SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a)
AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
(Amendment No. ___)
Lady Luck Gaming Corporation
(Name of Issuer)
Common Stock, par value $.006 per share
(Title of Class of Securities)
505820308
(CUSIP Number)
Paul W. Theiss
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
(312) 782-0600
-------------------------------------------------------------------
(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications)
October 5, 1999
-------------------------------------------------------------------
(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(e), 13d-1(f) or 13d-1(g),
check the following box [ ]
(Continued on following pages)
(Page 1 of 8 Pages)
<PAGE>
Page 2 of 8 Pages
CUSIP NO.: 505820308 Schedule 13D
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Isle of Capri Casinos, Inc. (#41-1659606)
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [x]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC, BK
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH 1,707,863 shares
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
10 REPORTING PERSON WITH SHARED DISPOSITIVE POWER
1,707,863 shares
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,707,863 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [x]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
34.99%
14 TYPE OF REPORTING PERSON
CO
<PAGE>
Page 3 of 8 Pages
ITEM 1. SECURITY AND ISSUER
This Schedule 13D relates to the common stock, par value $.006 per
share (the "Lady Luck Common Stock"), of Lady Luck Gaming Corporation, a
Delaware corporation ("Lady Luck" or "Issuer"). Lady Luck's principal
executive offices are located at 220 Stewart Avenue, Las Vegas, Nevada
89101.
ITEM 2. IDENTITY AND BACKGROUND
(a) - (c) This Schedule 13D is being filed by Isle of Capri
Casinos, Inc., a Delaware corporation ("Isle"). Isle's principal executive
offices are located at 711 Dr. Martin Luther King, Jr. Boulevard, Biloxi,
Mississippi 39530. Isle's principal business is the development, ownership
and operation of branded gaming and related lodging and entertainment
facilities in the United States. The names, business addresses and
principal occupation or employment (and the name, principal business and
address of any corporation or other organization in which such employment
is conducted) of each of the persons specified by Instruction C of Schedule
13D is set forth on Schedule 1 attached hereto.
(d) - (e) Neither Isle, nor to the knowledge of Isle, has any of
the persons listed on Schedule 1, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or been 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.
(f) See Schedule 1 attached hereto.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The source of the funds necessary to exercise the option granted
pursuant to the terms of the Support Agreement (as described in Item 4
below) will be from Isle's working capital or amounts available to be
borrowed under Isle's existing credit facility which is incorporated by
reference herein as Exhibit 99.4.
CIBC World Markets Corp. ("CIBC") has committed to loan Isle up to
$650 million pursuant to the terms of a new senior secured credit
facility (which has not yet been entered into and which will replace the
existing credit facility), which together with Isle's working capital, is
expected to be sufficient to fund the consummation of all of the
transactions contemplated by the Merger Agreement as described in Item 4
below. However, the funds made available under this new senior credit
facility are not expected to be a source of funds in the event Isle
exercises the option granted by the Stockholder Support Agreement.
ITEM 4. PURPOSE OF TRANSACTION
As of October 5, 1999, Isle, Isle Merger Corp. ("Merger Sub"), a
wholly owned subsidiary of Isle, and the Issuer entered into an Agreement
and Plan of Merger (the "Merger Agreement"), which provides that Merger Sub
is to be merged with and into the Issuer (the "Merger"), with the Issuer
being the surviving corporation, and each share of Lady Luck Common Stock
(except as to shares for which dissenters' rights have been properly
asserted) is to be converted into the right to receive from Isle $12.00 in
cash (the "Consideration").
In connection with Isle entering into the Merger Agreement, Andrew
H. Tompkins (the "Stockholder"), Lady Luck's chairman and the owner of
approximately 46% of Lady Luck's outstanding shares, entered into a
Stockholder Support Agreement (the "Support Agreement") for the benefit of
Isle which includes an immediately exercisable option to purchase the
Stockholder's shares in an amount equal to 34.99% of Lady Luck's Common
Stock outstanding. The Support Agreement also provides Isle an option to
purchase additional shares of Lady Luck Common Stock from the Stockholder
equal to approximately 10.4% of Lady Luck's outstanding shares in the event
that the Stockholder breaches his obligations under the Support Agreement.
<PAGE>
Page 4 of 8 Pages
If the Merger is consummated in accordance with the terms of the
Merger Agreement, (i) the directors and officers of Merger Sub immediately
prior to the effective time of the Merger will become the initial directors
and officers of the surviving corporation, respectively, (ii) the
Certificate of Incorporation of the Issuer shall be amended and restated to
read as the Certificate of Incorporation of Merger Sub as in effect
immediately prior to the effective time of the Merger, except that Article
One, relating to the name of the Issuer, shall remain unchanged and (iii)
the By-laws of Merger Sub, as in effect immediately prior to the effective
time of the Merger, shall be the By-laws of the surviving corporation.
Additionally, the Common Stock will be deregistered under the Securities
Exchange Act of 1934 and cease to be authorized for quotation on The Nasdaq
SmallCap Market.
Except as set forth above or in Item 5 or Item 6 below, Isle has not
formulated any plans or proposals which relate to or would result in: (i)
the acquisition by any person of additional securities of the Issuer or the
disposition of securities of the Issuer, (ii) an extraordinary corporate
transaction involving the Issuer or any of its subsidiaries, (iii) a sale
or transfer of a material amount of the assets of the Issuer or any of its
subsidiaries, (iv) any change in the present board of directors or
management of the Issuer, (v) any material change in the Issuer's
capitalization or dividend policy, (vi) any other material change in the
Issuer's business or corporate structure, (vii) any change in the Issuer's
charter or bylaws or other instrument corresponding thereto or other action
which may impede the acquisition of control of the Issuer by any person,
(viii) causing a class of the Issuer's securities to be deregistered or
delisted, (ix) a class of equity securities of the Issuer becoming eligible
for termination of registration or (x) any action similar to any of those
enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
As a result of the Support Agreement, the Filing Person may be deemed
to be the beneficial owner of 1,707,863 shares of Lady Luck Common Stock
for purposes of Rule 13d-1(a) promulgated under the Securities Exchange Act
of 1934, as amended, which represents approximately 34.99% of the shares of
Lady Luck Common Stock outstanding (based on the number of shares of Lady
Luck Common Stock outstanding on June 30, 1999). The Filing Person
disclaims beneficial ownership of the additional 506,807 shares (which
represent approximately 10.4% of the shares of Lady Luck Common Stock
outstanding) which are subject to the terms of the Support Agreement
because the Filing Person cannot exercise an option to purchase such shares
until such time as the Stockholder breaches his obligations under the
Support Agreement. All of the Stockholders' shares of Lady Luck Common
Stock have been placed in escrow for the benefit of Isle pursuant to an
Escrow Agreement dated October 5, 1999 among the Stockholder, Isle and
Swidler Berlin Shereff Friedman, LLP as escrow agent.
Neither the Filing Person, nor to the knowledge of the Filing
Person, does any other person referred to in Schedule 1, (i) beneficially owns,
as of this date, any shares of Lady Luck Common Stock or (ii) has acquired or
disposed of any shares of Lady Luck Common Stock during the past 60 days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Pursuant to the Merger Agreement and subject to the terms and
conditions set forth therein (including approval by the holders of the
Issuer's outstanding shares of Lady Luck Common Stock and expiration or
termination of the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended), the Merger Sub will merge with and
into the Issuer, with the Issuer continuing as the surviving corporation,
and each issued and outstanding share of Lady Luck Common Stock, other than
shares owned by Isle or the Issuer and shares as to which dissenters rights
have been properly asserted, will be converted into the right to receive
the Consideration. The Merger Agreement includes a provision restricting
the Issuer's ability to solicit competing acquisition proposals and
provides for a termination fee payable by the Issuer in the event that the
Merger is not consummated under certain circumstances.
<PAGE>
Page 5 of 8 Pages
Pursuant to the Support Agreement, the Stockholder has agreed,
among other things, (i) to vote all of his shares in favor of the
adoption of the Merger Agreement and approval of the Merger and the other
transactions contemplated by the Merger Agreement, (ii) to vote against any
proposal for any recapitalization, merger (other than the Merger), sale of
assets or other business combination between the Issuer and any person or
entity (other than Isle) or any other action or agreement that would result
in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Issuer under the Merger Agreement or which
could result in any of the conditions under the Merger Agreement not being
fulfilled, and (iii) to vote in favor of any other matter relating to
consummation of the transactions contemplated by the Merger Agreement. The
Stockholder has granted to Isle an irrevocable proxy to vote the Lady Luck
Common Stock owned by such Stockholder in the event that such Stockholder
violates its contractual obligations to vote as described above. The
Stockholder further has agreed to cause the number of shares over which he
has voting power to be voted in accordance with the foregoing. See Item 4
hereof for a description of the purchase option granted by the Stockholder
to Isle.
The obligations of the Stockholder under the Support Agreement
terminate upon the earlier of (i) the effective time of the Merger,
(ii) termination of the Merger Agreement under certain circumstances, in
accordance with the terms thereof or (iii) December 31, 2000.
The descriptions herein of the Merger Agreement and the Support
Agreement are qualified in their entirety by reference to such agreements,
copies of which are filed hereto as Exhibits 99.1 and 99.2, and which are
specifically incorporated herein by reference in their entirety.
Except as provided in the Merger Agreement and the Support
Agreement, to the best knowledge of the Filing Person, there are no
contracts, arrangements, understandings or relationships (legal or
otherwise) between such person and any person with respect to any
securities of the Issuer, including but not limited to transfer or voting
of any of the securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or
loss, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit Description
99.1 Agreement and Plan of Merger, dated as of October 5, 1999, among
Isle of Capri Casinos, Inc., Isle Merger Corp. and Lady Luck
Gaming Corporation.
99.2 Stockholder Support Agreement, dated as of October 5, 1999,
by Andrew H. Tompkins to and for the benefit of Isle of Capri
Casinos, Inc.
99.3 Escrow Agreement, dated October 5, 1999, among Andrew H. Tompkins,
Isle of Capri Casinos, Inc. and Swidler Berlin Shereff Friedman,
LLP.
99.4 Credit Agreement, dated as of April 23, 1999, among Isle
of Capri Casinos, Inc., the lenders listed therein,
Canadian Imperial Bank of Commerce, as administrative
agent and issuing lender, Bank One of Louisiana, N.A., as
syndication agent and Wells Fargo Bank, N.A., as
documentation agent. (Filed as Exhibit 10.72 to the
Annual Report of Isle of Capri Casinos, Inc. on Form 10-K
for the year ended April 25, 1999, File No. 0-20538,
filed with the SEC on July 2, 1999 and incorporated
herein by reference).
<PAGE>
Page 6 of 8 Pages
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.
Dated: October 15, 1999 ISLE OF CAPRI CASINOS, INC.
By: /s/ Allan B. Solomon
---------------------------
Name: Allan B. Solomon
Title: Executive Vice President,
Secretary, General Counsel
and Director
<PAGE>
Page 7 of 8 Pages
EXHIBIT INDEX
Exhibit Description
99.1 Agreement and Plan of Merger, dated as of October 5, 1999, among
Isle of Capri Casinos, Inc., Isle Merger Corp. and Lady Luck
Gaming Corporation.
99.2 Stockholder Support Agreement, dated as of October 5, 1999,
by Andrew H. Tompkins to and for the benefit of Isle of Capri
Casinos, Inc.
99.3 Escrow Agreement, dated October 5, 1999, among Andrew H. Tompkins,
Isle of Capri Casinos, Inc. and Swidler Berlin Shereff Friedman,
LLP.
99.4 Credit Agreement, dated as of April 23, 1999, among Isle
of Capri Casinos, Inc., the lenders listed therein,
Canadian Imperial Bank of Commerce, as administrative
agent and issuing lender, Bank One of Louisiana, N.A., as
syndication agent and Wells Fargo Bank, N.A., as
documentation agent. (Filed as Exhibit 10.72 to the
Annual Report of Isle of Capri Casinos, Inc. on Form 10-K
for the year ended April 25, 1999, File No. 0-20538,
filed with the SEC on July 2, 1999 and incorporated
herein by reference).
<PAGE>
Page 8 of 8 Pages
<TABLE>
<CAPTION>
SCHEDULE 1
Information Concerning Executive Officers and
Directors of Isle of Capri Casinos, Inc.
The current executive officers and directors of Isle of Capri Casinos, Inc. ("Isle") are listed below. The
address of Isle and of each executive officer listed below is: Isle of Capri Casinos, Inc., 711 Dr. Martin Luther King,
Jr. Boulevard, Biloxi, Mississippi 39530.
NAME PRESENT POSITION WITH ISLE CITIZENSHIP
<S> <C> <C>
CORPORATE OFFICERS
- ------------------
Bernard Goldstein............ Chairman, Chief Executive Officer and Director USA
John M. Gallaway............. President, Chief Operating Officer and Director USA
Allan B. Solomon............. Executive Vice President, Secretary, General
Counsel and Director USA
Rexford A. Yeisley........... Senior Vice President and Chief Financial Officer USA
Timothy M. Hinkley........... Senior Vice President of Operations USA
Robert Boone................. Vice President USA
Edward F. Reese.............. Vice President USA
James Guay................... Vice President USA
Gregory D. Guida............. Vice President USA
POSITION/PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND BUSINESS ADDRESS
DIRECTORS
- ---------
Bernard Goldstein............ Chairman and Chief Executive Officer USA
John M. Gallaway............. President and Chief Operating Officer USA
Allan B. Solomon............. Executive Vice President, Secretary and
General Counsel USA
Robert S. Goldstein.......... President
Alter Trading Corporation, a scrap metal recycling company USA
555 North New Ballas Road
Suite 150
St. Louis, MO 63141-6884
Alan J. Glazer............... Vice President and Regional Managing Director
Morris Anderson & Associates Ltd., a management consulting firm USA
One Penn Plaza
Suite 2134
New York, NY 10119
Emanuel Crystal.............. Chief Executive Officer
Jackson Iron & Metal Company, a scrap metal recycling company USA
1404 Allen Street
Jackson, MS 39225-3309
Randolph Baker............... President
Thompson & Baker, a public relations and public affairs firm USA
50 Peabody Place
4th Floor
Memphis, TN 38103
</TABLE>
AGREEMENT AND PLAN OF MERGER
dated as of October 5, 1999
among
ISLE OF CAPRI CASINOS, INC.,
ISLE MERGER CORP.
and
LADY LUCK GAMING CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER
Section 1.1. The Merger.................................................1
Section 1.2. Effective Time of the Merger...............................2
Section 1.3. Closing....................................................2
Section 1.4. Effect of the Merger.......................................2
Section 1.5. Certificate of Incorporation and Bylaws of the
Surviving Corporation.....................................2
Section 1.6. Directors and Officers of the Surviving Corporation........2
Section 1.7. Subsidiaries of the Surviving Corporation..................2
ARTICLE II EFFECT OF THE MERGER ON SECURITIES OF THE CONSTITUENT
CORPORATIONS
Section 2.1. Conversion of Securities...................................3
Section 2.2. Exchange of Certificates...................................4
Section 2.3. Acceleration and Payment for Lady Luck Options.............5
Section 2.4. Dissenting Shares..........................................6
Section 2.5. Lady Luck Preferred Stock..................................6
Section 2.6. Lady Luck Debt Securities..................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF LADY LUCK
Section 3.1. Organization of Lady Luck and its Subsidiaries.............7
Section 3.2. Capitalization.............................................8
Section 3.3. Authority; No Conflict; Required Filings and Consents......9
Section 3.4. Public Filings; Financial Statements......................11
Section 3.5. No Undisclosed Liabilities................................11
Section 3.6. Absence of Certain Changes or Events......................12
Section 3.7. Taxes.....................................................12
Section 3.8. Real Property, Title and Related Matters..................14
Section 3.9. Title to Personal Property; Liens.........................15
Section 3.10. Intellectual Property.....................................16
Section 3.11. Agreements, Contracts and Commitments.....................16
Section 3.12. Litigation................................................17
Section 3.13. Environmental Matters.....................................17
Section 3.14. Employee Benefit Plans....................................18
Section 3.15. Compliance................................................20
Section 3.16. Labor Matters.............................................21
Section 3.17. Insurance.................................................22
i
<PAGE>
Page
Section 3.18. Information in Proxy Statement............................22
Section 3.19. State Takeover Statute....................................22
Section 3.20. Voting Requirements.......................................22
Section 3.21. Year 2000.................................................22
Section 3.22. Opinion of Financial Advisor..............................23
Section 3.23. Brokers...................................................23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB
Section 4.1. Organization of Buyer and Merger Sub......................24
Section 4.2. Capitalization of Merger Sub..............................24
Section 4.3. Authority; No Conflict; Required Filings and Consents.....24
Section 4.4. Brokers...................................................25
Section 4.5. Ownership of Securities...................................26
Section 4.6. Proxy Statement...........................................26
Section 4.7. Litigation................................................26
Section 4.8. Financing.................................................26
ARTICLE V COVENANTS
Section 5.1. Conduct of Business of Lady Luck..........................27
Section 5.2. Cooperation; Notice; Cure.................................31
Section 5.3. No Solicitation...........................................31
Section 5.4. Proxy Statement...........................................32
Section 5.5. Special Meeting...........................................32
Section 5.6. Access to Information.....................................32
Section 5.7. Governmental Approvals....................................33
Section 5.8. Publicity.................................................34
Section 5.9. Indemnification...........................................34
Section 5.10. Stockholder Litigation....................................35
Section 5.11. Employee Benefits.........................................35
Section 5.12. Other Agreements..........................................35
Section 5.13. Miss Marquette Loans......................................35
Section 5.14. Further Assurances and Actions............................36
Section 5.15. Pending Acquisitions......................................36
Section 5.16. Allocation of Funds.......................................36
ARTICLE VI CONDITIONS TO MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect the
Merger...................................................36
Section 6.2. Additional Conditions to Obligations of Lady Luck.........37
Section 6.3. Additional Conditions to Obligations of Buyer.............38
12617413.14 100899 1140C 99520702
ii
<PAGE>
Page
ARTICLE VII TERMINATION AND AMENDMENT
Section 7.1. Termination...............................................39
Section 7.2. Effect of Termination.....................................42
Section 7.3. Fees and Expenses.........................................42
Section 7.4. Amendment.................................................43
Section 7.5. Extension; Waiver.........................................43
ARTICLE VIII MISCELLANEOUS
Section 8.1. Nonsurvival of Representations, Warranties, Covenants
and Agreements...........................................43
Section 8.2. Notices...................................................44
Section 8.3. Interpretation............................................45
Section 8.4. Counterparts..............................................45
Section 8.5. Entire Agreement; No Third Party Beneficiaries............45
Section 8.6. Governing Law.............................................45
Section 8.7. Assignment................................................45
Section 8.8. Severability; Enforcement.................................46
Section 8.9. Specific Performance......................................46
iii
<PAGE>
Index of Defined Terms
The following terms have the respective meanings specified in the
indicated Sections of the Agreement:
Term Agreement Section
- ---- -----------------
Acquisition Proposal 5.3(a)
Agreement Recitals
best knowledge Article III
Buyer Recitals
Buyer Disclosure Schedule Article IV
Buyer Material Adverse Effect 4.1
Certificate of Merger 1.2
CIBC 4.4
Closing 1.3
Closing Date 1.3
Code 2.2(f)
Confidentiality Agreement 5.6
DGCL 1.1
Dissenting Shares 2.4
Due Diligence Period 6.3
Effective Time 1.2
Encumbrances 3.8(b)
Environmental Law 3.13(b)
ERISA 3.14(a)
ERISA Affiliate 3.14(a)
Exchange Act 3.3(c)
Exchange Agent 2.2(a)
Exchange Fund 2.2(a)
foreign person 3.7(i)
GAAP 3.4(b)
Gemini 5.1(n)
Gemini Trademark Assets 5.1(n)
Governmental Approvals 5.7(a)
Governmental Entity 3.3(c)
GSMC 3.7(e)
Hazardous Substance 3.13(c)
HSR Act 3.3(c)
IMPS 5.1(n)
include, includes or including 8.3
Indebtedness 3.11(a)
Indemnified Parties 5.9(a)
IRS 3.7(c)
iv
<PAGE>
Term Agreement Section
---- -----------------
knowledge Article III
Lady Luck Recitals
Lady Luck Balance Sheet 3.4(b)
Lady Luck Common Stock 2.1(a)
Lady Luck Disclosure Schedule Article III
Lady Luck Employee Plans 3.14(a)
Lady Luck Gaming Laws 3.15(b)
Lady Luck Interim Financial Statements 3.4(b)
Lady Luck Las Vegas Agreement 5.1(n)
Lady Luck Material Contracts 3.11(a)
Lady Luck Material Adverse Effect 3.1
Lady Luck Notes 5.1(p)
Lady Luck Option 2.3
Lady Luck Option Plan 2.3
Lady Luck Permits 3.15(a)
Lady Luck Preferred Stock 3.2(a)
Lady Luck Series A Preferred Stock 2.1(c)
Lady Luck Series A Preferred Stock
Redemption Amount 2.5
Lady Luck SEC Reports 3.4(a)
Lady Luck Special Meeting 5.5
Lady Luck Stockholder Approval 3.20
Lady Luck Welfare Plan 3.14(g)
Las Vegas Hotel 5.1(n)
Leased Real Property 3.8(b)
Liens 3.1
made available 8.3
Merger Recitals
Merger Consideration 2.1(a)
Merger Sub Recitals
Merger Sub Common Stock 4.2
Miss Marquette Agreement 5.1(d)
Miss Marquette Credit Agreement 5.13
Multiemployer Plan 3.14(e)
Nevada Approval 6.1(c)
Notifying Party 5.7(a)
Onyx Partners 3.23
Outside Date 7.1(b)
Owned Real Property 3.8(b)
PBGC 3.14(f)
Permitted Encumbrances 3.8(b)
Physical Inspection and Review 6.3(d)
v
<PAGE>
Term Agreement Section
- ---- -----------------
prohibited transactions 3.14(c)
Proxy Statement 5.4(a)
Redemption Agent 2.5
SEC 3.3(c)
Securities Act 3.4(a)
Services 3.21
single employer 3.14(a)
Sodak 3.7(e)
strategic alliances 3.11(a)
Stockholder Support Agreement Recitals
Subsidiary 3.1
Superior Proposal 5.3(a)
Surviving Corporation 1.1
Tax or Taxes 3.7(a)
Terminating Buyer Breach 7.1(h)
Terminating Lady Luck Breach 7.1(g)
the date of this Agreement, the date hereof 8.3
Third Party 5.3(a)
Tompkins 5.1(m)
Voting Debt 3.2(b)
Wasserstein Perella 3.22
without limitation 8.3
Year 2000 Ready 3.21
vi
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
October 5, 1999, by and among ISLE OF CAPRI CASINOS, INC., a Delaware
corporation ("Buyer"), ISLE MERGER CORP., a Delaware corporation and a
wholly owned subsidiary of Buyer ("Merger Sub"), and LADY LUCK GAMING
CORPORATION, a Delaware corporation ("Lady Luck").
WHEREAS, the Board of Directors of Lady Luck has determined that
the merger of Merger Sub with and into Lady Luck, upon the terms and
subject to the conditions set forth in this Agreement (the "Merger"), is
fair to, and in the best interests of, Lady Luck and its stockholders;
WHEREAS, the Boards of Directors of Buyer and Merger Sub have
determined that the Merger is in the best interests of Buyer and Merger Sub
and their respective stockholders;
WHEREAS, the Boards of Directors of Buyer, Merger Sub and Lady
Luck have each approved and adopted this Agreement and approved the Merger
and the other transactions contemplated hereby; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to each of Buyer's and Merger
Sub's willingness to enter into this Agreement, the principal stockholder
of Lady Luck will enter into a Stockholder Support Agreement with Buyer,
dated as of the date of this Agreement in the form attached hereto as
Exhibit A (the "Stockholder Support Agreement"), pursuant to which such
stockholder will agree, among other things, to vote all voting securities
of Lady Luck owned by him beneficially or of record in favor of approval of
the transactions contemplated by this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
below, the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the
provisions of this Agreement and in accordance with Section 251 of the
Delaware General Corporation Law (the "DGCL"), at the Effective Time (as
defined in Section 1.2), Merger Sub shall be merged with and into Lady
Luck. As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and Lady Luck shall continue as the surviving corporation
(the "Surviving Corporation").
1
<PAGE>
Section 1.2. Effective Time of the Merger. Subject to the
provisions of this Agreement (including Section 7.1 hereof), a certificate
of merger with respect to the Merger in appropriate form (the "Certificate
of Merger") shall be duly prepared, executed and acknowledged and
thereafter delivered to the Secretary of State of the State of Delaware for
filing, as provided in the DGCL, as early as practicable on the Closing
Date (as defined in Section 1.3). The Merger shall become effective at the
later of the date of filing of the Certificate of Merger or at such time
within 90 days of the date of filing as is specified in the Certificate of
Merger (the "Effective Time").
Section 1.3. Closing. The closing of the Merger (the "Closing")
will take place at such time and place to be agreed upon by the parties
hereto, on a date to be specified by Buyer and Lady Luck, which shall be no
later than the third business day after satisfaction or, if permissible,
waiver of the conditions set forth in Article VI (the "Closing Date") and
no earlier than January 4, 2000, unless another date is agreed to by Buyer
and Lady Luck.
Section 1.4. Effect of the Merger. Upon becoming effective, the
Merger shall have the effects set forth in the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time,
all properties, rights, privileges, powers and franchises of Merger Sub and
Lady Luck shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Merger Sub and Lady Luck shall become the debts,
liabilities and duties of the Surviving Corporation.
Section 1.5. Certificate of Incorporation and Bylaws of the
Surviving Corporation. At the Effective Time, the Certificate of
Incorporation and Bylaws of the Surviving Corporation shall be amended to
be substantially identical to the Certificate of Incorporation and Bylaws,
respectively, of Merger Sub as in effect immediately prior to the Effective
Time, in each case until duly amended in accordance with applicable law;
provided the name of the Surviving Corporation as set forth in its
Certificate of Incorporation shall be changed to a new name to be
determined by Merger Sub prior to the Effective Time.
Section 1.6. Directors and Officers of the Surviving Corporation.
The directors of Merger Sub immediately prior to the Effective Time shall
be the initial directors of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation. The directors of Lady Luck immediately prior to the
Effective Time shall each have resigned as of the Effective Time. The
officers of Merger Sub immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation.
Section 1.7. Subsidiaries of the Surviving Corporation. The
Surviving Corporation may distribute shares of stock of the Subsidiaries of
the Surviving Corporation to the Buyer, or undertake similar transactions
having the effect of reorganizing the corporate structure of Buyer and its
Subsidiaries, from time to time after the Effective Time.
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ARTICLE II
EFFECT OF THE MERGER ON SECURITIES OF
THE CONSTITUENT CORPORATIONS
Section 2.1. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of any of the parties
hereto or the holders of any of the following:
(a) Lady Luck Common Stock. Each share of common stock,
par value $0.006 per share, of Lady Luck ("Lady Luck Common
Stock") issued and outstanding immediately prior to the Effective
Time (other than shares to be canceled and retired in accordance
with Section 2.1(b) and any Dissenting Shares (as defined in
Section 2.4), together with all rights in respect thereto, shall
be converted, subject to Section 2.1(e), into the right to receive
from the Surviving Corporation a net amount of $12.00 in cash (the
"Merger Consideration"). As of the Effective Time, all shares of
Lady Luck Common Stock upon which the Merger Consideration is
payable pursuant to this Section 2.1(a) 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 ownership or
other rights with respect thereto, except the right to receive the
Merger Consideration in exchange for such shares upon the
surrender of such certificate in accordance with Section 2.2.
(b) Cancellation of Treasury Stock and Buyer-Owned Stock.
All shares of Lady Luck Common Stock that are owned by Lady Luck
as treasury stock and any shares of Lady Luck Common Stock owned
by Buyer or any wholly-owned Subsidiary (as defined in Section
3.1) of Buyer shall be canceled and retired and shall cease to
exist, and no consideration shall be delivered in exchange
therefor.
(c) Capital Stock of Merger Sub. Each issued and
outstanding share of the common stock, par value $.01 per share,
of Merger Sub shall be converted into and become one fully paid
and nonassessable share of common stock, par value $.01 per share,
of the Surviving Corporation.
(d) Adjustments to Merger Consideration. The Merger
Consideration shall be adjusted to reflect fully the effect of any
stock split, reverse split, stock dividend (including any dividend
or distribution of securities convertible into Lady Luck Common
Stock, as applicable), reorganization, recapitalization or any
other like change with respect to Lady Luck Common Stock occurring
after the date hereof and prior to the Effective Time.
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Section 2.2. Exchange of Certificates.
(a) Exchange Agent. At or prior to the Effective Time,
Buyer shall deposit with a bank or trust company designated by
Buyer and reasonably acceptable to Lady Luck (the "Exchange
Agent"), for the benefit of the holders of shares of Lady Luck
Common Stock outstanding immediately prior to the Effective Time,
for exchange in accordance with this Section 2.2, through the
Exchange Agent, cash in an aggregate amount sufficient to pay the
Merger Consideration (the cash so deposited being hereinafter
referred to as the "Exchange Fund"). Any interest, dividends or
other income earned on the investment of cash or other property
held in the Exchange Fund shall be for the account of and payable
to Buyer.
(b) Exchange Procedures. Promptly after the Effective
Time, Buyer will instruct the Exchange Agent to mail to each
holder of record of Lady Luck Common Stock (i) a letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to a Certificate shall pass, only upon
proper delivery of the Certificate to the Exchange Agent and shall
be in such form and have such other provisions as Buyer may
reasonably specify), and (ii) instructions to effect the surrender
of the Certificate in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to
receive in exchange therefor cash in an amount equal to the Merger
Consideration multiplied by the number of shares represented by
such Certificate, and the Certificate so registered shall
forthwith be canceled. In the event of a transfer of ownership of
shares of Lady Luck Common Stock which is not registered in the
transfer records of Lady Luck as of the Effective Time, the Merger
Consideration may be issued and paid in accordance with this
Article II to a transferee if the Certificate evidencing such
shares of Lady Luck Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and
effect such transfer pursuant to this Section 2.2(b) and by
evidence that any applicable stock transfer taxes have been paid.
Until so surrendered, each outstanding Certificate that prior to
the Effective Time represented shares of Lady Luck Common Stock
(other than Certificates representing Dissenting Shares) will be
deemed from and after the Effective Time for all corporate
purposes (other than the payment of dividends and subject to
Section 2.1(e)), to evidence the right to receive the Merger
Consideration without interest. No interest will be paid or will
accrue on the cash payable upon the surrender of any Certificate.
(c) Transfers of Ownership. At the Effective Time, the
stock transfer books of Lady Luck shall be closed, and there shall
be no further registration of transfers of Lady Luck Common Stock
thereafter on the records of Lady Luck.
(d) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the former
stockholders of Lady Luck as of the date which is
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twelve months after the Effective Time shall be delivered to
Buyer, upon demand, and thereafter such former stockholders of
Lady Luck who have not theretofore complied with this Section 2.2
shall be entitled to look only to Buyer for payment of the Merger
Consideration to which they are entitled pursuant hereto.
(e) No Liability. None of Buyer, Merger Sub, Lady Luck or
the Exchange Agent shall be liable to any holder of Lady Luck
Common Stock for any Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered
immediately prior to the date on which the Merger Consideration or
any dividends or distributions with respect to Lady Luck Common
Stock in respect of such Certificate would otherwise escheat to or
become the property of any Governmental Entity, any such Merger
Consideration, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled
thereto on such date prior to the time such escheat laws become
applicable.
(f) Withholding Rights. Buyer or the Exchange Agent shall
be entitled to deduct and withhold from the Merger Consideration
otherwise payable pursuant to this Agreement to any holder of
Certificates which prior to the Effective Time represented shares
of Lady Luck Common Stock such amounts as Buyer or the Exchange
Agent is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as
amended (the "Code"), or any provision of state, local or foreign
tax law. To the extent that amounts are so withheld by Buyer or
the Exchange Agent and remitted to the proper authority, such
withheld amounts thereafter shall be treated for all purposes of
this Agreement as having been paid to the holder of the shares of
Lady Luck Common Stock in respect of which such deduction and
withholding was made by Buyer or the Exchange Agent.
(g) Lost, Stolen or Destroyed Certificates. In the event
any Certificates shall have been lost, stolen or destroyed, the
Exchange Agent shall pay in exchange for such lost, stolen or
destroyed Certificates, upon the making of an affidavit of that
fact by the holder thereof such Merger Consideration as may be
required pursuant to Section 2.2; provided, however, that Buyer
may, in its discretion, and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or
destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made
against Buyer, the Surviving Corporation or the Exchange Agent
with respect to the Certificates alleged to have been lost, stolen
or destroyed.
Section 2.3. Acceleration and Payment for Lady Luck Options.
Following the execution of this Agreement, the Board of Directors of Lady
Luck (or, if appropriate, any committee administering the Lady Luck Stock
Option Plan (as defined below)) shall adopt such resolutions or use its
best efforts to take such other actions as are required to provide that
each then outstanding stock option to purchase shares of Lady Luck Common
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Stock (a "Lady Luck Option") heretofore granted under any stock option or
other stock-based incentive plan, program or arrangement of Lady Luck,
including the 1993 Stock Option Plan and the 1996 Director Stock Option
Plan (collectively, the "Lady Luck Option Plan") shall be accelerated and
canceled immediately prior to the Effective Time in exchange for payment of
an amount of cash equal to the product of (x) the number of shares of Lady
Luck Common Stock subject to such Lady Luck Option immediately prior to the
consummation of the Merger and (y) the excess, if any, of the Merger
Consideration over the per share exercise price of such Lady Luck Option;
provided, however, that such excess shall not be less than zero.
Notwithstanding anything in this Section 2.3 to the contrary, with respect
to any Lady Luck Option granted under the Lady Luck Stock Option Plan
having a per share exercise price that is greater than the Merger
Consideration, whether or not vested and exercisable, the Board of
Directors of Lady Luck (or, if appropriate, any committee administering the
Lady Luck Stock Option Plan), shall adopt such resolutions or use its best
efforts to take such other actions as are required to provide that each
such Lady Luck Option shall be accelerated and, if not exercised before the
Effective Time, shall be canceled as of the Effective Time and shall have
no further force or effect as of the Effective Time, without regard to the
fact that the holder of such Lady Luck Option shall have received no
payment for the Lady Luck Option.
Section 2.4. Dissenting Shares. Notwithstanding Section 2.1, all
shares of Lady Luck Common Stock issued and outstanding immediately prior
to the Effective Time and held by a holder who has not voted in favor of
the Merger or consented thereto in writing and who has demanded appraisal
for such shares of Lady Luck Common Stock in accordance with the DGCL
(collectively, the "Dissenting Shares") shall not be converted into a right
to receive the Merger Consideration, unless such holder fails to perfect or
withdraws or otherwise loses such holder's right to appraisal. If after the
Effective Time such holder fails to perfect or withdraws or loses such
holder's right to appraisal, such shares of Lady Luck Common Stock shall be
treated as if they had been converted as of the Effective Time into a right
to receive the Merger Consideration without interest thereon. Lady Luck
shall give Buyer prompt notice of any demands received by Lady Luck for
appraisal of shares of Lady Luck Common Stock, and Buyer shall have the
right to participate in all negotiations and proceedings with respect to
such demands. Lady Luck shall not, except with the prior written consent of
Buyer, make any payment with respect to, or settle or offer to settle, any
such demands.
Section 2.5. Lady Luck Preferred Stock. Each share of Series A
Mandatory Cumulative Redeemable Preferred Stock, par value $25.00 per
share, of Lady Luck ("Lady Luck Series A Preferred Stock") issued and
outstanding immediately prior to the Effective Time, shall be redeemed in
connection with the transactions contemplated hereby immediately prior to
the Effective Time pursuant to its terms at its liquidation preference.
Immediately prior to the Effective Time, Buyer shall deposit with a bank or
trust company designated by Lady Luck and reasonably acceptable to Buyer
(the "Redemption Agent") for the benefit of the holders of shares of Lady
Luck Series A Preferred Stock outstanding immediately prior to the
Effective Time, for redemption by Lady Luck through the Redemption Agent,
cash in an aggregate amount sufficient to redeem all outstanding shares of
Lady Luck Series A Preferred Stock at the liquidation preference as of such
date (the "Lady Luck Series A Preferred Stock Redemption
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Amount"). Lady Luck shall call the Lady Luck Series A Preferred Stock for
redemption pursuant to its terms at the Lady Luck Series A Preferred Stock
Redemption Price at the direction of Buyer and conditioned upon closing of
the Merger. Any interest, dividends or other income earned on the
investment of cash or other property held in the Exchange Fund shall be for
the account of and payable to Buyer.
Section 2.6. Lady Luck Debt Securities. Except as otherwise
repaid, redeemed or purchased in connection with the transactions
contemplated hereby, all notes and other debt instruments of Lady Luck that
are outstanding at the Effective Time shall continue to be outstanding
subsequent to the Effective Time as debt instruments of the Surviving
Corporation, subject to their respective terms and provisions.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LADY LUCK
Lady Luck represents and warrants to Buyer and Merger Sub that the
statements contained in this Article III are true and correct except as set
forth herein and in the disclosure schedule delivered by Lady Luck to Buyer
and Merger Sub on or before the date of this Agreement (the "Lady Luck
Disclosure Schedule"). Any reference in the Merger Agreement to Lady Luck's
"knowledge" or "best knowledge," or to "the best of Lady Luck's knowledge,"
or words of similar import, shall be deemed a reference to the actual
knowledge of any of the (i) corporate officers of Lady Luck or any of its
Subsidiaries and (ii) general managers of any gaming property of Lady Luck
or any of its Subsidiaries for all purposes. The Lady Luck Disclosure
Schedule has been prepared based upon the foregoing definition.
Section 3.1. Organization of Lady Luck and its Subsidiaries. Each
of Lady Luck and its Subsidiaries (as defined below) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its organization and has all requisite corporate, partnership or limited
liability company power and authority to carry on its business as now being
conducted. Each of Lady Luck and its Subsidiaries is duly qualified or
licensed to do business and is in good standing 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,
except where the failure to be so qualified, licensed or in good standing
would not have a material adverse effect on the business, properties,
condition (financial or otherwise), prospects or results of operations of
Lady Luck and its Subsidiaries, taken as a whole other than any effect
arising out of, or resulting from, general economic conditions in the
United States or conditions generally affecting the gaming industry in the
United States (a "Lady Luck Material Adverse Effect"). Lady Luck has
delivered to Buyer a true and correct copy of the Certificate of
Incorporation and Bylaws of Lady Luck, in each case as amended to the date
of this Agreement. Assuming regulatory compliance by Buyer, the respective
organizational documents of Lady Luck's Subsidiaries do not contain any
provision that would limit or otherwise restrict the ability of Buyer,
following the Effective Time, from owning or operating such Subsidiaries on
the same basis as Lady Luck. Except as set forth on the Lady Luck
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Disclosure Schedule, all the outstanding shares of capital stock of, or
other equity interests in, each such Subsidiary have been validly issued
and are fully paid and nonassessable and are owned directly or indirectly
by Lady Luck, free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") and free of any other restriction (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests). As used in this Agreement, the word
"Subsidiary" means, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such
party or any other Subsidiary of such party is a general partner or (ii) at
least fifty percent (50%) of the securities or other interests having by
their terms ordinary 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.
Section 3.2. Capitalization.
(a) The authorized capital stock of Lady Luck consists of
75,000,000 shares of Lady Luck Common Stock, $0.006 par value per
share, and 4,000,000 shares of preferred stock, $25.00 par value
per share ("Lady Luck Preferred Stock"). As of the date hereof,
(i) 4,881,003 shares of Lady Luck Common Stock were issued and
outstanding, all of which are validly issued, fully paid and
nonassessable, (ii) no shares of Lady Luck Common Stock were held
in the treasury of Lady Luck or by Subsidiaries of Lady Luck, and
(iii) 433,638 shares of Lady Luck Series A Preferred Stock were
the only Lady Luck Preferred Stock issued and outstanding. Section
3.2(a)(i) of the Lady Luck Disclosure Schedule sets forth the
number of shares of Lady Luck Common Stock reserved for future
issuance upon exercise of Lady Luck Options granted and
outstanding as of the date hereof and under the Lady Luck Stock
Option Plans.
Section 3.2(a)(i) of the Lady Luck Disclosure Schedule
also sets forth as of the date hereof, for each Lady Luck Stock
Option Plan, the dates on which Options which are still
outstanding under such plan were granted, the number of
outstanding Options granted on each such date and the exercise
price thereof. Except as disclosed in Section 3.2(a)(i) of the
Lady Luck Disclosure Schedule, since December 31, 1998 through the
date of this Agreement, Lady Luck has not made any grants under
any of the Lady Luck Stock Option Plans. Except as disclosed in
Section 3.2(a)(i) of the Lady Luck Disclosure Schedule, as of the
date of this Agreement, Lady Luck has not granted any contractual
rights the value of which is derived from the financial
performance of Lady Luck or from the value of shares of Lady Luck
Common Stock. Except as disclosed in Section 3.2(a)(ii) of the
Lady Luck Disclosure Schedule, there are no obligations,
contingent or otherwise, of Lady Luck or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of Lady Luck
Common Stock or the capital stock or ownership interests of any
Subsidiary or to provide funds to or make any investment in an
amount greater than $250,000 in the aggregate (in the form of a
loan, capital contribution or otherwise) in any such Subsidiary or
any other entity other than
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guarantees of bank obligations or indebtedness for borrowed money
of Subsidiaries entered into in the ordinary course of business.
All of the outstanding shares of capital stock (including shares
which may be issued upon exercise of outstanding options) or other
ownership interests of each of Lady Luck's Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and,
except as disclosed in Section 3.2(a)(iii) of the Lady Luck
Disclosure Schedule and except as required by gaming industry
regulations, all such shares and ownership interests are owned by
Lady Luck or another Subsidiary of Lady Luck, free and clear of
all security interests, liens, claims, pledges, agreements,
limitations on Lady Luck's voting rights, charges or other
encumbrances or restrictions on transfer of any nature.
(b) There are no bonds, debentures, notes or other
indebtedness having voting rights (or convertible into securities
having such rights) in connection with the Merger or the
transactions contemplated by this Agreement ("Voting Debt") of
Lady Luck or any of its Subsidiaries issued and outstanding, other
than the debt securities disclosed in Section 3.2(b) of the Lady
Luck Disclosure Schedule. Except as set forth in Section 3.2(a) or
in this Section 3.2(b) or as reserved for future grants of options
under the Lady Luck Stock Option Plans as of the date hereof, (i)
there are no shares of capital stock of any class of Lady Luck, or
any security exchangeable into or exercisable for such equity
securities, issued, reserved for issuance or outstanding; (ii)
except as set forth in Section 3.2(b) of the Lady Luck Disclosure
Schedule, there are no options, warrants, equity securities,
calls, rights, commitments or agreements of any character to which
Lady Luck or any of its Subsidiaries is a party or by which it is
bound obligating Lady Luck or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other ownership interests
(including Voting Debt) of Lady Luck or any of its Subsidiaries or
obligating Lady Luck or any of its Subsidiaries to grant, extend,
accelerate the vesting of or enter into any such option, warrant,
equity security, call, right, commitment or agreement; and (iii)
except for the Stockholder Support Agreement being entered into on
the date hereof, there are no voting trusts, proxies or other
voting agreements or understandings with respect to the shares of
capital stock of Lady Luck. All shares of Lady Luck Common Stock
subject to issuance as specified in this Section 3.2(b) are duly
authorized and, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable,
shall be validly issued, fully paid and nonassessable.
Section 3.3. Authority; No Conflict; Required Filings and Consents.
(a) Lady Luck has all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby by Lady Luck have been duly
authorized by all necessary corporate action on the part of Lady
Luck, subject only to the approval and adoption of this Agreement
and the Merger by Lady Luck's common stockholders holding at least
75% of the outstanding shares of Lady Luck Common Stock. This
Agreement has been duly
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executed and delivered by Lady Luck and constitutes the valid and
binding obligation of Lady Luck, enforceable against Lady Luck in
accordance with its terms.
(b) Other than as disclosed in Section 3.3(b) of the Lady
Luck Disclosure Schedule, the execution and delivery of this
Agreement by Lady Luck does not, and the consummation of the
transactions contemplated hereby will not, (i) conflict with, or
result in any violation or breach of, any provision of the
Certificate of Incorporation or Bylaws of Lady Luck or the
comparable charter or organizational documents of any of its
Subsidiaries, (ii) result in any violation or breach of, or
constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or
acceleration of any obligation or loss of any material benefit)
under, or require a consent or waiver under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
lease, contract or other agreement, instrument or obligation to
which Lady Luck or any of its Subsidiaries is a party or by which
any of them or any of their properties or assets may be bound, or
(iii) subject to the governmental filings and other matters
referred to in Section 3.3(c), conflict with or violate any
permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Lady
Luck or any of its Subsidiaries or any of its or their properties
or assets, except in the case of clauses (ii) and (iii) for any
such conflicts, violations, defaults, terminations, cancellations
or accelerations which (x) are not, individually or in the
aggregate, reasonably likely to have a Lady Luck Material Adverse
Effect or (y) would not prevent or materially delay the
consummation of the Merger.
(c) Except as disclosed in Section 3.3(c) of the Lady
Luck Disclosure Schedule, no consent, approval, order or
authorization of, or registration, declaration or filing with, any
court, administrative agency, commission, gaming authority or
other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to Lady Luck or any of its
Subsidiaries in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated
hereby, except for (i) the filing of the pre-merger notification
report under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended ("HSR Act"), (ii) the filing of the Certificate
of Merger with respect to the Merger with the Secretary of State
of the State of Delaware, (iii) the filing of any Proxy Statement
(as such term is defined in Section 5.4(a) below) with the
Securities and Exchange Commission (the "SEC") in accordance with
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), (iv) any approvals and filing of notices required under any
applicable gaming industry regulation, (v) such consents,
approvals, orders, authorizations, permits, filings or
registrations related to, or arising out of, compliance with
statutes, rules or regulations regulating the consumption, sale or
serving of alcoholic beverages, and (vi) such immaterial filings
and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification,
disclosure or required approval triggered by the Merger.
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Section 3.4. Public Filings; Financial Statements.
(a) None of Lady Luck's Subsidiaries is required to file
forms, reports and documents with the SEC. Lady Luck has filed
with the SEC all reports, schedules, forms, statements and other
documents required to be filed by the Securities Act of 1933, as
amended (the "Securities Act") and the Exchange Act since December
31, 1998. Except as set forth in Section 3.4(a) of the Lady Luck
Disclosure Schedule and except for matters otherwise corrected by
the subsequent filing with the SEC of an appropriate amendment
prior to the date of this Agreement, the reports, forms, documents
filed by Lady Luck with the SEC prior to the date of this
Agreement (the "Lady Luck SEC Reports") (including any financial
statements filed as a part thereof or incorporated by reference
therein) (i) at the time filed, complied in all material respects
with the applicable requirements of the Securities Act and the
Exchange Act, as the case may be, and (ii) did not, at the time
they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing),
contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Lady Luck SEC Reports
or necessary in order to make the statements in such Lady Luck SEC
Reports, in the light of the circumstances under which they were
made, not misleading.
(b) Except as set forth in Section 3.4(a), each of the
consolidated financial statements (including, in each case, any
related notes) of Lady Luck contained in the Lady Luck SEC Reports
complied as to form in all material respects with the applicable
rules and regulations of the SEC with respect thereto; was
prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such
financial statements or, in the case of unaudited statements, as
permitted by Form 10-Q under the Exchange Act), and fairly
presented the consolidated financial position of Lady Luck and its
Subsidiaries as of the dates, and the consolidated results of its
operations and cash flows for the periods, indicated, except that
the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which, with respect to
interim periods since December 31, 1998, were not or are not
expected to be material in amount. The audited balance sheet of
Lady Luck as of December 31, 1998 is referred to herein as the
"Lady Luck Balance Sheet." The unaudited consolidated balance
sheet and consolidated income statement of Lady Luck as of and for
the period ended June 30, 1999 are referred to herein as the "Lady
Luck Interim Financial Statements."
Section 3.5. No Undisclosed Liabilities. Except as disclosed in
the Lady Luck SEC Reports or in Section 3.5 of the Lady Luck Disclosure
Schedule, and except for liabilities and obligations incurred since the
date of the Lady Luck Balance Sheet in the ordinary course of business
consistent with past practices, Lady Luck and its consolidated Subsidiaries
do not have any liabilities accrued, contingent or otherwise, of the type
required to be reflected in financial statements, including the notes
thereto, in accordance with GAAP, and whether due or to become due.
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Section 3.6. Absence of Certain Changes or Events. Except as
disclosed in the Lady Luck SEC Reports or in Section 3.6 of the Lady Luck
Disclosure Schedule, since the date of the Lady Luck Balance Sheet, Lady
Luck and its Subsidiaries have conducted their respective businesses only
in the ordinary course consistent with past practice, and there has not
been (a) any event, series of events, condition or series of conditions
that has had a Lady Luck Material Adverse Effect; (b) any declaration,
setting aside or payment of any dividend or other distribution (whether in
cash, stock or property) with respect to any of Lady Luck's capital stock;
(c) 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; (d) (i) any granting by Lady Luck or any of its Subsidiaries
to any director or officer of Lady Luck or its Subsidiaries of any increase
in compensation, except in the ordinary course of business consistent with
prior practice, or as was required under employment agreements in effect as
of the date of the most recent financial statements included in the Lady
Luck SEC Reports, (ii) any granting by Lady Luck or any of its Subsidiaries
to any director or officer of any stock options, (iii) any granting by Lady
Luck or any of its Subsidiaries to any officer of any increase in severance
or termination pay, or (iv) any entry by Lady Luck or any of its
Subsidiaries into any employment, severance or termination agreement with
any director, officer or other employee, consultant or independent
contractor; (e) any material change in accounting methods, principles or
practices of Lady Luck, except insofar as may have been required by a
change in GAAP; (f) any tax election that individually or in the aggregate
would be reasonably likely to have a Lady Luck Material Adverse Effect; or
(g) any settlement of pending or threatened litigation involving Lady Luck
or any of its Subsidiaries (whether brought by a private party or a
Governmental Entity) in amounts of $10,000 or more.
Section 3.7. Taxes.
(a) For the purposes of this Agreement, a "Tax" or,
collectively, "Taxes," means any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or
measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, gains,
franchise, withholding, payroll, recapture, employment, excise,
unemployment insurance, social security, business license,
occupation, business organization, stamp, environmental and
property taxes, together with all interest, penalties and
additions imposed with respect to such amounts.
(b) Lady Luck and each of its Subsidiaries have: (i)
filed all federal, state, local and foreign Tax returns and
reports required to be filed by them prior to the date of this
Agreement (taking into account all applicable extensions), and
such Tax returns and reports (taking into account all amendments
thereto) are true, correct and complete in all material respects;
(ii) paid or accrued all Taxes due and payable; and (iii) paid or
accrued all Taxes for which a notice of assessment or collection
has been received (other than amounts being contested in good
faith by appropriate proceedings with the relevant
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taxing authority and for which adequate reserves in accordance
with GAAP are being maintained).
(c) Except as set forth in Section 3.7(c) of the Lady
Luck Disclosure Schedule, no Tax return of Lady Luck or any of its
Subsidiaries is under examination by the Internal Revenue Service
(the "IRS") nor any other taxing authority and neither the IRS nor
any other taxing authority has asserted any claim for Taxes, or to
the actual knowledge of the executive officers of Lady Luck, is
threatening to assert any claims for Taxes. No material issues
relating to Taxes were raised by the relevant taxing authority in
any completed audit or examination that can reasonably be expected
to recur in a later taxable period.
(d) Lady Luck and its Subsidiaries have withheld or
collected and paid over to the appropriate governmental
authorities (or are properly holding for such payment) all Taxes
required by law to be withheld or collected. There are no liens
for Taxes upon the assets of Lady Luck or any of its Subsidiaries
(other than liens for Taxes that are not yet due or delinquent or
that are being contested in good faith by appropriate proceedings,
with the relevant taxing authority and for which adequate reserves
in accordance with GAAP are being maintained).
(e) Except as disclosed in Section 3.7(c) of the Lady
Luck Disclosure Schedule and Gamblers Supply Management Company
("GSMC"), which currently is a subsidiary of Sodak Gaming, Inc.
("Sodak"), and which is expected to be acquired by Lady Luck after
the date hereof but prior to Closing pursuant to the Miss
Marquette Agreement (as herein defined), neither Lady Luck nor any
of its Subsidiaries is or has been a member of an affiliated group
of corporations filing a consolidated federal income tax return
(or a group of corporations filing a consolidated, combined or
unitary income tax return under comparable provisions of state,
local or foreign tax law) other than a group the common parent of
which is or was Lady Luck or any Subsidiary of Lady Luck.
(f) Neither Lady Luck nor any of its Subsidiaries has any
obligation under any agreement or arrangement with any other
person with respect to Taxes of such other person (including
pursuant to Treas. Reg. Section 1.1502-6 or comparable provisions
of state, local or foreign tax law) and including any liability
for Taxes of any predecessor entity.
(g) Except as disclosed in Section 3.7(g) of the Lady
Luck Disclosure Schedule, neither Lady Luck nor any of its
Subsidiaries shall be required to include in a taxable period
ending after the Effective Time taxable income attributable to
income that accrued in a Tax period prior to the Effective Time
but that was not recognized in any such prior Tax period as a
result of the installment method of accounting, the completed
contract or percentage contract methods of accounting (including
the look-back method under Section 460(b)(2) of the Code), the
cash method of accounting or Section 481 of the Code or any
comparable provision of state, local, or foreign Tax law, or for
any other
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reason. Neither Lady Luck nor any of its Subsidiaries has made an
election under Section 341(f) of the Code.
(h) Except as disclosed in Section 3.7(h) of the Lady
Luck Disclosure Schedule, (i) there are no outstanding agreements
or waivers extending, or having the effect of extending, the
statutory period of limitation applicable to any Tax returns
required to be filed with respect to Lady Luck or any of its
Subsidiaries, (ii) neither Lady Luck nor any of its Subsidiaries,
nor any affiliated group, within the meaning of Section 1504 of
the Code, of which Lady Luck or any of its Subsidiaries is or has
ever been a member, has requested any extension of time within
which to file any Tax return, which return has not yet been filed,
and (iii) no power of attorney with respect to any Taxes has been
executed or filed with any taxing authority by or on behalf of
Lady Luck or any of its Subsidiaries which is still in effect.
(i) Except as set forth in Section 3.7(i) of the Lady
Luck Disclosure Schedule, no person who holds five percent or more
of the stock of Lady Luck is a "foreign person" as defined in
Section 1445 of the Code.
Section 3.8. Real Property, Title and Related Matters.
(a) Real Property. Section 3.8(a) of the Lady Luck
Disclosure Schedule sets forth a true and complete list as of the
date of this Agreement of (i) all contracts or agreements
(including leases, ground leases, licenses, options and other
agreements) relating to Leased Real Property, and (ii) a brief
description of each piece of Owned Real Property. Lady Luck or a
Subsidiary of Lady Luck, as the case may be, has (A) good and
marketable title to all Owned Real Property and to all fixtures
thereon, free and clear of any Encumbrances, except for Permitted
Encumbrances, and (B) except as set forth in Section 3.8(a) of the
Lady Luck Disclosure Schedule, the right to quiet enjoyment of the
Leased Real Property for the full term of the leases. Each lease
or other contract referred to in Section 3.8(a) of the Lady Luck
Disclosure Schedule relating to Leased Real Property is a valid
contract or agreement enforceable against Lady Luck or its
Subsidiary, as the case may be, in accordance with its terms and,
to the knowledge of Lady Luck, against the other parties thereto.
To the knowledge of Lady Luck, there are no rights or options of
any third party to acquire such Leased Real Property or any
ownership therein. Neither Lady Luck nor any of its Subsidiaries
are in default, nor have received any written notice alleging that
it or they are in default, under the leases, ground leases,
subleases, licenses, options or other agreements set forth in
Section 3.8(a) of the Lady Luck Disclosure Schedule relating to
Leased Real Property. To the knowledge of Lady Luck, no other
party to any such leases, ground leases, licenses, options or
other agreements is in default thereunder.
(b) Definitions. As used in this Section 3.8, the
following terms shall have the following meanings:
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"Encumbrances" means all leases, mortgages, liens,
pledges, charges, options, encumbrances or defects of any kind or
character.
"Leased Real Property" means all of the real property
leased or subleased by Lady Luck or a Subsidiary of Lady Luck as
tenant, together with, to the extent leased by Lady Luck, all
buildings and other structures, facilities or improvements
currently or hereafter located thereon, all fixtures, systems,
equipment and personal property of Lady Luck attached or
appurtenant thereto, and all easements, licenses, rights and
appurtenances related to the foregoing.
"Owned Real Property" means all of the real property
owned by Lady Luck or any of its Subsidiaries, together with all
buildings and other structures, facilities or improvements
currently or hereafter located thereon, all fixtures, systems,
equipment and personal property attached or appurtenant thereto,
and all easements, licenses, rights and appurtenances relating to
the foregoing.
"Permitted Encumbrances" means such of the following as
to which no enforcement, collection, execution, levy or
foreclosure proceeding shall have been commenced: (i) Encumbrances
that are disclosed in Section 3.8(a) of the Lady Luck Disclosure
Schedule, except for (A) any Encumbrance which would prevent or
impair in any way the use of the subject property for its current
use or (B) any Encumbrance which secures any indebtedness (other
than indebtedness that is otherwise permitted by this Agreement),
(ii) liens for taxes, assessments, fees and other governmental
charges or levies which are not yet due, payable or delinquent,
(iii) such survey exceptions or reciprocal easement agreements
that do not prevent Lady Luck or its Subsidiaries, and would not
prevent the Surviving Corporation, from conducting Lady Luck's
business as applicable as currently conducted and which would not
have a Lady Luck Material Adverse Effect, (iv) the provisions of
any federal, state or local law, ordinance or regulation, provided
the same are not violated by the current use of the property, (v)
Encumbrances imposed by law, such as materialmen's, mechanics',
carriers', workmen's and repairmen's liens and other similar liens
arising in the ordinary course of business, securing obligations
that are not in excess of $50,000 in the aggregate at any time,
and (vi) pledges or deposits to secure obligations under workers'
compensation laws or similar legislation or to secure public or
statutory obligations.
Section 3.9. Title to Personal Property; Liens. Lady Luck and each
of its Subsidiaries has sufficiently good and valid title to, or an
adequate leasehold interest in, its material tangible personal properties
and assets (including all river boats operated by Lady Luck and its
Subsidiaries) in order to allow it to conduct, and continue to conduct, its
business as and where currently conducted. Section 3.9 of the Lady Luck
Disclosure Schedule is a full and complete list of all leases, licenses and
similar agreements relating to all tangible personal property used by Lady
Luck and its Subsidiaries in the conduct of their business that is not
owned by them. Except as disclosed in Section 3.9 of the Lady Luck
Disclosure Schedule, all such material tangible personal assets and
properties are sufficiently free of liens to allow each
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of Lady Luck and its Subsidiaries to conduct, and continue to conduct, its
business as currently conducted, and the consummation of the transactions
contemplated by this Agreement will not alter or impair such ability in any
respect which, individually or in the aggregate, would have a Lady Luck
Material Adverse Effect.
Section 3.10. Intellectual Property. Section 3.10 of the Lady Luck
Disclosure Schedule lists all (i) trademark and service mark registrations
and applications owned by Lady Luck or any of its Subsidiaries, and (ii)
trademark, service mark and trade name license agreements to which Lady
Luck or any of its Subsidiaries is a party. Except as disclosed in Section
3.10 of the Lady Luck Disclosure Schedule, all material trademarks,
trademark applications, trade names, service marks, trade secrets
(including customer lists and customer databases), copyrights, patents,
licenses, know-how and other proprietary intellectual property rights used
in connection with the businesses of Lady Luck and its Subsidiaries as
currently conducted are without material restrictions or material
conditions on use, and there is no conflict with the intellectual property
rights of Lady Luck and its Subsidiaries therein or any conflict by them
with the intellectual property rights of others therein which, individually
or in the aggregate, would be reasonably likely to have a Lady Luck
Material Adverse Effect.
Section 3.11. Agreements, Contracts and Commitments.
(a) Except as listed as an exhibit to the Lady Luck SEC
Reports or as disclosed in Section 3.11(a) of the Lady Luck
Disclosure Schedule, as of the date of this Agreement, neither
Lady Luck nor any of its Subsidiaries is a party to any oral or
written (i) agreement, contract, indenture or other instrument
relating to Indebtedness (as defined below) in an amount exceeding
$100,000, (ii) partnership, joint venture or limited liability or
management agreement with any person, (iii) agreement, contract or
other instrument relating to any merger, consolidation, business
combination, share exchange or business acquisition, or for the
purchase, acquisition, sale or disposition of any material assets,
of Lady Luck or any of its Subsidiaries outside the ordinary
course of business, (iv) agreement, contract or other instrument
relating to any "strategic alliances" (i.e., cross-marketing,
affinity relationship, etc.), (v) contract, agreement or
commitment which materially restricts (geographically or
otherwise) the conduct of any line of business by Lady Luck or any
of its Subsidiaries, (vi) any contract, agreement or other
instrument having as a party a partnership, joint venture or
limited liability company in which Lady Luck or any of its
Subsidiaries is a partner, joint venture party or member which
would otherwise satisfy the criteria in clauses (i), (iii), (iv)
or (v) if Lady Luck or any of its Subsidiaries were a party to
such contract, agreement or other instrument, (vii) any other
contract, agreement or commitment that requires annual or
remaining payments in excess of $50,000 after the date hereof or
(viii) any other contract, agreement or commitment that is not
cancelable by Lady Luck or its Subsidiaries without penalty on 30
days' notice or less (collectively, the "Lady Luck Material
Contracts"). "Indebtedness" means any liability in respect of (A)
borrowed money, (B) capitalized lease obligations, (C) the
deferred purchase price of property or services (other than trade
payables in the ordinary course of business), and (D) guarantees
of any of the foregoing incurred by any other person other than
Lady Luck or any of its Subsidiaries. Except as
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set forth in Section 3.11(a) of the Lady Luck Disclosure Schedule
and except for the Lady Luck Las Vegas Agreement and the
Consulting, Advisory and Non-Competition Agreement described in
Section 5.12, from and after the Effective Time there will be no
contract, agreement, other instrument or commitment, written or
oral, between the Surviving Corporation or any of its
Subsidiaries, on the one hand, and any former or present officer,
director, shareholder or employee of Lady Luck or any of its
Subsidiaries.
(b) Except as disclosed in Section 3.11(b) of the Lady
Luck Disclosure Schedule, as of the date of this Agreement, (i)
each of the Lady Luck Material Contracts is valid and binding upon
Lady Luck or any of its Subsidiaries (and, to Lady Luck's best
knowledge, on all other parties thereto) in accordance with its
terms and is in full force and effect, (ii) there is no breach or
violation of or default by Lady Luck or any of its Subsidiaries
under any of the Lady Luck Material Contracts, whether or not such
breach, violation or default has been waived, and (iii) no event
has occurred with respect to Lady Luck or any of its Subsidiaries
which, with notice or lapse of time or both, would constitute a
breach, violation or default, or give rise to a right of
termination, modification, cancellation, foreclosure, imposition
of a lien, prepayment or acceleration under any of the Lady Luck
Material Contracts.
Section 3.12. Litigation. Except as specifically disclosed in the
Lady Luck SEC Reports or in Section 3.12 of the Lady Luck Disclosure
Schedule, (a) there is no action, suit or proceeding, claim, arbitration or
investigation against or affecting Lady Luck or any of its Subsidiaries
pending, or as to which Lady Luck or any of its Subsidiaries has received
any written notice of assertion against or affecting, Lady Luck or any of
its Subsidiaries, or any property or asset of Lady Luck or any of its
Subsidiaries, before any court, arbitrator, or administrative, governmental
or regulatory authority or body, domestic or foreign that is not fully
covered by insurance subject to deductible amounts under the applicable
insurance policies; and (b) there is no judgment, order, injunction or
decree of any Governmental Entity outstanding against Lady Luck or any of
its Subsidiaries.
Section 3.13. Environmental Matters.
(a) Except as disclosed in Section 3.13(a) of the Lady
Luck Disclosure Schedule: (i) Lady Luck and its Subsidiaries have
complied with all applicable Environmental Laws (as defined in
Section 3.13(b)); (ii) the properties currently owned, leased or
operated by Lady Luck and its Subsidiaries (including soils,
groundwater, surface water, buildings or other structures) are not
contaminated with any Hazardous Substances (as defined in Section
3.13(c)); (iii) neither Lady Luck nor its Subsidiaries are subject
to liability for any Hazardous Substance disposal or contamination
on any third party property; (iv) neither Lady Luck nor any of its
Subsidiaries has been associated with any release or threat of
release of any Hazardous Substance; (v) neither Lady Luck nor any
of its Subsidiaries has received any notice, demand, letter, claim
or request for information alleging that Lady Luck or any of its
Subsidiaries may be in violation of or liable under any
Environmental Law; (vi) neither Lady Luck nor any
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<PAGE>
of its Subsidiaries is subject to any orders, decrees, injunctions
or other arrangements with any Governmental Entity or is subject
to any indemnity or other agreement with any third party relating
to liability under any Environmental Law or relating to Hazardous
Substances; and (vii) there are no circumstances or conditions
involving Lady Luck or any of its Subsidiaries that could
reasonably be expected to result in any claims, liability,
investigations, costs or restrictions on the ownership, use or
transfer of any property of Lady Luck or any of its Subsidiaries
pursuant to any Environmental Law.
(b) For purposes of this Agreement, the term
"Environmental Law" means any federal, state, local or foreign
law, regulation, order, decree, permit, authorization, opinion,
common law or agency requirement relating to: (A) the protection,
investigation or restoration of the environment, health and
safety, or natural resources, (B) the handling, use, presence,
disposal, release or threatened release of any Hazardous
Substance, or (C) noise, odor, wetlands, pollution, contamination
or any injury or threat of injury to persons or property.
(c) For purposes of this Agreement, the term "Hazardous
Substance" means any substance that is: (A) listed, classified or
regulated pursuant to any Environmental Law; (B) any petroleum
product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials or radon; or (C) any other substance which
is the subject of regulatory action by any Governmental Entity
pursuant to any Environmental Law.
Section 3.14. Employee Benefit Plans.
(a) Section 3.14(a) of the Lady Luck Disclosure Schedule
contains a true and complete list of all employee benefit plans
(as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), all employment,
retention, change of control and severance agreements, and all
bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar
employee benefit plans, programs, policies and agreements, written
or otherwise, in each case that is sponsored, maintained,
contributed to or required to be contributed to by Lady Luck or
any of its Subsidiaries or any trade or business (whether or not
incorporated) which, together with Lady Luck or any of its
Subsidiaries, would be deemed a "single employer" under Section
4001(b) of ERISA (an "ERISA Affiliate"), or to which Lady Luck,
any of its Subsidiaries or any ERISA Affiliate is a party for the
benefit of any current or former employee, consultant, director or
independent contractor of Lady Luck or any of its Subsidiaries
(together, the "Lady Luck Employee Plans").
(b) Lady Luck has delivered or made available to Buyer
all documents related to the Lady Luck Employee Plans, including,
without limitation: (i) true and complete copies of all Lady Luck
Employee Plan documents and any summary plan descriptions, summary
annual reports and insurance contracts relating thereto, (ii)
detailed summaries of all unwritten Lady Luck Employee Plans,
(iii) true and complete copies of the most
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recent financial statements, actuarial reports and annual reports
with respect to all Lady Luck Employee Plans for which financial
statements, actuarial reports or annual reports are required or
have been prepared, (iv) the most recent determination letter from
the IRS (if applicable) for any such Lady Luck Employee Plan, and
(v) true and complete copies of any correspondence during the
twenty-four month period which ends on the date of this Agreement
between any Governmental Entity and Lady Luck or any of its
Subsidiaries relating to any of the documents described above.
(c) All Lady Luck Employee Plans conform in all material
respects to, and are being administered and operated in all
material respects in compliance with, the requirements of ERISA,
the Code and all other applicable laws, including applicable laws
of foreign jurisdictions. Except as set forth in Section 3.14(c)
of the Lady Luck Disclosure Schedule, there have not been any
"prohibited transactions," as such term is defined in Section 4975
of the Code or Section 406 of ERISA, involving any of the Lady
Luck Employee Plans that could subject Lady Luck or any of its
Subsidiaries to any penalties or taxes imposed under the Code or
ERISA. Section 3.14(c) of the Lady Luck Disclosure Schedule sets
forth a true and complete list of all outstanding loans from Lady
Luck or any of its Subsidiaries to any current or former director,
officer, employee or consultant which exceeds $3,500 per employee.
Loans to employees in the aggregate do not exceed $25,000.
(d) Except as set forth in Section 3.14(d) of the Lady
Luck Disclosure Schedule, any Lady Luck Employee Plan that is
intended to be qualified under Section 401(a) of the Code and
exempt from tax under Section 501(a) of the Code has been
determined by the IRS to be so qualified, has received a favorable
determination letter from the IRS covering any provision for which
the remedial amendment period (within the meaning of Section
401(b) of the Code) has not expired, and such determination
remains in effect and has not been revoked. Nothing has occurred
since the date of any such determination that is reasonably likely
to affect adversely such qualification or exemption in any
material respect or result in the imposition of material excise
taxes or income taxes on unrelated business income under the Code
or ERISA with respect to any Lady Luck Employee Plan. Except as
set forth in Section 3.14(d) of the Lady Luck Disclosure Schedule,
all contributions or other amounts payable by Lady Luck or any of
its Subsidiaries with respect to each Lady Luck Employee Plan have
been paid or accrued in accordance with GAAP, ERISA, the Code and
the terms of each such plan.
(e) Except as set forth in Section 3.14(e) of the Lady
Luck Disclosure Schedule, none of Lady Luck, any of its
Subsidiaries nor any ERISA Affiliate (i) at any time in the past
has had a current or contingent obligation to contribute to any
multiemployer plan (as defined in Section 3(37) of ERISA)
("Multiemployer Plan"), or (ii) at any time in the past has had
any liability, contingent or otherwise, under Title IV of ERISA or
Section 412 of the Code. As of the date of this Agreement, no Lady
Luck Employee Plan is subject to Title IV of ERISA and no Lady
Luck Employee Plan is a Multiemployer Plan.
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(f) There are no pending, or to Lady Luck's knowledge,
any threatened or anticipated claims by or on behalf of any Lady
Luck Employee Plan, or by or on behalf of any individual
participants or beneficiaries of any Lady Luck Employee Plan,
alleging any breach of fiduciary duty on the part of Lady Luck or
any of its Subsidiaries or any of the officers, directors or
employees of Lady Luck or any of its Subsidiaries under ERISA or
any other applicable Regulations, or claiming benefit payments
other than those made in the ordinary operation of such plans, or
alleging any violation of any other applicable laws. The Lady Luck
Employee Plans are not the subject of any investigation, audit or
action by the Internal Revenue Service, the Department of Labor or
the Pension Benefit Guaranty Corporation ("PBGC").
(g) With respect to any Lady Luck Employee Plan that is
an employee welfare benefit plan (within the meaning of Section
3(l) of ERISA) (a "Lady Luck Welfare Plan"), (i) each Lady Luck
Welfare Plan for which contributions are claimed as deductions
under any provision of the Code is in compliance in all material
respects with all applicable requirements pertaining to such
deductions, and (ii) any Lady Luck Employee Plan that is a group
health plan (within the meaning of Section 4980B(g)(2) of the
Code) complies, and in each and every case has complied, in all
material respects with all of the requirements of ERISA and
Section 4980B of the Code. No welfare benefit fund (within the
meaning of Section 419(e)(1) of the Code) or voluntary employees'
beneficiary association (within the meaning of Section 501(c)(9)
of the Code) has been established or maintained in connection with
a Lady Luck Welfare Plan.
Section 3.15. Compliance.
(a) Except as disclosed in Section 3.15(a) of the Lady
Luck Disclosure Schedule, each of Lady Luck and its Subsidiaries,
and each of their respective directors, officers, persons
performing management functions similar to officers and, to Lady
Luck's best knowledge, partners, hold all permits, registrations,
findings of suitability, licenses, variances, exemptions,
certificates of occupancy, orders and approvals of all
Governmental Entities (including all authorizations under
Environmental Laws, the Merchant Marine Act of 1920 and the
Shipping Act of 1916, Certificates of Inspection issued by the US
Coast Guard and permits and approvals issued by the United States
Army Corps of Engineers and pursuant to the Lady Luck Gaming Laws
(as defined below)), necessary to conduct the business and
operations of Lady Luck and each of its Subsidiaries as currently
conducted, each of which is in full force and effect in all
material respects, and no notice of revocation has been received
in respect thereof, (the "Lady Luck Permits") except where the
failure to hold such permits, registrations certificates of
occupancy, findings of suitability, licenses, variances not issued
or required pursuant to any Lady Luck Gaming Law would not,
individually or in the aggregate, be reasonably likely to have a
Lady Luck Material Adverse Effect. Except as disclosed in the Lady
Luck SEC Reports or as disclosed in Section 3.15(a) of the Lady
Luck Disclosure Schedule or as would not reasonably be likely to
have a Lady Luck
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Material Adverse Effect, the businesses of Lady Luck and its
Subsidiaries are not being conducted in violation of any law,
ordinance or regulation of any Governmental Entity. Except as
disclosed in Section 3.15(a) of the Lady Luck Disclosure Schedule,
no investigation or review by any Governmental Entity with respect
to Lady Luck or any of its Subsidiaries is pending or, to Lady
Luck's best knowledge, threatened, nor has any Governmental Entity
indicated any intention to conduct the same.
(b) The term "Lady Luck Gaming Laws" means any federal,
state, local or foreign statute, ordinance, rule, regulation,
permit, consent, registration, finding of suitability, approval,
license, judgment, order, decree, injunction or other
authorization, including any condition or limitation placed
thereon, governing or relating to the current or contemplated
casino and gaming activities and operations of Lady Luck or any of
its Subsidiaries, including any applicable state gaming law and
any federal or state laws relating to currency transactions.
(c) Except as disclosed in Section 3.15(c) of the Lady
Luck Disclosure Schedule, (i) neither Lady Luck nor any of its
Subsidiaries, nor any director, officer, key employee or, to Lady
Luck's best knowledge, partners of Lady Luck or any of its
Subsidiaries, has received any written claim, demand notice,
complaint, court order or administrative order from any
Governmental Entity in the past three years under, or relating to
any violation or possible violation of, any Lady Luck Gaming Laws
which did or would be reasonably likely to result in fines or
penalties of $10,000 or more; (ii) to the best knowledge of Lady
Luck, there are no facts, which, if known to the regulators under
the Lady Luck Gaming Laws, could reasonably be expected to result
in the revocation, limitation or suspension of a license, finding
of suitability, registration, permit or approval of it or them, or
any officer, director or other person performing management
functions similar to an officer or partner, under any Lady Luck
Gaming Laws; and (iii) neither Lady Luck nor any of its
Subsidiaries has suffered a suspension or revocation of any
material license, finding of suitability, registration, permit or
approval held under the Lady Luck Gaming Laws.
Section 3.16. Labor Matters. Except as disclosed in Section 3.16
of the Lady Luck Disclosure Schedule, (i) there are no proceedings pending
between Lady Luck or any of its Subsidiaries and any of their respective
employees before the Equal Employment Opportunity Commission, Department of
Labor or any other Governmental Entity; (ii) to the best knowledge of Lady
Luck, there are no activities or proceedings of any labor union to organize
any non-unionized employees; (iii) neither Lady Luck nor any of its
Subsidiaries has received notice of any alleged unfair labor practice
charges and/or complaints pending against Lady Luck or any of its
Subsidiaries or any of their respective representatives or employees before
the National Labor Relations Board or any current union representation
questions involving employees of Lady Luck or any of its Subsidiaries; (iv)
Lady Luck's employment policies and practices comply in all material
respects with applicable law; and (v) there is no strike, slowdown, work
stoppage, labor dispute or lockout or, to the best knowledge of Lady Luck,
threat thereof, by or with respect to any employees of Lady Luck or any of
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its Subsidiaries. Lady Luck and its Subsidiaries are not parties to any
collective bargaining agreements or other labor union contracts applicable
to individuals employed or previously employed by Lady Luck or any of its
Subsidiaries and, except as disclosed in Section 3.16 of the Lady Luck
Disclosure, no collective bargaining agreement or labor union contract is
being negotiated by Lady Luck or any such Subsidiary.
Section 3.17. Insurance. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and
water damage insurance policies maintained by Lady Luck or any of its
Subsidiaries are listed on Section 3.17 of the Lady Luck Disclosure
Schedule. At the Effective Time, all such insurance policies, or
replacements thereof, will be outstanding and duly in force. To Lady Luck's
knowledge, no notice of termination or non-renewal of any such insurance
policy has been received by Lady Luck.
Section 3.18. Information in Proxy Statement. The Proxy Statement,
as such term is defined in Section 5.4(a) below (or any amendment thereof
or supplement thereto), at the date mailed to Lady Luck's stockholders and
at the time of the Lady Luck Special Meeting, will not contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading;
provided, however, that no representation is made by Lady Luck with respect
to statements made therein based on information supplied in writing by
Buyer or Merger Sub for inclusion in the Proxy Statement. The Proxy
Statement will comply with the provisions of the Exchange Act and the rules
and regulations thereunder.
Section 3.19. State Takeover Statute. The Board of Directors of
Lady Luck has approved the Merger, this Agreement and the Stockholder
Support Agreement and, assuming the accuracy of the representations
contained in Section 4.5 hereof (without giving effect to the knowledge
qualification therein), such approval is sufficient to render inapplicable
to the Merger, this Agreement, the Stockholder Support Agreement and the
transactions contemplated hereby and thereby the provisions of Section 203
of the DGCL to the extent, if any, that such Sections are applicable to the
Merger, this Agreement, the Stockholder Support Agreement and the
transactions contemplated hereby and thereby. Except for Section 203 of the
DGCL, no "fair price," "moratorium," "control share acquisition" or other
similar anti-takeover statute or regulation enacted under any federal or
state law applicable to Lady Luck is applicable to the Merger or the other
transactions contemplated hereby.
Section 3.20. Voting Requirements. The affirmative vote of the
holders of at least 75% of the outstanding shares of Lady Luck Common Stock
entitled to vote thereon at the Lady Luck Special Meeting with respect to
the approval of the Merger (the "Lady Luck Stockholder Approval") is the
only vote of the holders of any class or series of Lady Luck's capital
stock necessary to approve and adopt this Agreement and the transactions
contemplated by this Agreement.
Section 3.21. Year 2000. Lady Luck has conducted an initial review
of whether its systems, processes, products, equipment and services are
"Year 2000 Ready." Interim results of such review are disclosed in
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Section 3.21 of the Lady Luck Disclosure Schedule. Lady Luck has provided
to Buyer all reports prepared by it or its outside consultants regarding
its Year 2000 Readiness. "Year 2000 Ready" means that the systems,
processes, products, equipment and services of Lady Luck and each of its
Subsidiaries (including any software embedded in any products)
("Services"), will correctly identify, recognize and process four-digit
year dates, and the Services will: (a) continue to function properly with
regard to dates before, during and after the transition to year 2000
including, but not limited to, the ability to roll dates from December 31,
1999 to January 1, 2000 and beyond with no errors or system interruptions;
(b) accurately perform calculations and comparisons on dates that span
centuries; (c) accept and properly process dates that could span more than
100 years (e.g., calculating a person's age from their birth date and the
current date); (d) properly sort and sequence dates that span centuries;
(e) understand that the year 2000 starts on a Saturday; (f) recognize that
February 29, 2000 is a valid date and that the year 2000 has 366 days; (g)
prohibit use of date fields for any purpose other than to store valid
dates; (h) preclude the use of 12/31/99 or any other valid date to indicate
something other than a date (e.g., 12/31/99 in a date field means "do not
ever cancel"); and (i) comply with and conform to the specifications of
American National Standard ANSI X3.30-1985, Representation for Calendar
Date and Ordinal Date for Information Interchange. Each of Lady Luck and
its Subsidiaries has made no express or implied warranties regarding the
Year 2000 Readiness of themselves, or any of their Services, except as
disclosed in Section 3.21 of the Lady Luck Disclosure Schedule.
Section 3.22. Opinion of Financial Advisor. Lady Luck has received
the written opinion of Wasserstein Perella & Co., Inc. ("Wasserstein
Perella") as of the date of this Agreement to the effect that the Merger
Consideration is fair to the holders of Lady Luck Common Stock from a
financial point of view.
Section 3.23. Brokers. None of Lady Luck, any of its Subsidiaries
nor any of their respective officers, directors or employees have employed
any broker, financial advisor or finder, or incurred any liability for any
brokerage fees, commissions, finder's or other fees or expenses in
connection with any pending capital markets or strategic transaction or the
transactions contemplated by this Agreement, except, as disclosed in
Section 3.23 of the Lady Luck Disclosure Schedule and except that Lady Luck
has retained Wasserstein Perella and Onyx Partners, Inc. ("Onyx Partners")
as its financial advisors and has delivered to Buyer copies of all written
agreements, and written descriptions of any oral agreements, with
Wasserstein Perella and Onyx Partners.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGER SUB
Buyer and Merger Sub represent and warrant to Lady Luck that the
statements contained in this Article IV are true and correct, except as set
forth herein and in the disclosure schedule delivered by Buyer and Merger
Sub to Lady Luck on or before the date of this Agreement (the "Buyer
Disclosure Schedule"). Any reference in the Merger Agreement to Buyer's
"knowledge" or "best knowledge," or to "the best of Buyer's knowledge," or
words of similar import, shall be deemed a reference to the actual
knowledge of any of the corporate officers of Buyer or any of its
Subsidiaries for all purposes. The Buyer Disclosure Schedule has been
prepared based upon the foregoing definition.
Section 4.1. Organization of Buyer and Merger Sub. Each of Buyer
and Merger Sub is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has all
requisite corporate, partnership or limited liability company power and
authority to carry on its business as now being conducted and as proposed
to be conducted. Each of Buyer and Merger Sub is duly qualified or licensed
to do business and is in good standing 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, except
where the failure to be so qualified, licensed or in good standing would
not have a material adverse effect on the business, properties, condition
(financial or otherwise), prospects or results of operations of Buyer and
its Subsidiaries, taken as a whole (a "Buyer Material Adverse Effect").
Buyer has delivered to Lady Luck a true and correct copy of the Certificate
of Incorporation and Bylaws of Buyer, in each case as amended to the date
of this Agreement.
Section 4.2. Capitalization of Merger Sub. The authorized capital
stock of Merger Sub consists of 2,500 shares of common stock, par value
$.01 per share ("Merger Sub Common Stock"), of which 1,000 shares are
issued and outstanding. Buyer owns directly all the outstanding shares of
Merger Sub Common Stock. The outstanding shares of Merger Sub Common Stock
are duly authorized, validly issued, fully paid and assessable and free of
any preemptive rights.
Section 4.3. Authority; No Conflict; Required Filings and Consents.
(a) Buyer and Merger Sub have all requisite corporate
power and authority to enter into this Agreement and to consummate
the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby by Buyer and Merger Sub have been
duly authorized by all necessary corporate action on the part of
Buyer and Merger Sub. This Agreement has been duly executed and
delivered by Buyer and Merger Sub and constitutes the valid and
binding obligation of Buyer and Merger Sub, enforceable against
each of them in accordance with its terms.
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(b) Other than as disclosed in Section 4.3(b) of the
Buyer Disclosure Schedule, the execution and delivery of this
Agreement by Buyer and Merger Sub do not, and the consummation of
the transactions contemplated hereby will not, (i) conflict with,
or result in any violation or breach of, any provision of the
Certificate of Incorporation or Bylaws of Buyer or the comparable
charter or organizational documents of any of its Subsidiaries,
(ii) result in any violation or breach of, or constitute (with or
without notice or lapse of time, or both), a default (or give rise
to a right of termination, cancellation or acceleration of any
obligation or loss of any material benefit) under, or require a
consent or waiver under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract
or other agreement, instrument or obligation to which Buyer or any
of its Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound, or (iii) subject to the
governmental filings and other matters referred to in Section
4.3(c), conflict with or violate any permit, concession,
franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Buyer or any of its
Subsidiaries or any of its or their properties or assets, except
in the case of clauses (ii) and (iii) for any such conflicts,
violations, defaults, terminations, cancellations or accelerations
which (x) are not, individually or in the aggregate, reasonably
likely to have a Buyer Material Adverse Effect, or (y) would not
impair or materially delay the consummation of the Merger.
(c) Except as disclosed in Section 4.3(c) of the Buyer
Disclosure Schedule, no consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Buyer or any of its
Subsidiaries in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated
hereby, other than (i) the filing of the pre-merger notification
report under the HSR Act, (ii) the filing of the Certificate of
Merger with respect to the Merger with the Secretary of State of
the State of Delaware, (iii) any approvals and filing of notices
required under any applicable gaming industry regulation, (iv)
such consents, approvals, orders, authorizations, permits, filings
or registrations related to, or arising out of, compliance with
statutes, rules or regulations regulating the consumption, sale or
serving of alcoholic beverages, (v) such immaterial filings and
consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification,
disclosure or required approval triggered by the Merger or the
transactions contemplated by this Agreement, and (vi) such other
filings, consents, approvals, orders, registrations and
declarations as may be required under the laws of any jurisdiction
in which Buyer or any of its Subsidiaries conducts any business or
owns any assets the failure of which to obtain would not have a
Buyer Material Adverse Effect.
Section 4.4. Brokers. None of Buyer, any of its Subsidiaries, nor
any of their respective officers, directors or employees have employed any
broker, financial advisor or finder or incurred any liability for any brokerage
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fees, commissions, finder's or other fees, in connection with the transactions
contemplated by this Agreement, except that Buyer has retained CIBC World
Markets Corp. ("CIBC") as its financial advisor.
Section 4.5. Ownership of Securities. As of the date hereof,
neither Buyer nor, to Buyer's knowledge, any of its affiliates or
associates (as such terms are defined under the Exchange Act), (i)
beneficially owns, directly or indirectly, or (ii) is party to an
agreement, arrangement or understanding (other than this Agreement and the
Stockholder Support Agreement) for the purpose of acquiring, holding or
disposing of, in each case, shares of Lady Luck Common Stock representing
at least 15% of the total number of outstanding shares of Lady Luck Common
Stock.
Section 4.6. Proxy Statement. The information supplied by Buyer
for inclusion in the Proxy Statement (as defined in Section 5.4(a) below)
shall not, on the date the Proxy Statement is first mailed to stockholders
of Lady Luck, at the time of the Lady Luck Special Meeting (as defined in
Section 5.5) and at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it shall be made,
is false or misleading with respect to any material fact, omit to state any
material fact necessary in order to make the statements made in the Proxy
Statement not false or misleading, or omit to state any material fact
necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies for the Lady Luck Special Meeting
which has become false or misleading.
Section 4.7. Litigation. Except as specifically disclosed by Buyer
in the reports, forms or documents filed by the Buyer with the SEC prior to
the date of this Agreement or as set forth in Section 4.7 of the Buyer
Disclosure Schedule, there is no (i) claim, action, suit or proceeding
pending or, to the best of the Buyer's knowledge, threatened against the
Buyer or any of its Subsidiaries or their respective properties, assets or
operations before any court or governmental or regulatory authority or body
or arbitration tribunal or (ii) outstanding judgment, order, writ,
injunction or decree of any court, governmental agency or arbitration
tribunal in a proceeding to which the Buyer, any of its Subsidiaries or any
of their respective assets was or is a party, which would prevent, impair
or materially alter, delay or impair the Buyer's ability to consummate the
Merger or the other transactions contemplated hereby.
Section 4.8. Financing. Attached under Section 4.8 of the Buyer
Disclosure Schedule are copies of all commitment letters from external
financing sources with respect to financing of the Merger and the
transactions contemplated thereby. Assuming that the external financing
sources loan the amounts designated for the transactions contemplated by
this Agreement to the Buyer as described in the commitment letter, the
Buyer will have sufficient funds to complete the transactions contemplated
by this Agreement including the repayment of the Lady Luck Notes and
redemption of the Lady Luck Series A Preferred Stock.
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ARTICLE V
COVENANTS
Section 5.1. Conduct of Business of Lady Luck. Except as set forth
in Section 5.1 of the Lady Luck Disclosure Schedule, during the period from
the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Lady Luck agrees as to
itself and its respective Subsidiaries (except to the extent that Buyer
shall otherwise consent in writing) to carry on its business in the usual,
regular and ordinary course in substantially the same manner as previously
conducted, to pay its debts and taxes when due subject to good faith
disputes over such debts or taxes, to pay or perform its other obligations
when due, and, to the extent consistent with such business, use all
commercially reasonable efforts consistent with past practices and policies
to preserve intact its present business organization, keep available the
services of its present officers and key employees and preserve its
relationships with customers, suppliers, distributors and others having
business dealings with it. Without limiting the generality of the
foregoing, during the period from the date of this Agreement until the
Effective Time, Lady Luck agrees (except as otherwise contemplated by this
Agreement or to the extent that Buyer shall otherwise consent in writing)
as follows:
(a) Dividends; Changes in Stock. Lady Luck shall not, and
shall cause its Subsidiaries not to, other than dividends and
distributions by a direct or indirect wholly owned Subsidiary of
Lady Luck to its parent, (x) declare, set aside or pay any
dividends on, or make any other distributions (whether in cash,
stock or property) in respect of, any of its capital stock, (y)
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock (other
than the issuance of shares of Lady Luck Common Stock upon the
exercise of Lady Luck Options outstanding on the date of this
Agreement and in accordance with their present terms), or (z)
purchase, redeem or otherwise acquire any shares of capital stock
of Lady Luck or any of its Subsidiaries or any other securities
thereof or any rights, warrants or options to acquire any such
shares or other securities.
(b) Issuance of Securities. Lady Luck shall not, and
shall cause its Subsidiaries not to, issue, deliver, sell, pledge
or otherwise encumber any shares of its capital stock, any other
voting securities or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, voting
securities or convertible securities (other than the issuance of
shares of Lady Luck Common Stock upon the exercise of Lady Luck
Options outstanding on the date of this Agreement and in
accordance with their present terms).
(c) Governing Documents. Lady Luck shall not, and shall
cause its Subsidiaries not to, amend its Certificate of
Incorporation, Bylaws or other comparable charter or
organizational documents.
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(d) No Acquisitions. Lady Luck shall not, and shall cause
its Subsidiaries not to, (i) enter into any agreement to acquire,
or (ii) subject to the provisions of Section 5.15, except for the
transactions contemplated by (x) the Stock Purchase Agreement by
and among Lady Luck, Sodak and GSMC (the "Miss Marquette
Agreement") and (y) the Lady Luck Las Vegas Agreement (which if
consummated in accordance with the terms of the Lady Luck Las
Vegas Agreement shall be consummated immediately prior to the
Effective Time), acquire (including, without limitation, by
merger, consolidation or acquisition of stock or assets), any
business or any interest therein, including through the
acquisition of any interest in any corporation, partnership, joint
venture, association or other business organization or division
thereof.
(e) No Dispositions. Lady Luck shall not, and shall cause
its Subsidiaries not to, sell, lease, license, mortgage or
otherwise encumber or otherwise dispose of any of its properties
or assets.
(f) Indebtedness. Lady Luck shall not, and shall cause
its Subsidiaries not to, (y) incur any indebtedness for borrowed
money or guarantee any such indebtedness of another person, issue
or sell any debt securities or warrants or other rights to acquire
any debt securities of Lady Luck or any of its Subsidiaries, or
guarantee any debt securities of another person, other than
short-term bank financing in the ordinary course of business
consistent with past practice and loans to employees in the amount
of no more than $3,500 per employee which are subject to a
documented repayment obligation and which for all employees of
Lady Luck do not exceed an aggregate of $25,000 outstanding at any
time, or (z) make any loans, advances or capital contributions to,
or investments in, any other person.
(g) Employee Benefits. Lady Luck shall not, and shall
cause its Subsidiaries not to, (A) adopt, enter into, terminate or
amend any employment, severance, retention or similar agreement or
contract; (B) negotiate or enter into any collective bargaining
agreement or labor union contract; (C) increase, in any manner,
the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee (except for normal increases of cash
compensation or cash bonuses in the ordinary course of business,
consistent with past practice); (D) adopt or establish any new
benefit plan; or amend any existing benefit plan, including,
without limitation, the Lady Luck Employee Plans and the Lady Luck
Welfare Plan, except as required by law; or pay any benefit not
provided for under any Lady Luck Employee Plan or Lady Luck
Welfare Plan; (E) adopt, establish or amend any severance pay
plan; or increase in any manner the severance or termination pay
of any officer or employee; (F) modify the provisions of any Lady
Luck Stock Option Plan, adjust or modify the terms of any
outstanding Lady Luck Options; or take any action to accelerate
the vesting of, or cash out rights associated with, any Lady Luck
Option; or remove existing restrictions in any Lady Luck Stock
Option Plan or other plan or arrangement; (G) grant any new awards
under any Lady Luck Stock Option Plan or other bonus, incentive,
performance or compensation plan or arrangement, including the
grant of Lady Luck Options, stock appreciation rights, stock-based
or
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stock-related awards, performance units or restricted stock; (H)
take any action to fund or, in any other way secure, the payment
of compensation or benefits under any Lady Luck Employee Plan,
Lady Luck Welfare Plan or other employee plan, agreement, contract
or arrangement; (I) hire any individual as an employee who will be
paid an annual base salary that equals or exceeds $75,000 or who
will be other than an "at will" employee; or (J) hire any
independent contractor or consultant, in each case without the
prior written consent of the Buyer.
(h) Leases or Material Contracts. Lady Luck shall not,
and shall cause its Subsidiaries not to, (i) enter into any lease
or agreement of any nature that would obligate Lady Luck or its
Subsidiary to pay $50,000 or more, (ii) enter into any lease or
agreement of any nature that is not terminable by Lady Luck or its
Subsidiary upon 90 days' notice without penalty, or (iii) modify,
amend or terminate any existing agreement of such type or waive,
release or assign any material rights or claims contained therein,
except in the ordinary course of business consistent with past
practice.
(i) Accounting Matters. Lady Luck shall not, and shall
cause its Subsidiaries not to, make any material change in
accounting methods, principles or practices, except as required by
GAAP or the applicable regulations under the Securities Act and
the Exchange Act.
(j) Tax Matters. Lady Luck shall not, and shall cause its
Subsidiaries not to, make any material tax election, enter into
any settlement or compromise with respect to any material income
tax liability or waive or extend the statute of limitations in
respect of any Taxes.
(k) Settlement. Lady Luck shall not, and shall cause its
Subsidiaries not to, settle any pending or threatened litigation
involving Lady Luck or any of its Subsidiaries (whether brought by
or against a private party or a Government Entity), except for
settlements that, in the aggregate, involve payments not covered
by insurance, by Lady Luck or any Subsidiaries, of less than
$50,000 and which settle entire claims or causes of action arising
out of the same or similar facts and circumstances or do not
impose any restrictions on the business or operations of Lady Luck
or any of its Subsidiaries.
(l) Capital Expenditures. Except as set forth in Section
5.1(l) of the Lady Luck Disclosure Schedule, Lady Luck, together
with its Subsidiaries, shall not make capital expenditures in
excess of $50,000 individually or $100,000 in the aggregate.
(m) Related Party Transactions. Except pursuant to
Section 5.1(n), Lady Luck shall not, and shall cause its
Subsidiaries not to, enter into or amend the terms of any
transaction of any nature whatsoever with its or its Subsidiaries'
directors, officers, employees, stockholders or their respective
affiliates.
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(n) Lady Luck Hotel & Casino. Lady Luck agrees, pursuant
to the Amended and Restated Purchase Agreement dated as of August
31, 1999, by and among Lady Luck and Gemini, Inc. (d/b/a Lady Luck
Casino Hotel) ("Gemini"), International Marco Polo's Services,
Inc. ("IMPS"), and Andrew H. Tompkins ("Tompkins"), that such
agreement will be amended concurrently with the execution of this
Agreement and with the approval of Buyer (as so amended, the "Lady
Luck Las Vegas Agreement") to provide that (i) the sale of all of
the outstanding capital stock of IMPS and the sale of those
certain trademarks, mailing lists and other intellectual property
owned by Gemini (the "Gemini Trademark Assets") that are related
to the operation of the Lady Luck Casino & Hotel located in Las
Vegas, Nevada (the "Las Vegas Hotel") can be consummated
immediately prior to the Effective Time without consummating the
acquisition of the Las Vegas Hotel and related real property and
leases and Gemini stock, which provision shall become effective
only upon consummation of the Merger; (ii) the Lady Luck Las Vegas
Agreement will not be amended without the prior approval of Buyer;
(iii) pursuant to the Lady Luck Las Vegas Agreement, Lady Luck
will provide an exclusive perpetual royalty free license agreement
to Gemini to use the Gemini Trademark Assets in connection with
the Las Vegas Hotel and will enter into a marketing agreement with
Gemini until such time as it is acquired by Lady Luck pursuant to
the Lady Luck Las Vegas Agreement, which provision shall become
effective only with consummation of the Merger; (iv) Lady Luck
will not consummate the transactions contemplated by the Lady Luck
Las Vegas Agreement prior to the Effective Time; and (v) for a
period of thirty (30) days following the date of this Agreement,
Buyer shall have the opportunity to conduct due diligence on
Gemini and the Las Vegas Hotel; at the end of that period, and
effective if the Merger is consummated, Buyer may determine that
Lady Luck shall not acquire Gemini, IMPS, the Las Vegas Hotel or
the Gemini Trademark Assets. In the event this Agreement is
terminated, the provisions of the Lady Luck Las Vegas Agreement
included as a result of the amendment described above will be of
no effect except as expressly stated therein and the original Lady
Luck Las Vegas Agreement shall continue in effect. Tompkins shall,
however, have the right to require Buyer to consummate the
acquisition of the Gemini Trademark Assets at the price and on the
terms provided in the Lady Luck Las Vegas Agreement and the Lady
Luck license agreement with IMPS shall be amended to give effect
to Lady Luck's ownership of the Gemini Trademark Assets.
(o) Maintenance of Las Vegas Hotel. Pursuant to the
amendment of the Lady Luck Las Vegas Agreement referred to in
Section 5.1(n), Lady Luck shall be afforded the right to require,
and pursuant to the Lady Luck Las Vegas Agreement as so amended,
Lady Luck shall use its best efforts to cause, the owners and
operators of the Las Vegas Hotel to maintain, at no expense to
Lady Luck or any of its Subsidiaries, the condition of the Las
Vegas Hotel and its related facilities such that upon the purchase
and sale of the Las Vegas Hotel, the condition of the Las Vegas
Hotel and related facilities is at least as good as on the date
hereof.
(p) Indebtedness and Preferred Stock. As directed by
Buyer, Lady Luck will, from time to time, take all actions
(including the transmittal of notices) as may be
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required from time to time in order to enable Buyer to repay Lady
Luck's outstanding 11- 7/8% First Mortgage Notes due 2001 (the
"Lady Luck Notes") (and to obtain releases of the collateral
securing the Lady Luck Notes) and redeem Lady Luck's outstanding
Lady Luck Preferred Stock, in each case as of the Effective Time.
(q) General. Lady Luck shall not, and shall cause its
Subsidiaries not to, authorize any of, or commit or agree to take
any of, the foregoing actions.
Section 5.2. Cooperation; Notice; Cure. Subject to compliance with
applicable law, from the date hereof until the Effective Time, each of
Buyer and Lady Luck shall confer on a regular and frequent basis with one
or more representatives of the other party to report on the general status
of ongoing operations. Each of Lady Luck and Buyer shall promptly notify
the other in writing of, and will use all commercially reasonable efforts
to cure before the Closing Date, any event, transaction or circumstance, as
soon as practical after it becomes known to such party, that causes or will
cause any covenant or agreement of Lady Luck or Buyer under this Agreement
to be breached in any material respect or that renders or will render
untrue in any material respect any representation or warranty of Lady Luck
or Buyer contained in this Agreement.
Section 5.3. No Solicitation.
(a) From and after the date hereof, Lady Luck shall not,
directly or indirectly, through any officer, director, employee,
financial advisor, representative or agent of such party (i)
solicit, initiate, or encourage (including by way of furnishing
information) or take any other action to facilitate any inquiries
or proposals that constitute, or could reasonably be expected to
lead to, a proposal or offer for a merger, consolidation, business
combination, sale of substantial assets, sale of shares of capital
stock (including, without limitation, by way of a tender or
exchange offer) or similar transaction involving Lady Luck or any
of its Subsidiaries, other than the transactions contemplated by
this Agreement (any of the foregoing inquiries or proposals being
referred to in this Agreement as an "Acquisition Proposal"), (ii)
engage in negotiations or discussions with any person (or group of
persons) other than Buyer or its respective affiliates (a "Third
Party") concerning, or provide any non-public information to any
person or entity relating to, any Acquisition Proposal, or (iii)
agree to or recommend any Acquisition Proposal; provided, however,
that until approval of the Merger at the Lady Luck Special Meeting
(as defined below), nothing contained in this Agreement shall
prevent Lady Luck or its Board of Directors from furnishing
non-public information to, or entering into discussions or
negotiations with, any person or entity in connection with an
unsolicited bona fide written Acquisition Proposal by such person
or entity or recommending an unsolicited bona fide written
Acquisition Proposal to the stockholders of Lady Luck, if (and
only if) the Board of Directors of Lady Luck reasonably believes
in good faith that (i) such Acquisition Proposal, after
consultation with and receipt of advice from Wasserstein Perella,
is reasonably capable of being completed on substantially the
terms proposed and if consummated, would result in a transaction
that would be superior from
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a financial point of view to the holders of Lady Luck Common Stock
including consideration of the financial terms of the Miss
Marquette Credit Agreement provided to Lady Luck by Buyer (a
"Superior Proposal"), and (ii) after receipt of advice to such
effect from outside legal counsel (who may be Lady Luck's
regularly engaged outside legal counsel), the Board of Directors
of Lady Luck, in the exercise of its fiduciary duties, determines
in good faith that the failure to take such action would be
contrary to the best interests of holders of Lady Luck Common
Stock. Nothing in this Agreement shall prevent Lady Luck from
complying with the provisions of Rule 14e-2 promulgated under the
Exchange Act with respect to an Acquisition Proposal.
(b) Lady Luck shall notify Buyer promptly (and no later
than 48 hours) after receipt by Lady Luck, or any officer,
director, employee, financial advisor, representative or agent of
Lady Luck, of any Acquisition Proposal or any request for
non-public information in connection with an Acquisition Proposal
or for access to the properties, books or records of Lady Luck or
its Subsidiaries by any Third Party that informs Lady Luck that it
is considering making, or has made, an Acquisition Proposal. Such
notice shall be made orally and shall indicate the identity of the
Third Party and the terms and conditions of such proposal, inquiry
or contract.
Section 5.4. Proxy Statement.
(a) As promptly as practicable after the execution of
this Agreement, Lady Luck shall prepare and file with the SEC, in
preliminary form, a proxy statement to be sent to Lady Luck's
common stockholders in connection with, and for their
consideration of, this Agreement and the Merger (the "Proxy
Statement").
(b) Lady Luck shall make all other necessary filings with
respect to the Merger under the Exchange Act, applicable state
blue sky laws and the rules and regulations thereunder.
Section 5.5. Special Meeting. Lady Luck shall duly call, give
notice of, convene and hold a special meeting of its common stockholders
for the purpose of voting upon this Agreement and the Merger (the "Lady
Luck Special Meeting") as promptly as reasonably practicable after the date
hereof. Except as expressly otherwise provided in Section 5.3 hereof or as
otherwise required to comply with the fiduciary duties of the Board of
Directors of Lady Luck, Lady Luck shall, through its Board of Directors,
recommend to its stockholders adoption and approval of this Agreement and
the Merger and shall use all reasonable efforts to solicit from its
stockholders proxies in favor of such matters.
Section 5.6. Access to Information. Upon reasonable notice, Lady
Luck (and each of its Subsidiaries) shall afford to Buyer, and its
officers, employees, accountants, counsel and other representatives,
reasonable access, during normal business hours during the period prior to
the Effective Time, to all its personnel, properties, books, contracts,
commitments and records, and during such period, Lady Luck shall, and shall
cause each of its Subsidiaries to, furnish
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promptly to Buyer (a) copies of monthly financial reports and development
reports, (b) 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 or state securities laws, and (c) all other
information concerning its business, properties and personnel as Buyer may
reasonably request. Buyer will hold any such information furnished to it by
Lady Luck in confidence in accordance with the confidentiality agreement
between the parties (the "Confidentiality Agreement"). No information or
knowledge obtained in any investigation pursuant to this Section 5.6 shall
affect or be deemed to modify any representation or warranty contained in
this Agreement or the conditions to the obligations of the parties to
consummate the Merger.
Section 5.7. Governmental Approvals.
(a) The parties hereto shall cooperate with each other
and use all commercially reasonable efforts to promptly prepare
and file all necessary documentation, to effect all applications,
notices, petitions and filings, to obtain as promptly as
practicable without conditions, restrictions or limitations that
are more restrictive than those conditions, restrictions and
limitations applicable to Lady Luck on the date hereof, all
permits, registrations, licenses, findings of suitability,
consents, variances, exemptions, orders, approvals and
authorizations of all third parties and Governmental Entities
which are necessary or advisable to consummate the transactions
contemplated by this Agreement ("Governmental Approvals"). Each of
the parties hereto and their respective officers, directors and
affiliates shall file within 60 days after the date hereof
(without the applicability of any grace periods set forth
elsewhere in this Agreement and with Buyer's efforts to complete
and file regulatory applications under Lady Luck Gaming Laws
focused on expeditiously complying with the requirements to obtain
the Nevada approval), all required initial applications and
documents in connection with obtaining approvals under the Lady
Luck Gaming Laws and shall file initial applications and documents
related to all other Governmental Approvals within such time as
necessary for such Governmental Approvals to be granted on or
before the effective date of the respective approvals required
under the Lady Luck Gaming Laws and shall act reasonably and
promptly thereafter in responding to additional requests in
connection therewith. Each of Lady Luck and Buyer (the "Notifying
Party") will notify the other reasonably promptly of the receipt
of material comments or requests from Governmental Entities
relating to Governmental Approvals, and will supply the other
party with copies of all material correspondence documents or
descriptions of communications 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,
documents or descriptions of communications relating to the
personal applications of individual applicants except for evidence
of filing.
(b) Lady Luck and Buyer 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
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party to believe that there is a reasonable likelihood that any
approval needed from a Governmental Entity will not be obtained or
that the receipt of any such approval will be materially delayed.
Lady Luck and Buyer shall take any and all actions reasonably
necessary to vigorously defend, lift, mitigate and rescind the
effect of any litigation or administrative proceeding adversely
affecting this Agreement or the transactions contemplated hereby
or thereby, including, without limitation, promptly appealing any
adverse court or administrative order or injunction to the extent
reasonably necessary for the foregoing purposes.
(c) Notwithstanding any other provision of this Agreement
(but without limiting the obligations set forth in Sections 5.7(a)
and (b)), Buyer shall have no obligation or affirmative duty under
this Section 5.7 to cease or refrain from the ownership of any
assets or properties (including any of the assets and properties
to be acquired from Lady Luck) or the association with any person
or entity which association is material to the operations of
Buyer, whether on the date hereof or at any time in the future.
Section 5.8. Publicity. Lady Luck and Buyer shall agree on the
form and content of the initial press release regarding the transactions
contemplated hereby and thereafter shall consult with each other before
issuing, and use all reasonable efforts to agree upon, any press release or
other public statement with respect to any of the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or
in connection with presentations or discussions with or before gaming
regulators.
Section 5.9. Indemnification.
(a) From and after the Effective Time, Buyer agrees that
it will, and will cause the Surviving Corporation to, indemnify
and hold harmless each present and former director and officer of
Lady Luck (the "Indemnified Parties"), against any costs or
expenses (including attorneys' fees), judgments, fines, losses,
claims, damages, liabilities or amounts paid in settlement
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or
occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest
extent that Lady Luck would have been permitted under the DGCL and
its Certificate of Incorporation or Bylaws in effect on the date
hereof to indemnify and to provide advancement of expenses to such
Indemnified Party.
(b) The provisions of this Section 5.9 are intended to be
in addition to the rights otherwise available to the current
officers and directors of Lady Luck by law, charter, statute,
bylaw or agreement, and shall operate for the benefit of, and
shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives.
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(c) For a period of six years after the Effective Time,
Buyer shall maintain or shall cause the Surviving Corporation to
maintain in effect a directors' and officers' liability insurance
policy covering those persons who are currently covered by Lady
Luck's directors' and officers' liability insurance policy (copies
of which have been heretofore delivered by Lady Luck to Buyer)
with coverage in amount and scope at least as favorable as Lady
Luck's existing coverage; provided that in no event shall Buyer or
the Surviving Corporation be required to expend in the aggregate
in excess of 200% of the annual premium currently paid by Lady
Luck for such coverage; and if such premium would at any time
exceed 200% of the such amount, then Buyer or the Surviving
Corporation shall maintain insurance policies which provide the
maximum and best coverage available at an annual premium equal to
200% of such amount.
Section 5.10. Stockholder Litigation. Lady Luck shall give Buyer
the reasonable opportunity to participate in the defense or settlement of
any stockholder litigation against Lady Luck and its directors relating to
the transactions contemplated hereby; provided, however, that no such
settlement shall be agreed to without Buyer's consent.
Section 5.11. Employee Benefits.
(a) Buyer shall cause the Surviving Corporation to honor
all written employment, severance and termination agreements
(including change in control provisions) of the employees of Lady
Luck and its Subsidiaries provided to Buyer on or prior to the
date of this Agreement and which are identified in Section 3.14(a)
of the Lady Luck Disclosure Schedule or which may be otherwise
agreed to by Buyer after the date hereof. Buyer agrees to confer
with Lady Luck and evaluate the appropriateness of severance and
stay bonuses for key employees of Lady Luck and its Subsidiaries.
(b) For purposes of determining eligibility for
participation and vesting under any employee benefit plan or
arrangement of Buyer or the Surviving Corporation, employees of
Lady Luck and its Subsidiaries as of the Effective Time shall
receive service credit for service with Lady Luck and any of its
Subsidiaries as if such service had been rendered to the Buyer or
Surviving Corporation, but not for purposes of determining benefit
accruals. This Section 5.11 shall not obligate the Buyer or
Surviving Corporation to provide duplicate benefits to employees
of Lady Luck and its Subsidiaries.
(c) Nothing in this Agreement is intended to create any
right of employment for any person or to create any obligation for
Buyer or the Surviving Corporation to continue any Plan of Lady
Luck following the Effective Time.
Section 5.12. Other Agreements. Buyer and Tompkins shall enter into
a Consulting, Advisory and Non-Competition Agreement in the form attached
hereto as Exhibit B, which shall become effective at the Effective Time.
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Section 5.13. Miss Marquette Loans. Immediately prior to the
consummation of the transactions contemplated by the Miss Marquette
Agreement, the parties shall enter into a credit agreement in the form
attached as Exhibit C (the "Miss Marquette Credit Agreement"), relating to
the making of a secured bridge loan by Buyer in the principal amount of
$16.3 million, for the purpose of enabling Lady Luck to consummate the
transactions contemplated by the Miss Marquette Agreement.
Section 5.14. Further Assurances and Actions.
(a) Subject to the terms and conditions herein, each of
the parties hereto agrees to use its reasonable best efforts to
take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including,
without limitation, (i) using their respective reasonable best
efforts to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities
and parties to contracts with each party hereto as are necessary
for consummation of the transactions contemplated by this
Agreement, and (ii) to fulfill all conditions precedent applicable
to such party pursuant to this Agreement.
(b) 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 any of the parties to the Merger, the proper
officers and/or directors of Buyer, Lady Luck and the Surviving
Corporation shall take all such necessary action.
Section 5.15. Pending Acquisitions. To the extent not prohibited
by applicable law, Lady Luck shall consult with Buyer as to any pre-closing
and post-closing determinations and actions related to the Miss Marquette
Agreement and the Lady Luck Las Vegas Agreement, and agrees to exercise any
rights it has, and take or omit to take all actions to be taken or not
taken by it, under such agreements in accordance with the Buyer's
reasonable directions and requests.
Section 5.16. Allocation of Funds. Subject to the financing
contingency set forth in Section 6.3(c) and Buyer's and Lady Luck's
obligations under the terms of the Las Vegas Agreement, immediately prior
to the Effective Time, Buyer agrees to allocate sufficient funds (i) to
close both the transactions contemplated thereunder or, (ii) if all
approvals necessary to acquire the Las Vegas Hotel and the capital stock of
Gemini have not been granted at or before the Effective Time, then to
consummate at the Effective Time the acquisition of the Gemini Trademark
Assets and, at such times as permitted, the Las Vegas Hotel and the capital
stock of Gemini.
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ARTICLE VI
CONDITIONS TO MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to this Agreement to
effect the Merger shall be subject to the satisfaction or waiver by each
party prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the Merger
shall have been approved by the stockholders of Lady Luck in the
manner required under the DGCL and the Certificate of
Incorporation of Lady Luck.
(b) No Injunctions. No Governmental Entity shall have
enacted, issued, promulgated, enforced or entered any order,
executive order, stay, decree, judgment or injunction or statute,
rule, regulation which is in effect and which has the effect of
making the Merger illegal or otherwise prohibiting consummation of
the Merger.
(c) Governmental Approvals. All Governmental Approvals
required to consummate the transactions contemplated by this
Agreement shall have been obtained, all such approvals shall
remain in full force and effect, all statutory waiting periods in
respect thereof (including, without limitation, under the HSR Act)
shall have expired and no such approval shall contain any
conditions, limitations or restrictions which Buyer reasonably
determines in good faith will have or would reasonably be expected
to have a Lady Luck Material Adverse Effect or a Buyer Material
Adverse Effect. Notwithstanding the foregoing, Lady Luck agrees
that if the Nevada Gaming Commission has not issued all approvals
necessary to be obtained in connection with the purchase and sale
of the Las Vegas Hotel pursuant to the terms of the Lady Luck Las
Vegas Agreement (the "Nevada Approval") on or before the
fulfillment or waiver of all other conditions precedent to the
parties' obligations to effect the Merger, it will, at Buyer's
request, for purposes of Section 6.1(c), consummate the purchase
of the Gemini Trademark Assets pursuant to the terms of the Lady
Luck Las Vegas Agreement for which the Nevada Approval is not
required as described in Section 5.1(n) and proceed with its
obligations to effect the Merger.
Section 6.2. Additional Conditions to Obligations of Lady Luck.
The obligations of Lady Luck to effect the Merger is subject to the
satisfaction of each of the following conditions prior to the Effective
Time, any of which may be waived in writing exclusively by Lady Luck:
(a) Representations and Warranties. The representations
and warranties of Buyer and Merger Sub set forth in this Agreement
shall be true and correct in all material respects (except for
those qualified as to materiality or a Buyer Material Adverse
Effect, which shall be true and correct) as of the date of this
Agreement and, except to the extent such representations
explicitly speak as of an earlier date, as of the Closing Date as
though made on and as of the Closing Date. Lady Luck shall have
received a certificate
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signed on behalf of Buyer by the Chief Executive Officer and the
Chief Financial Officer of Buyer to such effect.
(b) Performance of Obligations of Buyer. Buyer shall have
performed in all material respects all material obligations
required to be performed by it under this Agreement at or prior to
the Closing Date including, without limitation, that Buyer shall
not be in default under the Miss Marquette Credit Agreement, and
Lady Luck shall have received a certificate signed on behalf of
Buyer by the Chief Executive Officer the Chief Financial Officer
of Buyer to such effect. Immediately prior to the Effective Time
(i) Buyer shall have, and shall have made available to Lady Luck,
funds sufficient under the Lady Luck Las Vegas Agreement (x) to
close both the transactions contemplated thereunder or, (y) if all
approvals necessary to acquire the Las Vegas Hotel and the capital
stock of Gemini have not been granted on or before the Effective
Time, then to acquire the Gemini Trademark Assets and, at such
times as permitted, the Las Vegas Hotel and the capital stock of
Gemini and (ii) Buyer shall have caused Lady Luck to have
consummated at the Effective Time the acquisition of the Gemini
Trademark Assets and, if all necessary approvals have been
obtained, the Las Vegas Hotel and the capital stock of Gemini.
Section 6.3. Additional Conditions to Obligations of Buyer. The
obligations of Buyer and Merger Sub to effect the Merger are subject to the
satisfaction of each of the following conditions prior to the Effective
Time, any of which may be waived in writing exclusively by Buyer:
(a) Representations and Warranties. The representations
and warranties of Lady Luck set forth in this Agreement shall be
true and correct in all material respects (except for those
qualified as to materiality or a Lady Luck Material Adverse
Effect, which shall be true and correct) as of the date of this
Agreement and, except to the extent such representations and
warranties explicitly speak as of an earlier date, as of the
Closing Date as though made on and as of the Closing Date. Buyer
shall have received a certificate signed on behalf of Lady Luck by
the Chief Executive Officer and a senior financial officer of Lady
Luck to such effect.
(b) Performance of Obligations of Lady Luck. Lady Luck
shall have performed in all material respects all material
obligations required to be performed by it under this Agreement at
or prior to the Closing Date. Buyer shall have received a
certificate signed on behalf of Lady Luck by the Chief Executive
Officer and a senior financial officer of Lady Luck to each such
effect.
(c) Financing. Buyer shall have obtained financing on
terms satisfactory to it and sufficient to allow Buyer to complete
the transactions contemplated by this Agreement, including the
consummation of the transactions contemplated in the Las Vegas
Agreement the repayment of the Lady Luck Notes and the redemption
of the Lady Luck Series A Preferred Stock.
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(d) Due Diligence Review.
(i) Buyer shall have been reasonably satisfied
with the results of the Physical Investigation and Review
(as defined below) of the properties of Lady Luck and its
Subsidiaries described below. Buyer and its consultants
shall have the right for a period of forty five (45) days
after the date hereof (the "Due Diligence Period") to
enter all properties of Lady Luck and its Subsidiaries
during reasonable hours for the purpose of inspection of
the physical condition of the properties including hull
inspections, engine inspections, engineering surveys
(including inspection of the structural integrity of all
improvements to such properties) and environmental
reports and such other environmental and structural
integrity tests and inspections as the Buyer may
reasonably desire, including a Phase II environmental
inspection, that includes sampling and report
(collectively, the "Physical Investigation and Review").
Any such inspections and tests shall be performed at the
sole cost of the Buyer. The Buyer will not create or
cause to be created any claim against or Lien for third
party contractors upon the properties, nor otherwise
impair Lady Luck's estate or unreasonably interfere in
any manner with the regular conduct or business upon the
properties. The Buyer shall repair and restore to its
original condition any portion of the properties
physically damaged, altered or disturbed as a result of
such inspections and shall indemnify and hold Lady Luck
harmless from any and all liability damage, claims or
injury lawsuits resulting from the acts or omissions of
the Buyer, its employees, agents or contractors related
to such inspection of the properties. The Buyer's
obligations under this Section 6.3(d) shall survive the
termination of this Agreement;
(ii) Lady Luck shall, as promptly as practicable
after the execution of this Agreement, to the extent not
previously provided and to the extent in Lady Luck's
possession or control, provide or cause to be provided to
the Buyer copies of all documents reasonably related to
the Physical Investigation and Review.
(e) No Material Adverse Change. No material adverse
change shall have occurred in the business, properties, condition
(financial or otherwise), prospects or results of operations of
Lady Luck and its Subsidiaries, taken as a whole, since the date
of the Lady Luck Interim Financial Statements other than any
change arising out of, or resulting from, general economic
conditions in the United States or conditions generally affecting
the gaming industry in the United States.
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ARTICLE VII
TERMINATION AND AMENDMENT
Section 7.1. Termination. This Agreement may be terminated at any
time prior to the Effective Time (with respect to Sections 7.1(b) through
7.1(l), by written notice by the terminating party to the other party),
whether before or after approval of the matters presented in connection
with the Merger by the stockholders of Lady Luck:
(a) by mutual written consent of Lady Luck and Buyer; or
(b) by either Buyer or Lady Luck if the Merger shall not
have been consummated by December 31, 2000 (the "Outside Date");
provided that either Buyer or Lady Luck may extend the Outside
Date to June 30, 2001 by providing written notice thereof to the
other party between three (3) and five (5) business days prior to
and including December 31, 2000 if (i) the Merger shall not have
been consummated by such date because the requisite Governmental
Approvals required under Section 6.1(c) (not including the Nevada
Approval) have not been obtained and are still being pursued, (ii)
the party requesting such extension has not violated any of its
obligations under this Agreement in a manner that was the cause of
or resulted in the failure of the Merger to occur on or before
December 31, 2000, and (iii) it is reasonably probable, based on,
among other things, the status of completed regulatory filings,
scheduled regulatory meetings and the advice of regulatory counsel
to such party, that the requisite Governmental Approvals will be
obtained within such extension period; provided, further, that the
right to terminate this Agreement under this Section 7.1(b) shall
not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause or resulted in
the failure of the Merger to occur on or before such date; or
(c) by either Buyer or Lady Luck if a court of competent
jurisdiction or other Governmental Entity shall have issued an
order, decree or ruling or taken any other final action not
subject to appeal, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger; or
(d) by Buyer or Lady Luck, if, at the Lady Luck Special
Meeting (including any adjournment or postponement), the requisite
vote of the stockholders of Lady Luck in favor of the approval and
adoption of this Agreement and the Merger shall not have been
obtained; or
(e) by Buyer, if the Board of Directors of Lady Luck
shall have (i) withdrawn or modified its recommendation of this
Agreement or the Merger, (ii) recommended an Acquisition Proposal
to the stockholders of Lady Luck, or (iii) failed to reaffirm its
recommendation of this Agreement and the Merger upon the request
of Buyer at any time, in the case of (i), (ii) and (iii) in
accordance with the proviso in Section 5.3; or
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(f) by Lady Luck, as a result of the exercise of
fiduciary duties by its Board of Directors in accordance with
Section 5.3; provided that no termination under this Section
7.1(f) shall be effective until (i) the termination fee required
by Section 7.3(b) shall be paid, and (ii) at least three Business
Days shall have elapsed after delivery to Buyer of a written
notice from Lady Luck providing a complete and accurate
description of material terms of the Superior Proposal, including
the identity of all parties thereto; or
(g) by Buyer, upon breach of any representation,
warranty, covenant or agreement on the part of Lady Luck set forth
in this Agreement, or if any representation or warranty of Lady
Luck shall have become untrue, in either case such that the
conditions set forth in Section 6.3(a) or Section 6.3(b) would not
be satisfied ("Terminating Lady Luck Breach"); provided, however,
that, if such Terminating Lady Luck Breach is curable by Lady Luck
through reasonable best efforts within 30 days and for so long as
Lady Luck continues to exercise such reasonable best efforts
during such 30 day period, Buyer may not terminate this Agreement
under this Section 7.1(g); or
(h) by Lady Luck, upon breach of any representation,
warranty, covenant or agreement on the part of Buyer set forth in
this Agreement, or if any representation or warranty of Buyer
shall have become untrue, in either case such that the conditions
set forth in Section 6.2 would not be satisfied ("Terminating
Buyer Breach"); provided, however, that, if such Terminating Buyer
Breach is curable by Buyer through reasonable best efforts within
30 days and for so long as Buyer continues to exercise such
reasonable best efforts during such 30 day period, Lady Luck may
not terminate this Agreement under this Section 7.1(h); or
(i) by Buyer, if (A) any state gaming authority revokes
any of Lady Luck's licenses or permits to operate any of its
casino river boats, or (B) one or more gaming regulatory
authorities imposes fines or penalties against, or requires other
payments by, Lady Luck and/or any of its current or former
directors, officers, employees, agents or representatives (to the
extent that Lady Luck is responsible for any such fines, penalties
or other payments and such fines, penalties or other payments are
not covered by insurance policies of Lady Luck) relating to the
actions of Lady Luck and/or its current or former directors,
officers, agents or representatives in an aggregate amount or
which impose restrictions upon operations in the case of (A) or
(B), as applicable, that would reasonably be expected to have a
material adverse effect on the business of any Lady Luck casino
(with materiality determined with respect to the enterprise value
of such business); or
(j) by Buyer, if a material adverse change as described in
Section 6.3(e) has occurred; or
(k) by Lady Luck, if Buyer has not filed its initial
applications with the Mississippi, Iowa and Nevada gaming
authorities in connection with obtaining required approvals within
60 days after the date of this Agreement; provided, however, that
Lady
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Luck shall not be permitted to terminate the Agreement pursuant to
this Section 7.1(k) until it has given Buyer 30 days' notice of
its intent to terminate this Agreement pursuant to this Section
7.1(k), setting forth the initial applications that it believes
have not been filed, or if Buyer has filed all such initial
applications and documents; or
(l) by Buyer, if Lady Luck has not filed any required
applications with the Mississippi, Iowa and Nevada gaming
authorities in connection with obtaining any approvals required
for Lady Luck within 60 days after the date of this Agreement;
provided, however, that Buyer shall not be permitted to terminate
this Agreement pursuant to this Section 7.1(l) until it has given
Lady Luck 30 days' notice of its intent to terminate this
Agreement pursuant to this Section 7.1(l), setting forth the
initial applications that it believes have not been filed, or if
Lady Luck has filed all such initial applications and documents;
or
(m) by Buyer, if it is not satisfied with the Physical
Investigation and Review as described in Section 6.3(d).
Section 7.2. Effect of Termination. In the event of termination of
this Agreement as provided in Section 7.1, this Agreement shall immediately
become void and there shall be no liability or obligation on the part of
Buyer, Merger Sub or Lady Luck, or their respective officers, directors,
stockholders or affiliates, except as set forth in Section 7.3, and except
that such termination shall not limit liability for a willful breach of
this Agreement; provided that the provisions of this Section 7.2 and
Section 7.3 of this Agreement and the Confidentiality Agreement shall
remain in full force and effect and survive any termination of this
Agreement.
Section 7.3. Fees and Expenses.
(a) Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the Merger is consummated.
Fees and expenses payable under this Section 7.3 to any party
hereunder shall include all costs of collection and interest from
the date such payment is due at a rate per annum of London
Interbank Offered Rate plus 2%.
(b) Where an Acquisition Proposal exists or where an
intention (whether or not conditional) to make an Acquisition
Proposal has been communicated to Lady Luck or shall have been
communicated directly to a director, Lady Luck's counsel or
financial advisors, Lady Luck shall pay Buyer a termination fee of
$2,500,000 via wire transfer of same-day funds on the date of the
earliest to occur one of the following events:
(i) the termination of this Agreement by Buyer
or Lady Luck pursuant to Section 7.1(d) provided the
Acquisition Proposal has been communicated to
stockholders of Lady Luck generally;
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(ii) the termination of this Agreement by Buyer
pursuant to Section 7.1(e); or
(iii) the termination of this Agreement by Lady
Luck pursuant to Section 7.1(f).
Lady Luck's payment of a termination fee pursuant to this
subsection shall be the sole and exclusive remedy of Buyer against
Lady Luck and any of its Subsidiaries and their respective
directors, officers, employees, agents, advisors or other
representatives with respect to the occurrences giving rise to
such payment; provided that this limitation shall not apply in the
event of a willful breach of this Agreement by Lady Luck.
(c) In addition to the provisions of Section 7.3(b), if
(i) Buyer or Lady Luck terminates this Agreement pursuant to
Section 7.1(d), (ii) Buyer terminates this Agreement pursuant to
Section 7.1(g) or Section 7.1(l), (iii) Lady Luck or Buyer
terminates this Agreement pursuant to Section 7.1(b) and the
condition specified in Section 6.1(c) shall not have been
satisfied because of facts or circumstances relating to Lady Luck,
its employees or operations, or (iv) Buyer terminates this
Agreement pursuant to Section 7.1(j), Lady Luck shall immediately
thereafter reimburse Buyer and Merger Sub all fees and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby plus, in the case of (ii) or (iii) above, a
termination fee of $1,500,000.
(d) If (i) Lady Luck terminates this Agreement pursuant
to Section 7.1(h) or Section 7.1(k) or (ii) Lady Luck or Buyer
terminates this Agreement pursuant to Section 7.1(b) and the
condition specified in Section 6.1(c) shall not have been
satisfied because of facts or circumstances relating to Buyer, its
employees or operations, Buyer shall immediately thereafter
reimburse Lady Luck all fees and expenses incurred in connection
with this Agreement and the transactions contemplated hereby plus
a termination fee of $1,500,000.
Section 7.4. Amendment. This Agreement may be amended by the
parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Lady Luck; but, after any
such approval, no amendment shall be made which by law requires further
approval by such stockholders without such further approval. This Agreement
may not be amended except by an instrument in writing signed on behalf of
each of the parties hereto.
Section 7.5. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed (i) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto,
and (iii) waive compliance with any of the agreements or conditions
contained here. Any agreement on the part of a party hereto
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to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Nonsurvival of Representations, Warranties, Covenants
and Agreements. None of the representations, warranties, covenants and
agreements in this Agreement or in any instrument delivered pursuant to
this Agreement shall survive the Effective Time, except for the agreements
contained in Sections 1.4, 1.5, 1.6, 1.7, 2.1, 2.2, 2.3, 2.4, 5.9, 5.11,
5.14 and the last sentence Section 6.3(d)(i) and Article VIII. The
Confidentiality Agreement shall survive the execution and delivery of this
Agreement.
Section 8.2. Notices. Any and all notices, demands or other
communications required or desired to be given hereunder by any party shall
be in writing and shall be validly given or made to another party if served
personally, or by facsimile or air courier, or deposited in the United
States mail, certified or registered, postage prepaid, return receipt
requested. If such notice, demand or other communications be served
personally, or by facsimile or air courier, service shall be conclusively
deemed made at the time of such service. If such notice, demand or other
communications be given by mail, it shall be conclusively deemed given
three (3) days after the deposit thereof in the United States mail,
addressed to the party to whom such notice, demand or other communication
is to be given as hereinafter set forth:
(a) if to Lady Luck, to:
Lady Luck Gaming Corporation
206 North Third Street
Las Vegas, Nevada 89101
Attention: Chief Executive Officer
with a copy to:
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York 10022
Attention: Martin Nussbaum
(b) if to Buyer or Merger Sub, to:
Isle of Capri Casinos, Inc.
711 Dr. Martin Luther King, Jr. Boulevard
Biloxi, Mississippi 39530
Attention: Chief Executive Officer
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with copies to:
Isle of Capri Casinos, Inc.
2200 Corporate Boulevard, N.W.
Suite 310
Boca Raton, Florida 33431
Attention: Allan B. Solomon
Mayer, Brown & Platt
190 South LaSalle Street, Suite 3100
Chicago, Illinois 60603
Attention: Paul W. Theiss
Section 8.3. Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include," "includes" or "including" are used in this Agreement
they shall be deemed to be followed by the words "without limitation." The
phrase "made available" in this Agreement shall mean that the information
referred to has been made available if requested by the party to whom such
information is to be made available. The phrases "the date of this
Agreement," "the date hereof," and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to October 5, 1999.
Section 8.4. Counterparts. This Agreement may be executed in two
or more counterparts, all 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 parties, it
being understood that all parties need not sign the same counterpart.
Section 8.5. Entire Agreement; No Third Party Beneficiaries. This
Agreement and all documents and instruments referred to herein (a)
constitute 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) except as provided in Section 5.9, are
not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder; provided that the Confidentiality Agreements
shall survive the execution and delivery of this Agreement. Each party
hereto agrees that, except for the representations and warranties contained
in this Agreement, none of Buyer, Merger Sub or Lady Luck makes any other
representations or warranties, and each hereby disclaims any other
representations and warranties made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this
Agreement or the transactions contemplated hereby, notwithstanding the
delivery or disclosure to any of them or their respective representatives
of any documentation or other information with respect to any one or more
of the foregoing.
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Section 8.6. Governing Law. This Agreement shall be governed by
and construed, and the obligations, rights and remedies of the parties
hereunder shall be determined, in accordance with the laws of the State of
Delaware without reference to the conflicts of law or choice of law
doctrine of such state.
Section 8.7. 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 party, except that Merger Sub may assign its
rights and obligations hereunder to any direct or indirect wholly-owned
subsidiary of Buyer; provided that no such assignment shall relieve Buyer
of its obligations hereunder. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
Section 8.8. Severability; Enforcement. Except to the extent that
the application of this Section 8.8 would have a Buyer Material Adverse
Effect with respect to Buyer or a Lady Luck Material Adverse Effect with
respect to Lady Luck, the invalidity of any portion hereof shall not affect
the validity, force or effect of the remaining portions hereof. If it is
ever held that any covenant hereunder is too broad to permit enforcement of
such covenant to its fullest extent, each party agrees that a court of
competent jurisdiction may enforce such covenant to the maximum extent
permitted by law, and each party hereby consents and agrees that such scope
may be judicially modified accordingly in any proceeding brought to enforce
such covenant.
Section 8.9. Specific Performance. Except as provided in Section
7.3(b), the parties hereto agree that the remedy at law for any breach of
this Agreement will be inadequate and that any party by whom this Agreement
is enforceable shall be entitled to specific performance in addition to any
other appropriate relief or remedy. Such party may, in its sole discretion,
apply to a court of competent jurisdiction for specific performance or
injunctive or such other relief as such court may deem just and proper in
order to enforce this Agreement or prevent any violation hereof and, to the
extent permitted by applicable laws, each party hereto waives any objection
to the imposition of such relief.
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IN WITNESS WHEREOF, Isle of Capri Casinos, Inc., Isle Merger Corp.
and Lady Luck Gaming Corporation have caused this Agreement to be signed by
their respective duly authorized officers as of the date first written
above.
ISLE OF CAPRI CASINOS, INC.
By: /s/ Allan B. Solomon
----------------------------------
Its: Executive Vice President,
General Counsel and Secretary
ISLE MERGER CORP.
By: /s/ Allan B. Solomon
---------------------------------
Its: Executive Vice President,
General Counsel and Secretary
LADY LUCK GAMING CORPORATION
By: /s/ Rory J. Reid
---------------------------------
Its: Senior Vice President
47
STOCKHOLDER SUPPORT AGREEMENT
STOCKHOLDER SUPPORT AGREEMENT, dated as of October 5, 1999 (this
"Agreement"), by Andrew H. Tompkins ("Stockholder") to and for the benefit
of Isle of Capri Casinos, Inc., a Delaware corporation ("Buyer").
WHEREAS, as of the date hereof, Stockholder owns of record and
beneficially 2,226,409 shares (such shares, together with any other voting
or equity securities of Lady Luck Gaming Corporation, a Delaware
corporation ("Lady Luck"), hereafter acquired by Stockholder prior to the
termination of this Agreement, being referred to herein collectively as the
"Shares") of common stock, par value $0.006 per share ("Lady Luck Common
Stock");
WHEREAS, concurrently with the execution of this Agreement, Buyer,
Isle Merger Corp., a Delaware corporation and a wholly owned subsidiary of
Buyer ("Merger Sub"), and Lady Luck are entering into an Agreement and Plan
of Merger, dated as of the date hereof (the "Merger Agreement"; capitalized
terms used and not otherwise defined herein shall have the respective
meanings assigned to them in the Merger Agreement), pursuant to which, upon
the terms and subject to the conditions thereof, Merger Sub will be merged
with and into Lady Luck such that Lady Luck will become a wholly owned
subsidiary of Buyer (the "Merger"); and
WHEREAS, as a condition to the willingness of Buyer and Merger Sub
to enter into the Merger Agreement, Buyer has requested that the
Stockholder agree, and in order to induce Buyer and Merger Sub to enter
into the Merger Agreement the Stockholder is willing to agree, to vote in
favor of adopting the Merger Agreement and approving the Merger, upon the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally
bound hereby, the parties hereby agree, severally and not jointly, as
follows:
Section 1. Voting of Shares. Until the termination of this
Agreement in accordance with the terms hereof, Stockholder hereby agrees
that, at the Lady Luck Stockholders' Meeting or any other meeting of the
stockholders of Lady Luck, however called, and in any action by written
consent of the stockholders of Lady Luck, Stockholder will vote all of his
Shares (a) in favor of adoption of the Merger Agreement and approval of the
Merger and the other transactions contemplated by the Merger Agreement, (b)
against any proposal for any recapitalization, merger (other than the
Merger), sale of assets or other business combination between Lady Luck and
any person or entity (other than Buyer or any subsidiary of Buyer) or any
other action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of Lady
Luck under the Merger Agreement or which could result in any of the
conditions to the Merger Agreement not being fulfilled and (c) in favor of
any other matter necessary to the consummation of the transactions
contemplated by the Merger Agreement and considered and voted upon by the
stockholders of Lady Luck (or any class thereof). In addition,
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Stockholder agrees that he will, upon request by Buyer, furnish written
confirmation, in form and substance reasonably acceptable to Buyer, of such
Stockholder's vote in favor of the Merger Agreement and the Merger.
Stockholder acknowledges receipt and review of a copy of the Merger
Agreement.
Section 2. Proxy. Subject to any required approval under the Lady
Luck Gaming Laws, the Stockholder, by this Agreement, and for so long as
this Agreement shall remain in effect, does hereby constitute and appoint
Buyer, or any nominee of Buyer, with full power of substitution, as such
Stockholder's irrevocable proxy and attorney-in-fact to vote the Shares as
indicated in Section 1, in the event such Stockholder fails to comply with
his obligations under such section. Stockholder intends this proxy to be
irrevocable and coupled with an interest and will take such further action
and execute such other instruments as may be necessary to effectuate the
intent of this proxy and hereby revokes any proxy previously granted by him
with respect to its Shares.
Section 3. Transfer of Shares. Stockholder covenants and agrees
that he will not, without the consent of Buyer, prior to the termination of
this Agreement in accordance with the terms hereof, directly or indirectly,
(a) sell, assign, transfer (including by merger, testamentary disposition,
interspousal disposition pursuant to a domestic relations proceeding or
otherwise by operation of law), pledge, encumber or otherwise dispose of
any of the Shares, (b) deposit any of the Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Shares or
grant any proxy or power of attorney with respect thereto which is
inconsistent with this Agreement or (c) other than the Option (as defined
below), enter into any contract, option or other arrangement or undertaking
with respect to the direct or indirect sale, assignment, transfer
(including by merger, testamentary disposition, interspousal disposition
pursuant to a domestic relations proceeding or otherwise by operation of
law) or other disposition of any Shares. The consent of the Buyer shall not
be unreasonably withheld with respect to (i) transfers in connection with
Stockholder's estate planning or (ii) testamentary transfers by the
Stockholder, in which in both cases, each transferee agrees to be bound by
the terms of this Agreement prior to the acceptance of any transfer. Buyer
shall be deemed to have consented to the transfer of 11,739 shares of Lady
Luck Common Stock to Alain Uboldi pursuant to his agreement with the
Stockholder (the "Uboldi Agreement").
Section 4. Representations and Warranties of Stockholder.
Stockholder hereby represents and warrants to Buyer with respect to himself
and his ownership of the Shares as follows:
a. Ownership of Shares. On the date hereof, the Shares
are owned of record and beneficially by Stockholder, are not
subject to a pledge and do not otherwise serve as collateral for
any indebtedness. Upon the exercise of the Option, except with
respect to 11,739 shares of Lady Luck Common Stock which are
subject to the Uboldi Agreement, Buyer will receive good and
marketable title to the Shares, free and clear of all liens,
claims, encumbrances and security interests of any kind.
Stockholder has sole power and authority to vote and to sell
the Shares, without restrictions, with respect to all of the
Shares.
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b. Power, Binding Agreement. Stockholder has the legal
capacity, power and authority to enter into and perform all of his
obligations under this Agreement. The execution, delivery and
performance of this Agreement by Stockholder will not violate any
other agreement to which Stockholder is a party, including,
without limitation, any voting agreement, stockholders' agreement,
partnership agreement or voting trust. This Agreement has been
duly and validly executed and delivered by Stockholder and
constitutes a valid and binding obligation of Stockholder,
enforceable against Stockholder in accordance with its terms.
c. No Conflicts. The execution and delivery of this
Agreement do not, and the consummation of the transactions
contemplated hereby will not, conflict with or result in any
violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a
material benefit under, any provision of any loan or credit
agreement, note, bond, mortgage, indenture, lease, or other
agreement, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Stockholder or any of his properties or
assets, other than such conflicts, violations or defaults or
terminations, cancellations or accelerations which individually or
in the aggregate do not materially impair the ability of
Stockholder to perform his obligations hereunder. No consent,
approval, order or authorization of, or registration, declaration,
or filing with, any governmental entity is required by or with
respect to the execution and delivery of this Agreement by
Stockholder and the consummation by Stockholder of the
transactions contemplated hereby.
Section 5. Option to Purchase Shares. Stockholder hereby grants to
Buyer (i) an option to purchase that portion of the Shares equal to 34.99%
of the issued and outstanding shares of the Lady Luck Common Stock and (ii)
effective upon a breach by Stockholder of the provisions of Section 1, an
option to purchase the remainder of the Shares, except for Shares subject
to the Uboldi Agreement (each, an "Option" and collectively, the
"Options"), at a price of $12.00 per Share (or such higher price as Buyer
may determine), until the termination of this Agreement in accordance with
Section 7 hereof. Buyer agrees that if either of the Options are exercised
(which exercise shall be evidenced by payment for the Shares) and Buyer
disposes of the Shares within six months after the date of the exercise of
such Option, Buyer will pay to Stockholder one-half of the net profit
(after reduction for Buyer's expenses incurred for brokerage commissions
(net of any reimbursements) in connection with the exercise of such Option
and disposition of such Shares) to Buyer from such disposition (the "Profit
Amount"), provided that the Profit Amount is not subject to disgorgement
under Section 16 of the Securities Exchange Act of 1934, as amended. Solely
for income tax purposes, Buyer and Stockholder shall treat any portion of
the Profit Amount paid to Stockholder as additional consideration paid by
Buyer to Stockholder for purchase of the Shares. Subject to any required
approval under the Lady Luck Gaming Laws, either Option may be exercised by
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Buyer at any time upon two (2) business days' prior written notice to
Stockholder, against payment of the purchase price for the Shares that are
subject to such Option. Stockholder agrees to cooperate with Buyer at
Buyer's expense and use all commercially reasonable efforts to assist Buyer
in obtaining any approvals required under the Lady Luck Gaming Laws.
Section 6. No Solicitation. Stockholder agrees that (i) in his
individual capacity, as opposed to his capacity as a director of Lady Luck,
he will not, nor will he authorize or permit any of his employees, agents
and representatives to, directly or indirectly, (a) initiate, solicit or
encourage (including by way of furnishing information) or take any other
action to facilitate any inquiries or proposals that constitute, or could
reasonably be expected to lead to, an Acquisition Proposal, (b) agree to or
recommend any Acquisition Proposal, or (c) engage in negotiations or
discussions with a Third Party concerning, or provide any non-public
information to any person or entity relating to, any Acquisition Proposal
and (ii) he will notify Buyer as soon as possible (and in any event within
48 hours) if any such inquiries or proposals are received by, any
information or document is requested from, or any negotiations or
discussions are sought to be initiated or continued with him, any of his
affiliates or his legal or financial advisors
Section 7. Termination. This Agreement shall terminate upon the
earliest to occur of (i) the Effective Time, (ii) the termination of the
Merger Agreement pursuant to Section 7.1(a), Section 7.1(c), Section
7.1(e), Section 7.1(g), Section 7.1(h), Section 7.1(i), Section 7.1(j),
Section 7.1(k) or Section 7.1(l) of the Merger Agreement, and (iii)
December 31, 2000; provided that the provisions of Section 9 of this
Agreement shall survive any termination of this Agreement; and provided
further that no such termination shall relieve any party of liability for a
breach hereof prior to termination.
Section 8. Escrow of Shares. On the date hereof, Stockholder has
deposited with Swidler Berlin Shereff Friedman, LLP (the "Escrow Agent")
certificates representing all of the Shares. Buyer and Stockholder agree
that the Escrow Agent shall hold the Shares as escrowee in accordance with
the terms and conditions of the Escrow Agreement, dated the date hereof,
among Buyer, Stockholder and the Escrow Agent.
Section 9. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition
to any other remedy at law or in equity.
Section 10. Miscellaneous.
a. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written
and oral, between the parties with respect thereto. This Agreement
may not be amended, modified or rescinded except by an instrument
in writing signed by each of the parties hereto.
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b. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect. Upon
such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in a mutually
acceptable manner in order that the terms of this Agreement remain
as originally contemplated to the fullest extent possible.
c. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard
to the principles of conflicts of law thereof.
d. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which together
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date first written above.
ANDREW H. TOMPKINS
/s/ Andrew H. Tompkins
---------------------------------------
Agreed and Acknowledged:
ISLE OF CAPRI CASINOS, INC.
By: /s/ Allan B. Solomon
-------------------------------
Its: Executive Vice President,
General Counsel and Secretary
6
ESCROW AGREEMENT
ESCROW AGREEMENT (the "Escrow Agreement"), dated October 5, 1999,
among ANDREW H. TOMPKINS (the "Stockholder"), ISLE OF CAPRI CASINOS, INC.,
a Delaware corporation (the "Buyer"), and SWIDLER BERLIN SHEREFF FRIEDMAN,
LLP (the "Escrow Agent").
WHEREAS, the Stockholder, Isle Merger Corp., a Delaware
corporation and a wholly-owned subsidiary of Buyer ("Merger Sub"), the
Buyer and Lady Luck Gaming Corporation, a Delaware corporation ("Lady
Luck"), have entered into an Agreement and Plan of Merger dated October 5,
1999 (the "Merger Agreement") pursuant to which Merger Sub will be merged
with and into Lady Luck such that Lady Luck will become a wholly-owned
subsidiary of Buyer (the "Merger");
WHEREAS, the Stockholder and the Buyer have further entered into a
Stockholder Support Agreement, dated October 5, 1999 (the "Support
Agreement"), with respect to which the Stockholder agrees to vote all
shares of Lady Luck owned by him in favor of adopting the Merger Agreement
and approving the Merger;
WHEREAS, the Stockholder owns of record and beneficially 2,226,409
shares of common stock of Lady Luck (the "Shares"); and
WHEREAS, to effect the Support Agreement, the Buyer has required
that the Stockholder deposit, and the Stockholder has agreed to deposit,
the Shares into escrow on the date hereof (the "Escrow Shares").
NOW THEREFORE, in consideration of the premises and the mutual
agreements contained herein, intending to be legally bound hereby, the
parties hereto agree as follows:
1. Escrow. On the date hereof, the Stockholder shall deliver to
the Escrow Agent the certificate or certificates evidencing the Escrow
Shares to be held in escrow in accordance with the terms and provisions of
this Escrow Agreement. The Escrow Agent acknowledges receipt of the Escrow
Shares.
2. Release of Escrow Shares. The Escrow Agent shall hold the
Escrow Shares until it delivers the Escrow Shares to the Buyer or the
Stockholder, as the case may be, as provided in this Section 2 (the "Escrow
Account").
(a) Delivery Pursuant to Written Instructions of Both
Parties. If, at any time, the Escrow Agent shall receive written
instructions executed jointly by the Stockholder, on the one hand, and the
Buyer, on the other, stating that either the Effective Time (as defined in
the Merger Agreement) of the Merger has occurred or that the Support
Agreement has been terminated in accordance with Section 7 of the Support
Agreement, and directing the Escrow Agent to release the Escrow Shares out
of the Escrow Account, as directed in such notice, the
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Escrow Agent shall deliver the Escrow Shares as specified in such
instructions as promptly as practicable after the Escrow Agent's receipt of
such written instructions.
(b) Court Order. The Escrow Agent shall be obligated to
deliver any or all of the Escrow Shares or take any other action hereunder
in accordance with the terms of any final non-appealable order issued by a
court of competent jurisdiction (in form and substance acceptable to it).
3. Fees and Expenses. The Escrow Agent shall not be entitled to
any fee for acting as such, but shall be reimbursed for any out-of-pocket
expenses incurred in connection herewith, which shall be borne by the
Buyer. Except as otherwise provided herein, each party (other than the
Escrow Agent) shall be responsible for its own legal and accounting fees
and expenses.
4. Responsibilities of Escrow Agent. The Escrow Agent's acceptance
of its duties under this Escrow Agreement is subject to the following terms
and conditions, which shall govern and control with respect to its rights,
duties, liabilities and immunities:
(a) The Escrow Agent makes no representation or warranty
and has no responsibility as to the validity of the Merger Agreement, the
Support Agreement or any other agreement executed in connection with the
Merger between the Stockholder, the Buyer and any other signatories
thereto, and the agreements and documents referred to therein (other than
this Escrow Agreement) (collectively, the "Agreements"), or as to the
correctness of any statement contained therein, and the Escrow Agent shall
not be required to inquire as to the performance of any obligation under
the Agreements. The Escrow Agent is not bound by any agreement or document
other than this Escrow Agreement.
(b) The Escrow Agent shall be protected in acting or
failing to act upon any written notice, instruction, request, waiver,
consent, receipt or other paper or document from any officer or authorized
agent of the Buyer or the Stockholder, not only as to its due execution and
the validity and effectiveness of its provisions, but also as to the truth
of any information therein contained and what it purports to be.
(c) The Escrow Agent shall not be liable for any error of
judgment, or for any mistake of fact or law, or for anything which it may
do or refrain from doing in connection herewith, except as may result from
its own gross negligence or willful misconduct.
(d) The Escrow Agent may consult with legal counsel
selected by it (including any member of its firm) and shall not be liable
for any action taken or omitted by it in good faith in accordance with the
advice of such counsel. Any fees and expenses of such counsel (which may be
paid to retained attorneys or represents the fair value of legal services
rendered to itself) shall be considered part of the fees and expenses
described in Section 3 hereof.
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(e) The Stockholder and the Buyer, jointly and severally,
agree to indemnify the Escrow Agent against and save it harmless from any
and all claims, liabilities, costs, payments and expenses, including
reasonable fees and expenses of counsel either paid to retained attorneys
(who may be selected by the Escrow Agent) or amounts representing the fair
value of legal services rendered to itself, incurred as a result of or in
connection with the performance of this Escrow Agreement (other than the
costs of the preparation of this Escrow Agreement), except as a result of
the Escrow Agent's own gross negligence or willful misconduct.
(f) The Escrow Agent shall have no duties or
responsibilities except those expressly set forth herein. It shall not be
bound by any modification of this Escrow Agreement unless in writing and
signed by all the parties hereto and, if its duties as Escrow Agent
hereunder are affected, unless it shall have given prior written consent
thereto.
(g) The duties of the Escrow Agent hereunder are solely
ministerial in nature, and the Escrow Agent shall not have any liability
under, or duty to inquire into, the terms and provisions of any other
agreement or document including, but not limited to, the Agreements. Each
of the Stockholder and the Buyer acknowledge that the Escrow Agent serves
as counsel to the Stockholder and expressly waive any conflict of interest
arising on account of such representation by the Escrow Agent and its
service as the Escrow Agent hereunder. The participation of Swidler Berlin
Shereff Friedman, LLP as Escrow Agent is being undertaken as an
accommodation to the parties hereto and shall in no way hinder or limit the
present or future ability of Swidler Berlin Shereff Friedman, LLP to act as
counsel to the Stockholder with respect to any matter including, but not
limited to, disputes between the Stockholder and the Buyer arising from the
Agreements or with regard to this Escrow Agreement; provided, however, that
such representation shall not affect the Escrow Agent's obligations
hereunder and shall be at the cost and expense of the Stockholder.
(h) In the case any property held by the Escrow Agent
hereunder shall be attached, garnished or levied upon by an order of court,
or the delivery thereof shall be stayed or enjoined by an order of any
court, or any other writ, order, judgment or decree shall be entered or
issued by any court affecting such property, or any part thereof, or any
act of the Escrow Agent, the Escrow Agent is hereby expressly authorized in
its sole discretion to obey and comply with all writs, orders, judgments or
decrees so entered or issued, whether with or without jurisdiction, and if
the Escrow Agent obeys and complies with any such writ, order, judgment or
decree, it shall not be liable to any person, firm or corporation by reason
of such compliance notwithstanding the fact that such writ, order, judgment
or decree may be subsequently reversed, modified, annulled, set aside or
vacated. The Escrow Agent agrees to notify the Buyer in writing of its
receipt of written notice to the effect that any third party is asserting a
lien, security interest or other right to the Escrow Shares.
(i) The Escrow Agent may at any time resign and be
discharged from its duties hereunder by providing written notice to the
Stockholder and the Buyer and depositing the Escrow Shares with a successor
escrow agent designated jointly by the Stockholder, on the one
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hand, and the Buyer, on the other. Upon receipt of the Escrow Agent's
resignation, the Stockholder and the Buyer shall promptly appoint a
successor escrow agent. If no successor shall have been appointed within
ten business days after the mailing of notice of resignation by the Escrow
Agent, the Escrow Agent shall be entitled to petition a court of competent
jurisdiction in New York, New York for the appointment of a successor
escrow agent and transfer into the custody of that court or any other court
of competent jurisdiction all or any part of the Escrow Shares.
5. Amendment and Termination. This Escrow Agreement may be amended
or terminated only by a writing signed by the Buyer, the Stockholder and
the Escrow Agent. Once the Escrow Shares have been fully distributed in any
manner provided for herein, this Escrow Agreement shall terminate and the
Escrow Agent shall have no further duties or responsibilities hereunder;
provided, however, the fee and expense provisions of Sections 3 and 4, and
the exculpatory and indemnifications provisions of Section 4 shall survive
termination.
6. Notices. All notices and other communications which are
required or permitted hereunder shall be in writing and shall be deemed to
have been duly given when delivered by hand, one business day after
delivery to a reputable overnight carrier or four business days after
delivery to the U.S. Postal Services, if sent by first class mail,
certified or registered mail with postage prepaid, or upon receipt if sent
by telecopy with a copy following by hand or by overnight carrier or
mailed, certified or registered mail with postage prepaid:
(a) If to the Stockholder to:
Andrew H. Tompkins
c/o Lady Luck Casino Hotel
206 North Third Street
Las Vegas, NV 89101
Fax: (702) 258-8175
Phone: (702) 387-1793
with a copy to:
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York 10022
Attention: Robert M. Friedman, Esq.
Fax: (212) 758-9526
Phone: (212) 758-9500
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If to the Buyer to:
Isle of Capri Casinos, Inc.
711 Dr. Martin Luther King, Jr. Boulevard
Biloxi, Mississippi 39530
Attention: Chief Financial Officer
Fax: (228) 435-5998
Phone: (228) 436-7000
with a copy to:
Mayer Brown & Platt
190 South LaSalle Street, Suite 3100
Chicago, Illinois 60603
Attention: Paul W. Theiss
Fax: (312) 701-7711
Phone: ( 312) 782-0600
If to the Escrow Agent to:
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York 10022
Attention: Robert M. Friedman, Esq.
Fax: (212) 758-9526
Phone: (212) 758-9500
or to such other person or address as any party shall furnish to the other
parties in writing. Copies of all notices hereunder to the Escrow Agent
shall, if sent by the Stockholder, also be furnished promptly by the
Stockholder to the Buyer, and, if sent by the Buyer, also be furnished
promptly by the Buyer to the Stockholder.
7. Governing Law; Consent to Jurisdiction. This Escrow Agreement
shall be construed in accordance with, and governed by, the internal laws
of the State of New York as applied to contracts made and to be performed
entirely within the State of New York. Any legal action, suit or proceeding
arising out of or relating to this Escrow Agreement may be instituted in
any state or federal court located within the County of New York, State of
New York, and each party hereto agrees not to assert, by way of motion, as
a defense, or otherwise, in any such action, suit or proceeding, any claim
that it is not subject personally to the jurisdiction of such court, that
such action was brought in an inconvenient forum, that the venue of the
action, suit or proceeding is improper or that this Escrow Agreement or the
subject matter hereof may not be enforced in or by such court. Each party
hereto further irrevocably submits to the jurisdiction of any such court in
any such action, suit or proceeding.
8. Miscellaneous. This Escrow Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors,
assigns and legal representatives. The headings in this Escrow Agreement
are for convenience of reference only and shall not define or limit the
provisions hereof. This Escrow Agreement may be executed in one or more
counterparts, each of which is an original but all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow
Agreement to be executed as of the date first above written.
ISLE OF CAPRI CASINOS, INC.
By: /s/ Allan B. Solomon
-----------------------------------
Name: Allan B. Solomon
Title: Executive Vice President,
General Counsel and Secretary
/s/ Andrew H. Tompkins
------------------------------------
ANDREW H. TOMPKINS
SWIDLER BERLIN SHEREFF FRIEDMAN, LLP
as Escrow Agent
By: /s/ Swidler Berlin Shereff Friedman, LLP
----------------------------------------
Name: Robert M. Friedman
Title: Partner
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