a Company
Material Adverse Effect.
4.17 Labor Matters.
-------------
(a) Except as set forth in Schedule 4.17(a) hereto, the Company is
----------------
not a party to any collective bargaining or other labor union contract
applicable to persons employed by the Company, no collective bargaining
agreement is being negotiated by the Company and the Company has no knowledge of
any material activities or proceedings (i) involving any unorganized employees
of the Company seeking to certify a collective bargaining unit or (ii) of any
labor union to organize any of the employees of the Company. There is no labor
dispute, strike or work stoppage against the Company pending or, to the
Company's knowledge, threatened which may interfere with the
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business activities of the Company, except where such dispute, strike or work
stoppage would not have a Company Material Adverse Effect.
(b) Except as set forth in Schedule 4.17(b) hereto, the Company has
----------------
paid in full, or fully accrued for in their financial statements, all wages,
salaries, commissions, bonuses, severance payments, vacation payments, holiday
pay, sick pay, pay in lieu of compensatory time and other compensation due or to
become due to all current and former employees of the Company for all services
performed by any of them on or prior to the date hereof. The Company is in
compliance in all material respects with all applicable federal, state, local
and foreign laws, rules and regulations relating to the employment of labor,
including without limitation, laws, rules and regulations relating to payment of
wages, employment and employment practices, terms and conditions of employment,
hours, immigration, discrimination, child labor, occupational health and safety,
collective bargaining and the payment and withholding of Taxes and other sums
required by governmental authorities.
4.18 Real Property.
-------------
(a) Schedule 4.18 identifies all real property owned by the Company
-------------
(the "OWNED PROPERTY") and all real property leased or operated (or leased and
subleased) by the Company (the "LEASED PROPERTY"). The Owned Property and the
Leased Property shall be referred to collectively as the "REAL PROPERTY."
(b) The Company has good and marketable fee simple absolute title to
the Owned Property, and the right to use the Leased Property, free and clear of
any and all liens, encumbrances, easements, restrictions, leases, subleases,
concession agreements, options to purchase, options to lease, options to joint
venture or jointly develop, conditions, covenants, assessments, defects, claims
or exceptions, except for the exceptions described on Schedule 4.18 or as shown
-------------
on the policies of title insurance or preliminary title reports (if more recent)
attached as part of such schedule. Except as set forth on Schedule 4.18(b)
----------------
hereto, all leases, subleases and licenses on the Owned Property or Leased
Property, including renewal rights or other options, are terminable by the
Company without penalty on not more than 30 days notice.
(c) True and correct copies of the documents under which the Owned
Property and Leased Property is leased, subleased (to or by the Company or
otherwise) or operated (the "LEASE DOCUMENTS") have been delivered to Parent.
The Lease Documents are unmodified and in full force and effect, and there are
no other agreements, written or oral, between the Company and any third parties,
or by and amongst any third parties, claiming an interest in the interest of the
Company in the Owned Property, Leased Property or otherwise relating to the use
and occupancy of the Owned Property or Leased Property. Without limiting the
generality of the foregoing, except as set forth on Schedule 4.18, no person or
-------------
entity other than the Company has any right to occupancy, or right to acquire
any occupancy right, to any portion of the Real Property (whether pursuant to a
lease, sublease, license or otherwise) for any period of time beyond June 30,
1998. Neither the Company nor any other party is in material default under the
Lease
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<PAGE>
Documents, and no defaults (which have not been cured) by the Company nor any
other party have been asserted thereunder. To the best knowledge of the Company,
each landlord or other party (e.g., a subtenant or concessionaire) named in any
of the Lease Documents is not in material default thereunder, and no material
defaults (whether or not subsequently cured) by such landlord or other parties
have been alleged thereunder.
(d) Except as disclosed in Schedule 4.18, (i) the Real Property
-------------
complies with, and is operated in accordance with, all applicable laws
(including without limitation all Environmental Laws to the extent stated in
Section 4.19) affecting the Real Property or the ownership, improvement,
- ------------
development, possession, use, occupancy or operation thereof, and with any and
all liens, encumbrances, easements, agreements, covenants, conditions and
restrictions (collectively, "RESTRICTIONS") affecting the Real Property, except
where the failure to comply, individually or in the aggregate, would not result
in a Company Material Adverse Effect; (ii) to the best knowledge of the Company,
no land or property adjacent to the Real Property is in material violation of
any applicable laws, regulations or Restrictions, except for such violations
which, individually or in the aggregate, would not result in a Company Material
Adverse Effect; (iii) there are no material defects in the physical condition of
the Real Property or the improvements located on the Real Property, except for
defects which, individually or in the aggregate, would not have a Company
Material Adverse Effect; and (iv) the Company has not received any notice from
any governmental body (a) requiring it to make any material repairs or changes
to the Real Property or the improvements located on the Real Property or (b)
giving notice of any material governmental actions pending, except for such
repairs, changes or actions which, individually or in the aggregate, would not
have a Company Material Adverse Effect.
(e) Except as disclosed in Schedule 4.18, there is no action,
-------------
proceeding or litigation pending (or, to the best knowledge of the Company,
contemplated or threatened): (i) to take all or any portion of the Real
Property, or any interest therein, by eminent domain; (ii) to modify the zoning
of, or other governmental rules or restrictions applicable to, the Real Property
or the use or development thereof; (iii) for any street widening or changes in
highway or traffic lanes or patterns in the immediate vicinity of the Real
Property; or (iv) otherwise relating to the Real Property or the interests of
the Company therein, or which otherwise would interfere with the use, ownership,
improvement, development and/or operation of the Real Property.
(f) Except as disclosed in Schedule 4.18, no portion of the Real
-------------
Property or the roads immediately adjacent to the Real Property: (i) is
situated in a "Special Flood Hazard Area," as set forth on a Federal Emergency
Management Agency Flood Insurance Rate Map or Flood Hazard Boundary Map; (ii) to
the best knowledge of the Company, was the former site of any public or private
landfill, dump site, retention basin or settling pond; (iii) to the best
knowledge of the Company, was the former site of any oil or gas drilling
operations; (iv) to the best knowledge of the Company, was the former site of
any experimentation, processing, refining, reprocessing, recovery or
manufacturing operation for any petrochemicals; or (v) has any defect or
condition which
-22-
<PAGE>
would materially impair either (a) the current use of the Real Property or (b)
the use of the Real Property for gaming or other currently contemplated
activities, as applicable.
(g) The parcels constituting the Real Property are assessed
separately from all other adjacent property for purposes of real property taxes.
(h) Except as disclosed in Schedule 4.18, (i) all improvements on the
-------------
Real Property are in compliance with current building codes, to the extent
applicable and (ii) the Company has not received any written notices of any
material violations of any applicable building codes relating to the Real
Property which have not been remedied.
(i) The Real Property is connected to and serviced by adequate water,
sewage disposal, gas and electricity facilities in accordance with all
applicable laws, statutes, ordinances, rules and regulations of all public or
quasi-public authorities having or claiming jurisdiction there over. All
material systems (heating, air conditioning, electrical, plumbing and the like)
for the basic operation of the Real Property are operable and in good condition
(ordinary wear and tear excepted).
(j) There are no material commitments to or agreements with any
governmental authority or agency (federal, state or local) affecting the Real
Property which are not listed in Schedule 4.18 or described in the SEC Reports.
-------------
(k) Except as disclosed in Schedule 4.18 or as shown in the policies
-------------
of title insurance or preliminary title reports (if more recent) delivered
previously to Parent, there are no commitments, agreements, understandings or
other Restrictions materially adversely affecting Company's ability to utilize
the Real Property for its intended purposes or to improve or develop or effect
expansion of the Company's business on the Real Property.
(l) There are no contracts or other obligations outstanding for the
sale, exchange or transfer of any of the Real Property or any interest therein,
or any portion of it or the business operated thereon, except as disclosed on
Schedule 4.18.
- -------------
4.19 Environmental Matters.
---------------------
(a) "CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"ENVIRONMENTAL CLAIM" means, with respect to any Person, any written
notice, claim, demand or other communication (collectively, a "CLAIM") by any
other Person alleging or asserting such Person's liability for investigatory
costs, cleanup costs, Governmental Authority response costs, damages to natural
resources or other property, personal injuries, fines or penalties arising out
of, based on or resulting from (a) the
-23-
<PAGE>
presence, or release into the environment, of any Hazardous Material at any
location, whether or not owned by such Person, or (b) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law. The term
"ENVIRONMENTAL CLAIM" shall include, without limitation, any claim by any
Governmental Authority for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and any
claim by any third party (other than workers compensation claims arising from
isolated incidents) seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the presence of
Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.
"ENVIRONMENTAL LAW" means any law, regulation or order relating to the
regulation or protection of human health, safety or the environment or to
emissions, discharges, releases or threatened releases of Hazardous Materials
into the environment (including without limitation ambient air, soil, surface
water, ground water, wetlands, land or subsurface strata), or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.
"GOVERNMENTAL AUTHORITY" means any agency, authority, board, bureau,
commission, department, office or instrumentality of any nature whatsoever of
any governmental or quasi-governmental unit, whether federal, state, county,
district, city or other political subdivision, foreign or otherwise and whether
now or hereafter in existence, or any officer or official of any thereof.
"HAZARDOUS MATERIALS" includes (a) any "hazardous substance", as
defined by CERCLA or any other similar substance or waste regulated pursuant to
any similar state or local law, regulation or ordinance; (b) any "waste" or
"hazardous waste", as defined by the Resource Conservation and Recovery Act, as
amended, or any other similar substance or waste regulated pursuant to any
similar state or local law, regulation or ordinance; (c) any pollutant,
contaminant, material, substance or waste regulated by the Clean Water Act, as
amended, or any other similar substance or waste regulated pursuant to any
similar state or local law, regulation or ordinance; (d) any pollutant,
contaminant, material, substance or waste regulated by the Clean Air Act, as
amended, or any other similar substance or waste regulated pursuant to any
similar state or local law, regulation or ordinance; (e) any petroleum product;
(f) any polychorinated biphenyls; or (g) any radioactive materials or
substances.
"RELEASE" means release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment or into or out of any real or personal property or any
fixture, including the movement of Hazardous Materials through or in the air,
soil, surface water or groundwater.
(b) Except as set forth in Schedule 4.19 (with paragraph references
-------------
corresponding to those set forth below):
-24-
<PAGE>
(i) all facilities and property owned or leased by the Company at
any time have been, and continue to be, operated by the Company in material
compliance with all Environmental Laws;
(ii) there have been no past, and there are no pending or, to the
best knowledge of the Company, threatened (x) claims, complaints, notices,
requests for information or investigations with respect to any alleged material
violation of any Environmental Law by the Company, or (y) complaints, notices or
inquiries to or investigations of the Company regarding potential liability
under any Environmental Law by the Company;
(iii) there have not been, at any facilities or property presently or
formerly owned or leased by the Company, any Releases of Hazardous Materials and
there are no citations, notices or orders of noncompliance issued and
outstanding to the Company under any Environmental Law, except as would not,
individually or in the aggregate, be reasonably expected to have a Company
Material Adverse Effect;
(iv) the Company has been issued and is in material compliance with
all permits, certificates, approvals, licenses and other governmental
authorizations relating to environmental matters and necessary for their
businesses, and no order has been issued, no Environmental Claim has been made,
no penalty has been assessed and no investigation or review has occurred or is
pending or, to the best knowledge of the Company, threatened, by any Person with
respect to any alleged failure by the Company to have any license or permit
required under applicable Environmental Laws in connection with the conduct of
its business or operations or to comply with any Environmental Laws or with
respect to any generation, treatment, storage, recycling, transportation,
discharge, disposal or release of any Hazardous Material generated by the
Company;
(v) neither any property now or previously owned or leased by the
Company nor any property to which wastes generated at any such property have
been disposed of, is listed or proposed for listing on the National Priorities
List pursuant to CERCLA, or on the CERCLIS or on any similar federal or state
list of sites requiring investigation or clean-up;
(vi) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, under any property now owned or leased by the
Company; and
(vii) there are no facts upon which the Company may reasonably be
expected to become liable under any Environmental Law in any material respect.
4.20 Representations Complete. None of the representations or warranties
------------------------
made by the Company herein or in any Schedule or Exhibit hereto contains or will
contain at the Effective Time any untrue statement of a material fact, or omits
or will omit at the Effective Time any material fact necessary in order to make
the statements contained
-25-
<PAGE>
herein or therein, in light of the circumstances under which they are made, not
misleading.
4.21 Disclosure Schedules. Disclosure of a matter on a Schedule called for
--------------------
under one Section or subsection of this Article IV shall be deemed to be
disclosure for any other Schedule under another Section or subsection of this
Article IV provided that the statements in the Schedule relating to the matter
can be clearly identified as relating to the Schedule to be delivered under such
other Section or subsection. Notwithstanding the preceding sentence, the
listing of a security interest on a title report does not constitute disclosure
of the associated indebtedness or liability under a representation and warranty
where disclosure of such indebtedness or liability was required.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
5.1 Organization. Each of Parent and Merger Sub is a corporation duly
------------
organized, validly existing and in good standing under the laws of their
jurisdiction of incorporation and has the requisite corporate power to carry on
its business. Merger Sub has made available to the Company a complete and
correct copy of its articles of incorporation and bylaws, each as amended to
date and as in full force and effect. Merger Sub is not in default in any
material respect in the performance, observation or fulfillment of any provision
of its articles of incorporation or bylaws.
5.2 Authority Relative to this Agreement. Each of Parent and Merger Sub
------------------------------------
has all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby on the part of Parent and Merger Sub have been duly and
validly authorized by the Boards of Directors of Parent and Merger Sub and by
Parent as the sole stockholder of Merger Sub and no other corporate proceedings
on the part of Parent and Merger Sub are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby, except as contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Parent and Merger Sub and, assuming this Agreement constitutes a valid and
binding obligation of the Company and the requisite approval of the Company's
stockholders has been obtained, this Agreement constitutes a valid and binding
agreement of Parent and Merger Sub, enforceable against each of them in
accordance with its terms, except (a) as such enforcement may be subject to the
Bankruptcy Exceptions, and (b) as the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
5.3 Consent and Approvals; No Violation. Neither the execution and
-----------------------------------
delivery of this Agreement by Parent and Merger Sub, nor the consummation of the
transactions contemplated hereby, will:
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<PAGE>
(a) conflict with any provision of the respective articles of
incorporation or bylaws of Parent or Merger Sub;
(b) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, except
(i) the filing of a premerger notification and report form under the HSR Act,
(ii) the filing with the SEC of the Company Proxy Statement relating to the
approval and adoption by the Company's stockholders of the Merger and this
Agreement as contemplated by Section 1.5 of this Agreement, if such approval is
required by law, and such reports under Sections 13 and 16 of the Exchange Act
as may be required in connection with this Agreement, the Stockholder Agreements
and the transactions contemplated hereby and thereby, (iii) obtaining all
necessary approvals under the Gaming Laws, including those required by the
Gaming Authorities, (iv) the filing of the Articles of Merger with the Secretary
of State of the State of Nevada, and (v) where the failure to obtain such
consents, approvals, authorizations or permits or the failure to make such
filings or notifications would not have a material adverse effect on the ability
of Parent and Merger Sub to consummate the transactions contemplated hereby; or
(c) conflict with or violate the provisions of any order, writ,
injunction, judgment, decree, statute, rule or regulation applicable to Parent
or Merger Sub, or any contract or agreement to which Parent or Merger Sub is a
party, in such a manner as to result in a material adverse effect on the ability
of Parent and Merger Sub to consummate the transactions contemplated hereby.
5.4 Information Supplied. None of the information supplied or to be
--------------------
supplied by Parent or Merger Sub expressly for inclusion in the Company Proxy
Statement will, at the time filed with the SEC, as of the date mailed to the
Company's stockholders or at the time of the Special Meeting, contain any untrue
statement of a material fact or will 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 in which they are made, not misleading.
5.5 Merger Sub's Operations. Merger 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.
5.6 Capitalization. The authorized capital stock of Merger Sub consists
--------------
of 1,000 shares of common stock. All of the issued and outstanding shares of
Merger Sub's common stock have been duly and validly issued and are held of
record and beneficially by Parent.
5.7 Financing. Parent has available to it funds necessary to purchase all
---------
of the Shares, to pay the Merger Consideration and to pay all of its fees and
expenses related to the transactions contemplated by this Agreement.
-27-
<PAGE>
ARTICLE VI
CONDUCT OF BUSINESS BY THE COMPANY
PRIOR TO EFFECTIVE DATE
The Company agrees, except (i) as expressly contemplated by this Agreement,
or (ii) as agreed in writing by Parent, from the date hereof and prior to the
Effective Time, as follows:
6.1 Ordinary Course. The Company shall carry on its business in the
---------------
usual, regular and ordinary course, in substantially the same manner as
heretofore conducted, and use its reasonable efforts consistent with past
practice and policies to preserve intact its present business organization, keep
available the services of its present officers and employees and preserve its
existing relationships with customers, suppliers, lessors, lessees, creditors
and others having business dealings with it. The Company will continue to
maintain a standard system of accounting established and administered in
accordance with GAAP.
6.2 Dividends; Changes in Stock. The Company shall not (a) declare, set
---------------------------
aside or pay any dividends on or make other distributions in respect of any
shares of its capital stock, (b) split, combine or reclassify any shares of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for any shares of its capital stock or
(c) propose to do any of the foregoing.
6.3 Issuance, Repurchase or Repricing of Securities. The Company shall
-----------------------------------------------
not issue, pledge, deliver, sell or transfer or authorize or propose the
issuance, pledge, delivery, sale or transfer of, or repurchase, redeem or
otherwise acquire directly or indirectly, or propose the repurchase, redemption
or other acquisition of, any shares of capital stock of any class of the
Company, or any options, warrants or other rights exercisable for or securities
convertible into or exchangeable for, any such shares (or enter into any
agreements, arrangements, plans or understandings with respect to any of the
foregoing), other than pursuant to the exercise of outstanding options or
warrants pursuant to the terms thereof as of the date hereof or amend any of the
terms of any of such securities. The Company shall take no action to reduce or
alter the consideration to be paid to the Company upon the exercise of any
outstanding options, warrants or other rights exercisable for, or securities
convertible into or exchangeable for, any shares of the Company's capital stock,
nor shall it enter into any agreements, arrangements, plans or understandings
with respect to any such reduction or alteration.
6.4 Governing Documents; Board of Directors. The Company shall not
---------------------------------------
propose or adopt any amendment to its articles of incorporation or bylaws (or
similar charter documents) or take any action to alter the size or composition
of its Board of Directors.
6.5 No Dispositions. The Company shall not transfer, sell, lease,
---------------
license, mortgage or otherwise dispose of or encumber any material assets, or
enter into any
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<PAGE>
commitment to do any of the foregoing, other than in the ordinary and usual
course of business, consistent with past practice.
6.6 Indebtedness.
------------
(a) The Company shall not incur, become subject to, or agree to incur
any debt for borrowed money or incur or become subject to any other obligation
or liability (absolute or contingent), except current liabilities incurred, and
obligations under contracts entered into, in the ordinary course of business
consistent with prior practice.
(b) The Company shall not pay or be liable for prepayment or other
penalties in connection with the early retirement of any Company indebtedness
for borrowed money.
6.7 Employees and Affiliates. The Company shall not make any change in
------------------------
the compensation payable or to become payable to any of its officers, directors,
employees, agents, affiliates or consultants, enter into or amend any
employment, severance, termination or other agreement or make any loans to any
of its officers, directors, employees, agents, affiliates or consultants or make
any change in its existing borrowing or lending arrangements for or on behalf of
any of such persons, or otherwise enter into any transactions with or make any
payment to or for any affiliate of the Company, in each case whether contingent
on consummation of the Merger or otherwise, except for increases in the
compensation payable to non-management salaried employees in the ordinary course
of business and consistent with past practice.
6.8 Benefit Plans. The Company shall not, except as required by law, (a)
-------------
pay, agree to pay or make any accrual or arrangement for payment of any pension,
retirement allowance or other employee benefit pursuant to any existing plan,
agreement or arrangement to any officer, director or employee except in the
ordinary course of business and consistent with past practice or as permitted by
this Agreement; (b) pay or agree to pay or make any accrual or arrangement for
payment to any employees of the Company of any amount relating to unused
vacation days; (c) commit itself or themselves to adopt or pay, grant, issue,
accelerate or accrue salary or other payments or benefits pursuant to any
pension, profit-sharing, bonus, extra compensation, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other employee benefit plan, agreement
or arrangement, or any employment or consulting agreement with or for the
benefit of any director, officer, employee, agent or consultant, whether past or
present; or (d) amend in any material respect any such existing plan, agreement
or arrangement.
6.9 Taxes. The Company shall (i) properly prepare and file all material
-----
reports or Tax Returns required by the Company to be filed with any governmental
or regulatory authorities with respect to its business, operations, or affairs,
and (ii) pay in full and when due all Taxes indicated on such Tax Returns or
otherwise levied or assessed upon the Company or any of its assets and
properties unless such Taxes are being contested in good faith by appropriate
proceedings and reasonable reserves therefor have been
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<PAGE>
established in accordance with GAAP. The preparation of any such Tax Returns
filed by the Company shall be subject to the timely review and approval of
Parent, which approval shall not be unreasonably withheld.
6.10 Consultation and Cooperation. The Company shall (i) report on a
----------------------------
regular basis, at reasonable times, to a representative designated by Parent
regarding material operational matters and financial matters (including monthly
unaudited financial information); (ii) promptly and regularly notify Parent of
any change in the normal course of operation of its business or its properties
and of any material development in the business or operations of the Company
(including without limitation any Company Material Adverse Effect or any
governmental or third party claims, complaints, investigations or hearings, or
communications indicating that the same may be forthcoming or contemplated);
and (iii) cooperate with Parent and its affiliates and representatives in
arranging for an orderly transition in connection with the transfer of control
of the Company.
6.11 Additional Matters. The Company shall not:
------------------
(a) enter into, amend or terminate any agreements, commitments or
contracts which, individually or in the aggregate, are material to the financial
condition, business, assets, properties or results of operations of the Company,
or waive, release, assign or relinquish any material rights or claims
thereunder, except in the ordinary course of business, consistent with past
practice;
(b) discharge or satisfy any lien or encumbrance or payment of any
obligation or liability (absolute or contingent) other than current liabilities
in the ordinary course of business;
(c) cancel or agree to cancel any material debts or claims, except in
each case in the ordinary course of business;
(d) waive any rights of substantial value;
(e) pay, discharge, satisfy or settle any litigation or other claims,
liabilities or obligations (absolute, accrued, asserted, unasserted, contingent
or otherwise) involving the payment by the Company of more than $50,000;
(f) make any equity investments in third parties;
(g) create any subsidiaries;
(h) (i) incur, pay, or be subject to any material obligation to make
any payment of, or in respect of, any Tax on or before the Effective Time,
except in the ordinary course of business consistent with past practice, (ii)
settle any material audit, make or change any material Tax election or file any
amended Tax Returns, or (iii) agree to extend or waive any statute of
limitations on the assessment or collection of Tax;
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(i) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company (other than the Merger) or otherwise make any material change in
the conduct of the business or operations of the Company; or
(j) agree in writing or otherwise to take any of the foregoing
actions or any other action which would constitute a Company Material Adverse
Effect in any of the items and matters covered by the representations and
warranties of the Company set forth in Article , or make any representation or
warranty of the Company in this Agreement materially inaccurate in any respect.
6.12 Consent to Stockholder Agreements and Release.
---------------------------------------------
(a) By the execution of this Agreement, the Company hereby consents
to the entry into the Stockholder Agreements by Diversified Opportunites Group
Ltd., Jacobs Entertainment, Inc., Jacobs, and Jansen (collectively the
"Memorandum Parties") and to the termination and release of all of the rights,
title and interest of the Memorandum Parties under that certain Option and Proxy
Agreement (the "Option Agreement") dated September 24, 1996,and the Memorandum
of Understanding (the "Memorandum") dated as October 29, 1997.
(b) Effective at the Closing (and contingent on the occurrence of the
Closing), the Company terminates and releases any and all rights, title and
interest which it may have under or pursuant to that certain Purchase Agreement
dated as of September 24, 1996 ("Purchase Agreement"), the Option Agreement, or
the Memorandum, including any and all claims for breaches or violations of those
agreements that may have occurred on or prior to the date of the Closing. The
Company expressly agrees that, effective at the Closing, the Purchase Agreement,
the Option Agreement, and the Memorandum shall be terminated and of no further
force and effect. Effective at the Closing (and contingent on the occurrence of
the Closing), the Company releases the Memorandum Parties from any and all
obligations, charges or claims arising out of or in connection with the Purchase
Agreement, the Option Agreement, or the Memorandum. The Memorandum Parties shall
each be a third party beneficiary with respect to the consents, releases, and
agreements contained in this Section 6.12.
ARTICLE VII
ADDITIONAL COVENANTS
7.1 No Solicitation.
---------------
(a) The Company and its affiliates will not, and the Company and its
affiliates will use their reasonable efforts to ensure that their respective
officers, directors, employees, investment bankers, attorneys, accountants and
other representatives and agents do not, directly or indirectly, initiate,
solicit, encourage or participate in negotiations or discussions relating to, or
provide any information to any Person (as defined below) concerning, or take any
action to facilitate the making of, any offer or
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proposal which constitutes or is reasonably likely to lead to any Acquisition
Proposal (as defined below) of the Company or any affiliate, or any inquiry with
respect thereto, or agree to approve or recommend any Acquisition Proposal. The
Company shall, and shall cause its affiliates, and their respective officers,
directors, employees, investment bankers, attorneys, accountants and other
agents to, immediately cease and cause to be terminated all existing activities,
discussions and negotiations, if any, with any parties conducted heretofore with
respect to any of the foregoing. Notwithstanding the foregoing, the Company may,
directly or indirectly, provide access and furnish information concerning its
business, properties or assets to any corporation, partnership, person or other
entity or group pursuant to an appropriate confidentiality agreement, and may
negotiate and participate in discussions and negotiations with such entity or
group concerning an Acquisition Proposal if (x) such entity or group has
submitted an unsolicited bona fide written proposal to the Board of Directors of
the Company relating to an Acquisition Proposal which contemplates the
acquisition of all of the stock, assets or business of the Company and (i) in
which the offeror demonstrates proof of its financial capability and authority
to consummate the transactions contemplated by such offer (including without
limitation the payments required by Section 10.1(b) hereof); and (ii) which
provides for (x) net aggregate cash proceeds to the Company or all of its
stockholders in an amount greater than that provided for hereunder, at a per
Share purchase price greater than the Merger Consideration (or, in the event the
Merger Consideration has been increased by Parent, such greater amount), (y) the
Company's financial advisers have advised the Board of Directors of the Company
that such Acquisition Proposal is more favorable to the Company's stockholders,
from a financial point of view, than the transactions contemplated hereby, and
(z) in the opinion of the Board of Directors of the Company, after consultation
with independent legal counsel to the Company, the failure to provide such
information or access or to engage in such discussions or negotiations would
result in a substantial risk of liability for a breach of fiduciary duties of
the members of the Board of Directors. Except with Parent's consent, the Company
shall not release any third party from, or waive any provisions of, any
confidentiality or standstill agreement to which the Company is a party.
(b) The Company shall immediately notify Parent of any such offers,
proposals or Acquisition Proposals (including without limitation the terms and
conditions thereof and the identity of the Person making it), and will keep
Parent apprised of all developments with respect to any such Acquisition
Proposal, including without limitation any modifications thereof.
(c) Nothing contained in this Section 7.1 shall prohibit the Company
or its Board of Directors from (i) taking and disclosing to the Company's
stockholders a position with respect to a tender offer by a third party pursuant
to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making such
disclosure to the Company's stockholders which, in the opinion of the Board of
Directors of the Company, after consultation with independent legal counsel to
the Company, may be required under applicable law.
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(d) As used in this Agreement, "ACQUISITION PROPOSAL" shall mean any
tender or exchange offer involving the Company or its securities, any proposal
for a merger, consolidation or other business combination involving the Company,
any proposal or offer to acquire in any manner a substantial equity interest in,
or a substantial portion of the business or assets of, the Company, any proposal
or offer with respect to any recapitalization or restructuring with respect to
the Company or any proposal or offer with respect to any other transaction
similar to any of the foregoing with respect to the Company; provided, however,
-------- -------
that, as used in this Agreement, the term "ACQUISITION PROPOSAL" shall not apply
to (i) any transaction of the type described in this subsection (d) involving
Parent, Merger Sub or their affiliates.
(e) The Company shall continue to be obligated to hold the Special
Meeting notwithstanding the existence of an Acquisition Proposal and shall take
all further action in furtherance of the consummation of the transactions
contemplated under this Agreement.
7.2 Access to Information; Confidentiality.
--------------------------------------
(a) Between the date of this Agreement and the Effective Time, upon
reasonable notice the Company shall (i) give Parent, Merger Sub and their
respective officers, employees, accountants, counsel, financing sources and
other agents and representatives full access to all buildings, offices, and
other facilities and to all contracts, internal reports, data processing files
and records, Federal, state, local and foreign tax returns and records,
commitments, books, records and affairs of the Company, whether located on the
premises of the Company or at another location; (ii) furnish promptly to Parent
a copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of Federal
securities laws or regulations; (iii) permit Parent and Merger Sub to make such
inspections as they may require; (iv) cause its officers to furnish Parent and
Merger Sub such financial, operating, technical and product data and other
information with respect to the business and properties of the Company as Parent
and Merger Sub from time to time may request, including without limitation
financial statements and schedules; (v) allow Parent and Merger Sub the
opportunity to interview such employees and other personnel and affiliates of
the Company with the Company's prior written consent, which consent shall not be
unreasonably withheld; and (vi) assist and cooperate with Parent and Merger Sub
in the development of integration plans for implementation by Parent and the
Surviving Corporation following the Effective Time; provided, however, that no
-------- -------
investigation pursuant to this Section 7.2 shall affect or be deemed to modify
any representation or warranty made by the Company herein. Materials furnished
to Parent pursuant to this Section 7.2 may be used by Parent for strategic and
integration planning purposes relating to accomplishing the transactions
contemplated hereby.
(b) Except as otherwise provided below, until Parent or Merger Sub
acquires Shares pursuant to the Stockholder Agreements, Parent and Merger Sub
shall, and shall cause their affiliates, agents and representatives to, keep
secret and retain in confidence, and not use for the benefit of any such person
or others (other than in
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connection with this Agreement and the transactions contemplated hereby), any
confidential information of the Company which Parent or Merger Sub obtained from
the Company pursuant to this Section 7.2. The restrictions on use and disclosure
contained herein shall not apply if and to the extent any such information (i)
is publicly available or becomes publicly available (through no action or fault
of Parent or Merger Sub), (ii) was or is obtained by Parent or Merger Sub from a
third party, provided that to the recipient's knowledge, such third party was
--------
not bound by a contractual, legal or fiduciary obligation of confidentiality to
the Company or any other party with respect to such information or material,
(iii) was already in the possession of Parent or Merger Sub or known to Parent
or Merger Sub prior to being disclosed or provided to them by or on behalf of
the Company, provided that, to the recipient's knowledge, the source of such
--------
information or material was not bound by a contractual, legal or fiduciary
obligation of confidentiality to the Company or any other party with respect
thereto, or (iv) is required to be disclosed in a legal proceeding or pursuant
to applicable law, gaming regulations or the rules or regulations of any
national securities exchange or over-the-counter market. In the event that
Parent or Merger Sub is requested or required (by oral questions,
interrogatories, request for information or documents in legal proceedings,
subpoena, civil investigative demand or other similar process) to disclose any
of the confidential information provided under this Section 7.2, such party
shall provide the Company with prompt written notice of any such request or
requirement so that the Company may seek a protective order or other appropriate
remedy and/or waive compliance with the provisions of this Section 7.2. If, in
the absence of a protective order or other remedy or the receipt of a waiver by
the Company, Parent or Merger Sub is nonetheless, based on advice of its
counsel, legally compelled to disclose the confidential information to any
tribunal or else stand liable to contempt or suffer other censure or penalty,
such party may, without liability hereunder, disclose to such tribunal only that
portion of the confidential information which such counsel advises such party is
legally required to be disclosed, provided that such party shall use its
reasonable efforts to preserve the confidentiality of the confidential
information, including without limitation by cooperating with the Company to
obtain an appropriate protective order or other reliable assurance that
confidential treatment will be afforded the confidential information by such
tribunal. The restrictions on use and disclosure of confidential information
under this Section 7.2 shall expire three years from the date hereof.
7.3 HSR Act. The Company and Parent shall take all reasonable actions
-------
necessary to file as soon as practicable notifications under the HSR Act and to
respond as promptly as practicable to any inquiries received from the Federal
Trade Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any state attorney
general or other Governmental Entity in connection with antitrust matters.
7.4 Consents and Approvals.
----------------------
(a) The parties hereto shall cooperate with each other and use
reasonable best efforts (and, with respect to Gaming Laws, shall use reasonable
best
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<PAGE>
efforts to cause their respective directors, officers and (if required)
stockholders to do so) to promptly prepare and file all necessary documentation,
to effect all applications, notices, petitions and filings, to obtain as
promptly as practicable all permits, consents, approvals and authorizations of
all third parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including without
limitation the Merger) ("GOVERNMENTAL APPROVALS"), and to comply (and, with
respect to Gaming Laws, to cause their respective directors, officers and (if
required) stockholders to so comply) with the terms and conditions of all such
permits, consents, approvals and authorizations of all such Governmental
Entities. Each of the parties hereto and their respective officers, directors
and affiliates shall use their reasonable best efforts to file within 30 days
after the date hereof, and in all events shall file within 60 days after the
date hereof, all required initial applications and documents in connection with
obtaining the Governmental Approvals (including without limitation under
applicable Gaming Laws) and shall act reasonably and promptly thereafter in
responding to additional requests in connection therewith; and each party will
use its reasonable best efforts to secure such Governmental Approvals as
expeditiously as practicable. Parent and the Company shall have the right to
review in advance, and to the extent practicable each will consult the other on,
in each case subject to applicable laws relating to the exchange of information,
all the information relating to Parent or the Company, as the case may be, and
any of their respective subsidiaries, directors, officers and stockholders which
appear in any filing made with, or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. Without limiting the foregoing, each of Parent
and the Company (the "NOTIFYING PARTY") will notify the other promptly of the
receipt of comments or requests from Governmental Entities relating to
Governmental Approvals, and will supply the other party with copies of all
correspondence between the Notifying Party or any of its representatives and
Governmental Entities with respect to Governmental Approvals; provided, however,
-------- -------
that it shall not be required to supply the other party with copies of
correspondence relating to the personal applications of individual applicants
except for evidence of filing.
(b) Parent and the Company shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval (as defined below) will not be
obtained or that the receipt of any such approval will be materially delayed.
7.5 Closing of Stockholder Agreements; Parent Obligation to Effect Merger
---------------------------------------------------------------------
Once Stockholder Agreements Fully Consummated. To the extent the Stockholder
- ---------------------------------------------
Agreements otherwise permit Parent to do so, Parent shall not waive the
condition to its closing obligation in the Stockholder Agreement(s) with one
Selling Stockholder that the Stockholder Agreement(s) with the other Selling
Stockholder shall have been consummated or consummated concurrently. In the
event the transactions contemplated by the Stockholder Agreements are fully
consummated, including without limitation the acquisition by Parent of the
Shares owned by the Selling Stockholders and the purchase
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<PAGE>
of Jansen's real estate contemplated thereunder, then all of the conditions to
Parent's obligations to effect the Merger under Sections 8.1 and 8.2 shall be
deemed satisfied or waived.
7.6 Notification of Certain Matters. The Company will give prompt notice
-------------------------------
to Parent of (a) any notice of default received by it subsequent to the date of
this Agreement and prior to the Effective Time under any material instrument or
material agreement to which it is a party or by which it is bound, which default
would, if not remedied, result in a Company Material Adverse Effect or which
would render materially incomplete or untrue any representation or warranty made
herein, (b) any suit, action or proceeding instituted or, to the knowledge of
the Company, threatened against or affecting the Company subsequent to the date
of this Agreement and prior to the Effective Time which, if adversely
determined, would have a Company Material Adverse Effect or which would render
materially incorrect any representation or warranty made herein and (c) any
material breach of the Company's covenants hereunder or the occurrence of any
event that is reasonably likely to cause any of its representations and
warranties hereunder to become incomplete or untrue in any material respect.
7.7 Additional Actions. Subject to the terms and conditions of this
------------------
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations, or
to remove any injunctions or other impediments or delays, to consummate and make
effective the Merger and the other transactions contemplated by this Agreement,
subject, however, to the appropriate vote of stockholders of the Company
required so to vote as described in Section 1.5 hereof. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full title to all properties, assets, rights, approvals, immunities and
franchises of either of Merger Sub or the Company, the proper officers and
directors of each corporation which is a party to this Agreement shall take all
such necessary action.
7.8 Interference with Transactions. The Company, prior to the Effective
------------------------------
Date shall not (a) take any action which, in the reasonable judgment of Parent,
would impede, interfere with or attempt to discourage the transactions
contemplated by this Agreement or the Stockholder Agreements, (b) amend, revoke,
withdraw or modify the approval of Parent's and Merger Sub's acquisition of the
Company Common Stock, the Merger and the other transactions contemplated hereby
so as to render the prohibitions contained in Sections 78.411 to 78.444 of the
NRS applicable to the Merger or the other transactions contemplated hereby as a
result of the failure to satisfy the requirements of Section 78.438 or 78.439
thereof, or (c) without limiting the generality of Section 6.4, amend, revoke,
repeal, withdraw, restrict or modify the Control Share Opt-Out Bylaw for any
reason whatsoever, or permit (whether by action of the Company's Board of
Directors or stockholders or otherwise) the Control Share Opt-Out Bylaw to be
amended, revoked, repealed, withdrawn, restricted or modified for any reason
whatsoever, or take any other action which might be expected to render the
provisions of NRS Sections 78.378 through 78.3793 applicable to the Company or
which would otherwise jeopardize
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<PAGE>
the right of Parent and Merger Sub to exercise all voting and other rights with
respect to Shares acquired by them.
7.9 Publicity. So long as this Agreement is in effect and subject to
---------
Section 7.1 hereof, neither the Company nor any of its affiliates shall issue or
cause the publication of any press release or other announcement with respect to
the Merger, this Agreement or the other transactions contemplated hereby without
prior consultation with Parent, except as may be required by law or by any
listing agreement with a national securities exchange.
7.10 Opinion of Company Counsel. Prior to the Effective Time, the Company
--------------------------
shall cause to be delivered to Parent an opinion, dated the Closing Date, of
Jones Vargas, counsel for the Company, with respect to matters customarily
covered in legal opinions in transactions of this type, in form and substance
reasonably satisfactory to Parent and its counsel.
7.11 Resignation of Directors. Prior to the Effective Time, the Company
------------------------
shall deliver to Parent evidence satisfactory to Parent of the resignation of
such directors of the Company as Parent shall specify, which resignations shall
be effective at the Effective Time.
7.12 Parent Consent to Merger. Parent, in its capacity as holder of all of
------------------------
the Company's 16.5% First Mortgage Notes Due March 31, 2005 (the "FIRST MORTGAGE
NOTES") (and as holder of that certain Convertible Subordinated Note dated
September 24, 1996, originally made by the Company in favor of Diversified
Opportunities Group Ltd. when it acquires such Convertible Note pursuant to the
Stockholder Agreement with Jacobs), hereby consents to the Merger and the other
transactions contemplated hereby, all subject to the terms set forth herein.
7.13 Parent Consent to Deferral of March Interest Payment on First
-------------------------------------------------------------
Mortgage Notes. At the request of the Company, Parent, in its capacity as
- --------------
holder of all the First Mortgage Notes hereby agrees that the Company may, at
its option, defer payment of all or any portion of the March 31, 1998 interest
payment that will become due on the First Mortgage Notes (the "Deferred
Interest"); provided, however that (i) the Deferred Interest will become due and
payable on September 30, 1998 along with the regular September 30, 1998 interest
payment and (ii) the Deferred Interest will accrue interest at the same rate
that interest accrues on the principal amount of the First Mortgage Notes and
such accrued interest on the Deferred Interest shall be due and payable on
September 30, 1998. The Company may pay the Deferred Interest and any interest
thereon at any time prior to September 30, 1998.
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<PAGE>
ARTICLE VIII
CONDITIONS
8.1 Conditions to each Party's Obligations to Effect the Merger. The
-----------------------------------------------------------
respective obligations of the parties to effect the Merger shall be subject to
the satisfaction or waiver, on or prior to the Closing Date, of the following
conditions:
(a) Regulatory Approvals. Other than the filing of the Articles of
--------------------
Merger in accordance with the NRS, all licenses, permits, registrations,
authorizations, consents, waivers, orders or other approvals of Governmental
Authorities required to be obtained, and all filings, notices or declarations
required to be made by the parties and their subsidiaries, officers, directors
and affiliates in order to consummate the Merger and the transactions
contemplated by this Agreement, and in order to permit the Company to conduct
its business in the jurisdictions regulated by the Gaming Authorities after the
Effective Time in the same manner as conducted by the Company or its
subsidiaries prior to the Effective Time (all such approvals and the expiration
of all such waiting periods being referred to herein as the "REQUISITE
REGULATORY APPROVALS") shall have been obtained or made, and no such approval
shall contain any conditions, limitations or restrictions which Parent
reasonably determines in good faith will have or reasonably be expected to have
a Company Material Adverse Effect.
(b) Legal Action. No temporary restraining order, preliminary
------------
injunction or permanent injunction or other order precluding, restraining,
enjoining, preventing or prohibiting the consummation of the Merger shall have
been issued by any Federal, state or foreign court or other governmental or
regulatory authority and remain in effect.
(c) Statutes. No Federal, state, local or foreign statute, rule or
--------
regulation shall have been enacted which prohibits, restrains, enjoins or
restricts the consummation of the Merger, would limit Surviving Corporation's
conduct of its business or would make the consummation of the Merger illegal.
(d) Stockholder Approval. Subject to Section 1.6, this Agreement and
--------------------
the transactions contemplated hereby shall have been approved and adopted by the
requisite affirmative vote of the holders of the Company Common Stock as
described in Section 15, in accordance with applicable law.
(e) HSR Waiting Period. All waiting periods applicable to the
------------------
consummation of the Merger under the HSR Act shall have expired or been
terminated.
(f) Parent to Fund Paying Agent. On or prior to the Effective Time,
---------------------------
Parent shall have deposited with the Paying Agent the funds to which holders of
Company Common Stock shall become entitled pursuant to Section 2.1(c) hereof.
8.2 Conditions to Obligations of Parent and Merger Sub to Effect the
----------------------------------------------------------------
Merger. The obligations of Parent and Merger Sub to effect the Merger shall be
- ------
subject to the
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<PAGE>
fulfillment at or prior to the Effective Date of the additional following
conditions, unless waived by Parent:
(a) Representations and Warranties Accurate. The representations and
---------------------------------------
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects (i) as of the date hereof and (ii) as of the date of
the Closing (provided that in the cases of clauses (i) and (ii) any such
representation and warranty made as of a specific date shall be true and correct
as of such specific date), and Parent and Merger Sub shall have received a
certificate signed by the president and the chief financial officer of the
Company to such effect.
(b) No Material Breach. The Company shall have performed in all
------------------
material respects all obligations and covenants required to be performed by it
under this Agreement prior to or as of the date of the Closing, and Parent and
Merger Sub shall have received a certificate signed by the president and the
chief financial officer of the Company to such effect.
(c) No Material Adverse Change. There shall have been no material
--------------------------
adverse change in the business, assets (tangible or intangible), results of
operations, liabilities, prospects or financial condition of the Company after
the date hereof through the Effective Date.
(d) Consents Received. Parent and the Company shall have received
-----------------
all third-party consents and approvals required to be obtained by the Company or
Parent in connection with the transactions contemplated hereby, under any
contract to which the Company or Parent (or any of their respective
subsidiaries) may be a party, except for such third-party consents and approvals
as to which the failure to obtain, either individually or in the aggregate,
would not reasonably be expected to result in a Company Material Adverse Effect.
(e) Consent Under Holiday Inn License Agreement. Without limiting
-------------------------------------------
the generality of Section 8.2(d) hereof, within sixty (60) days of the date
hereof Parent shall have received the written consent to the Merger and the
transactions contemplated hereby (including without limitation Parent's
acquisition of Shares pursuant to the Stockholder Agreements) of the licensor
under that certain Holiday Inn Conversion License Agreement dated December 16,
1993, as amended, between HIFI and the Company, which consent shall be obtained
without any payment required of, or penalty imposed on, Parent, Merger Sub or
the Company.
(f) Termination of Options and Warrants. Parent shall be satisfied,
-----------------------------------
in its sole discretion, that, without payment made in respect thereof, all
warrants, options and other rights to purchase Company Securities either have
been terminated or will terminate at the Effective Time or will constitute only
the right to receive the Option/Warrant Spread, other than the Compensation
Options which will continue in accordance with their terms.
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<PAGE>
(g) Title Policy. Parent shall have obtained the unconditional
------------
commitment of Nevada Title Company to issue its ALTA form of owner's policy of
title insurance with endorsements designated by Parent (the "TITLE POLICY") in
favor of the Company and Parent insuring that the Company is the fee owner of
the Company Owned Property in the amount of $101 million, subject to no
exceptions or exclusions other than those (i) of the exceptions or exclusions
shown on Schedule 4.18 hereof which in the reasonable judgment of Parent do not
-------------
materially adversely affect the use or value of the Owned Properties, or (ii)
which are created subsequently to the date hereof with the consent of Parent, or
(iii) which are reflected as indebtedness of the Company on the Draft September
30, 1997 Balance Sheet.
(h) No Breach of Stockholder Agreements. None of the other parties
-----------------------------------
to either of the Stockholder Agreements shall have breached any representation,
warranty or covenant set forth in such agreements.
(i) Maximum Number of Dissenting Shares. The number of shares of
-----------------------------------
Company Common Stock as to which the holders thereof have purported to exercise
dissenters' rights, if any, with respect to the Merger shall not exceed ten
percent (10%) of the total number of shares of Company Common Stock outstanding
as of the record date for the Special Meeting.
ARTICLE IX
TERMINATION
9.1 Termination. Anything herein or elsewhere to the contrary
-----------
notwithstanding, this Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
stockholder approval thereof:
(a) By Mutual Consent. By mutual consent of Parent and the Company.
-----------------
(b) By Any Party. By Parent or Merger Sub, or by the Board of
------------
Directors of the Company:
(i) if the Merger shall not have been consummated on or prior to
June 30, 1998; provided, however, that the right to terminate this Agreement
-------- -------
under this Section 9.1(b)(i) shall not be available to any party whose failure
to fulfill any material obligation under this Agreement has been the cause of,
or resulted in, the failure of the Merger to be consummated on or prior to such
date; or
(ii) if a court of competent jurisdiction or other governmental
or regulatory authority shall have issued an order, decree or ruling or taken
any other action (which order, decree, ruling or other action the parties hereto
shall use their reasonable efforts to lift), in each case permanently
restraining, enjoining or otherwise
-40-
<PAGE>
prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and non-appealable.
(c) By Parent or Merger Sub. By Parent or Merger Sub:
-----------------------
(i) if neither Parent nor Merger Sub is in material breach of
this Agreement and the Board of Directors of the Company shall have withdrawn,
modified or changed in a manner adverse to Parent or Merger Sub its approval or
recommendation of this Agreement or the Merger or shall have approved or
recommended an Acquisition Proposal; or
(ii) if any approval of the stockholders of the Company
contemplated by this Agreement shall not have been obtained by reason of the
failure to obtain the required vote at the Special Meeting or at any adjournment
or postponement thereof; or
(iii) if any person or group (other than Parent or any of its
affiliates) acquires beneficial ownership (as such term is defined in Rule 13d-3
under the Exchange Act), or the right to acquire beneficial ownership, of 25% or
more of the outstanding Company Common Stock or the voting power of the
Company's equity securities, whether by purchase of outstanding shares from
third parties or by exercise of currently-existing or newly-issued options or
warrants; or
(iv) if the Company breaches or fails in any material respect to
perform or comply with any of its material covenants and agreements contained
herein (including without limitation the covenants in Article ), or breaches any
of its representations or warranties contained herein, in any material respect;
or
(v) if the Control Share Opt-Out Bylaw is amended, revoked,
repealed, withdrawn, restricted or modified in any respect; or
(vi) if any of the other parties to either of the Stockholder
Agreements commits any material breach of, or fails in any material respect to
perform or comply with any of its material covenants and agreements contained
in, such agreement, or breaches any of its representations or warranties
contained therein in any material respect.
(d) By the Company. By the Company, if Parent or Merger Sub breaches
--------------
or fails in any material respect to perform or comply with any of their
respective material covenants and agreements contained herein, or breaches any
of their respective representations or warranties contained herein, in any
material respect, which breach shall not have been cured in the case of a
representation or warranty, prior to the Closing or, in the case of a covenant
or agreement, within ten (10) days following receipt by Parent of written notice
specifying such breach from the Company.
9.2 Effect of Termination. In the event of termination of this Agreement
---------------------
as provided in Section 9.1 above, written notice thereof shall forthwith be
given to the other
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party or parties specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forthwith become null and void and
there shall be no liability or obligation on the part of Parent and Merger Sub,
or either of them, or the Company, or their respective officers, directors or
employees, except (a) for fraud or for willful material breach of this Agreement
and (b) as set forth in this Section 9.2 and in Sections 7.2(b) and 10.1 hereof.
ARTICLE X
GENERAL PROVISIONS
10.1 Fees and Expenses.
-----------------
(a) Except as contemplated by this Agreement, including Section
10.1(b) and (c) hereof, all costs and expenses incurred in connection with this
Agreement and the consummation of the transactions contemplated hereby shall be
paid by the party incurring such expenses.
(b) If Parent or Merger Sub shall terminate this Agreement pursuant
to Section 9.1(c)(iii) or 9.1(c)(iv) hereof, then (i) the Company shall pay or
cause to be paid to Parent a fee in the amount equal to One Million Dollars
($1,000,000); provided, however, that if Parent or Merger Sub terminate this
-----------------
Agreement pursuant to Section 9.1(c)(iv) by reason of a breach of the
representation and warranty contained in Section 4.2(c) and there remain
outstanding warrants, options (other than Compensation Options) and other rights
to purchase not more than 500,000 shares of Company Common Stock which have not
been terminated or otherwise constitute only the right to receive the
Option/Warrant Spread, then Parent shall not be entitled to the payment
described in this Section 10.1(b).
(c) If Parent or Merger Sub shall terminate this Agreement:
(x) pursuant to Section 9.1(c)(ii), 9.1(c)(iii) or 9.1(c)(iv)
hereof and any of the following events (a "SUBSEQUENT TRANSACTION") occur prior
to the date which is nine (9) months after the termination of this Agreement:
any person or group (other than Parent) shall have entered into a definitive
agreement or agreement in principle with the Company or any person holding at
least ten percent (10%) of the Company's then outstanding voting securities with
respect to an Acquisition Proposal or other business combination with the
Company (including a transaction in which the then outstanding shares of the
Company Common Stock would, after such business combination, represent less than
a majority of the then outstanding common shares of the Company) or any person
or group (other than Parent) shall have acquired beneficial ownership (as such
terms is defined in Rule 13d-3 under the Exchange Act) of a majority of the
voting power of the Company's equity securities, or
(y) pursuant to Section 9.1(c)(i) or 9.1(c)(v) hereof,
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then (i) the Company shall pay or cause to be paid to Parent an amount equal to
Two Million Dollars ($2,000,000) plus all costs and expenses of Parent and
Merger Sub relating to this Agreement and the transactions contemplated hereby
(including without limitation fees and expenses of Parent's counsel, accountants
and financial advisors). In the event that Parent shall have terminated this
Agreement pursuant to Section 9.1(c)(iii) or 9.1(c)(iv) hereof and become
entitled to receive the $1,000,000 payment described in Section 10.1(b) hereof,
and a Subsequent Transaction occurs prior to the date which is nine (9) months
after the termination of this Agreement, then Parent shall be entitled to the
payment described in this Section 10.1(c), less any amounts received pursuant to
Section 10.1(b) hereof.
(d) Any payments to which Parent may become entitled pursuant to
Section 10.1(b) hereof shall be payable in equal quarterly installments with the
first installment being due three months following the relevant triggering
event; provided, however, that, in the event the Company issues shares of
-----------------
capital stock following the date hereof (whether through private placements,
public offerings, the exercise of Company Securities or otherwise), the Company
shall make additional payments of the fee described in Section 10.1(b) hereof
equal to the net cash proceeds of such issuance to Parent within two business
days after the later of such issuance or such triggering event and such payment
shall be credited against the installment payments due hereunder in reverse
order of maturity. Any payments to which Parent may become entitled pursuant to
Section 10.1(c) hereof shall be payable by the Company within two business days
after the relevant triggering event.
10.2 Amendment and Modification. Subject to applicable law, this Agreement
--------------------------
may be amended, modified and supplemented in any and all respects, whether
before or after any vote of the stockholders of the Company contemplated hereby,
by written agreement of the parties hereto, by action taken by their respective
Boards of Directors (which in the case of the Company shall include approvals as
contemplated in Section 4.3 hereof), at any time prior to the Closing Date with
respect to any of the terms contained herein; provided, however, that after the
-------- -------
approval of this Agreement by the stockholders of the Company, no such
amendment, modification or supplement shall reduce or change the Merger
Consideration.
10.3 Nonsurvival of Representations and Warranties. None of the
---------------------------------------------
representations and warranties in this Agreement shall survive the Effective
Time.
10.4 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given upon personal delivery, facsimile transmission
(which is confirmed), telex or delivery by an overnight express courier service
(delivery, postage or freight charges prepaid), or on the fourth day following
deposit in the United States mail (if sent by registered or certified mail,
return receipt requested, delivery, postage or freight charges prepaid),
addressed to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
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<PAGE>
(a) if to Parent or Merger Sub, to:
Mirage Resorts, Incorporated
3400 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Telecopy No.: (702) 792-7268
Attn: Daniel Lee and Bruce Levin, Esq.
with a copy to:
Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Telecopy No.: (310) 203-7199
Attention: C. Kevin McGeehan, Esq.
and
Bruce A. Leslie, Esq.
Bernhard & Leslie, Chtd.
3980 Howard Hughes Parkway . Suite 550
Las Vegas, Nevada 89109
Telecopy No.: (702) 650-2995
(b) if to the Company, to:
Boardwalk Casino, Inc.
3750 Las Vegas Boulevard South
Las Vegas, Nevada 89109
Attention: Forrest J. Woodward
Telecopy No: (702) 739-7918
with a copy to:
Jones Vargas
3773 Howard Hughes Parkway, 3rd Floor South
Las Vegas, Nevada 89109
Attention: Gary Goodheart, Esq. and Douglas G. Crosby, Esq.
Telecopy No.: (702) 737-7705
10.5 Definitions; Interpretation. As used in this Agreement, the term
---------------------------
"AFFILIATE(S)" shall have the meaning set forth in Rule 12b-2 under the Exchange
Act. When a reference is made in this Agreement to an Article, Section, Exhibit
or Schedule, such reference shall be to an Article, Section, Exhibit or Schedule
to this Agreement unless otherwise indicated. The words "include," "includes"
and "including" when used
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<PAGE>
herein shall be deemed in each case to be followed by the words "without
limitation." 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.
10.6 Specific Performance. The parties hereto 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 hereof (including without limitation
Section 7.1(e) hereof) in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
10.7 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
10.8 Entire Agreement; No Third Party Beneficiaries. This Agreement
----------------------------------------------
(including the documents and the instruments referred to herein and therein) (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) is not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder.
10.9 No Control of the Company by Parent Under Gaming Laws.
-----------------------------------------------------
Notwithstanding any provision contained in this Agreement, Parent shall not have
the power, directly or indirectly, to direct or cause the direction of the
management and policies of the Company until Parent receives all Requisite
Regulatory Approvals under applicable Gaming Laws to acquire control of the
Company pursuant to the terms of this Agreement. To the extent that any
provision contained in this Agreement would purport to give Parent such power
prior to the receipt of all such Requisite Regulatory Approvals, such provision
shall be deemed amended to the extent necessary, but only to the extent
necessary, so as not to give Parent such power.
10.10 Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
10.11 Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of Nevada (without giving effect to the
principles of conflicts of law thereof).
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<PAGE>
10.12 Assignment. Neither this Agreement nor any of the rights, interests
----------
or obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
parties, except that Merger Sub may assign, in its sole discretion, any or all
of its rights, interests and obligations hereunder to Parent or to any direct or
indirect subsidiary of Parent. 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.
10.13 No Prior Agreements. Each of the parties hereto acknowledges and
-------------------
agrees that, prior to the execution of this Agreement on the date hereof, there
was no agreement, arrangement or understanding among the parties with respect to
the acquisition, disposition, holding or voting of Company Common Stock.
[SIGNATURE PAGE FOLLOWS]
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<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
COMPANY: PARENT:
Boardwalk Casino, Inc. Mirage Resorts, Incorporated
/s/ Forrest J. Woodward, II /s/ Daniel Lee
_____________________________ ________________________________
Name: Forrest J. Woodward, II Name: Daniel Lee
Title: President Title: Chief Financial Officer
MERGER SUB:
Mirage Acquisition Sub, Inc.
/s/ Daniel Lee
________________________________
Name: Daniel Lee
Title: Chief Financial Officer
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<PAGE>
EXHIBIT 3
AGREEMENT
This Agreement (the "AGREEMENT") is made this 22nd day of December, 1997
between Mirage Resorts, Incorporated, a Nevada corporation ("PARENT"), and Avis
P. Jansen, a Nevada resident, individually (in this capacity, "JANSEN"), as
executrix of the Estate of Norbert W. Jansen (the "Estate"), and as Trustee for
the Jansen Family Trust (the "TRUST") under an Agreement dated July 14, 1993 (in
all such capacities, "SELLER") with reference to the following facts:
A. The Trust is the record owner of 2,750,000 shares of the common stock,
$.001 par value (the "COMMON STOCK"), of Boardwalk Casino, Inc., a Nevada
corporation (the "COMPANY") (the "SHARES"). The beneficiaries of the Trust are
Linda Tijerina and Judy Anderson. The Shares include 1,734,620 shares (the
"OPTIONED SHARES") as to which Seller has granted a purchase option (the "COMMON
STOCK OPTION") to Diversified Opportunities Group Ltd., an Ohio limited
liability company ("DIVERSIFIED"), or its nominee pursuant to that certain
Option and Proxy Agreement dated September 24, 1996 among the Company,
Diversified and Norbert W. Jansen, individually and as trustee under the Trust
(as amended by that certain Memorandum of Understanding (the "MEMORANDUM") dated
as of October 29, 1997 among the Company, Diversified, Jacobs Entertainment
Nevada, Inc., a Nevada corporation ("JACOBS") or its nominee and Seller (the
"OPTION AGREEMENT"). All of the rights of Jacobs under the Option Agreement and
the Memorandum have been or will be assigned to Diversified before the closing
of the transfers hereunder.
B. Jansen is the owner of 600 shares (the "Preferred Stock") of Series A
6% Non-Voting Cumulative Preferred Shares (the "Preferred Shares") of the
Company.
C. Seller is the owner of a parcel of land located at 3734 Las Vegas
Blvd. South, Las Vegas, Nevada (the "REAL PROPERTY").
D. Concurrently herewith, Parent is entering into an Agreement and Plan
of Merger (the "MERGER AGREEMENT") with Mirage Acquisition Sub Inc., a Nevada
corporation and wholly-owned subsidiary of Parent ("MERGER SUB"), and the
Company, pursuant to which Parent will acquire the Company, on the terms and
subject to the conditions set forth in the Merger Agreement, by means of a
merger of Merger Sub into the Company (the "MERGER").
E. As an inducement to Parent to seek to acquire the Company, and as a
condition to Parent's willingness to enter into the Merger Agreement, Parent has
required that the Seller agree, and the Seller has agreed, (i) to sell to Parent
or one of its designees the Shares at $5.00 per share and the Preferred Stock;
(ii) to vote the Shares in favor of the Merger and grant to Parent or its
designee an irrevocable proxy; (iii) to sell the Real Property to a subsidiary
of Parent; and (iv) to amend the term of that certain lease agreement between
Norbert W. Jansen, in his individual capacity and as trustee of the Trust, and
the Company, effective as of October 1, 1996, which permits Mr. Jansen and the
Trust to operate a gift shop
1
<PAGE>
upon the Company's premises (the "GIFT SHOP LEASE"), to a month-to-month
arrangement and to make certain other modifications thereto.
F. Parent has agreed to purchase from Diversified Opportunities Group,
Ltd. ("Diversified") 1,071,429 shares of Common Stock (the "JACOBS SHARES")
pursuant to an agreement dated as of the date hereof among Parent, Diversified,
Jacobs Entertainment Nevada, Inc. and Jeffrey P. Jacobs (the "JACOBS STOCK
PURCHASE AGREEMENT").
G. On December 18, 1997, the Board of Directors of the Company, pursuant
to notice duly given or waived, held a meeting at which the Board approved the
acquisition by Parent and Merger Sub of the Shares for purposes of the Nevada
Business Combination Statute, and adopted a bylaw providing that the Company is
not subject to the provisions of the Nevada Control Share Statute.
H. On December 22, 1997 the Board of Directors of the Company, pursuant
to notice duly given or waived, held a meeting at which the Board approved the
Merger Agreement, the Merger and the transactions contemplated thereby.
In consideration of the foregoing premises and the mutual covenants and
promises contained herein, Parent and Seller hereby agree as follows:
1. Sale of Real Property. Seller agrees concurrently herewith to enter
---------------------
into an Agreement of Purchase and Sale and Joint Escrow Instructions (the
"AGREEMENT OF SALE") with Restaurant Ventures of Nevada, Inc., a Nevada
corporation ("PROPERTIES CORPORATION"), pursuant to which Seller will agree to
sell, transfer and convey the Real Property to Properties Corporation on the
terms and subject to the conditions set forth therein.
2. Purchase and Sale of Shares.
---------------------------
2.1 Sale of Shares. Subject to the conditions to closing set forth in
--------------
Sections 2.3 and 2.4 below, Seller shall sell, transfer and convey the Shares to
Parent (or its designee) and Parent (or its designee) shall purchase the Shares
at a purchase price of $5.00 per share in cash for a total aggregate purchase
price of $13,750,000, in the manner set forth in Section 2.2. Subject to the
conditions to closing set forth in Sections 2.3 and 2.4 below, Seller shall
sell, transfer and convey the Preferred Stock to Parent (or its designee) and
Parent (or its designee) shall purchase the Preferred Stock at a purchase price
equal to $600,000, plus any accumulated but unpaid dividends on the Preferred
Stock as of the date of payment, in the manner set forth in Section 2.2.
2.2 Closing. The closing (the "CLOSING") will take place at Jones Vargas,
-------
3773 Howard Hughes Parkway, Las Vegas, Nevada, on such date as specified by
Parent within three business days after the latest to occur of (i) receipt by
Parent of all necessary approvals under the regulations and statutes regulating
the active gaming operations of Parent and/or the Company ("GAMING APPROVALS")
and other necessary government and regulatory approvals, if any, (ii) expiration
or early termination of the waiting period under the Hart-Scott-Rodino
2
<PAGE>
Antitrust Improvements Act of 1976, as amended (the "HSR ACT") with respect to
the acquisition of Shares by Parent, and (iii) satisfaction or waiver of all
material conditions precedent to Parent's obligation to consummate the Merger,
or such other date and place as the parties may specify (the "CLOSING DATE"). At
the Closing, Parent (or its designee) shall purchase from Seller, and Seller
shall sell to Parent (or its designee), the Shares and the Preferred Stock.
Seller shall deliver to Parent (or its designee) stock certificates representing
the Shares and the Preferred Stock duly endorsed or accompanied by stock powers
duly executed in blank sufficient to permit the Shares and the Preferred Stock
to be transferred without restrictive legends other than with regard to the
Securities Act of 1933, as amended, and Parent (or its designee) shall pay to
Seller the aggregate purchase price for the Shares and the Preferred Stock by
cash or certified check drawn on a banking institution domiciled in the United
States.
2.3 Parent's Conditions to Closing. The obligation of Parent to
------------------------------
consummate the purchase of the Shares and the Preferred Stock pursuant to
Section 2.2 is subject to the following conditions, any of which may be waived
by Parent in its sole discretion:
(a) Parent shall have obtained all necessary Gaming Approvals and
other necessary approvals of other governmental or regulatory authorities, if
any;
(b) The representations and warranties of Seller set forth in Section
4 hereof shall be true and correct in all material respects on the Closing Date
with the same effect as if made on and as of such date;
(c) Seller shall have performed and complied with all agreements and
covenants required to be performed and complied with by Seller prior to the
Closing Date;
(d) All waiting periods under the HSR Act applicable to the
transaction provided for herein shall have expired or been terminated;
(e) Parent shall have consummated or shall concurrently consummate
the purchase of the Jacobs Shares pursuant to the Jacobs Stock Purchase
Agreement;
(f) All material conditions precedent to Parent's obligation to
consummate the Merger shall have been satisfied or waived;
(g) On the Closing Date, Parent shall not have terminated the Merger
Agreement due to a breach by the Company or the Company's failure to comply with
its obligations thereunder;
(h) On the Closing Date, there shall not be in effect any injunction,
writ or temporary restraining order or any other order of any nature issued by a
court or agency of competent jurisdiction directing that the transaction
provided for herein not be consummated as herein provided nor shall there be any
litigation or proceeding pending or threatened in respect of the transactions
contemplated hereby;
3
<PAGE>
(i) Seller shall sell and convey the Real Property to Properties
Corporation pursuant to the Agreement of Sale concurrently with the Closing
under this Agreement;
(j) Seller shall have delivered to Parent instruments of transfer
which vest in Parent (or its designee) good and marketable title to the Shares
and the Preferred Stock as required herein, and shall have delivered all other
instruments, certificates and other documents required to be delivered hereby;
(k) Jansen shall deliver letters testamentary dated not more than 10
days earlier than the Closing verifying that she is the sole executrix of the
Estate;
(l) Jansen shall deliver an opinion of Jeffrey Burr, counsel for the
Estate and the Trust, satisfactory in form and substance to Parent, to the
effect that as sole executrix of the Estate and as sole Trustee of the Trust,
Jansen can execute, deliver, and perform this Agreement, without court approval
(or that such court approval has been obtained); and
(m) The Company's bylaw provision which provides in substance that
the Company shall not be subject to the provisions of the Nevada Control Share
Statute shall not have been amended, revoked, repealed, withdrawn, restricted or
modified in any respect.
2.4 Seller's Conditions to Closing. The obligation of Seller to
------------------------------
consummate the sale of the Shares and the Preferred Stock pursuant to Section
2.2 is subject to the following conditions, any of which may be waived by Seller
in its sole discretion:
(a) All waiting periods under the HSR Act applicable to the
transaction provided for herein shall have expired or been terminated;
(b) Seller shall sell and convey the Real Property to Properties
Corporation and Properties Corporation shall purchase the Real Property pursuant
to the Agreement of Sale concurrently with the Closing under this Agreement;
(c) Parent shall have paid the aggregate purchase price for the
Shares and the Preferred Stock;
(d) All material conditions precedent to the consummation of the
Merger shall have been satisfied or waived by Parent;
(e) The representations and warranties of Parent set forth in this
Agreement shall be true and correct in all material respects on the Closing Date
with the same effect as if made on and as of such date;
(f) On the Closing Date, the Company shall not have terminated the
Merger Agreement due to a material breach by Parent or Parent's failure to
comply with a material obligation thereunder;
4
<PAGE>
(g) On the Closing Date, there shall not be in effect any injunction,
writ or order issued by a court or agency of competent jurisdiction directing
that the transactions provided herein not be consummated; and
(h) On the Closing Date, the releases of Seller with respect to the
Purchase Agreement, the Option Agreement and the Memorandum given by the Company
in the Merger Agreement and by Diversified, Jacobs, and Jeffrey Jacobs in the
Jacobs Stock Purchase Agreement shall have become effective in accordance with
their terms.
3. Amendments to Gift Shop Lease. Seller and Holiday Gifts, Inc.
-----------------------------
("Lessee") agree that upon the Closing, the Gift Shop Lease shall be deemed to
be automatically amended to (i) be a month-to-month lease terminable without
cause and without the payment of any consideration upon sixty (60) days' notice
by either lessee or lessor under the Gift Shop Lease and (ii) provide for the
additional modifications set forth on Exhibit B hereto. Concurrently with the
---------
Closing, Seller and Lessee shall execute and deliver to the Company an amendment
to the Gift Shop Lease and such other agreements as may be necessary or
advisable to implement such amendments. Seller and Lessee agree that such
amendment of the Gift Shop Lease will be in consideration of payment of $268,000
by Parent or one of its designees to the Seller concurrently with the Closing.
Seller and Lessee will execute any additional documentation necessary, in
Parent's reasonable judgment, to perfect this amendment, or record a memorandum
of the amended Gift Shop Lease.
4. Representations and Warranties of Seller.
----------------------------------------
As a material inducement to Parent to enter into this Agreement,
Seller (jointly and severally) represents and warrants to Parent that as of the
date hereof and as of the Closing Date:
4.1 Sole Ownership of Shares; No Encumbrances. On the date hereof, the
-----------------------------------------
Trust is the record and beneficial owner of 2,750,000 Shares, and, on the date
hereof, such Shares together constitute all of the shares of Common Stock owned
of record or beneficially by Seller. On the date hereof, Jansen is the record
and beneficial owner of the Preferred Stock, and, on the date hereof, such
Preferred Stock constitutes all of the Preferred Stock owned of record or
beneficially by Seller. The sole beneficiaries of the Trust are Linda Tijerina
and Judy Anderson. Seller has sole voting power, sole power of disposition and
sole power to agree to all of the matters set forth in this Agreement with
respect to all of the Shares and Preferred Stock, with no limitations,
qualifications or restrictions on such rights, and the Shares and the Preferred
Stock are the only shares of Common Stock or Preferred Shares over which Seller
has any of such powers. The Shares and the Preferred Stock and the certificates
representing such Shares and the Preferred Stock are now, and at all times
during the term hereof will be, held by Seller free and clear of all liens,
claims, security interests, proxies, voting trusts or agreements, understandings
or arrangements or any other encumbrances whatsoever, except for any such
encumbrances or proxies arising under the Option Agreement and the Memorandum
and hereunder. The Estate has no interest in any debt or equity security of the
Company (except for options that are released pursuant to Section 5.7, below)
5
<PAGE>
or the any assets of the Company or in the Real Property and neither Seller nor
the Estate has assigned any such rights except under the Option Agreement and
the Memorandum.
4.2 Validity; Binding Effect; No Conflict. This Agreement has been duly
-------------------------------------
and validly authorized, executed and delivered by Seller and constitutes the
valid and binding obligation of Seller enforceable against Seller in accordance
with its terms, except as such enforcement may be subject to principles of
equity and to bankruptcy, insolvency or similar laws now or hereafter in effect
relating to creditors' rights generally. Jansen is the sole Trustee under the
Trust, has the full power and authority (without further action) under the Trust
documents to execute and deliver this Agreement, and to perform the obligations
of the Trust under this Agreement. A true, correct and complete copy of the
Trust Agreement has been provided by Seller to Parent prior to the execution of
this Agreement. Jansen is the sole executrix of the Estate, has the full power
and authority to execute and deliver the Agreement and to perform the
obligations of the Estate under this Agreement, and no action or approval by the
probate court (or any other court exercising similar authority over the Estate)
is required. The execution and delivery of this Agreement does not and, subject
to receipt of all requisite governmental or other consents or approvals, the
consummation of the transactions contemplated hereby will not, (i) violate or
conflict with any law, ordinance, rule, regulations, orders, judgment, or decree
to which Seller is subject or by which Seller is bound; or (ii) violate or
conflict with or constitute a default (or an event which, with notice or the
lapse of time, or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets under, any term or provision of any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which Seller is a party or by which any of Seller's assets may be bound or
affected, except under the Option Agreement and the Memorandum. Except for the
Gaming Approvals and the expiration of any waiting periods under the HSR Act, no
consent, approval, authorization or action by or any filings with any federal,
state or local governmental agency or any other third party are required in
connection with the execution and delivery by Seller of this Agreement and the
other documents and instruments to be executed and delivered by Seller pursuant
hereto or the consummation by Seller of the transactions contemplated hereby.
4.3 Brokerage. No investment banker, broker, financial advisor, finder or
---------
other person is entitled to a commission or fee from Parent or the Company in
respect of this Agreement, the Merger or the transactions contemplated hereby
based upon any arrangement or agreement made by or on behalf of Seller.
4.4 SEC Reports. To the actual knowledge of Seller without obligation of
-----------
independent investigation, (a) the Company has filed all forms, reports and
documents required to be filed with the Securities and Exchange Commission
("SEC") since February 11, 1994, including without limitation Annual Reports on
Form 10-KSB, Quarterly Reports on Form 10-QSB and proxy statements (collectively
and as amended as required, the "SEC REPORTS") and (b) as of their respective
dates, none of the SEC Reports, including, without limitation, any financial
statements or schedules included therein, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or
6
<PAGE>
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
5. Covenants of Seller
-------------------
5.1 Voting. (a) The Seller hereby agrees that (for as long as the Merger
------
Agreement is in effect), at any meeting of the holders of Common Stock, however
called, or in connection with any written consent of the holders of Common
Stock, Seller shall vote (or cause to be voted) the Shares (a) in favor of the
Merger, the execution and delivery by the Company of the Merger Agreement and
the approval of the terms thereof and each of the other actions contemplated by
the Merger Agreement and this Agreement and any actions required in furtherance
thereof and hereof; (b) against any action or agreement that would result in a
breach in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or this
Agreement; and (c) except as otherwise agreed to in writing in advance by
Parent, against any of the following actions or agreements (other than the
Merger Agreement or the transactions contemplated thereby): (i) any action or
agreement that is intended, or might reasonably be expected, to impede,
interfere with, delay, postpone or attempt to discourage or adversely affect the
Merger and the transactions contemplated by this Agreement and the Merger
Agreement; (ii) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or any of its
subsidiaries; (iii) a sale, lease or transfer of a material amount of assets of
the Company and any of its subsidiaries or a reorganization, recapitalization,
dissolution or liquidation of the Company or any of its subsidiaries; (iv) any
change in the management or Board of Directors of the Company; (v) any change in
the present capitalization or dividend policy of the Company; (vi) any amendment
of the Company's articles of incorporation or bylaws; or (vii) any other
material change in the Company's corporate structure or business. Any such vote
or consent shall be given in accordance with such procedures relating thereto as
shall ensure that it is duly counted for purposes of determining that a quorum
is present and for purposes of recording the results of such vote or consent.
Notwithstanding anything to the contrary contained in this Agreement, Jansen
shall be free to act in her capacity as a member of the Board of Directors of
the Company and to discharge her fiduciary duties as such.
(b) In order to secure Seller's obligation to vote the Shares in
accordance with the provisions of Section 5.1(a), Seller hereby appoints Parent
as Seller's true and lawful proxy and attorney-in-fact, with full power of
substitution, to vote all of the Shares on all matters set forth in Section
5.1(a). Parent may exercise the irrevocable proxy granted to it hereunder at
any time Seller fails to comply with the provisions of this Agreement, subject
to the receipt of necessary Gaming Approvals, if any. The proxy and powers
granted by Seller pursuant to this Section 5.1(b) are coupled with an interest
and are given to secure the performance of Seller's obligations to Parent under
this Agreement. Such proxy and powers shall be irrevocable and shall survive the
death, incompetency, disability, bankruptcy or dissolution of Seller and the
subsequent holders of the Shares.
7
<PAGE>
5.2 Restriction on Transfer, Proxies and Non-Transference; Stop Transfer
--------------------------------------------------------------------
Order; Legend.
- -------------
(a) Seller hereby agrees, while this Agreement is in effect, and
except as specifically contemplated hereby, not to (i) offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or
other disposition of, any of the Shares or the Preferred Stock or any interest
therein, (ii) grant any proxies or powers of attorney, deposit any Shares into a
voting trust or enter into a voting agreement with respect to any Shares or
(iii) take any action that would make any representation or warranty of Seller
contained herein untrue or incorrect or have the effect of preventing or
disabling Seller from performing Seller's obligations under this Agreement.
(b) In furtherance of the provisions of Section 5.2(a) hereof,
--------------
concurrently herewith the Seller shall and hereby does (i) authorize the
Company's counsel to notify the Company's transfer agent that there is a stop
transfer order with respect to all of the Shares (and that this Agreement places
limits on the voting and transfer of such shares) and (ii) agree that a legend
in substantially the following form shall be placed on each certificate
representing the Shares:
"The securities represented by this certificate are subject to the
conditions, restrictions and obligations specified in the Agreement dated
December 22, 1997, and as amended and modified from time to time, between
Mirage Resorts, Incorporated., a Nevada corporation, and Avis P. Jansen, a
Nevada resident, Individually, as Executrix of the Estate of Norbert W.
Jansen and as Trustee for the Jansen Family Trust under an Agreement dated
July 14, 1993, and the Company reserves the right to refuse the transfer of
such securities until such conditions, restrictions and obligations have
been fulfilled with respect to such transfer or said Agreement has been
terminated in accordance with its terms."
Seller shall deliver all certificates representing the Shares and the Company
shall or shall cause its transfer agent to imprint such legend on all such
certificates.
5.3 No Additional Purchases. Seller hereby agrees not to acquire any
-----------------------
additional securities of the Company from and after the date hereof.
5.4 No Inconsistent Agreements. Seller shall not enter into any agreement
--------------------------
or understanding with any person or entity the effect of which would be
inconsistent or violative of the provisions of this Agreement or which could
interfere with Parent's efforts to acquire the Company by Merger.
8
<PAGE>
5.5 Further Assurances. From time to time, at the other party's request
------------------
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate and make effective, in the most expeditious manner
practicable, the transactions contemplated by this Agreement.
5.6 No Indemnity Claims. Seller shall not, either before or after the
-------------------
Closing, assert any claim against the Company or any officer, director, employee
or agent of the Company or its affiliates as to which the Company may have any
obligation of indemnity, either under the Company's bylaws, by contract or
otherwise. All such named persons are third party beneficiaries of this
provision and may enforce the provisions hereof. Seller further agrees that if
it should secure a judgment against any such indemnified person who asserts a
claim for indemnity against the Company, then the amount of such judgment shall
automatically be reduced by and to the extent of such indemnity right.
5.7 Stock Option. At the Closing, without consideration, Seller shall
------------
release the Company from any obligation under any options to acquire Common
Shares or Preferred Shares held by Seller under the Company's 1994 Stock
Compensation Plan or the Outside Directors Stock Option Plan or otherwise.
5.8 Consent and Release.
-------------------
(a) By the execution of this Agreement, each Seller hereby consents
to the termination and release by Diversified of all of its rights, title and
interest under the Option Agreement and the Memorandum.
(b) Effective at the Closing (and contingent on the occurrence of the
Closing), the Seller terminates and releases any and all rights, title and
interest which they may have under or pursuant to that certain Purchase
Agreement dated as of September 24, 1996 ("Purchase Agreement"), the Option
Agreement, or the Memorandum, including any and all claims for breaches or
violations of those agreements that may have occurred on or prior to the date of
the Closing. The Seller expressly agrees that, effective on the Closing Date
(and contingent on the occurrence of the Closing), the Purchase Agreement, the
Option Agreement, and the Memorandum shall be terminated and of no further force
and effect. Effective on the Closing Date (and contingent on the occurrence of
the Closing), each of Seller releases the Company, Diversified, Jacobs, and Mr.
Jeffrey Jacobs from any and all obligations, charges or claims arising out of or
in connection with the Purchase Agreement, the Option Agreement, or the
Memorandum. Diversified, Jacobs, and Mr. Jeffrey Jacobs shall each be a third
party beneficiary with respect to the consents, releases, and agreements
contained in this Section 5.8.
-----------
6. Indemnity.
---------
Each party (the "INDEMNIFYING PARTY") shall and hereby does indemnify
and hold harmless the other (the "INDEMNITEE") from and against and in respect
of any and all
9
<PAGE>
loss, damage and expense incurred by the Indemnitee resulting from, arising out
of, attributable to, or in any manner connected with:
(i) Any matter in respect of which the Indemnifying Party shall
have made any misrepresentation, breached any warranty made
pursuant to this Agreement or failed to fulfill any covenant
or agreement on the part of the Indemnifying Party contained
in this Agreement; and
(ii) Any and all actions, suits, proceedings, demands,
assessments or judgments, costs and expenses (including
legal and accounting fees and investigation costs) incident
to the foregoing and the enforcement thereof.
If any event shall occur or any circumstance arise which might give
rise to a claim in respect of any matter against which the Indemnifying Party
has indemnified the Indemnitee hereunder, the Indemnitee shall give notice
thereof to the Indemnifying Party. If the matter as to which indemnification
may be sought is a claim by a third party, such notice shall be given within
thirty (30) days after said claim shall have been presented to the Indemnitee;
otherwise, such notice shall be given promptly after the Indemnitee shall
determine that the matter is one as to which indemnification is sought. Failure
to give notice within the required time shall have no effect if the lack of
notice by Indemnitee is not materially prejudicial to the rights of the
Indemnifying Party. Unless the parties otherwise agree in writing, the
Indemnifying Party shall defend against all such third-party claims or otherwise
satisfy such claims, at its sole cost and expense, through counsel and
accountants designated by it and approved by the Indemnitee, which approval
shall not be withheld unreasonably. The Indemnitee shall have the right to
participate with the Indemnifying Party in the defense of any such matter and
shall fully cooperate with and make available to the Indemnifying Party the
business records of the Indemnitee for said purpose. If the Indemnifying Party,
after receipt of notification from Indemnitee of a third-party claim, fails to
protest, defend or settle any such third-party claim, demand, suit or proceeding
promptly, diligently and in good faith, Indemnitee shall have the right at its
discretion to settle, defend or pay the same, in which event, the obligations of
the Indemnifying Party shall extend to and include the amounts of said
settlement or payment and/or the costs of legal expenses of such defense.
7. Miscellaneous.
-------------
7.1 Survival of Representations, Warranties and Agreements. All
------------------------------------------------------
representations, warranties and agreements made by Seller or Parent pursuant
hereto shall survive the Closing of this transaction regardless of any
investigation by Parent, except that the representations and warranties made by
Seller to Parent in Section 4.5 shall terminate upon purchase of all of Seller's
Shares hereunder.
10
<PAGE>
7.2 Binding Agreement; Assignments; Third-Party Beneficiaries. All of the
---------------------------------------------------------
terms and provisions of this Agreement shall inure to the benefit of, be
enforceable by and be binding upon and enforceable against the parties hereto
and their respective heirs and personal representatives, successors and assigns;
provided, however, that except for an assignment by Parent to one of its
affiliates (which may be done in whole or in part), neither of the parties
hereto may assign its rights or duties hereunder. If Parent assigns this
Agreement to one of its affiliates, Parent shall remain liable for the
performance of its obligations hereunder. Nothing contained in this Agreement
shall confer any rights or remedies upon any other person, firm or corporation
(except those persons benefitting from the covenant not to sue in Section 5.6,
above).
7.3 Obligations Joint and Several. The obligations of Jansen, the Trust,
-----------------------------
and the Estate under this Agreement are joint and several as to each other.
7.4 Waiver of Provisions. The terms, covenants, representations,
--------------------
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party
at any time or times to require performance of any provision of this Agreement
shall in no manner affect the right at a later date to enforce the same. No
waiver by any party of any condition or the breach of any provision, term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as further or continuing waiver of any such condition or of the breach
of any other provision, term, covenant, representation or warranty of this
Agreement.
7.5 Specific Performance. Each of the parties hereto recognizes and
--------------------
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
11
<PAGE>
7.6 Notices.
-------
Any notice or other communication required or permitted hereunder
shall be expressed in writing and delivered in person or sent by certified or
registered mail, return receipt requested, or sent by overnight courier service
such as Federal Express and confirmed by certified or registered mail, return
receipt requested, or sent by facsimile (receipt confirmed) to the respective
parties at the following addresses, or at such other addresses as the parties
shall designate by written notice to the other:
If to Seller at: If to Parent at:
- --------------- ---------------
Avis P. Jansen Mirage Resorts, Incorporated
978 Bel Air Circle 3400 Las Vegas Boulevard South
Las Vegas, NV 89109 Las Vegas, Nevada 89109
Attn: Daniel Lee and Bruce Levin, Esq.
Fax No.: (702) 792-7268
Fax No.: (702) 791-5787
with a copy to: with a copy to:
- -------------- --------------
Barry Goold, Esq. C. Kevin McGeehan, Esq.
4496 S. Pecos Road Irell & Manella LLP
Las Vegas, NV 89120 1800 Avenue of the Stars, Suite 900
Fax No.: (702) 436-2650 Los Angeles, California 90067
Fax No.: (310) 203-7199
All notices shall be deemed received on the third business day after
mailing or the first business day after delivery to the overnight courier
service or the same business day if personally delivered or sent by facsimile.
7.7 Cooperation. Each party shall cooperate and use its best efforts to
-----------
consummate the transactions contemplated herein. In addition, each party shall
cooperate and take such action and execute such other and further documents as
reasonably may be requested by any other party from time to time after the
consummation of the transactions contemplated herein to carry out the terms and
provisions and intent of this Agreement.
7.8 Interpretation. When a reference is made in this Agreement to
--------------
Section, such reference shall be to a Section in this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
The descriptive headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
7.9 Severability. If any term, provision, covenant or restriction of this
------------
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
the terms, provisions,
12
<PAGE>
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
7.10 Entire Agreement; Modification. This Agreement contains the entire
------------------------------
agreement between the parties and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. This Agreement may be amended, modified and supplemented
in any and all respects by written agreement of the parties hereto.
7.11 Governing Law. The Agreement shall be governed by and construed
-------------
under the laws of the State of Nevada.
7.12 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which taken together shall constitute one instrument.
7.13 Release of the Company. Effective as of the Closing (and contingent
----------------------
on the occurrence of the Closing), each Seller releases the Company from any and
all claims, debts or obligations of the Company to such Seller other than any
obligation of the Company to indemnify or defend such Seller against claims made
against such Seller resulting from or related to such Seller having been a
director or officer of the Company and other than the obligation to pay deferred
rent for the period of November 1, 1997, through the Closing to the extent
provided in Section 9 of the Agreement of Sale executed concurrently herewith.
7.14 Termination with Merger Agreement. If the Merger Agreement
---------------------------------
terminates in accordance with its terms without the Merger having occurred, then
this Agreement and the obligations of the parties hereunder shall terminate on
the same day as the termination of the Merger Agreement.
7.15 Contingency on Consent by Diversified, Jacobs, and Jeffrey Jacobs.
-----------------------------------------------------------------
This Agreement shall not become effective until Diversified, Jacobs, and Jeffrey
Jacobs shall have consented to Seller entering into this Agreement. The
execution of the Jacobs Stock Purchase Agreement by each of Diversified, Jacobs,
and Jeffrey Jacobs, if such agreement contains a provision in the form
previously reviewed and approved by counsel for Seller, shall cause this
Agreement to become effective.
7.16 No Prior Agreements. Each of the parties hereto acknowledges and
-------------------
agrees that, prior to the execution of this Agreement on the date hereof, there
was no agreement, arrangement or understanding among the parties with respect to
the acquisition, disposition, holding or voting of the Shares.
7.17 Guarantee Remains in Place. Parent covenants and agrees not to
--------------------------
revoke its guaranty of the obligations of Properties Corporation under the
Agreement of Sale, unless and until this Agreement or the Agreement of Sale is
terminated according to their respective terms.
13
<PAGE>
[SIGNATURE PAGE FOLLOWS]
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above set forth.
SELLER:
/s/ Avis P. Jansen
________________________________
Avis P. Jansen, a Nevada resident,
Individually, as executrix of the Estate of
Norbert W. Jansen, and as Trustee for the
Jansen Family Trust under an Agreement dated
July 14, 1993
PARENT:
MIRAGE RESORTS, INCORPORATED
a Nevada corporation
By: /s/ Daniel Lee
__________________________
Daniel Lee
Chief Financial Officer
Holiday Gifts, Inc., a Nevada corporation, hereby joins in and agrees to be
bound by the provisions of Section 3 hereof.
HOLIDAY GIFTS, INC.
a Nevada corporation
By: /s/ Avis P. Jansen
__________________________
Avis P. Jansen, President
<PAGE>
EXHIBIT B
Additional Modifications to Gift Shop Lease
(1) Lessee shall only operate a gift shop on the Gift Shop premises. Lessee
shall maintain the same quality of the merchandise and operations as Lessee now
provides in the Gift Shop at the date of this Agreement.
(2) Lessee shall not transfer the Lease, and the Lease shall terminate
immediately if a controlling interest in Lessee is transferred.
(3) Lessee shall not have exclusive rights to sell T-shirts with a design or
logo including the words "Las Vegas." Lessee's exclusive rights to sell
merchandise shall extend only to the specific building in which the Gift Shop
premises are located.
<PAGE>
EXHIBIT 4
AGREEMENT OF PURCHASE AND
SALE AND JOINT ESCROW INSTRUCTIONS
THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS
("Agreement") is made as of December 22, 1997, by and between Restaurant
Ventures of Nevada, Inc. a Nevada corporation ("Buyer") and Avis Jansen, as sole
trustee of the Norbert W. Jansen and Avis Jansen Family Trust dated July 14,
1993 ("Seller") upon the terms and conditions set forth below with reference to
the following facts and circumstances:
A. Seller owns the Property (as hereinafter defined).
B. Concurrently herewith, Mirage Resorts, Incorporated, a Nevada
corporation ("Parent") which is an affiliate of Buyer, is entering into an
Agreement and Plan of Merger (the "Merger Agreement") with Mirage Acquisition
Merger Sub, Inc., a Nevada corporation (the "Merger Sub"), and Boardwalk Casino,
Inc. a Nevada corporation (the "Company"), pursuant to which Parent will acquire
the Company, on the terms and subject to the conditions set forth in the Merger
Agreement, by means of a merger (the "Merger") of Merger Sub into the Company.
C. Seller is a shareholder of the Company. As a material inducement to
Parent to acquire the Company, and as a condition to Parent's willingness to
enter into the Merger Agreement and consummate the transactions contemplated
thereby, Parent has required that Seller agree, and the Seller has agreed, to
sell the Property (as hereinafter defined) to Buyer.
NOW THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties agree as
follows:
1. Purchase and Sale of Real Property. Seller hereby agrees to sell, and
----------------------------------
Buyer hereby agrees to purchase, upon the terms and conditions herein stated,
that certain real property in Clark County (the "County"), State of Nevada,
consisting of approximately 1.08 acres of land and improvements thereon,
commonly known as assessor's parcel numbers 162-20-701-005 and 162-20-701-017
and more particularly described on Exhibit "A" hereto, including the land,
buildings and other improvements and all water, oil and mineral rights
appurtenant thereto and all other rights, privileges and easements which are
appurtenant to such real property (collectively, the "Property"). The Property
includes any and all strips, gores, licenses, accretions, abandonments, and real
property adjacent to the land described in Exhibit A which was at any time owned
by, or is hereinafter acquired by, Seller and/or Norbert W. Jansen and/or Avis
Jansen, unless now owned by the Company. "Property" includes any and all right,
title and interest which the Seller holds or has claim to in fixtures,
furniture, furnishings, fittings, equipment, machinery, apparatus, appliances,
vehicles and other articles of personal property (including expendable and
consumable items) located at or upon or used in connection with the real
property referenced in this Section 1 other than those items of personal
property specifically listed on Exhibit D hereto, but only to the extent owned
by the Seller, which shall be removed by Seller prior to Closing (as
hereinafter defined).
2. Purchase Price. The purchase price for the Property (the "Purchase
--------------
Price") shall be Seven Million Three Hundred Eighty Two Thousand and no/100s
Dollars ($7,382,380.00). The Purchase Price shall be payable through Escrow (as
defined below) upon the "Closing" (as defined below) in cash or immediately
available funds.
3. Survey. Within five (5) days following mutual execution of this
------
Agreement, Buyer shall order a certified ALTA survey of the Property at Buyer's
sole expense (the "Survey"). Seller shall provide to Buyer within five (5) days
after opening of escrow any existing surveys within Seller's possession or
notify Buyer of any existing surveys which Seller believes exists which Seller
does not have a copy of.
<PAGE>
4. Buyer's Approvals.
-----------------
(a) Preliminary Title Report.
------------------------
(1) Buyer has already received a preliminary title report dated
December 11,1997, escrow number 97-12-1221 RWC from Nevada Title Company.
Seller shall request Nevada Title Company, Attn: Troy Lochhead (the "Title
Company"), to provide an updated preliminary title report with respect to the
Property setting forth the legal description of the Property and containing such
exceptions as the Title Company would specify in an American Land Title
Association ("ALTA") form of owner's policy of title insurance and to deliver
within 5 days after the Opening of Escrow (as defined below) said updated
preliminary title report to Buyer and Seller and, in addition, to deliver to
Buyer and Seller legible copies of all documents of record or in its possession
identified as exceptions in said preliminary title report (such preliminary
title report and legible copies of documents are hereinafter collectively
referred to as the "Preliminary Title Report").
(2) Buyer may, not later than fifteen (15) days following the
receipt of: (i) the Title Report together with legible copies of all documents
referred to therein as exceptions (and within fifteen (15) days following the
date of any supplemental Preliminary Title Report modifying the legal
description of the Property or containing exceptions not contained in the
original Preliminary Title Report, together with legible copies of all documents
identified as additional exceptions and (ii) a current ALTA survey by a surveyor
approved by Buyer (the survey and any others subsequently completed being
"SURVEYS")), give written notice to Seller reasonably disapproving any items
shown in the Surveys or specified or identified in said Preliminary Title Report
or any supplemental Preliminary Title Report, and identifying the items
reasonably disapproved; provided, however, that Buyer hereby disapproves any
mortgages, deeds of trust or liens for monetary obligations (or alleged monetary
obligations) other than special assessments shown on the Preliminary Title
Report (all of which (other than special assessments) shall be removed by Seller
at or prior to the Closing Date). If Buyer does not timely give notice of
disapproval as aforesaid, then Buyer shall be deemed to have approved all items
on the Surveys, Preliminary Title Report and any supplemental Preliminary Title
Report, as the case may be. Buyer will expeditiously obtain the Survey so that
Buyer shall complete its review of title (including the Survey) and give nay
notice of disapproval to Seller prior to the "INSPECTION CUTOFF" provided in
Section 4(c) hereof. Prior to the Inspection Cutoff, Buyer shall also satisfy
itself as to the availability of any title policy endorsements Buyer may require
and the availability of any such endorsements shall be an item of disapproval to
be included in Buyer's title notice.
It is the intent of the parties that the defined term PROPERTY shall
include all of the real property owned at any time by Seller and/or Norbert W.
Jansen and/or Avis Jansen individually within the description set forth in the
Exhibit A or adjacent thereto such that the Property is contiguous on the north,
west and east with property owned by Buyer (or Las Vegas Boulevard on the east
in the case of the parcel having direct access to the Boulevard) and on the
south with property owned by the Company, and that Buyer and/or its affiliates
can obtain endorsements from the Title Company assuring that Buyer and its
affiliated entities collectively have good and marketable title to the entire
contiguous area.
(3) If Buyer shall timely give notice of disapproval as
aforesaid, then Seller, for a period of ten (10) days following receipt of such
notice, or such longer period as may be specified in writing by Buyer, in no
event to exceed thirty (30) days, (the "TITLE CURE PERIOD"), shall use its
commercially reasonable efforts to remove (or otherwise modify or cure in a
manner satisfactory to Buyer) said disapproved item or items. If Seller fails to
cure such disapproved items within such 5 days, then except for (A) those items
that exist because of intentional or negligent actions of Seller (excluding any
items on the December 11 preliminary title report to the extent they have not
been disapproved as of the execution hereof) or (B) those items which by the
terms of Section 4 (a) (2) (such as all deeds of trust) which Seller is
obligated to remove, or (C) items which remain because of Seller's failure to
exercise commercially reasonable efforts to avoid or remove , as to which all
such excepted items all remedies shall remain, Buyer's sole remedy shall be to
either (i) waive Buyer's disapproval, or (ii) to terminate this Agreement by
delivering written termination notice to Seller not later than ten (10) days
following the expiration of the Title
2
<PAGE>
Cure Period. In such event, neither party shall have any further obligations to
the other hereunder, except as otherwise specified herein.
(b) Examination of Reports.
----------------------
Within five (5) days after the Opening of Escrow, Seller shall
use all reasonable efforts and make all reasonable inquiries to locate and
deliver to Buyer true, full and correct copies of all data, reports, studies,
plans and other written materials in Seller's possession, or prepared for or at
the request of Seller or (if presently known to Seller) prepared by or at the
request of third parties (including but not limited to any Federal, state or
local governmental authority) and known to Seller to exist after due inquiry,
pertaining to the Property, including but not limited to such data, reports,
studies, plans and other written materials relating to: (i) geological
conditions, including earthquake faults, underground aquifers, soil compaction,
subsidence problems and slope analysis studies, (ii) the actual or possible
presence of any "Hazardous Substance" (as defined below) at, on, in, under or in
the vicinity of the Property, including without limitation any and all
environmental investigation and/or assessment reports and including without
limitation any and all notices from or correspondence with any governmental
authority or any third party concerning "Hazardous Substances" and (iii)
inspections or investigations similar to the Inspections and Investigations
which Buyer has the right to perform pursuant to Paragraph 4(c) hereof (all of
the foregoing being collectively referred to for purposes of this Agreement as
the "Reports"). Buyer hereby acknowledges that copies of materials referenced in
Exhibit C were delivered to Buyer prior to its execution hereof.
(c) Inspections and Investigations. Buyer, and its engineers,
------------------------------
contractors, other qualified professionals and agents, shall, in addition to
having the right to review the Reports delivered pursuant to paragraph 4(b),
supra, shall also have the right to conduct, at Buyer's sole expense, tests,
- -----
appraisals, surveys, other studies, inspections, investigations and interviews
regarding the Property (including, without limitation, regarding structures,
wells, septic tanks, and underground storage tanks on the Property, soils,
drainage, seismic, geologic and topographical matters, utility lines and
systems, Hazardous Substances and other possible environmental issues,
compliance of the Property and with applicable zoning ordinances, subdivision
laws and other land use laws and regulations) (all of the foregoing being
collectively referred to for purposes of this Agreement as the "Inspections and
Investigations"). Buyer may at any time not later than sixty (60) days after
the execution hereof give written notice to Seller disapproving the results of
the Inspections and Investigations ("INSPECTION CUTOFF"). Buyer will provide
Seller with copies of written reports prepared by Consultants as part of such
investigation and (unless this Agreement is terminated by Buyer) Seller agrees
to maintain such reports on a confidential basis and not disclose any of the
contents thereof.
In the event Buyer gives notice of such disapproval, this Agreement
shall terminate and neither party shall have any further obligations to the
other hereunder, except as otherwise specified herein. If Buyer does not give
notice of such disapproval, then Buyer shall be deemed to have approved the
results of the Inspections and Investigations.
(d) Disapproval Rights. Any right of disapproval granted to Buyer
------------------
pursuant to this Paragraph 4 may be exercised by Buyer in its subjective good
faith discretion. In the event that Buyer receives information or documents
subject to Buyer's approval pursuant to this Paragraph 4 prior to the date of
mutual execution of this Agreement, the time period for Buyer's disapproval
thereof shall be computed as if Buyer had received such information or documents
on the day following the date of mutual execution of this Agreement, rather than
on the date of Buyer's actual receipt of such information or documents.
5. Representations, Warranties, Covenants, and Acknowledgments.
-----------------------------------------------------------
(a) Authority. Seller represents and warrants that Seller is the
---------
sole fee simple absolute owner of the Property with good and marketable title
thereto and that Seller has full right, power and authority to enter into this
Agreement and to sell, convey and transfer the Property to Buyer free and clear
of any and all liens and encumbrances other than those property taxes, special
assessments, easements, patents and other matters (excluding monetary
encumbrances other than assessments) shown on the current preliminary title
report
3
<PAGE>
delivered to Buyer prior to the date hereof, and/or on the updated title report
contemplated by Section 4(a)(1) hereof, or as listed on Exhibit B or C and to
carry out Seller's obligations hereunder without the consent or approval of any
other person or entity. Each person executing this Agreement on behalf of
Seller represents and warrants that such person is duly authorized to act on
behalf of Seller in executing this Agreement without the further consent of any
other person or entity or any judicial or other governmental authority, and that
this Agreement constitutes a valid and legally binding obligation of Seller
enforceable against Seller in accordance with its terms.
(b) Off-Record Matters. Seller represents and warrants that except
------------------
as set forth on Exhibit B hereto the Property is free and clear of all
prescriptive (other than possible prescriptive rights of the Company and/or
Buyer as the owners of adjacent properties) and similar rights and any
unrecorded instruments affecting title to or otherwise granting interests in or
rights with respect to the Property.
(c) Condition of Property. Seller represents and warrants that (1)
---------------------
to the best of Seller's knowledge and without any specific independent
investigation the Property complies with in all material respects, and is
operated in accordance with in all material respects, all applicable ordinances,
laws, rules, regulations, statutes, codes and orders (collectively referred to
for purposes of this Agreement as "Applicable Laws," which term shall also
include, without limitation, all Applicable Laws relating to Hazardous
Substances as defined in Section 5(e), infra, affecting the Property or the
-----
possession, use, occupancy or operation thereof promulgated or issued by any
governmental or quasi-governmental body, agency or entity) and with any and all
liens, encumbrances, agreements, easements, covenants, conditions and
restrictions (collectively referred to for purposes of this Agreement as
"Restrictions") affecting Seller or the Property, (2) to the best of Seller's
knowledge and without any specific independent investigation, there are no
material defects in the physical condition of the Property or the improvements,
if any, located on the Property, and (3) Seller has received no notice from any
governmental body requiring Seller to make any repairs or changes to the
Property or the improvements, if any, located on the Property, except for
notices with which Seller has fully complied.
(d) Reports. Seller represents and warrants that it is not aware of
-------
the existence of any Reports relating to the Property other than those delivered
to Buyer pursuant to Paragraph 4(b) hereof, and that to the best of Seller's
knowledge the Reports so delivered are true, accurate and complete.
(e) Hazardous Substances. Seller represents and warrants that (1) to
--------------------
the best of Seller's knowledge without specific investigation, and except as
otherwise disclosed in writing by Seller to Buyer prior to the date of mutual
execution of this Agreement the Property (including, without limitation, the
subsurface soil and the ground water thereunder) does not contain any Hazardous
Substance, or any active or abandoned underground storage tank, (2) to the best
of Seller's knowledge without specific investigation, and except as otherwise
disclosed in writing by Seller to Buyer prior to the date of mutual execution of
this Agreement there has been no generation, transportation, storage, treatment,
or disposal of any Hazardous Substance on the Property and no off-site disposal
of any Hazardous Substance, and (3) there have been no communications or
agreements (other than those, if any, of which Seller has heretofore delivered
true, correct and complete copies to Buyer) with any governmental authority or
agency (Federal, state or local) or any private person or entity (including,
without limitation, any prior owner of the Property and any present or former
occupant of the Property), or any actual or, to Seller's knowledge, threatened
investigation, litigation or administrative proceedings, relating in any way to
the presence, release, threat of release, placement on or in the Property, or
the generation, transportation, storage, treatment, or disposal at or from the
Property, of any Hazardous Substance.
For purposes of this Agreement, "Hazardous Substance(s)" shall mean
and include any and all hazardous, toxic, harmful or regulated substances,
materials or wastes including without limitation (1) a "hazardous substance"
under CERCLA, (2) a hazardous waste or waste under RCRA, (3) a "pollutant" under
the Clean Water Act, (4) any other matter regulated pursuant to any other
federal environmental law or state environmental law (including, without
limitation, any radioactive substance, methane gas, crude oil, petroleum, or any
fraction thereof, polychlorinated biphenyls, chlorinated or other solvents,
metals or
4
<PAGE>
asbestos) or any other matter which could cause a detriment to, or impair the
beneficial use of, the Property, or constitute a health, safety or environmental
risk to tenants, occupants or patrons of the Property or surrounding areas.
(f) Leases and Other Agreements. Seller represents and warrants
---------------------------
that, except as set forth in any Exhibit hereto, there are no off record
matters, including without limitation any liens, encumbrances, easements,
restrictions, title defects or exceptions, conditions, covenants, assessments,
leases, subleases, concessionaire agreements, licenses, options to purchase,
options to lease, options to joint venture or jointly develop, or other
agreements, relating to the possession, use or occupancy of any portion of the
Property, and that there are no service, maintenance, security or other
agreements or commitments relating to or affecting the Property. The Company is
not in default as to any of its obligations under the Company Lease and has paid
all rent and monetary obligations due through the date hereof other than $40,000
per month which has accrued for each of the months of November and December,
1997, under the M.O.U. (as hereinafter defined). Notwithstanding the prior
sentence, there are certain rent payment arrearages owed Seller by the Company,
which Seller agrees to waive in favor of, or to assign without any claim for
proration to, Buyer at Closing.
(g) "Foreign Person" Status. Seller represents and warrants that it
----------------------
is not a "foreign person" within the meaning of (S)1445 of the Internal Revenue
Code of 1986, as amended (the "Internal Revenue Code").
(h) Eminent Domain; Zoning; Street Changes; Other Litigation. Seller
--------------------------------------------------------
represents and warrants that except as otherwise disclosed by Seller to Buyer in
writing prior to the mutual execution of this Agreement, there are no actions,
litigation or proceedings pending (or, to Seller's knowledge, contemplated or
threatened): (1) to take all or any portion of the Property, or any interest
therein, by eminent domain, (2) to modify the zoning of, or other governmental
rules or restrictions applicable to the Property, (3) for any street widening or
changes in highway or traffic patterns in the vicinity of the Property or (4)
which would otherwise inhibit Buyer from obtaining good and marketable title to
the Property or interfere with Seller's use of the Property.
(i) Flood Zone/Earthquake/Dumpsite/Petrochemicals. Seller represents
---------------------------------------------
and warrants that to Seller's knowledge without conducting any specific
investigation, except as otherwise disclosed by Seller to Buyer in writing prior
to the date of mutual execution of this Agreement, no portion of the Property
(1) is or was the site of any public or private landfill, dumpsite, retention
basin or settling pond, or (2) is or was the site of any oil or gas drilling
operations, or (3) is or was the former site of any experimentation, processing,
refining, reprocessing, recovery or manufacturing operation for any
petrochemicals or other manufacturing operation, or (4) has been listed or
proposed for listing under the Comprehensive Environmental Response,
Compensation and Liability Act as amended ("CERCLA") or has been listed or
proposed for listing under any other database or list of sites which are or may
have had releases of Hazardous Substances.
(j) No Employees. Seller represents that it has no employees or
------------
advisors who are employed or engaged primarily to perform duties in connection
with the Property.
(k) Indemnity. Seller hereby indemnifies and covenants and agrees to
---------
defend, protect and hold Buyer harmless from and against any and all claims,
demands, losses, liabilities, costs and expenses (including attorneys' fees and
costs, and including interest, at the maximum rate permitted by law, on the
amount of all expenditures and costs for which Buyer is entitled to be
indemnified hereunder, computed from the time such expenditures and costs are
made or incurred by Buyer) arising as a result of or relating to (1) the
inaccuracy of any representations or warranties made herein, (2) the omission of
any fact or document necessary to make the representations and warranties made
herein, (3) any transactions or occurrences upon, or relating to, the Property
prior to the Closing Date, and (4) any liabilities to the extent based upon acts
or omissions that occurred prior to the Closing Date.
(l) "As Is" Purchase. Except and subject to any representation,
----------------
warranty or other provision contained herein, the sale of the Property as
provided for herein is made on an "AS IS" basis, and Buyer expressly
acknowledges that, in consideration of the agreements of
5
<PAGE>
Seller herein, except as provided herein, SELLER MAKES NO WARRANTY OR
REPRESENTATION CONCERNING THE PHYSICAL CONDITION OF THE PROPERTY, INCLUDING BUT
IN NO WAY LIMITED TO, ANY WARRANTY OF CONDITION, HABITABILITY, MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE.
(m) Survival. The representations and warranties contained in this
--------
Paragraph 5 are made as of the date this Agreement is executed by Seller and
shall be deemed to be remade as of the Closing Date. The covenants,
representations and warranties of Buyer and Seller contained herein shall
survive the Close of Escrow, and recordation of the grant deed conveying fee
title to the Property. Written notice to Seller of any claims under Sections
5(c), 5(h), 5(i) and 5(j) must be made within one year after Closing (as
hereinafter defined) in order to be valid claims. All other claims shall be
governed by statutory provisions of limitation.
(n) Knowledge. The knowledge of Seller shall only be deemed to
---------
include the actual knowledge of Avis Jansen and any beneficiaries of Seller and
Esther Gallegher. To the extent Buyer or any of its affiliates acquires
knowledge of any matters prior to the Inspection Cutoff, such matters shall be
deemed to have been disclosed to Buyer in this Agreement, and Seller shall have
no liability to Buyer with respect to a breach of any such applicable
representation.
6. The Closing.
-----------
(a) The Closing Date. The consummation of the purchase and sale of
----------------
the Property (the "Closing") shall occur within 1 business day after the date
when all of the conditions in this Section 6 have been satisfied or waived (by
the party which such conditions benefit) but in no event later than June 30,
1998. If the Closing Date of June 30, 1998, in the Merger Agreement is extended
for any reason, then the June 30, 1998, date in this paragraph shall be extended
without further action of the parties to the new closing date of the Merger
Agreement, but in such case not later than December 31, 1998. If the Merger
Agreement is terminated by Parent or the Merger Agreement is terminated by a
final binding judgment (after the passage of all available appeals) this
Agreement shall terminate. The date upon which the Closing shall occur is
sometimes referred to in this Agreement as the "Closing Date." Closing shall
occur through Escrow upon recordation of the Grant Deed (as defined below) and
in the customary manner for the consummation of real estate transactions in the
County. Seller shall deliver possession of the Property to Buyer on the Closing
Date, free and clear of all liens and encumbrances and matters of record (except
as permitted by this Agreement).
(b) Conditions to Closing. The failure of a condition for the
---------------------
benefit of a Party shall excuse such party's performance. The Closing is subject
to and conditioned upon the satisfaction of the following conditions, in
addition to any others expressly set forth in this Agreement, by the date
specified in the first sentence of subparagraph (a) of this Paragraph 6, as the
same may be extended pursuant to the express provisions of this Agreement:
(1) As a condition to Buyer's obligation, Buyer shall have
obtained the unconditional commitment of the Title Company to issue its
ALTA form of owner's policy of title insurance (the "Title Policy") in
favor of Buyer insuring Buyer as the fee owner of the Property in the
amount of $9,000,000, subject to no exceptions except (A) the exceptions
approved by Buyer pursuant to Paragraph 4(a) hereof (excluding, however,
all deeds of trust, mortgages and liens of any kind for monetary
obligations (whether or not any amounts are, in fact, owed), all of which
shall be removed by Seller at or prior to the Closing Date), (B) property
taxes for the current fiscal year not yet payable and special assessments
not delinquent, (C) such other exceptions as may have been approved in
writing by Buyer or imposed upon the Property by Buyer, together with such
endorsements as Buyer is entitled to receive pursuant to Section 4(a)(2),
with reinsurance and direct access agreements as (specified prior to the
Inspection Cutoff) required by Buyer.
(2) As a condition to Buyer's obligation, each and all of the
representations and warranties made by Seller in Paragraph 5 hereof shall
be true and correct as of the Closing Date in all material respects.
6
<PAGE>
(3) As a condition to Buyer's obligation, Seller shall have
fully performed in all material respects all of the covenants which Seller,
pursuant to the terms of this Agreement, has agreed to perform on or prior
to the Closing Date.
(4) As a condition to Seller's obligation, Buyer shall have
fully performed in all material respects all of the covenants which Buyer,
pursuant to the terms of this Agreement, has agreed to perform on or prior
to the Closing Date.
(5) As a condition to Buyer's and Seller's obligation, the
Merger shall have become effective.
(6) As a condition to Buyer's and Seller's obligation, either
(i) Buyer shall have acquired all of the rights of Diversified
Opportunities Group Ltd. and Jacobs Entertainment Nevada, Inc. under that
certain memorandum of understanding dated October 29, 1997 (the "M.O.U.")
or (ii) the M.O.U. shall have been terminated.
(7) As a condition to Seller's obligation, at Closing Buyer
shall either obtain a release of Avis Jansen and the Estate of Norbert
Jansen's guarantee of the Company's obligations (i) under the License
Agreement dated December 16, 1993 with Holiday Inn Franchising, Inc., and
(ii) the GIAC Leasing Corporation Master Lease Agreement dated January 9,
1996 in the initial amount of $1,750,000.00 and with the current balance of
not greater than $1,200,000.00, or cause Mirage Resorts, Inc. to indemnify
such guarantors in an document reasonably satisfactory to Seller against
liabilities under such License Agreement and Master Lease Agreement.
(c) Deliveries at Closing. Seller and Buyer shall each deliver to
---------------------
the other through Escrow such instruments and funds as are necessary to
consummate the purchase and sale of the Property, including the following:
(1) Buyer shall deliver to Seller:
-----------------------------
(A) the Purchase Price as specified in Paragraph 2 hereof,
(2) Seller shall deliver to Buyer:
-----------------------------
(A) a duly executed and acknowledged grant, bargain and
sale deed (the "Grant Deed"), sufficient to invoke Nevada's statutory
warranties, and sufficient to convey fee title to the Property to
Buyer as required herein,
(B) a certificate executed by Seller dated the Closing
Date, confirming the accuracy, as of the Closing Date, of each of the
representations and warranties made by Seller pursuant to Paragraph 5
hereof, except as otherwise discovered by Buyer prior to the
Inspection Cutoff.
(C) an affidavit directed to Buyer giving Seller's taxpayer
identification number and confirming that Seller is not a "foreign
person".
(D) a bill of sale in form and substance acceptable to
Buyer sufficient to convey Seller's interest in any personal property
included within the Property.
(E) certified copies of appropriate instruments as
designated by Buyer at least 15 days prior to the Inspection Cutoff in
form reasonably acceptable to Buyer including copies of the leases,
subleases, concession agreements, agreements and commitments
referenced in exhibits to this Agreement, and estoppel certificates
(to the extent obtained prior to the Inspection Cutoff) in form
satisfactory to Buyer executed by all of the parties to any leases,
subleases, concession agreements, contracts or other commitments
referenced in exhibits to this Agreement certifying that such
instruments are complete and in full force and effect, attaching
complete sets of relevant
7
<PAGE>
documentation, confirming the absence of any material defaults, and
such other matters as may be reasonably requested by Buyer.
(F) such other instruments and documents as may be
reasonably required for Seller to perform its obligations hereunder
(including without limitation documents of assignment) or as may be
reasonably required by Escrow Holder or the Title Company.
(d) Simultaneous Delivery; Conditions Concurrent. All documents and
--------------------------------------------
other items to be delivered at the Closing shall be deemed to have been
delivered simultaneously, and no delivery shall be effective until all such
items have been delivered.
(e) Failure of Condition. Either party may waive, in writing, any
--------------------
condition to Closing which is for the benefit of such party. If a condition to
Closing is not satisfied or waived, the party whose obligation was subject to
such condition may cancel this Agreement, in which case neither party shall have
any further obligations to the other hereunder, except as otherwise specified
herein; provided, however, that notwithstanding anything to the contrary herein,
such cancellation shall be without prejudice to the canceling party's other
rights and remedies if the failure of condition was due to the other party's
breach of this Agreement.
7. Buyer's Access.
--------------
Buyer and its authorized agents shall have full and complete access to
the Property at all reasonable times (but in a manner to minimize disruption)
prior to the Closing for any lawful purpose, including without limitation, in
order to make (at Buyer's sole cost and expense) such inspections,
investigations, inquiries, surveys, studies, tests, borings, wells, soil gas
surveys, site analyses and tests, and to erect such signs, as Buyer, in its sole
and absolute discretion, shall deem necessary or appropriate. Buyer shall
indemnify, defend and hold harmless Seller and the Property from and against any
loss, liability, claim or expense (including reasonable attorneys' fees and
court costs) for property damage, death, or personal injury to the extent caused
by Buyer's exercise of such access rights. In the event that Buyer's
investigation requires any investigation beneath the surface of the ground or
the use of heavy machinery, Buyer will name Seller as an additional insured on a
$2,000,000 liability policy in commercially reasonable form as selected by
Buyer.
8. Condemnation and Casualty. Seller shall promptly notify Buyer of any
-------------------------
condemnation proceeding filed or any casualty to the Property occur
(a) Condemnation. If any condemnation proceeding filed prior to the
------------
Closing may result in the loss of all or more than 10% of the land area of the
Property, then this Agreement and the Escrow shall, at Buyer's sole election,
either (i) continue in effect without modification of the terms thereof, in
which event, upon the close of Escrow, Buyer shall be entitled to any
compensation, awards, or other payments or relief resulting from such
condemnation proceeding, or (ii) terminate by Buyer's written notice to Seller
and Escrow Agent delivered within five (5) days after receipt by Buyer of notice
of such condemnation, and all obligations, duties, rights and entitlement of
Seller and Buyer shall terminate. If the condemnation is 10% or less of the land
area, Seller shall assign all condemnation proceeds to Buyer at Closing.
(b) Casualty. In the event of fire, casualty or any other damage of
--------
any kind whatsoever (insured or uninsured) to the Property which costs Two
Million Dollars ($2,000,000.00) or more to repair, replace or remediate, Buyer
may upon written notice to Seller and Escrow Agent terminate this Agreement and
Escrow and all obligations, duties, rights and entitlement of Seller and Buyer
shall terminate. If any such occurrence costs less than Two Million Dollars
($2,000,000.00) to repair, replace or remediate, or if Buyer does not elect to
terminate this Agreement and the Escrow, then Seller shall assign all available
insurance proceeds to Buyer (and Buyer shall receive a credit against the
Purchase Price for any such proceeds that are received and retained by any
creditor of Seller and for the amount of any deductible and any uninsured or
underinsured loss), and the parties shall proceed to the Closing pursuant to the
terms and conditions hereof, without modification of the terms of this
Agreement. Upon execution of this Agreement Seller shall obtain the proper
indorsements to all existing policies insuring the above described risks naming
Buyer as an additional insured.
8
<PAGE>
9. Costs and Prorations.
--------------------
Costs. Costs of the Closing and Escrow shall be allocated as follows:
-----
Seller shall Pay: (1) the costs of preparing and recording the Grant
----------------
Deed and all other documents to be recorded at the Closing, (2) all Federal,
state and local documentary transfer, stamp, excise, sales and other taxes, if
any, imposed in connection with the transfer of the Property, (3) all trustee's
and other fees in connection with any deeds of trust which shall be reconveyed
at Closing, and any other expenses of placing title in proper condition, (4) the
cost of the title insurance examination and the premiums for the CLTA premium
portion of an ALTA Owner's Title Policy in the amount of $9,000,000 , and (5)
one-half of the fee, if any, of the Escrow Holder and one-half of the costs of
the Escrow.
Buyer shall Pay: (1) one-half of the fee, if any, of the Escrow
---------------
Holder and the one-half of the costs of Escrow, (2) the cost of the updated
Survey, and (3) that portion of the ALTA title policy fee in excess of the cost
of CLTA coverages and the cost of endorsements thereto..
All other costs, if any, shall be apportioned in the customary manner for real
estate transactions in the County.
Prorations. Property taxes, security deposits, special improvement
----------
district charges and special assessments and utility charges and rents
(excluding rents on those leases and licenses for which the Company has
collected rents for the past 6 months, but including rent under the lease with
the Company which under the M.O.U. is deferred, but that prorated deferral shall
not exceed $40,000 per month in the period of November 1, 1997 through Closing,
which Buyer shall cause the Company to pay at Closing if it occurs) shall be
prorated between Buyer and Seller as of the Closing Date. Said prorations shall
be based on a thirty (30) day month and a three hundred sixty (360) day year.
In the event that the actual property taxes payable in respect of the Property
are not ascertainable as of the Closing Date, then the parties will prorate such
taxes on the basis of the latest available tax bill and will make such post-
Closing adjustment as may be necessary when the actual taxes are determined.
All taxes relating to periods prior to the Closing shall be paid by Seller.
Seller shall pay any supplemental tax bills or taxes or assessments levied by
the taxing authorities or received subsequent to the Closing Date to the extent
applicable to periods or attributable to facts or circumstances arising prior to
the Closing Date, or which are otherwise excepted from coverage under the Title
Policy, and Seller hereby indemnifies and agrees to defend, protect and hold
Buyer harmless from any such supplemental assessments or taxes and any late
charges or penalties associated therewith. Assessments and bonds, either
general or special, for improvements completed prior to the Closing, and other
governmental charges, whether matured or unmatured, shall be paid current and
prorated as of the Closing. Seller shall deliver to Buyer, or grant a credit to
Buyer at Closing, the amount of all security deposits received from tenants,
occupants and licensees by Seller under any agreement with respect to the
Property. Although the parties hereto do not believe that any termination
consideration is payable to the tenant under the lease referenced in item 1 to
Exhibit B hereto, in the event that a payment is required to be made pursuant to
the terms of Section 6 of such lease to the tenant thereunder, Seller shall at
the option of Buyer either reimburse Buyer upon demand of Buyer for such amount
or make such payment directly to such tenant.
10. Operation of the Property Prior to Closing. During the period from
------------------------------------------
the date of this Agreement to the Closing Date (the "Interim Period") Seller
shall, at its expense, comply with all Applicable Laws and Restrictions
respecting the Property or the possession, use, occupancy or operation thereof
except to the extent maintenance and repairs are the responsibility of the
Company under its lease of portions of the Property. Seller shall deliver the
Property to Buyer free of all occupants and of any known claims to possession
other than those listed on Exhibit C hereto and in condition at least equivalent
in quality to that existing as of Buyer's execution hereof, less reasonable wear
and tear, and except to the extent maintenance and repairs are the
responsibility of the Company under its lease of portions of the Property.
Notwithstanding anything to the contrary herein, during the Interim Period
Seller shall not: (i) enter into any new lease or occupancy agreement, or any
other agreement or contract relating to the Property, or modify any of the
foregoing agreements or other contracts which now exist or (ii) permit or
acquiesce in any prescriptive or similar right in or
9
<PAGE>
to the Property, or (iii) cause, permit or suffer any encumbrance, easement or
other matter affecting the Property to become of record, in each case without
the prior written consent of Buyer.
11. The Escrow.
----------
(a) Opening of Escrow. Within five (5) days after mutual execution
-----------------
of this Agreement, the parties shall open an escrow (the "Escrow") with Nevada
Title Company, Attention: Troy Lochhead ("Escrow Holder"). The Opening of
Escrow shall be deemed to have occurred when Buyer and Seller have delivered a
signed copy of this Agreement to the Escrow Holder.
(b) Additional Provisions. The Escrow Holder's rights and
---------------------
obligations shall be further specified by such additional terms and provisions
acceptable to Buyer and Seller as said Escrow Holder customarily requires in
real property escrows administered by it. In the event of any inconsistency
between this Agreement and any additional escrow instructions executed by the
parties, this Agreement shall be controlling. The failure of any party to
execute any additional instructions shall in no way diminish or invalidate the
enforceability of this Agreement.
12. Defaults. If Seller breaches or fails to perform fully the terms of
--------
this Agreement, Buyer may, at its option, exercise every right and remedy
available at law, in equity, or hereunder, including but not limited to the
right to: (i) cancel this Agreement and recover from Seller any and all
reasonable expenses paid or incurred by Buyer in connection with this Agreement,
(ii) proceed with the Closing hereunder, reserving all of Buyer's rights to
thereafter recover actual and consequential damages arising from Seller's
breach, or (iii) enforce Buyer's right to specific performance of Seller's
obligations hereunder and related injunctive relief, and to record a lis pendens
--- -------
against the Property in connection therewith. Seller acknowledges that Buyer
has rigorous internal guidelines regarding the suitability of a site and that
Buyer has selected the Property as a potential site after careful analysis of a
number of factors, including, without limitation, the geographic location, and
ingress and egress. Accordingly, Seller acknowledges and agrees that the
Property is unique for Buyer's purposes, that monetary damages alone would not
adequately compensate Buyer for Seller's breach of its obligation to convey the
Property to Buyer hereunder, and that if Buyer seeks specific performance of
this Agreement, Buyer shall be entitled to an order of the court enforcing this
Agreement without any need to make a further showing that the Property is unique
or that Buyer's damages are liquidated and not speculative, or that other
remedies are impracticable, unavailable, ineffective or inadequate. Seller
acknowledges that if Buyer seeks injunctive relief, the same may be fashioned in
a mandatory or prohibitive manner, and Seller hereby waives any right, at law or
in equity, to demand the posting of a bond or other security by Buyer as a
condition to the continuation, of record, of any lis pendens which Buyer may
--- -------
file.
13. Miscellaneous.
-------------
(a) Assignability. Buyer shall have the absolute and unconditional
-------------
right at any time and from time to time to assign any and all of its rights
hereunder to any person or entity, but no such assignment shall relieve Buyer of
its obligations hereunder.
(b) Entire Agreement. This Agreement together with the exhibits
----------------
hereto embodies the entire agreement between the parties relative to the subject
matter hereof, and there are no oral or parol agreements existing between Seller
and Buyer relative to the subject matter hereof which are not expressly set
forth herein or therein and covered hereby or thereby.
(c) Headings/Construction. The headings contained in this Agreement
---------------------
are for reference purposes only and shall not in any way affect the meaning or
interpretation hereof. Unless otherwise expressly provided, the words "herein,"
"hereof," "hereunder" and other similar compounds of the word "here" when used
in this Agreement shall refer to the entire Agreement and not to any particular
provision or section. This Agreement has been the subject of negotiation
between the parties hereto, and shall be deemed to have been jointly
10
<PAGE>
prepared by the parties. Accordingly, this Agreement shall be construed simply
and in accordance with its fair meaning, and not strictly for or against either
of the parties.
(d) Pronouns. All pronouns and any variations thereof shall be
--------
deemed to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the parties may require.
(e) Notice. Any notice required or permitted to be delivered
------
hereunder shall be in writing and shall be deemed received upon personal
delivery to the address set forth below of the party to whom the notice is
directed or, if sent by mail, three (3) business days following its deposit in
the United States mail, postage prepaid, certified or registered mail, return
receipt requested, addressed to the address set forth below of the party to whom
the notice is directed or by facsimile properly addressed and sent to the
facsimile numbers set forth below. Notice by facsimile shall be deemed received
when delivery is electronically confirmed. The respective addresses for notice
of the parties are:
<TABLE>
<S> <C> <C>
BUYER: Restaurant Ventures of Nevada, Inc. copy to: Daniel R. Lee
ATTN: Bruce A. Leslie, President P.O. Box 7777
BERNHARD & LESLIE, CHTD. Las Vegas, NV 89177
3980 Howard Hughes Parkway . Suite 550 Facsimile: (702) 792-7628
Las Vegas, NV 89019
Facsimile: (702) 650-2995
additional copy to: Irell & Manella LLP
1800 Avenue of the Stars, Suite 900
Los Angeles, California 90067
Facsimile: (310) 203-7199
Attention: C. Kevin McGeehan
SELLER: Avis Jansen, Trustee copy to: Barry S. Goold, Esq.
978 Bel Air Circle GOOLD, PATTERSON,
Las Vegas, NV 89109 DeVORE & RONDEAU
_____________________ 4496 S. Pecos Road
(FAX) Las Vegas, NV 89121
Facsimile: (702) 436-2650
</TABLE>
Any party or other person to whom notice is to be given hereunder may
change its address for notice by notice given pursuant to this subparagraph (e).
(f) Brokers. Buyer and Seller each represent and warrant to the
-------
other that they have not used the services of any broker or finder who may be
owed a commission in connection with this transaction.
(g) Nevada Law. Except to the extent otherwise expressly agreed in
----------
writing in any other document executed by Buyer and Seller, this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Nevada applicable to agreements made between Nevada domiciliaries to be
performed wholly within the State of Nevada.
(h) General. If any one or more of the provisions contained in this
-------
Agreement (other than provisions going to the essence hereof) shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof, and the remainder of the provisions of this Agreement shall continue in
full force and effect without impairment. Time is of the essence in this
Agreement. No waiver of any covenant, condition or provision of this Agreement
shall be valid unless in writing and duly executed by the party to be charged
therewith. The waiver by either party of a breach of any provision of this
Agreement shall not be deemed a waiver of any subsequent breach whether of the
same or another provision of this Agreement. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
11
<PAGE>
respective heirs, administrators, executors, assigns and successors in interest
and without limiting the generality of the foregoing, upon the making of
distributions by or from the Trust (and only to the extent of such
distributions) all obligations of Seller hereunder shall be binding upon all
beneficiaries of Seller. The provisions of this Agreement may not be amended or
altered except by a written instrument duly executed by each of the parties
hereto.
(i) Further Assurances. Each of the parties shall execute such other
------------------
and further documents and do such further acts as may be reasonably required to
effectuate the intent of the parties and carry out the terms of this Agreement.
The provisions of this subparagraph (i) shall survive the Closing and the
termination of this Agreement. Within 5 days after the request of Buyer, the
parties will execute and acknowledge in form reasonably satisfactory to Buyer a
memorandum of this Agreement for recordation.
(j) Attorneys' Fees. In the event that either party hereto brings
---------------
any action or files any proceeding to determine or enforce its rights under this
Agreement or as a consequence of any breach by the other party hereto of its
obligations hereunder, or in connection with any other matter relating to the
transaction which is the subject matter hereof, the prevailing party in such
action or proceeding shall, in addition to any other relief to which it may be
entitled, recover from the losing party all of the prevailing party's reasonable
attorneys' fees and costs and expenditures (including, without limitation,
experts' and consultants' professional fees) incurred in each and every such
proceeding or other action, including any and all new trials, appeals, petitions
and subsequent proceedings. The provisions of this subparagraph (j) shall
survive the Closing and the termination of this Agreement.
(k) Time Periods. As used in this Agreement, (1) a "day" is a
------------
calendar day and (2) a "business day" is a calendar day other than a Saturday or
Sunday upon which (A) the Office of the County Recorder of the County is open
and accepting documents for recording, (B) the United States Postal Service is
delivering first class mail, and (C) banks in the County are generally open for
business. If, pursuant to this Agreement, a party must act by a particular
time, or an act is effective only if done by a particular time, and the last
date for the doing or effectiveness of such act falls upon a day other than a
business day, the time for the doing or effectiveness of such act shall be
extended to the next succeeding business day.
(l) Confidentiality. Except to the extent disclosure is made by
Buyer, or required to be made by any party under securities, gaming or other
applicable laws, the Seller agrees to keep the terms of this Agreement
confidential.
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above set forth.
"BUYER"
RESTAURANT VENTURES OF NEVADA, INC.,
a Nevada corporation
By: /s/ Bruce A. Leslie
_________________________________
Bruce A. Leslie, President
"SELLER"
AVIS JANSEN, as sole trustee of the Norbert W. Jansen
and Avis Jansen Family Trust Dated July 14, 1993
By: /s/ Avis Jansen
_________________________________
Avis Jansen, Trustee
<PAGE>
Avis Jansen, as an individual, joins in with "SELLER" in agreeing to sell to
Buyer on the terms of the above Agreement (all of which terms are hereby
incorporated by reference, including the representations and warranties therein
as to when she joins in individually) and agrees to transfer and convey on such
terms the interest, if any, she holds, or in the future may hold, in any of the
Property as defined in the Agreement. Further, if at any time an interest to
the Property is owned or claimed by the Estate of Norbert W. Jansen (the
"ESTATE"), Avis Jansen as Executrix of the Estate shall take all actions as are
necessary to transfer that interest to the Buyer without additional cost or
expense to Buyer.
/s/ Avis Jansen
_________________________
Avis Jansen, as an individual and as
Executrix of the Estate of Norbert W. Jansen
<PAGE>
GUARANTY UNDER THE AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW
INSTRUCTIONS DATED DECEMBER 22, 1997 ("AGREEMENT") BETWEEN AVIS JANSEN AS SOLE
TRUSTEE (AND INDIVIDUALLY) ("SELLER") AND RESTAURANT VENTURE OF NEVADA, INC.
Mirage Resorts, Incorporated, a Nevada corporation, at the request of
Seller, hereby guarantees to Seller the performance of all of the obligations of
the Buyer to the Seller under the Agreement. This guaranty shall automatically
and contemporanously terminate as Buyer's obligations or performances under the
Agreement cease or are excused, but in no event later than December 31, 1998.
This guaranty shall be personal to Seller and may not be transferred or
assigned.
MIRAGE RESORTS, INCORPORATED
By: /s/ Daniel R. Lee
_________________________
Daniel R. Lee
Its: Chief Financial Officer
<PAGE>
ESCROW NUMBER: 97-12-1086 BLS
EXHIBIT "A"
LEGAL DESCRIPTION
PARCEL 1:
- ---------
A PORTION OF THE NORTHEAST QUARTER (NE 1/4) OF THE SOUTHEAST QUARTER (SE 1/4) OF
SECTION 20, TOWNSHIP 21 SOUTH, RANGE 61 EAST, M.D.B. & M., MORE PARTICULARLY
DESCRIBED AS FOLLOWS:
BEGINNING AT THE EAST QUARTER (E 1/4) CORNER OF SECTION 20, TOWNSHIP 21 SOUTH,
RANGE 61 EAST, M.D.B. & M.; THENCE NORTH 88 DEGREES 44'24" WEST, 110.02 FEET TO
A POINT ON THE WEST RIGHT-OF-WAY LINE OF U.S. HIGHWAY NO. 91 SOUTH; THENCE SOUTH
0 DEGREES 02'15" WEST ALONG SAID RIGHT-OF-WAY LINE, 215.00 FEET TO THE TRUE
POINT OF BEGINNING; THENCE CONTINUING SOUTH 0 DEGREES 02'15" WEST, 150.00 FEET
TO A POINT; THENCE NORTH 89 DEGREES 57'47" WEST, 167.00 FEET TO A POINT; THENCE
NORTH 0 DEGREES 02"15" EAST, 150.00 FEET TO A POINT; THENCE SOUTH 89 DEGREES
57'47" EAST, 167.00 FEET TO THE TRUE POINT OF BEGINNING.
PARCEL 2A:
- ----------
THE SOUTH 150.00 FEET OF THE WEST 72.00 FEET OF THE EAST 239.03 FEET, SAID
DISTANCES BEING MEASURED ALONG OR PARALLEL WITH THE NORTH AND EAST LINES OF THAT
PORTION OF SECTION 20, TOWNSHIP 21 SOUTH, RANGE 61 EAST, M.D.B. & M., IN THE
COUNTY OF CLARK, STATE OF NEVADA, DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER (E 1/4) CORNER OF SAID SECTION 20; THENCE ALONG
THE EAST LINE OF SAID SECTION, NORTH 0 DEGREES 50'24" WEST, 30.01 FEET TO THE
SOUTHEAST CORNER OF THE LAND DESCRIBED IN THE DEED TO HOWARD J. WERNER, RECORDED
MARCH 4, 1959, AS DOCUMENT NO. 153963 OF OFFICIAL RECORDS OF SAID COUNTY; THENCE
ALONG THE SOUTH LINE OF SAID LAND, NORTH 88 DEGREES 57'30" WEST, 109.76 FEET TO
A POINT IN THE WEST LINE OF U.S. HIGHWAY NO. 91; THENCE ALONG SAID WEST LINE
SOUTH 0 DEGREES 02'15" WEST, 215.00 FEET TO THE TRUE POINT OF BEGINNING; THENCE
CONTINUING ALONG THE SAID WEST LINE, SOUTH 0 DEGREES 02'15" WEST, 180.00 FEET;
THENCE NORTH 88 DEGREES 57'47" WEST, 600.00 FEET; THENCE NORTH 0 DEGREES 02'15"
WEST, 180.00 FEET; THENCE SOUTH 88 DEGREES 57'47" EAST, 600.00 FEET TO THE TRUE
POINT OF BEGINNING.
PARCEL 2B:
- ----------
A NON EXCLUSIVE EASEMENT FOR ROAD AND INCIDENTAL PURPOSES OVER THE SOUTH 28.00
FEET OF THE NORTH 30.00 FEET OF THE EAST 293.03 FEET OF THAT PORTION OF SECTION
20, TOWNSHIP 21 SOUTH, RANGE 61 EAST, M.D.B. & M., IN THE COUNTY OF CLARK, STATE
OF NEVADA, DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 20;
THENCE ALONG THE EAST LINE OF SAID SECTION, NORTH 0 DEGREES 50'24" WEST, 30.01
FEET TO THE SOUTHEAST CORNER OF THE LAND DESCRIBED IN THE DEED TO HOWARD J.
WERNER, RECORDED MARCH 4, 1959 AS DOCUMENT NO. 153963 OF OFFICIAL RECORDS OF
SAID COUNTY;
THENCE ALONG THE SOUTH LINE OF SAID LAND, NORTH 88 DEGREES 57'30" WEST, 109.76
FEET TO A POINT IN THE WEST LINE OF U.S. HIGHWAY NO. 91;
<PAGE>
ESCROW NO. 97-12-1086 BLS
EXHIBIT "A" (continued)
LEGAL DESCRIPTION
THENCE ALONG SAID WEST LINE, SOUTH O DEGREES 02'15" WEST, 215.00 FEET TO THE
TRUE POINT OF BEGINNING;
THENCE CONTINUING ALONG THE SAID WEST LINE, SOUTH 0 DEGREES 02'15" WEST, 180.00
FEET;
THENCE NORTH 88 DEGREES 57'47" WEST, 600.00 FEET;
THENCE NORTH 0 DEGREES 02'15" EAST, 180.00 FEET;
THENCE SOUTH 88 DEGREES 57'47" EAST, 600.00 FEET TO THE TRUE POINT OF BEGINNING.
EXCEPT ANY PORTION OF SAID EASEMENT LYING OVER THE LANDS DESCRIBED IN THE DEED
TO THE GULF OIL CORPORATION OF CALIFORNIA, A DELAWARE CORPORATION, RECORDED
DECEMBER 30, 1960 AS DOCUMENT NO. 222932 OF OFFICIAL RECORDS, CLARK COUNTY,
NEVADA.
PARCEL 3A:
- ----------
THE SOUTH 150.00 FEET OF THE WEST 71.97 FEET OF THE EAST 373.00 FEET, SAID
DISTANCES BEING MEASURED ALONG OR PARALLEL WITH THE NORTH AND EAST LINES OF
THAT PORTION OF SECTION 20, TOWNSHIP 21 SOUTH, RANGE 61 EAST, M.D.B. & M.,
DESCRIBED AS FOLLOWS:
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 20;
THENCE ALONG THE EAST LINE OF SAID SECTION, NORTH 0 DEGREES 50'24" WEST, 30.01
FEET TO THE SOUTHEAST CORNER OF THE LAND DESCRIBED IN THE DEED TO HOWARD J.
WERNER, RECORDED MARCH 4, 1959, AS DOCUMENT NO. 153963 OF OFFICIAL RECORDS,
CLARK COUNTY, NEVADA RECORDS;
THENCE ALONG THE SOUTH LINE OF SAID LAND, NORTH 88 DEGREES 57'30" WEST, 109.76
FEET TO A POINT IN THE WEST LINE OF U.S. HIGHWAY NO. 91;
THENCE ALONG SAID WEST LINE, SOUTH 0 DEGREES 02'15" WEST, 215.00 FEET TO THE
TRUE POINT OF BEGINNING;
THENCE CONTINUING ALONG THE SAID WEST LINE, SOUTH 0 DEGREES 02'15" WEST, 180.00
FEET;
THENCE NORTH 88 DEGREES 57'47" WEST, 600.00 FEET;
THENCE NORTH 0 DEGREES 02'15" EAST, 180.00 FEET;
THENCE SOUTH 88 DEGREES 57'47" EAST, 600.00 FEET TO THE TRUE POINT OF BEGINNING.
PARCEL 3B:
- ----------
A NON EXCLUSIVE EASEMENT FOR ROAD AND INCIDENTAL PURPOSES OVER THE SOUTH 28.00
FEET OF THE NORTH 30.00 FEET OF THE EAST 373.00 FEET OF THAT PORTION OF SECTION
20, TOWNSHIP 21 SOUTH, RANGE 61 EAST, M.D.B. & M., IN THE COUNTY OF CLARK, STATE
OF NEVADA, DESCRIBED AS FOLLOWS:
<PAGE>
ESCROW NO. 97-12-1086 BLS
EXHIBIT "A" (continued)
LEGAL DESCRIPTION
COMMENCING AT THE EAST QUARTER CORNER OF SAID SECTION 20;
THENCE ALONG THE EAST LINE OF SAID SECTION, NORTH 0 DEGREES 50'24" WEST, 30.01
FEET TO THE SOUTHEAST CORNER OF THE LAND DESCRIBED IN THE DEED TO HOWARD J.
WERNER, RECORDED MARCH 4, 1959 AS DOCUMENT NO. 153963 OF OFFICIAL RECORDS OF
SAID COUNTY;
THENCE ALONG THE SOUTH LINE OF SAID LAND, NORTH 88 DEGREES 57'30" WEST, 109.76
FEET TO A POINT IN THE WEST LINE OF U.S. HIGHWAY NO. 91;
THENCE ALONG SAID WEST LINE, SOUTH 0 DEGREES 02'15" WEST, 215.00 FEET TO THE
TRUE POINT OF BEGINNING;
THENCE CONTINUING ALONG THE SAID WEST LINE, SOUTH 0 DEGREES 02'15" WEST, 180.00
FEET;
THENCE NORTH 88 DEGREES 57'47" WEST, 600.00 FEET;
THENCE NORTH 0 DEGREES 02'15" EAST, 180.00 FEET;
THENCE SOUTH 88 DEGREES 57'47" EAST, 600.00 FEET TO THE TRUE POINT OF BEGINNING.
EXCEPT ANY PORTION OF SAID EASEMENT LYING OVER THE LANDS DESCRIBED IN THE DEED
TO THE GULF OIL CORPORATION OF CALIFORNIA, A DELAWARE CORPORATION, RECORDED
DECEMBER 30, 1960 AS DOCUMENT NO. 222932 OF OFFICIAL RECORDS, CLARK COUNTY,
NEVADA.
<PAGE>
EXHIBIT 5
AGREEMENT
This Agreement (the "AGREEMENT") is made this 22nd day of December, 1997,
by and among Mirage Resorts, Incorporated, a Nevada corporation ("PARENT"), on
the one hand, and Diversified Opportunities Group Ltd., an Ohio limited
liability company ("DIVERSIFIED"), Jacobs Entertainment Nevada, Inc., a Nevada
corporation ("JACOBS ENTERTAINMENT"), and Jeffrey P. Jacobs, an individual
("JACOBS") (Diversified, Jacobs Entertainment and Jacobs are collectively
referred to as the "SELLERS"), with reference to the following facts:
A. Diversified entered into that certain Purchase Agreement dated as of
September 24, 1996 (the "PURCHASE AGREEMENT"), by and among Diversified, Norbert
W. Jansen, a Nevada resident, Individually ("MR. JANSEN") and as Trustee for the
Jansen Family Trust (the "TRUST") under an Agreement dated July 14, 1993, and
Boardwalk Casino, Inc., a Nevada corporation (the "COMPANY"), pursuant to which
Diversified acquired (i) an aggregate of 571,429 shares of the common stock,
$.001 par value, of the Company ("COMMON STOCK"); and (ii) a $5 Million
Convertible Subordinated Note (together with the Deed of Trust and any other
associated documents, the "NOTE").
B. Concurrently with the Purchase Agreement, Diversified, the Company,
and Mr. Jansen, Individually and as Trustee for the Trust, entered into that
certain Option and Proxy Agreement dated September 24, 1996 (as amended by the
Memorandum (as defined below), the "OPTION AGREEMENT"), pursuant to which
Diversified acquired 500,000 shares of Common Stock from Mr. Jansen and obtained
an option to acquire an additional 1,000,000 shares of Common Stock owned by Mr.
Jansen, individually and in his capacity as Trustee for the Trust, and a right
of first refusal with respect to other shares of Common Stock owned by Mr.
Jansen, individually and in his capacity as Trustee for the Trust (the "COMMON
STOCK OPTION").
C. On October 29, 1997, the Company, Diversified, Jacobs Entertainment
and Avis P. Jansen, a Nevada resident, Individually, as Executrix of the Estate
of Norbert W. Jansen and as Trustee for the Trust (in all such capacities,
"JANSEN"), entered into that certain Memorandum of Understanding (the
"MEMORANDUM") pursuant to which (i) Jacobs Entertainment purchased 2,650 shares
(the "PREFERRED SHARES") of Series A 6% Non-Voting Cumulative Preferred Shares
(the "PREFERRED STOCK") from the Company; (ii) Diversified relinquished the
convertibility provision of the Note; (iii) the Company granted Jacobs
Entertainment an option to acquire an additional 15,000 shares of Preferred
Stock (the "PREFERRED STOCK OPTION"); (iv) Jansen granted to Jacobs
Entertainment an option (the "LAND OPTION") to purchase the premises (the
"LAND") leased under that certain Lease Agreement effective as of October 1,
1996, between the Company, as Lessee, and Mr. Jansen and the Trust, as Lessors;
(v) the number of optioned shares of Common Stock covered by the Common Stock
Option was increased to 1,734,620 and the exercise price was reduced to $4.00
per share; and (vi) Jacobs Entertainment agreed to undertake a feasibility study
of a $20 million development on the Land (the "PROJECT"), with a termination fee
(the "TERMINATION FEE") of $2 million payable to Jacobs Entertainment by the
Company upon the occurrence of certain events which interfere with or negatively
impact the Project.
1
<PAGE>
D. Jacobs Entertainment has assigned to Diversified its Preferred Shares
and all of its rights under the Memorandum and otherwise with respect to the
Company.
E. As of the date hereof, Diversified is the record and beneficial owner
of 1,071,429 shares of Common Stock (the "SHARES"), and Jacobs Entertainment
and Jacobs own no shares of Common Stock or other securities of the Company. In
addition, Diversified owns the rights of Jacobs Entertainment under the
Memorandum, and owns 2,650 Preferred Shares.
F. Parent has agreed to purchase from Jansen, and Jansen has agreed to
sell to Parent, 2,750,000 shares of Common Stock owned by Jansen (the "JANSEN
SHARES") pursuant to an agreement dated as of the date hereof between Parent and
Jansen (the "JANSEN STOCK AGREEMENT").
G. Concurrently herewith, Parent is entering into an Agreement and Plan
of Merger (the "MERGER AGREEMENT") with Mirage Acquisiiton Sub Inc., a Nevada
corporation and wholly -owned subsidiary of Parent ("MERGER SUB"), and the
Company, pursuant to which Parent will acquire the Company, on the terms and
subject to the conditions set forth in the Merger Agreement, by means of a
merger of Merger Sub into the Company (the "MERGER").
H. On December 18, 1997, the Board of Directors of the Company, pursuant
to notice duly given or waived, held a meeting at which the Board approved the
acquisition by Parent or Merger Sub of the Shares for purposes of the Nevada
Business Combination Statute, and adopted a bylaw providing that the Company is
not subject to the provisions of the Nevada Control Share Statute.
I. On December 22, 1997, the Board of Directors of the Company, pursuant
to notice duly given or waived, held a meeting at which the Board approved the
Merger Agreement, the Merger, and the transactions contemplated thereby.
In consideration of the foregoing premises and the mutual covenants and
promises contained herein, and such other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Purchase and Sale of Shares.
---------------------------
1.1 Sale of Shares. Subject to the conditions to closing set forth in
--------------
Section 1.3 and 1.4 below, Diversified shall sell, transfer and convey the
- -----------
Shares to Parent (or its designee) and Parent (or its designee) shall purchase
the Shares at a purchase price of $5.00 per share in cash for a total aggregate
purchase price of $5,357,145, in the manner set forth in Section 1.2.
------------
1.2 Closing. The closing (the "CLOSING") will take place at the offices
-------
of Jones Vargas, 3773 Howard Hughes Parkway, 3rd Floor, Las Vegas, Nevada on
such date as specified by Parent within three business days after the latest to
occur of (i) receipt by Parent of all necessary approvals under the regulations
and statutes regulating the active gaming operations of Parent and/or the
Company ("GAMING APPROVALS") and other necessary
2
<PAGE>
government and regulatory approvals, if any, (ii) expiration or early
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR ACT"), and (iii) satisfaction or
waiver of all material conditions precedent to the consummation of the Merger,
or such other date and place as the parties may specify (the "CLOSING DATE"). At
the Closing, Parent (or its designee) shall purchase from Diversified, and
Diversified shall sell to Parent (or its designee), the Shares. Diversified
shall deliver to Parent (or its designee) stock certificates representing the
Shares duly endorsed or accompanied by stock powers duly executed in blank
sufficient to permit the Shares to be transferred without restrictive legends
other than with regard to the Securities Act of 1933, as amended, and Parent (or
its designee) shall pay to Diversified the aggregate purchase price for the
Shares by cash or certified check drawn on a banking institution domiciled in
the United States.
1.3 Parent's Conditions to Closing. The obligations of Parent to
------------------------------
consummate the purchase of the Shares pursuant to Section 1.2 is subject to the
-----------
following conditions, any of which may be waived by Parent in its sole
discretion:
(a) Parent shall have obtained all necessary Gaming Approvals and
other necessary approvals of other governmental or regulatory authorities, if
any;
(b) The representations and warranties of the Sellers set forth in
Section 4 hereof shall be true and correct in all material respects on the
- ---------
Closing Date with the same effect as if made on and as of such date;
(c) The Sellers shall have performed and complied with all agreements
and covenants required to be performed and complied with by the Sellers prior to
the Closing Date;
(d) All waiting periods under the HSR Act applicable to the
transaction provided for herein shall have expired or been terminated;
(e) Parent shall have consummated or shall concurrently consummate
the purchase of the Jansen Shares pursuant to the Jansen Stock Agreement;
(f) All material conditions precedent to Parent's obligation to
consummate the Merger shall have been satisfied or waived;
(g) On the Closing Date, Parent shall not have terminated the Merger
Agreement due to a breach by the Company or the Company's failure to comply with
its obligations thereunder;
(h) On the Closing Date, there shall not be in effect any injunction,
writ or temporary restraining order or any other order of any nature issued by a
court or agency of competent jurisdiction directing that the transaction
provided for herein not be consummated as herein provided nor shall there be any
litigation or proceeding pending or threatened in respect of the transactions
contemplated hereby;
3
<PAGE>
(i) Diversified shall have delivered to Parent (or its designee)
instruments of transfer which vest in Parent (or its designee) good and
marketable title to the Shares as required herein, and shall have delivered all
other instruments, certificates and other documents required to be delivered
hereby; and
(j) Section IX of the Company's bylaws, which provides in substance
that the Company shall not be subject to the provisions of the Nevada Control
Share Statute, shall not have been amended, revoked, repealed, withdrawn,
restricted or modified in any respect.
1.4 Diversified's Conditions to Closing. The obligations of Diversified
-----------------------------------
to consummate the sale of the Shares pursuant to Section 1.2 is subject to the
-----------
following conditions, any of which may be waived by the Sellers in their sole
discretion:
(a) All waiting periods under the HSR Act applicable to the
transaction provided for herein shall have expired or been terminated;
(b) Parent (or its designee) shall have paid the aggregate purchase
price for the Shares;
(c) The closing of the Jansen Stock Purchase Agreement shall have
occurred or shall be closed concurrently with the Closing, and prior to or
concurrently with the Closing, Jansen shall convey the real property located at
3734 Las Vegas Boulevard South, Las Vegas, Nevada, pusuant to the Agreement of
Sale;
(d) The representations and warranties of Parent set forth in this
Agreement shall be true and correct in all material respects on the Closing Date
with the same effect as if made on and as of such date;
(e) On the Closing Date, the Company shall not have terminated the
Merger Agreement due to a material breach by Parent or Parent's failure to
comply with a material obligation thereunder; all material conditions precedent
to the consummation of the Merger shall have been satisfied or waived by Parent;
(f) On the Closing Date, there shall not be in effect any injunction,
writ or order issued by a court or agency of competent jurisdiction directing
that the transaction provided herein not be consummated; and
(g) On the Closing Date, the releases of the Sellers with respect to
the Purchase Agreement, the Option Agreement and the Memorandum given by the
Company in the Merger Agreement and by Jansen in the Jansen Agreement shall have
become effective in accordance with their terms.
2. Purchase and Sale of Preferred Shares and Note. (a) On the later of
----------------------------------------------
(i) the eleventh day after the date hereof or (ii) January 5, 1998, and assuming
the conditions in Section 2(d) below have been met, Diversified shall sell,
transfer and convey all of the Preferred Shares to Parent (or its designee) and
Parent (or its designee) shall purchase the Preferred Shares. Diversified shall
deliver to Parent (or its designee) concurrently and
4
<PAGE>
therewith stock certificates representing the Preferred Shares duly endorsed or
accompanied by stock powers duly executed in blank sufficient to permit the
Preferred Shares to be transferred without restrictive legends other than with
regard to the Securities Act of 1933, as amended.
(b) On the later of (i) the eleventh day after the date hereof, or (ii)
January 5, 1998, and assuming the conditions in Section 2(d) below have been
------------
met, Diversified shall sell, transfer and convey the Note to Parent (or its
designee) and Parent (or its designee) shall purchase the Note. Diversified
shall deliver to Parent (or its designee) (A) the Note, duly endorsed or
accompanied by bond powers duly executed in blank sufficient to permit the Note
to be transferred without restrictive legends other than with regard to the
Securities Act of 1933, as amended, (B) an assignment and transfer in recordable
form of the Deed of Trust, Fixture Filing and Security Agreement, dated
September 24, 1996, and (C) an assignment of any security agreements, UCC
filings and other security instruments securing the Note.
(c) In full payment for the Preferred Shares and the Note, Parent (or its
designee) shall pay to Diversified the sum of (a) $2,650,000 plus any accrued
and accumulated but unpaid dividends on the Preferred Stock as of the date of
payment, and (b) $5,000,000 plus accrued but unpaid interest on the Note to the
date of payment (the "NOTE AND PREFERRED STOCK PURCHASE PRICE") concurrently
with the deliveries contemplated in clauses (a) and (b) above. The allocation
of the Note and Preferred Stock Purchase Price as between the Note and the
Preferred Shares shall be the responsibility of the Sellers and any such
division shall in no way affect the validity of the sale of the Note and the
Preferred Shares to Parent (or its designee).
(d) Parent's obligation to purchase the Preferred Shares and the Note
shall be subject to each of the conditions contained in Section 1.3(b), (c),
-------------- ---
(g), (i) and (j) being satisfied as of such date, any of which may be waived by
- --- --- ---
Parent in its sole discretion.
(e) Parent agrees that after the acquisition of the Preferred Stock and
the Note, Parent will not sell or transfer the Preferred Stock or the Note until
the earlier of (i) the Closing of the acquisition of the Shares, or (ii) the
termination of this Agreement; provided, however, that nothing in this provision
shall prevent Parent from enforcing any provision of the Preferred Stock or the
Note. If this Agreement is terminated without the Closing having occurred, other
than as a result of a breach by Diversified or Diversified's failure to comply
with any of its obligations hereunder, Diversified shall have an option for a
period of ten (10) days after such termination to repurchase the Preferred
Shares and the Note for the Note and Preferred Stock Purchase Price (increased
by the amount of any additional accumulated but unpaid dividends on the
Preferred Shares and any accrued but unpaid interest on the Note). This option
shall be exercised by tendering the Note and Preferred Stock Purchase Price
(increased as described above) to Parent in same day funds.
3. Termination and Release; Assignment. Effective at the Closing (and
-----------------------------------
contingent upon the occurrence of the Closing), the Sellers terminate and
release any and all rights, title and interest which they may have under or
pursuant to the Purchase Agreement, the Common Stock Option, the Option
Agreement, or the Memorandum, including any rights in and with respect to the
Company, any of its assets, its Common Stock or Preferred Stock, the Termination
Fee, and the land owned by Jansen, including any and all claims for breaches or
5
<PAGE>
violations of those agreements that may have occurred on or prior to the date
hereof. The Sellers expressly agree that, effective at the Closing (and
contingent upon the occurrence of the Closing), the Purchase Agreement, the
Common Stock Option, the Option Agreement, the Memorandum, and the Termination
Fee shall be terminated and be of no further force and effect. Effective at the
Closing (and contingent upon the occurrence of the Closing), the Sellers also
release the Company, Jansen, the Trust, and the estate of Norbert W. Jansen (the
"Estate") from any and all obligations, charges or claims arising out of or in
connection with the Purchase Agreement, the Common Stock Option, the Option
Agreement, or the Memorandum. Jansen, the Trust, and the Estate shall each be a
third party beneficiary with respect to the Sellers' agreements contained in
this Section 3. The consideration for the terminations, releases and assignments
---------
granted pursuant to this Section 3 shall be a payment of $3,735,000 (the
---------
"TERMINATION PAYMENT") by Parent to the Sellers at the Closing. The division of
the Termination Payment as between the Sellers shall be the responsibility of
the Sellers and any such division shall in no way affect or limit the
terminations, releases and assignments granted hereunder.
3.1 Standstill with Respect to Option Agreement and Memorandum. Sellers
----------------------------------------------------------
agree that until the earlier of the Closing or the termination of the Merger
Agreement in accordance with its terms, Sellers will take no action to enforce
any of Sellers' rights or exercise any of Sellers' powers under the Option
Agreement or the Memorandum. Jansen, the Trust, and the Estate are express
third party beneficiaries of this Section 3.1.
-----------
3.2 Consent with respect to Jansen Agreements. By execution of this
-----------------------------------------
Agreement, each of the Sellers consents to Jansen, the Trust, and the Estate
entering into the Jansen Stock Agreement and the Agreement of Purchase and Sale
and Joint Escrow Instructions between Avis Jansen, Trustee, and Restaurant
Ventures of Nevada, Inc. Jansen, the Trust, and the Estate are express third
party beneficiaries of this section 3.1.
4. Representations and Warranties. As a material inducement to Parent to
------------------------------
enter into this Agreement, the Sellers, jointly and severally, represent and
warrant to Parent that as of the date hereof and as of the Closing Date:
4.1 Sole Ownership of Securities; No Encumbrances. Diversified is the
---------------------------------------------
record and beneficial owner of 1,071,429 Shares, the Preferred Shares, and the
Note which constitute all of the shares of Common Stock or Preferred Stock or
other debt or equity securities of the Company owned of record or beneficially
by any of the Sellers or their affiliates (except for the shares of Common Stock
owned by Jansen subject to the Common Stock Option which may be deemed to be
beneficially owned by Diversified until termination of Diversified's rights
under the Option Agreement and the Common Stock Option). Diversified has sole
voting power, sole power of disposition and sole power to agree to all of the
matters set forth in this Agreement with respect to all of the Shares or
Preferred Shares owned of record by it, with no limitations, qualifications or
restrictions on such rights, and the Shares and the Preferred Shares are the
only shares of Common Stock or Preferred Stock over which the Sellers have any
of such powers. The Shares, the Preferred Shares and the Note and the
certificates representing such securities are now, and at all times during the
term hereof will be, held of record and beneficially by the Sellers free and
clear of all liens, claims, security
6
<PAGE>
interests, proxies, voting trusts or agreements, understandings or arrangements
or any other encumbrances whatsoever, except for any such encumbrances or
proxies arising hereunder.
4.2 Non-Assignment of Rights. Sellers have not assigned, transferred, or
------------------------
otherwise encumbered or disposed of any of their rights under the Purchase
Agreement or the Assigned Agreements, except as provided in this Agreement.
4.3 Validity; Binding Effect; No Conflict. This Agreement has been duly
-------------------------------------
and validly authorized, executed and delivered by each of the Sellers and
constitutes the valid and binding obligation of each of them enforceable against
them in accordance with its terms, except as such enforcement may be subject to
principles of equity and to bankruptcy, insolvency or similar laws now or
hereafter in effect relating to creditors rights generally. Jacobs has full
power and authority to execute and deliver this Agreement on behalf of
Diversified and Jacobs Entertainment. The execution and delivery of this
Agreement and consummation of the transactions contemplated hereby does not and,
subject to receipt of all requisite governmental or other consents or approvals,
the consummation of the transactions contemplated hereby will not, (i) violate
or conflict with any law, ordinance, rule, regulations, orders, judgment, or
decree to which any of the Sellers is subject or by which any of the Sellers is
bound; or (ii) violate or conflict with or constitute a default (or an event
which, with notice or the lapse of time, or both, would constitute a default)
under, or will result in the termination of, or accelerate the performance
required by or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets under, any term or provision of
any contract, commitment, understanding, arrangement, agreement or restriction
of any kind or character to which any of the Sellers is a party or by which any
of their respective assets may be bound or affected. Except for the Gaming
Approvals and expiration of any waiting periods under the HSR Act, no consent,
approval, authorization or action by or any filings with any federal, state or
local governmental agency or any other third party are required in connection
with the execution and delivery by the Sellers of this Agreement and the other
documents and instruments to be executed and delivered by the Sellers pursuant
hereto or the consummation by the Sellers of the transactions contemplated
hereby.
4.4 Brokerage. Except as expressly contemplated in the Merger Agreement,
---------
no investment banker, broker, financial advisor, finder or other person is
entitled to a commission or fee from Parent or the Company in respect of this
Agreement, the Merger or the transactions contemplated hereby based upon any
arrangement or agreement made by or on behalf of the Sellers.
4.5 SEC Reports. To the actual knowledge of the Sellers without any
-----------
obligation of independent investigation, (a) the Company has filed all forms,
reports and documents required to be filed with the Securities and Exchange
Commission ("SEC") since February 11, 1994, including without limitation Annual
Reports on Form 10-KSB, Quarterly reports on Form 10-QSB and proxy statements
(collectively and as amended as required, the "SEC REPORTS") and (b) as of their
respective dates, none of the SEC Reports, including, without limitation, any
financial statements or schedules included therein, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or
7
<PAGE>
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
5. Covenants of the Sellers. The Sellers hereby covenant and agree as
------------------------
follows:
5.1 Voting. (a) The Sellers hereby agree that (for as long as the Merger
------
Agreement is in effect), at any meeting of the holders of Common Stock, however
called, or in connection with any written consent of the holders of Common
Stock, the Sellers shall vote (or cause to be voted) the Shares (a) in favor of
the Merger, the execution and delivery by the Company of the Merger Agreement
and the approval of the terms thereof and each of the other actions contemplated
by the Merger Agreement and this Agreement and any actions required in
furtherance thereof and hereof; (b) against any action or agreement that would
result in a breach in any respect of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Merger Agreement or
this Agreement; and (c) except as otherwise agreed to in writing in advance by
Parent, against any of the following actions or agreements (other than the
Merger Agreement or the transactions contemplated thereby): (i) any action or
agreement that is intended, or might reasonably be expected, to impede,
interfere with, delay, postpone or attempt to discourage or adversely affect the
Merger and the transactions contemplated by this Agreement and the Merger
Agreement; (ii) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or any of its
subsidiaries; (iii) a sale, lease or transfer of a material amount of assets of
the Company and any of its subsidiaries or a reorganization, recapitalization,
dissolution or liquidation of the Company or any of its subsidiaries; (iv) any
change in the management or Board of Directors of the Company; (v) any change in
the present capitalization or dividend policy of the Company; (vi) any amendment
of the Company's articles of incorporation or bylaws; or (vii) any other
material change in the Company's corporate structure or business. Any such vote
or consent shall be given in accordance with such procedures relating thereto as
shall ensure that it is duly counted for purposes of determining that a quorum
is present and for purposes of recording the results of such vote or consent.
Notwithstanding anything to the contrary contained in this Agreement, Jeffrey
Jacobs shall be free to act in his capacity as a member of the Board of
Directors of the Company and to discharge his fiduciary duties as such.
(b) In order to secure each of the Sellers' obligation to vote the
Shares in accordance with the provisions of Section 5.1(a), each of the Sellers
--------------
hereby appoints Parent as such Sellers' true and lawful proxy and attorney-in-
fact, with full power of substitution, to vote all of the Shares on all matters
set forth in Section 5.1(a). Parent may exercise the irrevocable proxy granted
--------------
to it hereunder at any time any of the Sellers fails to comply with the
provisions of this Agreement, subject to the receipt of necessary Gaming
Approvals, if any. The proxy and powers granted by the Sellers pursuant to this
Section 5.1(b) are coupled with an interest and are given to secure the
- --------------
performance of the Sellers' obligations to Parent under this Agreement. Such
proxies and powers shall be irrevocable and shall survive the death,
incompetency, disability, bankruptcy or dissolution of the applicable Sellers
and the subsequent holders of the Shares.
8
<PAGE>
5.2 Restriction on Transfer, Proxies and Non-Transference; Stop Transfer
--------------------------------------------------------------------
Order; Legend.
- -------------
(a) The Sellers hereby agree, while this Agreement is in effect, and
except as specifically contemplated hereby, not to (i) offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
the offer for sale, sale, transfer, tender, pledge, encumbrance, assignment or
other disposition of, any of the Shares or any interest therein, (ii) grant any
proxies or powers of attorney, deposit any Shares into a voting trust or enter
into a voting agreement with respect to any Shares or (iii) take any action that
would make any representation or warranty of the Sellers contained herein untrue
or incorrect or have the effect of preventing or disabling the Sellers from
performing their obligations under this Agreement.
(b) In furtherance of the provisions of Section 5.2(a) hereof,
--------------
concurrently herewith the Sellers shall and hereby do (i) authorize the
Company's counsel to notify the Company's transfer agent that there is a stop
transfer order with respect to all of the Shares (and that this Agreement places
limits on the voting and transfer of such shares) and (ii) agree that a legend
in substantially the following form shall be placed on each certificate
representing the Shares:
"The securities represented by this certificate are subject to the
conditions, restrictions and obligations specified in the Agreement dated
as of December 22, 1997, and as amended and modified from time to time,
between Mirage Resorts, Incorporated, a Nevada corporation, Diversified
Opportunities Group Ltd., an Ohio limited liability company, Jacobs
Entertainment Nevada, Inc., a Nevada corporation, and Jeffrey P. Jacobs, an
individual, and the Company reserves the right to refuse the transfer of
such securities until such conditions, restrictions and obligations have
been fulfilled with respect to such transfer or said Agreement has been
terminated in accordance with its terms."
The Sellers shall deliver all certificates representing the Shares and the
Company shall or shall cause its transfer agent to imprint such legend on all
such certificates.
5.3 No Additional Purchases. The Sellers hereby agree not to acquire any
-----------------------
additional securities of the Company from and after the date hereof.
5.4 No Inconsistent Agreements. The Sellers shall not enter into any
--------------------------
agreement or understanding with any person or entity the effect of which would
be inconsistent or violative of the provisions of this Agreement or which could
interfere with Parent's efforts to acquire the Company by merger.
5.5 Further Assurances. From time to time, at the other party's request
------------------
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate
9
<PAGE>
and make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.
5.6 No Indemnity Claims. Sellers shall not, either before or after the
-------------------
Closing, assert any claim against the Company or any officer, director, employee
or agent of the Company or its affiliates as to which the Company may have any
obligations of indemnity, either under the Company's bylaws, by contract or
otherwise. All such named persons are third party beneficiaries of this
provision and may enforce the provisions hereof. Seller further agrees that if
it should secure a judgment against any such indemnified person who asserts a
claim for indemnity against the Company, then the amount of such judgment shall
automatically be reduced by and to the extent of such indemnity right.
6. Covenant and Representations of Parent.
--------------------------------------
6.1 Gaming Approvals; HSR Filing. Parent shall promptly prepare and file
----------------------------
such applications and other filings as are necessary to secure required Gaming
Approvals and to comply with the filing requirements of the HSR and will use its
reasonable best efforts (consistent with its other gaming operations) to secure
such Gaming Approvals. Parent has no actual knowledge of a reason why the
Gaming Approvals will not be granted.
6.2 Validity; Binding Effect; No Conflict. This Agreement has been duly
-------------------------------------
and validly authorized, executed and delivered by Parent and constitutes the
valid and binding obligation of Parent enforceable in accordance with its
terms, except as such enforcement may be subject to principles of equity and
bankruptcy, insolvency or similar laws now or hereafter in effect relating to
creditors rights generally. The execution and delivery of this Agreement and
consummation of the transactions contemplated hereby does not and, subject to
receipt of all requisite governmental or other consents or approvals, the
consummation of the transactions contemplated hereby will not, (i) violate or
conflict with any law, ordinance, rule, regulations, orders, judgment, or decree
to which Parent is subject or by which Parent is bound; or (ii) violate or
conflict with or constitute a default (or an event which, with notice or the
lapse of time, or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by or result in the
creation of any lien, security interest, change or encumbrance upon any of the
properties or assets under, any term or provision of any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which Parent is a party or by which its respective assets may be bound or
affected. Except for the Gaming Approvals and expiration of any waiting periods
under the HSR Act, no consent, approval, authorization or action by or any
filings with any federal, state or local governmental agency or any other third
party are required in connection with the execution and delivery by Parent of
this Agreement and the other documents and instruments to be executed and
delivered by Parent pursuant hereto or the consummation by Parent of the
transactions contemplated hereby.
10
<PAGE>
7. Indemnity.
---------
Parent, on the one hand, and the Sellers, on the other hand (in either
case, the "INDEMNIFYING PARTY") shall and hereby do indemnify and hold harmless
the other (in either case, the "INDEMNITEE") from and against and in respect of
any and all loss, damage and expense incurred by the Indemnitee resulting from,
arising out of, attributable to, or in any manner connected with:
(i) Any matter in respect of which the Indemnifying Party shall
have made any misrepresentation, breached any warranty made
pursuant to this Agreement or failed to fulfill any covenant
or agreement on the part of the Indemnifying Party contained
in this Agreement;
(ii) Any and all actions, suits, proceedings, demands,
assessments or judgments, costs and expenses (including
legal and accounting fees and investigation costs) incident
to the foregoing and the enforcement thereof.
If any event shall occur or any circumstance arise which might give
rise to a claim in respect of any matter against which the Indemnifying Party
have indemnified the Indemnitee hereunder, the Indemnitee shall give notice
thereof to the Indemnifying Party. If the matter as to which indemnification
may be sought is a claim by a third party, such notice shall be given within
thirty (30) days after said claim shall have been presented to the Indemnitee;
otherwise, such notice shall be given promptly after the Indemnitee shall
determine that the matter is one as to which indemnification is sought. Failure
to give notice within the required time shall have no effect if the lack of
notice by Indemnitee is not materially prejudicial to the rights of the
Indemnifying Party. Unless the parties otherwise agree in writing, the
Indemnifying Party shall defend against all such third-party claims or otherwise
satisfy such claims, at their sole cost and expense, through counsel and
accountants designated by them and approved by the Indemnitee, which approval
shall not be withheld unreasonably. The Indemnitee shall have the right to
participate with the Indemnifying Party in the defense of any such matter and
shall fully cooperate with and make available to the Indemnifying Party the
business records of the Indemnitee for said purpose. If the Indemnifying Party,
after receipt of notification from Indemnitee of a third-party claim, fails to
protest, defend or settle any such third-party claim, demand suit or proceeding
promptly, diligently and in good faith, Indemnitee shall have the right at its
discretion to settle, defend or pay the same, in which event, the obligations of
the Indemnifying Party shall extend to and include the amounts of said
settlement or payment and/or the costs of legal expenses of such defense.
8. Miscellaneous.
-------------
8.1 Survival of Representations, Warranties and Agreements. All
------------------------------------------------------
representations, warranties and agreements made by the Sellers or Parent
pursuant hereto shall survive the Closing of this transaction regardless of any
investigation by Parent or Sellers, except that the
11
<PAGE>
representations and warranties made by the Sellers to Parent in Section 4.5
-----------
shall terminate upon purchase of all of Sellers' Shares hereunder.
8.2 Binding Agreement; Assignments; Third-Party Beneficiaries. All of the
---------------------------------------------------------
terms and provisions of this Agreement shall inure to the benefit of, be
enforceable by and be binding upon and enforceable against the parties hereto
and their respective heirs and personal representatives, successors and assigns;
provided, however, that except for an assignment by Parent to one of its
affiliates (which may be done in whole or in part), neither of the parties
hereto may assign its rights or duties hereunder. If Parent assigns this
Agreement to one of its affiliates, Parent shall remain liable for the
performance of its obligations hereunder. Nothing contained in this Agreement
shall confer any rights or remedies upon any other person, firm or corporation
(except as otherwise provided in Section 3 hereof with respect to Jansen, the
---------
Trust, the Estate, and those persons benefitted from the covenant not to sue in
Section 5.7, above).
- -----------
8.3 Obligations Joint and Several. The obligations of Diversified, Jacobs
-----------------------------
Entertainment and Jacobs under this Agreement are joint and several as to each
other.
8.4 Waiver of Provisions. The terms, covenants, representations,
--------------------
warranties and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party
at any time or times to require performance of any provision of this Agreement
shall in no manner affect the right at a later date to enforce the same. No
waiver by any party of any condition or the breach of any provision, term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as further or continuing waiver of any such condition or of the breach
of any other provision, term, covenant, representation or warranty of this
Agreement.
8.5 Specific Performance. Each of the parties hereto recognizes and
--------------------
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
12
<PAGE>
8.6 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given upon personal delivery, facsimile transmission
(which is confirmed), telex or delivery by an overnight express courier service
(delivery, postage or freight charges prepaid), or on the fourth day following
deposit in the United States mail (if sent by registered or certified mail,
return receipt requested, delivery, postage or freight charges prepaid),
addressed to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
<TABLE>
<CAPTION>
If to the Sellers at: If to Parent at:
- -------------------- ---------------
<S> <C>
Diversified, Jacobs Entertainment or Jacobs Mirage Resorts, Incorporated
c/o Jacobs Entertainment Ltd. 3400 Las Vegas Boulevard South
1231 Main Avenue Las Vegas, Nevada 89109
Cleveland, OH 44113 Attn: Daniel Lee and Bruce Levin,Esq.
Attn: Jeffrey P. Jacobs Fax No.: (702) 792-7268
Fax No.: (216) 861-6315 Fax No: (702) 791-5787
with a copy to: with a copy to:
- -------------- --------------
Hahn Loeser & Parks C. Kevin McGeehan, Esq.
3300 BP America Building Irell & Manella LLP
200 Public Square 1800 Avenue of the Stars, Suite 900
Cleveland, OH 44114 Los Angeles, California 90067
Attn: Stephen P. Owendoff, Esq. Fax No.: (310) 203-7199
Fax No.: (216) 241-2824
</TABLE>
All notices shall be deemed received on the third business day after
mailing or the first business day after delivery to the overnight courier
service or the same business day if personally delivered or sent by facsimile.
8.7 Interpretation. When a reference is made in this Agreement to
--------------
Section, such reference shall be to a Section in this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
The descriptive headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
8.8 Cooperation. Each party shall cooperate and use its best efforts to
-----------
consummate the transaction contemplated herein. In addition, each party shall
cooperate and take such action and execute such other and further documents as
reasonably may be requested by any other party from time to time after the
consummation of the transactions contemplated herein to carry out the terms and
provisions and intent of this Agreement.
8.9 Severability. If any term, provision, covenant or restriction of
------------
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void, unenforceable or against its regulatory policy, the
remainder of the terms, provisions,
13
<PAGE>
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
8.10 Entire Agreement; Modification. This Agreement contains the entire
------------------------------
agreement between the parties and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. This Agreement may be amended, modified and supplemented
in any and all respects by written agreement of the parties hereto.
8.11 Governing Law. The Agreement shall be governed by and construed
-------------
under the laws of the State of Nevada.
8.12 Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which taken together shall constitute one instrument.
8.13 Release of the Company. Effective as of the Closing (and contingent
----------------------
on the occurrence of the Closing), each of Sellers releases the Company from any
and all claims, debts or obligations of the Company to Sellers other than any
obligation of the Company to indemnify or defend any of the Sellers against
claims made against the Sellers resulting from or related to any of Sellers
having been a director or officer of the Company.
8.14 Termination with Merger Agreement. If the Merger Agreement
---------------------------------
terminates in accordance with its terms without the Merger having occurred, then
this Agreement and the obligations of the parties hereunder shall terminate on
the same day as the termination of the Merger Agreement, except that Section
-------
2(e) (only as it relates to the option granted to Diversified) shall remain in
- ----
effect.
8.15 No Prior Agreements. Each of the parties hereto acknowledges and
-------------------
agrees that, prior to the execution of this Agreement on the date hereof, there
was no agreement, arrangement or understanding among the parties with respect to
the acquisition, disposition, holding or voting of the Shares.
8.16 Facsimile Signatures. Facsimile signatures shall have the same force
--------------------
and effect as if the parties had delivered such signatures in person.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above set forth.
PARENT: DIVERSIFIED:
Mirage Resorts, Incorporated Diversified Opportunities Group Ltd.,
a Nevada corporation an Ohio limited liability company
By: Jacobs Entertainment Ltd., its manager
By: /s/ Daniel R. Lee By: /s/ Jeffrey P. Jacobs
--------------------------- -----------------------------
Daniel R. Lee Jeffrey P. Jacobs
Its: Chief Financial Officer Its: President
JACOBS ENTERTAINMENT:
Jacobs Entertainment Nevada, Inc.,
a Nevada corporation
By: /s/ Jeffrey P. Jacobs
-----------------------------
Jeffrey P. Jacobs
Its: President
/s/ Jeffrey P. Jacobs
-----------------------------------
Jeffrey P. Jacobs, an individual
