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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported): OCTOBER 5, 1999
LADY LUCK GAMING CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 000-22436 880295602
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
220 STEWART AVENUE
LAS VEGAS, NEVADA 89101
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(Address of principal executive offices) (Zip Code)
(702) 477-3000
----------------------------------------------------
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
Lady Luck Gaming Corporation (the "Registrant" or "Lady Luck") entered
into an Agreement and Plan of Merger dated as of October 5, 1999 (the "Agreement
and Plan of Merger") with Isle of Capri Casinos, Inc., a Delaware corporation
("Isle of Capri") and Isle Merger Corp., a Delaware corporation and wholly-owned
subsidiary of Isle of Capri ("Merger Sub"), providing for the merger of Merger
Sub with and into Lady Luck, with Lady Luck to be the surviving corporation (the
"Merger"). Pursuant to the Agreement and Plan of Merger, if the Merger is
consummated at the effective time of the Merger, the separate existence of the
Merger Sub will cease, Lady Luck will become a wholly-owned subsidiary of Isle,
and each share of Lady Luck common stock, par value $.006 (except as to shares
for which dissenters' rights have been properly asserted) will be converted into
the right to receive $12.00 per share in cash, for an aggregate cash
consideration of approximately $59 million. As a result of the Merger, Isle of
Capri will assume all of Lady Luck's outstanding debt in the amount of
approximately $177 million and will provide the funds necessary for Lady Luck to
redeem its outstanding preferred stock in the amount of approximately $22
million. The closing of the acquisition of Lady Luck is subject to a number of
customary conditions, including the approval of Lady Luck's stockholders and the
approval of or notification by the gaming regulators in each of the
jurisdictions in which Lady Luck and Isle of Capri operate. The Agreement and
Plan of Merger is attached hereto as Exhibit 2.1 and incorporated by reference
herein.
As permitted under Item 601(b) of Regulation S-K, the Agreement and
Plan of Merger is filed with this report without the disclosure schedules. The
Registrant will supply a copy of any omitted schedule or similar attachment to
the Securities and Exchange Commission upon request.
On October 6, 1999, a joint press release was issued by the Registrant
and Isle of Capri announcing the Merger. The press release is attached hereto as
Exhibit 99.1 and incorporated by reference herein.
In connection with entering into the Agreement and Plan of Merger,
Andrew H. Tompkins, the Chairman of the Board and Chief Executive Officer of the
Registrant, as well as the holder of approximately 46% of Lady Luck's common
stock, entered into a Stockholder Support Agreement to and for the benefit of
Isle of Capri pursuant to which he agreed to vote his shares of the Registrant's
common stock in favor of the approval and adoption of the Agreement and Plan of
Merger and the transactions contemplated therein and to sell to Isle of Capri
shares of Lady Luck equal to 34.99% of the issued and outstanding shares of the
Lady Luck common stock and, under certain circumstances, to sell the balance of
the shares of Lady Luck common stock owned by him. The Stockholder Support
Agreement is attached hereto as Exhibit 10.1 and incorporated by reference
herein.
Pursuant to the Stock Purchase Agreement, dated as of July 30, 1999,
entered into by and among Lady Luck, Sodak Gaming, Inc., a South Dakota
corporation ("Sodak") and Gamblers
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Supply Management Company, a South Dakota corporation ("Gamblers Supply"), a
wholly-owned subsidiary of Sodak. Lady Luck is to acquire all of the outstanding
capital stock of Gamblers Supply and the Miss Marquette riverboat casino and
related real property. Pursuant to the Agreement and Plan of Merger, Isle of
Capri agreed to make a secured loan of $16.3 million to Gamblers Supply in order
to enable Lady Luck to consummate its acquisition of Gamblers Supply and the
Miss Marquette Casino. The balance of the purchase price for Miss Marquette will
be funded out of Lady Luck's working capital. This loan will be evidenced by a
Credit Agreement to be entered into by Gamblers Supply and Isle of Capri which
is attached to the Agreement and Plan of Merger as an exhibit. The Credit
Agreement is attached hereto as Exhibit 10.2 and incorporated herein by
reference.
The Registrant, Gemini, Inc. ("Gemini"), International Marco Polo's
Services, Inc. ("IMPS") and Andrew H. Tompkins entered into a First Amendment
dated as of October 5, 1999, to amend certain provisions of the Amended and
Restated Purchase Agreement dated as of August 31, 1999, and effective as of
August 19, 1999, by and among the Registrant, Gemini, IMPS and Andrew H.
Tompkins which provides for the Registrant's purchase (the "Gemini Transaction")
of the Lady Luck Casino & Hotel in Las Vegas and associated real property and
Gemini's trademark assets, including the name "Lady Luck" and the mailing list
used in Lady Luck's business ("Trademark Assets"). The First Amendment provides
for a two part closing of the Gemini Transaction. The closing of the sale of
Gemini's Trademark Assets is scheduled to close concurrently with the Merger.
The closing of the sale of Lady Luck Casino & Hotel in Las Vegas is subject to
the approval of the Nevada gaming regulators and will close subsequent to
receipt of approval from the Nevada gaming regulators and the satisfaction of
customary closing conditions. The First Amendment is attached hereto as Exhibit
2.2 and incorporated by reference herein.
On October 5, 1999, the Registrant, Gemini and Andrew H. Tompkins
entered into an Exclusive License Agreement which contains the agreement of the
Registrant to grant an exclusive perpetual license to Gemini and Mr. Tompkins
for the use of the trademarks, including the "Lady Luck" name, and the customer
mailing list in connection with the Lady Luck Casino & Hotel in Las Vegas,
effective upon the closing of the Merger until the closing of the purchase of
the Las Vegas Casino & Hotel in Las Vegas. If Isle of Capri decides not to
purchase the Las Vegas Casino & Hotel, the Exclusive License Agreement remains
effective indefinitely, and subject to termination as provided for therein. The
Exclusive License Agreement is attached hereto as Exhibit 10.3 and incorporated
by reference herein.
On October 5, 1999, Isle of Capri and Andrew H. Tompkins entered into a
Consulting, Advisory and Noncompetition Agreement which provides for the
retention of Mr. Tompkins by Isle of Capri as a consultant and advisor to Isle
of Capri and Mr. Tompkins' agreement to act in such capacity, effective upon the
closing of the Merger. The Consulting, Advisory and Noncompetition Agreement is
attached hereto as Exhibit 10.4 and incorporated by reference herein.
3
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
EXHIBIT NO. DESCRIPTION
2.1 Agreement and Plan of Merger dated as of October 5, 1999
by and among the Registrant, Isle of Capri and Merger
Sub.
2.2 First Amendment dated as of October 5, 1999, to the
Amended and Restated Purchase Agreement dated as of
August 31, 1999, and effective as of August 19, 1999, by
and among the Registrant, Gemini, IMPS and Andrew H.
Tompkins.
10.1 Stockholder 4 dated as of October 5,
1999, by Andrew H. Tompkins to and for the benefit of
Isle of Capri.
10.2 Credit Agreement dated as of October , 1999, by and
between Gamblers Supply and Isle of Capri.
10.3 Exclusive License Agreement dated as of October 5, 1999,
by and between the Registrant, Gemini and Andrew H.
Tompkins.
10.4 Consulting, Advisory and Noncompetition Agreement dated
as of October 5, 1999, by and between Isle of Capri and
Andrew H. Tompkins.
99.1 Press Release dated October 6, 1999.
4
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LADY LUCK GAMING CORPORATION
By: /s/ Rory J. Reid
-------------------------------------
Rory J. Reid
Senior Vice President, Secretary
and General Counsel
Date: October , 1999
5
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
2.1 Agreement and Plan of Merger dated as of October 5, 1999 by and
among the Registrant, Isle of Capri and Merger Sub.
2.2 First Amendment dated as of October 5, 1999, to the Amended and
Restated Purchase Agreement dated as of August 31, 1999, and
effective as of August 19, 1999, by and among the Registrant,
Gemini, IMPS and Andrew H. Tompkins.
10.1 Stockholder Support Agreement dated as of October 5, 1999, by
Andrew H. Tompkins to and for the benefit of Isle of Capri.
10.2 Credit Agreement dated as of October , 1999, by and between
Gamblers Supply and Isle of Capri.
10.3 Exclusive License Agreement dated as of October 5, 1999, by and
between the Registrant, Gemini and Andrew H. Tompkins.
10.4 Consulting, Advisory and Noncompetition Agreement dated as of
October 5, 1999, by and between Isle of Capri and Andrew H.
Tompkins.
99.1 Press Release dated October 6, 1999.
6
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
dated as of October 5, 1999
among
ISLE OF CAPRI CASINOS, INC.,
ISLE MERGER CORP.
AND
LADY LUCK GAMING CORPORATION
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TABLE OF CONTENTS
Page
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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
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Page
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Section 3.16. Labor Matters..................................................21
Section 3.17. Insurance......................................................22
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
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Page
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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
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)
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Term Agreement Section
- ---- -----------------
Indemnified Parties 5.9(a)
IRS 3.7(c)
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)
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Term Agreement Section
- ---- -----------------
PBGC 3.14(f)
Permitted Encumbrances 3.8(b)
Physical Inspection and Review 6.3(d)
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
2
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undertake similar transactions having the effect of reorganizing the corporate
structure of Buyer and its Subsidiaries, from time to time after the Effective
Time.
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
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respect to Lady Luck Common Stock occurring after the date hereof and
prior to the Effective Time.
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.
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(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 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
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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 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.
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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
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
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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 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.
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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 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
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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 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.
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(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.
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
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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.
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
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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
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).
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(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 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.
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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:
"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.
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"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 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
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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
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
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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 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,
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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 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.
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(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.
(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
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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
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
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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 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
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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
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such review are disclosed in 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
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binding obligation of Buyer and Merger Sub, enforceable against
each of them in accordance with its terms.
(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.
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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 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).
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(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.
(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
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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 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.
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(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.
(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.
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(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 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
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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 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.
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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 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
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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 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.
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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.
(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
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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.
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
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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.
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
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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 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
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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.
(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
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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.
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
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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
(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,
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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 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).
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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;
(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
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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 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.
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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
with copies to:
Isle of Capri Casinos, Inc.
2200 Corporate Boulevard, N.W.
Suite 310
Boca Raton, Florida 33431
Attention: Allan B. Solomon
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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.
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.
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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
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EXHIBIT 2.2
FIRST AMENDMENT
TO
PURCHASE AGREEMENT
This First Amendment, dated as of October 5, 1999 (this "First
Amendment"), to the Amended and Restated Purchase Agreement, dated as of August
31, 1999, and effective as of August 19, 1999 (the "Amended and Restated
Purchase Agreement"), by and among Lady Luck Gaming Corporation, a Delaware
corporation (the "Purchaser"), and Gemini, Inc. (d/b/a Lady Luck Casino Hotel),
a Nevada corporation ("Gemini"), International Marco Polo's Services, Inc., a
Nevada corporation ("IMPS") (Gemini and IMPS being sometimes herein referred to
collectively as the "Companies" and individually as a "Company"), and Andrew H.
Tompkins (the "Seller"), is entered into by and among the Purchaser, the
Companies and the Seller.
RECITALS
A. The parties have heretofore entered into the Amended and Restated
Purchase Agreement, which provides, among other things, for the purchase and
sale of all of the issued and outstanding capital stock of the Companies, and
the sale and assignment of certain Real Property related to the operation of the
Lady Luck Casino & Hotel in Las Vegas, Nevada. All capitalized terms used herein
and not otherwise defined herein shall have the meanings ascribed to them in the
Amended and Restated Purchase Agreement.
B. Pursuant to that certain Agreement and Plan of Merger dated as of
the date hereof (the "Merger Agreement"), by and among Isle of Capri Casinos,
Inc., a Delaware corporation ("Isle of Capri"), Isle Merger Corp., a Delaware
corporation and a wholly owned subsidiary of Isle of Capri
-1-
<PAGE>
("Merger Sub"), and the Purchaser, Merger Sub shall be merged with and into the
Purchaser, the separate corporate existence of Merger Sub shall cease, and
Purchaser shall continue as the surviving corporation and as a wholly owned
subsidiary of Isle of Capri (the "Merger").
C. In connection with the Merger, Isle of Capri has agreed to enter
into that certain Credit Agreement establishing a $16,300,000 Senior Secured
Bridge Facility (the "Bridge Financing"), to be dated as of the date of funding
of the Bridge Financing, between Gamblers Supply Management Company, as
Borrower, and Isle of Capri, as Lender (the "Credit Agreement").
D. The Purchaser, the Companies and the Seller wish to enter into this
First Amendment to amend certain provisions of the Amended and Restated Purchase
Agreement as contemplated by the Merger Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Status of Amended and Restated Purchase Agreement. Except as set forth in
this First Amendment, the Amended and Restated Purchase Agreement and each of
the exhibits and schedules thereto shall remain in full force and effect and
shall not be waived, modified, superseded or otherwise affected by this First
Amendment. The terms of this First Amendment shall be effective as of the date
of this First Amendment; provided, that if the Merger is not consummated in
accordance with the terms of the Merger Agreement or if Isle of Capri defaults
upon its obligations under the Credit Agreement, the terms of this First
Amendment shall terminate with no further action
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by any of the parties to this Agreement and the terms of the Amended and
Restated Purchase Agreement prior to the execution of this First Amendment shall
be reinstated in their entirety; provided further, that notwithstanding the
foregoing, the amendments contained in this First Amendment to Sections 2.8(a),
2.9(a) and 6.9 of the Amended and Restated Purchase Agreement shall survive and
remain in full force and effect regardless of whether the Merger and Bridge
Financing are consummated. To the extent there are inconsistencies between the
terms of this First Amendment and the terms of the Amended and Restated Purchase
Agreement, the terms of this First Amendment shall prevail.
2. Amendments to the Amended and Restated Purchase Agreement.
(a) Section 1.1. Section 1.1 of the Amended and Restated Purchase
Agreement is hereby modified to (i) delete the following definitions:
"Adjusted EBITDA," "Cancellation Notice," "Closing," "Due Diligence Period,"
"Purchase Price" and "Refinancing" and (ii) add or to replace, as
applicable, the following definitions, such definitions to be inserted in
the appropriate alphabetical order:
Allocation Schedule: As defined in Section 6.14 of this Agreement.
Bridge Financing: The $16,300,000 Senior Secured Bridge Facility
between Gamblers Supply Management Company, as Borrower, and Isle of Capri
Casinos, Inc., as Lender, pursuant the terms and conditions contained in the
Bridge Credit Agreement.
Bridge Credit Agreement: Credit Agreement, to be dated as of the
date of funding of the Bridge Financing, between Gamblers Supply Management
Company, as Borrower, and Isle of Capri Casinos, Inc., as Lender, in the amount
of U.S. $16,300,000.
Certificate of Merger: The certificate of merger filed with the
Secretary of State of the State of Delaware pursuant to the Merger Agreement.
Claims: As defined in Section 11.10 of this Agreement.
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Closing Date: With respect to the transfer of the First Closing
Assets, references to the Closing Date shall mean the First Closing Date and,
with respect to the transfer of the Second Closing Assets, references to the
Closing Date shall mean the Second Closing Date.
Damages: As defined in Section 11.10 of this Agreement.
Effective Time: The date of filing of the Certificate of Merger
filed with the Secretary of State of the State of Delaware pursuant to the
Merger Agreement or such later date and time as may be specified in the
Certificate of Merger.
Excluded Assets: As defined in Section 2.1(c) of this Agreement.
Excluded Real Property: As defined in Section 2.1(d) of this
Agreement.
Expiration Date: As defined in Section 11.9 of this Agreement.
Final S Tax Period: As defined in Section 11.1 of this Agreement.
First Closing: As defined in Section 2.3 of this Agreement.
First Closing Assets: As defined in Section 2.1 of this Agreement.
First Closing Date: As defined in Section 2.3 of this Agreement.
First Closing Purchase Price: As defined in Section 2.2 of this
Agreement.
Gemini Copyrights: All copyrights, copyright registrations and
copyright applications, which, in each case, have been filed with the Copyright
Office of the Library of Congress or any similar office or agency of any other
country or used in the United States, any state, territory or possession thereof
or any other country, and all renewals thereof, which are owned by Gemini.
Gemini Intellectual Property: The Gemini Trademarks; the Mailing
List; the Gemini Copyrights; the Internet Domain Name; all incomes, royalties,
damages and payments now or hereafter due or payable under the Gemini
Trademarks, the Mailing List, the Gemini Copyrights and the Internet Domain
Name; all rights to sue and collect charges and payments for past and future
infringements of the Gemini Trademarks, the Mailing List, the Gemini Copyrights
and the Internet Domain Name; and all goodwill and business in any way relating
to the Trademarks, the Mailing List, the Gemini Copyrights and the Internet
Domain Name.
Gemini Trademarks: All of Gemini's right, title and interest (in
the United States and throughout the world) in and to all of Gemini's
trademarks, service marks, trade names, trade dress, colors, designs, logos,
indicia, corporate names, company names, business names,
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fictitious business names, trade styles or other source or business identifiers
and all registrations and applications to register the same, including, without
limitation, the Licensed Trademarks, and all renewals thereof.
Indemnified Party: As defined in Section 11.11 of this Agreement.
Indemnifying Party: As defined in Section 11.11 of this Agreement.
Internet Domain Name: The Internet domain name ladyluck.com.
Isle Cancellation Notice: As defined in Section 2.9(d) of this
Agreement.
Isle Due Diligence Period: As defined in Section 2.9(a) of this
Agreement.
Isle of Capri: Isle of Capri Casinos, Inc., a Delaware
corporation.
Landlord and Landlords: As defined in Section 8.6 of this
Agreement.
Landlord Estoppel Certificate: As defined in Section 8.8 of this
Agreement.
Mailing List: The mailing list that is owned by Gemini, and
currently maintained by IMPS, containing the names and addresses of, and other
information regarding, over five million (5,000,000) casino patrons, including,
without limitation: (1) all computer disks, magnetic tape and other electronic
media upon which such information may be recorded; (2) all filing cabinets, disk
and tape storage facilities and other equipment which is used for maintenance or
storage of such information; and (3) the books and records that are maintained
in connection therewith.
Merger: The merger of Merger Sub with and into the Purchaser
pursuant to the Merger Agreement, following which the separate corporate
existence of Merger Sub shall cease and Purchaser will become a wholly owned
subsidiary of Isle of Capri.
Merger Agreement: That certain Agreement and Plan of Merger, dated
as of October 5, 1999, by and among Isle of Capri, Merger Sub and the Purchaser,
pursuant to which the Merger shall be effected.
Merger Sub: Isle Merger Corp., a Delaware corporation and wholly
owned subsidiary of Isle of Capri.
Outside Date: As defined in Section 12.1(b) of this Agreement.
Property Taxes: As defined in Section 11.3(a) of this Agreement.
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Purchaser Cancellation Notice: As defined in Section 2.8(d) of
this Agreement.
Purchaser Claims: As defined in Section 11.10 of this Agreement.
Purchaser Due Diligence Period: As defined in Section 2.8(a) of
this Agreement.
Purchaser Group: As defined in Section 11.10 of this Agreement.
Purchaser Indemnitees: As defined in Section 11.3 of this
Agreement.
Purchaser License Agreement: That certain Exclusive License
Agreement dated as of October 5, 1999, by and among the Purchaser, Gemini and
the Seller, annexed hereto as Exhibit A.
Put Option Exercise Period: As defined in Section 6.13 of this
Agreement.
Second Closing: As defined in Section 2.4 of this Agreement.
Second Closing Assets: As defined in Section 2.1 of this
Agreement.
Second Closing Date: As defined in Section 2.4 of this Agreement.
Second Closing Purchase Price: As defined in Section 2.2 of this
Agreement.
Section 338(h)(10) Election: As defined in Section 6.14 of this
Agreement.
Seller Claims: As defined in Section 11.10 of this Agreement.
Seller Group: As defined in Section 11.10 of this Agreement.
Seller Put Option: As defined in Section 6.13 of this Agreement.
Services Agreement: That certain Services Agreement dated as of
October 5, 1999, between Gemini and IMPS, annexed hereto as Exhibit C.
Straddle Period: As defined in Section 11.3(a) of this Agreement.
Tax Claim: As defined in Section 11.6 of this Agreement.
Title Insurance Company: As defined in Section 2.7(a) of this
Agreement.
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(b) Article 2. Article 2 of the Amended and Restated Purchase
Agreement is hereby deleted in its entirety and replaced with the
following:
"2. Purchase and Sale.
2.1 Sale, Purchase and Delivery of Purchased Assets; Excluded Assets.
Subject to the terms and conditions of this Agreement:
(a) the Seller and Gemini hereby agree to sell and, on the First
Closing Date (as defined below), shall sell, convey, assign, transfer
and deliver to the Purchaser, and the Purchaser shall purchase, acquire
and accept from the Seller and Gemini, free and clear of all Liens, all
of the Seller's right, title and interest in and to the IMPS Shares and
all of Gemini's right, title and interest in and to the Gemini
Intellectual Property and the Company License Agreement (the "First
Closing Assets").
(b) the Seller hereby agrees to sell and, on the Second Closing
Date (as defined below), shall sell, convey, assign, transfer and
deliver to the Purchaser, and the Purchaser shall purchase, acquire and
accept from the Seller, free and clear of all Liens (other than, with
respect to paragraphs (2) - (5) below, Permitted Liens), all of the
Seller's right, title and interest in and to the following assets,
properties, privileges, claims and rights (collectively, the "Second
Closing Assets" and, together with the First Closing Assets, the
"Purchased Assets"):
(1) the Gemini Shares;
(2) the Fee Property and all Real Property in any way
appertaining to the Fee Property;
(3) the Hotel/Casino Facilities, including all buildings and
improvements forming a part thereof;
(4) the Real Property Leases, the Hotel/Casino Lease and the
Leased Parcels; and
(5) all goodwill of the Business.
(c) The Assets of the Seller set forth on Schedule 2.1(b) are not
included in the Purchased Assets and no rights in or to such assets are
to be transferred pursuant to this Agreement (the "Excluded Assets").
To the extent any of the Excluded Assets are located in the
Hotel/Casino Facilities, the Seller, at his expense, shall have the
right to remove the
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same at any time within thirty (30) days after the Second Closing
Date (provided that the Seller shall repair any damage caused by such
removal).
(d) The Real Property owned by Gemini set forth on Schedule 2.1(c)
is not included in the Purchased Assets and no rights, interest or
title in such Real Property are to be transferred pursuant to this
Agreement (the "Excluded Real Property"). Notwithstanding anything to
the contrary contained herein, the Seller, at his expense, shall
transfer all right, title and interest in the Excluded Real Property
from Gemini to the Seller prior to the Second Closing Date. In
connection with such transfer, the Seller shall refinance or assume all
indebtedness relating to the Excluded Real Property, shall take
commercially reasonable steps to cause Gemini to be released from all
such indebtedness and shall deliver to the Purchaser at the Second
Closing an agreed upon form of indemnification undertaking with respect
to any liabilities associated with the Excluded Real Property. The
indemnification provided under this Section 2.1(d) shall be separate
from, and not subject to the terms of, the Seller's general
indemnification obligations under Sections 11.10 through 11.12 of this
Agreement.
2.2 Purchase Price. The aggregate purchase price for the First Closing
Assets shall be Thirty One Million Dollars ($31,000,000) (the "First Closing
Purchase Price") and shall be paid on the First Closing Date by the Purchaser by
wire transfer of immediately available funds in such amounts and to such
accounts as designated by the Seller on or before the First Closing Date. The
aggregate purchase price for the Second Closing Assets shall be Fourteen Million
Five Hundred Thousand Dollars ($14,500,000) (the "Second Closing Purchase
Price") and shall be paid on the Second Closing Date by the Purchaser by wire
transfer of immediately available funds in such amounts and to such accounts as
designated by the Seller on or before the Second Closing Date.
2.3 First Closing.
(a) Subject to the terms and conditions of this Agreement, the
sale, assignment and purchase of the First Closing Assets pursuant to
Section 2.1(a) of this Agreement shall take place at a closing (the
"First Closing") at the offices of Purchaser's counsel in Nevada at
10:00 a.m., local time, on the date which is ten Business Days after
the satisfaction or waiver of all conditions to the First Closing, but
not prior to the date of the closing of the Merger or at such other
time and place as the Seller and the Purchaser mutually shall agree,
but not prior to the date of the closing of the Merger (it being
understood that the desire of the parties is to consummate the First
Closing on the closing date of the Merger); provided, that the First
Closing shall take place on the date of the closing of the Merger if
all conditions to the First Closing have been satisfied (or could be
satisfied if the First Closing were to occur) or waived on or prior to
such date (the day on which the First Closing takes place is referred
to herein as the "First Closing Date").
(b) At the First Closing, the Seller shall deliver or cause to be
delivered to the Purchaser the following:
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(1) certificates representing the IMPS Shares, duly endorsed
for transfer in blank or accompanied by a stock power
duly endorsed in blank by the Seller, with any requisite
documentary or stock transfer taxes affixed thereto;
(2) the certificates required by Sections 7.1 and 7.2
hereof;
(3) certificates issued by the Secretary of State of Nevada
evidencing, as of a recent date, the good standing of
IMPS and Gemini in the State of Nevada;
(4) copies of the Articles of Incorporation, including all
amendments thereto, of IMPS and Gemini, certified by the
Secretary of State or other appropriate official of the
State of Nevada;
(5) copies of the By-laws, including all amendments thereto,
of IMPS, certified by the Secretary of IMPS;
(6) copies of the By-laws, including all amendments thereto,
of Gemini, certified by the Secretary of Gemini;
(7) resolutions adopted by the Board of Directors of IMPS
authorizing the transactions contemplated hereby,
certified by the Secretary of IMPS;
(8) resolutions adopted by the Board of Directors of Gemini
authorizing the transactions contemplated hereby,
certified by the Secretary of Gemini;
(9) certificate of the Secretary of IMPS to the effect that
there have been no amendments to the applicable charter
documents and resolutions referred to in Sections
2.3(b)(4), 2.3(b)(5) and 2.3(b)(7) hereof since the date
of the certifications referred to in such subsections;
(10) certificate of the Secretary of Gemini to the effect
that there have been no amendments to the applicable
charter documents and resolutions referred to in
Sections 2.3(b)(4), 2.3(b)(6) and 2.3(b)(8) hereof since
the date of the certification referenced to in such
subsections;
(11) the Consent of any Person required for the consummation
by the Seller or Gemini of the transactions contemplated
hereby;
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(12) the documents, instruments and other certificates
required to be delivered by Seller and Gemini to the
Purchaser pursuant to Section 7.6 of this Agreement;
(13) a duly executed bill of sale and assignment, in form and
substance reasonably acceptable to the Purchaser,
transferring to the Purchaser all interests of Gemini in
the Company License Agreement to be transferred to the
Purchaser hereunder; and
(14) a duly executed assignment, in form and substance
reasonably acceptable to the Purchaser, transferring to
the Purchaser all of Gemini's right, title and interest
in and to the Gemini Intellectual Property.
(c) At the First Closing, the Purchaser shall deliver to the
Seller, the following:
(1) the First Closing Purchase Price, which shall be paid as
set forth in Section 2.2 of this Agreement;
(2) the certificates required by Sections 9.1 and 9.2
hereof;
(3) resolutions adopted by the Board of Directors of the
Purchaser authorizing the transactions contemplated
hereby, certified by the Secretary of the Purchaser;
(4) the Purchaser License Agreement; and
(5) the Consent of any Person required for the consummation
by the Purchaser of the transactions contemplated
hereby.
(d) In addition to the deliveries provided in Sections 2.3(b) and
(c), each of the parties hereto shall deliver all other documents and
instruments required to be delivered by either of them at or prior to
the First Closing Date pursuant to this Agreement or reasonably
required to effectuate the transactions provided for herein.
2.4 Second Closing.
(a) Subject to the terms and conditions of this Agreement, the
sale, assignment and purchase of the Second Closing Assets pursuant to
Section 2.1(b) of this Agreement shall take place at a closing (the
"Second Closing") at the offices of Purchaser's counsel in Nevada at
10:00 a.m., local time, on the date which is ten Business Days after
the satisfaction or waiver of all conditions to the Second Closing, but
not prior to the First Closing Date, or
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at such other time and place as the Seller and the Purchaser
mutually shall agree, but not prior to the date of the closing of the
Merger; provided, that the Second Closing shall take place on the date
of the closing of the Merger if all conditions to the Second Closing
have been satisfied (or could be satisfied if the Second Closing were
to occur) or waived on or prior to such date (the day on which the
Second Closing takes place is referred to herein as the "Second Closing
Date").
(b) At the Second Closing, the Seller shall deliver or cause to be
delivered to the Purchaser the following:
(1) certificates representing the Gemini Shares, duly
endorsed for transfer in blank or accompanied by a stock
power duly endorsed in blank by the Seller, with any
requisite documentary or stock transfer taxes affixed
thereto;
(2) certificates required by Sections 8.1 and 8.2 hereof;
(3) a certificate issued by the Secretary of State of Nevada
evidencing, as of a recent date, the good standing of
Gemini in the State of Nevada;
(4) copies of the Articles of Incorporation including all
amendments thereto, of Gemini, certified by the
Secretary of State or other appropriate official of the
State of Nevada;
(5) copies of the By-laws, including all amendments thereto,
of Gemini, certified by the Secretary of Gemini;
(6) resolutions adopted by the Board of Directors of Gemini
authorizing the transactions contemplated hereby,
certified by the Secretary of Gemini;
(7) certificate of the Secretary of Gemini to the effect
that there have been no amendments to the applicable
charter documents and resolutions referred to in
Sections 2.3(b)(4), 2.3(b)(6) and 2.3(b)(8) hereof since
the date of the certifications referred to in such
subsections;
(8) the Consent of any Person required for the consummation
by the Seller or Gemini of the transactions contemplated
hereby;
(9) such other instruments as may be reasonably requested by
the Purchaser evidencing the transfer of all rights and
interests of the Seller in the Leased Parcels and the
transfer of all right, title and
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interest of the Seller in the Fee Property and the
Hotel/Casino Facilities to the Purchaser, including the
following:
(a) Assignment of Tenant's Interest in Ground Lease
(FNB Lease);
(b) Assignment of Tenant's Interest in Ground Lease
(Garside Lease);
(c) Assignment of Tenant's Interest in Lease (Parking
Garage Lease);
(d) Grant Bargain Sale Deed for each of the parcels
contained in the Fee Property;
(e) Grant Bargain Sale Deed and Bill of Sale for the
Hotel/Casino Facilities;
(f) all necessary title affidavits;
(g) an affidavit, dated the Second Closing Date,
pursuant to Section 1445 of the Code (Foreign
Investment in Real Property Tax Act of 1980);
(h) to the extent not previously provided, copies of
executed counterparts of the Leases and all
amendments thereto (nothing contained herein shall
be deemed to prohibit the Seller from retaining
additional copies of all or any thereof);
(i) the Landlord Estoppel Certificates which the Seller
is required to obtain pursuant to the provisions of
Section 8.8;
(j) the Consents of the Landlords to the assignment of
the Leases which the Seller is required to obtain
pursuant to the provisions of Section 8.9;
(k) originals of all Licenses and Permits being
assigned to the Purchaser at the Closing, to the
extent such originals are in the possession of the
Seller;
(l) letter notices to Landlords, duly executed by the
Seller, advising Landlords of the assignment of the
Leases and
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directing that notices thereafter be sent to
Purchaser or its designee;
(m) such affidavits of title and other instruments and
documents as may be reasonably required to
consummate the transactions herein contemplated,
and as may be reasonably required by the Title
Insurance Company to cure and/or modify the
exceptions and/or objections to title in accordance
with Section 2.7 of this Agreement;
(n) Non-Disturbance Agreements from any mortgages of
fee interest of the ground lessor under the Real
Property Leases with priority over the Real
Property Leases;
(o) originals of each bill for current real estate
Taxes, sewer charges and assessments, water charges
and other utilities, together with proof of payment
thereof (to the extent same had been paid), to the
extent in the Seller's possession or control
(nothing contained herein shall be deemed to
prohibit the Seller from retaining additional
copies of all or any thereof).
(10) ALTA Owner's title insurance policy from the Title
Insurance Company in the amount of Fourteen Million Five
Hundred Thousand Dollars ($14,500,000) with respect to
the Leased Parcels and the Fee Property (the premium for
CLTA coverage being paid by the Seller and the remaining
premium being paid by the Purchaser); and
(11) an assignment, duly executed by the Seller, of all
warranties and guarantees, if any, in effect as of the
Second Closing Date.
(c) At the Second Closing, the Purchaser shall deliver to the
Seller the following:
(1) the Second Closing Purchase Price, which shall be paid
as set forth in Section 2.2 of this Agreement;
(2) the certificates required by Sections 10.1 and 10.2
hereof;
(3) resolutions adopted by the Board of Directors of the
Purchaser authorizing the transactions contemplated
hereby, certified by the Secretary of the Purchaser;
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(4) the Consent of any Person required for the consummation
by the Purchaser of the transactions contemplated
hereby; and
(5) a duly executed Assumption of Leases.
(d) In addition to the deliveries provided in Sections 2.4(b) and
(c), each of the parties hereto shall deliver all other documents and
instruments required to be delivered by either of them at or prior to
the Second Closing Date pursuant to this Agreement or reasonably
required to effectuate the transactions provided for herein.
2.5 Proceedings at the First Closing and the Second Closing. All
proceedings to be taken and all documents to be executed and delivered by all
parties at the First Closing shall be deemed to have been taken and executed and
delivered simultaneously, and no proceedings shall be deemed taken nor any
documents executed or delivered until all have been taken, executed and
delivered. All proceedings to be taken and all documents to be executed and
delivered by all parties at the Second Closing shall be deemed to have been
taken and executed and delivered simultaneously, and no proceedings shall be
deemed taken nor any documents executed or delivered until all have been taken,
executed and delivered.
2.6 Adjustments and Prorations.
(a) The following matters and items set forth in clause (1) of
this Section 2.6(a) pertaining to the Gemini Intellectual Property
shall be apportioned between the parties hereto or, where applicable,
credited in total to a particular party, as of 9:00 a.m. on the First
Closing Date. Net credits in favor of the Purchaser shall be deducted
from the balance of the First Closing Purchase Price at the First
Closing and net credits in favor of the Seller or Gemini, as
applicable, shall be paid in cash at the First Closing. Unless
otherwise indicated below, the Seller or Gemini, as applicable, shall
receive a credit for any of the following items to the extent the same
are accrued but unpaid as of 9:00 a.m. on the First Closing Date
(whether or not due, owing or delinquent as of 9:00 a.m. on the First
Closing Date) and the Purchaser shall receive a credit to the extent
any of the following items shall have been paid prior to the First
Closing Date to the extent the payment thereof relates to any period of
time after 9:00 a.m. on the First Closing Date.
(1) License Fee Payments. License fee payments and other
charges payable under the License Agreement and the
Company License Agreement. If as of the First Closing
Date, there are license fee payments or other charges
owed and not yet paid to Gemini or IMPS under the
License Agreement or the Company License Agreement,
Gemini shall receive payment in cash for such amount at
the First Closing.
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(b) The following matters and items set forth in clauses (1) and
(2) of this Section 2.6(b) pertaining to the Property shall be
apportioned between the parties hereto or, where applicable, credited
in total to a particular party, as of 9:00 a.m. on the Second Closing
Date. Net credits in favor of the Purchaser shall be deducted from the
balance of the Second Closing Purchase Price at the Second Closing and
net credits in favor of the Seller shall be paid in cash at the Second
Closing. Unless otherwise indicated below, the Purchaser shall receive
a credit for any of the following items to the extent the same are
accrued but unpaid as of 9:00 a.m. on the Second Closing Date (whether
or not due, owing or delinquent as of 9:00 a.m. on the Second Closing
Date) and the Seller shall receive a credit to the extent any of the
following items shall have been paid prior to the Second Closing Date
to the extent the payment thereof relates to any period of time after
9:00 a.m. on the Second Closing Date.
(1) Taxes and Assessments. All nondelinquent ad valorem
Taxes, special or general assessments, real property
Taxes, personal property Taxes and any municipal License
and Permit fees. If the amount of any such item is not
ascertainable on the Second Closing Date, the credit
therefor shall be based on the most recent available
bill and adjusted as necessary post-Second Closing as
contemplated in Section 11.5.
(2) Rent under the Real Property Leases and the Hotel/Casino
Lease. Rents and other charges payable under the Real
Property Leases and the Hotel/Casino Lease. If as of the
Second Closing Date, there are past due rents or other
charges owed under the Real Property Leases, the
Purchaser shall receive a credit for such amount against
the Second Closing Purchase Price.
(c) The parties agree to make such post-First Closing and
post-Second Closing adjustments and readjustments as may be required
due to errors and omissions in the First Closing and Second Closing
adjustments, as applicable. If information is not available to make any
adjustments at the First Closing or the Second Closing, as applicable,
the same shall not be deemed a ground for adjournment of the First
Closing or the Second Closing and such adjustment shall be made as soon
as practicable after such information is available. The provisions of
Section 2.6(a) shall survive the First Closing for one year and the
provisions of Section 2.6(b) shall survive the Second Closing for one
year.
2.7 Title Insurance and Ability of Seller to Convey.
(a) Within 30 days from the date hereof, the Seller shall cause
title to the Property to be searched and examined by a title insurance
company reasonably acceptable to the Purchaser (the "Title Insurance
Company") and shall deliver to the attorneys for Purchaser the title
report for the issuance of an ALTA Owner's policy, including the tax
search, survey readings, all other accompanying searches and all
underlying title exception documents together with an ALTA survey of
the Property performed by a surveyor licensed by the State
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of Nevada and reasonably acceptable to the Purchaser. The Purchaser, at
the Purchaser's sole cost and expense, shall cause the title commitment
to the Property to be delivered to the Purchaser's attorneys for the
issuance of an ALTA Owner's policy; provided, that such cost of the
title commitment shall be reimbursed to the Purchaser by the Seller on
the Second Closing Date should the transactions provided for herein
close. The Seller agrees to take all reasonably necessary actions as
will enable the Title Insurance Company to delete (i) any exceptions
from the said commitment that are not listed among the Permitted Liens
and (ii) all Liens referenced in clause (v) of the definition of
Permitted Liens that have been recorded against the Property. If any
objections appear in any subsequent report, the Purchaser shall notify
the attorneys for the Seller promptly after becoming aware of same and,
if the Seller is unable to remedy such objections prior to the Second
Closing, the Purchaser hereby grants to the Seller a reasonable
adjournment of the Second Closing Date during which time the Seller
shall reasonably attempt to remedy same. The premium for CLTA coverage
shall be paid by the Seller and the remaining premium shall be paid by
the Purchaser.
(b) Notwithstanding anything contained herein to the contrary, the
Seller shall eliminate all mortgages and security interests regardless
of amount and any other Liens affecting the Property, other than
Permitted Liens, which Liens secure a liquidated sum of money.
(c) The Seller shall not, between the date hereof and the Second
Closing Date, subject the Property to any Lien or other encumbrance to
title except (i) Permitted Liens and (ii) Liens or other encumbrances
to the extent that the same will be discharged of record at or before
the Second Closing, and the Seller shall discharge same of record at or
before the Second Closing.
(d) If at the Second Closing there shall be any Liens affecting
the Property in addition to the Permitted Liens, the Seller may require
the Purchaser to apply such portion of the Second Closing Purchase
Price as shall be necessary to discharge such Liens; provided, that at
or prior to the Second Closing, the Seller shall have delivered to the
Purchaser instruments satisfactory to the Title Insurance Company and
sufficient to discharge the same of record.
2.8 Purchaser's Inspection of the Property; Due Diligence.
(a) The Purchaser shall have the right to continue for a period of
thirty (30) days after the date of this First Amendment (the "Purchaser
Due Diligence Period") to enter upon the Property during reasonable
hours for the purpose of inspection of the Property and preparing
engineering surveys and environmental reports and such other tests and
inspections as the Purchaser may reasonably desire, including a Phase
II environmental inspection, that includes sampling and report. Any
such inspections and tests shall be performed at the sole cost of the
Purchaser. The Purchaser will not create or cause to be created any
claim against or Lien upon the Property, nor otherwise impair the
Seller's estate or unreasonably interfere
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in any manner with the regular conduct of business upon the
Property. The Purchaser shall repair and restore to its original
condition any portion of the Property damaged, altered or disturbed as
a result of such inspections and the Purchaser shall indemnify and hold
the Seller and the Companies harmless from any and all liability
damage, claims or injury lawsuits resulting from the acts or omissions
of the Purchaser, its employees, agents or contractors related to such
inspection of the Property. The Purchaser's obligations under this
Section 2.8(a) shall survive the First Closing and the Second Closing
or earlier termination of this Agreement.
(b) The Seller shall, as promptly as practicable after the
execution of this Agreement, to the extent not previously provided and
to the extent in the Seller's possession or control, provide or cause
to be provided to the Purchaser copies of the Leases; material service
contracts; material Contracts; material Licenses and Permits; insurance
policies; material personal property, inventory and fixture lists;
current real estate tax bills/receipts; as-built plans and
specifications; existing surveys; existing title reports and policies;
existing engineering, property condition or environmental reports; and
such other material documents regarding the operation of the Business
and Properties as the Purchaser may reasonably request. The Seller
shall, to the extent such items exist and are in the Seller's or the
Companies' possession or control, provide or cause to be provided to
the Purchaser the items set forth on the Outstanding Due Diligence list
annexed hereto as Exhibit B (other than those certain projections
requested in Section I.4 and I.5(b) which are being prepared by the
Purchaser) as promptly as practicable after the execution of this
Agreement but in any case at least twenty (20) days prior to the end of
the Purchaser Due Diligence Period.
(c) In addition to Purchaser's rights under Section 2.8(a) and
(b), during the Purchaser Due Diligence Period, the Seller shall permit
the Purchaser and its representatives full access to the books,
records, facilities, properties, assets and operations of the
Companies; provided, that such access shall not interfere with the
normal business and operations of the Companies. The Seller shall
arrange for the Purchaser and its representatives to discuss with
appropriate officers, employees and representatives of the Companies
such matters related to the transactions provided for herein as the
Purchaser may reasonably request; provided that a representative of or
counsel to the Seller and the Companies is present.
(d) Subject to Section 6.13 of this Agreement, the Special
Committee shall have the right to cancel this Agreement on behalf of
the Purchaser at any time during the Purchaser Due Diligence Period if,
as a result of its due diligence review, the Special Committee shall
have discovered any matter which the Special Committee reasonably
believes would be materially adverse to the Business or its prospects
and such matter was not known by the Special Committee or its counsel
prior to the onset of the Purchaser Due Diligence Period, by notice to
the Seller given prior to the expiration of the Purchaser Due Diligence
Period (the "Purchaser Cancellation Notice"), following which all
parties shall be released from any further obligation under this
Agreement. Without limiting the foregoing,
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any information set forth in the Limited Asbestos Survey, dated as
of October 25, 1996, and in the Operations Maintenance Plan, dated as
of November 4, 1996, both prepared for The Lady Luck Casino Hotel by
Terracon Consultants Western, Inc., shall be deemed to be known by the
Purchaser."
2.9 Isle of Capri's Inspection of the Property; Due Diligence.
(a) Isle of Capri shall have the right to continue for a period of
thirty (30) days after the date of this First Amendment, (the "Isle Due
Diligence Period") to enter upon the Property during reasonable hours
for the purpose of inspection of the Property and preparing engineering
surveys and environmental reports and such other tests and inspections
as Isle of Capri may reasonably desire, including a Phase II
environmental inspection, that includes sampling and report. Any such
inspections and tests shall be performed at the sole cost of Isle of
Capri. Isle of Capri will not create or cause to be created any claim
against or Lien upon the Property, nor otherwise impair the Seller's
estate or unreasonably interfere in any manner with the regular conduct
of business upon the Property. Isle of Capri shall repair and restore
to its original condition any portion of the Property damaged, altered
or disturbed as a result of such inspections and shall indemnify and
hold the Seller and the Companies harmless from any and all liability
damage, claims or injury lawsuits resulting from the acts or omissions
of Isle of Capri, its employees, agents or contractors related to such
inspection of the Property. Isle of Capri's obligations under this
Section 2.9(a) shall survive the First Closing and the Second Closing
or earlier termination of this Agreement.
(b) The Seller shall, as promptly as practicable after the
execution of this Agreement, to the extent not previously provided and
to the extent in the Seller's possession or control, provide or cause
to be provided to Isle of Capri copies of the Leases; material service
contracts; material Contracts; material Licenses and Permits; insurance
policies; material personal property, inventory and fixture lists;
current real estate tax bills/receipts; as-built plans and
specifications; existing surveys; existing title reports and policies;
existing engineering, property condition or environmental reports; and
such other material documents regarding the operation of the Business
and Properties as Isle of Capri may reasonably request. The Seller
shall, to the extent such items exist and are in the Seller's or the
Companies' possession or control or can be obtained through reasonable
commercial efforts, provide or cause to be provided to Isle of Capri
the items set forth on the Outstanding Due Diligence list annexed
hereto as Exhibit B as promptly as practicable after the execution of
this Agreement but in any case at least twenty (20) days prior to the
end of the Isle Due Diligence Period.
(c) In addition to Isle of Capri's rights under Section 2.9(a) and
(b), during the Isle Due Diligence Period, the Seller shall permit Isle
of Capri and its representatives full access to the books, records,
facilities, properties, assets and operations of the Companies;
provided, that such access shall not interfere with the normal business
and operations of the Companies. The Seller shall arrange for Isle of
Capri and its representatives to discuss with
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appropriate officers, employees and representatives of the
Companies such matters related to the transactions provided for herein
as Isle of Capri may reasonably request; provided that a representative
of or counsel to the Seller and the Companies is present.
(d) Subject to Section 6.13 of this Agreement, Isle of Capri shall
have the right to cancel this Agreement on behalf of the Purchaser at
any time during the Isle Due Diligence Period (and effective only after
the consummation of the Merger pursuant to the terms of the Merger
Agreement) if, as a result of its due diligence review, Isle of Capri
shall have discovered any matter which Isle of Capri reasonably
believes would be materially adverse to the Business or its prospects
and such matter was not known by Isle of Capri or its counsel prior to
the onset of the Isle Due Diligence Period, by notice to the Seller
given prior to the expiration of the Isle Due Diligence Period (the
"Isle Cancellation Notice"), following which all parties shall be
released from any further obligation under this Agreement. Without
limiting the foregoing, any information set forth in the Limited
Asbestos Survey, dated as of October 25, 1996, and in the Operations
Maintenance Plan, dated as of November 4, 1996, both prepared for The
Lady Luck Casino Hotel by Terracon Consultants Western, Inc., shall be
deemed to be known by Isle of Capri."
(c) Section 4.5. Section 4.5 of the Amended and Restated Purchase
Agreement is hereby deleted in its entirety and replaced with the following:
"4.5 Bringdown of Representations and Warranties. All representations
and warranties of the Seller contained in this Agreement shall be true and
correct on and as of the First Closing Date and the Second Closing Date, except
for such representations and warranties relating to the First Closing Assets
which shall be true and correct only on and as of the First Closing Date, with
the same force and effect as though such representations and warranties had been
made on, as of and with reference to such date (except that any representations
and warranties that speak as of a particular date shall continue to speak only
as of such date)."
(d) Section 5.11. Section 5.11 of the Amended and Restated Purchase
Agreement is hereby deleted in its entirety and replaced with the following:
"Section 5.11. Bringdown of Representations and Warranties. All
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct on and as of the First Closing Date and the Second
Closing Date with the same force and effect as though such representations and
warranties had been made on, as of and with reference to such date (except that
any representations and warranties that speak as of a particular date shall
continue to speak only as of such date)."
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<PAGE>
(e) Articles 6, 7 and 8. Articles 6, 7 and 8 of the Amended and
Restated Purchase Agreement are hereby deleted in their entirety and replaced
with the following and Articles 6 through 10, all subsequent Articles and
Sections shall be appropriately renumbered and all cross-references to such
Articles and Sections shall be appropriately renumbered:
"6. Conduct of Business Prior to the Closing and Other Agreements.
The parties hereto covenant and agree as follows:
6.1 Conduct of Business
(a) Except as otherwise expressly contemplated by this Agreement
or as specifically consented to in writing by the Purchaser, each of
the Seller and Gemini, from and after the date of this Agreement until
the Second Closing Date, and IMPS, from and after the date of this
Agreement until the First Closing Date, will use reasonable efforts
consistent with good business judgment to preserve the present business
organization of each of Gemini and IMPS intact, preserve the present
relationships of each of Gemini and IMPS with Persons having material
business dealings with each of Gemini and IMPS, generally operate the
Business and Properties in the ordinary and regular course consistent
with their prior practices and maintain all Insurance and Licenses and
Permits necessary for the ownership or conduct of their respective
business as currently conducted.
(b) Except as specifically contemplated by this Agreement,
including the Schedules attached hereto, or as otherwise consented to
in writing by the Purchaser, the Seller will cause Gemini, during the
period from the date of this Agreement to the Second Closing, and IMPS,
during the period from the date of this Agreement to the First Closing,
to:
(1) carry on its business only in the ordinary course in
substantially the same manner as heretofore conducted;
(2) use commercially reasonable efforts to (i) preserve
intact the present business organization and reputation
of Gemini and IMPS, (ii) keep available (subject to
dismissals, voluntary departures and retirements in the
ordinary course of business consistent with past
practice) the services of the present officers,
employees and consultants of Gemini and IMPS, (iii)
maintain the Assets and properties of Gemini and IMPS in
good working order and condition, ordinary wear and tear
excepted, (iv) maintain the goodwill of customers,
suppliers, lenders
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<PAGE>
and other persons to whom Gemini or IMPS sells goods or
provides services or with whom Gemini or IMPS otherwise
has significant business relationships, and (v) continue
all current sales, marketing and promotional activities
relating to the business and operations of Gemini and
IMPS;
(3) except to the extent required by applicable Law, cause
the books and records of Gemini and IMPS to be
maintained in the usual, regular and ordinary manner;
(4) use commercially reasonable efforts to maintain in full
force and effect until the Closing substantially the
same levels of coverage of insurance on Gemini's and
IMPS's properties and Assets as are currently in effect;
(5) not amend its Articles of Incorporation or By-laws;
(6) not acquire, by merger, consolidation, purchase of stock
or assets or otherwise, any corporation, partnership,
association or other business organization;
(7) not alter its outstanding capital stock or declare, set
aside, make or pay any dividend or other distribution in
respect of its capital stock (in cash or otherwise), or
purchase or redeem any shares of its capital stock;
(8) not issue or sell (or agree to issue or sell) any of its
capital stock or any options, warrants or other rights
to purchase any such shares or any securities
convertible into or exchangeable for such shares;
(9) not incur, other than in the ordinary course of business
consistent with past practice, any material indebtedness
for borrowed money (including through the issuance of
debt securities) or vary in any material manner the
terms of any material existing indebtedness, except that
the indebtedness under the Credit Agreement may be
modified if advantageous to the Borrowers and if such
modification does not materially and adversely affect
the ability of any party to timely perform its
obligations under this Agreement or otherwise to
consummate the transactions contemplated by this
Agreement;
(10) except to the extent required by applicable Law, not
permit any material change in (A) any pricing,
investment, accounting, financial reporting, inventory,
credit, allowance or tax practice or policy of the
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<PAGE>
Companies, (B) any method of calculating any bad debt,
contingency or other reserve of the Companies for
accounting, financial reporting or tax purposes, (C) its
accounting procedures or practices or (D) the fiscal
year of the Companies;
(11) not make or change any Tax election, file any amended
Tax Return, change its Tax accounting period, adopt or
change any method of Tax accounting, enter into any
closing agreement, compromise or settle any Tax claim or
assessment, surrender any right to claim a Tax refund,
consent to any extension or waiver of the statute of
limitations period applicable to any Tax claim or
assessment, or take or omit to take any other required
action relating to Taxes without the written consent of
the Purchaser, which shall not be unreasonably withheld;
(12) except in connection with the ordinary conduct of the
Business consistent with past practice and except to the
extent required by applicable Law, (i) not enter into,
amend, modify, terminate (partially or completely),
grant any waiver under or give any Consent with respect
to (A) any Lease, IP Agreement or Material Contract or
any Contract to which Gemini or IMPS is a party that
would, if in existence on the date of this Agreement, be
deemed a Material Contract or (B) any material License,
Permit or Consent, or (ii) not grant any irrevocable
powers of attorney;
(13) not violate, breach or default under, or take or fail to
take any action that (with or without notice or lapse of
time or both) would constitute a violation or breach of,
or default under, any term or provision of any Licenses
and Permits or Consent held or used by Gemini or IMPS or
any material Contract to which Gemini or IMPS is a party
or by which any of its Assets and properties is bound,
which violation, breach or default could reasonably be
expected to have a Material Adverse Effect;
(14) not make capital expenditures or commitments for
additions to property, plant or equipment constituting
capital assets in an aggregate amount exceeding $50,000
per annum unless required under the Credit Agreement;
(15) not dispose of, or incur any Lien (other than a
Permitted Lien) on, any Assets and properties of Gemini
or IMPS, material individually or in the aggregate other
than in the ordinary course of business consistent with
past practice;
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<PAGE>
(16) not write off or write down any of its Assets and
properties, outside the ordinary course of business
consistent with past practice;
(17) not take any action that would be reasonably likely to
cause any of the representations or warranties of the
Seller contained in this Agreement to be untrue in any
material respect;
(18) not increase the compensation payable or to become
payable by Gemini and IMPS to their respective
employees, except for increases in salary or wages in
the ordinary course of business consistent with past
practices or as required by applicable Law, or grant any
severance or termination pay (except as required by
current agreement, policy or by applicable Law);
(19) not sell, transfer, license or otherwise dispose of, or
permit to lapse or expire, any material Intellectual
Property or any interest therein; or
(20) not agree to take any of the actions set forth in the
foregoing subparagraphs 5 through 19.
(c) The Seller covenants with the Purchaser that subsequent to the
date of this Agreement and prior to the Second Closing:
(1) The Seller, without the Purchaser's prior written
consent, (i) will not modify or amend the Real Property
Leases or the Hotel/Casino Lease and (ii) will not
terminate the Real Property Leases or the Hotel/Casino
Lease.
(2) Subject to applicable Law, the Seller shall permit the
Purchaser and its authorized representatives, during
usual business hours, to inspect the Property and to
examine the operational records of the Seller with
respect thereof.
(3) The Seller shall pay or make, as and when due and
payable, all payments of principal and interest and all
deposits required to be paid or made under any mortgage
or deed of trust encumbering the Property.
(4) The Seller shall not permit Gemini, until the Second
Closing Date, and IMPS, until the First Closing Date, to
enter into any transaction with an Affiliate, or to
amend or modify existing agreements with Affiliates,
except for the Purchaser License Agreement and the
Services Agreement, and except in the ordinary course of
business
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<PAGE>
consistent with past practice or except with the written
consent of the Purchaser, which shall not be
unreasonably withheld.
(d) The Purchaser, from and after the First Closing Date, shall
preserve the present business organization of IMPS intact, preserve the
present relationships of IMPS with Gemini, the Seller and any other
person having material business dealings with IMPS, including the
provision of and payment for marketing services performed by IMPS
relating to the Business and Properties, generally operate the business
of IMPS in the ordinary and regular course consistent with prior
practice and maintain all Insurance and Licenses and Permits necessary
for the ownership or conduct of its business as currently conducted;
provided, however that, this covenant shall expire and be of no further
force or effect upon the provision of not less than ninety (90) days
notice to Gemini and the Seller that Purchaser has elected not to
continue the operation of IMPS and that Gemini and the Seller may
retain IMPS personnel.
6.2 Consents. Each of the parties hereto will use its good faith
efforts and shall fully cooperate with each other party to make promptly all
registrations, filings and applications, give all notices and obtain all
Consents, including without limitation, all necessary filings under the HSR Act.
6.3 Cooperation; Further Assurances.
(a) Each of the Seller, Gemini and IMPS, upon request by the
Purchaser, shall use its commercially reasonable efforts to provide the
Purchaser, its counsel, accountants and other authorized
representatives with such information concerning Gemini and IMPS as may
be reasonably necessary for the Purchaser to ascertain the accuracy and
completeness of the information supplied by or on behalf of Gemini and
IMPS and to verify Gemini's and IMPS' performance of and compliance
with its warranties and covenants herein contained.
(b) The parties hereto agree to (i) cooperate with each other in
determining whether any filings are required to be made or Consents
required to be obtained in any jurisdiction in connection with the
consummation of the transactions contemplated by this Agreement and in
making or causing to be made any such filings promptly and in seeking
to obtain timely any such Consents, and (ii) pursue all reasonable
commercial efforts to obtain promptly the satisfaction of the
conditions to the First Closing and the Second Closing. Each party
hereto shall furnish to each other and each other's counsel all such
information as may be reasonably available to such party and as may be
reasonably required in order to effectuate the foregoing actions.
6.4 Investment Assurances. The Seller and the Purchaser have discussed
certain capital expenditures, investments and other changes in the Business and
Properties. To the extent permitted by the Nevada gaming authorities, the Seller
and each Company agree that they will (i) cooperate with the Purchaser in
connection with any reasonable suggestions made by the Purchaser regarding
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such capital expenditures, investments and other changes in the Business and
Properties and (ii) take commercially reasonable steps to implement the
suggestions referred to in clause (i) of this sentence; provided that neither
the Seller nor either Company shall be obligated to implement such suggestions.
6.5 Notification of Certain Matters. The parties hereto each agree to
give prompt notice to the other of (i) the occurrence, or failure to occur, of
any event which occurrence or failure to occur would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the First
Closing Date or the Second Closing Date, as applicable, and (ii) any material
failure on its part to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
6.6 Litigation Prior to Effective Time. Each of Gemini and IMPS shall
advise the Purchaser in writing promptly of the assertion, commencement or
threat of any claim, litigation, proceeding or investigation where a restraining
order, injunction, or preliminary injunction is sought or the amount claimed is
in excess of $100,000, in which Gemini or IMPS is or may be made a party or by
which the Assets or the business of Gemini or IMPS may be affected or which
relates to or may affect the transactions contemplated hereby.
6.7 Supplements to Schedules. Prior to the First Closing and the Second
Closing, the parties hereto will supplement or amend those portions of the
Seller Disclosure Schedule relating to the representations and warranties in
Articles 3, 4 and 5 hereof with respect to any matter hereafter arising which,
if existing or occurring at the date of this Agreement, would have been required
to be set forth or described in such Schedules; provided, that any such
supplemental disclosure shall not be deemed to have cured any breach of any
representation or warranty made as of the date hereof for purposes of the
indemnification obligations hereunder (or to have modified any representation or
warranty made as of the date hereof for purposes of determining whether the
conditions to the First Closing or the Second Closing, including the continued
accuracy of the representation and warranty set forth in Section 3.8(a), have
been met) but the Seller Disclosure Schedule shall be deemed to have been
amended and to have cured any breach of any representation or warranty made as
of the First Closing Date or the Second Closing Date, as applicable, for
purposes of the indemnification obligations hereunder.
6.8 No Other Representations or Warranties. Except for the
representations and warranties of Seller and the Companies expressly contained
in this Agreement, neither the Seller, nor the Companies nor any other person
acting for either of them makes any other representation or warranty, express or
implied, and the Seller and the Companies hereby disclaim any such
representation or warranty, with respect to the execution, delivery or
performance by the Seller of this Agreement notwithstanding the delivery or
disclosure to the Purchaser or any of its affiliates or any other person of any
documentation or other information by the Seller or the Companies or any of
their respective representatives or any other person with respect to any of such
matters.
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6.9 Sale of Common Stock by the Seller. Purchaser and the Companies
agree that the Seller's execution of the Merger Agreement and the Stockholder
Support Agreement (as defined in the Merger Agreement) in the form attached as
an exhibit to the Merger Agreement, and the sale by the Seller of the Purchaser
Common Stock in accordance with the terms of the Stockholder Support Agreement
(as defined in the Merger Agreement) and the Merger Agreement, shall not be
deemed a violation of Section 6.9 of the Amended and Restated Purchase
Agreement.
6.10 Gaming Approvals. Promptly after the execution of this Agreement,
the Purchaser, accompanied by a representative of the Seller, shall notify the
Chairman of the Nevada State Gaming Control Board and the Chairman of the Nevada
Gaming Commission of the existence of this Agreement and shall promptly
thereafter file all necessary applications in good faith for the Purchaser and
all Persons required in order to obtain the necessary approvals and licenses
from all applicable agencies in order to consummate the transactions
contemplated hereby, and shall make every commercially reasonable effort to
place the applications for such approvals on the agenda in all applicable
jurisdictions, as soon as possible. All written communications between the
Purchaser and any Nevada Governmental Authority or official shall promptly be
delivered to the Seller and a written summary of any material telephonic
communications that would affect the approval process shall be promptly
delivered to the Seller.
6.11 Availability of Funds. The Purchaser shall use reasonable
commercial efforts to consummate the Merger Agreement on terms reasonably
acceptable to the Purchaser, following which and assuming consummation, the
Purchaser shall have available funds at least equal to the First Closing
Purchase Price and the Second Closing Purchase Price, in the aggregate, and the
expenses of the Purchaser incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and the consummation of
the transactions contemplated thereby.
6.12 Maintenance of Hotel/Casino Facilities. Seller and the Companies
agree to maintain, at no expense to the Purchaser or any of Purchaser's
subsidiaries, the condition of the Hotel/Casino Facilities and all other
facilities related to the Business such that, upon the consummation of the
Second Closing, the condition of the Hotel/Casino Facilities and all other
facilities related to the Business shall be at least as good as on the date of
the First Amendment, ordinary wear and tear, casualty and condemnation excepted.
6.13 Seller Put Option. In the event that this Agreement is terminated
by the Special Committee or Isle of Capri on behalf of the Purchaser pursuant to
Section 12.1(f) of this Agreement, Seller shall have the right (the "Seller Put
Option") for a period of thirty (30) days after such termination (the "Put
Option Exercise Period"), in Seller's sole discretion, to sell, convey, assign,
transfer and deliver to the Purchaser, and Purchaser shall have the obligation
to purchase all of Seller's and Gemini's respective right, title and interest in
and to the First Closing Assets, in each case in accordance with Article 2 of
this Agreement. The Seller shall exercise the Seller Put Option by delivering to
the Purchaser within the Put Option Exercise Period written notice of the
Seller's intention to exercise the Seller Put Option. The parties to this
Agreement agree to consummate the purchase and sale of the First Closing Assets
as soon as practicable after the satisfaction or waiver
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of all conditions to the First Closing set forth in Article 7 of this Agreement,
but not prior to the date of the closing of the Merger.
6.14 Section 338(h)(10) Election. (a) At the Purchaser's option, the
Seller shall make a joint election(s) with the Purchaser under Section
338(h)(10) of the Code, and any corresponding elections permitted under state or
local law, with respect to the purchase of the Shares of either or each of the
Companies (each a "Section 338(h)(10) Election"); provided, that the Purchaser
must notify the Seller if it wishes to make such an election or elections no
later than forty-five (45) days after the First Closing Date (in the case of the
sale of IMPS Shares) or the Second Closing Date (in the case of the sale of
Gemini Shares), and in no event later than one hundred fifty (150) days prior to
the due date for filing Internal Revenue Service Form 8023 with respect to such
338(h)(10) Election. The Seller and the Purchaser shall, not later than one
hundred twenty (120) days prior to the filing date, exchange completed and
executed copies of the Internal Revenue Service Form 8023, required schedules
thereto, and any similar state and local forms. The Purchaser shall prepare an
allocation schedule with respect to each 338(h)(10) Election (each an
"Allocation Schedule") allocating the Purchase Price allocated to the relevant
Shares and the liabilities of the such Company among the assets of the such
Company in accordance with Section 338 of the Code and the regulations issued
thereunder, and shall submit such Allocation Schedule to the Seller for its
review and signature no later than ninety (90) days prior to the filing date.
The Purchaser shall consult with the Seller as it prepares an Allocation
Schedule.
(b) The Seller will notify the Purchaser in writing within thirty(30)
days of delivery of the Allocation Schedule if it does not agree with an
Allocation Schedule. Any disputed items not resolved between the parties within
five (5) days shall be resolved by an independent accountant or accounting firm
reasonably acceptable to both the Seller and the Purchaser, whose determination
shall bind all parties. The Purchaser shall bear the cost of such independent
accountant or accounting firm. Each of the Seller, the Purchaser and the
Companies will file all Tax Returns and reports in a manner consistent with the
Allocation Schedule and will not take any position for purposes of any Taxes
respecting the allocation of the Purchase Price and the liabilities of the
Companies which is inconsistent with the Allocation Schedule.
(c) Prior to making any Section 338(h)(10) Election, the Purchaser
shall pay to the Seller with respect to such Section 338(h)(10) Election an
amount of cash equal to any Taxes imposed on the Seller as a result of such
Section 338(h)(10) Election and the payment required by this subsection 6.14(c).
Such amount shall be computed as the product of (y) the excess of (i) the
Seller's combined federal, state and local Tax liability (determined by treating
Seller as in the highest marginal Tax bracket in each such jurisdiction,
ignoring any effect of the alternative minimum Tax, and by treating state and
local Taxes as non-deductible) on the taxable income resulting from such Section
338(h)(10) Election (as reflected on the Tax Return of each Company) over (ii)
the amount of the Seller's combined federal, state and local Tax liability
(determined by treating all gain on the sale of each Company as long-term
capital gain, taxable at the Tax rates applicable to long-term capital gains) on
the taxable income that the Seller would have recognized had no Section
338(h)(10) Election been made, as agreed by the Purchaser and the Seller,
multiplied by (z) a fraction, the
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numerator of which is one, and the denominator of which is one minus the
Seller's combined federal, state and local Tax liability (determined by treating
Seller as in the highest marginal Tax bracket in each such jurisdiction,
ignoring any effect of the alternative minimum Tax, and by treating state and
local Taxes as non-deductible). In the event the Purchaser fails to make the
payment contemplated by this Section 6.14, the Seller shall be relieved of any
obligation to join in the filing of Section 338(h)(10) Election.
(d) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, the Purchaser shall be responsible for, and shall indemnify the
Seller for and against, (y) the excess of (i) any Tax imposed on the Seller or
the Companies which is attributable to or arises out of any Section 338(h)(10)
Election (including but not limited to an election under Section 338(g) of the
Code or similar provision of state, local or foreign law) with respect to the
transactions contemplated herein over (ii) the Tax which would have been imposed
on the Seller or the Companies had such election not been made, and (ii) any
Taxes incurred by the Seller or the Companies on any payment pursuant to
subsection 6.14(c) or this subsection 6.14(d).
7. Conditions Precedent to the Purchaser's Obligations Prior to the First
Closing.
The obligations of the Purchaser prior to the First Closing are subject
to the satisfaction, at or before the First Closing, of the conditions set out
below. The benefit of these conditions is for the Purchaser only and may be
waived in writing by the Special Committee at any time in its sole and absolute
discretion.
7.1 Accuracy of Seller's, Gemini's and IMPS' Warranties. The warranties
of each of the Seller, Gemini and IMPS shall be true and correct in all respects
as of the date when made and as of the First Closing Date (except that any
representations and warranties that speak as of a particular date shall continue
to speak only as of such date), as though made at that time as supplemented or
amended in accordance with and subject to Section 6.7 hereof, and the Purchaser
shall have received a certificate from each of the Seller, Gemini and IMPS
attesting thereto signed by the Seller and a duly authorized officer of each of
Gemini and IMPS.
7.2 Performance by Seller, Gemini and IMPS. The Seller, Gemini and IMPS
shall have performed, satisfied and complied in all material respects with all
covenants, agreements, and conditions required by this Agreement including those
set forth in Section 2.3(b) and the Purchaser shall have received a certificate
attesting thereto signed by the Seller and a duly authorized officer of each of
Gemini and IMPS.
7.3 Consents. All Consents (including the Consents set forth on
Schedules 3.5 and 5.4) which are required for the consummation of the purchase,
sale and assignment of the First Closing Assets shall have been obtained, shall
be in full force and effect and shall not have been revoked as of the First
Closing Date.
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7.4 HSR Act. Any applicable waiting period relating to the transactions
contemplated by this Agreement under the HSR Act shall have expired or been
terminated.
7.5 Proceedings and Documents. All legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall be in form
and substance reasonably satisfactory to the Purchaser and the Purchaser's
counsel (including counsel to the Special Committee), and the Purchaser shall
have received all such counterpart originals or certified or other copies of
such documents and proceedings in connection with such transactions as the
Purchaser reasonably requests, in form and substance as to certification and
otherwise reasonably satisfactory to the Purchaser and the Purchaser's counsel
(including counsel to the Special Committee).
7.6 Release of Obligations; Liens. Seller and Gemini shall have
delivered to the Purchaser at the First Closing a duly executed release and such
other documents, instruments and certificates as Purchaser may request, in each
case in form and substance satisfactory to Purchaser, in Purchaser's sole
discretion, necessary to evidence (i) the termination of the obligations of IMPS
in connection with the Credit Agreement and (ii) the release of any and all
Liens against the Gemini Intellectual Property, the Company License Agreement
and the License Agreement securing the obligations of the borrowers under the
Credit Agreement;
7.7 No Litigation. No Order (including a preliminary or permanent
injunction or temporary restraining order) of any state, commonwealth or federal
court or other Governmental Authority that prevents or restrains the
consummation of the transactions that are the subject of this Agreement shall
have been issued and remain in effect.
7.8 Merger. The Purchaser shall have consummated the transactions
contemplated by the Merger Agreement and the Bridge Financing on terms
reasonably acceptable to the Purchaser as contemplated by Section 6.11 hereof.
8. Conditions Precedent to the Purchaser's Obligations Prior to the Second
Closing.
The obligations of the Purchaser prior to the Second Closing are
subject to the satisfaction, at or before the Second Closing, of the conditions
set out below. The benefit of these conditions is for the Purchaser only and may
be waived in writing by the Special Committee at any time in its sole and
absolute discretion.
8.1 Accuracy of Seller's and Gemini's Warranties. The warranties of
each of the Seller and Gemini shall be true and correct in all respects as of
the date when made and as of the Second Closing Date (except that any
representations and warranties that speak as of a particular date shall continue
to speak only as of such date), as though made at that time as supplemented or
amended in accordance with and subject to Section 6.7 hereof, and the Purchaser
shall have received a certificate from each of the Seller and Gemini attesting
thereto signed by the Seller and a duly authorized officer of Gemini.
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8.2 Performance by Seller and Gemini. The Seller and Gemini shall have
performed, satisfied and complied in all material respects with all covenants,
agreements, and conditions required by this Agreement including those set forth
in Section 2.4(b) and the Purchaser shall have received a certificate attesting
thereto signed by the Seller and a duly authorized officer of Gemini.
8.3 Consents. All Consents (including the Consents set forth on
Schedules 3.5 and 5.4 and those referenced in Section 6.10) which are required
for the consummation of the purchase, sale and assignment of the Second Closing
Assets shall have been obtained, shall be in full force and effect and shall not
have been revoked as of the Second Closing Date.
8.4 Proceedings and Documents. All legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall be in form
and substance reasonably satisfactory to the Purchaser and the Purchaser's
counsel (including counsel to the Special Committee), and the Purchaser shall
have received all such counterpart originals or certified or other copies of
such documents and proceedings in connection with such transactions as the
Purchaser reasonably requests, in form and substance as to certification and
otherwise reasonably satisfactory to the Purchaser and the Purchaser's counsel
(including counsel to the Special Committee).
8.5 Release of Obligations, Liens. Gemini shall have delivered to the
Purchaser at the Second Closing, duly executed instruments necessary to evidence
(i) the termination of the obligations of Gemini in connection with the Credit
Agreement, and (ii) the release of Liens securing the obligations described in
the immediately preceding clause.
8.6 Leases. The Real Property Leases and the Hotel/Casino Lease shall
be in full force and effect on the Closing Date with no default by the Seller,
either Company or any landlord under any of the Leases (individually a
"Landlord" and collectively, the "Landlords") and the Purchaser through the
Special Committee shall have a right to terminate this Agreement in the event of
a default by the Seller, either Company or any Landlord under the Leases on the
Second Closing Date.
8.7 No Litigation. No Order (including a preliminary or permanent
injunction or temporary restraining order) of any state, commonwealth or federal
court or other Governmental Authority that prevents or restrains the
consummation of the transactions that are the subject of this Agreement shall
have been issued and remain in effect.
8.8 Landlord Estoppel Certificates. The Seller shall have obtained a
current estoppel certificate from each Landlord under each Real Property Lease
stating (i) that such Lease is in full force and effect and has not been
amended, modified or supplemented other than as set forth in Schedule 3.12, (ii)
that all rent and other sums and charges payable under such Lease are current,
and setting forth the date through which such payments have been made, (iii) the
amount of any tenant security or other similar deposit held by or on behalf of
such Landlord under such Lease, (iv) that to the best knowledge of the lessor,
no notice of default on the part of the Seller or termination notice has been
served under such Lease which remains outstanding, (v) that to the best
knowledge of the lessor, no default exists under such Lease, and that no event
has occurred or condition exists
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which, with the giving of notice or the lapse of time or both, would constitute
such a default and (vi) that, except as set forth in Schedule 3.12, the
consummation of the transactions provided for herein will not constitute a
default under such Lease or grounds for the termination thereof or for the
exercise of any other right or remedy adverse to the interests of the tenant
thereunder (a "Landlord Estoppel Certificate"). If the Seller is unable to
obtain a Landlord Estoppel Certificate acceptable to the Purchaser, in
Purchaser's sole and absolute discretion, then the Special Committee may either
(i) waive and close or (ii) on or before the Second Closing Date, elect to
terminate this Agreement.
8.9 Landlord Consents. The Seller shall have obtained the Consents of
the Landlords under the Real Property Leases to the assignment of the Real
Property Leases to the Purchaser to the extent required pursuant to the terms of
the Leases.
8.10 Governmental Approval. The consent and approval of the Nevada
Gaming Commission, the Nevada Gaming Control Board and any other applicable
Governmental Authority to the transfer of the Business and Properties to the
Purchaser and all other transfers hereunder and the operation of the Business
and Properties by the Purchaser, shall have been obtained.
8.11 Title Insurance Endorsements. The ALTA Owner's policy referenced
in Section 2.7(a) shall include endorsements insuring over the encroachments
listed in Exception 29 to the Title Policy attached hereto as Schedule 1.1
similar to the endorsements listed in such Title Policy.
8.12 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 the Business of the Seller and Gemini,
taken as a whole, since the date of the Gemini 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 and other than as resulting from the sale of the
First Closing Assets.
9. Conditions Precedent to the Seller's Obligations Prior to the First Closing.
The obligations of the Seller prior to the First Closing are subject to
the satisfaction, at or before the First Closing, of the conditions set out
below to the satisfaction of the Seller. The benefit of these conditions is for
the Seller only and may be waived on his behalf by the Seller in writing at any
time in his sole discretion.
9.1 Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser shall be true and correct as of
the date when made and as of the First Closing Date as though made at that time
and the Seller shall have received a certificate attesting thereto signed by a
duly authorized officer of the Purchaser.
9.2 Performance by the Purchaser. The Purchaser shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this
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Agreement including those set forth in Section 2.3(c) and the Seller shall have
received a certificate of a duly authorized officer of the Purchaser to such
effect.
9.3 Consents. All Consents which are required for the consummation of
the purchase, sale and assignment of the First Closing Assets shall have been
obtained, shall be in full force and effect and shall not have been revoked as
of the First Closing Date.
9.4 Absence of Litigation. There shall not have been issued and be in
effect any Order of any court or tribunal of competent jurisdiction preventing
or restraining the sale by the Seller of the Purchased Assets.
9.5 HSR Act. Any applicable waiting period relating to the transactions
contemplated by this Agreement under the HSR Act shall have expired or been
terminated.
9.6 Proceedings and Documents. All legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall be in form
and substance reasonably satisfactory to the Seller and each Company's counsel,
and the Seller shall have received all such counterpart originals or certified
or other copies of such documents and proceedings in connection with such
transactions as the Seller reasonably requests, in form and substance as to
certification and otherwise reasonably satisfactory to the Seller and each
Company's counsel.
9.7 Delivery of Agreements. The Purchaser, the Seller and Gemini shall
have entered into the Purchaser License Agreement. IMPS and Gemini shall have
entered into the Services Agreement.
10. Conditions Precedent to the Seller's Obligations Prior to the Second
Closing.
The obligations of the Seller prior to the Second Closing are subject
to the satisfaction, at or before the Second Closing, of the conditions set out
below to the satisfaction of the Seller. The benefit of these conditions is for
the Seller only and may be waived on his behalf by the Seller in writing at any
time in his sole discretion.
10.1 Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser shall be true and correct as of
the date when made and as of the Second Closing Date as though made at that time
and the Seller shall have received a certificate attesting thereto signed by a
duly authorized officer of the Purchaser.
10.2 Performance by the Purchaser. The Purchaser shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement including those set forth in Section
2.4(c) and the Seller shall have received a certificate of a duly authorized
officer of the Purchaser to such effect.
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10.3 Consents. All Consents which are required for the consummation of
the purchase, sale and assignment of the Second Closing Assets shall have been
obtained, shall be in full force and effect and shall not have been revoked as
of the Second Closing Date.
10.4 Absence of Litigation. There shall not have been issued and be in
effect any Order of any court or tribunal of competent jurisdiction preventing
or restraining the sale by the Seller of the Second Closing Assets.
10.5 Proceedings and Documents. All legal and corporate proceedings in
connection with the transactions contemplated by this Agreement shall be in form
and substance reasonably satisfactory to the Seller and each Company's counsel,
and the Seller shall have received all such counterpart originals or certified
or other copies of such documents and proceedings in connection with such
transactions as the Seller reasonably requests, in form and substance as to
certification and otherwise reasonably satisfactory to the Seller and Gemini's
counsel.
10.6 Releases. The Seller shall have been completely released from all
guarantees and other contractual obligations to third parties incurred by him in
connection with the Business or the Purchased Assets, including any obligations
in connection with the Credit Agreement. All other parties named as borrowers in
the Credit Agreement and as guarantors of the obligations under the Credit
Agreement pursuant to any other document shall have received complete releases
of any such obligations."
(e) Section 11.1. Renumbered Section 11.1 of the Amended and
Restated Purchase Agreement is hereby deleted in its entirety and replaced with
the following:
"11. Obligations After the Closing.
11.1 Closing of Tax Year. The Seller and the Purchaser hereby
acknowledge that (i) effective as of the passing of title to the IMPS Shares on
the First Closing Date, IMPS will cease to be an S corporation under the Code
and (ii) effective as of the passing of title to the Gemini Shares on the Second
Closing Date, Gemini will cease to be an S corporation under the Code. As a
result, the S corporation taxable year of each Company will terminate as of the
day before the applicable Closing Date and each Company will be required to file
Tax Returns for the period beginning on the first day of its then current fiscal
year and ending on the day before the applicable Closing Date (the "Final S Tax
Period"). The Seller and the Purchaser hereby agree that each Company shall be
treated as an S corporation for federal income Tax purposes, and by all states
in which an "S" election is in effect, for the Final S Tax Period of each
Company."
(f) Renumbered Section 11.10 of the Amended and Restated Purchase
Agreement is hereby amended by adding the following subsection (c):
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"(c) Subject to the terms and conditions of Section 11.11, the
Seller hereby agrees to indemnify, defend and hold harmless the
Purchaser Group and each member thereof for, from and against any and
all Damages, directly or indirectly asserted against, resulting to,
imposed upon or incurred by the Purchaser Group or any member thereof,
at any time after the Second Closing Date by reason of or resulting
from the termination of any Employee Benefit Plan that has been
terminated or was otherwise previously sponsored or maintained by
either Company. The amount of indemnification due under this Section
11.10(c) shall be calculated after deduction of (i) any amount of
Damages which is attributable to the action or failure to act of any
member of the Purchaser Group and (ii) any amounts as set forth in
Section 11.8 of this Agreement. The Seller's indemnification
obligations under this Section 11.10(c) are in addition to, separate
from, and not subject to the terms or limitations of, the Seller's
indemnification obligations under Section 11.3, 11.10(a) or 11.12."
(g) Article 12. Renumbered Article 12 of the Amended and Restated
Purchase Agreement is hereby deleted in its entirety and replaced with
the following:
12. Termination.
12.1 Right to Terminate. Notwithstanding anything to the contrary set
forth in this Agreement, this Agreement may be terminated and the transactions
contemplated herein abandoned by notice given in writing as provided herein at
any time prior to the Second Closing (provided, that any right to terminate
other than pursuant to (a) and (b) must be exercised within thirty (30) days
after the terminating party receives written notice of the event giving rise to
such right of termination and further provided, that any right to terminate that
is exercised at any time after the First Closing shall be deemed to be effective
only with respect to the Second Closing Assets):
(a) by mutual consent of the parties hereto;
(b) by either the Purchaser or the Seller if the Second Closing
shall not have occurred by December 31, 2000 (the "Outside Date");
provided, that if on or prior to the Outside Date (but on or after
October 1, 2000), the Nevada State Gaming Control Board, the Nevada
Gaming Commission and any other Governmental Authority whose approval
is required have granted the gaming licenses or the approvals necessary
for the Purchaser to consummate the purchase of the Purchased Assets,
the Outside Date shall be extended to March 5, 2001; provided further,
that the right to terminate this Agreement under this Section 12.1(b)
shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in,
the failure of the Second Closing Date to occur on or before the
Outside Date; and further provided that if the Outside Date is extended
to March 5, 2001 as set forth in this Section 12.1(b), the Purchaser,
or Isle of Capri on behalf of the Purchaser, shall reimburse the Seller
for any obligations incurred by the Seller with respect to Taxes
incurred in respect of the First Closing and the Second Closing not
being
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consummated in the same calendar year, as well as a gross-up
amount for any such reimbursement amounts paid to the Seller. Any
payment made to the Seller in accordance with this Section 12.1(b)
shall be paid within ten (10) days after the Seller makes written
demand upon the Purchaser or Isle of Capri, but in no case earlier than
five (5) business days prior to the date on which the relevant Taxes
are required to be paid to the relevant Taxing Authority.
(c) by either the Purchaser or the Seller if a court of competent
jurisdiction shall have issued a Judgment or Order permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such Judgment or Order or other
action shall have become final and nonappealable;
(d) by the Seller if the Purchaser (x) breaches its
representations and warranties, or (y) fails to comply in any material
respect with any of its covenants or agreements contained herein, and
such breach or non-compliance as set forth in clauses (x) and (y) of
this paragraph shall not have been cured within ten (10) days after
receipt by the Purchaser of written notice specifying particularly such
breach or non-compliance;
(e) by either the Purchaser or the Seller as set forth in Section
12.5(b), or by the Purchaser as set forth in Section 12.4(b);
(f) by the Special Committee on behalf of the Purchaser as set
forth in Section 2.8(d), or Isle of Capri on behalf of the Purchaser as
set forth in Section 2.9(d);
(g) by the Purchaser, if the Seller, Gemini or IMPS (x) breaches
any of their respective representations and/or warranties to the extent
contained in this Agreement or (y) fails to comply in any material
respect with any of their respective covenants and/or agreements
contained in this Agreement, and such breach or non-compliance as set
forth in clauses (x) and (y) of this paragraph shall not have been
cured within ten (10) days after receipt by the Seller of written
notice specifying particularly such breach or non-compliance; and
(h) by the Purchaser, if a material adverse change as described in
Section 8.12 has occurred.
12.2 Obligations to Cease. In the event that this Agreement shall be
terminated pursuant to Section 12.1 hereof, all obligations of the parties
hereto under this Agreement shall terminate and there shall be no liability of
any party hereto to any other party except for the obligations set forth in
Section 13.1 hereof.
12.3 Remedies for Breach. Nothing herein will relieve any party from
liability for any breach of this Agreement. Without limiting the generality of
the foregoing, if the Purchaser breaches this Agreement, the Seller, Gemini and
IMPS shall be entitled to seek specific performance from the
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Purchaser and if the Seller, Gemini or IMPS shall breach this Agreement, the
Purchaser shall be entitled to seek specific performance from any of them.
12.4 Fire or Other Damage.
(a) If, prior to the Second Closing Date, all or any part of the
Property is damaged by fire or other casualty, the Seller shall
promptly inform the Purchaser of same and the following shall apply:
(b) The risk of loss or damage to the Property by fire or other
casualty, until the time of the delivery of the deeds as herein
provided pursuant to Section 2.4(b)(9)(d)-(e) is assumed by the Seller
and the Seller shall repair any such damage or pay insurance as
provided below prior to the Second Closing; provided, that if more than
10% of the rentable square feet of the Property is destroyed or
severely damaged as a result of such casualty and such loss or damage
materially impairs the operation of the Business and the Properties for
at least four (4) months after the date of such loss or damage, but not
more than two (2) months after the Second Closing Date, the Purchaser
shall have the option, exercisable by notice to the Seller within 30
days after receipt of written notice of such loss or damage, to
terminate this Agreement and thereupon this Agreement shall be deemed
null and void and the parties shall be released from all further
obligation and liability hereunder. If less than 10% of the rentable
square feet of the Property is destroyed or severely damaged, if the
condition set forth in the preceding sentence is not satisfied or if
the Purchaser fails to exercise the option hereinabove granted within
the time period provided, this Agreement shall continue in full force
and effect, without any abatement of the Second Closing Purchase Price
by reason of such loss or damage; and the Seller shall repair such
damage prior to Second Closing, or at the option of the Purchaser, at
the Second Closing, the Seller shall pay to the Purchaser the amount of
any insurance proceeds paid by the Seller's insurance company in
connection with such damage less all sums reasonably expended by the
Seller in collecting the same and all sums expended by the Seller
pursuant to this Section 12.4 and shall execute and deliver an
assignment (without recourse to the Seller) of all future sums to be
paid by the Seller's insurance company in connection with such damage.
(c) The Seller shall consult with, and keep the Purchaser advised
of, the Seller's progress in connection with all actions required to
adjust, compromise and collect the proceeds payable under the
applicable policy or policies of casualty insurance. Provided that the
Purchaser has agreed to consummate the sale of the Property following a
casualty, the Seller shall not agree to any settlement of the insurance
proceeds payable in connection with any such casualty without the
Purchaser's approval, which approval shall not be unreasonably
withheld.
(d) The Seller, prior to the Second Closing Date and upon the
collection of the insurance proceeds paid in connection with a
casualty, shall cause to be promptly commenced all work necessary to
restore or repair the damage or destruction caused by such
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casually. The Seller shall cause to be entered into such Contracts
and agreements and cause to be prepared such plans and specifications
as may be necessary to undertake such work, subject in each case to the
approval of the Purchaser, which approval shall not be unreasonably
withheld. Such Contracts, agreements, plans and specifications shall
not be modified or amended in any material respect without the
Purchaser's approval, such approval not to be unreasonably withheld. If
such restoration or repair shall not be completed by the Second Closing
Date, the Second Closing Date shall be adjourned until the restoration
or repair is completed, or at the Purchaser's option, the Seller and
the Purchaser shall proceed with the Second Closing. In such event, at
the Second Closing, the Seller shall assign to the Purchaser any and
all Contracts and agreements entered into by the Seller in connection
with such restoration and repair, together with any plans and
specifications prepared in connection therewith.
12.5 Condemnation.
(a) If, prior to the Second Closing Date, all or any part of the
Property is taken by eminent domain (or is the subject of a pending
taking or a taking which has been announced by a Governmental
Authority, which, in either case, has not been consummated), the Seller
shall promptly give the Purchaser written notice thereof and the
following shall apply:
(b) In the event a "material part of the Property" (as defined
below) is taken (or is the subject of a pending taking or a taking
which has been announced by a Governmental Authority, which, in either
case, has not been consummated), either party may, by written notice to
the other, elect to cancel this Agreement prior to the Closing Date and
thereupon this Agreement shall be deemed null and void and the parties
shall be released from all further obligation and liability hereunder.
(c) In the event an immaterial part of the Property is taken (or
is the subject of a pending taking or a taking which has been announced
by a Governmental Authority, which, in either case, has not been
consummated), neither party shall have any right to cancel this
Agreement or if neither party exercises its right to terminate pursuant
to Section 12.5(b), title shall nonetheless close in accordance with
this Agreement, without any abatement on the part of the Purchaser by
reason of such taking; provided, that, at the Second Closing, the
Seller shall pay to the Purchaser the amount of any award for or other
proceeds on account of such taking which may have been paid as a result
of such taking and shall execute and deliver an assignment (without
recourse to the Seller) of all future sums to be paid by the
Governmental Authority in connection with such taking.
(d) For purposes of this Section 12.5, "material part of the
Property" shall mean 10% of the rentable square footage of the
Property, or a lesser portion of the Property as, when so taken, would
leave remaining a balance of the Property which, due either to the area
so taken or the location of the parts so taken in relation to the part
not so taken, would not,
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under economic conditions, Zoning laws or building regulations
then existing or prevailing, readily accommodate a new or reconstructed
building or buildings of a type and size generally similar to the
building or buildings existing on the date of such taking or would
result in the lack of reasonable access to public roads.
(e) The Seller, prior to the Second Closing Date and upon the
collection of the award made in connection with a taking, shall cause
to be promptly commenced all work necessary to restore or repair the
damage or destruction caused by such taking. The Seller shall cause to
be entered into such Contracts and agreements and cause to be prepared
such plans and specifications as may necessary to undertake such work,
subject in each case to the approval of the Purchaser, which approval
shall not be unreasonably withheld. Such Contracts, agreements, plans
and specifications shall not be modified or amended without the
Purchaser's approval, such approval not to be unreasonably withheld. If
such restoration or repair shall not be completed by the Second Closing
Date, then the Second Closing Date shall be adjourned until restoration
or repair is completed, or at the Purchaser's option, the Seller and
the Purchaser nevertheless shall proceed with the Second Closing. In
such event, at the Second Closing, the Seller shall assign to the
Purchaser any and all Contracts and agreements entered into by the
Seller in connection with such restoration and repair, together with
any plans and specifications prepared in connection therewith."
(i) Sections 13.2, 13.3 and 13.6. Renumbered Sections 13.2, 13.3
and 13.6 of the Amended and Restated Purchase Agreement are hereby deleted in
their entirety and replaced with the following:
"13.2 Transfer Taxes.
(a) All stock transfer, Real Property transfer, documentary,
registration, value-added and other similar Taxes (including interest,
penalties and additions thereto) incurred in connection with the
transactions contemplated by the Agreement shall be borne by the
Seller, and the Seller shall indemnify the Purchaser for any such Taxes
incurred by the Purchaser as a result of the Seller's failure to timely
pay such Taxes. All sales and use Taxes incurred in connection with the
transactions contemplated by this Agreement shall be borne by the
Purchaser.
(b) The Seller shall deliver to the Purchaser at or prior to the
Second Closing a certificate, in form and substance reasonably
satisfactory to the Purchaser, certifying that all payments under this
Agreement are exempt from withholding pursuant to the Foreign
Investment in Real Property Tax Act.
13.3 Publicity. At all times from the date hereof to the Second
Closing, the parties will consult with each other before issuing any
press releases or otherwise making any public
-38-
<PAGE>
statement with respect to this Agreement or the transactions
contemplated herein and shall not issue any such press release or make
any such public statement prior to such consultation or as to which the
other party promptly and reasonably objects, except as may be required
by Law based on the advice of such party's counsel or by obligations
pursuant to any listing agreement with any national securities exchange
or inter-dealer quotation system, in which case the party proposing to
issue such press release or make such public announcement shall notify
and use its best efforts to consult in good faith with the other party
before issuing any such press release or making any such public
announcements.
13.6 Assignment; Binding Effect; Successors and Assigns. Prior to the
Second Closing, none of the parties hereto shall assign (except by
means of the Merger as contemplated by the Merger Agreement) any rights
hereunder without the prior written consent of the other parties. This
Agreement will be binding upon and inure to the benefit of the parties
hereto (including following the change of control of any such party or
following any sale, or other transfer, of all or substantially all of
the assets of any such party) and their respective successors
(including a purchaser of all or substantially all of the assets of or
a controlling equity interest in any such party) and permitted assigns.
Notwithstanding the foregoing or any other provision of this Agreement,
the Seller may transfer the Shares or any of the Seller's right, title
or interest in or to any Assets (including the Property) to members of
his family or trusts for the benefit of members of his family or
pursuant to his will or the laws of intestate succession, so long as
each transferee shall have agreed to be bound by the terms of this
Agreement (and each such transferee shall be deemed to be included in
the term "Seller"); provided that no such transfer shall release the
Seller from any of his representations, warranties, covenants or
obligations under this Agreement; and further provided that no such
transfer shall invalidate either Company's status as an "S Corporation"
under Sections l361 through 1379 of the Code and further provided, that
no such transfer shall materially and adversely affect the ability of
any party to timely perform its obligation under this Agreement or
otherwise to consummate the transactions contemplated by this
Agreement."
(i) Section 13.15. The following is hereby inserted as a new
Section 13.15 of the Amended and Restated Purchase Agreement:
"13.15 Third Party Beneficiary. The parties to this Agreement expressly
acknowledge and agree that this Agreement confers certain benefits
upon, and creates certain rights in favor of, Isle of Capri, including,
without limitation, Sections 2.9 and 12.1(f) of this Agreement and the
right, from and after the closing date of the Merger Agreement, to
cause Purchaser to exercise its rights under this Agreement.
Notwithstanding the foregoing, the parties to this Agreement expressly
acknowledge and agree that Isle of Capri shall have no obligations
under this Agreement."
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<PAGE>
(j) Schedule 3.11. Schedule 3.11 shall be deemed amended by adding a
reference to the amendments to the License Agreement and the Company License
Agreement, the Purchaser License Agreement, and that certain marketing agreement
dated as of the date hereof between Gemini and IMPS, relating to the provision
of certain marketing services by IMPS to Gemini consistent with past practice,
as set forth in Section 6.1(c)(4) of the Amended and Restated Purchase Agreement
as amended by this First Amendment.
(k) Any provision in the Amended and Restated Purchase Agreement
notwithstanding, Gemini may distribute any moneys Gemini receives under the
Amended and Restated Purchase Agreement as amended hereby.
3. Authorization of First Amendment. The parties hereto each represent and
warrant that their respective execution, delivery and performance of this First
Amendment has been duly authorized (including by the Special Committee), this
First Amendment is a legal, valid and binding obligation of each such entity
enforceable in accordance with its terms, and this First Amendment does not
conflict with any agreement or obligation of the respective parties.
4. Counterparts. This First Amendment may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
5. Governing Law. This First Amendment shall be a contract made under and
governed by the laws of the State of Delaware, without regard to conflict of law
principles.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this First Amendment and
caused the same to be duly delivered on their behalf on the day and year first
written above.
/s/ Andrew H. Tompkins
------------------------------------
Andrew H. Tompkins
GEMINI, INC.
By: /s/ Andrew H. Tompkins
---------------------------------
Name: Andrew H. Tompkins
Title: President
INTERNATIONAL MARCO POLO'S
SERVICES, INC.
By: /s/ Andrew H. Tompkins
---------------------------------
Name: Andrew H. Tompkins
Title: President
LADY LUCK GAMING CORPORATION
By: /s/ Rory J. Reid
---------------------------------
Name: Rory J. Reid
Title: Senior Vice President
ISLE OF CAPRI CASINOS, INC.
solely with respect to
Sections 2.9(d) and 12.1(f)
By: /s/ Allan B. Solomon
---------------------------------
Name: Allan B. Solomon
Title: Executive Vice President,
General Counsel and Secretary
-41-
<PAGE>
EXHIBIT A
PURCHASER LICENSE AGREEMENT
-42-
<PAGE>
EXHIBIT C
SERVICES AGREEMENT
-43-
<PAGE>
EXHIBIT 10.1
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
<PAGE>
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, 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
2
<PAGE>
11,739 shares of Lady Luck Common Stock which are subject to the
Uboldi Agreement, Buyer will receive good and marketable title to the
Shares, free and clear of all liens, claims, encumbrances and security
interests of any kind. Stockholder has sole power and authority to vote
and to sell the Shares, without restrictions, with respect to all of
the Shares.
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
3
<PAGE>
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 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.
4
<PAGE>
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.
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.
5
<PAGE>
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
<PAGE>
EXHIBIT 10.2
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
i
<PAGE>
5.1.1. Resolutions, etc...........................................16
5.1.2. Delivery of Note...........................................16
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
ii
<PAGE>
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
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
iii
<PAGE>
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
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.
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"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
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(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;
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(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.
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"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.
"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.
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"Hazardous Material" means
(a) any "hazardous substance", as defined by CERCLA;
(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.
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"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
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First Trust National Association, as amended and supplemented, relating to the
11 7/8% First Mortgage Notes.
9
"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
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(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.
"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
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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.
"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.
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"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.
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.
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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.
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
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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.
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.
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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.
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.
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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. 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.
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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).
(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
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(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 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
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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.
(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.
SECTION 5.1.11. 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
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(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 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.
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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, 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.
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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,
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
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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;
(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;
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(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 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
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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 7.1.1. 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 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
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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.
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
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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;
(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.
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(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;
(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.
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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 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.
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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 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:
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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).
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
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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.
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
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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.
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
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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.
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.
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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 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
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(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;
(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
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(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 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.
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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
(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,
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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 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.
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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
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
40
<PAGE>
(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
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
41
<PAGE>
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]
42
<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
43
<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
<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 of
damages reported.
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 of
damages reported.
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 of
damages reported.
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.
Rick Rosacker
<PAGE>
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.
ITEM 7.2.2(b)
<PAGE>
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>
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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 The Borrower
such proceeds ---------------------------
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
C-1
<PAGE>
[Affix Corporate Seal]
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
<PAGE>
FURTHER RESOLVED, that the President or any Vice President and the
Secretary or any Assistant Secretary of this Corporation, and each of them, 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 resolutions, 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 evidence of the approval thereof by such officer and by this Board
of Directors.
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EXHIBIT III
Name of Officer Office Signature
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EXHIBIT 10.3
EXCLUSIVE LICENSE AGREEMENT
EXCLUSIVE LICENSE AGREEMENT dated as of October 5, 1999 (this
"Agreement"), by and among Lady Luck Gaming Corporation, a Delaware corporation
("Licensor"), and Gemini, Inc., a Nevada corporation ("Gemini") and Andrew H.
Tompkins ("Tompkins", and together with Gemini, "Licensee").
RECITALS
WHEREAS, Licensor will acquire certain rights in the Property at the
First Closing, as defined in the Amended and Restated Purchase Agreement (as
such terms are defined below).
WHEREAS, pursuant to that certain Purchase Agreement dated as of August
19, 1999, as amended and restated as of August 31, 1999, effective as of August
19, 1999 (as so amended and restated, and as further amended and/or restated
from time to time, the "Amended and Restated Purchase Agreement"), by and among
the Licensor, Gemini, International Marco Polo's Services, Inc. ("IMPS") and
Tompkins, the Licensor desires to grant, and Licensee desires to obtain, free
and clear of any threat of litigation or loss of the goodwill built up in its
business, an exclusive perpetual license for the use of the Property in the
Territory (as defined below), subject to termination as provided herein.
WHEREAS, pursuant to that certain Agreement and Plan of Merger dated as
of the date hereof (the "Merger Agreement"), by and among Isle of Capri Casinos,
Inc., a Delaware corporation ("Isle of Capri"), Isle Merger Corp., a Delaware
corporation and a wholly-owned subsidiary of Isle of Capri ("Merger Sub"), and
Licensor, Merger Sub shall be merged with and into Licensor, the separate
corporate existence of Merger Sub shall cease and Licensor shall continue as the
surviving corporation and as a wholly-owned subsidiary of Isle of Capri (the
"Merger").
NOW THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein,
intending to be legally bound hereby, the parties hereto agree as follows:
1. Exclusive License.
a. Grant. Licensor hereby grants to Licensee, and Licensee
accepts, an exclusive fully paid license to use the Property (the "License") in
perpetuity (the "Term") within the Territory, provided, however, that Licensee
may only use the License in Downtown Las Vegas in connection with the Lady Luck
Casino & Hotel (including any expansion of Licensee's business in Downtown Las
Vegas), and further provided that this Agreement shall terminate upon the
consummation of the sale of all of the capital stock of Gemini and the Lady Luck
Casino & Hotel located in Las Vegas, Nevada to Licensor as contemplated by the
Amended and Restated Purchase Agreement. Licensor acknowledges that such sale
may never occur. Such uses shall be limited to use in connection with
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(i) the operation of and services provided by hotels, clubs, restaurants and
casinos located in Downtown Las Vegas (the "Operations"), (ii) the advertising,
publicity and promotion (in any and all media and signage now known or hereafter
devised) of the Operations and (iii) the manufacturing, distribution, marketing,
advertising, publicity, promotion and sale of products under or referencing any
of the names, logos, or other items included within the Property (the uses
described in (i) through (iii) are referred to hereinafter as the "Permitted
Uses"). Nothing herein contained shall be construed as an assignment or grant to
Licensee of any right, title, or interest in or to the Property. All rights
relating to the Property, except for the License, are reserved by Licensor;
provided, that it is expressly understood that such reservation of rights
permits each of Licensor, Isle of Capri and its respective affiliates to use or
license others to use(only in a manner substantially similar to the Permitted
Uses), the Property only outside the State of Nevada; provided, further, that
the Gemini Names (as hereafter defined) may not be used by Licensor, or licensed
by Licensor to be used, even outside the State of Nevada (the "Reserved
Rights").
For purposes of this Agreement, "Property" means any of the
following, whether presently existing or hereafter created (A) all registered
and unregistered trade names, trademarks, service marks, copyrights, and rights
under or related to copyrights of Licensor, including without limitation, those
listed on Schedule 1(a) hereto and derivatives thereof; (B) the Internet domain
names of Licensor listed on Schedule 1(a) hereto; (C) all designs, patterns,
colors, symbols, art work, logos, indicia, trade names, corporate names, company
names, business names, trade dress, trade styles, and other source or business
identifiers of the Licensor related to the trademarks, service marks, copyrights
and rights under or related to copyrights of Licensor described in Clause (A)
above; (D) all unpatented secret formulas or processes known to a limited number
of affiliates of Licensor who use such formulas or processes, to a competitive
advantage, with respect to business of the Licensor, including, without
limitation, odds making, player tracking systems and, subject to the last
sentence of this paragraph, the mailing list ("Mailing List") which currently
consists of over five million (5,000,000) casino patrons from within and without
the United States (as updated and expanded from time to time during the term of
this Agreement)(the "Trade Secrets"), and (E) all common law and other rights
therein which relate to the business of the Licensor and including, without
limitation, those listed in Schedule 1(a) hereto. In addition, "Property"
includes, without limitation, any derivations or variations of any of the
foregoing. However, "Property" does not include any names of persons on the
Mailing List who are not customers of, and which are not used in connection with
the marketing of, the Lady Luck Casino & Hotel in Las Vegas, Nevada (the names
included in the Property being called "Gemini Names" and the names not included
in the Property being called "Excluded Names").
b. Territory. For purposes of this Agreement, "Territory" means
Downtown Las Vegas; provided that in the event a Permitted Use by the Licensee
relating to advertising, publicity, promotion, marketing or distribution shall
occur outside Downtown Las Vegas (whether through any on-line service, worldwide
or other computer network (e.g., the Internet), etc., or any other form of
advertising, publicity, promotion, marketing or distribution), each such use
shall not be deemed a breach of this Agreement and is expressly permitted.
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c. Royalty. Licensee shall pay to the Licensor a one-time license fee
of $100, and, from and after the date hereof, Licensee shall have a fully
paid-up License to use the Property as described above.
2. Covenants.
a. Compliance with Laws. Each party agrees to comply in all material
respects with the provisions of applicable law, including without limitation,
the notice provisions of the copyright and trademark law of the United States
and other jurisdictions in the Territory. Each party agrees to place appropriate
notice of any applicable trademark, service mark or copyright with respect to
the Property.
b. Ownership and Goodwill.
i. Each party recognizes the value of the goodwill associated with
the Property and acknowledges that all rights based upon or derived from the
Property, including all rights therein and goodwill pertaining thereto, belong
to Licensor, subject to the License, and that the Property has a secondary
meaning in the mind of the public associated with Licensor and, as used subject
to the License, with Licensee. Each party agrees that it will not, during the
Term, do or permit to be done any act that will invalidate, attack or affect in
any manner whatsoever Licensor's rights based upon or derived from the Property
as well as the goodwill associated therewith.
ii. Each party recognizes and acknowledges that any intellectual
property developed by the Licensee or on its behalf ("Developments") that is not
similar to, variations of or derivatives from the Property, whether or not used
in conjunction with any of the Property and/or the Operations, shall belong
exclusively to the Licensee (the "Licensee Property"); provided, however, that
the Licensee shall only own the Developments and not the Property. Licensor
agrees that it will not do or permit to be done any act that will invalidate,
attack or affect in any manner whatsoever Licensee's rights based upon or
derived from the Licensee Property as well as the goodwill associated therewith.
c. Quality. Each party agrees that it shall use, and shall authorize
the use of, the Property with such style, appearance and quality as to be
adequate and suited for exploitation to the best advantage and to the protection
and enhancement of the Property and the goodwill pertaining thereto, and that
such uses shall in no manner reflect adversely upon the Property; provided,
however, that the foregoing does not require that the Lady Luck Casino & Hotel
located in Las Vegas, Nevada, be operated in a different manner than it is
currently operated. Licensee shall submit to Licensor a sample of all uses of
the Property to approve the design and quality of such use of the Property,
which approval shall not be unreasonably withheld, conditioned or delayed and
which approval shall be (i) deemed given, and the submission of a sample shall
not be required, if the uses of the Property by the Licensee are the same as or
similar to (x) the Licensor's past or future practices, (y) the Licensee's past
practices, or (z) uses previously approved by the Licensor, or (ii) evidenced by
written notice executed by Licensor. Licensor's failure to approve or disapprove
any
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such sample by written notice within thirty (30) days of receipt of such sample
shall be deemed approval of such sample.
d. Advertising and Promotion. Each party agrees that it shall not
engage, participate or otherwise become involved in any activity or course of
action including, without limitation, advertising and promotion, that diminishes
and/or tarnishes the image and/or reputation of the Property.
e. Consultation. The parties agree to consult with each other whenever
either party reasonably deems it necessary regarding all new logos and designs
or any other substantive changes with respect to the Property, which would
materially adversely affect the rights, obligations and benefits of either party
to this Agreement.
f. Noninterference; No Encumbrances. Licensor agrees that it shall not
create, incur or suffer to exist any claim, lien, charge or encumbrance upon the
Property or the Excluded Names.
g. Cooperation. Each party agrees to cooperate with the other in
obtaining and enforcing copyright, service mark, trade name, trade dress and
trademark protection for the Property, including without limitation, in
connection with suits and claims for infringement of the Property.
h. No Conflicts. The Licensor shall not grant to any third party a
license relating to the Property within the State of Nevada, or authorize or
permit any violation of the rights granted to the Licensee hereunder. The
Licensor shall not, under any circumstances, use or authorize the use of any of
the Reserved Rights within the State of Nevada, or beyond the Permitted Uses.
i. Trade Secrets. Each Party shall not use, disclose or make accessible
the Trade Secrets to any third party, except that each party may disclose the
Trade Secrets only to its personnel and agents that have a need to know the
Trade Secrets and to IMPS (provided IMPS first agrees to be bound by the
foregoing confidentiality covenants). The Licensor shall fully disclose to
Licensee any Trade Secrets, whether now known or hereafter created.
3. Protection of the Property.
a. Enforcement of Property Rights. Each party agrees to assist the
other in protecting the intellectual property rights with respect to the
Property as follows:
i. Registration. Licensor agrees that it shall seek to obtain and
maintain, with counsel reasonably satisfactory to the Licensee, a registration
from the United States Patent and Trademark Office, the United States Register
of Copyrights, appropriate state agencies within the United States, or any other
comparable agencies in other jurisdictions outside of the United States with
respect to uses of the Property by either the Licensee or Licensor or any
modifications thereto or derivations thereof (the "Registrations") and shall
renew all such registrations, as required,
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maintain notices of allowance and otherwise take all appropriate action relating
to the Registrations, including, without limitation, the filing of Statements of
Use, Requests for Extensions of Time to File Statements of Use, Affidavits of
Use and Affidavits of Incontestability. Licensee shall have the right to take
all necessary steps to obtain and maintain the Registrations and take all action
relating to such Registrations as described above where Licensor shall have
failed to do so in a manner satisfactory to Licensee and Licensor shall
reimburse Licensee for its out-of-pocket costs and the fees and expenses of
counsel and other professionals incurred in obtaining and maintaining any
Registration on the Property. All registrations shall be obtained and maintained
in Licensor's name. Each party shall furnish the other with copies of each
registration application filed and registration certificate so obtained, as well
as copies of all other papers relating to the Registration including, without
limitation, correspondence to and from government agencies and third parties
contesting any claim to the Property.
ii. Infringement. Licensor may commence or prosecute any claims or
suits with respect to any infringements or possible infringement of the Property
in its own name. If Licensor elects to prosecute any such claim or suit,
Licensor shall notify Licensee of such election and bear all costs and expenses,
including legal fees, incurred in connection with any such suits and Licensee
shall not institute any suit or take any action on account of any infringements
or possible infringements of the Property without first notifying and consulting
with Licensor. If Licensor elects not to prosecute any such claim or suit within
fourteen (14) days after the receipt of written notice of Licensee requesting it
to do so, then Licensee shall have the right to prosecute any such infringement
or possible infringement. If Licensee elects to do so, costs and expenses,
including legal fees, incurred in connection with any such suits shall be borne
by Licensee (subject to paragraph 4, to the extent applicable). If either party
institutes a suit for infringement pursuant to this Agreement, the other party
shall have the right to participate and represent its interest through other
counsel of its own choosing and at its cost and expense, including legal fees,
incurred in connection with such participation.
iii. Remedies. In the event that either party obtains any recovery
as a result of any claims or suits commenced, prosecuted or settled, the
allocation of such recovery (net of the cost and expenses, including legal fees,
reasonably incurred in connection with any such suit or claim) shall be
allocated as follows: (i) in the event that either party bears all costs and
expenses, including legal fees, incurred in connection with any such claims or
suit, such party shall receive one hundred percent (100%) of any such recovery,
or (ii) in the event that the Licensor and Licensee each bear a portion of the
costs and expenses, including legal fees, incurred in connection with any such
claims or suits, then such recovery shall be allocated between the Licensor and
Licensee in proportion to costs and expenses so incurred.
b. Damages for Failure to Protect the Property. Neither party shall
have any rights against the other for damages or other remedy by reason of
failure to prosecute, or the settlement of, any alleged infringements by others
of the Property; provided, however, that neither party shall enter into a
settlement of any alleged infringements by others of the Property which in
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any way may adversely affect the Property, the License, the Licensor's rights in
the Property or the Licensee's rights granted under the License.
c. Notice of Infringement. Each party agrees to notify the other
promptly in writing of any adverse use of the Property or other designation
similar to the Property of which such party is or becomes aware.
4. Indemnification.
a. Infringement. Licensor covenants and agrees to indemnify and hold
harmless, and to reimburse within thirty (30) days after demand, Licensee and
each subsidiary and affiliate or sub-licensee of Licensee and their respective
successors, assigns, members, partners, stockholders, directors, officers,
agents and employees against any and all liabilities, damages, costs and
expenses (including reasonable attorneys' fees) incident to, arising out of,
resulting from or incurred in connection with any claim that Licensee's use of
the Property in accordance with the terms of this Agreement infringes on the
rights of any third party.
b. Misrepresentation by Licensor. Licensor also agrees to indemnify and
hold harmless Licensee, its subsidiaries, sublicensees and their respective
officers, directors and employees from and against any and all damages, costs
and expenses (including reasonable attorney's fees) incurred by any of them
arising out of or in connection with (i) any misrepresentation or inaccuracy of
Licensor or any of its officers, directors or employees (the "Licensor
Affiliates"), whether contained in the representations and warranties in this
Agreement or otherwise communicated in writing to Licensee, (ii) any breach of
any covenant or agreement of the Licensor or the Licensor Affiliates with the
Licensee, whether contained in this Agreement or otherwise reduced by writing,
and (iii) any use of the Property by the Licensor during the Term.
5. Remedies Upon Breach.
a. Breach. In the event of any breach of this Agreement, the party
alleging such breach shall give written notice of the breach to the breaching
party and shall specify a reasonable period of time (not less than ninety (90)
days) within which the breaching party is to cure the breach.
b. Remedies. In the event that such breach has not been cured within
the specified period, (i) the exclusive remedies of the Licensor shall be as
follows: (x) in the event of a breach of (a) the quality control provisions set
forth in paragraph 2(c) or (b) the territorial use of the Property provisions
set forth in paragraph 1(b) by the Licensee, then the Licensor shall have the
right to obtain an injunction against the Licensee from any court having
jurisdiction over the matter restraining any further breach of such quality
control provisions or of such territorial use provisions with respect to the
particular service or product involved, the granting of which the Licensee shall
not oppose on the grounds that monetary damages are sufficient or to terminate
this Agreement as provided in paragraph 6(iii) and (y) in the event of any
breach by the Licensee, the Licensor shall have the right to seek and receive
monetary damages for breach of contract from the breaching party;
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provided, that it is expressly agreed that in no event shall the Licensor have
the right to terminate or rescind this Agreement or obtain equitable relief,
except as expressly provided herein; and (ii) Licensee shall have the right to
pursue any remedies it may have in law or equity, including, without limitation,
the right to seek to obtain an injunction against the Licensor from any court
having jurisdiction over the matter restraining any further breach, the granting
of which the Licensor shall not oppose on the grounds that money damages are
sufficient.
6. Termination
Licensor may terminate this Agreement upon written notice given to
Licensee in the event of any one of the following:
i. dissolution of Licensee, other than in connection with a
corporate reorganization; and
ii. filing by Licensee of a voluntary petition in bankruptcy,
filing of an involuntary petition in bankruptcy against Licensee (which petition
remains unlifted or unstayed for sixty (60) days), appointment by a court of a
temporary or permanent receiver, trustee or custodian for Licensee's business or
a general assignment by Licensee for the benefit of Licensee's creditors; and
iii. in the event that within a one (1) year period Licensee has
failed to cure at least three (3) material breaches of any agreement, covenant
or obligation contained in paragraph 2(c) within the time period provided in
Section 5(a) of this Agreement. A breach shall be deemed material only if it
results in a material diminution of the value of the Property. For the purposes
of this paragraph 6(iii), a continuing breach shall only be considered a single
breach.
7. Effect of Termination
a. Within sixty (60) days after the termination or expiration of this
Agreement, Licensee shall cease all use of the Property, except that in the case
of signs and other media which cannot reasonably practicably be replaced within
such sixty (60) day period Licensee shall have up to one (1) year from such
termination or expiration to cease such use of the Property.
b. After termination of this Agreement, all rights granted herein shall
revert to Licensor who may continue to license others to use the Property in any
way whatsoever.
c. Licensee acknowledges that its failure to cease all use of the
Property at the termination or expiration of this Agreement as provided in
paragraph 7(a) will result in immediate and irreparable damage to Licensor.
Licensee acknowledges and admits that there is no adequate remedy at law for
failure to cease use of the Property and agrees that in the event of such
failure, Licensor shall be entitled to seek equitable relief by way of
injunctive relief and such other relief as any court with jurisdiction may deem
just and proper.
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8. Representations and Warranties of Gemini. Gemini hereby represents and
warrants as follows:
a. Organization; Authority; Enforceability. Gemini is a corporation,
duly organized, validly existing and in good standing under the laws of the
State of Nevada, and has all requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Gemini, has been duly authorized by all
necessary corporate action, and constitutes the legal, valid and binding
obligation of Gemini enforceable in accordance with its terms.
b. No Conflict or Breach. The execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby, and the fulfillment of
the terms hereof, will not (i) constitute, with or without the giving of notice
or passage of time, or both, a breach of any of the terms or provisions of, or a
default under any agreement, indenture or other instrument to which Gemini is a
party or by which it or any of its property is bound, (ii) cause, or give any
person grounds to cause, with or without the giving of notice or passage of
time, or both, the maturity of any material liability or obligation of Gemini to
be accelerated, increased or otherwise affected, or (iii) conflict with Gemini's
Articles of Incorporation or By-laws, or any judgment, decree, order or award of
any court, governmental body or arbitrator binding upon Gemini, or any law,
rule, or regulation applicable to it.
c. Approvals. No consent, action, approval or authorization prescribed
by any law, rule or regulation, or by any agreement to which Gemini is a party,
is required in order to permit the consummation of the transactions contemplated
by this Agreement.
d. No Legal Bar. Gemini is not prohibited by any order, writ,
injunction or decree from consummating the transactions contemplated by this
Agreement, and no action or proceeding is pending or, to the best of Gemini's
knowledge, threatened against Gemini which questions the validity of this
Agreement or any of the actions which the parties hereto have taken in
connection herewith or which it is contemplated they shall take in connection
herewith.
9. Representations and Warranties of Tompkins. Tompkins hereby represents
and warrants as follows:
a. No Conflict or Breach. The execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby, and the fulfillment of
the terms hereof, will not (i) constitute, with or without the giving of notice
or passage of time, or both, a breach of any of the terms or provisions of, or a
default under any agreement, indenture or other instrument to which Tompkins is
a party or by which he or any of his property is bound, (ii) cause, or give any
person grounds to cause, with or without the giving of notice or passage of
time, or both, the maturity of any material liability or obligation of Tompkins
to be accelerated, increased or otherwise
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affected, or (iii) conflict with any judgment, decree, order or award of any
court, governmental body or arbitrator binding upon Tompkins, or any law, rule,
or regulation applicable to him.
b. Approvals. No consent, action, approval or authorization prescribed
by any law, rule or regulation, or by any agreement to which Tompkins is a
party, is required in order to permit the consummation of the transactions
contemplated by this Agreement.
c. No Legal Bar. Tompkins is not prohibited by any order, writ,
injunction or decree from consummating the transactions contemplated by this
Agreement, and no action or proceeding is pending or, to the best of Tompkins'
knowledge, threatened against Tompkins which questions the validity of this
Agreement or any of the actions which the parties hereto have taken in
connection herewith or which it is contemplated they shall take in connection
herewith.
10. Licensor. Licensor represents and warrants as follows:
a. Organization and Authority. Licensor is a corporation, duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Licensor, has been duly authorized by
all necessary corporate action on the part of Licensor, and constitutes the
legal, valid and binding obligation of Licensor, enforceable in accordance with
its terms.
b. No Conflict or Breach. The execution and delivery of this Agreement,
the consummation of the transactions contemplated hereby and the fulfillment of
the terms hereof will not (i) constitute, with or without the giving of notice
or passage of time, or both, a breach of any of the terms or provisions of, or a
default under, any agreement, indenture or other instrument to which Licensor is
a party or by which Licensor or any of its property is bound, (ii) cause, or
give any person grounds to cause, with or without the giving of notice or
passage of time, or both, the maturity of any material liability or obligation
of Licensor to be accelerated, increased or otherwise affected, or (iii)
conflict with Licensor's Certificate of Incorporation or By-Laws, or any
judgment, decree, order or award of any court, governmental body or arbitrator
binding upon Licensor, or any law, rule or regulation applicable to Licensor. To
the Licensor's knowledge, after due inquiry, there are no license agreements,
arrangements or understandings with respect to the Property other than this
Agreement, and Licensor has no obligation to grant a License to or enter into an
agreement, arrangement or understanding with any third party with respect to the
Property.
c. Approvals. No consent, action, approval or authorization prescribed
by any law, rule or regulation or any agreement to which Licensor is a party is
required in order to permit the consummation of the transactions contemplated by
this Agreement.
d. No Legal Bar. Licensor is not prohibited by any order, writ,
injunction or decree from consummating the transactions contemplated by this
Agreement, and no action or proceeding is pending or, to the best of Licensor's
knowledge, threatened against Licensor which
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questions the validity of this Agreement or any of the actions which the parties
hereto have taken in connection herewith, or which it is contemplated they shall
take in connection herewith. To the Licensor's knowledge, after due inquiry,
there is no action or proceeding relating to the Property, or any legal,
administrative or other proceeding that may adversely affect the License or the
Property.
e. Solvency; Fraudulent Conveyance. The liabilities of the Licensor do
not exceed its assets. Immediately after giving effect to the License pursuant
to the terms of this Agreement, the Licensor will not (i) be rendered insolvent,
(ii) be left with unreasonably small capital with which to engage its business
or (iii) have incurred indebtedness beyond its ability to pay such indebtedness
as it matures. No transfer of property is being made and no obligation is being
incurred in connection with the transactions contemplated by this Agreement with
the intent to hinder, delay or defraud either present or future creditors of the
Licensor.
11. Miscellaneous.
a. Effectiveness. As a condition precedent to the effectiveness of any
of the terms of this Agreement, Licensor shall have consummated the Merger in
accordance with the terms of the Merger Agreement. If the Merger is not
consummated in accordance with the terms of the Merger Agreement, the terms of
this Agreement shall be given no effect. This Agreement shall become effective
on the First Closing Date (as defined in the Amended and Restated Purchase
Agreement).
b. No Waiver. No action taken by any party hereto shall be deemed to
constitute a waiver by such party of compliance with any covenant or agreement
contained in this Agreement; no course of dealing between the parties hereto and
no failure or delay on the part of any party hereto in exercising any right,
power, or privilege hereunder shall operate as a waiver thereof and no single or
partial exercise of any right, power or privilege shall preclude any other or
future exercise thereof or the exercise of any other right, power or privilege.
c. Entire Agreement; Amendments. This Agreement along with the
Schedules hereto constitute the entire agreement, and supersedes all prior and
contemporaneous agreements and understandings, whether oral or written, between
the parties hereto with respect to the subject matter hereof. No modification,
amendment or waiver of any provision of this Agreement shall be effective unless
in writing and signed by the party or parties against whom enforcement thereof
is sought, and any such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.
d. Assignment. The parties may assign the License or any of their
respective rights hereunder; provided, however, that (i) the Licensee may only
assign the License to a party who is purchasing the Lady Luck Casino & Hotel
located in Las Vegas, Nevada, or to any of its affiliates, and (ii) any such
assignment shall not become effective until such time as (1) the assignee
executes an instrument binding it to the terms of this Agreement, (2) the
assigning party provides written notice of such assignment to the other party,
and (3) in the event of an assignment by the
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Licensor, the Licensor provides an opinion of counsel (reasonably satisfactory
to the other party) stating that any such assignment includes all of the
goodwill associated with the Property, that all of the Property shall be
assigned and that any such transaction shall not constitute an "assignment in
gross" or might otherwise adversely affect the Property or the License.
e. Power of Attorney. Licensor hereby makes, constitutes and appoints
Licensee its true and lawful attorney, in its name, place and stead, to execute
documents, and take actions on behalf of the Licensor for the limited purpose of
carrying out the terms and conditions of this Agreement, which permit Licensee
to act on behalf of Licensor.
f. Specific Performance; Jurisdiction. Licensor and Licensee each
acknowledge that the License is unique and that Licensor and/or Licensee may
have no adequate remedy at law for the failure by either of them to perform
their respective obligations hereunder. Accordingly, Licensor and Licensee each
agrees that, subject to the provisions of paragraph 5(a), in the event of any
such failure, the non breaching party shall have the right to obtain an
injunction as set forth in paragraph 5(b).
g. Notices. Any notice, demand, request, waiver, or other communication
under this Agreement shall be in writing (including facsimile or similar
writing) and shall be deemed to have been duly given (i) on the date of service
if personally served, (ii) on the third day after mailing if mailed to the party
to whom notice is to be given, by first class mail, registered, return receipt
requested, postage prepaid, or (iii) on the date sent if sent by telecopier, to
the parties at the following addresses or facsimile numbers (or at such other
address or facsimile number for a party as shall be specified by like notice):
If to Licensor to:
Lady Luck Gaming Corporation
220 Stewart Avenue
Las Vegas, Nevada 89101
Attention: General Counsel
Fax No.: (702) 477-3003
With a copy to:
Isle of Capri Casinos, Inc.
711 Dr. Martin Luther King, Jr. Blvd.
Biloxi, Mississippi 39530
Attention: Chief Financial Officer
Fax No.: (228) 435-5998
Mayer, Brown & Platt
190 South La Salle Street
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Chicago, Illinois 60603-3441
Attention: Paul Theiss, Esq.
Fax No.: (312) 706-8218
If to Gemini, Inc., to:
Gemini, Inc.
206 North Third Street
Las Vegas, NV 89101
Attention: Andrew H. Tompkins
Fax No.: (702) 258-8175
If to Tompkins, to:
Andrew H. Tompkins
c/o Lady Luck Casino Hotel
206 North Third Street
Las Vegas, NV 89101
Fax No.: (702) 258-8175
With a copy in the case of Gemini and Tompkins to:
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York 10022
Attention: Robert M. Friedman, Esq.
Fax No.: (212) 758-9526
and a copy to:
Lionel Sawyer & Collins
1700 Bank of America Plaza
300 South Fourth Street
Las Vegas, Nevada 89101
Attention: Jeffrey P. Zucker, Esq.
Fax No.: (702) 383-8845
h. Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of and be enforceable by the parties hereto and their respective
successors, assigns, heirs and legal representatives.
i. Severability. The invalidity of all or part of any paragraph of this
Agreement shall not render invalid the remainder of such paragraph or of this
Agreement. If any provision of
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this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
j. Headings. The headings of this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
k. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
taken together shall be deemed to constitute a single instrument.
l. Choice of Law and Venue; Jury Trial Waiver. The validity of this
Agreement, its construction, interpretation, and enforcement, and the rights of
the parties hereto with respect to all matters arising hereunder or related
hereto shall be determined under, governed by, and construed in accordance with
the laws of the State of Nevada, without giving effect to its conflict of law
principles. The Licensor and the Licensee waive their respective rights to a
jury trial of any claim or cause of action based upon or arising out of this
Agreement or any of the transactions contemplated therein, including contract
claims, tort claims, breach of duty claims, and all other common law or
statutory claims. The Licensor and the Licensee represent that each has reviewed
this waiver and each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. Any and all service of process shall
be effective against any party if given personally or by registered or certified
mail, return receipt requested, or by any other means of mail that requires a
signed receipt, postage prepaid, mailed to such party as herein provided.
Nothing herein contained shall be deemed to affect the right of any party to
serve process in any manner permitted by law.
m. Franchise. The parties acknowledge and agree that this Agreement is
an intellectual property rights license agreement and does not constitute, and
shall not be construed as, a franchise agreement. The parties further
acknowledge and agree that state and federal franchise laws do not and will not
apply to this Agreement or to the relationship between Licensee and Licensor and
their respective rights and obligations hereunder.
n. Further Assurances. The parties hereto hereby agree to execute and
deliver any further instruments, certificates and documents as may be reasonably
requested from each such party by any of the parties hereto in order to carry
out the terms and conditions of this Agreement.
o. Construction. Neither party shall assert that the other is the
drafting party for purposes of interpretation of this Agreement.
p. Attorneys' Fees. In any legal action or other proceeding brought to
enforce or interpret the terms of this Agreement, the prevailing party or
parties shall be entitled to reasonable attorneys' fees.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered, or
have caused this Agreement to be executed and delivered by their duly authorized
representative, as of the date first above written.
LADY LUCK GAMING CORPORATION
By: /s/ Rory J. Reid
--------------------------------------
Name: Rory J. Reid
Title: Senior Vice President
GEMINI, INC.
By: /s/ Andrew H. Tompkins
--------------------------------------
Name: Andrew H. Tompkins
Title: President
/s/ Andrew H. Tompkins
-----------------------------------------
Andrew H. Tompkins
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Schedule 1(a)
PROPERTY
The term "Property" as used in this Agreement shall include the
following applications, registrations and Internet domain names:
- --------------------------------------------------------------------------------
Mark Registration No. Issued Renewal/8&15 Due
- ---- ---------------- ------ ----------------
LADY LUCK 1,165,866 8/18/81 Renewal Due 8/18/2001
- --------------------------------------------------------------------------------
LADY LUCK & Design 1,165,867 8/18/81 Renewal Due 8/18/2001
- --------------------------------------------------------------------------------
LADY LUCK & Design 1,165,868 8/18/81 Renewal Due 8/18/2001
- --------------------------------------------------------------------------------
LUCKY LADY 1,528,853 3/7/89 Renewal Due 3/7/2009
- --------------------------------------------------------------------------------
LADY LUCK 1,530,253 3/14/89 Renewal Due 3/14/2009
- --------------------------------------------------------------------------------
LADY LUCK 1,650,606 7/16/91 Renewal Due 7/16/2001
- --------------------------------------------------------------------------------
MARCO POLO'S 1,726,344 10/20/92 Renewal Due
10/20/2002
- --------------------------------------------------------------------------------
LADY LUCK 1,613,796 9/18/90 Renewal Due 9/18/2000
- --------------------------------------------------------------------------------
BLUSHING LADY 1,636,938 3/5/91 Renewal Due 3/5/2001
- --------------------------------------------------------------------------------
LADY LUCK 1,847,065 7/26/94 8 & 15 Due 7/26/2000
- --------------------------------------------------------------------------------
MAD MONEY 1,535,814 4/18/89 Renewal Due 4/18/2009
- --------------------------------------------------------------------------------
MAD MONEY & Design 1,535,808 4/18/89 Renewal Due 4/18/2009
- --------------------------------------------------------------------------------
LADY LUCK 2,166,197 6/16/98 8 & 15 Due 6/16/2004
EXPERIENCE
- --------------------------------------------------------------------------------
LADY LUCK 2,238,666 4/13/99 8 & 15 Due 4/13/2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mark Serial No. Filed Status
- --------------------------------------------------------------------------------
MARCO POLO 75/486,489 5/18/98 Cancellation Pending
- --------------------------------------------------------------------------------
THE PLAYER'S PLACE 75/578,185 10/26/98 Application Pending
- --------------------------------------------------------------------------------
<PAGE>
Schedule 1(a)(cont.)
Internet domain names:
1. ladyluck.com
2
<PAGE>
EXHIBIT 10.4
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
<PAGE>
Commission and 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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<PAGE>
(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,
3
<PAGE>
whether or not Tompkins had 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.
4
<PAGE>
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.
5
<PAGE>
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
6
<PAGE>
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.
7
<PAGE>
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
<PAGE>
EXHIBIT 99.1
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 financing
being provided to Lady Luck by Isle of Capri will enable us to conclude the
Miss
<PAGE>
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.
