SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
October 5, 1999
Date of Report (Date of earliest event reported)
ISLE OF CAPRI CASINOS, INC.
(Exact Name of Registrant as Specified in its Charter)
-----------------------------------
Delaware 0-20538 41-1659606
(State or other (Commission File Number) (I.R.S. Employer
Jurisdiction of Identification No.)
Incorporation)
---------------------------------
711 Dr. Martin Luther King, Jr. Boulevard
Biloxi, Mississippi 39530
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (228) 436-7000
711 Washington Loop, Second Floor
Biloxi, Mississippi 39530
(Former Name or Former Address, if Changed Since Last Report)
---------------------------------
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Item 5. Other Events.
As of October 5, 1999, Isle of Capri Casinos, Inc., a Delaware
corporation ("Isle"), and Isle Merger Corp., a Delaware corporation
and a wholly-owned subsidiary of Isle ("Merger Sub") entered into an
Agreement and Plan of Merger (the "Merger Agreement") with Lady Luck Gaming
Corporation, a Delaware corporation ("Lady Luck"). Pursuant to the terms of
the Merger Agreement, and subject to the conditions set forth therein
(including approval of the transaction by the common stockholders of Lady
Luck), Merger Sub will be merged with and into Lady Luck (the "Merger"). At
the effective time of the Merger, the separate existence of Merger Sub will
cease, Lady Luck will become a wholly-owned subsidiary of Isle and (except
as to shares for which dissenters' rights have been properly asserted) each
common stockholder of Lady Luck will receive cash in the amount of $12.00
per share for an aggregate share consideration of approximately
$59 million.
In addition, Isle will assume all of Lady Luck's outstanding debt
in the amount of approximately $177 million. The Merger Agreement also
provides for the redemption of Lady Luck's outstanding preferred stock in
the amount of approximately $22 million. Andrew H. Tompkins, the owner of
approximately 46% of Lady Luck's common stock, has agreed to vote for the
transaction. Isle has also agreed to make a secured loan of $16.3 million
to Lady Luck in order to assist Lady Luck in consummating the Miss
Marquette acquisition in October, 1999.
Isle also announced that it has entered into a letter of intent to
acquire the other 50% interest in Lady Luck's Bettendorf, Iowa facility and
related real estate in exchange for approximately 6.3 million shares of
Isle common stock, subject to adjustment in certain circumstances. This
interest is owned by members of the family of Bernard Goldstein, Isle's
Chairman and Chief Executive Officer. This transaction is contingent on the
completion of Isle's acquisition of Lady Luck, the approval of Isle's
shareholders and other contingencies. The sellers have the option to receive
up to $10 million of their consideration in cash rather than Isle stock.
As permitted under Item 601(b) of Regulation S-K, the Merger
Agreement is filed with this report without the disclosure schedules. Isle
will supply a copy of any omitted schedule or similar attachment to the
Commission upon request.
In addition, the press release of Isle and Lady Luck, dated
October 6, 1999, is filed as Exhibit 99.1 and is incorporated herein by
reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. Description
- --------- -----------
Exhibit 2.1 Agreement and Plan of Merger, dated as of October 5, 1999.
Exhibit 10.1 Stockholder Support Agreement, dated as of October
5, 1999, by Andrew H. Tompkins to and for the benefit of
Isle of Capri Casinos, Inc.
Exhibit 10.2 Consulting, Advisory and Noncompetition Agreement, dated as
of October 5, 1999 by and between Isle of Capri Casinos, Inc.
and Andrew H. Tompkins.
Exhibit 10.3 Letter of Intent, dated October 5, 1999, between Isle of
Capri Casinos, Inc. and Bettendorf Riverfront Development
Company, L.C.
Exhibit 10.4 Form of Credit Agreement between Gamblers Supply Management
Company as the Borrower, and Isle of Capri Casinos, Inc.
as the Lender.
Exhibit 99.1 Press Release dated October 6, 1999.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
ISLE OF CAPRI CASINOS, INC.
By: /s/ Allan B. Solomon
-------------------------------------
Name: Allan B. Solomon
Title: Executive Vice President,
Secretary, General Counsel and
Director
Date: October 15, 1999
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EXHIBIT INDEX
Exhibit No. Description
- ---------- -----------
Exhibit 2.1 Agreement and Plan of Merger, dated as of October 5, 1999.
Exhibit 10.1 Stockholder Support Agreement, dated as of October 5,
1999, by Andrew H. Tompkins to and for the benefit of
Isle of Capri Casinos, Inc.
Exhibit 10.2 Consulting, Advisory and Noncompetition Agreement, dated as
of October 5, 1999 by and between Isle of Capri Casinos, Inc.
and Andrew H. Tompkins.
Exhibit 10.3 Letter of Intent, dated October 5, 1999, between Isle of
Capri Casinos, Inc. and Bettendorf Riverfront Development
Company, L.C.
Exhibit 10.4 Form of Credit Agreement between Gamblers Supply Management
Company as the Borrower, and Isle of Capri Casinos, Inc.
as the Lender.
Exhibit 99.1 Press Release dated October 6, 1999.
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
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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
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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
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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)
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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)
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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
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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").
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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.
2
<PAGE>
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
4
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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
Stock (a "Lady Luck
5
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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
Disclosure Schedule, all the
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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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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 a
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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.
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Stockholder has sole power and authority to vote and to sell the
Shares, without restrictions, with respect to all of the Shares.
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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<PAGE>
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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<PAGE>
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
CONSULTING, ADVISORY AND NONCOMPETITION AGREEMENT
This Consulting, Advisory and Noncompetition Agreement (this
"Agreement") is made as of October 5, 1999, by and between Isle of Capri
Casinos, Inc., a Delaware corporation ("Buyer"), and Andrew H. Tompkins, a
Nevada resident ("Tompkins").
RECITALS
WHEREAS, concurrently with the execution and delivery of this
Agreement, Buyer is entering into an agreement and plan of merger with Lady
Luck Gaming Corporation, a Delaware corporation (the "Merger Agreement");
WHEREAS, Tompkins founded Lady Luck and is its Chairman;
WHEREAS, Tompkins owns all the shares of Gemini, Inc. ("Gemini") and
International Marco Polo's Services, Inc. ("IMPS") and owns the Lady Luck Las
Vegas Hotel & Casino (the "Hotel"). Buyer will have the right to acquire
Gemini, IMPS and the Hotel from Tompkins after the consummation of the Merger;
WHEREAS, Buyer desires to retain Tompkins' services as a
consultant and advisor to Buyer, and Tompkins desires to perform such
services for Buyer;
NOW, THEREFORE, in consideration of the foregoing and the
representations, covenants and agreements set forth below, the parties,
intending to be legally bound, agree as follows:
Section 1. Effectiveness and Interpretation. This Agreement shall
become effective upon the Effective Time of the Merger (as defined in the
Merger Agreement). Upon the earlier termination of the Merger Agreement,
this Agreement shall terminate automatically and be of no further force and
effect. Until such date as the Buyer has acquired the Hotel from Tompkins,
this Agreement shall be interpreted as not restricting Tompkins' operation
of the Hotel or ownership and use of Confidential Information (as defined
below) as it relates to the Hotel and the terms of this Agreement as it
relates to the Hotel shall be effective only upon Buyer's closing of the
acquisition of the Hotel.
Section 2. Acknowledgments by Tompkins. Tompkins acknowledges that
(a) Tompkins has occupied a position of trust and confidence with Lady Luck
Gaming Corporation, its subsidiaries and its affiliates including, without
limitation, Gemini and IMPS (collectively, "Lady Luck") prior to the date
hereof and has become familiar with the following, any and all of which
constitute confidential information of Lady Luck and the Hotel
(collectively the "Confidential Information," which in all instances does
not include information to the extent such information is reflected in
publicly available filings with the Securities and Exchange Commission and
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which is otherwise generally known by management in the gaming industry in
the jurisdictions in which Lady Luck and the Gemini have casino
properties): (i) any and all trade secrets concerning the business and
affairs of Lady Luck, data, know-how, processes, photographs, inventions
and ideas, customer lists, business and technical information, current and
anticipated customer requirements, price lists, market studies and plans,
business plans, systems, methods and information of Lady Luck and the Hotel
and any other information, however documented, of Lady Luck and the Hotel
that is a trade secret under Nevada, Iowa or Mississippi law; (ii) any and
all information concerning the business and affairs of Lady Luck and the
Hotel (which includes historical financial statements, financial
projections and budgets, historical and projected sales, capital spending
budgets and plans, the names and backgrounds of key personnel, personnel
training and techniques and materials, however documented); and (iii) any
and all notes, analysis, compilations, studies, summaries, and other
material prepared by or for Lady Luck and the Hotel containing or based, in
whole or in part, on any information included in the foregoing, (b)
although the businesses of Buyer, Lady Luck and the Hotel have regional
customer bases, the expansion and development opportunities are national
and international in scope, (c) Buyer has required that Tompkins make the
covenants set forth in Sections 3 and 4 of this Agreement in consideration
of the Buyer entering into the Merger Agreement with Lady Luck; (d) the
provisions of Sections 3 and 4 of this Agreement are reasonable and
necessary to protect and preserve Lady Luck's and the Hotel's business, and
(e) Buyer and Lady Luck and the Hotel would be irreparably damaged if
Tompkins were to breach the covenants set forth in Sections 3 and 4 of this
Agreement.
Section 3. Confidential Information. Tompkins acknowledges and
agrees that all Confidential Information known or obtained by Tompkins,
whether before or after the date hereof, is the property of Lady Luck or
the Hotel, as applicable. Therefore, Tompkins agrees that Tompkins will
not, at any time, disclose to any unauthorized persons or use for his own
account (except as contemplated in Section 1 with respect to the Hotel) or
for the benefit of any third party any Confidential Information, whether
Tompkins has such information in Tompkins' memory or embodied in writing or
other physical form, without Buyer's written consent, unless and to the
extent that the Confidential Information is or becomes generally known to
and available for use by the public other than as a result of Tompkins'
fault or the fault of any other person bound by a duty of confidentiality
to Buyer or Lady Luck. Except with respect to the Hotel in the event that
Buyer does not acquire the Hotel at the Effective Time, Tompkins agrees to
deliver to Buyer at the Effective Time, and at any other time Buyer may
request, all documents, memoranda, notes, plans, records, reports, and
other documentation, models, components, devices, or computer software,
whether embodied in a disk or in other form (and all copies of all of the
foregoing), relating to the businesses, operations, or affairs of Lady Luck
and the Hotel and any other Confidential Information that Tompkins may then
possess or have under Tompkins' control.
Section 4. Noncompetition. In connection with Buyer entering into
the Merger Agreement and for the consideration to be paid under this Agreement,
Tompkins agrees that:
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(a) For a period of four years after the Effective Time of
the Merger:
(i) Tompkins agrees not to compete, directly or
indirectly (including as an officer, director, partner,
employee, consultant, independent contractor, or equity
holder of any entity) with Buyer or any of its
subsidiaries in any way concerning (including by
permitting his name to be used in connection with) the
ownership, development or management of any gaming
operation or facility within a 75-mile radius of any
gaming operation or facility with respect to which Buyer
or any of its subsidiaries has an ownership interest or
renders or is actively negotiating to render management
services; provided, however, that Tompkins may purchase
or otherwise acquire up to (but not more than) 5% of any
class of securities of any gaming enterprise which owns a
facility within such radius (but without otherwise
participating in the activities of such enterprise) if
such securities are listed on any national or regional
securities exchange or have been registered under Section
12(g) of the Securities Exchange Act of 1934.
Notwithstanding the preceding sentence, with regard to
any gaming operation or facility owned or managed by
Buyer: (i) located in Las Vegas, Nevada, such radius
shall be a 25-mile radius; or (ii) with respect to which
Buyer has not filed regulatory applications or publicly
indicated an intention to conduct business in such
location prior to Tompkins entering into a written
agreement for gaming activities within a 75-mile radius
of such location, Tompkins shall not be deemed to be in
breach of the provisions hereof. Tompkins agrees that
this covenant is reasonable with respect to its duration,
geographical area, and scope.
(ii) Tompkins will not, directly or indirectly,
either for himself or any other person or entity, (A)
induce or attempt to induce any employee of Lady Luck or
Buyer or any of their subsidiaries or the Hotel to leave
the employ of Lady Luck or Buyer or any of their
subsidiaries or the Hotel, (B) in any way interfere with
the relationship between Lady Luck or Buyer and any
employee of Lady Luck or Buyer or their subsidiaries or
the Hotel, (C) employ, or otherwise engage as an
employee, independent contractor, or otherwise, any then
current employee of Lady Luck, Buyer or any of their
subsidiaries or the Hotel, or (D) induce or attempt to
induce any customer, supplier, licensee, or business
relation to cease doing business with, or in any way
interfere with the relationship between any customer,
supplier, licensee, or business relation of Lady Luck or
Buyer or their subsidiaries or the Hotel.
(iii) Tompkins will not, directly or indirectly,
either for himself or any other person or entity, solicit
the business of any person known to Tompkins to be a
customer of Lady Luck or Buyer or any of their
subsidiaries or the Hotel, whether or not Tompkins had
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personal contact with such person, with respect to activities
which compete in whole or in part with the Buyer;
(b) In the event of a breach by Tompkins of any covenant
set forth in subsection 4(a) of this Agreement, the term of such
covenant will be extended by the period of the duration of such
breach; and
(c) Tompkins and Buyer hereby agree not to make any
statements, in writing or otherwise, that may disparage the
reputation or character of the other (and Gemini if Tompkins shall
retain ownership) or any of Buyer's or Gemini's subsidiaries,
affiliates, officers, directors, employees, agents, stockholders,
partners, members, successors and assigns both individually and in
their official capacities with such party at any time for any
reason whatsoever, except as required by law or as required in
connection with any litigation or administrative proceeding by or
between Buyer and Tompkins in which the party making such
statement has been subpoenaed and is required by law to give
testimony and in any litigation or administrative proceeding by
and between Buyer and Tompkins.
Section 5. Consulting Duties. Tompkins will have such consulting
and advisory duties as are assigned or delegated to him by the Chairman of
Buyer and as agreed to by Tompkins in his sole and absolute discretion.
Tompkins will devote such time, attention, skill, and energy to the
business of Buyer as is appropriate, and will cooperate fully with the
Chairman of Buyer as reasonably requested in the advancement of the best
interests of Buyer. Nothing in this Section 5, however, will (i) require
Tompkins to travel outside of the Las Vegas area at Buyer's request, or
(ii) prevent Tompkins from engaging in additional activities in connection
with employment, consulting, personal investments and community affairs
that are not inconsistent with Tompkins' duties under this Agreement.
Section 6. Compensation. As consideration for the covenants in
Section 3 and Section 4 of this Agreement and the duties to be performed by
Tompkins pursuant to Section 5 of this Agreement, Buyer will pay Tompkins
the sum of Two Million Dollars ($2,000,000) (the "Total Consideration")
payable as follows:
(a) The sum of One Hundred Twenty-Five Thousand Dollars
($125,000) upon the Effective Time of the Merger; and
(b) The sum of One Hundred Twenty-Five Thousand Dollars
($125,000) on the last day of each calendar quarter beginning with
the full calendar quarter immediately following the quarter in
which the Effective Time occurs, until the Total Consideration has
been paid in full.
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In addition, Buyer will permit Tompkins and his immediate family
to enroll in any welfare benefit plans available to management of Buyer and
its subsidiaries at Tompkins' expense and subject to the enrollment and
eligibility requirements of such plans.
Section 7. Remedies. If Tompkins breaches the covenants set forth in
Sections 3 or 4 of this Agreement, Buyer will be entitled to the following
remedies:
(a) Damages from Tompkins;
(b) To offset against any and all amounts owing to
Tompkins under Subsection 6(b) of this Agreement any and all
amounts which Buyer claim under Subsection 7(a) of this Agreement;
(c) In addition to its right to damages and any other
rights it may have, to obtain injunctive or other equitable relief
to restrain any breach or threatened breach or otherwise to
specifically enforce the provisions of Sections 3 and 4 of this
Agreement; it being agreed that money damages alone would be
inadequate to compensate the Buyer and would be an inadequate
remedy for such breach; and
(d) The rights and remedies of the parties to this
Agreement are cumulative and not alternative.
Section 8. Successors and Assigns. This Agreement will be binding
upon Buyer and Tompkins and will inure to the benefit of Buyer and its
affiliates, successors and assigns and Tompkins and Tompkins' assigns,
heirs and legal representatives.
Section 9. Waiver. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement will
operate as a waiver of such right, power, or privilege, and no single or
partial exercise of any such right, power, or privilege will preclude any
other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this
Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except
in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement.
Section 10. Governing Law and Jurisdiction. This Agreement will be
governed by the laws of the State of Mississippi without regard to conflicts of
laws principles.
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Section 11. Severability. Whenever possible each provision and
term of this Agreement will be interpreted in a manner to be effective and
valid but if any provision or term of this Agreement is held to be
prohibited by law or invalid, then such provision or term will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement.
If any of the covenants set forth in Section 4 of this Agreement are held
to be unreasonable, arbitrary, or against public policy, such covenants
will be considered divisible with respect to scope, time, and geographic
area, and in such lesser scope, time and geographic area, will be
effective, binding and enforceable against Tompkins.
Section 12. Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.
Section 13. Section Headings; Construction. The headings of
Sections in this Agreement are provided for convenience only and will not
affect its construction or interpretation. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this Agreement
unless otherwise specified. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the word "including" does not limit
the preceding words or terms.
Section 14. Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be deemed
to have been duly given when (a) delivered by hand (with written
confirmation of receipt), (b) sent by facsimile (with written confirmation
of receipt), provided that a copy is mailed by registered mail, return
receipt requested, or (c) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and facsimile numbers set forth
below (or to such other addresses and facsimile numbers as a party may
designate by notice to the other parties):
` Tompkins: Andrew H. Tompkins
220 Stewart Avenue
Las Vegas, NV 89101
Facsimile No.: (702) 258-8175
with a copy to:
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, NY 10022
Attention: Martin Nussbaum
Facsimile No.: (212) 891-9442
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Buyer: Isle of Capri Casinos, Inc.
711 Dr. Martin Luther King, Jr. Boulevard
Biloxi, Mississippi 39530
Attention: Chief Executive Officer
Facsimile No.: (228) 435-5998
with a copy to:
Mayer Brown & Platt
190 South LaSalle Street
Chicago, IL 60603
Attention: Paul W. Theiss
Facsimile No.: (312) 701-7711
Section 15. Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter of
this Agreement and supersedes all prior written and oral agreements and
understandings between Buyer and Tompkins with respect to the subject
matter of this Agreement. This Agreement may not be amended except by a
written agreement executed by the party to be charged with the amendment.
Section 16. Indemnification. Buyer agrees to indemnify Tompkins to
the fullest extent provided to any member of management of Buyer consistent
with the provisions of its Certificate of Incorporation and Bylaws against
any liability arising out of his performance of any obligations under
Section 5 hereof.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
ISLE OF CAPRI CASINOS, INC. ANDREW H. TOMPKINS
By: /s/ Allan B. Solomon /s/ Andrew H. Tompkins
--------------------------------- ------------------------------
Its: Executive Vice President,
General Counsel and Secretary
8
ISLE OF CAPRI CASINOS, INC.
711 DR. MARTIN LUTHER KING, JR. BLVD.
BILOXI, MISSISSIPPI 39530
October 5, 1999
BRDC, Inc.
Bettendorf Riverfront Development
Company, L.C.
2117 State Street
Bettendorf, Iowa 52722
Ladies and Gentlemen:
The term sheet attached to this letter of intent sets forth the
principal terms and conditions upon which Isle of Capri Casinos, Inc. (the
"Purchaser"), itself or through a wholly owned subsidiary, is prepared to
acquire all of the capital stock of BRDC, Inc., which we understand owns
100% of the equity interests in Bettendorf Riverfront Development Company,
L.C., which we understand owns 50% of the equity interests in Lady Luck
Bettendorf, L.C. As you know, the Purchaser has, or is about to, enter into
an Agreement and Plan of Merger with respect to the proposed acquisition of
Lady Luck Gaming Corporation, the owner of the other 50% interest in Lady
Luck Bettendorf, L.C.
By our execution of this letter, we are confirming to you that our
Board of Directors, acting upon the recommendation of a Special Committee
thereof, has approved the principal terms and conditions set forth on the
attached term sheet, and we are committing to you to negotiate in good
faith toward the execution of definitive documentation reflecting those
terms and conditions. By your execution of this letter, you confirm to us
the approval of such terms and conditions by your management committee or
board of directors, as the case may be, as well as each of your equity
holders, and your (and their) commitment to so negotiate.
If for any reason a definitive Purchase Agreement or other binding
agreement has not been signed on or before November 15, 1999 (or such later
date as the parties may agree), then at the option of either party
communicated to the other in writing, this letter and all obligations set
forth herein shall terminate. Prior to the termination of this letter, each of
<PAGE>
BRDC, Inc.
Bettendorf Riverfront Development
Company, L.C.
October 5, 1999
Page 2
you agrees that you will not directly or indirectly solicit or encourage
offers with respect to the sale of the subject business, or engage in any
discussions relating thereto.
This letter is not intended to be, and is not, a binding agreement
between the parties but is merely an expression of their intent with regard
to the transactions described herein, and no binding agreement shall be
deemed to exist between the parties unless and until a definitive agreement
is executed.
If the foregoing correctly sets forth our understanding, please
execute and return to the undersigned the enclosed copy of this letter.
Very truly yours,
Isle of Capri Casinos, Inc.
By: /s/ Allan B. Solomon
-------------------------------------
Allan B. Solomon
ACCEPTED:
BRDC, Inc.
Bettendorf Riverfront Development
Company, L.C.
By: /s/ Bernard Goldstein
--------------------------------
Authorized Signatory
<PAGE>
PROJECT CYCLONE
TERM SHEET
Transaction: G Company and Dixie will enter into a tax-free
reorganization (the form and structure of
which will be acceptable to both parties) in
which Dixie will acquire all of the capital
stock of G Company (the "G Company
Interests"). G Company owns, directly or
indirectly, (i) 50% of the outstanding
ownership interests in Cyclone and (ii) an
interest in the land currently used by
Cyclone, other than the leased temporary
parking (the "Land").
Consideration: In exchange for acquiring all of the G
Company Interests, the G Company
shareholders will receive 6,300,000
shares (adjusted for any stock splits
or stock dividends) of Dixie Common
Stock (the "Consideration"), adjusted
as provided below.
Adjusted Consideration: The Consideration will be adjusted at closing
valuing each Dixie share at $9.486 (the
average of the per share closing price for
Dixie's shares for the 45 trading days ended
September 22, 1999), as follows:
(i) If Actual Cyclone EBITDA for the twelve
months ended September 30, 1999 is greater
or less than $18.744 million the
Consideration will be increased or
decreased by one-half of the
product of the increase or
decrease multiplied by 6.35;
(ii) If Cyclone's "Net Debt" at September 30,
1999 is greater than $17,000,000 the
Consideration will be decreased by
one-half of the difference and if
Cyclone's Net Debt at September 30, 1999
is less than $17,000,000 the
Consideration will be increased by
one-half of the difference. "Net Debt"
means indebtedness for borrowed money
(including guarantees), the deferred
purchase price of property or assets and
capitalized lease obligations less
"Excess Cash." "Excess Cash" mans total
cash and cash equivalents minus "cage
cash" of $2.5 million.
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(iii) If G Company indebtedness at
closing, including all
indebtedness secured by the
Land is greater than
$10,200,000 the Consideration
will be decreased by the
difference and if such
indebtedness at closing is
less than $10,200,000 the
Consideration will be
increased by the difference.
(iv) The Consideration will be
increased by one-half of the
net income of Cyclone for the
period from October 1, 1999
through the closing (the
"Allocated Net Income").
(v) The Consideration will be
decreased by the amount of all
cash distributed to the G
Company shareholders after
September 30, 1999.
Related Party Loan: Dixie agrees that it will cause
G Company to prepay, immediately
following the closing, the loan owed
to Valley Corporation (in the
approximate amount of $3,200,000).
Cash Withdrawals Prior Prior to the closing, it is understood that,
to Closing: Cyclone will distribute to G Company and G
Company will distribute to its shareholders
the following amounts in cash: (i) 45% of
one-half of Cyclone's September, 1999 net
income (the "October Tax Distribution"), (ii)
45% of Allocated Net Income on a monthly basis
(the "Additional Tax Distributions"), and
(iii) such additional amount as requested by
the G Company shareholders on the closing date
(the "Discretionary Distribution"); provided
that the Discretionary Distribution and the
Additional Tax Distributions (i) shall not
exceed $10,000,000 plus the Allocated Net
Income, (ii) results in less than $2,500,000
in Cyclone cash at closing, and (iii) shall
not be less than any amount necessary such
that the number of shares of Dixie Common
Stock to be received by the G Company
shareholders is equal to or less than
6,300,000 shares.
Expenses: Each of the parties shall pay all costs and
expenses incurred or to be incurred by it in
connection with the transaction including,
without limitation, any legal, investment
banking and accounting fees.
2
<PAGE>
Representations, Customary representations and warranties which
Warranties, Covenants shall survive only until closing, except for the
Agreements: representations and warranties relating to the
Land (including environmental), which shall
survive for an agreed period, and customary
covenants, agreements and conditions,
including conduct of business prior to
closing. Due diligence to be performed prior
to execution of definitive agreement. The
parties shall use all reasonable efforts prior
to closing to (i) obtain the release of the G
Company shareholders and all of their
affiliates ("G Affiliates") from all
guarantees of Cyclone indebtedness and G
Company indebtedness, (ii) obtain the release
of all collateral pledged by G Affiliates to
secure such indebtedness and (iii) eliminate
or document (to the satisfaction of the
parties) all agreements and arrangements
between Cyclone and any G Affiliates.
Reasonable efforts shall include, if
necessary, the guarantee by Dixie of all the
guaranteed indebtedness but shall not require
the payment of any significant amount or the
release of any significant rights.
Indemnification: Dixie agrees to indemnify G Company and its
affiliates and their respective directors,
officers, employees, agents and controlling
persons from and against any losses, claims,
damages and liabilities, to which G Company or
such persons may become subject in connection
with their entering into and consummating the
transaction contemplated herein. G Company
agrees to indemnify Dixie and its affiliates
and their respective directors, officers,
employees, agents and controlling persons from
and against any losses, claims, damages and
liabilities, to which Dixie or such persons
may become subject as a result of inaccuracies
in the representations and warranties
regarding the Land.
Conditions Precedent: Receipt of fairness opinion from CIBC World
Markets with respect to the transaction
described herein (subject to the approval of
CIBC World Markets' M&A Committee), Dixie's
due diligence review and the closing of the
proposed transaction with Gypsy, which at the
time shall include its 50% interest in
Cyclone. CIBC World Markets has indicated that
subject to the results of due diligence and
preparation of the definitive agreement, it is
prepared to provide its fairness opinion.
Assumption: "Clean" company as to absence of material
contingent liabilities as determined
prior to execution of definitive agreement.
Closing: Simultaneous with closing of Gypsy merger.
3
10/5/99
$16,300,000
CREDIT AGREEMENT
dated as of October __, 1999
between
GAMBLERS SUPPLY MANAGEMENT COMPANY
as the Borrower,
and
ISLE OF CAPRI CASINOS, INC.
as the Lender.
<PAGE>
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS......................................2
1.1. Defined Terms.................................................2
1.2. Use of Defined Terms.........................................12
1.3. Cross-References.............................................12
1.4. Accounting and Financial Determinations......................12
ARTICLE II
COMMITMENT, BORROWING PROCEDURES AND NOTE.............................12
2.1. Commitment...................................................12
2.1.1. Commitment To Make Loan......................................12
2.1.2. Lender Not Permitted or Required To Make Loan................12
2.2. Borrowing Procedure..........................................12
2.3. Note.........................................................13
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES............................13
3.1. Repayments and Prepayments...................................13
3.2. Interest Provisions..........................................14
3.2.1. Rates........................................................14
3.2.2. Post-Maturity Rate...........................................14
3.2.3. Payment Dates................................................14
3.3. Fees.........................................................14
3.3.1 Upfront Fee..................................................15
3.3.2 Prepayment/Repayment Fee.....................................15
ARTICLE IV
TAXES, PAYMENTS, CALCULATIONS, ETC...................................15
4.1. Taxes.......................................................15
4.2. Payments, Computations, etc.................................16
4.3. Use of Proceeds.............................................16
ARTICLE V
CONDITIONS TO LOAN....................................................16
5.1. Conditions to Loan..........................................16
5.1.1. Resolutions, etc............................................16
5.1.2. Delivery of Note............................................16
<PAGE>
5.1.3. Acquisition Consummated.....................................16
5.1.4. Payment of Outstanding Indebtedness, etc....................17
5.1.5. Equity Infusion.............................................17
5.1.6. Security Agreement..........................................17
5.1.7. Mortgage....................................................18
5.1.8. Ship Mortgage...............................................18
5.1.9. Opinions of Counsel.........................................19
5.1.10. Closing Fees, Expenses, etc.................................19
5.1.11. Compliance with Warranties, No Default, etc.................19
5.1.12. Borrowing Request...........................................20
5.1.13. Financial Condition.........................................20
5.1.14 Satisfactory Legal Form; Other Documents....................20
5.1.15. Payoff Letters..............................................20
5.1.16. Amendment to CIBC Credit Agreement..........................20
ARTICLE VI
REPRESENTATIONS AND WARRANTIES........................................20
6.1. Organization, etc...........................................20
6.2. Due Authorization, Non-Contravention, etc...................21
6.3. Government Approval, Regulation, etc........................21
6.4. Validity, etc...............................................21
6.5. Financial Information.......................................21
6.6. No Material Adverse Change..................................22
6.7. Litigation, Labor Controversies, etc........................22
6.8. Subsidiaries................................................22
6.9. Ownership of Properties.....................................22
6.10. Taxes.......................................................22
6.11. Pension and Welfare Plans...................................22
6.12. Environmental Warranties....................................23
6.13. Regulations U and X........................................24
6.14. Accuracy of Information.....................................24
ARTICLE VII
COVENANTS.............................................................24
7.1. Affirmative Covenants..............................24
7.1.1. Financial Information, Reports, Notices, etc.......24
7.1.2. Compliance with Laws, etc..........................26
7.1.3. Maintenance of Properties..........................26
7.1.4. Insurance..........................................26
7.1.5. Books and Records..................................26
7.1.6. Environmental Covenant.............................27
7.1.7. Year 2000 Compliance...............................27
<PAGE>
7.2. Negative Covenants.................................28
7.2.1. Business Activities................................28
7.2.2. Indebtedness.......................................28
7.2.3. Liens..............................................28
7.2.4. Financial Condition................................29
7.2.5. Investments........................................29
7.2.6. Restricted Payments, etc...........................30
7.2.7. Capital Expenditures, etc..........................30
7.2.8. Rental Obligations.................................30
7.2.9. Take or Pay Contracts..............................31
7.2.10. Consolidation, Merger, etc.........................31
7.2.11. Asset Dispositions, etc............................31
7.2.12. Modification of Certain Agreements.................31
7.2.13. Transactions with Affiliates.......................31
7.2.14. Negative Pledges, etc..............................31
ARTICLE VIII
EVENTS OF DEFAULT.....................................................32
8.1. Listing of Events of Default................................32
8.1.1. Non-Payment of Obligations..................................32
8.1.2. Breach of Warranty..........................................32
8.1.3. Non-Performance of Certain Covenants and Obligations........32
8.1.4. Non-Performance of Other Covenants and Obligations..........32
8.1.5. Default on Other Indebtedness...............................32
8.1.6. Judgments...................................................32
8.1.7. Pension Plans...............................................33
8.1.8. Control of the Borrower.....................................33
8.1.9. Bankruptcy, Insolvency, etc.................................33
8.1.10. Impairment of Security, etc.................................34
8.2. Action if Nonpayment, etc...................................34
8.3. Action if Bankruptcy........................................34
8.4. Action if Other Event of Default............................34
ARTICLE IX MISCELLANEOUS PROVISIONS.........................................35
9.1. Waivers, Amendments, etc...........................35
9.2. Notices............................................35
9.3. Payment of Costs and Expenses......................35
9.4. Indemnification....................................36
9.5. Survival...........................................37
9.6. Severability.......................................37
9.7. Headings...........................................37
9.8. Execution in Counterparts, Effectiveness, etc......37
9.9. Governing Law; Entire Agreement....................37
<PAGE>
9.10. Successors and Assigns.............................37
9.11. Confidentiality....................................37
9.12. Other Transactions.................................38
9.13. Forum Selection and Consent to Jurisdiction........38
9.14. Waiver of Jury Trial...............................39
9.15. Limitation of Liability............................40
9.16. Interest Rates.....................................41
9.17. Iowa Gaming Licenses...............................42
SCHEDULE I - Disclosure Schedule
EXHIBIT A - Form of Note
EXHIBIT B - Form of Borrowing Request
EXHIBIT C - Form of Certificate of Authorized Officer
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of October __, 1999 between
GAMBLERS SUPPLY MANAGEMENT COMPANY, a South Dakota corporation (the
"Borrower"), and ISLE OF CAPRI CASINOS, INC., a Delaware corporation (the
"Lender"),
W I T N E S S E T H:
WHEREAS, Lady Luck Gaming Corporation, a Delaware corporation
("Parent"), is engaged directly and through its various Subsidiaries in the
business of operating gaming casinos; and
WHEREAS, pursuant to a Stock Purchase Agreement, dated July 30,
1999 (as so originally executed and delivered, the "Sodak Stock Purchase
Agreement"), among Parent, the Borrower and Sodak Gaming Inc., a South
Dakota corporation ("Sodak"), Parent intends to acquire all of the issued
and outstanding stock of the Borrower from Sodak for $47,100,000 (including
the assumption of approximately $4,250,000 of indebtedness in connection
with an existing equipment lease and approximately $640,000 of indebtedness
related to a hotel on the premises of the Borrower's gaming facilities, and
up to $485,000 of prepayment premiums) (the "Acquisition"); and
WHEREAS, in connection with, and to fund, the Acquisition, the
Borrower desires to obtain a Commitment from the Lender pursuant to which a
Loan, in a maximum aggregate principal amount not to exceed $16,300,000,
will be made to the Borrower prior to the Commitment Termination Date;
WHEREAS, Lender, Parent and Isle Merger Corp., a Delaware
corporation ("Merger Sub"), have entered into an Agreement and Plan of
Merger, dated as of October __, 1999 (as so originally executed and
delivered, the "Isle Merger Agreement"), pursuant to which Merger Sub will
merge with and into Parent (the "Isle Merger"); and
WHEREAS, the Lender is willing, on the terms and subject to the
conditions hereinafter set forth (including Article V), to extend such
Commitment and make such Loan to the Borrower; and
WHEREAS, the proceeds of such Loan will be used to make partial
payment of the Parent's obligations under the Sodak Stock Purchase
Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and
recitals, shall, except where the context otherwise requires, have the
following meanings (such meanings to be equally applicable to the singular
and plural forms thereof):
"Acquisition" is defined in the recitals.
"Affiliate" of any Person means any other Person which, directly
or indirectly, controls, is controlled by or is under common control with
such Person (excluding any trustee under, or any committee with
responsibility for administering, any Plan). A Person shall be deemed to be
"controlled by" any other Person if such other Person possesses, directly
or indirectly, power
(a) to vote 10% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of
directors, managers or managing general partners; or
(b) to direct or cause the direction of the management
and policies of such Person whether by contract or otherwise.
"Agreement" means, on any date, this Credit Agreement as
originally in effect on the Effective Date and as thereafter from time to
time amended, supplemented, amended and restated, or otherwise modified and
in effect on such date.
"Authorized Officer" means, relative to the Borrower, those of its
officers whose signatures and incumbency shall have been certified to the
Lender pursuant to Section 5.1.1.
"Base Rate" means, on any date, a fluctuating rate of interest per
annum equal to the rate of interest most recently established by CIBC as
its Base Rate. The Base Rate is not necessarily intended to be the lowest
rate of interest determined by CIBC in connection with extensions of
credit. Changes in the rate of interest will take effect simultaneously
with each change in the Base Rate. The Lender will give notice promptly to
the Borrower of changes in the Base Rate.
"Borrower" is defined in the preamble.
"Borrower Excess Cash Flow" means, for any period, EBITDA for such
period less the sum of (i) cash interest expense, (ii) cash income taxes,
(iii) the sum of (x) $150,000 monthly scheduled principal payments and (y)
any voluntary prepayments of the Borrower on the Loan, (iv) maintenance
Capital Expenditures not to exceed $100,000 per quarter, (v) Capital
Expenditures in connection with the replacement of the mooring barge not to
exceed $1,000,000 in the aggregate, and (vi) such other Capital
Expenditures as shall be agreed to by the Lender.
<PAGE>
"Borrowing Request" means the loan request and certificate duly
executed by an Authorized Officer of the Borrower, substantially in the
form of Exhibit B hereto.
"Business Day" means any day which is neither a Saturday or Sunday
nor a legal holiday on which banks are authorized or required to be closed
in New York or Mississippi.
"Capital Expenditures" means, for any period, the sum of
(a) the aggregate amount of all expenditures of the
Borrower for fixed or capital assets made during such period
which, in accordance with GAAP, would be classified as capital
expenditures; and
(b) the aggregate amount of all Capitalized Lease
Liabilities incurred during such period.
"Capitalized Lease Liabilities" means all monetary obligations of
the Borrower under any leasing or similar arrangement which, in accordance
with GAAP, would be classified as capitalized leases, and, for purposes of
this Agreement and each other Loan Document, the amount of such obligations
shall be the capitalized amount thereof, determined in accordance with
GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than
one year after such time, issued or guaranteed by the United
States Government;
(b) commercial paper, maturing not more than nine months
from the date of issue, which is issued by
(i) a corporation (other than an Affiliate of
the Borrower) organized under the laws of any state of
the United States or of the District of Columbia and
rated A-l or higher by Standard & Poor's Corporation or
P-l or higher by Moody's Investors Service, Inc., or
(ii) CIBC;
(c) any certificate of deposit or bankers acceptance,
maturing not more than one year after such time, which is issued
by either
(i) a commercial banking institution that is a
member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less
than $500,000,000, or
<PAGE>
(ii) CIBC; or
(d) any repurchase agreement entered into with CIBC (or
other commercial banking institution of the stature referred to in
clause (c)(i)) which
(i) is secured by a fully perfected security
interest in any obligation of the type described in any
of clauses (a) through (c), and
(ii) has a market value at the time such
repurchase agreement is entered into of not less than
100% of the repurchase obligation of CIBC (or other
commercial banking institution) thereunder.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means the failure of Parent to own, free and
clear of all Liens or other encumbrances, 100% of the outstanding shares of
voting stock of the Borrower on a fully diluted basis (other than prior to
the closing under the Sodak Stock Purchase Agreement, and except for a
pledge of all capital stock of the Borrower pursuant to the Indenture).
"CIBC" means Canadian Imperial Bank of Commerce.
"CIBC Credit Agreement" means the Credit Agreement dated as of
April 23, 1999 by and among the Lender, various lenders and agents and
CIBC, as administrative agent.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Commitment" means the Lender's obligation to make the Loan pursuant
to Section 2.1.1.
"Commitment Amount" means $16,300,000.
"Commitment Termination Date" means the earliest of
(a) October 31, 1999, or such other date as Parent,
Borrower and Sodak agree to extend the closing date under the
Sodak Stock Purchase Agreement;
<PAGE>
(b) the date on which the Commitment Amount is terminated
in full or reduced to zero pursuant to this Agreement;
(c) the date on which any Commitment Termination Event
occurs; and
(d) the Maturity Date.
Upon the occurrence of any event described in clause (b), (c) or (d), the
Commitment shall terminate automatically and without any further action.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses
(a) through (d) of Section 8.1.9 with respect to the Borrower; or
(b) the occurrence and continuance of any other Event of
Default and either
(i) the declaration of the Loan to be due and
payable pursuant to Section 8.2, or
(ii) in the absence of such declaration, the
giving of notice by the Lender to the Borrower that the
Commitment has been terminated.
"Contingent Liability" means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise becomes
or is contingently liable upon (by direct or indirect agreement, contingent
or otherwise, to provide funds for payment, to supply funds to, or
otherwise to invest in, a debtor, or otherwise to assure a creditor against
loss) the indebtedness, obligation or any other liability of any other
Person (other than by endorsements of instruments in the course of
collection), or guarantees the payment of dividends or other distributions
upon the shares of any other Person. The amount of any Person's obligation
under any Contingent Liability shall (subject to any limitation set forth
therein) be deemed to be the outstanding principal amount (or maximum
principal amount, if larger) of the debt, obligation or other liability
guaranteed thereby.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower, are treated as a single employer under Section 414(b) or 414(c)
of the Code or Section 4001 of ERISA.
"Default" means any Event of Default or any condition, occurrence
or event which, after notice or lapse of time or both, would constitute an
Event of Default.
"Disclosure Schedule" means the Disclosure Schedule attached
hereto as Schedule I, as it may be amended, supplemented or otherwise
modified from time to time by the Borrower with the written consent of the
Lender.
<PAGE>
"Dollar" and the sign "$" means lawful money of the United States.
"EBITDA" means the sum for any period of (i) net income for the
Borrower (excluding extraordinary gains or losses), on a pro forma basis
for periods prior to the date of the Acquisition, such net income being the
net income of the Miss Marquette Gaming Facility, (ii) provisions for taxes
deducted in determining such net income, (iii) interest expense deducted in
determining such net income, (iv) depreciation expense deducted in
determining such net income, and (v) amortization expense deducted in
determining such net income.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 9.8.
"Environmental Laws" means all applicable federal, state or local
statutes, laws, ordinances, codes, rules, regulations and guidelines
(including consent decrees and administrative orders) relating to public
health and safety and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"Event of Default" is defined in Section 8.1.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar
months ending on December 31; references to a Fiscal Year with a number
corresponding to any calendar year (e.g., the "1999 Fiscal Year") refer to
the Fiscal Year ending on December 31 occurring during such calendar year.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"GAAP" is defined in Section 1.4.
"Gaming Vessel" means the vessel Miss Marquette having Official
No. 950558 of approximately 99.96 gross and 67 net tons and with dimensions
of approximately 228.4 feet by 55 feet, built in 1989 at Freeport, Florida,
by Freeport Ship Builders and Marine Repair, Inc., which is duly documented
in the name of the Borrower under the laws of the United States at the
National Vessel Documentation Center at Falling Waters, West Virginia.
"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
<PAGE>
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous
or toxic chemical, material or substance within the meaning of any
other applicable federal, state or local law, regulation,
ordinance or requirement (including consent decrees and
administrative orders) relating to or imposing liability or
standards of conduct concerning any hazardous, toxic or dangerous
waste, substance or material, all as amended or hereafter amended.
"Hedging Obligations" means, with respect to any Person, all
liabilities of such Person under interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements, and all other
agreements or arrangements designed to protect such Person against
fluctuations in interest rates or currency (or currency unit) exchange
rates.
"Heller" means Heller Financial, Inc. in its capacity as lessor under
the Heller Lease.
"Heller Lease" means the Master Lease Agreement dated June 30,
1997 between the Borrower, as lessee, and Heller (as successor to PDS
Financial Corporation).
"herein", "hereof", "hereto", "hereunder" and similar terms
contained in this Agreement or any other Loan Document refer to this
Agreement or such other Loan Document, as the case may be, as a whole and
not to any particular Section, paragraph or provision of this Agreement or
such other Loan Document.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial
statement of the Borrower, any qualification or exception to such opinion
or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of
matters relevant to such financial statement; or
(c) which relates to the treatment or classification of
any item in such financial statement and which, as a condition to
its removal, would require an adjustment to such item the effect
of which would be to cause the Borrower to be in default of its
obligation under Section 7.2.4.
<PAGE>
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and
each other Loan Document, the parties hereto agree that the rule of ejusdem
generis shall not be applicable to limit a general statement, which is
followed by or referable to an enumeration of specific matters, to matters
similar to the matters specifically mentioned.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and
all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(b) all obligations, contingent or otherwise, relative to
the face amount of all letters of credit, whether or not drawn,
and banker's acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases
which have been or should be, in accordance with GAAP, recorded as
Capitalized Lease Liabilities;
(d) all other items which, in accordance with GAAP, would
be included as liabilities on the liability side of the balance
sheet of such Person as of the date at which Indebtedness is to be
determined;
(e) net liabilities of such Person under all Hedging
Obligations;
(f) whether or not so included as liabilities in
accordance with GAAP, all obligations of such Person to pay the
deferred purchase price of property or services, and indebtedness
(excluding prepaid interest thereon) secured by a Lien on property
owned or being purchased by such Person (including indebtedness
arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse; and
(g) all Contingent Liabilities of such Person in respect
of any of the foregoing.
For all purposes of this Agreement, the Indebtedness of any Person shall
include the Indebtedness of any partnership or joint venture in which such
Person is a general partner or a joint venturer.
"Indemnified Liabilities" is defined in Section 9.4.
"Indemnified Parties" is defined in Section 9.4.
"Indenture" means the Indenture, dated as of February 17, 1994, by
and among Lady Luck Gaming Finance Corporation, the Parent, certain
subsidiary guarantors named therein and First Trust National Association,
as amended and supplemented, relating to the 11 7/8% First Mortgage Notes.
<PAGE>
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other
Person (excluding commission, travel and similar advances to
officers and employees made in the ordinary course of business);
(b) any Contingent Liability of such Person; and
(c) any ownership or similar interest held by such Person
in any other Person.
The amount of any Investment shall be the original principal or capital
amount thereof less all returns of principal or equity thereon (and without
adjustment by reason of the financial condition of such other Person) and
shall, if made by the transfer or exchange of property other than cash, be
deemed to have been made in an original principal or capital amount equal
to the fair market value of such property.
"Isle Merger" is defined in the recitals.
"Isle Merger Agreement" is defined in the recitals.
"Lender" is defined in the preamble.
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), charge against or interest in property to secure
payment of a debt or performance of an obligation or other priority or
preferential arrangement of any kind or nature whatsoever.
"Loan" is defined in Section 2.1.1.
"Loan Document" means this Agreement, the Note, the Mortgage, the
Ship Mortgage and the Security Agreement.
"Material Adverse Effect" means, with respect to the Borrower, a
material adverse effect upon the ability of the Borrower to pay the
Obligations or upon the business, financial condition, results of
operation, prospects or properties of the Borrower.
"Maturity Date" means the earliest to occur of the following: (i)
the Isle Merger Agreement shall, in whole or in part, terminate, cease to
be effective or cease to be the legally valid, binding and enforceable
obligation of Parent and (a) such termination or cessation shall continue
for two Business Days if resulting from the Parent's acceptance of a
Superior Proposal (as defined in the Isle Merger Agreement) to be acquired
by another Person other than the Lender or (b) such termination or
cessation shall continue for 180 days if resulting for any other reason
under the Isle Merger Agreement; (ii) the Parent or any Affiliate of the
Parent shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability or (iii)
consummation of the Isle Merger.
<PAGE>
"Merger Sub" is defined in the recitals.
"Miss Marquette Gaming Facility" means the Miss Marquette gaming
property in Marquette, Iowa, including the Gaming Vessel, gaming equipment,
and dockside buildings, including a motel, an enclosed walkway, a parking
lot, a restaurant, an administrative office and other entertainment
facilities.
"Monthly Payment Date" means the last day of each calendar month,
beginning with November 30, 1999, or, if any such day is not a Business
Day, the next succeeding Business Day.
"Mortgage" means the Mortgage on the Miss Marquette Gaming
Facility (excluding the Gaming Vessel).
"Note" means a promissory note of the Borrower payable to the
Lender, in the form of Exhibit A hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate indebtedness of the Borrower to the Lender resulting from the
outstanding Loan, and also means all other promissory notes accepted from
time to time in substitution therefor or renewal thereof.
"Obligations" means all obligations (monetary or otherwise) of the
Borrower arising under or in connection with this Agreement, the Note and
each other Loan Document.
"Organic Document" means, relative to the Borrower, its
certificate of incorporation, its by-laws and all shareholder agreements,
voting trusts and similar arrangements applicable to any of its authorized
shares of capital stock.
"Parent Excess Cash Flow" means Excess Cash Flow (as such term is
defined in the Indenture) less, without duplication, the sum of (i) the sum
of (x) scheduled principal payments and (y) any voluntary prepayments by
the Parent or the Borrower on the Loan and (ii) amounts paid by the Parent
to repurchase 11 7/8% First Mortgage Notes from the holders thereof
pursuant to the terms of the Indenture.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan," as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in Section 4001(a)(3) of ERISA), and to which
the Borrower or any corporation, trade or business that is, along with the
Borrower, a member of a Controlled Group, may have liability, including any
liability by reason of having been a substantial employer within the
meaning of Section 4063 of ERISA at any time during the preceding five
years, or by reason of being deemed to be a contributing sponsor under
Section 4069 of ERISA.
<PAGE>
"Person" means any natural person, corporation, limited liability
company, firm, association, government, governmental agency or any other
entity, whether acting in an individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Quarterly Payment Date" means the 45th day after the end of each
calendar quarter, beginning with February 14, 2000, or, if any such day is
not a Business Day, the next succeeding Business Day.
"Release" means a "release," as such term is defined in CERCLA.
"Resource Conservation and Recovery Act" means the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., as in
effect from time to time.
"Security Agreement" means the Security Agreement
executed and delivered pursuant to Section 5.1.6, substantially in a form
acceptable to the Lender, as amended, supplemented, restated or otherwise
modified from time to time.
"Ship Mortgage" means the First Preferred Mortgage executed and
delivered by the Borrower to the Lender pursuant to Section 5.1.8, in form
and substance acceptable to the Lender, as amended, supplemented, restated
or otherwise modified from time to time.
"Sodak" is defined in the recitals.
"Sodak Stock Purchase Agreement" is defined in the recitals.
"Subsidiary" means, with respect to any Person, any other Person
of which more than 50% of the outstanding capital stock or other equity
interest having ordinary voting power to elect a majority of the board of
directors or similar management group of such other Person (irrespective of
whether at the time equity of any other class or classes of such other
Person shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by
such Person and one or more other Subsidiaries of such Person, or by one or
more other Subsidiaries of such Person.
"Taxes" is defined in Section 4.1.
"United States" or "U.S." means the United States of America, its
fifty States and the District of Columbia.
"Welfare Plan" means a "welfare plan," as such term is defined in
Section 3(1) of ERISA.
"Year 2000 Compliant" is defined in Section 7.1.7.
<PAGE>
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and
the Note and in each Borrowing Request, Loan Document, notice and other
communication delivered from time to time in connection with this Agreement
or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified,
references in this Agreement and in each other Loan Document to any Article
or Section are references to such Article or Section of this Agreement or
such other Loan Document, as the case may be, and, unless otherwise
specified, references in any Article, Section or definition to any clause
are references to such clause of such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless
otherwise specified, all accounting terms used herein or in any other Loan
Document shall be interpreted, all accounting determinations and
computations hereunder or thereunder (including under Section 7.2.4) shall
be made, and all financial statements required to be delivered hereunder or
thereunder shall be prepared in accordance with, those generally accepted
accounting principles ("GAAP") applied in the preparation of the financial
statements referred to in Section 6.5.
ARTICLE II
COMMITMENT, BORROWING PROCEDURES AND NOTE
SECTION 2.1. Commitment. On the terms and subject to the conditions of
this Agreement (including Article V), the Lender agrees to make a Loan
pursuant to the Commitment described in this Section 2.1.
SECTION 2.1.1. Commitment To Make Loan. On a Business Day
occurring prior to the Commitment Termination Date, the Lender will make a
loan (the "Loan") to the Borrower equal to the aggregate amount of the
amount requested by the Borrower to be made on such day. The commitment of
the Lender described in this Section 2.1.1 is herein referred to as its
"Commitment". No amounts paid or prepaid with respect to the Loan may be
reborrowed.
SECTION 2.1.2. Lender Not Permitted or Required To Make Loan. The
Lender shall not be permitted or required to make the Loan if it would exceed
the Commitment Amount.
SECTION 2.2. Borrowing Procedure. By delivering a Borrowing
Request to the Lender on or before 10:00 a.m. (Central time) on a Business
Day, the Borrower may irrevocably request, on not less than one nor more
than three Business Days' notice, that the Loan be made in an amount up to
the Commitment Amount. On the terms and subject to the conditions of this
Agreement, the Loan shall be made on the Business Day specified in such
Borrowing Request. On or before 11:00 a.m. (Central time) on such Business
Day, the Lender shall make funds in an amount equal to the requested Loan
available to the Borrower by wire transfer to the accounts the Borrower
shall have specified in the Borrowing Request.
<PAGE>
SECTION 2.3. Note. The Lender's Loan under its Commitment shall be
evidenced by the Note payable to the order of the Lender in a maximum
principal amount equal to the original Commitment Amount. The Borrower
hereby irrevocably authorizes the Lender to make (or cause to be made)
appropriate notations on the grid attached to the Lender's Note (or on any
continuation of such grid), which notations, if made, shall evidence, inter
alia, the date of and the outstanding principal amount of the Loan
evidenced thereby. Such notations shall be conclusive and binding on the
Borrower absent manifest error; provided, however, that the failure of the
Lender to make any such notations shall not limit or otherwise affect any
Obligations of the Borrower.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrower shall cause
the Parent to make three equal monthly principal payments each in the
amount of $500,000 on the Monthly Payment Date in each of March 2000, April
2000 and May 2000. In addition, the Borrower shall make equal monthly
principal payments each in the amount of $150,000 on each Monthly Payment
Date after the making of the Loan, with any remaining principal and
interest payable on the Maturity Date. Prior thereto, the Borrower
(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the outstanding
principal amount of the Loan; provided, however, that
(i) all such voluntary prepayments shall require
at least one but no more than three Business Days' prior
written notice to the Lender; and
(ii) all such voluntary partial prepayments
shall be in an aggregate minimum amount of $100,000 and
an integral multiple of $25,000;
(b) shall, immediately upon any acceleration of the
Maturity Date of the Loan pursuant to Section 8.2 or Section 8.3,
repay the Loan, unless, pursuant to Section 8.2, only a portion of
the Loan is so accelerated. Each prepayment of the Loan made
pursuant to this Section shall be without premium or penalty
(except for the fees provided in Section 3.3);
(c) shall, on each Quarterly Payment Date, pay an amount
equal to the Borrower Excess Cash Flow for the immediate prior
calendar quarter; and
(d) shall, on August 1, 2000, cause to be paid an amount
equal to the Parent Excess Cash Flow.
<PAGE>
All prepayments of the Loan shall be applied to the installments of the
Loan in the inverse order of maturity.
SECTION 3.2. Interest Provisions. Interest on the outstanding
principal amount of the Loan shall accrue and be payable in accordance
with this Section 3.2.
SECTION 3.2.1. Rates. Prior to maturity (whether on the Maturity
Date, upon acceleration or otherwise) the Loan and the Note shall bear interest
at a rate per annum equal to the Base Rate plus a margin of 3.625%.
SECTION 3.2.2. Post-Maturity Rate. After the date any principal
amount of the Loan is due and payable (whether on the Maturity Date, upon
acceleration or otherwise), after any other monetary Obligation of the
Borrower shall have become due and payable, or pursuant to Section 8.4, the
Borrower shall pay, but only to the extent permitted by law, interest
(after as well as before judgment) on such amounts at a rate per annum
equal to the Base Rate plus a margin of 10.00%.
SECTION 3.2.3. Payment Dates. Interest accrued on the Loan shall
be payable, without duplication:
(a) on the Maturity Date therefor;
(b) on the date of any payment or prepayment, in whole
or in part, of principal
outstanding on the Loan;
(c) on each Monthly Payment Date occurring after the
making of the Loan hereunder;
(d) on that portion of the Loan the Maturity Date of
which is accelerated pursuant to Section 8.2 or Section 8.3,
immediately upon such acceleration.
Interest accrued on the Loan or other monetary Obligations arising under
this Agreement or any other Loan Document after the date such amount is due
and payable (whether on the Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.3. Fees. The Borrower agrees to pay the fees set forth
in this Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1 Upfront Fee. The Borrower agrees to pay to the
Lender an upfront fee in an amount equal to 2.5% of the Commitment Amount
(without regard to any reduction thereto), payable on the date of the Loan
hereunder.
SECTION 3.3.2 Prepayment/Repayment Fee. The Borrower agrees to pay
to the Lender a repayment/prepayment fee in an amount equal to 2% of any
principal amount of the Loan repaid or prepaid hereunder. Such fee shall
be payable upon the date of each such repayment or prepayment on the amount
so repaid or prepaid.
<PAGE>
ARTICLE IV
TAXES, PAYMENTS, CALCULATIONS, ETC.
SECTION 4.1. Taxes. All payments by the Borrower of principal of,
and interest on, the Loan and all other amounts payable hereunder shall be
made free and clear of and without deduction for any present or future
income, excise, stamp or other taxes, fees, duties, withholdings or other
charges of any nature whatsoever imposed by any taxing authority, other
than franchise taxes and taxes imposed on or measured by the Lender's net
income or receipts (such non-excluded items being called "Taxes"). In the
event that any withholding or deduction from any payment to be made by the
Borrower hereunder is required in respect of any Taxes pursuant to any
applicable law, rule or regulation, then the Borrower will
(a) pay directly to the relevant authority the full
amount required to be so withheld or deducted;
(b) promptly forward to the Lender an official receipt or
other documentation satisfactory to the Lender evidencing such
payment to such authority; and
(c) pay to the Lender such additional amount or amounts
as are necessary to ensure that the net amount actually received
by the Lender will equal the full amount the Lender would have
received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Lender with
respect to any payment received by the Lender hereunder, the Lender may pay
such Taxes and the Borrower will promptly pay such additional amounts
(including any penalties, interest or expenses) as are necessary so that
the net amount received by such person after the payment of such Taxes
(including any Taxes on such additional amounts) shall equal the amount
such Person would have received had not such Taxes been asserted.
If the Borrower fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Lender the required receipts or
other required documentary evidence, the Borrower shall indemnify the
Lender for any incremental Taxes, interest or penalties that may become
payable by the Lender as a result of any such failure.
SECTION 4.2. Payments, Computations, etc. All payments by the
Borrower pursuant to this Agreement, the Note or any other Loan Document
shall be made by the Borrower to the Lender, without setoff, deduction or
counterclaim, not later than 11:00 a.m. (Central time) on the date due, in
same day or immediately available funds, to such account as the Lender
shall specify from time to time by notice to the Borrower. Funds received
after that time shall be deemed to have been received by the Lender on the
next succeeding Business Day.
<PAGE>
All interest and fees shall be computed on the basis of the actual number
of days (including the first day but excluding the last day) occurring
during the period for which such interest or fee is payable over a year
comprised of 365 days. Whenever any payment to be made shall otherwise be
due on a day which is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be included
in computing interest and fees, if any, in connection with such payment.
SECTION 4.3. Use of Proceeds. The Borrower shall apply the
proceeds of the Loan to make the payment due under the Sodak Stock Purchase
Agreement.
ARTICLE V
CONDITIONS TO LOAN
SECTION 5.1. Conditions to Loan. The obligation of the Lender to
fund the Loan shall be subject to the prior or concurrent satisfaction of each
of the conditions precedent set forth in this Section 5.1.
SECTION 5.1.1. Resolutions, etc. The Lender shall have received
from the Borrower a certificate, dated on or prior to the date on which the
Loan is made, of its Secretary or Assistant Secretary as to
(a) resolutions of its Board of Directors then in full
force and effect authorizing the execution, delivery and
performance of this Agreement, the Note and each other Loan
Document to be executed by it; and
(b) the incumbency and signatures of those of its
officers authorized to act with respect to this Agreement, the
Note and each other Loan Document executed by it,
upon which certificate the Lender may conclusively rely until it shall have
received a further certificate of the Secretary of the Borrower canceling
or amending such prior certificate.
SECTION 5.1.2. Delivery of Note. The Lender shall have received
its Note duly executed and delivered by the Borrower.
SECTION 5.1.3. Acquisition Consummated. The conditions
set forth in Section 6.1 and Section 6.2 of the Sodak Stock Purchase
Agreement regarding the obligations of the Parent, Sodak and Borrower to
consummate the Acquisition shall have been satisfied in all material
respects, and the Acquisition shall have been consummated in accordance
therewith to the satisfaction of the Lender.
SECTION 5.1.4. Payment of Outstanding Indebtedness, etc. All
Indebtedness identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the
Disclosure Schedule, together with all interest, all prepayment premiums and
other amounts due and payable with respect thereto, shall have been paid in
full (including, to the extent necessary, from proceeds of the Loan).
<PAGE>
(b) The Borrower shall use all reasonable efforts from and after
the date hereof until the date on which the Loan is made to cause the
Heller Lease to remain in full force and effect and not to become part of
the Indebtedness to be Paid. If such efforts of the Borrower fail, then the
Lender agrees to take all reasonable efforts to cause Heller to keep the
Heller Lease in full force and effect and not to become part of the
Indebtedness to be Paid. If such efforts of the Lender fail, then the
Lender shall either guaranty the obligations of the Borrower under the
Heller Lease or take an assignment from Heller of the Heller Lease.
SECTION 5.1.5. Equity Infusion. The Borrower shall have received a
cash equity infusion from Parent in the amount of $25,367,000.
SECTION 5.1.6. Security Agreement. The Lender shall have received
executed counterparts of the Security Agreement, dated on or before the date
on which the Loan is made, duly executed by the Borrower, together with
(a) acknowledgment copies of properly filed Uniform
Commercial Code financing statements (Form UCC-1), dated a date
reasonably near to the date of the Loan, or such other evidence of
filing as may be acceptable to the Lender, naming the Borrower as
the debtor and the Lender as the secured party, or other similar
instruments or documents, filed under the Uniform Commercial Code
of all jurisdictions as may be necessary or, in the opinion of the
Lender, desirable to perfect the security interest of the Lender
pursuant to the Security Agreement;
(b) executed copies of proper Uniform Commercial Code
Form UCC-3 termination statements, if any, necessary to release
all Liens and other rights of any Person
(i) in any collateral described in the Security
Agreement previously granted by any Person, and
(ii) securing any of the Indebtedness identified
in Item 7.2.2(b) ("Indebtedness to be Paid") of the
Disclosure Schedule,
together with such other Uniform Commercial Code Form UCC-3
termination statements as the Lender may reasonably request from
such obligors; and
(c) certified copies of Uniform Commercial Code Requests
for Information or Copies (Form UCC-11), or a similar search
report certified by a party acceptable to the Lender, dated a date
reasonably near to the date of the Loan, listing all effective
financing statements which name the Borrower (under its present
name and any previous names including Sodak) as the debtor and
which are filed in the jurisdictions in which filings were made
pursuant to clause (a) above, together with copies of such
financing
<PAGE>
statements (none of which (other than those described in clause
(a), if such Form UCC-11 or search report, as the case may be, is
current enough to list such financing statements described in
clause (a)) shall cover any collateral described in the Security
Agreement).
SECTION 5.1.7. Mortgage. The Lender shall have received
counterparts of the Mortgage, dated on or before the date on which the Loan
is made, duly executed by the Borrower, together with
(a) evidence of the completion (or satisfactory
arrangements for the completion) of all recordings and filings of
the Mortgage as may be necessary or, in the reasonable opinion of
the Lender, desirable effectively to create a valid, perfected
Lien against the properties purported to be covered thereby,
subject only to the Lien in favor of Chester and Geneva Busse
described in Item 7.2.3 ("Liens") of the Disclosure Schedule;
(b) mortgagee's title insurance policies (and survey
required by the Lender in connection therewith) in favor of the
Lender in amounts and in form and substance and issued by
insurers, reasonably satisfactory to the Lender, with respect to
the property purported to be covered by the Mortgage, insuring
that title to such property is marketable and that the interests
created by the Mortgage constitute valid first Liens thereon free
and clear of all defects and encumbrances other than as approved
by the Lender, and such policies shall also include such
endorsements as the Lender shall request and shall be accompanied
by evidence of the payment in full of all premiums thereon; and
(c) such other approvals, opinions, or documents relating
to the Mortgage as the Lender may reasonably request.
SECTION 5.1.8. Ship Mortgage.
(a) The Lender shall have received from the Borrower a
duly executed Ship Mortgage, dated on or before the date on which
the Loan is made, on the Gaming Vessel; the Ship Mortgage shall
have been duly filed and recorded in the manner prescribed by the
laws of the United States of America; and the Borrower shall have
complied with and shall have provided to the Lender evidence
reasonably satisfactory to the Lender that the Borrower has
satisfied all requisite formalities and provisions of such laws so
that the Ship Mortgage constitutes a valid and enforceable first
"preferred mortgage" on the Gaming Vessel as provided in such laws
(including Chapter 313 of Title 46, United States Code), having
the effect and with the priority as therein provided.
(b) The Lender shall have received the report of the
Borrower's marine insurance broker required pursuant to Section
2.15.6(a) of the Ship Mortgage, together with such evidence of
insurance as is required by Section 2.15.6(b) of the Ship Mortgage
and such other evidence of the maintenance of the insurance
required by Section 2.15 of the Ship Mortgage as the Lender shall
reasonably request.
<PAGE>
(c) The Lender shall have received such other approvals,
opinions, and documents relating to the Ship Mortgage as the
Lender may reasonably request.
SECTION 5.1.9. Opinions of Counsel. The Lender shall have received
opinions, dated the date of the Loan and addressed to the Lender, from
Swidler Berlin Shereff Friedman, LLP, special counsel to the Borrower and
Parent, and from Lane & Waterman, counsel to the Borrower and Parent, each
in form and substance satisfactory to the Lender.
SECTION 5.1.10. Closing Fees, Expenses, etc. The Lender shall
have received all fees, costs and expenses due and payable pursuant to
Section 3.3 and 9.3, if then invoiced.
Compliance with Warranties, No Default, etc. Both before and
after giving effect to the Loan (but, if any Default of the nature referred
to in Section 8.1.5 shall have occurred with respect to any other
Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds thereof) the following statements shall be true
and correct
(a) the representations and warranties set forth in
Article VI shall be true and correct in all material respects
(except as to representations and warranties which are qualified
as to materiality, which representations and warranties shall be
true in all respects), unless stated to relate solely to an early
date, in which case such representations and warranties shall be
true and correct as of such earlier date;
(b) except as disclosed by the Borrower to the Lender
pursuant to Section 6.7
(i) no labor controversy, litigation,
arbitration or governmental investigation or proceeding
shall be pending or, to the knowledge of the Borrower,
threatened against the Borrower which could reasonably be
expected to have a Material Adverse Effect or which
purports to affect the legality, validity or
enforceability of this Agreement, the Note or any other
Loan Document; and
(ii) no development shall have occurred in any
labor controversy, litigation, arbitration or
governmental investigation or proceeding disclosed
pursuant to Section 6.7 which could reasonably be
expected to materially adversely affect the consolidated
businesses, operations, assets, revenues, properties or
prospects of the Borrower; and
(c) no Default shall have then occurred and be
continuing, and the Borrower shall not be in material violation of
any law or governmental regulation or court order or decree.
SECTION 5.1.12. Borrowing Request. The Lender shall have received a
Borrowing Request for the Loan. Each of the delivery of such Borrowing
Request and the acceptance by the Borrower of the proceeds of the Loan
shall constitute a representation and warranty by the Borrower that on the
date of the Loan (both immediately before and after giving effect to such
<PAGE>
Loan and the application of the proceeds thereof) the statements made in
Section 5.1.11 are true and correct in all material respects.
SECTION 5.1.13. Financial Condition. The Lender shall have
received an unaudited pro forma balance sheet of the Borrower as of
September 30, 1999 after giving effect to the Loan (if the Borrower is able
to produce such balance sheet after using all reasonable efforts).
SECTION 5.1.14. Satisfactory Legal Form; Other Documents. All
documents executed or submitted pursuant hereto by or on behalf of the
Borrower shall be satisfactory in form and substance to the Lender and its
counsel; the Lender and its counsel shall have received all information,
approvals, opinions, documents or instruments as the Lender or its counsel
may reasonably request.
SECTION 5.1.15. Payoff Letters. The Lender shall have received
payoff letters with regard to Indebtedness to be paid, including without
limitation any such Indebtedness relating to the Miss Marquette Gaming
Facility.
SECTION 5.1.16. Amendment to CIBC Credit Agreement. An amendment
to the CIBC Credit Agreement shall have been executed by the Requisite
Lenders (as defined in the CIBC Credit Agreement) which, among other
things, contains the consent of such Requisite Lenders to the making of the
Loan by the Lender under this Agreement, provided that the Lender shall use
all reasonable efforts to cause such amendment to be executed.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to
make the Loan hereunder, the Borrower represents and warrants unto the
Lender as set forth in this Article VI.
SECTION 6.1. Organization, etc. The Borrower is a corporation
validly existing and in good standing under the laws of the State of its
incorporation, is duly qualified to do business and is in good standing as
a foreign corporation in each jurisdiction where the nature of its business
requires such qualification, except where the failure to so qualify and be
in good standing could not reasonably be expected to have a Material
Adverse Effect, and has full corporate power and authority and holds all
requisite governmental licenses, permits and other approvals to enter into
and perform its Obligations under this Agreement, the Note and each other
Loan Document to which it is a party and to own and hold under lease its
property and to conduct its business substantially as currently conducted
by it.
SECTION 6.2 Due Authorization, Non-Contravention, etc.
The execution, delivery and performance by the Borrower of this Agreement,
the Note and each other Loan Document executed or to be executed by it,
<PAGE>
and the Borrower's participation in the consummation of the Acquisition are
within the Borrower's corporate powers, have been duly authorized by all
necessary corporate action, and do not
(a) contravene the Borrower's Organic Documents;
(b) contravene any material contractual restriction, law
or governmental regulation or court decree or order binding on or
affecting the Borrower, except where such contravention could not
reasonably be expected to have a Material Adverse Effect; or
(c) result in, or require the creation or imposition of,
any Lien on any of the Borrower's or the Parent's properties.
SECTION 6.3. Government Approval, Regulation, etc. No
authorization or approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body or other Person is
required for the due execution, delivery or performance by the Borrower of
this Agreement, the Note or any other Loan Document or for the Borrower's
and Parent's participation in the consummation of the Acquisition, except
as described in Item 6.3 ("Government Approvals") of the Disclosure
Schedule, all of which have been duly obtained or made and are in full
force and effect or will be prior to the making of the Loan. The Borrower
is not an "investment company" within the meaning of the Investment Company
Act of 1940, as amended, or a "holding company", or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
SECTION 6.4. Validity, etc. This Agreement constitutes, and the
Note and each other Loan Document executed by the Borrower will, on the due
execution and delivery thereof, constitute, the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance
with their respective terms, subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar law affecting
creditors' rights generally.
SECTION 6.5. Financial Information. The pro-forma balance sheet of
the Borrower as at June 30, 1999, and the related statements of earnings
and cash flow of the Borrower (or the Miss Marquette Gaming Facility),
copies of which have been furnished to the Lender, have been prepared in
accordance with GAAP consistently applied, except as indicated on Item 6.5
("Financial Information") of the Disclosure Schedule, and present fairly in
all material respects the consolidated financial condition of the Borrower
as at the dates thereof and the results of the Borrower's operations for
the periods then ended, subject to the absence of complete footnotes and
subject to normal year-end adjustments.
SECTION 6.6. No Material Adverse Change. Since the date of the
financial statements described in Section 6.5, there has been no material
adverse change in the financial condition, operations, assets, business,
<PAGE>
properties or prospects of the Borrower or the Miss Marquette Gaming
Facility, other than general economic conditions in the United States and
conditions affecting the gaming business generally.
SECTION 6.7. Litigation, Labor Controversies, etc. There is no
pending or, to the knowledge of the Borrower, threatened litigation,
action, proceeding or labor controversy affecting the Borrower, or any of
its properties, assets or revenues, which could reasonably be expected to
have a Material Adverse Effect or which purports to affect the legality,
validity or enforceability of this Agreement, the Note or any other Loan
Document, except as disclosed in Item 6.7 ("Litigation") of the Disclosure
Schedule.
SECTION 6.8. Subsidiaries. The Borrower has no Subsidiaries.
SECTION 6.9. Ownership of Properties. The Borrower owns good and
marketable title to all of its properties and assets, real and personal,
tangible and intangible, of any nature whatsoever (including patents,
trademarks, trade names, service marks and copyrights), free and clear of
all Liens, charges or claims (including infringement claims with respect to
patents, trademarks, copyrights and the like) except as permitted pursuant
to Section 7.2.3 and as set forth in Item 7.2.3 ("Liens") of the Disclosure
Schedule.
SECTION 6.10. Taxes. The Borrower has filed, or caused to be
filed, all tax returns and reports required by law to have been filed by it
or on its behalf and has paid, or has made adequate provision for the
payment of, all taxes and governmental charges shown to be owing on such
tax returns and reports, except as shown on Item 6.10 ("Taxes") of the
Disclosure Schedule and except for any such taxes or charges which are
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside
on its books.
SECTION 6.11. Pension and Welfare Plans. During the
twelve-consecutive-month period prior to the date of the execution and
delivery of this Agreement and prior to the date of the Loan, no steps have
been taken to terminate any Pension Plan, and no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under section 302(f) of ERISA. No condition exists or event or transaction
has occurred with respect to any Pension Plan which might result in the
incurrence by the Borrower of any material liability, fine or penalty.
Except as disclosed in Item 6.11 ("Employee Benefit Plans") of the
Disclosure Schedule, the Borrower has no contingent liability with respect
to any post-retirement benefit under a Welfare Plan, other than liability
for continuation coverage described in Part 6 of Title I of ERISA.
SECTION 6.12. Environmental Warranties. Except as set forth in
Item 6.12 ("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying
groundwater) owned or leased by the Borrower have been, and
continue to be, owned or leased by the Borrower in material
compliance with all Environmental Laws;
<PAGE>
(b) there have been no past, and there are no pending or,
to the Borrower's knowledge, threatened
(i) claims, complaints, notices or requests for
information received by the Borrower with respect to any
alleged violation of any Environmental Law, or
(ii) complaints, notices or inquiries to the
Borrower regarding potential liability under any
Environmental Law;
(c) there have been no Releases of Hazardous Materials
at, on or under any property now or, to the Borrower's knowledge,
previously owned or leased by the Borrower that, singly or in the
aggregate, have, or could reasonably be expected to have, a
Material Adverse Effect;
(d) the Borrower has been issued and is in material
compliance with all permits, certificates, approvals, licenses and
other authorizations relating to environmental matters and
necessary or desirable for its business;
(e) no property now or, to the Borrower's knowledge,
previously owned or leased by the Borrower is listed or proposed
for listing (with respect to owned property only) on the National
Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list of sites requiring investigation or clean-up;
(f) there are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any
property now or, to the Borrower's knowledge, previously owned or
leased by the Borrower that, singly or in the aggregate, have, or
could reasonably be expected to have, a Material Adverse Effect;
(g) Borrower has not directly transported or directly
arranged for the transportation of any Hazardous Material to any
location which is listed or proposed for listing on the National
Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list or which is the subject of federal, state or
local enforcement actions or other investigations which may lead
to material claims against the Borrower thereof for any remedial
work, damage to natural resources or personal injury, including
claims under CERCLA;
(h) there are no polychlorinated biphenyls or friable
asbestos present at any property now or, to the knowledge of the
Borrower, previously owned or leased by the Borrower that, singly
or in the aggregate, have, or could reasonably be expected to
have, a Material Adverse Effect; and
(i) no conditions exist at, on or under any property now
or, to the knowledge of the Borrower, previously owned or leased
by the Borrower which, with the passage of time, or the giving of
notice or both, would give rise to material liability under any
<PAGE>
Environmental Law, except where such conditions could not
reasonably be expected to have a Material Adverse Effect.
SECTION 6.13. Regulations U and X. The Borrower is not engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock, and no proceeds of any Loan will be used for a purpose which
violates, or would be inconsistent with, F.R.S. Board Regulation U or X.
Terms for which meanings are provided in F.R.S. Board Regulation U or X or
any regulations substituted therefor, as from time to time in effect, are
used in this Section with such meanings.
SECTION 6.14. Accuracy of Information. No representation or
warranty of the Borrower contained in this Agreement, any Loan Document,
the Sodak Stock Purchase Agreement or any other document, certificate or
written statement furnished to the Lender or its representatives by or on
behalf of the Borrower for use in connection with this Agreement or any
Loan Document contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements contained
therein not misleading.
ARTICLE VII
COVENANTS
SECTION 7.1. Affirmative Covenants. The Borrower agrees with the
Lender that, until the Commitment has terminated and all Obligations have
been paid and performed in full, the Borrower will perform the obligations
set forth in this Section 7.1.
SECTION 7 Financial Information, Reports, Notices, etc.
The Borrower will furnish, or will cause to be furnished, to the Lender copies
of the following financial statements, reports, notices and information:
(a) as soon as available and in any event within 45 days
after the end of each of the first three Fiscal Quarters of each
Fiscal Year of the Borrower, a balance sheet of the Borrower as of
the end of such Fiscal Quarter and statements of earnings and cash
flow of the Borrower for such Fiscal Quarter and for the period
commencing at the end of the previous Fiscal Year and ending with
the end of such Fiscal Quarter, certified by the chief financial
officer of the Borrower;
(b) as soon as available and in any event within 90 days
after the end of each Fiscal Year of the Borrower, a copy of the
annual audit report for such Fiscal Year for the Borrower
including therein a balance sheet of the Borrower as of the end of
such Fiscal Year and a statement of earnings and cash flow of the
Borrower for such Fiscal Year, in each case certified (without any
Impermissible Qualification) in a manner acceptable to the Lender
by Arthur Andersen, LLP or other independent public accountants
acceptable to the Lender, together with a certificate from such
accountants containing a computation
<PAGE>
of, and showing compliance with, the financial ratio and
restriction contained in Section 7.2.4 and to the effect that, in
making the examination necessary for the signing of such annual
report by such accountants, they have not become aware of any
Default or Event of Default that has occurred and is continuing,
or, if they have become aware of such Default or Event of Default,
describing such Default or Event of Default and the steps, if any,
being taken to cure it;
(c) as soon as available and in any event within 45 days
after the end of each Fiscal Quarter, a certificate, executed by
the chief financial officer of the Borrower, showing (in
reasonable detail and with appropriate calculations and
computations in all respects satisfactory to the Lender)
compliance with the financial covenant set forth in Section 7.2.4;
(d) as soon as possible and in any event within three
days after the occurrence of each Default, a statement of the
chief financial officer of the Borrower setting forth details of
such Default and the action which the Borrower has taken and
proposes to take with respect thereto;
(e) as soon as possible and in any event within three
days after (x) the occurrence of any adverse development with
respect to any litigation, action, proceeding or labor controversy
described in Section 6.7 or (y) the commencement of any labor
controversy, litigation, action or proceeding of the type
described in Section 6.7, notice thereof and copies of all
documentation relating thereto;
(f) promptly after the sending or filing thereof, copies
of all reports which the Borrower sends to any of its
securityholders, and all reports and registration statements which
the Borrower files with the Securities and Exchange Commission or
any national securities exchange;
(g) immediately upon becoming aware of the institution of
any steps by the Borrower or any other Person to terminate any
Pension Plan, or the failure to make a required contribution to
any Pension Plan if such failure is sufficient to give rise to a
Lien under section 302(f) of ERISA, or the taking of any action
with respect to a Pension Plan which could result in the
requirement that the Borrower furnish a bond or other security to
the PBGC or such Pension Plan, or the occurrence of any event with
respect to any Pension Plan which could result in the incurrence
by the Borrower of any material liability, fine or penalty, or any
material increase in the contingent liability of the Borrower with
respect to any post-retirement Welfare Plan benefit, notice
thereof and copies of all documentation relating thereto; and
(h) such other information respecting the financial
condition or operations of the Borrower as the Lender may from
time to time reasonably request.
<PAGE>
SECTION 7.1.2. Compliance with Laws, etc. The Borrower will comply
in all material respects with all applicable laws, rules, regulations and
orders, such compliance to include (without limitation):
(a) the maintenance and preservation of its corporate
existence and qualification as a foreign corporation; and
(b) the payment, before the same become delinquent, of
all taxes, assessments and governmental charges imposed upon it or
upon its property except to the extent being diligently contested
in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its
books.
SECTION 7.1.3. Maintenance of Properties. The Borrower will,
consistent with past practice, maintain, preserve, protect and keep its
properties in good repair, working order and condition, and make necessary
and proper repairs, renewals and replacements so that its business carried
on in connection therewith may be properly conducted at all times unless
the Borrower determines in good faith that the continued maintenance of any
of its properties is no longer economically desirable.
SECTION 7.1.4. Insurance. The Borrower will use commercially
reasonable efforts to maintain or cause to be maintained with responsible
insurance companies insurance with respect to its properties and business
(including business interruption insurance) against such casualties and
contingencies and of such types and in such amounts as is customary in the
case of similar businesses and will, upon request of the Lender, furnish to
the Lender at reasonable intervals a certificate of an Authorized Officer
of the Borrower setting forth the nature and extent of all insurance
maintained by the Borrower in accordance with this Section.
SECTION 7.1.5. Books and Records. The Borrower will keep books and
records which accurately reflect all of its business affairs and
transactions and permit the Lender or any of its representatives, upon
reasonable advance written notice and at reasonable times and intervals, to
visit all of its offices, to discuss its financial matters with its
officers and independent public accountant (and the Borrower hereby
authorizes such independent public accountant to discuss the Borrower's
financial matters with the Lender or its representatives whether or not any
representative of the Borrower is present) and to examine (and, at the
expense of the Borrower, photocopy extracts from) any of its books or other
corporate records. The Borrower shall pay any reasonable fees of such
independent public accountant incurred in connection with the Lender's
exercise of its rights pursuant to this Section.
SECTION 7.1.6. Environmental Covenant. The Borrower will,
(a) use and operate all of its facilities and properties
in material compliance with all Environmental Laws, keep all
necessary permits, approvals, certificates, licenses and other
authorizations relating to environmental matters in effect and
remain in material compliance therewith, and handle all Hazardous
Materials in material compliance with all applicable Environmental
Laws;
<PAGE>
(b) immediately notify the Lender and provide copies upon
receipt of all written claims, complaints, notices or inquiries
relating to the condition of its facilities and properties or
compliance with Environmental Laws; and
(c) provide such information and certifications which the
Lender may reasonably request from time to time to evidence
compliance with this Section 7.1.6.
SECTION 7.1.7. Year 2000 Compliance. (a) The Borrower agrees to
(i) prior to or promptly following the date on which the Loan is made,
initiate a review and assessment of all areas within its business and
operations that could be adversely affected by the "Year 2000 Problem"
(that is, the risk that computer applications used by the Borrower may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (ii) develop
a plan and timeline for addressing the Year 2000 Problem on a timely basis,
and (iii) implement that plan in accordance with that timetable.
(b) The Borrower agrees to use commercially reasonable efforts to
cause all computer applications that are material to its business and
operations to, on a timely basis, be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000
(that is, be "Year 2000 Compliant"), except to the extent that a failure to
do so could not reasonably be expected to have a Material Adverse Effect.
(c) The Borrower will promptly notify Lender in the event the
Borrower discovers or determines that any computer application (including
those of its suppliers and vendors) that is material to its business and
operations will not be Year 2000 Compliant on a timely basis, except to the
extent that such failure to be Year 2000 Compliant could not reasonably be
expected to have a Material Adverse Effect.
SECTION 7.2. Negative Covenants. The Borrower agrees with the
Lender that, until the Commitment has terminated and all Obligations have
been paid and performed in full, the Borrower will perform the obligations
set forth in this Section 7.2.
SECTION 7.2.1. Business Activities. The Borrower will not engage in
any business activity, except the operation of the Miss Marquette Gaming
Facility in Marquette, Iowa and such activities as may be incidental or related
thereto.
SECTION 7.2.2. Indebtedness. The Borrower will not create, incur,
assume or suffer to exist or otherwise become or be liable in respect of any
Indebtedness, other than, without duplication, the following:
(a) Indebtedness in respect of the Loan and other
Obligations;
(b) until the date of the Loan, Indebtedness identified
in Item 7.2.2(b) ("Indebtedness to be Paid") of the Disclosure
Schedule;
<PAGE>
(c) Indebtedness existing as of the Effective Date which
is identified in Item 7.2.2(c) ("Ongoing Indebtedness") of the
Disclosure Schedule;
(d) unsecured Indebtedness incurred in the ordinary
course of business (including open accounts extended by suppliers
on normal trade terms in connection with purchases of goods and
services, but excluding Indebtedness incurred through the
borrowing of money or Contingent Liabilities);
(e) Indebtedness in respect of Capital Expenditures in an
aggregate amount not to exceed $5,400,000 (without regard to the
period in which such Capital Expenditures are incurred); and
(f) any guaranty by the Borrower of the notes issued
under or pursuant to the Indenture, as supplemented, and the
Borrower's execution of a supplemental indenture to jointly and
severally guaranty, on a senior basis, the obligations under the
Indenture.
provided, however, that no Indebtedness otherwise permitted by
clauses (d) or (e) shall be permitted if, after giving effect to
the incurrence thereof, any Default shall have occurred and be
continuing.
SECTION 7.2.3. Liens. The Borrower will not create, incur,
assume or suffer to exist any Lien upon any of its property, revenues or
assets, whether now owned or hereafter acquired, except:
(a) Liens securing payment of the Obligations, granted
pursuant to any Loan Document;
(b) Liens securing payment of Indebtedness of the type
permitted and described in clauses (b) and (e) of Section 7.2.2;
(c) Liens granted prior to the Effective Date to secure
payment of Indebtedness of the type permitted and described in
clause (c) of Section 7.2.2;
(d) Liens for taxes, assessments or other governmental
charges or levies not at the time delinquent or thereafter payable
without penalty or being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books;
(e) Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the ordinary course of
business for sums not overdue or being diligently contested in
good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its
books;
(f) Liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or
other forms of governmental
<PAGE>
insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for
borrowed money) entered into in the ordinary course of business or
to secure obligations on surety or appeal bonds;
(g) judgment Liens in existence less than 30 days after
the entry thereof or with respect to which execution has been
stayed or the payment of which is covered in full (subject to a
customary deductible) by insurance maintained with responsible
insurance companies;
(h) Liens described on Item 7.2.3 ("Liens") of the
Disclosure Schedule; and
(i) easements, rights of way, restrictions, minor defects
or irregularities in title and other similar Liens not interfering
in any material respect with the ordinary conduct of the business
of the Borrower.
SECTION 7.2.4. Financial Condition. The Borrower will not permit
EBITDA as of any Fiscal Quarter end to be less than $8,000,000 for the prior
trailing four Fiscal Quarters ending on such date.
SECTION 7.2.5. Investments. The Borrower will not make, incur,
assume or suffer to exist any Investment in any other Person, except:
(a) Investments existing on the Effective Date and
identified in Item 7.2.5(a) ("Ongoing Investments") of the
Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) Investments permitted as Indebtedness pursuant to
Section 7.2.2;
provided, however, that
(d) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent
Investment" may continue to be held notwithstanding that such
Investment if made thereafter would not comply with such
requirements; and
(e) no Investment otherwise permitted by clause (d) shall
be permitted to be made if, immediately before or after giving
effect thereto, any Default shall have occurred and be continuing.
SECTION 7.2.6. Restricted Payments, etc. On and at all times
after the Effective Date:
(a) the Borrower will not declare, pay or make any
dividend or distribution (in cash, property or obligations) on any
shares of any class of capital stock (now or
<PAGE>
hereafter outstanding) of the Borrower or on any warrants, options
or other rights with respect to any shares of any class of capital
stock (now or hereafter outstanding) of the Borrower (other than
dividends or distributions payable in its common stock or warrants
to purchase its common stock or splitups or reclassifications of
its stock into additional or other shares of its common stock) or
apply any of its funds, property or assets to the purchase,
redemption, sinking fund or other retirement of any shares of any
class of capital stock (now or hereafter outstanding) of the
Borrower, or warrants, options or other rights with respect to any
shares of any class of capital stock (now or hereafter
outstanding) of the Borrower;
(b) the Borrower will not make any deposit for any of the
foregoing purposes.
SECTION 7.2.7. Capital Expenditures, etc. The Borrower will not
make or commit to make Capital Expenditures in any period, except (i)
Capital Expenditures related to the purchase of a new mooring barge in an
aggregate amount not to exceed $1,700,000 and (ii) other Capital
Expenditures which do not aggregate in excess of the amount set forth below
opposite such period:
Period Amount
------ ------
4th Fiscal Quarter 1999 $975,000
Fiscal Year 2000 $2,100,000
SECTION 7.2.8. Rental Obligations. The Borrower will not enter
into at any time any arrangement which does not create a Capitalized Lease
Liability and which involves the leasing by the Borrower from any lessor of
any real or personal property (or any interest therein), except as
disclosed on Item 7.2.8 ("Rental Obligations") of the Disclosure Schedule
and arrangements which, together with all other such arrangements which
shall then be in effect, will not require the payment of an aggregate
amount of rentals by the Borrower in excess of (excluding escalations
resulting from a rise in the consumer price or similar index) $720,000 for
any Fiscal Year or $2,160,000 during the full remaining term of such
arrangements; provided, however, that any calculation made for purposes of
this Section shall exclude any amounts required to be expended for
maintenance and repairs, insurance, taxes, assessments, and other similar
charges.
SECTION 7.2.9. Take or Pay Contracts. The Borrower will not enter
into or be a party to any arrangement for the purchase of materials,
supplies, other property or services if such arrangement by its express
terms requires that payment be made by the Borrower regardless of whether
such materials, supplies, other property or services are delivered or
furnished to it.
SECTION 7.2.10. Consolidation, Merger, etc. Except as necessitated
by the Acquisition or the Isle Merger, the Borrower shall not liquidate or
dissolve, consolidate with, or merge into or with, any other corporation,
or purchase or otherwise acquire all or substantially all of the assets of
any Person (or of any division thereof).
<PAGE>
SECTION 7.2.11. Asset Dispositions, etc. The Borrower will not
sell, transfer, lease, contribute or otherwise convey, or grant options,
warrants or other rights with respect to, all or any substantial part of
its assets to any Person other than in the ordinary course of business and
other than the disposal of damaged or obsolete property if such property is
no longer necessary for the operation of the Borrower's business.
SECTION 7.2.12. Modification of Certain Agreements. The Borrower
will not consent to any amendment, supplement or other modification of any of
the terms or provisions contained in, or applicable to, the Sodak Stock
Purchase Agreement.
SECTION 7.2.13. Transactions with Affiliates. The Borrower will
not enter into, or cause, suffer or permit to exist any arrangement or
contract with any of its other Affiliates unless such arrangement or
contract is fair and equitable to the Borrower and is an arrangement or
contract of the kind which would be entered into by a prudent Person in the
position of the Borrower with a Person which is not one of its Affiliates.
SECTION 7.2.14. Negative Pledges, etc. The Borrower will not enter
into any agreement (excluding this Agreement, any other Loan Document and
any agreement governing any Indebtedness permitted either by clause (b) of
Section 7.2.2 as in effect on the Effective Date or by clause (d) of
Section 7.2.2 as to the assets financed with the proceeds of such
Indebtedness) prohibiting the creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or hereafter acquired, or
the ability of the Borrower to amend or otherwise modify this Agreement or
any other Loan Document.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. Listing of Events of Default. Each of the following
events or occurrences described in this Section 8.1 shall constitute an
"Event of Default".
SECTION 8.1.1. Non-Payment of Obligations. The Borrower shall
default in the payment or prepayment when due of any principal of or
interest on the Loan, or the Borrower shall default (and such default shall
continue unremedied for a period of three Business Days) in the payment
when due of any fee or of any other Obligation.
SECTION 8.1.2. Breach of Warranty. Any representation or warranty
of the Borrower made or deemed to be made hereunder or in any other Loan
Document or any other writing or certificate furnished by or on behalf of
the Borrower to the Lender for the purposes of or in connection with this
Agreement or any such other Loan Document (including any certificates
delivered pursuant to Article V) is or shall be incorrect when made in any
material respect.
<PAGE>
SECTION 8.1.3. Non-Performance of Certain Covenants and
Obligations. The Borrower shall default in any material respect in the due
performance and observance of any of its obligations under Section 7.2
(except Section 7.2.4), and such default shall continue unremedied for a
period of 5 Business Days after written notice thereof shall have been
given to the Borrower by the Lender.
SECTION 8.1.4. Non-Performance of Other Covenants and Obligations.
The Borrower shall default in any material respect in the due performance
and observance of any other agreement contained herein or in any other Loan
Document, and such default shall continue unremedied for a period of 15
Business Days after written notice thereof shall have been given to the
Borrower by the Lender.
SECTION 8.1.5. Default on Other Indebtedness. A default shall
occur in the payment when due (subject to any applicable grace period),
whether by acceleration or otherwise, of any Indebtedness (other than
Indebtedness described in Section 8.1.1) of the Borrower having a principal
amount, individually or in the aggregate, in excess of $1,000,000, or a
default shall occur in the performance or observance of any obligation or
condition with respect to such Indebtedness if the effect of such default
is to accelerate the maturity of any such Indebtedness or to permit the
holder or holders of such Indebtedness, or any trustee or agent for such
holders, to cause such Indebtedness to become due and payable prior to its
expressed maturity in accordance with the terms of such Indebtedness.
SECTION 8.1.6. Judgments. Any judgment or order for the payment
of money in excess of $1,000,000 shall be rendered against the Borrower and
either
(a) enforcement proceedings shall have been commenced
by any creditor upon such judgment or order; or
(b) there shall be any period of 10 consecutive days
during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect.
SECTION 8.1.7. Pension Plans. Any of the following events shall
occur with respect to any Pension Plan:
(a) the institution of any steps by the Borrower, any
member of its Controlled Group or any other Person to terminate a
Pension Plan if, as a result of such termination, the Borrower
could be required to make a contribution to such Pension Plan, or
could reasonably expect to incur a liability or obligation to such
Pension Plan, in excess of $1,000,000; or
(b) a contribution failure occurs with respect to any
Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA.
<PAGE>
SECTION 8.1.8. Control of the Borrower. Any Change in Control
shall occur with respect to the Borrower.
SECTION 8.1.9. Bankruptcy, Insolvency, etc. The Borrower shall
(a) become insolvent or generally fail to pay, or admit
in writing its inability or unwillingness to pay, debts as they
become due;
(b) apply for, consent to, or acquiesce in, the
appointment of a trustee, receiver, sequestrator or other
custodian for the Borrower or any property of the Borrower, or
make a general assignment for the benefit of creditors;
(c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a
trustee, receiver, sequestrator or other custodian for the
Borrower or for a substantial part of the property of the
Borrower, and such trustee, receiver, sequestrator or other
custodian shall not be discharged within 60 days, provided that
the Borrower hereby expressly authorizes the Lender to appear in
any court conducting any relevant proceeding during such 60-day
period to preserve, protect and defend its rights under the Loan
Documents;
(d) permit or suffer to exist the commencement of any
bankruptcy, reorganization, debt arrangement or other case or
proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect of
the Borrower and, if any such case or proceeding is not commenced
by the Borrower, such case or proceeding shall be consented to or
acquiesced in by the Borrower or shall result in the entry of an
order for relief or shall remain for 60 days undismissed, provided
that the Borrower hereby expressly authorizes the Lender to appear
in any court conducting any such case or proceeding during such
60-day period to preserve, protect and defend its rights under the
Loan Documents; or
(e) take any corporate action authorizing, or in
furtherance of, any of the foregoing.
SECTION 8.1.10. Impairment of Security, etc. (a) Any Loan
Document, or any Lien granted thereunder, shall (except in accordance with
its terms), in whole or in part in any material respect, terminate, cease
to be effective or cease to be the legally valid, binding and enforceable
obligation of the Borrower; (b) the Borrower, or any other party shall,
directly or indirectly, contest in any manner such effectiveness, validity,
binding nature or enforceability; (c) or any Lien securing any Obligation
shall, in any material respect, cease to be a perfected first priority
Lien, subject only to those exceptions expressly permitted by such Loan
Document.
SECTION 8.1.11. Loss of a Material License. The Borrower shall
lose any license (and shall exhaust all appeal procedures to regain such
license) that could reasonably be expected to have a Material Adverse
Effect.
<PAGE>
SECTION 8.2. Action if Nonpayment, etc. If any Event of Default
described in Sections 8.1.1, 8.1.3, 8.1.5, 8.1.6, 8.1.8, 8.1.10 or 8.1.11
shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Lender may by notice to the Borrower declare all or any
portion of the outstanding principal amount of the Loan and other monetary
Obligations to be due and payable and/or the Commitment (if not theretofore
terminated) to be terminated, whereupon the outstanding principal amount of
such Loan and other Obligations which shall be so declared due and payable
shall be and become immediately due and payable, without further notice,
demand or presentment, and/or, as the case may be, the Commitment (if not
theretofore terminated) shall terminate.
SECTION 8.3. Action if Bankruptcy. If any Event of Default
described in clauses (a) through (d) of Section 8.1.9 shall occur, the
Commitment (if not theretofore terminated) shall automatically terminate
and the outstanding principal amount of the Loan and all other monetary
Obligations shall automatically be and become immediately due and payable,
without notice or demand.
SECTION 8.4. Action if Other Event of Default. If any Event of
Default (other than any Event of Default listed in Sections 8.2 and 8.3
above) shall occur for any reason, whether voluntary or involuntary, and be
continuing, the Obligations shall bear interest at the post-maturity rate
as described in Section 3.2.2 until such Event of Default has been cured or
waived by the Lender or is no longer continuing.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing
and consented to by the Borrower and the Lender. No failure or delay on the
part of the Lender or the holder of the Note in exercising any power or
right under this Agreement or any other Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power
or right preclude any other or further exercise thereof or the exercise of
any other power or right. No notice to or demand on the Borrower in any
case shall entitle it to any notice or demand in similar or other
circumstances. No waiver or approval by the Lender or the holder of the
Note under this Agreement or any other Loan Document shall, except as may
be otherwise stated in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 9.2. Notices. All notices and other communications provided
to any party hereto under this Agreement or any other Loan Document shall
be in writing or by facsimile and addressed, delivered or transmitted to
such party at its address, or facsimile number set forth below its
signature hereto or at such other address or facsimile number as may be
designated by such party in a notice to the other parties. Any notice, if
<PAGE>
mailed and properly addressed with postage prepaid or if properly addressed
and sent by pre-paid courier service, shall be deemed given when received;
any notice, if transmitted by facsimile, shall be deemed given when
transmitted.
SECTION 9.3. Payment of Costs and Expenses. The Borrower agrees to
pay on demand all reasonable expenses of the Lender (including the fees and
out-of-pocket expenses of counsel to the Lender and of local counsel, if
any, who may be retained by counsel to the Lender) up to $___________ in
connection with
(a) the negotiation, preparation, execution and delivery
of this Agreement and of each other Loan Document, including
schedules and exhibits, and any amendments, waivers, consents,
supplements or other modifications to this Agreement or any other
Loan Document as may from time to time hereafter be required,
whether or not the transactions contemplated hereby are
consummated, and
(b) the filing, recording, refiling or rerecording of the
Mortgage and the Security Agreement and/or any Uniform Commercial
Code financing statements relating thereto and all amendments,
supplements and modifications to any thereof and any and all other
documents or instruments of further assurance required to be filed
or recorded or refiled or rerecorded by the terms hereof or of the
Mortgage or the Security Agreement, and
(c) the preparation and review of the form of any
document or instrument relevant to this Agreement or any other
Loan Document.
The Borrower further agrees to pay, and to save the Lender harmless from
all liability for, any stamp or other taxes which may be payable in
connection with the execution or delivery of this Agreement, the borrowings
hereunder, or the issuance of the Note or any other Loan Documents. The
Borrower also agrees to reimburse the Lender upon demand for all reasonable
out-of-pocket expenses (including attorneys' fees and legal expenses)
incurred by the Lender in connection with (x) the negotiation of any
restructuring or "work-out", whether or not consummated, of any Obligations
and (y) the enforcement of any Obligations.
SECTION 9.4. Indemnification. In consideration of the execution
and delivery of this Agreement by the Lender and the extension of the
Commitment, the Borrower hereby indemnifies, exonerates and holds the
Lender and each of its officers, directors, employees and agents
(collectively, the "Indemnified Parties") free and harmless from and
against any and all actions, causes of action, suits, losses, costs,
liabilities and damages, and expenses incurred in connection therewith
(irrespective of whether any such Indemnified Party is a party to the
action for which indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a
result of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of any Loan;
<PAGE>
(b) the entering into and performance of this Agreement
and any other Loan Document by any of the Indemnified Parties
(including any action brought by or on behalf of the Borrower as
the result of any determination by the Lender pursuant to Article
V not to fund the Loan);
(c) any investigation, litigation or proceeding related
to the Acquisition;
(d) any investigation, litigation or proceeding related
to any environmental cleanup, audit, compliance or other matter
relating to the protection of the environment or the Release by
the Borrower of any Hazardous Material; or
(e) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releases
from, any real property owned or operated by the Borrower thereof
of any Hazardous Material (including any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising
under any Environmental Law), regardless of whether caused by, or
within the control of, the Borrower,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
gross negligence or wilful misconduct, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrower
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
SECTION 9.5. Survival. The obligations of the Borrower under
Sections 4.1, 9.3 and 9.4 shall in each case survive any termination of
this Agreement, the payment in full of all Obligations and the termination
of all Commitments. The representations and warranties made by the Borrower
in this Agreement and in each other Loan Document shall survive the
execution and delivery of this Agreement and each such other Loan Document.
SECTION 9.6. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such provision and such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or such Loan
Document or affecting the validity or enforceability of such provision in
any other jurisdiction.
SECTION 9.7. Headings. The various headings of this Agreement and
of each other Loan Document are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or such other Loan
Document or any provisions hereof or thereof.
SECTION 9.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts,
each of which shall be deemed to be an original and all of which shall
constitute together but one and the same agreement. This Agreement shall
become effective when counterparts hereof executed on behalf of the
<PAGE>
Borrower and the Lender (or notice thereof satisfactory to the Lender)
shall have been received by the Lender and notice thereof shall have been
given by the Lender to the Borrower.
SECTION 9.9. Governing Law; Entire Agreement. THIS AGREEMENT,
THE NOTE AND EACH OTHER LOAN DOCUMENT (OTHER THAN THE MORTGAGE)
SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement, the Note
and the other Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and supersede any
prior agreements, written or oral, with respect thereto.
SECTION 9.10. Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that neither the
Borrower nor the Lender may assign or transfer its rights or obligations
hereunder without the prior written consent of the other party (other than
the collateral assignment of the Note by the Lender to CIBC as required by
an existing credit agreement between the Lender and CIBC).
SECTION 9.11.Confidentiality. The Lender shall hold all non-public
information (which has been identified as such by the Borrower) obtained
pursuant to the requirements of this Agreement in accordance with its
customary procedures for handling confidential information of this nature
and in any event may make disclosure to any of its regulators, Affiliates,
outside auditors, counsel and other professional advisors in connection
with this Agreement or as reasonably required by any bona fide transferee,
participant or assignee or as required or requested by any governmental
agency or representative thereof or pursuant to legal process; provided,
however, that
(a) unless specifically prohibited by applicable law or
court order, the Lender shall notify the Borrower of any request
by any governmental agency or representative thereof (other than
any such request in connection with an examination of the
financial condition of the Lender by such governmental agency) for
disclosure of any such non-public information prior to disclosure
of such information;
(b) prior to any such disclosure pursuant to this Section
9.11, the Lender shall require any such bona fide transferee,
participant and assignee receiving a disclosure of non-public
information to agree in writing
(i) to be bound by this Section 9.11; and
(ii) to require such Person to require any other
Person to whom such Person discloses such non-public
information to be similarly bound by this Section 9.11;
and
<PAGE>
(c) except as may be required by an order of a court of
competent jurisdiction and to the extent set forth therein, the
Lender shall not be obligated or required to return any materials
furnished by the Borrower.
SECTION 9.12. Other Transactions. Nothing contained herein shall
preclude the Lender from engaging in any transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with the
Borrower or any of its Affiliates in which the Borrower or such Affiliate
is not restricted hereby from engaging with any other Person.
SECTION 9.13 Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER
OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS
OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
LENDER'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR
THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH
LITIGATION. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN
OR WITHOUT OF THE STATE OF NEW YORK. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE
EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE
BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 9.14. Waiver of Jury Trial. THE LENDER AND THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
<PAGE>
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER
OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED
FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER
PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS
AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
SECTION 9.15. Limitation of Liability.
(a) Notwithstanding any provision in the Loan Documents
to the contrary, except as set forth in subsections (b) and (c),
the Borrower shall not be personally liable for payment of the
Loan or performance of the Obligations and the Loan is intended to
be secured by Liens in favor of the Lender which are purchase
money security interests.
(b) The limitation of liability in Section 9.15(a) will
not affect or impair (i) the lien of the Mortgage, the Ship
Mortgage or the Security Agreement or the Lender's other rights
and remedies under the Loan Documents, including the Lender's
right to commence an action to foreclose (by judicial foreclosure,
power of sale or otherwise) any Lien or security interest the
Lender has under the Loan Documents; (ii) the validity of the Loan
Documents or the Obligations or (iii) the Lender's right to
present and collect on any letter of credit or other credit
enhancement document held by the Lender in connection with the
Obligations.
(c) The following are excluded and excepted from the
limitation of liability of the Borrower in Section 9.15(a) and the
Lender may recover personally against the Borrower for the
following:
(i) all losses suffered and liabilities and
expenses incurred by the Lender relating to any fraud or
intentional misrepresentation or omission by the Borrower
or any of the officers or directors of the Borrower in
connection with (A) the performance of any of the
conditions to the Lender making the Loan; (B) any
inducements to the Lender to make the Loan; (C) the
execution and delivery of the Loan Documents; (D) any
certificates, representations or warranties given in
connection with the Loan; or (E) the Borrower's
performance of the Obligations;
(ii) the cost of remediation of any
environmental activity affecting the property subject to
the Mortgage, any diminution in the value of the property
subject to the Mortgage arising from any environmental
activity affecting the property subject to the Mortgage
and any other losses suffered and liabilities and
<PAGE>
expenses incurred by the Lender relating to a default under
Section 6.12 or Section 7.1.6;
(iii) the replacement cost of any fixtures or
personal property removed by the Borrower or its
Affiliates from the property subject to the Mortgage
after an Event of Default occurs and is continuing;
(iv) all losses suffered and liabilities and
expenses incurred by the Lender relating to any acts or
omissions by the Borrower that result in waste (including
economic and non-physical waste) on the property subject
to the Mortgage;
(v) all proceeds that are not applied in
accordance with the Mortgage or not paid to the Lender as
required under the Mortgage; and
(vi) all losses suffered and liabilities and
expenses incurred by the Lender relating to any default
by the Borrower under any of the provisions of any Loan
Document relating to ERISA.
(d) Nothing under Section 9.15(a) will be deemed to be a
waiver of any right which the Lender may have under Section
506(a), 506(b), 1111(b) or any other provisions of the Bankruptcy
Code or under any other applicable law relating to bankruptcy or
insolvency to file a claim for the full amount of the Obligations
or to require that all collateral will continue to secure all of
the Obligations in accordance with the Loan Documents.
SECTION 9.16. Interest Rates.
(a) It is the intention of the parties hereto that the
Loan made hereunder shall conform strictly to applicable usury
laws. Accordingly, none of the terms and provisions contained in
this Agreement or any of the other Loan Documents shall ever be
construed to create a contract to pay interest to the Lender for
the use, forbearance or detention of money at a rate in excess of
the highest lawful rate applicable (the "Maximum Lawful Rate");
for purposes of this Section 9.16, "interest" shall include the
aggregate of all charges or other consideration which constitute
interest under applicable laws (whether or not denominated as
interest) and are contracted for, taken, reserved, charged or
received under this Agreement or the other Loan Documents or
otherwise in connection with the transactions contemplated by this
Agreement and the other Loan Documents. If as a result of
prepayment, acceleration of maturity or otherwise, the effective
rate of interest which would otherwise be payable to the Lender
under this Agreement or any other Loan Document would exceed the
Maximum Lawful Rate for the period during which the principal
amount of the Loan was outstanding, or if the Lender shall receive
moneys or other consideration that are deemed to constitute
interest that would increase the effective rate of interest
payable by the Borrower to the Lender under this Agreement or any
other Loan Document to a rate in excess of the Maximum Lawful Rate
<PAGE>
for the period during which the principal amount of the Loan was
outstanding, then (i) the amount of interest that would otherwise
be payable by the Borrower to the Lender under this Agreement and
the other Loan Documents shall be reduced to the Maximum Lawful
Rate, and (ii) any interest paid by the Borrower to the Lender in
excess of the Maximum Lawful Rate shall be credited by the Lender
as an optional prepayment of the Loan and, thereafter, shall be
returned to the Borrower. All calculations of the rate or amount
of interest contracted for, taken, reserved, charged or received
by the Lender under this Agreement and the other Loan Documents
that are made for the purpose of determining whether such rate or
amount exceeds the Maximum Lawful Rate shall be made, to the
extent permitted by applicable law, by amortizing, prorating,
allocating and spreading during the full stated term of the Loan
owed to the Lender.
(b) If at any time and from time to time (i) the amount
of interest payable to the Lender on any date would otherwise
exceed the Maximum Lawful Rate, the amount of interest payable to
the Lender shall be limited to the Maximum Lawful Rate pursuant to
paragraph (a) above and (ii) in respect of any subsequent interest
computation period, the amount of interest otherwise payable to
the Lender would be less than the amount of interest payable to
the Lender computed at the Maximum Lawful Rate, then the amount of
interest payable in respect of such subsequent computation period
shall be computed at the Maximum Lawful Rate until the earlier to
occur of (x) the date upon which the total amount of interest
payable to the Lender shall equal the total amount of interest
that would have been payable to the Lender if the total amount of
interest had been computed without giving effect to paragraph (a)
above, or (y) payment in full of the Loan held by the Lender.
SECTION 9.17. Iowa Gaming Licenses. No interest of the Lender created
or arising under this Agreement or any other Loan Document shall attach to
any gaming license issued by the State of Iowa.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of
the day and year first above written.
GAMBLERS SUPPLY MANAGEMENT COMPANY
By:---------------------------------------------
Title:
Address: ------------------------------------
------------------------------------
Facsimile No.:----------------------------------
Attention: -------------------------------------
with copies to:
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York
Attention: Robert M. Friedman
Facsimile No.: (212) 758-9526
ISLE OF CAPRI CASINOS, INC.
By:----------------------------------------------
Title:
Address: 711 Dr. Martin Luther King, Jr. Boulevard
Biloxi, Mississippi 39530
Attention: Chief Executive Officer
Facsimile No.: (228) 436-5998
<PAGE>
with copies to:
Isle of Capri Casinos, Inc.
2200 Corporate Boulevard, N.W.
Suite 310
Boca Raton, Florida 33431
Attention: Allan B. Solomon
Facsimile No.: (561) 995-6665
Mayer, Brown & Platt
190 South LaSalle Street, Suite 3100
Chicago, Illinois 60603
Attention: Paul W. Theiss
Facsimile No.: (312) 701-7711
<PAGE>
SCHEDULE I
Disclosure Schedule
for
U.S. $16,300,000
CREDIT AGREEMENT
dated as of October __, 1999
between
GAMBLERS SUPPLY MANAGEMENT COMPANY
as the Borrower,
and
ISLE OF CAPRI CASINOS, INC.
as the Lender
<PAGE>
The following schedules refer to the Credit Agreement, dated as of
October __, 1999 (the "Credit Agreement"), Gamblers Supply Management
Company, as the Borrower, and Isle of Capri Casinos, Inc., as the Lender.
This Disclosure Schedule is qualified in its entirety by references to
specific provisions of the Credit Agreement and is not intended to
constitute, and shall not be construed as constituting any representations
or warranties of the Borrower, except as and to the extent provided in the
Credit Agreement.
To the extent more than one representation and warranty contained in
the Credit Agreement require the same disclosure, the appearance of such
disclosure on any single item herein shall serve as disclosure for all
other representations and warranties to which such disclosure applies.
Except to the extent explicitly provided in the respective schedule,
inclusion of any item in the schedules: (1) does not represent a
determination by the Borrower that such item is material nor shall it be
deemed to establish a standard of materiality (it being the intent that
Borrower shall not be penalized for having disclosed more than may be
required by the terms of the Credit Agreement), (2) does not represent a
determination by the Borrower that such item did not arise in the ordinary
course of business, and (3) shall not constitute, or be deemed to be, an
admission concerning such item by the Borrower. The items in the schedules
are descriptions of instruments or brief summaries of certain aspects of
the Borrower's business. Such descriptions and summaries are qualified in
their entirety by reference to the more detailed information in documents
previously delivered or made available to the Lender and its
representatives.
Capitalized terms used but not defined herein shall have the same
meanings ascribed to them in the Credit Agreement. The headings in the
following schedules are for reference only and shall not affect the
disclosures contained therein.
<PAGE>
Item 6.3
Government Approvals
The Borrower and Sodak Gaming, Inc. ("Sodak") must notify the U.S. Coast
Guard prior to a change in ownership of the Miss Marquette Riverboat.
The Borrower and Sodak must file with the Federal Trade Commission and
the Antitrust Division of the Department of Justice a premerger
notification and report form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
The Iowa Racing and Gaming Commission must determine that Parent is a
suitable buyer and approve the Parent's purchase of the shares of the
Borrower's stock from Sodak.
Item 6.5
Financial Information
The Borrower has settled a dispute relating to an Iowa sales/use tax
audit for the 1995 and 1996 tax years and has paid $150,000 in final
settlement thereof.
Item 6.7
Litigation
The Iowa Department of Natural Resources (the "DNR") has notified
Sodak and the Borrower that a treatment agreement is required to be entered
into between the City of Marquette and the owner of the Miss Marquette
Riverboat, whereby the latter shall quantify and describe its discharge to
the City and the City agrees to treat such discharge based on the disclosed
volume and quantities.
It is anticipated that pursuant to the treatment agreement and a side
agreement relating to rate structure, increased treatment rates and
surcharges will be charged to the Riverboat Complex. The treatment
agreement and side agreement have not yet been concluded. No draft of the
side agreement has been prepared or exchanged between the parties as yet.
The following actions are pending:
Case: Plaintiffs Byron Clements and Mark Clements v. Defendants Gamblers
Supply Management Company and Sodak Gaming Iowa, Inc. a/k/a Sodak Gaming, Inc.
Byron Clements discharge: October 2, 1996
Mark Clements discharge: July 28, 1996
Date Filed: October 1, 1997
8
<PAGE>
Court and File Number: Clayton County Iowa District Court,
Case No. LACV005269
Claim and Demand: Plaintiffs allege wrongful discharge.
No specific monetary amount
of damages reported.
Insurance Company: Miss Marquette's insurance carrier has
declined coverage.
Sodak Counsel: E. David Wright
Dubuque, Iowa
(315) 556-6433
Status/outcome: Summary Judgment was entered in favor of
Defendants, Plaintiffs filed a Notice of
Appeal as of October 9, 1998. Briefs have
been filed with Iowa Supreme Court, the oral
arguments are scheduled for March 2000.
Case: Plaintiff Pauline Smith v. Defendant Miss Marquette Riverboat Casino
---------------------------------------------------------------------
Date of Occurrence: July 13, 1995
Date Filed: July 11, 1997
Court and File Number: Clayton County Iowa District Court, Case
No. LACV005204
Claim and Demand: Plaintiff claims she suffered serious and
permanent personal injuries. Plaintiff's
initial settlement demand is in the amount of
$85,000.
Insurance Company: Reliance Insurance Company
Juanna Kuby
233 South Wacker Avenue
Chicago, IL 60606
Sodak Counsel: E. David Wright
Dubuque, Iowa
(319) 556-6433
Status/outcome: Pending
Case: Plaintiff Beulah Hanson v. Sodak Gaming Iowa, Inc., Gamblers
Supply Management Company and Upper Mississippi Gaming Corporation
- ----------------------------------------------------------------------------
Date of Occurrence: September 18, 1996
Date Filed: March 5, 1998
<PAGE>
Court and File Number: U.S. District Court Northern District of Iowa
Eastern Division, Case No. C98-1009-MIM.
Claim and Demand: Personal Injury Claim. No specific monetary
amount of damages reported.
Insurance Company: Zurich American Insurance Company
Ottis J. Parry
1450 American Lane
Schaumburg, IL 60173
(847) 605-7691
Sodak Counsel: E. David Wright
Dubuque, Iowa
(319) 556-6433
Anthony Todd Schneider
Chicago, IL
(312) 360-9500
Status/outcome: Pending
Case: Plaintiff Margot Palbicki v. Defendant Miss Marquette
------------------------------------------------------
Date Filed: September 21, 1998
Court and File Number: United States District Court for the
Northern District of Iowa, Case
No. C98-1033-MIM.
Claim and Demand: Jones Act Claim. No specific monetary amount
reported. of damages
Insurance Company: Zurich American Insurance Company
Carol Woo
1400 American Lane
Schaumburg, IL 60196-1056
(815) 439-6978
Sodak Counsel: E. David Wright
Dubuque, Iowa
(319) 556-6433
Status/outcome: Pending
<PAGE>
Case: Plaintiff Kristin L. Valentine v. Defendant Miss Marquette
----------------------------------------------------------
Date Filed: November 23, 1998
Court and File Number: United States District Court for the Western
District of Wisconsin,
Case No. 98C-0806-S.
Claim and Demand: Jones Act Claim. No specific monetary amount
reported of damages
Insurance Company: Zurich American Insurance Company Bill Watering
Sodak Counsel: Insurance Company will be appointing Counsel
Status/outcome: Pending
Case: Plaintiff Jill Wilt v. Defendant Miss Marquette
-----------------------------------------------
Date Filed: August 31, 1998
Court and File Number: United States District Court for the Northern
District of Iowa.
Claim and Demand: Jones Act Claim. No specific monetary amount
reported. of damages
Insurance Company: Zurich American Insurance Company
Carol Woo
Sodak Counsel: Insurance Company will be appointing Counsel
Status/outcome: Pending
In addition, the following claims have been made by customers against the
Borrower and have been referred to its insurer:
Allen Dorzaner
April 10, 1999
Said broke tooth while eating fish in buffet.
Charlene Swanson
July 5, 1999
Said burned by a cup of coffee.
<PAGE>
Rick Rosacker
July 12, 1999
Said automatic doors hit him.
No formal action has been taken with respect to any of these
claims and no additional information is known; however, the Borrower does
not expect any of these claims to have a Material Adverse Effect.
Item 6.10
Taxes
The Borrower has settled a dispute relating to an Iowa sales/use
tax audit for the 1995 and 1996 tax years and has paid $150,000 in final
settlement thereof.
The Borrower files a consolidated federal income tax return with
Sodak. Sodak allocates the consolidated provision for income tax to its
subsidiaries as if the subsidiaries filed separate federal income tax
returns. The current and deferred income tax expense allocated to the
Borrower for the year ended December 31, 1998 represents the income tax
expense realized by the consolidated group as a result of the Borrower's
1998 earnings. See the Borrower's financial statements and notes thereto
for more information.
Item 6.11
Employee Benefit Plans
The employees of the Borrower participate in the Sodak Gaming Inc.
Healthcare Plan which is a self-insured plan.
Item 6.12
Environmental Matters
The Iowa Department of Natural Resources (the "DNR") has notified
Sodak and the Borrower that a treatment agreement is required to be entered
into between the City of Marquette and the owner of the Miss Marquette
Riverboat, whereby the latter shall quantify and describe its discharge to
the City and the City agrees to treat such discharge based on the disclosed
volume and quantities.
It is anticipated that pursuant to the treatment agreement and a
side agreement relating to rate structure, increased treatment rates and
surcharges will be charged to the Riverboat Complex. The treatment
agreement and side agreement have not yet been concluded. No draft of the
side agreement has been prepared or exchanged between the parties as yet.
<PAGE>
Item 7.2.2(b)
Indebtedness to be Paid
None.
Item 7.2.2(c)
Ongoing Indebtedness
1. Chester and Geneva Busse indebtedness in the amount of approximately
$642,125.
2. Heller Capital Lease indebtedness in the amount of approximately
$4,250,000.
3. The Sodak Gaming Inc. Amended and Restated Credit Agreement among
Seller, Comerica Bank Midwest, as agent bank, and certain syndicate banks
dated February 21, 1996 is secured by a first preferred ship mortgage on
the Miss Marquette Riverboat. Sodak has obtained the consent of Comerica
Bank Midwest to the contribution of the Miss Marquette Riverboat to the
Borrower and the subsequent sale of the Borrower. In connection with the
contribution of the Miss Marquette Riverboat to the Borrower, Comerica Bank
Midwest will release its first preferred ship mortgage on the Miss
Marquette Riverboat.
Item 7.2.3
Liens
1. Approximately $642,125 payable pursuant to a contract with Chester and
Geneva Busse, which is secured by the Port of Marquette hotel real estate.
2. The Sodak Gaming Inc. Amended and Restated Credit Agreement among
Seller, Comerica Bank Midwest, as agent bank, and certain syndicate banks
dated February 21, 1996 is secured by a first preferred ship mortgage on
the Miss Marquette Riverboat. Sodak has obtained the consent of Comerica
Bank Midwest to the contribution of the Miss Marquette Riverboat to the
Borrower and the subsequent sale of the Borrower. In connection with the
contribution of the Miss Marquette Riverboat to the Borrower, Comerica Bank
Midwest will release its first preferred ship mortgage on the Miss
Marquette Riverboat.
3. The Master Lease Agreement with PDS Financial Corporation dated June 30,
1997 (subsequently assigned to Heller Financial Corporation) is secured by
the gaming equipment and office equipment on the Miss Marquette Riverboat.
4. A lien search has revealed the existence of the following two liens.
Although the management of the Borrower was not aware of such liens, it
believes that they originated in connection with debts that have now been
paid off. Management will seek to have the filings made that are necessary
to remove these liens.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Debtor Secured Party Filing Number Filing Date Document Type
- -------------------------------------------------------------------------------------- ----------------------------
Miss Marquette Mikohn Gaming 00K659915 06/23/1995 Financing Statement
Corporation
- -------------------------------------------------------------------------------------- ----------------------------
Gambler Supply Associates Capital 00K587025 10/21/1994 Financing Statement
Management Co. Services Corp.
- -------------------------------------------------------------------------------------- ----------------------------
</TABLE>
Item 7.2.5
Investments
None.
Item 7.2.8
Rental Obligations
The Borrower is party to a lease with the City of Marquette that
obligates the Borrower to make the following payments: (i) $180,000 per
annum; (ii) $0.50 per customer who enters the Miss Marquette Riverboat; and
(iii) a percentage of the net gaming receipts (as defined in the lease)
from the Miss Marquette Riverboat equal to (A) 2.5% of net gaming receipts
greater than $20,000,000 up to $40,000,000, (B) 5.0% of net gaming receipts
greater than $40,000,000 up to $60,000,000, and (C) 7.5% of net gaming
receipts greater than $60,000,000.
The Borrower paid $759,000 in 1998 pursuant to this lease.
<PAGE>
EXHIBIT A
NOTE
$16,300,000 October , 1999
FOR VALUE RECEIVED, the undersigned, GAMBLERS SUPPLY MANAGEMENT
COMPANY, a South Dakota corporation (the "Borrower"), promises to pay to
the order of ISLE OF CAPRI CASINOS, INC. (the "Lender") the principal sum
of SIXTEEN MILLION THREE HUNDRED THOUSAND DOLLARS ($16,300,000) or, if
less, the aggregate unpaid principal amount of the Loan shown on the
schedule attached hereto (and any continuation thereof) made by the Lender
pursuant to that certain Credit Agreement, dated as of October ___, 1999
(together with all amendments and other modifications, if any, from time to
time thereafter made thereto, the "Credit Agreement"), between the Borrower
and the Lender, payable as set forth in the Credit Agreement, with a final
installment (in the amount necessary to pay in full this Note) due and
payable on or before the Maturity Date.
The Borrower also promises to pay interest on the unpaid principal
amount hereof from time to time outstanding from the date hereof until
maturity (whether by acceleration or otherwise) and, after maturity, until
paid, at the rates per annum and on the dates specified in the Credit
Agreement.
Payments of both principal and interest are to be made in lawful
money of the United States of America in same-day or immediately-available
funds to the account designated by the Lender pursuant to the Credit
Agreement.
This Note is the Note referred to in, and evidences Indebtedness
incurred under, the Credit Agreement, to which reference is made for a
description of the security for this Note and for a statement of the terms
and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by
this Note and on which such Indebtedness may be declared to be immediately
due and payable. Unless otherwise defined, terms used herein have the
meanings provided in the Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise,
severally waive presentment for payment, demand, protest and notice of
dishonor.
A-1
<PAGE>
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
GAMBLERS SUPPLY MANAGEMENT
COMPANY
By: ------------------------------------------------
Title:-----------------------------------------------
A-2
<PAGE>
LOAN AND PRINCIPAL PAYMENTS
Amount of Unpaid Notation
Amount of Principal Principal Made
Date Loan Made Repaid Balance By
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
A-3
<PAGE>
EXHIBIT B
BORROWING REQUEST
Isle of Capri Casinos, Inc.
711 Dr. Martin Luther King, Jr. Boulevard
Biloxi, Mississippi 39530
Attention: Chief Executive Officer
GAMBLERS SUPPLY MANAGEMENT COMPANY
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to Section 2.2
of the Credit Agreement, dated as of October __, 1999 (together with all
amendments, if any, from time to time made thereto, the "Credit
Agreement"), between Gamblers Supply Management Company, a South Dakota
corporation (the "Borrower"), and you. Unless otherwise defined herein or
the context otherwise requires, terms used herein have the meanings
provided in the Credit Agreement.
The Borrower hereby requests that the Loan be made in the
aggregate principal amount of $ ________________ on _____________, 1999.
The Borrower hereby acknowledges that, pursuant to Section 5.1.12
of the Credit Agreement, each of the delivery of this Borrowing Request and
the acceptance by the Borrower of the proceeds of the Loan requested hereby
constitute a representation and warranty by the Borrower that, on the date
of the Loan, and before and after giving effect thereto and to the
application of the proceeds therefrom, all statements set forth in Section
5.1.11 are true and correct in all material respects.
The Borrower agrees that if prior to the time of the Loan
requested hereby any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately so notify you.
Except to the extent, if any, that prior to the time of the Loan requested
hereby you shall receive written notice to the contrary from the Borrower,
each matter certified to herein shall be deemed once again to be certified
as true and correct at the date of such Loan as if then made.
B-1
<PAGE>
Please wire transfer the proceeds of the Loan to the accounts of
the following persons at the financial institutions indicated respectively:
Amount to be Person to be Paid Name, Address, etc.
Transferred Name Account No. of Transferee Lender
- ----------- ---- ---------- ---------------------
$______ _____ _______ _____________________
_____________________
Attention: __________
_____ _____ _______ _______________________
_______________________
Attention: ____________
Balance of _______________________
such proceeds The Borrower ______ _______________________
Attention:
The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be
made, by its duly Authorized Officer this day of , 1999.
GAMBLERS SUPPLY MANAGEMENT
COMPANY
By:-----------------------------
Title:
B-2
<PAGE>
EXHIBIT C
Certificate of Authorized Officer
I, the undersigned, [Assistant] Secretary of Gamblers Supply
Management Company, a corporation (the "Borrower"), DO HEREBY CERTIFY that:
1. This Certificate is furnished pursuant to Section 5.1.1 of that
certain Credit Agreement, dated as of October__ , 1999 (the "Credit
Agreement"), between the Borrower and Isle of Capri Casinos, Inc. (the
"Lender"). Unless otherwise defined herein, capitalized terms used in this
Certificate have the meanings assigned to such terms in the Credit
Agreement.
2. There have been no amendments to the Articles of Incorporation
of the Borrower since ______________ , 19 ___.
3. Attached hereto as Exhibit I is a true, correct and complete
copy of the by-laws of the Borrower as in effect on the date hereof.
4. Attached hereto as Exhibit II is a true, correct and complete
copy of resolutions duly adopted at a meeting of the Board of Directors of
the Borrower, convened and held on the __ day of __________, 1999, which
resolutions have not been revoked, modified, amended or rescinded and are
still in full force and effect, and the Credit Agreement, the Note and the
other Loan Documents to which the Borrower is a party are in substantially
the forms of those documents submitted to and approved by the Board of
Directors of the Borrower at such meeting.
5. The persons named in Exhibit III attached hereto have been duly
elected, have been duly qualified as and at all times since _____________ ,
1999 (to and including the date hereof), have been officers of the Borrower
holding the respective offices set forth therein opposite their names, and the
signatures set forth therein opposite their names are their genuine
signatures.
6. I know of no proceeding for the dissolution or liquidation of
the Borrower or threatening its existence.
WITNESS my hand and seal of the Borrower this __ day of ______, 1999.
__________________________________
[Assistant] Secretary
[Affix Corporate Seal]
C-1
<PAGE>
I, the undersigned, [Vice] President of the Borrower, DO HEREBY
CERTIFY that:
1. is [a] the duly elected and qualified [Assistant] Secretary of
the Borrower and the signature above is his genuine signature.
2. The representations and warranties on the part of the Borrower
contained in the Credit Agreement are as true and correct at and as of the
date hereof as though made on and as of the date hereof.
3. No Default has occurred and is continuing, or would result from
the consummation of the Loan on this date.
WITNESS my hand on this ____ day of ________________ , 1999.
[Vice] President
C-2
<PAGE>
EXHIBIT I
Copy of the by-laws of Gamblers Supply Management Company
<PAGE>
EXHIBIT II
Resolutions of the Board of Directors of Gamblers Supply Management
Company
WHEREAS, there has been presented to this meeting a form of
Credit Agreement (draft of _____________ , 19 ___ ) (the "Credit Agreement"),
between this Corporation and Isle of Capri Casinos, Inc. (the "Lender"),
providing for the making by the Lender of a Loan (as defined in the Credit
Agreement) to this Corporation; and
WHEREAS, it is proposed that payment of this
Corporation's obligations under and in connection with the Credit Agreement
and the promissory note to be executed by this Corporation pursuant thereto
be secured by the following collateral security documents:
(1) A certain Mortgage, substantially in the form of the
draft Mortgage, dated ________, 1999 (the "Mortgage"),
presented to this meeting,
(2) A certain Ship Mortgage, substantially in the form of
the draft Ship Mortgage, dated ___________ , 1999 (the "Ship
Mortgage"), presented to this meeting, and
(3) A certain Security Agreement, substantially in the form
of the draft Security Agreement, dated ___________, 1999 (the
"Security Agreement"), presented to this meeting.
NOW, THEREFORE, BE IT RESOLVED, that the President or any Vice
President of this Corporation, and each of them, be and hereby is
authorized to execute, in the name and on behalf of this Corporation, and
deliver a credit agreement between this Corporation and the Lender,
substantially in the form of the Credit Agreement presented to this
meeting, except for such changes, additions and deletions as to any or all
of the terms and provisions thereof as the officer executing the Credit
Agreement on behalf of this Corporation shall deem proper, such execution
by such officer of the Credit Agreement to be conclusive evidence that such
officer deems all of the terms and provisions thereof to be proper;
FURTHER RESOLVED, that the President or any Vice President of this
Corporation, and each of them, be and hereby is authorized to borrow from
time to time on behalf of this Corporation the amounts permitted or
provided to be borrowed by this Corporation under the Credit Agreement
executed by this Corporation pursuant to these resolutions, and to execute
and deliver on behalf of this Corporation the promissory note payable to
the order of the Lender, substantially in the form provided for as an
exhibit to the Credit Agreement, evidencing such borrowings; and
FURTHER RESOLVED, that the President or any Vice President and the
Secretary or any Assistant Secretary of this Corporation, and each of them,
<PAGE>
be and hereby is authorized to execute, in the name and on behalf of this
Corporation and under its corporate seal, and deliver to the Lender [and
trustees for the Lender], on behalf of and in the name of this Corporation
and under its corporate seal, a mortgage, substantially in the form of the
Mortgage presented to this meeting, except for such changes, additions and
deletions as to any or all of the terms and provisions thereof as the
officers executing such instrument on behalf of this Corporation shall deem
proper, such execution by such officers of such instrument to be conclusive
evidence that such officers deem all of the terms and provisions thereof to
be proper;
FURTHER RESOLVED, that the President or any Vice President of this
Corporation, and each of them, be and hereby is authorized to execute, in
the name and on behalf of this Corporation, and deliver a security
agreement, substantially in the form of the Security Agreement presented to
this meeting, except for such changes, additions and deletions as to any or
all of the terms and provisions thereof as the officer executing the
Security Agreement on behalf of this Corporation shall deem proper, such
execution by such officer of the Security Agreement to be conclusive
evidence that such officer deems all of the terms and provisions thereof to
be proper; and
FURTHER RESOLVED, that the President or any Vice President of this
Corporation, and each of them, be and hereby is authorized to execute, in
the name and on behalf of this Corporation, and deliver a ship mortgage,
substantially in the form of the Ship Mortgage presented to this meeting,
except for such changes, additions and deletions as to any or all of the
terms and provisions thereof as the officer executing the Ship Mortgage on
behalf of this Corporation shall deem proper, such execution by such
officer of the Ship Mortgage to be conclusive evidence that such officer
deems all of the terms and provisions thereof to be proper; and
FURTHER RESOLVED, that each and every officer of this Corporation
be and hereby is authorized in the name and on behalf of this Corporation
from time to time to take such actions and to execute and deliver such
certificates, instruments, notices and documents as may be required or as
such officer may deem necessary, advisable or proper in order to carry out
and perform the obligations of this Corporation under the Credit Agreement,
the Mortgage, the Ship Mortgage and the Security Agreement executed by this
Corporation pursuant to these resolu tions, or under any other instrument
or document executed pursuant to or in connection with the Credit
Agreement, the Mortgage, the Ship Mortgage and the Security Agreement; all
such actions to be performed in such manner, and all such certificates,
instruments, notices and documents to be executed and delivered in such
form, as the officer performing or executing the same shall approve, the
performance or execution thereof by such officer to be conclusive evi dence
of the approval thereof by such officer and by this Board of Directors.
<PAGE>
EXHIBIT III
Name of Officer Office Signature
- --------------- ------ ---------
- -------------------- ------------------- --------------------
- -------------------- ------------------- --------------------
- -------------------- ------------------- --------------------
IMMEDIATE RELEASE
- -----------------
ISLE OF CAPRI CASINOS, INC. SIGNS
DEFINITIVE AGREEMENT TO ACQUIRE
LADY LUCK GAMING CORPORATION
Biloxi, Mississippi, October 6, 1999. Isle of Capri Casinos, Inc.
(NASDAQ: ISLE) and Lady Luck Gaming Corporation (NASDAQ: LUCK) announced
today that they have entered into a definitive agreement under which Isle
of Capri would acquire Lady Luck in a merger transaction. Under terms of
the agreement, Lady Luck's common shareholders will receive cash in the
amount of $12.00 per share for an aggregate share consideration of
approximately $59 million and Isle of Capri will assume all of Lady Luck's
outstanding debt in the amount of approximately $177 million. The agreement
also provides for the redemption of Lady Luck's outstanding preferred stock
in the amount of approximately $22 million. Closing is expected in the
first half of 2000 pending the approval of Lady Luck's shareholders and
gaming regulators and other contingencies. Andrew Tompkins, the owner of
approximately 46% of Lady Luck's common stock, has agreed to vote for the
transaction. Lady Luck operates dockside riverboat casinos and hotels in
Coahoma and Natchez, Mississippi, and owns a 50% interest in the Lady Luck
Casino and Hotel in Bettendorf, Iowa. Lady Luck also has agreements to
acquire the Miss Marquette Casino in Marquette, Iowa for $41.7 million and
the Lady Luck Casino & Hotel in downtown Las Vegas and certain intellectual
property for $45.5 million. Isle of Capri has also agreed to make a secured
loan of $16.3 million to Lady Luck in order to assist Lady Luck in
consummating the Miss Marquette acquisition in October.
Isle of Capri also announced that it has entered into a letter of
intent to acquire the other 50% interest in Lady Luck's Bettendorf, Iowa
facility and related real estate in exchange for approximately 6.3 million
shares of Isle of Capri common stock, subject to adjustment in certain
circumstances. This interest is owned by members of the family of Bernard
Goldstein, Isle of Capri's Chairman and Chief Executive Officer. This
transaction is contingent on the completion of Isle of Capri's acquisition
of Lady Luck, the approval of Isle of Capri's shareholders and other
contingencies. The sellers have the option to receive up to $10 million of
their consideration in cash rather than Isle of Capri stock.
CIBC World Markets has fully underwritten the financing for the
transactions and is also acting as financial advisor to Isle of Capri.
Wasserstein Perella & Co. and Onyx Partners, Inc. are acting as financial
advisors to Lady Luck.
Bernard Goldstein, Chairman of the Board and Chief Executive
Officer of Isle of Capri, said "We are pleased to have reached an agreement
with Lady Luck and to have the opportunity to offer our shareholders the
benefits of this natural combination. This acquisition takes Isle of Capri
to the next level and makes the Company, on a pro forma basis, one of the
ten largest public gaming companies in the United States."
"We believe that the transaction with Isle of Capri will benefit both
our company and its stockholders," said Mr. Tompkins, Chairman and Chief
Executive Officer of Lady Luck. "The $12.00 per share purchase price
represents a significant premium to our stockholders, the bridge
<PAGE>
financing being provided to Lady Luck by Isle of Capri will enable us to
conclude the Miss Marquette acquisition without being subject to the
uncertainties of the high-yield debt market, and in a consolidating
industry, our employees and customers will have an opportunity to be part
of a strong company with a significant position in the gaming industry."
"This transaction allows the Isle of Capri brand to expand to new
venues throughout the country in order to give a more diverse product mix
to our present and future data base customers," said Isle of Capri's
President and Chief Operating Officer, John M. Gallaway. "Lady Luck has a
talented management team and seasoned employees whom we welcome to our
ever-growing Isle family."
Isle of Capri owns and operates seven riverboat, dockside and
land-based casinos at six locations, including the Isle of Capri Casino,
Crowne Plaza Resort in Biloxi, Mississippi; the Isle of Capri Casino &
Hotel in Vicksburg, Mississippi; the Isle of Capri Casino & Hotel in
Bossier City, Louisiana; two riverboats operating as the Isle of Capri
Casino & Hotel in Lake Charles, Louisiana, the Isle of Capri Casino in
Black Hawk, Colorado (through a 57% owned subsidiary), and the Isle of
Capri Casino in Tunica, Mississippi. The Company also operates Pompano Park
Harness Racing Track in Pompano Beach, Florida and through a joint venture,
the Enchanted Capri cruise ship, that features an Isle of Capri Casino,
sailing from New Orleans, Louisiana.
This press release may be deemed to contain forward-looking statements
which are subject to change. These forward looking statements may be
significantly impacted, either positively or negatively by various factors,
including without limitation, licensing and other regulatory approvals,
financing sources, development and construction activities, costs and
delays, permits, competition and business conditions in the gaming
industry. Additional information concerning potential factors that could
affect the Isle of Capri's financial condition, results of operations and
expansion projects, is included in its filings with the Securities and
Exchange Commission, including but not limited to, Isle of Capri's Annual
Report on Form 10-K for the fiscal year ended April 25, 1999.
CONTACTS: Allan B. Solomon, Isle of Capri Casinos, Inc., Executive
Vice President, 561.995.6660.
Rex Yeisley, Isle of Capri Casinos, Inc., Chief Financial Officer,
228.436.7052.
Rory Reid, Lady Luck Gaming Corporation, Senior Vice President and
General Counsel, 800.634.6580
NOTE: Other Isle of Capri Casinos, Inc. press releases and a corporate
profile are available by fax at no charge. For a menu of available Isle of
Capri Casinos press releases, call 800.758.5804, ext. 145913 or log on to
http://www.prnewswire.com. Isle of Capri Casinos, Inc.'s home page is
http://www.theislecorp.com.
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