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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): April 26, 1996
BOYD GAMING CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Nevada
(State or Other Jurisdiction of
Incorporation or Organization)
1-12168 88-0242733
(Commission File Number) (I.R.S. Employer
Identification No.)
2950 South Industrial Road
Las Vegas, Nevada 89109
(Address of Principal Executive Offices) (Zip Code)
(702) 792-7200
(Registrant's telephone number,
including area code)
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Item 5. Other Events.
Boyd Gaming Corporation (the "Company") has entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement") dated as of April 26, 1996,
among the Company, Par-A-Dice Gaming Corporation ("Par-A-Dice"), East Peoria
Hotel, Inc. ("EPH") and the owners of all the capital stock of Par-A-Dice and
EPH, a copy of which is attached as Exhibit 2.1 hereto and incorporated herein
by reference. Under the terms of the Stock Purchase Agreement, the Company may
assign its rights thereunder to a subsidiary. The Company currently expects to
assign its rights under the Stock Purchase Agreement to its wholly-owned
subsidiary, California Hotel and Casino. Pursuant to the Stock Purchase
Agreement, the Company will purchase all the outstanding capital stock of
Par-A-Dice and EPH for aggregate consideration of $174.6 million, consisting of
$162.6 million (subject to adjustment, as set forth in the Stock Purchase
Agreement) in cash and the assumption of $12 million of outstanding
indebtedness (subject to adjustment as set forth in the Stock Purchase
Agreement) (the "Acquisition").
Par-A-Dice is the owner and operator of the Par-A-Dice riverboat casino
in East Peoria, Illinois. In addition, Par-A-Dice is a limited partner and EPH
the general partner of a partnership which is constructing a 204-room hotel
adjacent to the Par-A-Dice Casino. The Company intends to continue the uses of
the casino and hotel assets in the business in which they are currently used.
The Company will assist in the completion of the hotel, and an allowance for
the estimated cost of completion of the hotel is included in the purchase price
for the Acquisition.
It is anticipated that the Company will fund the cash portion of the
purchase price for the Acquisition through bank borrowings. The Company has
received a commitment for a $500 million revolving credit facility and is
currently finalizing the documentation of the new loan facility with the
lenders.
The Company is acquiring Par-A-Dice from Par-A-Dice's 18 stockholders,
none of whom owns more than 15.5% of its outstanding capital stock.
The Acquisition is subject to customary closing conditions, including
the approval of the Illinois Gaming Board and other regulatory approvals.
Item 7. Financial Statements and Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
Exhibit Number Description
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2.1 Stock Purchase Agreement dated as of April 26,
1996, among Boyd Gaming Corporation, Par-A-Dice
Gaming Corporation, East Peoria Hotel, Inc. and
the owners of all the capital stock of
Par-A-Dice Gaming Corporation and East Peoria
Hotel, Inc.
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* * * * *
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 under-
signed hereunto duly authorized.
BOYD GAMING CORPORATION
Date: May 13, 1996 /s/ Keith E. Smith
-----------------------------
Keith E. Smith
Vice President and Controller
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Exhibit 2.1
CONFORMED COPY
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STOCK PURCHASE AGREEMENT
among
BOYD GAMING CORPORATION,
PAR-A-DICE GAMING CORPORATION,
EAST PEORIA HOTEL, INC.
AND
THE INDIVIDUALS SET
FORTH ON THE SIGNATURE PAGES HERETO
dated as of April 26, 1996
================================================================================
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TABLE OF CONTENTS
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ARTICLE I PURCHASE AND SALE OF SHARES ........................... 1
Section 1.1 Purchase and Sale of Shares ........................... 1
Section 1.2 Purchase Price ........................................ 2
Section 1.3 Closing ............................................... 2
Section 1.4 Deliveries by the Shareholders and the Company Entities 2
Section 1.5 Deliveries by Buyer ................................... 4
Section 1.6 Payments at Closing ................................... 4
Section 1.7 Working Capital Certificate ........................... 4
Section 1.8 Indebtedness Certificate .............................. 8
ARTICLE II CERTAIN PRE-CLOSING TRANSACTIONS ...................... 11
Section 2.1 Transfer of Certain Assets ............................ 11
Section 2.2 Excluded Liabilities .................................. 11
Section 2.3 Termination of Agreements ............................. 13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS .... 13
Section 3.1 Ownership of Shares ................................... 13
Section 3.2 Authority ............................................. 13
Section 3.3 Binding Effect, No Violation, Consents ................ 13
Section 3.4 Litigation ............................................ 14
Section 3.5 Commissions ........................................... 14
Section 3.6 Tax Matters ........................................... 14
Section 3.7 Transactions with Affiliates .......................... 14
Section 3.8 Compliance with Law and Terms of License .............. 15
Section 3.9 Disclosure ............................................ 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY ......... 15
Section 4.1 Organization and Qualification ........................ 15
Section 4.2 Authority ............................................. 16
Section 4.3 Capitalization ........................................ 17
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Section 4.4 Binding Effect, No Violation, Consents ................ 18
Section 4.5 Financial Information ................................. 19
Section 4.6 No Undisclosed Liabilities ............................ 19
Section 4.7 Absence of Certain Changes ............................ 20
Section 4.8 Tax Matters ........................................... 20
Section 4.9 Real Property ......................................... 22
Section 4.10 Leases ................................................ 22
Section 4.11 Title to Assets ....................................... 23
Section 4.12 Tangible Personal Property ............................ 23
Section 4.13 Intellectual Property ................................. 25
Section 4.14 Litigation ............................................ 26
Section 4.15 Insurance ............................................. 26
Section 4.16 Labor Matters ......................................... 27
Section 4.17 Compliance with WARN Act .............................. 28
Section 4.18 Employee Benefit Plans; ERISA ......................... 29
Section 4.19 Environmental Matters ................................. 32
Section 4.20 No Condemnation or Expropriation ...................... 33
Section 4.21 Suppliers ............................................. 34
Section 4.22 Contracts and Commitments ............................. 34
Section 4.23 Compliance with Applicable Law ........................ 36
Section 4.24 Bank Accounts ......................................... 38
Section 4.25 Assets Necessary to Business .......................... 38
Section 4.26 Commissions ........................................... 39
Section 4.27 Disclosure of All Material Facts ...................... 39
Section 4.28 Hotel Construction Budget ............................. 39
Section 4.29 East Peoria Matters ................................... 39
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER ............... 40
Section 5.1 Organization .......................................... 40
Section 5.2 Authority ............................................. 40
Section 5.3 Binding Effect, No Violation, Contents ................ 40
Section 5.4 Litigation ............................................ 41
Section 5.5 Commissions ........................................... 42
Section 5.6 Access to Information ................................. 42
Section 5.7 Commitment Letter ..................................... 42
ARTICLE VI COVENANTS OF THE SHAREHOLDERS AND THE COMPANY ......... 42
Section 6.1 Operation of the Business ............................. 42
Section 6.2 Access ................................................ 46
Section 6.3 Existence ............................................. 47
Section 6.4 Consents .............................................. 47
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Section 6.5 Governmental Filings .................................. 48
Section 6.6 Performance ........................................... 48
Section 6.7 Updating of Information ............................... 48
Section 6.8 Shareholders' Agreement ............................... 49
Section 6.9 S Corporation Status .................................. 49
Section 6.10 Monthly Financial Statements; Weekly Gaming Revenue
Reports; Employment Information Updates ............. 49
Section 6.11 Other Transactions .................................... 50
Section 6.12 Interest Periods ...................................... 50
Section 6.13 Owner's Affidavits .................................... 51
Section 6.14 Confidentiality of Information ........................ 51
ARTICLE VII COVENANTS OF BUYER .................................... 51
Section 7.1 Performance ........................................... 51
Section 7.2 Governmental Filings .................................. 51
Section 7.3 Confidentiality of Information ........................ 52
Section 7.4 Shareholder Releases .................................. 52
ARTICLE VIII ENVIRONMENTAL MATTERS ................................. 52
Section 8.1 Site Access ........................................... 52
ARTICLE IX CONDITIONS TO OBLIGATIONS OF BUYER. ................... 53
Section 9.1 Representations and Warranties
Correct. ............................................ 53
Section 9.2 Performance; No Default ............................... 53
Section 9.3 Delivery of Certificate ............................... 53
Section 9.4 Opinion of Counsel to the Shareholders and the Company 53
Section 9.5 Good Standing Certificates ............................ 53
Section 9.6 Consents .............................................. 54
Section 9.7 Governmental Approvals ................................ 54
Section 9.8 No Material Adverse Change ............................ 54
Section 9.9 Absence of Litigation ................................. 54
Section 9.10 FIRPTA Certificates ................................... 55
Section 9.11 Termination of Certain Contracts ...................... 55
Section 9.12 Post-Closing Escrow Agreement ......................... 55
Section 9.13 Coordination Agreement ................................ 55
Section 9.14 RPTA Certificate ...................................... 55
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ARTICLE X CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS ......... 56
Section 10.1 Representations and Warranties Correct ................ 56
Section 10.2 Performance; No Default ............................... 56
Section 10.3 Delivery of Certificate ............................... 56
Section 10.4 Opinion of Counsel to Buyer ........................... 56
Section 10.5 Governmental Approvals ................................ 56
Section 10.6 Absence of Litigation ................................. 57
Section 10.7 Shareholder Releases .................................. 57
ARTICLE XI CERTAIN ADDITIONAL COVENANTS .......................... 57
Section 11.1 Section 338 Elections ................................. 57
Section 11.2 Noncompetition ........................................ 58
Section 11.3 Certain Hotel-Related Matters ......................... 59
ARTICLE XII TERMINATION, AMENDMENT AND WAIVER ..................... 62
Section 12.1 Termination of Agreement .............................. 62
Section 12.2 Effect of Termination ................................. 63
ARTICLE XIII SURVIVAL; ESCROW; INDEMNIFICATION ..................... 64
Section 13.1 Survival of Representations ........................... 64
Section 13.2 Statements as Representations ......................... 64
Section 13.3 Escrow ................................................ 64
Section 13.4 Release of Reimbursable Losses ........................ 65
Section 13.5 Release of Escrowed Funds to Shareholders ............. 65
Section 13.6 Indemnification Events ................................ 65
Section 13.7 General Indemnification Event ......................... 65
Section 13.8 Tax Indemnification Event ............................. 66
Section 13.9 Preparation and Filing of Tax Returns ................. 69
Section 13.10 Defense of Claims ..................................... 70
Section 13.11 Escrow Statement ...................................... 71
Section 13.12 Indemnification by the Shareholders
for Certain Matters ................................. 72
Section 13.13 Indemnification by Buyer .............................. 76
Section 13.14 Subrogation ........................................... 76
Section 13.15 Adjustment to Purchase Price .......................... 76
Section 13.16 Environmental Remediation Matters ..................... 76
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ARTICLE XIV MISCELLANEOUS ......................................... 78
Section 14.1 Remedies Cumulative ................................... 78
Section 14.2 [Intentionally Omitted] ............................... 78
Section 14.3 Expenses .............................................. 78
Section 14.4 Transfer Taxes ........................................ 79
Section 14.5 Press Releases and Announcements ...................... 79
Section 14.6 Entire Agreement ...................................... 79
Section 14.7 Amendment, Extension and Waiver ....................... 80
Section 14.8 Headings .............................................. 80
Section 14.9 Notices ............................................... 80
Section 14.10 Assignment ............................................ 82
Section 14.11 Applicable Law ........................................ 82
Section 14.12 Words in Singular and Plural Form ..................... 82
Section 14.13 Further Assurances; Antitrust Notification ............ 82
Section 14.14 Counterparts .......................................... 84
Section 14.15 Shareholders' Representative .......................... 84
Section 14.16 No Third-Party Beneficiaries .......................... 84
Section 14.17 Severability .......................................... 84
Section 14.18 Consent to Jurisdiction ............................... 84
ARTICLE XV CERTAIN DEFINITIONS ................................... 85
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Contents, p. 6
The following list of exhibits and schedules to this Stock Purchase
Agreement have not been included for filing. The Company hereby undertakes to
furnish supplementarily to the Securities and Exchange Commission a copy of any
omitted exhibit or schedule upon request.
Index of Exhibits
Exhibit 1.7 Form of Coordination Agreement
Exhibit 6.1(c) Pavilion Documents
Exhibit 9.4 Opinions of the Shareholders' and the Company's Counsel
Exhibit 9.10 Form of FIRPTA Certificate
Exhibit 10.4 Opinions of Buyer's Counsel
Exhibit 11.3(a) Scope of Hotel
Exhibit 13.3 Form of Post-Closing Escrow Agreement
Index of Schedules
Schedule 1.7 Working Capital
Schedule 2.2(b) Certain Contracts
Schedule 2.3 Termination of Agreements
Schedule 3.1 The Shares
Schedule 3.3 Consents
Schedule 3.5 Commissions
Schedule 3.7 Transactions with Affiliates
Schedule 4.1(b) Subsidiaries
Schedule 4.1(d) Foreign Jurisdictions
Schedule 4.3 Capitalization
Schedule 4.4 Consents
Schedule 4.5 Financial Statements
Schedule 4.6 Liabilities; Indebtedness
Schedule 4.7 Changes
Schedule 4.8 Tax Matters
Schedule 4.9(a) Owned Property
Schedule 4.9(b) Leased Property
Schedule 4.9(c) Use of Property
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Contents, p. 7
Schedule 4.10 Property Leases
Schedule 4.11 Title to Assets
Schedule 4.12(a) Owned Tangible Personal Property
Schedule 4.12(b) Leased Tangible Personal Property
Schedule 4.12(c) Gaming Devices
Schedule 4.12(d) Liens
Schedule 4.13 Intellectual Property
Schedule 4.14 Litigation
Schedule 4.15 Insurance
Schedule 4.16 Labor
Schedule 4.18 Benefit Plans
Schedule 4.19 Environmental Matters
Schedule 4.21 Suppliers
Schedule 4.22 Contracts
Schedule 4.23 Compliance with Laws
Schedule 4.24 Bank Accounts
Schedule 4.26 Commissions
Schedule 4.28 Hotel Construction Budget
Schedule 5.3 Consents
Schedule 5.5 Commissions
Schedule 6.1(c) Capital Budget
Schedule 6.1(p) Certain Contracts
Schedule 7.4 Shareholder Releases
Schedule 11.2 Shareholder Investments
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CONFORMED COPY
STOCK PURCHASE AGREEMENT dated as of April 26,
1996, among BOYD GAMING CORPORATION, a Nevada
corporation ("Buyer"), PAR-A-DICE GAMING CORPORATION,
an Illinois corporation (the "Company"), EAST PEORIA
HOTEL, INC., an Illinois corporation ("EPH"), and each
of the INDIVIDUALS SET FORTH ON THE SIGNATURE PAGES
HERETO (each a "Shareholder" and, collectively, the
"Shareholders"). Certain initially capitalized terms
used herein are defined in Article XV.
WHEREAS, the Shareholders own, and at the Closing (as defined
in Section 1.3) will own, all of the issued and outstanding shares of capital
stock of each of the Company and EPH; and
WHEREAS, this Agreement sets forth the terms and conditions
pursuant to which Buyer will purchase from the Shareholders all of the
outstanding shares of common stock, no par value (the "Common Stock"), of the
Company; and
WHEREAS, this Agreement sets forth the terms and conditions
pursuant to which Buyer will purchase from the Shareholders all of the
outstanding shares of common stock, no par value (the "EPH Common Stock"), of
EPH.
NOW THEREFORE, in consideration of the premises and of the
respective covenants and agreements contained herein, the parties hereto hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
Section 1.1 Purchase and Sale of Shares. Upon the terms and
subject to the satisfaction or waiver, if permissible, of all the conditions set
forth herein, at the Closing (as defined in Section 1.3), the Shareholders will
sell, transfer and convey to Buyer, and Buyer will purchase from the
Shareholders, 9,308,535 shares of Common Stock (the "Company Shares"),
representing all of the outstanding capital stock of the Company, and 972,800
shares of EPH Common Stock, representing all of the outstanding capital stock of
EPH (the "EPH Shares", and together with the
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Company Shares, the "Shares"), free and clear of all Liens, for the Purchase
Price (as defined in Section 1.2).
Section 1.2 Purchase Price. In consideration of the sale,
transfer and conveyance of the Shares to Buyer by the Shareholders and the other
agreements of the Shareholders contained herein, Buyer will deliver, or cause to
be delivered, to the Shareholders at the Closing, pursuant to Section 1.6, the
Closing Payment (as defined below). For purposes of this Agreement, "Closing
Payment" means (A) $162.6 million, minus (B) $5 million (the "Escrowed Funds"),
minus (C) to the extent the Preliminary Working Capital Amount (as defined in
Section 1.7) is less than $0.00, the amount of such shortfall, minus (D) to the
extent the Preliminary Indebtedness Amount (as defined in Section 1.8) is
greater than $12 million, the amount of such excess, minus (E) the Hotel
Construction Amount, plus (F) the Pre-Signing Hotel Construction Amount (as
defined in Section 11.3(e)), plus (G) the Post-Signing Hotel Construction Amount
(as defined in Section 11.3(f)), plus (H) to the extent the Preliminary Working
Capital Amount is greater than $0.00, the amount of such excess, plus (I) to the
extent the Preliminary Indebtedness Amount is less than $12 million, the amount
of such shortfall. For purposes of this Agreement, "Purchase Price" shall mean
the sum of the Closing Payment and the Escrowed Funds, subject to adjustment in
accordance with Sections 1.7 and 1.8.
Section 1.3 Closing. The purchase and sale of the Shares
pursuant to this Agreement (the "Closing") will take place at the offices of
Cravath Swaine & Moore, 825 Eighth Avenue, New York, New York, at 10:00 A.M.,
New York time, on the tenth day after the satisfaction or waiver, if
permissible, of all the conditions set forth herein, or if such day is not a
Business Day, the next succeeding Business Day, or such other time and place as
Buyer and the Shareholders' Representative may mutually agree upon in writing.
The date on which the Closing occurs is herein referred to as the "Closing
Date".
Section 1.4 Deliveries by the Shareholders and the Company
Entities. At the Closing, the Shareholders will deliver, or cause each
applicable Company Entity to deliver (unless previously delivered) to Buyer the
following:
(a) stock certificates representing all of the Shares,
accompanied by stock powers duly executed in blank, with signatures
guaranteed, and otherwise in
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form acceptable to Buyer for transfer on the books of the Company and
EPH, respectively;
(b) the stock books, stock ledgers, minute books and the
corporate seals of each of the Company and EPH;
(c) copies of the Articles of Incorporation, partnership
agreement or other comparable organizational or governing documents of
each of the Continuing Company Entities, certified (to the extent
available) as of a date within 30 days of the Closing Date by the
Secretary of State of the State of Illinois;
(d) instruments of assignment, transfer and conveyance, in
form and substance reasonably acceptable to Buyer, evidencing and
effecting the transfer pursuant to Section 2.1 of the Excluded Assets
to the Shareholders or their designees;
(e) the certificate referred to in Section 1.7;
(f) the certificate referred to in Section 1.8;
(g) the evidence of termination and release referred to in
Section 2.3;
(h) the certified resolutions referred to in Section 4.2;
(i) the records referred to in Section 4.24;
(j) executed counterparts of any consents referred to in
Section 6.4;
(k) the executive officer certificate referred to in Section
9.3;
(l) the opinions of counsel referred to in Section 9.4;
(m) the affidavits referred to in Section 9.10;
(n) resignations effective as of the Closing Date from such
officers and directors of the Continuing Company Entities as Buyer
shall have requested in writing not less than seven days prior to the
Closing Date; and
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(o) all other previously undelivered documents, instruments or
writings required to be delivered by any of the Shareholders or the
Company Entities to Buyer at or prior to the Closing pursuant to this
Agreement or otherwise required in connection herewith.
Section 1.5 Deliveries by Buyer. At the Closing, Buyer
shall deliver, or cause to be delivered, to the Shareholders' Representative
(unless previously delivered) the following:
(a) the payments required by Section 1.6;
(b) the certified resolutions referred to in Section 5.2;
(c) the releases referred to in Section 7.4;
(d) the executive officer certificate referred to in Section
10.3;
(e) the opinions of counsel referred to in Section 10.4; and
(f) all other previously undelivered documents, instruments or
writings required to be delivered by Buyer to the Shareholders at or
prior to the Closing pursuant to this Agreement or otherwise required
in connection herewith.
Section 1.6 Payments at Closing. At the Closing, Buyer shall
deliver by wire transfer of immediately available funds (i) to the account or
accounts specified by, and in the amounts specified by, the Shareholders'
Representative on behalf of the Shareholders entitled thereto, an aggregate
amount equal to the Closing Payment and (ii) to the Escrow Agent, the Escrowed
Funds.
Section 1.7 Working Capital Certificate. (a) On the second
Business Day prior to the Closing Date, the Company shall deliver to Buyer a
certificate of the chief financial officer of the Company, dated the date of
delivery, (i) estimating in good faith the amount of Working Capital (as defined
below) as of the Closing Date (the "Preliminary Working Capital Amount") (which
estimate shall be reasonably satisfactory to Buyer) and (ii) certifying that he
has no basis to believe that Working Capital as of the Closing Date will vary
materially from the Preliminary
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Working Capital Amount. "Working Capital" shall be calculated in the manner set
forth in Schedule 1.7.
(b) Within thirty (30) days following the Closing Date, Buyer
shall prepare a statement setting forth the Working Capital as of the Closing
Date ("Buyer's Working Capital Amount") describing in reasonable detail how
Buyer's Working Capital Amount was determined ("Buyer's Working Capital
Statement"). Within ten (10) days following the delivery of Buyer's Working
Capital Statement, the Shareholders' Representative may deliver to Buyer a
written statement (the "Shareholders' Working Capital Statement") on behalf of
the Shareholders setting forth with reasonable specificity any disagreement with
Buyer's Working Capital Statement. During such ten (10) day period, the
Shareholders' Representative shall be permitted to review the working papers of
Buyer and its auditors relating to Buyer's Working Capital Statement. The
Shareholders' Working Capital Statement may disagree with Buyer's Working
Capital Statement either on the basis that (i) Working Capital has not been
calculated in accordance with Schedule 1.7 or on the basis that (ii)
there has been an arithmetical error in calculating Working Capital. If the
Shareholders' Representative does not submit the Shareholders' Working Capital
Statement on or prior to such tenth (10th) day then Working Capital as of the
Closing Date (the "Closing Date Working Capital Amount") shall be deemed to have
been finally determined for purposes of this Agreement.
(c) If the Shareholders' Representative does submit the
Shareholders' Working Capital Statement on or prior to such tenth (10th) day,
any amounts contained in Buyer's Working Capital Statement which are not
disputed by the Shareholders' Working Capital Statement shall be deemed to have
been finally determined for purposes of calculating the Closing Date Working
Capital Amount. For a period of ten (10) days, Buyer and the Shareholders'
Representative shall attempt to resolve in good faith any dispute or
disagreement between Buyer's Working Capital Statement and the Shareholders'
Working Capital Statement. During such ten (10) day period, Buyer shall be
permitted to review the working papers of the Shareholders' Representative and
the Shareholders' Representative's auditors relating to the Shareholders'
Working Capital Statement. Amounts resolved by such attempts shall be deemed to
have been finally determined for purposes of calculating the Closing Date
Working Capital Amount.
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(d) At the end of such ten (10) day period, Arthur Andersen LLP
(the "Accounting Firm") shall be deemed appointed by the parties hereto to
finally determine the Closing Date Working Capital Amount. Within ten (10) days
thereafter, Buyer shall submit to the Accounting Firm Buyer's Working Capital
Statement and any supporting evidence and statements which it deems necessary to
verify and support Buyer's Working Capital Statement, and the Shareholders'
Representative shall submit to the Accounting Firm the Shareholders' Working
Capital Statement and any supporting evidence and statements which it deems
necessary to verify and support the Shareholders' Working Capital Statement.
Neither party may revise the amounts claimed on its respective Working Capital
Statement prior to submission to the Accounting Firm except to reflect amounts
finally determined pursuant to Section 1.7(b) or (c). Based solely upon the
foregoing submissions, the Accounting Firm shall make a final, binding and
unappealable determination of the matters in dispute and of the Closing Date
Working Capital Amount, which the parties agree shall be conclusively binding
upon all parties; provided, however, that (i) the Accounting
Firm must choose either the Closing Date Working Capital Amount set forth on
Buyer's Working Capital Statement or the Closing Date Working Capital Amount set
forth on the Shareholders' Working Capital Statement (in each case relying
without modification upon any portions of the Closing Date Working Capital
Amount resolved pursuant to Section 1.7(c)), and may not choose any other amount
and (ii) the Accounting Firm may not make any determination with respect to any
matter not in dispute between Buyer's Working Capital Statement and the
Shareholders' Working Capital Statement; provided further,
however, that any determination by the Accounting Firm shall not be
final, binding and nonappealable, and shall be without effect, if it does not
comply with the foregoing proviso. The party whose Working Capital Statement is
not selected is the "Losing Party" for purposes of this Section 1.7 and shall
pay all fees, charges and expenses for the services of the Accounting Firm
(including the fees, charges and expenses of any experts used by the Accounting
Firm) plus any reasonable fees and expenses of enforcement of a determination of
the Accounting Firm. In addition, the Losing Party shall reimburse (in cash) all
reasonable attorneys' fees, charges and expenses and reasonable accountant's
fees, charges and expenses incurred by the other party in connection with the
dispute (all of the foregoing, for purposes of this Section 1.7, the "Fees").
The Accounting Firm shall be instructed to make its final determination within
twenty (20) days of the
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submissions to the Accounting Firm referred to above and, in any case, as soon
as practicable after such submissions. Within five (5) days of the Accounting
Firm's determination of the Closing Date Working Capital Amount, the Accounting
Firm shall deliver to Buyer and the Shareholders' Representative a statement
setting forth the Closing Date Working Capital Amount and describing in
reasonable detail how the Closing Date Working Capital Amount was determined.
Within ten (10) days after the final determination by the Accounting Firm, the
party entitled to receive the Fees shall submit a statement setting forth its
Fees incurred and the Accounting Firm, within ten (10) days after such
submission, will make a final, binding and unappealable determination of the
amount of such Fees and award such amounts to such party.
(e) Any final determination and award of Fees shall be in
writing and shall state the reasons upon which it is based. Judgment upon the
award shall be entered in any court having jurisdiction thereof. The provisions
of this Section 1.7 shall constitute the exclusive and sole means for resolving
those disputes, disagreements, controversies or claims between the parties with
respect to Buyer's Working Capital Statement.
(f) To the extent the Closing Date Working Capital Amount is
(i) greater than the Preliminary Working Capital Amount, Buyer shall, within ten
(10) days of Buyer's receipt of the Closing Date Working Capital Statement,
deliver by wire transfer of immediately available funds to the account or
accounts specified by, and in amounts specified by, the Shareholders'
Representative on behalf of the Shareholders entitled thereto, an amount, in the
aggregate, equal to such excess, or (ii) less than the Preliminary Working
Capital Amount, the Shareholders shall within ten (10) days of the Shareholders'
Representative's receipt of the Closing Date Working Capital Statement (x) cause
to be released from the escrow account (the "Shareholders' Escrow Account")
established pursuant to the Coordination Agreement by and among the Shareholders
substantially in the form of Exhibit 1.7 and (y) deliver by wire transfer of
immediately available funds to the account or accounts specified by Buyer, an
amount equal to such shortfall, in each case plus interest on such amount at the
Interest Rate for the period commencing on (and including) the Closing Date to
(but excluding) the date of payment.
<PAGE> 16
8
(g) Buyer shall, or shall after the Closing cause the Company
and EPH, as applicable, to, pay when due the Replacement Tax referred to in
Schedule 1.7; provided that Buyer shall not be required to pay (or cause the
Company or EPH to pay) any Replacement Tax in excess of the amount included in
current liabilities in the Closing Working Capital Amount as finally determined
pursuant to this Section 1.7, it being understood and agreed by the parties that
any such excess shall be deemed a Specified Indemnifiable Loss; and provided
further, that interest shall be deemed to accrue at the Interest Rate on the
reserves held by Buyer pursuant to this Section 1.7 in respect of liabilities
for such Replacement Tax from and after the date such reserves are credited to
Buyer (whether as of the Closing Date pursuant to the estimate of the
Preliminary Working Capital Amount pursuant to Section 1.7(a) or as of such date
as any relevant portion of the Closing Working Capital Amount is finally
determined and paid to Buyer pursuant to this Section 1.7), and Buyer shall
promptly pay to the Shareholders' Representative an amount equal to the sum of
any such reserves and interest remaining after the Replacement Tax has been paid
in full.
Section 1.8 Indebtedness Certificate. (a) On the second
Business Day prior to the Closing Date, the Company shall deliver to Buyer a
certificate of the chief financial officer of the Company, dated the date of
delivery, (i) estimating in good faith the amount (the "Preliminary Indebtedness
Amount") of indebtedness of the Company as of the Closing Date for borrowed
money (the "Indebtedness") (which estimate shall be reasonably satisfactory to
Buyer) and (ii) certifying that he has no basis to believe that Indebtedness as
of the Closing Date will vary materially from the Preliminary Indebtedness
Amount.
(b) Within thirty (30) days following the Closing Date, Buyer
shall prepare a statement setting forth Indebtedness as of the Closing Date
("Buyer's Indebtedness Amount") describing in reasonable detail how Buyer's
Indebtedness Amount was determined ("Buyer's Indebtedness Statement"). Within
ten (10) days following the delivery of Buyer's Indebtedness Statement, the
Shareholders' Representative may deliver to Buyer a written statement (the
"Shareholders' Indebtedness Statement") on behalf of the Shareholders setting
forth with reasonable specificity any disagreement with Buyer's Indebtedness
Statement. During such ten (10) day period, the Shareholders' Representative
<PAGE> 17
9
shall be permitted to review the working papers of Buyer and its auditors
relating to Buyer's Indebtedness Statement. If the Shareholders' Representative
does not submit the Shareholders' Indebtedness Statement on or prior to such
tenth (10th) day then Indebtedness as of the Closing Date (the "Closing Date
Indebtedness Amount") shall be deemed to have been finally determined for
purposes of this Agreement.
(c) If the Shareholders' Representative does submit the
Shareholders' Indebtedness Statement on or prior to such tenth (10th) day, any
amounts contained in Buyer's Indebtedness Statement which are not disputed by
the Shareholders' Indebtedness Statement shall be deemed to have been finally
determined for purposes of calculating the Closing Date Indebtedness Amount. For
a period of ten (10) days, Buyer and the Shareholders' Representative shall
attempt to resolve in good faith any dispute or disagreement between Buyer's
Indebtedness Statement and the Shareholders' Indebtedness Statement. During such
ten (10) day period, Buyer shall be permitted to review the working papers of
the Shareholders' Representative and the Shareholders' Representative's auditors
relating to the Shareholders' Indebtedness Statement. Amounts resolved by such
attempts shall be deemed to have been finally determined for purposes of
calculating the Closing Date Indebtedness Amount.
(d) At the end of such ten (10) day period, the Accounting
Firm shall be deemed appointed by the parties hereto to finally determine the
Closing Date Indebtedness Amount. Within ten (10) days thereafter, Buyer shall
submit to the Accounting Firm Buyer's Indebtedness Statement and any supporting
evidence and statements which it deems necessary to verify and support Buyer's
Indebtedness Statement, and the Shareholders' Representative shall submit to the
Accounting Firm the Shareholders' Indebtedness Statement and any supporting
evidence and statements which it deems necessary to verify and support the
Shareholders' Indebtedness Statement. Neither party may revise the amounts
claimed on its respective Indebtedness Statement prior to submission to the
Accounting Firm except to reflect amounts finally determined pursuant to Section
1.8(b) or (c). Based solely upon the foregoing submissions, the Accounting Firm
shall make a final, binding and unappealable determination of the matters in
dispute and of the Closing Date Indebtedness Amount, which the parties agree
shall be conclusively binding upon all parties; provided, however, that (i) the
Accounting Firm must choose either the Closing Date Indebtedness Amount set
forth on Buyer's Indebtedness
<PAGE> 18
10
Statement or the Closing Date Indebtedness Amount set forth on the Shareholders'
Indebtedness Statement (in each case relying without modification upon any
portions of the Closing Date Indebtedness Amount resolved pursuant to Section
1.8(c)), and may not choose any other amount and (ii) the Accounting Firm may
not make any determination with respect to any matter not in dispute between
Buyer's Indebtedness Statement and the Shareholders' Indebtedness Statement;
provided further, however, that any determination by the
Accounting Firm shall not be final, binding and nonappealable, and shall be
without effect, if it does not comply with the foregoing proviso. The party
whose Indebtedness Statement is not selected is the "Losing Party" for purposes
of this Section 1.8 and shall pay all fees, charges and expenses for the
services of the Accounting Firm (including the fees, charges and expenses of any
experts used by the Accounting Firm) plus any reasonable fees and expenses of
enforcement of a determination of the Accounting Firm. In addition, the Losing
Party shall reimburse (in cash) all reasonable attorneys' fees, charges and
expenses and reasonable accountant's fees, charges and expenses incurred by the
other party in connection with the dispute (all of the foregoing, for purposes
of this Section 1.8, the "Fees"). The Accounting Firm shall be instructed to
make its final determination within twenty (20) days of the submissions to the
Accounting Firm referred to above and, in any case, as soon as practicable after
such submissions. Within five (5) days of the Accounting Firm's determination of
the Closing Date Indebtedness Amount, the Accounting Firm shall deliver to Buyer
and the Shareholders' Representative a statement setting forth the Closing Date
Indebtedness Amount and describing in reasonable detail how the Closing Date
Indebtedness Amount was determined. Within ten (10) days after the final
determination by the Accounting Firm, the party entitled to receive the Fees
shall submit a statement setting forth its Fees incurred and the Accounting
Firm, within ten (10) days after such submission, will make a final, binding and
unappealable determination of the amount of such Fees and award such amounts to
such party.
(e) Any final determination and award of Fees shall be in
writing and shall state the reasons upon which it is based. Judgment upon the
award shall be entered in any court having jurisdiction thereof. The provisions
of this Section 1.8 shall constitute the exclusive and sole means for resolving
those disputes, disagreements, controversies or claims between the parties with
respect to Buyer's Indebtedness Statement.
<PAGE> 19
11
(f) To the extent the Closing Date Indebtedness Amount is (i)
less than the Preliminary Indebtedness Amount, Buyer shall, within ten (10) days
of Buyer's receipt of the Closing Date Indebtedness Statement, deliver by wire
transfer of immediately available funds to the account or accounts specified by,
and in amounts specified by, the Shareholders' Representative on behalf of the
Shareholders entitled thereto, an amount, in the aggregate, equal to such
shortfall, or (ii) greater than the Preliminary Indebtedness Amount, the
Shareholders shall within ten (10) days of the Shareholders' Representative's
receipt of the Closing Date Indebtedness Statement (x) cause to be released from
the Shareholders' Escrow Account and (y) deliver by wire transfer of immediately
available funds to the account or accounts specified by Buyer, an amount equal
to such excess, in each case plus interest on such amount at the Interest Rate
for the period commencing on (and including) the Closing Date to (but excluding)
the date of payment.
ARTICLE II
CERTAIN PRE-CLOSING TRANSACTIONS
Section 2.1 Transfer of Certain Assets. Prior to the Closing,
the Company will transfer and assign to entities designated by the Shareholders'
Representative (which entities shall be wholly owned by the Shareholders or
otherwise reasonably acceptable to Buyer) all right, title and interest of the
Company in and to the following assets, properties and rights of the Company
(such assets, properties and rights, the "Excluded Assets):
(a) the Virginia Assets; and
(b) any proceeds received or receivable after the Closing Date
by the Company related to or arising out of (i) the Jamaica Litigation
or (ii) the Missouri Litigation.
Buyer shall pay or cause the Company to pay to the Shareholders' Representative
any proceeds or payments Buyer or the Company receives after the Closing Date
which constitute Excluded Assets.
Section 2.2 Excluded Liabilities. The Shareholders
hereby assume and agree to pay and discharge (pro rata in accordance with their
respective Percentage
<PAGE> 20
12
Interests), and will indemnify and hold harmless, to the extent and in the
manner provided in Section 13.12, the Continuing Company Entities and Buyer for,
all of the following liabilities and obligations of the Continuing Company
Entities (the "Excluded Liabilities"):
(a) any and all existing or future liabilities or obligations
of any of the Continuing Company Entities, whether primary or
secondary, direct or indirect, absolute, accrued or contingent, known
or unknown or suspected to exist or unsuspected, related to or arising
out of the Excluded Assets;
(b) any and all existing or future liabilities or obligations
of any of the Continuing Company Entities, whether primary or
secondary, direct or indirect, absolute, accrued or contingent, known
or unknown or suspected to exist or unsuspected, relating to or arising
out of (i) the Contracts set forth in Schedule 2.2(b) or
referred to in Section 2.3 or (ii) the Virginia Contracts;
(c) any and all existing or future liabilities or obligations
of any of the Continuing Company Entities, whether primary or
secondary, direct or indirect, absolute, accrued or contingent, known
or unknown or suspected to exist or unsuspected, relating to or arising
out of agreements, arrangements or commitments, whether oral or
written, made by any Shareholder or any of the Company Entities prior
to the Closing with any of the Jamaica Entities;
(d) any and all existing or future liabilities or obligations
of any of the Continuing Company Entities, whether primary or
secondary, direct or indirect, absolute, accrued or contingent, known
or unknown or suspected to exist or unsuspected, related to or arising
out of the Jamaica Litigation or the Missouri Litigation; and
(e) any and all existing or future liabilities or obligations
of any of the Continuing Company Entities, whether primary or
secondary, direct or indirect, absolute, accrued or contingent, known
or unknown or suspected to exist or unsuspected, relating to or arising
out of agreements, arrangements or commitments, whether oral or
written, made by any Shareholder or any
<PAGE> 21
13
of the Company Entities prior to the Closing with any of the Sister
Companies.
Section 2.3 Termination of Agreements. Immediately
prior to the Closing, the Shareholders will cause the Contracts set forth on
Schedule 2.3 to be terminated and the Shares and the Company Entities to
be released from any liability, restriction or required performance thereunder.
Evidence of such termination and release, in form and substance reasonably
satisfactory to Buyer, shall be furnished by the Shareholders' Representative at
the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder, solely for itself (on a several, and not a
joint and several basis), except as provided in Section 13.12, represents and
warrants to Buyer that:
Section 3.1 Ownership of Shares. Such Shareholder owns
and has an unqualified right to and shall transfer to Buyer at the Closing,
good, valid and marketable title to the Shares set forth opposite such
Shareholder's name on Schedule 3.1, free and clear of all Liens. Other
than this Agreement and the Shareholders' Agreement (as defined in Section 6.8),
such Shares are not subject to any voting trust agreement or other Contract,
including any Contract restricting or otherwise relating to the voting or
disposition of such Shares. Schedule 3.1 sets forth such Shareholder's
Percentage Interest.
Section 3.2 Authority. Such Shareholder has the
requisite individual power, capacity and authority to execute, deliver and
perform this Agreement and the other instruments and documents required or
contemplated hereby.
Section 3.3 Binding Effect, No Violation, Consents.
This Agreement constitutes, and, when executed and delivered, the other
documents and instruments to be executed and delivered by such Shareholder
pursuant hereto will constitute, valid and binding agreements of such
Shareholder, enforceable in accordance with their respective terms, and
(assuming receipt of the consents, approvals and authorizations contemplated by
the next sentence) neither the execution and delivery of this Agreement or the
other
<PAGE> 22
14
documents and instruments to be executed and delivered by such Shareholder
pursuant hereto, nor the consummation by such Shareholder of the transactions
contemplated hereby or thereby will violate any statute or law or any rule,
regulation, order, writ, injunction, judgment or decree of any court or
governmental authority applicable to such Shareholder. Except for consents,
approvals or authorizations set forth on Schedule 3.3 and except for
consents required under the Illinois Riverboat Gambling Act, 230 ILCS 10/1, and
the rules and regulations promulgated thereunder (the "Illinois Riverboat
Gambling Act") and any applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and the rules and regulations promulgated
thereunder (the "HSR Act"), no consent, approval, authorization or action by,
notice to or filing with any governmental authority or any other Person is
required with respect to such Shareholder in connection with the execution,
delivery and performance of this Agreement, the other documents and instruments
to be executed and delivered by such Shareholder pursuant hereto or the
consummation by such Shareholder of the transactions contemplated hereby or
thereby.
Section 3.4 Litigation. There are no claims, actions, suits,
proceedings or investigations pending or threatened by or against such
Shareholder with respect to the Company Entities, the Shares or the transactions
contemplated hereby, at law or in equity, before any federal, state, municipal
or other governmental department, commission, board, agency, instrumentality or
authority.
Section 3.5 Commissions. Except as set forth on Schedule 3.5,
there are no claims for brokerage commissions or finder's fees incurred by
reason of any action taken by or on behalf of such Shareholder.
Section 3.6 Tax Matters. Each of the Company and EPH is a small
business corporation as defined in Section 1361 of the Code and has had in
effect since its incorporation a valid election to be treated as an "S"
corporation for federal income Tax purposes under the Code and in the State of
Illinois, and none of the Company Entities or the Shareholders has taken or
caused or permitted to be taken any action during such periods that would have
caused a termination of such S elections.
Section 3.7 Transactions with Affiliates. Other than this
Agreement, the Shareholders' Agreement and the
<PAGE> 23
15
Coordination Agreement or as set forth in Schedule 3.7, none of the Company
Entities is party to or bound by any Contract with, does business with or has
any obligations or liabilities to such Shareholder or any Affiliate or Associate
of such Shareholder (other than another Shareholder or Company Entity).
Section 3.8 Compliance with Law and Terms of License. Such
Shareholder is not aware of any facts or circumstances relating to the conduct
of such Shareholder that could reasonably be expected to cause the Illinois
Gaming Board to revoke, suspend or fail to renew the License (as defined in
Section 4.23) or take disciplinary action against any of the Company Entities or
any shareholder or equityholder thereof.
Section 3.9 Disclosure. To such Shareholder's knowledge, no
representation or warranty to Buyer contained herein contains any untrue
statement of material fact or omits to state a material fact which is necessary
in order to make such representation or warranty not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer that:
Section 4.1 Organization and Qualification. (a) The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Illinois and has the corporate power and authority to carry
on its business as presently conducted, to enter into this Agreement and the
other documents and instruments to be executed and delivered by it, to perform
its obligations hereunder or thereunder and to carry out the transactions
contemplated hereby and thereby.
(b) The Company has no Subsidiaries other than those set forth
on Schedule 4.1(b). EPH has no Subsidiaries. Except for EPHLP, Annabel Lee, L.P.
and the trust created pursuant to the Trust Agreement, neither the Company nor
EPH directly or indirectly owns any capital stock of or other equity interests
in any corporation, partnership, land trust or any other Person and none of the
Company Entities is a member of or participant in any partnership, joint venture
or similar Person. Each of the
<PAGE> 24
16
Company Entities other than the Company is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, in each
case with power and authority to carry on its business as presently conducted,
to perform its obligations under this Agreement and the other documents and
instruments to be executed and delivered in connection therewith and to carry
out the transactions contemplated hereby and thereby.
(c) The copies of the Articles of Incorporation of the Company,
and all amendments thereto, as certified by the Secretary of State of Illinois,
and the By-Laws, as amended to date, of the Company, as certified by the
Secretary of the Company, which have heretofore been delivered to Buyer, are, as
of the date of this Agreement, and will be, as of the Closing, complete,
accurate and current. The copies of the organizational and governing documents
of each of the other Company Entities, and all amendments thereto, as certified
by the Secretary of State of each applicable jurisdiction or, if not applicable,
a partner or executive officer of such Company Entity, which have heretofore
been delivered to Buyer, are complete, accurate and current. The stock transfer
books and minute books or similar records of the Company Entities, which have
heretofore been made available to Buyer, are complete, accurate and current.
(d) Each of the Company Entities is duly qualified or
registered for the transaction of business and in good standing in the
jurisdictions listed on Schedule 4.1(d), which are the only jurisdictions other
than its respective jurisdiction of organization wherein the character of the
properties so owned or leased by or the nature of the business of each such
entity, makes such licensing or qualification to do business necessary, except
for such failure to so qualify or be licensed, which, when taken together with
all other such failures, has not had and is not reasonably likely to have a
Material Adverse Effect.
Section 4.2 Authority. The execution and delivery of this
Agreement by the Company and the execution and delivery of the other instruments
or documents required or contemplated hereby and the consummation of the
transactions contemplated hereby by each of the Company Entities have been duly
and validly authorized by the Board of Directors or other applicable governing
body of each applicable Company Entity. Prior to the Closing, each of the
Company Entities will deliver to Buyer a complete and
<PAGE> 25
17
correct copy, certified by its Secretary (or other appropriate executive officer
or partner), of the resolutions heretofore duly and validly adopted by its Board
of Directors or other applicable governing body evidencing such authorization
which resolutions will not have been rescinded prior to, and will be in full
force and effect on the date of, the Closing. No other corporate or partnership
act or proceeding on the part of any of the Company Entities is necessary to
authorize this Agreement or the other documents and instruments to be executed
and delivered by the Company Entities pursuant hereto or the transactions
contemplated hereby or thereby.
Section 4.3 Capitalization. (a) The authorized capital stock of
the Company consists solely of 13 million shares of Common Stock, of which
9,308,535 shares are issued and outstanding and are owned of record by the
Shareholders in the amounts set forth on Schedule 3.1. The authorized capital
stock of EPH consists solely of 10 million shares of EPH Common Stock, of which
972,800 shares are issued and outstanding and are owned of record by the
Shareholders in the amounts set forth on Schedule 3.1. All of the issued and
outstanding shares of capital stock of each of the Company and EPH have been
duly authorized and are validly issued, fully paid and nonassessable, are not
subject to any preemptive rights (other than preemptive rights with respect to
the Company Shares provided for by the Shareholders' Agreement) and have not
been issued in violation of any applicable law, Articles of Incorporation or
By-Laws, or the terms of any agreement to which any Shareholder or Continuing
Company Entity is a party or is bound. There are no shares of capital stock or
other equity interest or securities of the Company or EPH reserved for issuance
or any outstanding subscriptions, options, warrants, rights, "phantom" stock
rights, convertible or exchangeable securities, stock appreciation rights or
other agreements or commitments (other than this Agreement and the Shareholders'
Agreement) granting to any Person any interest in or right to acquire at any
time, or upon the happening of any stated event, any shares of the capital stock
or other equity interest or securities of any Continuing Company Entity, or any
interest in, exchangeable for or convertible into capital stock or other equity
interest or securities of any Continuing Company Entity or restricting any
Shareholder's rights to transfer any of the Shares. Schedule 4.3 sets forth for
each Subsidiary as of the date of this Agreement the amount of its authorized
capital stock and its
<PAGE> 26
18
outstanding capital stock or all partnership or other equity interests therein,
as applicable, and the owners thereof.
(b) All of the issued and outstanding shares of capital stock
of each corporate Subsidiary have been duly authorized and are validly issued,
fully paid and nonassessable, and the partnership and beneficial trust interests
owned by the Company and EPH respectively in the Subsidiaries are owned free and
clear of all Liens (except, in the case of the Virginia Assets, to the extent
transferred by the Company pursuant to Section 2.1).
Section 4.4 Binding Effect, No Violation, Consents. This
Agreement constitutes, and, when executed and delivered, the other documents and
instruments to be executed and delivered by each applicable Company Entity
pursuant hereto will constitute, valid and binding agreements of each such
Company Entity enforceable in accordance with their respective terms, and
(assuming receipt of the consents, approvals and authorizations specifically
contemplated by the next sentence) neither the execution and delivery of this
Agreement and the other documents and instruments to be executed and delivered
by each applicable Company Entity pursuant hereto, nor the consummation by each
such Company Entity of the transactions contemplated hereby or thereby will (i)
violate or conflict with or result in any breach of any provision of its
Certificate of Incorporation, By-Laws, partnership agreement or other
organizational or governing documents, (ii) violate or conflict with or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under or will result in the termination of, or
accelerate the performance required by, or result in the creation of any Lien
upon any of the assets under, any Contract to which any Company Entity is a
party or by which any Company Entity or its respective assets or properties may
be bound or affected or (iii) violate any statute or law or any rule,
regulation, order, writ, injunction, judgment or decree of any court or
governmental authority, excluding from the foregoing clauses (ii) and (iii) such
defaults, rights and violations which, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. Except for consents, approvals or
authorizations set forth on Schedule 4.4 and except for consents required under
the Illinois Riverboat Gambling Act and the applicable requirements of the HSR
Act, no consent, approval, authorization or action by, notice to, or filing
with, any governmental authority or any other Person is required in
<PAGE> 27
19
connection with the execution, delivery and performance of this Agreement, the
other documents and instruments to be executed and delivered by the Company
Entities pursuant hereto or the consummation by the Company Entities of the
transactions contemplated hereby or thereby, except (in the case of consents,
approvals and notices required under Contracts) where the failure to obtain such
consents and approvals and give such notices could not reasonably be expected to
have a Material Adverse Effect.
Section 4.5 Financial Information. Set forth as Schedule 4.5
are audited (a) consolidated balance sheets of the Company as at December 31,
1995 and 1994 (such balance sheet as at December 31, 1995 is sometimes referred
to herein as the "Balance Sheet") and (b) consolidated statements of income,
cash flows and changes in stockholders' equity of the Company for each of the
years ended December 31, 1995, 1994 and 1993, all certified by Coopers &
Lybrand, whose reports thereon are included therein (together with the balance
sheets, and including all notes thereto, the "Financial Statements"). Such
balance sheets and the notes thereto are true, complete and accurate and fairly
present the assets, liabilities and financial condition of the Company on a
consolidated basis as of the respective dates thereof, and such consolidated
statements of income, cash flows and changes in stockholders' equity and the
notes thereto are true, complete and accurate and fairly present the results of
operations of the Company on a consolidated basis for the period therein
referred to, all in accordance with GAAP consistently applied throughout the
periods involved.
Section 4.6 No Undisclosed Liabilities. Except as set forth on
Schedule 4.6, the Continuing Company Entities as of the date hereof do not have
any material liability or obligation of any nature, whether fixed or contingent
or otherwise, whether due or to become due, including, without limitation, any
unfunded obligation under any pension plan, any liability for Taxes or any
environmental liabilities, that is not reflected or reserved against in the
Balance Sheet or otherwise disclosed in the notes thereto, other than
liabilities and obligations incurred subsequent to the date of the Balance Sheet
in the ordinary course of business consistent with past practice and not in
violation of this Agreement. Furthermore, except as set forth in Schedule 4.6,
as of the date hereof, the Company does not know and has no reason to know of
any basis for the assertion against the Continuing Company Entities of
<PAGE> 28
20
any such liability or obligation not fully reflected in the Balance Sheet or
otherwise disclosed in the notes thereto. There are no agreements or
arrangements pursuant to which any Continuing Company Entity has incurred
Indebtedness or is liable for payments to Shareholders or former Shareholders or
their respective Affiliates or Associates other than those set forth in
Schedule 4.6. Except as set forth on Schedule 4.6, EPH has no
liabilities.
Section 4.7 Absence of Certain Changes. Except as set forth on
Schedule 4.7, and except as otherwise contemplated by this Agreement, (a) since
the date of the Balance Sheet the business of the Company Entities has been
conducted only in the ordinary course, consistent with past practice, and there
has not occurred any event, condition, circumstance, change or development
(whether or not in the ordinary course of business consistent with past
practice) other than a Specified Illinois Gaming Industry Development that,
individually or in the aggregate, has had or, in the future, is reasonably
likely to have a Material Adverse Effect and (b) since the date of the Balance
Sheet, neither the Shareholders nor any of the Company Entities has taken any
action which, if taken after the date of this Agreement, would constitute a
breach of any of the covenants set forth in Section 6.1.
Section 4.8 Tax Matters. (a) Each of the Company and EPH is a
small business corporation as defined in Section 1361 of the Code and has had in
effect since its incorporation a valid election to be treated as an "S"
corporation for federal income Tax purposes under the Code and in the State of
Illinois, and none of the Company Entities or the Shareholders has taken or
caused or permitted to be taken any action during such periods that would have
caused a termination of such S elections. Each of the Company and EPH files a
state income Tax Return only in Illinois.
(b) The Company Entities are registered to do business in the
states and localities set forth in Schedule 4.8, and the Company Entities file
Tax Returns in the states and localities set forth in Schedule 4.8.
(c) Except as set forth on Schedule 4.8:
(i) each of the Company Entities has (x) duly filed with the
appropriate governmental authorities all Tax Returns required to be
filed by it on or prior to
<PAGE> 29
21
the date hereof, and such Tax Returns are true, correct and complete in
all material respects and (y) duly paid in full or made provision in
accordance with GAAP for the payment of all Taxes for all periods
ending through the date hereof;
(ii) there are no liens for Taxes upon the Shares or the assets
of any of the Company Entities except for statutory liens for current
Taxes not yet due;
(iii) since the date of the Balance Sheet, none of the Company
Entities has incurred any liability for Taxes other than in the
ordinary course of business consistent with past practice;
(iv) each of the Company Entities has complied in all respects
with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes (including, without limitation, withholding of
Taxes pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or
similar provisions under any foreign laws) and has, within the time and
the manner prescribed by law, withheld from and paid over to the proper
governmental authorities all amounts required to be so withheld and
paid over under applicable laws;
(v) no federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently pending
with regard to any Taxes or Tax Returns of any of the Company Entities,
and none of the Company Entities has received a written notice of any
pending audits or proceedings;
(vi) there are no outstanding written requests, agreements,
consents or waivers to extend the statutory period of limitations
applicable to the assessment of any Taxes or deficiencies against any
of the Company Entities;
(vii) none of the Company Entities is a party to any agreement
providing for the allocation or sharing of Taxes;
(viii) none of the Company Entities is a party to any
agreement, contract or arrangement that could result, separately or in
the aggregate, in the payment of any "excess parachute payments" within
the meaning of Section 280G of the Code; and
<PAGE> 30
22
(ix) no power of attorney has been executed by any of the
Company Entities with respect to any matter relating to Taxes which is
currently in force.
Section 4.9 Real Property. (a) Schedule 4.9(a) sets forth the
location and a description of the Owned Property (as defined below) and the
general nature of the facilities located on the Owned Property. For purposes of
this Agreement, "Owned Property" shall mean all real property owned in fee by
any Company Entity and each non-fee interest (other than a leasehold interest)
owned by any Company Entity in any real property.
(b) Schedule 4.9(b) sets forth the location of, and a
description of the general nature of the facilities located on, each parcel of
real property and each interest in real property leased by any Company Entity
(such real property, the "Leased Property", and together with the Owned
Property, the "Property").
(c) There are now in full force and effect duly issued
certificates of occupancy, where required, permitting the Property and the
improvements located thereon to be legally used and occupied as the same are now
constituted. Except as set forth on Schedule 4.9(c), each of the Properties is
used exclusively for the business of the applicable Company Entity owning or
leasing such Property. Except with respect to Environmental Laws, the Property
does not violate any material provisions of any applicable building code, fire,
health or safety regulations, or other governmental ordinances, orders or
regulations, and the applicable Company Entity owning or leasing each Property
is in material compliance with all applicable laws, ordinances, regulations,
statutes, rules and restrictions relating to the applicable Property or any part
thereof.
Section 4.10 Leases. (a) All leases of Property leased or
subleased by or for the use or benefit of any Company Entity and all leases as
to which any Company Entity is the lessee or sublessee, and all amendments and
modifications thereof, are listed on Schedule 4.10(a) (true, correct and
complete copies of which have been delivered to Buyer). All such leases are
valid, binding and in full force and effect and are enforceable by the
applicable Company Entity in accordance with their terms and have not been
modified or amended, except as set forth in Schedule 4.10(a); each applicable
Company Entity has performed all material obligations required to be performed
<PAGE> 31
23
by it to date under each such lease, and there has been no material breach or
default under any such leases by any Company Entity, or, to the knowledge of the
Company, any other party thereto, nor any such breach or default by any Company
Entity, or, to the knowledge of the Company, any other party thereto which with
notice or lapse of time or both would constitute an event of default thereunder.
(b) All leases of Property leased or subleased by or for the
use or benefit of third parties to which any Company Entity is a party, and any
and all amendments thereto and modifications thereof, are listed on Schedule
4.10(b) (true, correct and complete copies of which have been delivered to
Buyer) all such leases are valid, binding and in full force and effect and are
enforceable by the applicable Company Entity in accordance with their terms and
have not been modified or amended, except as set forth in Schedule 4.10(b); no
such lease, nor any other agreement relating to the Property, contains any
option or right (conditional or otherwise) to extend the term thereof or to
purchase all or any part of the Property or any rights therein; each applicable
Company Entity has performed all material obligations required to be performed
by it to date under each such lease; and there has been no material breach or
default (or event which with notice or lapse of time or both would constitute an
event of default) under any such lease by any Company Entity, or, to the
knowledge of the Company, any other party thereto.
Section 4.11 Title to Assets. Except as disclosed on Schedule
4.11, (a) the Continuing Company Entities have good, marketable and insurable
title (fee title, in the case of fee Owned Property) to, and are the owners of,
the Owned Property and such ownership is free and clear of any and all Liens,
other than Permitted Liens and (b) the Continuing Company Entities have good and
valid title to their respective assets (other than the Owned Property and the
Riverboat), free and clear of any and all Liens. The Company has good and
marketable title to the Riverboat and owns the Riverboat free and clear of all
Liens, except for the Liens pursuant to the CFSC Loan Documents.
Section 4.12 Tangible Personal Property. Schedule 4.12(a) lists
each item of tangible personal property (other than inventory) owned by the
Continuing Company Entities having an initial purchase price in excess of
$10,000; Schedule 4.12(b) lists each item of tangible
<PAGE> 32
24
personal property leased by the Continuing Company Entities (other than pursuant
to individual leases having an annual rental of less than $10,000 or which are
terminable by the applicable Continuing Company Entity within ninety (90) days
of the date hereof without penalty) and each item of personal property having a
value of $10,000 or more used by a Continuing Company Entity and owned or leased
by Persons providing services to a Continuing Company Entity; and Schedule
4.12(c) lists each live gaming device or electronic gaming device (including
all gaming tables and slot machines) owned, leased or otherwise used by a
Continuing Company Entity (collectively, the "Tangible Personal Property"). The
Tangible Personal Property, together with other tangible personal property owned
by the Continuing Company Entities or used by a Continuing Company Entity and
owned by Persons providing services to the Continuing Company Entities,
constitutes substantially all of the tangible personal property used in the
operation of the business of the Continuing Company Entities and constitutes
substantially all tangible personal property necessary to conduct the business
of the Continuing Company Entities as presently conducted by them. Except as set
forth on Schedule 4.12(d), (i) the Tangible Personal Property (other
than the Riverboat) owned by the Continuing Company Entities and all other
personal property, whether tangible or intangible, owned by the Continuing
Company Entities is free and clear of any and all Liens and (ii) all the
Tangible Personal Property is located at the Property and there is no material
tangible personal property located at the Property which is not owned or leased
by the Continuing Company Entities. The Tangible Personal Property (other than
the Riverboat) is in all material respects in working order, ordinary wear and
tear excepted. All the material Tangible Personal Property (other than the
Riverboat) of the Continuing Company Entities has been maintained in all
material respects in accordance with the past practice of the Continuing Company
Entities and generally accepted industry practice. The Riverboat is in working
order and has been maintained in all material respects in accordance with the
past practice of the Company and generally accepted industry practice. All
leased Tangible Personal Property of the Continuing Company Entities is in all
material respects in the condition required of such property by the terms of the
lease applicable thereto during the term of the lease and upon the expiration
thereof.
<PAGE> 33
25
Section 4.13 Intellectual Property. (a) Schedule 4.13 contains
a true, correct and complete list of the Continuing Company Entities'
Intellectual Property and all license agreements relating thereto to which a
Continuing Company Entity is a party (either as licensor or licensee) (the
"License Agreements").
(b) The Continuing Company Entities are the sole and exclusive
owners of the Intellectual Property and their rights under the License
Agreements, and the Intellectual Property and all registrations and applications
for registration therefor are currently standing in the name of the Continuing
Company Entity set forth in Schedule 4.13. The Intellectual Property, License
Agreements and Business Know-How are free and clear of all Liens, and the
Intellectual Property and Business Know-How are free of all licenses to third
parties except those set forth on Schedule 4.13. None of the Continuing Company
Entities owns or is a party to any License Agreement with respect to any patent
or application therefor. The Intellectual Property is valid and enforceable, all
registrations were validly obtained, and no registration has lapsed, expired or
been abandoned, or is subject to any pending or threatened opposition or
cancelation proceeding before the United States Patent and Trademark Office or
any other registration authority, except where such invalidity,
unenforceability, lapse, expiration, abandonment or proceeding could not,
individually or in the aggregate, reasonably be expected to have a material
effect on the use by the Continuing Company Entities of such Intellectual
Property. The Company does not know of a reason why any of the Continuing
Company Entities' trademarks or service marks (other than common law trademarks
or service marks) would not be registrable in any jurisdiction. Except as set
forth in Schedule 4.13, there are no claims pending or, to the Company's
knowledge, threatened, and the Continuing Company Entities have not received
notice of any claims alleging that the Continuing Company Entities' activities
infringe upon or constitute the unauthorized use of the proprietary rights of
any third party, or challenging the Continuing Company Entities' ownership or
the validity or enforceability of the Intellectual Property, the Business
Know-How or the License Agreements. Except as set forth in Schedule 4.13, to the
Company's knowledge, there are no infringements of the Intellectual Property or
the License Agreements by third parties. Except as set forth in Schedule 4.13,
none of the Continuing Company Entities has entered into any consent,
indemnification, forbearance to sue, or settlement agreement
<PAGE> 34
26
with any third party relating to the Continuing Company Entities' Intellectual
Property, Business Know-How or License Agreements, or the intellectual property
or business know-how of any third party.
Section 4.14 Litigation. (a) Except as set forth in Schedule
4.14(a), there are no claims, actions, suits, proceedings or investigations
pending or, to the Company's knowledge, threatened by any Company Entity at law
or in equity or before or by any federal, state, municipal or other governmental
court, department, commission, board, agency, instrumentality or authority or
before any arbitration body.
(b) Except as set forth in Schedule 4.14(b), there are no
claims, actions, suits, proceedings or investigations pending or, to the
Company's knowledge, threatened against or adversely affecting any Company
Entity or Shareholder at law or in equity or before or by any federal, state,
municipal or other governmental court, department, commission, board, agency,
instrumentality or authority or arbitration body which, as of the date of this
Agreement, (i) involve a claim against any Company Entity of more than $10,000,
(ii) seek any injunctive relief or punitive damages not covered by insurance
against any Company Entity or (iii) individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect, and the Company as of
the date hereof does not know or have any reason to know of any basis for any
such claim, action, suit, proceeding or investigation. As of the Closing Date,
there will be no pending or threatened claims, actions, suits, proceedings or
investigations of the kind described in clause (iii) above, or which challenge
the legality or validity of the transactions contemplated hereby or seek damages
in excess of $100,000 in connection with the consummation of the transactions
contemplated hereby. To the knowledge of the Company, except as set forth in
Schedule 4.14, none of the Company Entities is a party or subject to or in
default under any material judgment, order, injunction or decree of any
governmental entity or arbitration tribunal applicable to it or any of its
respective properties, assets, operations or business.
Section 4.15 Insurance. (a) Schedule 4.15 (a) sets forth a
complete and accurate list and description, including but not limited to annual
premiums thereon, expiration dates thereof and the deductibles thereunder, of
all policies of fire, liability, business interruption, hull
<PAGE> 35
27
and machinery, protection and indemnity, pollution, product liability, workers'
compensation, health and other forms of insurance presently in effect with
respect to the Continuing Company Entities, true copies of which have heretofore
been delivered to Buyer.
(b) Except as set forth in Schedule 4.15(b), all such policies
are valid, outstanding and enforceable policies and provide insurance coverage
for the properties, assets and operations of the Continuing Company Entities and
of the kinds, in the amounts and against the risks customarily maintained by
organizations similarly situated. The Company has kept the Riverboat insured
under marine (including navigation and port risk), hull, protection and
indemnity, machinery and pollution liability insurance. None of the Continuing
Company Entities has been refused any insurance with respect to any aspect of
the operations of the Continuing Company Entities, nor has the coverage been
limited by any insurance carrier to which it has applied for insurance or with
which it has insurance during the last three years. All premia and/or club calls
respecting each such policy of insurance have been paid through the end of each
respective policy year. No insurance or proceeds thereof have been assigned by
any Continuing Company Entity to any Person, except assignments of hull and
machinery insurance to Caterpillar Financial Services Corporation pursuant to
the CFSC Loan Documents.
Section 4.16 Labor Matters. Except to the extent set forth in
Schedule 4.16, (i) each Company Entity is, and has at all times been, in
material compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment, wages, hours of work
and occupational safety and health, and is not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, ordinance or regulation; (ii) there is no labor strike, dispute, slowdown,
stoppage or lockout actually pending, or threatened against or affecting any of
the Company Entities, and during the past three years there has not been any
such action; (iii) to the Company's knowledge, no union claims to represent the
employees of any of the Company Entities; (iv) none of the Company Entities is a
party to or bound by any collective bargaining or similar agreement with any
labor organization, or work rules or practices agreed to with any labor
organization or employee association applicable to employees of the Company
Entities; (v) to the Company's knowledge, none of the employees of the Company
<PAGE> 36
28
Entities is represented by any labor organization and there is no current union
organizing activities among the employees of the Company Entities, nor does any
question concerning representation exist concerning such employees; (vi) there
are no written personnel policies, rules or procedures applicable to employees
of the Company Entities; (vii) the Company Entities have not received notice of
any unfair labor practice charge or complaint against any of the Company
Entities pending or threatened before the National Labor Relations Board or any
similar state or foreign agency; (viii) the Company Entities have not received
notice of any grievance arising out of any collective bargaining agreement or
other grievance procedure against the Company Entities; (ix) the Company
Entities have not received notice of any charges with respect to or relating to
any of the Company Entities pending before the Equal Employment Opportunity
Commission or any other agency responsible for the prevention of unlawful
employment practices; (x) the Company Entities have not received notice of the
intent of any federal, state, local or foreign agency responsible for the
enforcement of labor or employment laws to conduct an investigation; (xi) the
Company Entities have not received notice of any complaints, lawsuits or other
proceedings pending or threatened in any forum by or on behalf of any present or
former employee of the Company Entities, any applicant for employment or classes
of the foregoing alleging breach of any express or implied contract of
employment, any law or regulation governing employment or the termination
thereof or other discriminatory, wrongful or tortious conduct in connection with
the employment relationship; and (xii) there are no employment contracts or
severance agreements with any employees of any of the Company Entities which, by
their terms, could result in any liability to the Company Entities.
Section 4.17 Compliance with WARN Act. Since the enactment of
the Worker Adjustment and Retraining Notification Act of 1988 (the "WARN Act"),
none of the Company Entities has effectuated (i) a "plant closing" (as defined
in the WARN Act) affecting any site of employment or one or more facilities or
operating units within any site of employment or facility of any of the Company
Entities or (ii) a "mass layoff" (as defined in the WARN Act) affecting any site
of employment or facility of any of the Company Entities; nor has any of the
Company Entities been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law. None of the employees of
<PAGE> 37
29
any of the Company Entities has suffered an "employment loss" (as defined in the
WARN Act) since January 1, 1993.
Section 4.18 Employee Benefit Plans; ERISA. (a) Schedule
4.18(a)(1) contains a true and complete list of each bonus, deferred
compensation, incentive compensation, stock purchase, stock option, severance or
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension or retirement plan,
program, agreement or arrangement, and each other employee benefit plan program,
agreement or management, whether formal or informal, written or oral, that is
maintained or contributed to or was maintained or contributed to at any time by
any Company Entity or by any trade or business, whether or not incorporated,
which together with any Company Entity would be deemed a "single employer"
within the meaning of Section 4001 of ERISA or Section 414(b), (c), (m) or (o)
of the Code (an "ERISA Affiliate"), within the last six years, for the benefit
of any employee, former employee, consultant, officer or director of any Company
Entity or any ERISA Affiliate (a "Plan"). Schedule 4.18(a)(2) identifies each
Plan that is an "employee benefit plan" within the meaning of Section 3(3) of
ERISA (a "Benefit Plan").
(b) With respect to each Plan, the Company has heretofore
delivered to Buyer true and complete copies of each of the following documents
to the extent applicable:
(i) a copy of the Plan (including all amendments thereto);
(ii) a copy of the most recent annual report with respect to
each such Plan for the last two most recently completed plan years;
(iii) a copy of the most recent Summary Plan Description,
together with each Summary of Material Modifications;
(iv) if the Plan is funded through a trust or any third-party
funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and the latest financial statements
thereto;
(v) all Contracts relating to any Plan with respect to which
any Company Entity or any ERISA Affiliate may have any liability,
including, without
<PAGE> 38
30
limitation, insurance contracts, investment management agreements,
subscription or participation agreements and record keeping or other
servicing or administration agreements; and
(vi) the most recent determination letter received from the IRS
with respect to each Benefit Plan intended to qualify under Section 401
of the Code.
All reports, returns and similar documents with respect to the Benefit Plans
required to be filed with any governmental agency or distributed to any Benefit
Plan participant or beneficiary have been duly and timely filed or distributed
and, to the knowledge of the Company, all reports, returns and similar documents
actually filed or distributed were true, complete and correct in all material
respects.
(c) No Benefit Plan is a "multiemployer plan", as such term is
defined in Section 3(37) of ERISA and no Benefit Plan is subject to Title IV of
ERISA; each of the Benefit Plans is, and has always been, operated in all
material respects in accordance with the requirements of all applicable law; and
each of the Benefit Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code, and each related trust intended to be tax-exempt
under Section 501(a) of the Code, has received a favorable determination letter
from the Internal Revenue Service. No such favorable determination letter has
been revoked, and, to the knowledge of the Company, revocation has not been
threatened; to the knowledge of the Company, no event has occurred and no
circumstances exist that would adversely affect the tax-qualification of such a
plan; and no Benefit Plan has been amended since the effective date of its most
recent determination letter.
(d) All contributions to, and payments from, the Benefit Plans
required to be made by any Company Entity or any ERISA Affiliate in accordance
with the terms of the Benefit Plans have been timely made as of the last day of
the most recent plan year thereof ended prior to the date of this Agreement, or
will be timely made in accordance with Section 404(a)(6) of the Code. All
required contributions to, and payments from, the Plans for any period on or
before December 31, 1995 that were not required to be made as of such date were
properly accrued and reflected on the Balance Sheet.
<PAGE> 39
31
(e) No Plan provides benefits, including, without limitation,
death or medical benefits (whether or not insured), with respect to current or
former employees of any Company Entity or any ERISA Affiliate for periods
extending beyond their retirement or other termination of service (other than
(i) coverage mandated by applicable law, (ii) death benefits or retirement
benefits under any "employee pension plan," as that term is defined in Section
3(2) of ERISA, (iii) deferred compensation benefits accrued as liabilities on
the books of the Company or an ERISA Affiliate or (iv) benefits the full cost of
which is borne by the current or former employee (or his beneficiary)).
(f) There has been no prohibited transaction (within the
meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Benefit Plan; none of the Company Entities has incurred any liability for any
excise tax arising under Section 4975 or 4976 of the Code or civil penalty
assessed pursuant to Section 409 or 502(i) of ERISA and, to the Company's
knowledge, no fact or event exists that could give rise to any such liability
with respect to any Benefit Plan; there are no pending, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Plans, or any trusts related thereto or any trustee or
administrator thereof, and no litigation or administrative or other proceeding
has occurred or, to the best knowledge of the Company, is threatened involving
any Plan or any trusts related thereto or any trustee or administrator thereof.
(g) No provision of any Benefit Plan that is an "employee
welfare benefit plan", as such term is defined in Section 3(1) of ERISA (each, a
"Welfare Plan"), limits the ability of any of the Company Entities to amend or
terminate such Welfare Plan at any time after the Closing Date and there have
been no written or, to the Company's knowledge, oral communications to
employees, former employees or their respective dependents by any of the Company
Entities to the contrary. The list of plans in Schedule 4.18(a)(1) discloses
whether each Welfare Plan is (i) unfunded, (ii) funded through a "welfare
benefit fund", as such term is defined in Section 419(e) of the Code, or other
funding mechanism or (iii) insured.
(h) The consummation of the transactions contemplated by this
Agreement will not (i) except as a result of the termination pursuant to Section
2.3 of the
<PAGE> 40
32
Contracts referred to in Schedule 2.3, (a) entitle any current or former
employee or officer of any Company Entity to severance pay, unemployment
compensation or any other similar payment or (b) accelerate the time of payment
or vesting or increase the amount of compensation due any such employee or
officer, or (ii) result in any prohibited transaction described in Section 406
of ERISA or Section 4975 of the Code.
(i) No employee of any of the Company Entities is a "leased
employee" within the meaning of Section 414(n) of the Code.
Section 4.19 Environmental Matters. (a) Except as set forth in
Schedule 4.19(a), each of the Company Entities is in compliance in all material
respects with all applicable Environmental Laws, which compliance includes, but
is not limited to, the possession by the Company Entities of, and their
compliance in all material respects with terms and conditions of, all permits,
certificates of financial responsibility and other governmental authorizations
required under applicable Environmental Laws ("Environmental Permits"). Except
as set forth in Schedule 4.19(a), no Company Entity has received any formal
communication (written or oral) that alleges that any Company Entity is not in
such material compliance, and, to the Company's knowledge, except as identified
elsewhere in this Section 4.19, there are no circumstances or conditions that
under existing Environmental Law could reasonably be expected to prevent or
interfere with such material compliance in the future. All permits, certificates
of financial responsibility and other governmental authorizations currently held
by any Company Entity pursuant to Environmental Laws are identified in Schedule
4.19(a).
(b) Except as set forth in Schedule 4.19(b) there is no
Environmental Claim pending or, to the Company's knowledge, threatened against
any Company Entity or against any person or entity whose liability for any
Environmental Claim any Company Entity has contractually retained or assumed.
(c) Except as set forth in Schedule 4.19(c), there are no past
or present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the presence, release, emission, discharge or
disposal by any Person of any Material of Environmental Concern at or under any
facility currently or
<PAGE> 41
33
formerly owned or operated by any Company Entity, that could reasonably be
expected to form the basis of any Environmental Claim against any Company Entity
or against any person or entity whose liability for any Environmental Claim any
Company Entity has contractually retained or assumed.
(d) Without in any way limiting the generality of the
foregoing, (i) all on-site and off-site locations where any Company Entity has
stored, disposed or arranged for the disposal of Materials of Environmental
Concern are identified in Schedule 4.19(d); (ii) all underground storage tanks,
and the capacity and contents of such tanks, located on property owned or leased
by any Company Entity are identified in Schedule 4.19(d); (iii) except as set
forth in Schedule 4.19(d), and except with respect to the Property located in
Missouri, there is no asbestos contained in or forming part of any building,
building component, vessel, structure or office space owned or leased by any
Company Entity; and (iv) except as set forth in Schedule 4.19(d), no
polychlorinated biphenyls (PCBs) are used or stored at any property owned or
leased by any Company Entity in violation of any Environmental Law.
(e) All river dredging operations and disposal of dredge spoils
have been carried out in compliance in all material respects with all applicable
Environmental Laws, and, except for the currently existing condition of the
Illinois River, of which the Company has general knowledge but no knowledge with
regard to the impact of such condition on dredging, the Company is aware of no
facts, conditions or circumstances, other than conditions imposed by the
Company's Environmental Permits or other requirements of law that have been
specifically applied to the Company's dredging operations, that could reasonably
be expected to prevent or restrict in any manner the continuation of such
dredging in substantially the same manner and at substantially the same
locations as previously carried out.
Section 4.20 No Condemnation or Expropriation. Neither the
whole nor any portion of the Property or any other assets of any Company Entity
is subject to any governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken by any public authority, with or without payment
of compensation therefor, nor has any such condemnation, expropriation or taking
been proposed.
<PAGE> 42
34
Section 4.21 Suppliers. Schedule 4.21 contains a true and
complete list of the names and addresses of the twenty-five largest suppliers
(indicating dollar volume for each) of products and services to the Company
during the twelve months ended December 31, 1995, indicating the existing
contractual arrangements for continued supply from each such firm. The Company
has not received any notice of, and knows of no reasonable basis for, any
development which threatens to affect adversely its arrangements with its
suppliers that could reasonably be expected to have a Material Adverse Effect.
Except as set forth on Schedule 4.21, there are no supply arrangements between
any Continuing Company Entity and the Shareholders or Affiliates of the
Shareholders which are on terms more or less favorable to a Continuing Company
Entity than could be obtained by such Continuing Company Entity in transactions
with unaffiliated third parties.
Section 4.22 Contracts and Commitments. Except as set forth on
Schedule 4.22 or expressly referred to in the notes to the Financial Statements:
(a) None of the Company Entities is party to or bound by any
Contract which is material to its business, operations, financial condition or
prospects or which involves, or is reasonably likely to involve, the expenditure
or receipt by a Company Entity after the date of the Balance Sheet of more than
$25,000. The legal enforceability after the Closing by the Continuing Company
Entities of their respective Contracts will not be affected in any material
respect by the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby.
(b) No purchase commitment of any of the Company Entities, or
by which any of the Company Entities is bound, is materially in excess of the
normal, ordinary and usual requirements of the business or in the opinion of the
management of the Company is at an excessive price.
(c) None of the Company Entities is a party to or bound by (i)
any Contract (other than this Agreement, the Shareholders' Agreement, the EPHLP
Partnership Agreement or the Coordination Agreement) with Shareholders or former
Shareholders, or any Person known to the Company to be an Affiliate or Associate
of a Shareholder or former Shareholder, (ii) any Contract with officers,
employees, agents, consultants, advisors, salesmen, sales
<PAGE> 43
35
representatives, distributors or dealers that are not cancelable by the
applicable Company Entity at will without liability, penalty or premium, (iii)
any Contract providing for the payment of any bonus or commission based on sales
or earnings, (iv) any Contract that contains any severance or termination or
change in control pay liability or obligation, (v) any Contract for the purchase
or sale of any security (other than this Agreement), (vi) any Contract for the
borrowing of money (or guarantee of indebtedness), (vii) any Contract for
leasing personal property which requires annual payments in excess of $50,000 or
the term of any of which exceeds two years, (viii) any Contract relating to
express product or service warranties, (ix) any Contract containing a covenant
not to compete by a Continuing Company Entity, (x) any Contract granting a Lien,
security interest or other material encumbrance on any property or asset of any
Company Entity, (xi) any Contract providing for exclusive purchases by or from a
Continuing Company Entity or containing a requirement purchase obligation, (xii)
any Contract with East Peoria or a Jamaica Entity, (xiii) any Contract providing
for administration, service, utilization review, adjustment, claims management
or similar functions relating to insurance, litigation or Plans of any of the
Company Entities or (xiv) any Contract for the sale of any of the assets,
property or rights of a Company Entity outside of the ordinary course of
business, except as contemplated by this Agreement.
(d) No Continuing Company Entity has given any power of
attorney (whether revocable or irrevocable) to any Person that is or may
hereafter be in force for any purpose whatsoever.
(e) No Continuing Company Entity is paying, or has any
obligation to pay, any pension, deferred compensation or retirement allowance to
any Person.
(f) Each material Contract of a Continuing Company Entity is
valid and binding upon such Continuing Company Entity and, to the knowledge of
the Company, each other party thereto and is in full force and effect and
enforceable by the applicable Continuing Company Entity in accordance with its
terms. Each applicable Continuing Company Entity has performed all obligations
required to be performed by it to date under each Contract to which such
Continuing Company Entity is a party, and there has been no breach or default or
claim of default by a Continuing Company Entity or, to the knowledge of the
Company, by any
<PAGE> 44
36
other party thereto under any provision thereof and no event has occurred which,
with or without notice, the passage of time or both, would constitute a default
by the Company or, to the knowledge of the Company, any other party thereto
under any provision thereof or which would permit modification, acceleration or
termination of any Contract by any other party thereto or by a Continuing
Company Entity, except for such defaults which in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
True, complete and correct copies of each of the Contracts set forth in
Schedule 4.22 or expressly referred to in the notes to the Financial
Statements have heretofore been provided to Buyer by the Company.
Section 4.23 Compliance with Applicable Law. (a) Except as set
forth in Schedule 4.23(a), (i) each of the Company Entities has in the past
complied and is presently complying with all applicable laws (whether statutory
or otherwise), rules, regulations, orders, ordinances, judgments or decrees of
all governmental authorities (federal, state, local or otherwise) (collectively,
"Laws"), including, but not limited to, all Gaming Laws (as defined below), the
Federal Occupational Safety and Health Act and all Laws relating to the safe
conduct of business and environmental protection and conservation, the Civil
Rights Act of 1964 and Executive Order 11246 concerning equal employment
opportunity obligations of federal contractors and any applicable health,
sanitation, fire, safety, labor, zoning and building laws and ordinances, except
for such failures to comply that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect, (ii) none of the
Company Entities has received notification of any asserted present or past
failure to so comply and (iii) to the knowledge of the Company, each of the
Company Entities is in compliance in all material respects with all applicable
Laws governing or relating to the current or contemplated casino and gaming
activities and operations of the Company Entities, including the Illinois
Riverboat Gambling Act and the rules and regulations promulgated thereunder
("Gaming Laws").
(b) To the knowledge of the Company, each of the Company
Entities has in effect all federal, state, local or other governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits, registrations, variances and rights, including all
<PAGE> 45
37
authorizations under Environmental Laws and Gaming Laws ("Permits"), necessary
for it to own, lease or operate its properties and assets and to carry on its
business as now conducted other than such Permits the absence of which could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, and there has occurred no default under any such Permit other
than such defaults which, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect. The Company has obtained and
maintained in full force and effect all U.S. Coast Guard approvals, U.S. Army
Corps of Engineers permits and all other rights, authorizations, certificates,
licenses, consents, approvals and permits necessary to operate (including all
matters related to the cruising schedule and route) and dock the Riverboat in
the manner in which it is currently operated. The Riverboat has been operated in
material compliance with its U.S. Coast Guard marine document and all applicable
stability letters. The Company has complied, and has caused the Riverboat to
comply, in all material respects with all Laws or Permits applicable to the
ownership or operation of the Riverboat.
(c) The Company holds a license to own a riverboat gambling
operation issued under the provisions of the Illinois Riverboat Gambling Act
(the "License") and such License is in full force and effect and has not been
revoked or suspended, and there has occurred no default under such license
except as set forth in Schedule 4.23(c). The Company has maintained and
presently maintains at all times reserves for working capital, capital
improvement, replacements and/or contingencies to the extent, and in the
amounts, required by the Illinois Riverboat Gambling Act and the rules and
regulations promulgated thereunder, including, without limitation, Title 86
Chapter IV, Section 3000.1072 (cash reserve requirements).
(d) Since 1991 and except as disclosed in Schedule 4.23(d),
neither the Company nor any Affiliate of the Company has (i) ever applied for a
casino, racing or other gaming license in any state or other jurisdiction and
been denied, (ii) experienced any revocation or failure to renew any such
license or (iii) not applied for any such license or renewal after being
informed orally or in writing by any regulatory authority in any state or other
jurisdiction, or any representative of such regulatory authority, that the
Company or such Affiliate of the Company, as the case may be, would be denied
such a license or renewal if it were applied for.
<PAGE> 46
38
(e) The Company has given Buyer access to (i) copies of all
material correspondence between the Illinois Gaming Board and the Company
relating to the Company's compliance with the rules and regulations of the
Illinois Gaming Board and the terms of the License, (ii) a true and complete
copy of the Company's original Gaming Application for an Owner's License filed
with the Illinois Gaming Board (excluding Personal Disclosure Forms of the
Shareholders) and any and all amendments and updates made thereto; (iii) a true
and complete copy of the Company's 1995 Renewal Application filed with the
Illinois Gaming Board (excluding Personal Disclosure Form updated information
unless it relates to shareholder criminal history) and any and all amendments
and updates made thereto; and (iv) a true and complete copy of the Company's
1996 Application for an Owner's License Renewal filed with the Illinois Gaming
Board on December 15, 1995 (excluding Personal Disclosure Form updated
information unless it relates to shareholder criminal history) and any and all
amendments and updates made thereto. Except as disclosed in such correspondence
and such applications or as set forth in Schedule 4.23(e), the Company
is not aware of any facts or circumstances relating to the conduct of any
Company Entity, or any director, officer, employee or Shareholder of any Company
Entity that could cause the Illinois Gaming Board to revoke, suspend or fail to
renew the License or take disciplinary action against any of the Company
Entities or any shareholder or equityholder thereof.
Section 4.24 Bank Accounts. Schedule 4.24 sets forth the names
and locations of all banks in which any Continuing Company Entity has a bank
account or safe deposit box and the names of all Persons authorized to draw
thereon or to have access thereto. At the Closing, the Company will deliver to
Buyer copies of all records, including all signature or authorization cards,
pertaining to such bank accounts and safe deposit boxes.
Section 4.25 Assets Necessary to Business. The Continuing
Company Entities presently have and immediately prior to the Closing will have
good, valid and marketable title to all property and assets, real, personal and
mixed, tangible and intangible, and all leases, licenses and other agreements,
necessary to permit the Continuing Company Entities to carry on the respective
businesses of the Continuing Company Entities as presently conducted.
<PAGE> 47
39
Section 4.26 Commissions. Except as set forth on Schedule 4.26,
there are no claims for brokerage commissions or finder's fees incurred by
reason of any action taken by any of the Shareholders or any of the Company
Entities.
Section 4.27 Disclosure of All Material Facts. The Company has
disclosed to Buyer in writing in or pursuant to this Agreement all facts, of
which the Company is aware, material to a Person considering a purchase of the
Shares. No representation or warranty to Buyer contained herein, and no
statement contained in any certificate, schedule, list or other writing
furnished to Buyer pursuant to the provisions of this Agreement, contains any
untrue statement of a material fact or omits to state a material fact which is
necessary in order to make the information given by or on behalf of the Company
to Buyer or its representatives prior to the Closing not misleading and which if
disclosed would reasonably affect the decision of a Person considering a
purchase of the Shares.
Section 4.28 Hotel Construction Budget. Schedule 4.28(a) sets
forth in the column entitled "Construction Expense" the committed amounts with
respect to each line item set forth in such Schedule for the construction and
development of the Hotel pursuant to the Standard Form of Agreement (the
"Construction Agreement") between EPHLP and River City Construction Co. dated
May 19, 1995, as amended and in effect on the date hereof. Schedule 4.28(b) sets
forth in the column entitled "Construction Expense" the amount that each
contractor referred to in such Schedule has agreed to charge for all of its
services to be provided in connection with the construction and development of
the Hotel.
Section 4.29 East Peoria Matters. (a) The transactions
contemplated hereby, including the sale of the Shares to Buyer, do not, and as
of the Closing Date will not, violate or constitute a default under any
Contracts between East Peoria and any of the Company Entities or Shareholders.
(b) As of the date hereof none of the Company Entities is, and
as of the Closing Date none of the Company Entities will be, in material breach
or violation of any such Contract.
(c) As of the date hereof, East Peoria has not asserted the
existence of any violation, breach or default
<PAGE> 48
40
under any such Contract. As of the Closing Date, East Peoria will not have made
any such assertion with regard to which (i) the assertion (in light of the
likelihood that East Peoria will take further action in connection therewith) or
(ii) the alleged violation (in light of the likelihood that the assertion is
correct and the consequences if it is correct) could reasonably be expected to
have a material adverse effect on the business or operations of the Continuing
Company Entities or Buyer's ownership or effective control thereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Shareholders that:
Section 5.1 Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada.
Section 5.2 Authority. Buyer has the corporate power and
authority to execute, deliver and perform this Agreement and the other
instruments and documents required or contemplated hereby. Buyer will deliver to
the Shareholders prior to the Closing a complete and correct copy, certified by
its Secretary, of the resolutions heretofore duly and validly adopted by its
Board of Directors evidencing such authorization (which resolutions will not
have been rescinded prior to and will be in full force and effect on the date of
the Closing). No other corporate act or proceeding on the part of Buyer or its
shareholders is necessary to authorize this Agreement or the other documents and
instruments to be executed and delivered by Buyer pursuant hereto or the
transactions contemplated hereby or thereby.
Section 5.3 Binding Effect, No Violation, Consents. This
Agreement constitutes, and, when executed and delivered, the other documents and
instruments to be executed and delivered by Buyer pursuant hereto will
constitute, valid and binding agreements of Buyer, enforceable in accordance
with their respective terms, and (assuming receipt of the consents, approvals
and authorizations specifically contemplated by the next
<PAGE> 49
41
sentence) neither the execution and delivery of this Agreement or the other
documents and instruments to be executed and delivered by Buyer pursuant hereto,
nor the consummation by Buyer of the transactions contemplated hereby or thereby
will (i) violate or conflict with or result in any breach of any provision of
the Certificate of Incorporation or By-Laws of Buyer, (ii) violate or conflict
with or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under or will result in the termination of,
or accelerate the performance required by, or result in the creation of any Lien
upon any of the assets under, any Contract to which Buyer is a party or by which
its assets or properties may be bound or affected or (iii) violate any statute
or law or any rule, regulation, order, writ, injunction or decree of any court
or governmental authority, excluding from the foregoing clauses (ii) and (iii)
such defaults, rights and violations which, in the aggregate, could not
reasonably be expected to have a material adverse effect on the ability of Buyer
to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby. Except for consents, approvals or
authorizations set forth in Schedule 5.3 and except for consents
required under the Illinois Riverboat Gambling Act and the applicable
requirements of the HSR Act, no consent, approval, authorization or action by,
notice to or filings with, any governmental authority or any other Person is
required in connection with the execution of this Agreement, the other documents
and instruments to be executed and delivered by Buyer pursuant hereto or the
consummation by Buyer of the transactions contemplated hereby or thereby, except
where the failure to obtain such consent, give such notice or make such filing
could not reasonably be expected to have a material adverse effect on the
ability of Buyer to perform its obligations under this Agreement or to
consummate the transactions contemplated hereby.
Section 5.4 Litigation. There are no claims, actions, suits,
proceedings or investigations pending or threatened by or against Buyer, at law
or in equity or before or by any federal, state, municipal or other governmental
department, commission, board, agency, instrumentality or authority, other than
claims, actions, suits, proceedings or investigations pending or threatened
which individually or in the aggregate could not reasonably be expected to have
a material adverse effect on the ability of Buyer to perform its obligations
under this Agreement or to consummate the transactions contemplated hereby, and
Buyer
<PAGE> 50
42
does not know or have any reason to know of any basis for any such claim,
action, suit, proceeding or investigation.
Section 5.5 Commissions. Except as set forth on Schedule 5.5,
there are no claims for brokerage commissions or finder's fees incurred by
reason of any action taken by Buyer.
Section 5.6 Access to Information. Buyer hereby acknowledges
and confirms that it has been provided access to information concerning, among
other things, the business affairs and financial condition of the Company and
had the opportunity to ask questions of and receive information and answers from
officers of the Company respecting, among other things, the business affairs and
financial conditions of the Company.
Section 5.7 Commitment Letter. Buyer has heretofore provided to
the Company a true, complete and correct copy of the commitment letter dated
April 4, 1996, among Buyer, California Hotel and Casino and Canadian Imperial
Bank of Commerce, as amended or supplemented to date.
ARTICLE VI
COVENANTS OF THE SHAREHOLDERS, THE COMPANY AND EPH
Each of the Shareholders, solely for itself (on a several, and
not joint and several basis), except as provided in Section 13.12, solely with
respect to Sections 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.11 and 6.14 (to the
extent such Sections contain covenants of the Shareholders) and Sections 6.1(j),
(k), (l) and (n) and Section 6.9, covenants and agrees with Buyer that, from the
date hereof until the Closing, the Shareholders will, and each of the Company
and EPH covenants and agrees with Buyer that, from the date hereof until the
Closing, it will do (or cause to be done) the following:
Section 6.1 Operation of the Business. Each of the Continuing
Company Entities (i) will conduct its respective business (including, without
limitation, the Company's management of Working Capital) diligently, only in the
ordinary course and substantially in the same manner as heretofore conducted;
provided, however, that (A) the Company may declare and pay certain cash
dividends prior to
<PAGE> 51
43
the Closing in amounts greater than the Company has paid historically, so long
as the Working Capital at the Closing shall be greater than or equal to $0.00;
and (B) that the Continuing Company Entities may take such actions outside the
ordinary course of business as required by law or as expressly contemplated or
required by this Agreement and (ii) will obtain Buyer's consent to any business
decision reasonably likely to have a significant financial or operational effect
on the Continuing Company Entities. Without limiting the foregoing, unless Buyer
otherwise consents in advance in writing:
(a) The Company Entities will give prompt notice to Buyer of
(i) any breach or default (or notice thereof) of any of their respective
material Contracts or (ii) any other event that has resulted or may result in a
Material Adverse Effect.
(b) The Company Entities will not incur or guarantee any
obligation or liability (whether absolute, accrued, contingent or otherwise and
whether due or to become due) material to the Continuing Company Entities or
enter into any Contract that (had such Contract been in existence on the date
hereof) would have been required to be set forth on Schedule 4.22, or
amend any of their respective Certificates of Incorporation, By-Laws,
partnership agreements or other organizational or governing documents, as
applicable.
(c) The Continuing Company Entities will (i) make the capital
expenditures disclosed in the capital budget set forth on Schedule 6.1(c)
pursuant to and in accordance with their existing commitments, (ii) use
commercially reasonable efforts to pursue the diligent completion of the
renovation and expansion of the pavilion in accordance with the Pavilion
Documents attached as Exhibit 6.1(c) as in effect on the date hereof and (iii)
not make other capital expenditures except (A) as contemplated in Section 11.3,
(B) capital expenditures which individually (including any series of related
expenditures) do not exceed $100,000 and in the aggregate do not exceed
$250,000, (C) with the prior written consent of Buyer (which Buyer shall not
unreasonably withhold with respect to capital expenditures that do not involve
any post-Closing liability to or obligation or commitment of any of the
Continuing Company Entities or Buyer) or (D) as required to meet an emergency
(it being understood and agreed that the Company shall promptly notify Buyer of
any such emergency and the emergency expenditures
<PAGE> 52
44
and other actions to be taken by the Company in response thereto).
(d) Except as directed by the Construction Manager, the
Continuing Company Entities will not pay, discharge or satisfy any Lien or
liability (whether absolute, accrued, contingent or otherwise and whether due or
to become due), other than liabilities shown on the Balance Sheet and
liabilities incurred after the date thereof in the ordinary course of business
in normal amounts, and no such payment, discharge or satisfaction shall be
effected other than in accordance with the ordinary payment terms relating to
the liability paid, discharged or satisfied.
(e) Except as directed by the Construction Manager, the
Continuing Company Entities will not permit or allow any of their respective
properties or assets, real, personal or mixed, tangible or intangible, to be
mortgaged, pledged or subjected to any Lien, except for any Permitted Liens.
(f) The Continuing Company Entities will not cancel any debts
or claims except in the ordinary course of business and consistent with past
practice, or waive any rights of material value or, except for inventory sold in
the ordinary course of business, disposal of obsolete assets and the transfer of
Excluded Assets in accordance with this Agreement, sell, transfer or convey any
of their respective properties or assets, real, personal or mixed, tangible or
intangible.
(g) The Continuing Company Entities will not dispose of or
permit to lapse any Intellectual Property.
(h) Except as provided in Section 2.3, the Continuing Company
Entities will not adopt, amend or terminate any Benefit Plan and will not enter
into any employment contract or compensation arrangement of any kind whatsoever,
or change (including, without limitation, any change pursuant to any bonus,
pension, profit-sharing or other plan, commitment, policy or arrangement) the
compensation payable or to become payable to any of their respective officers,
directors, employees or agents except for such changes which are in the ordinary
course of business and are not material or are required by law.
<PAGE> 53
45
(i) The Continuing Company Entities will not make any pension,
retirement, profit-sharing, bonus or other employee welfare or benefit payment
or contribution, other than in the ordinary course of business and consistent
with past practice.
(j) The Company and EPH will not declare, pay or make, or set
aside for payment or making, any dividend or other distribution (other than cash
dividends and the transfer of Excluded Assets in accordance with this Agreement)
in respect of their capital stock or other securities, or directly or indirectly
redeem, purchase or otherwise acquire any of the capital stock or other
securities of either the Company or EPH.
(k) The Company and EPH will not subdivide or in any way
reclassify any shares of their respective capital stock.
(l) The Continuing Company Entities will not (i) issue, grant
or sell any shares of their respective capital stock or any equity interest or
security or (ii) issue, grant or sell any security, option, warrant, call,
subscription or other right of any kind, fixed or contingent, that directly or
indirectly calls for the issuance, sale, pledge or other disposition of any
shares of their respective capital stock or any equity interest or security.
(m) The Continuing Company Entities will not make any change in
any accounting principles, practices or methods, including their principles,
practices or methods relating to calculation of reserves for receivables.
(n) Other than the transfer of Excluded Assets and the
termination of the Contracts referred to in Section 2.3, in each case in
accordance with this Agreement, the Continuing Company Entities will not pay,
loan, or advance any amount to or in respect of, or sell, transfer or lease any
property or assets (real, personal or mixed, tangible or intangible) to, or
enter into any transaction with or for the benefit of, any of their respective
officers or directors or any Affiliate or Associate of any of their respective
officers or directors or any of the Shareholders or any Affiliate or Associate
of any of the Shareholders.
(o) Except as directed by the Construction Manager, the
Continuing Company Entities will not enter into
<PAGE> 54
46
any lease of real property or material lease of personal property.
(p) The Continuing Company Entities will not terminate or
amend, or fail to perform any of their obligations or cause any breach under,
any Contract set forth in Schedule 6.1(p)(1) or any other material
Contract. The Continuing Company Entities will exercise their respective
commercially reasonable efforts to renew each of the Contracts set forth on
Schedule 6.1(p)(2) which is scheduled to terminate prior to the Closing
Date.
(q) Each of the Continuing Company Entities will use
commercially reasonable efforts to preserve intact the existing relationships
with its suppliers, customers and employees and others with which it has
business relationships. The Continuing Company Entities will permit Buyer, in
consultation and cooperation with the representatives of the Continuing Company
Entities, to contact suppliers, customers and employees.
(r) The Continuing Company Entities will maintain the insurance
referred to in Schedule 4.15.
(s) Each of the Company Entities will duly comply in all
material respects with all laws applicable to it and its properties, operations,
business and employees. The Company will maintain at all times reserves for
working capital, capital improvement, replacements and/or contingencies to the
extent, and in the amounts, required by all applicable Gaming Laws. The Company
will own and operate the Riverboat at all times in material compliance with its
U.S. Coast Guard marine document and all applicable stability letters. The
Company will maintain the Riverboat in good working order, subject to ordinary
wear and tear, in accordance with the past practice of the Company. The Company
will comply, and cause the Riverboat to comply, in all material respects with
all Laws or Permits applicable to the ownership or operation of the Riverboat.
(t) The Continuing Company Entities will not change any of
their policies or practices relating to the extension of credit to customers or
the collection from customers of receivables arising from gaming operations.
Section 6.2 Access. The Shareholders, to the extent within
their control, and the Company Entities will permit Buyer and its authorized
representatives at all
<PAGE> 55
47
reasonable times, and upon reasonable notice, to have access to and to examine
all premises, properties, files, books, documents, records, financial
information (including working papers and data in the possession of the
Company's independent public accountants, internal audit reports, and
"management letters" from such accountants with respect to the Company's systems
of internal control) and other information of the Company Entities (including
the right to make extracts therefrom or copies thereof), and will cooperate with
Buyer in its investigation of the Company Entities. Each of the Shareholders and
the Company Entities will permit representatives of Buyer to consult with him,
or its personnel, as the case may be, concerning all financial and operational
matters relating to the Company Entities and will be available, or, in the case
of the Company Entities, make available its personnel, to consult with such
representatives. The Continuing Company Entities will promptly furnish to Buyer
all existing surveys and title and lien searches, examinations, binders and
commitments as are available. The Shareholders and the Company Entities will
promptly furnish to Buyer such other documents relevant to the transaction
contemplated hereby as may reasonably be requested from time to time.
Section 6.3 Existence. Except as expressly contemplated by and
in accordance with Sections 1.4(d) and 2.1, the Shareholders, to the extent
within their control, and the Company Entities will take such action as may be
necessary to maintain, preserve, renew and keep in full force and effect each
such entity's existence (corporate or otherwise), rights and franchises and will
not amend any such entity's Certificate of Incorporation or By-Laws, partnership
agreement or other applicable organizational or governing document.
Section 6.4 Consents. The Shareholders and the Company Entities
shall at their own expense obtain prior to the Closing all consents, other than
governmental consents, necessary to the consummation of the transactions
contemplated hereby, including, without limitation, any such non-governmental
consents set forth on Schedule 3.3 or Schedule 4.4 and such other
non-governmental consents as Buyer or its counsel shall reasonably determine to
be necessary. All such consents shall be in writing, and executed counterparts
thereof shall be delivered to Buyer promptly after receipt thereof by the
Company Entities or the Shareholders but in no event later than immediately
prior to the Closing.
<PAGE> 56
48
Section 6.5 Governmental Filings. Each of the Company Entities
and each of the Shareholders will, at the expense (subject to Section 14.3) of
the Company or such Shareholders, as promptly as practicable, make any required
governmental filings, including filings pursuant to the Illinois Riverboat
Gambling Act and the HSR Act, and comply with any applicable governmental
waiting periods, notification or other procedures required to be complied with
by it in connection with the transactions contemplated by this Agreement. The
Shareholders will cooperate with the Company Entities in connection with such
filings.
Section 6.6 Performance. The Company Entities and the
Shareholders will perform all acts to be performed by them pursuant to this
Agreement and will refrain from taking or omitting to take any action that would
violate the Shareholders' or the Company's representations and warranties
hereunder or render them inaccurate as of the date hereof or the Closing Date or
that in any way would prevent or adversely affect the consummation of the
transactions contemplated hereby. The Company Entities and the Shareholders will
use their respective commercially reasonable efforts to satisfy or cause to be
satisfied all the conditions to the obligations of Buyer set forth in Article
IX.
Section 6.7 Updating of Information. (a) The Company Entities
and the Shareholders shall have the continuing obligation to supplement or
amend, within a reasonable period of time prior to the Closing Date, the
Schedules being delivered concurrently with the execution of this Agreement and
annexed hereto with respect to any matter hereafter arising or discovered which,
if existing or known at the date of this Agreement, would have been required to
be set forth or described in the Schedules. If when any such supplement or
amendment of the Schedules is delivered to Buyer, the Company and the
Shareholder's Representative acknowledge in writing that the condition set forth
in Section 9.1 has become incapable of fulfillment, such supplement or amendment
shall modify the representations and warranties made by the Company or the
Shareholders hereunder for purposes of the obligations of the Shareholders to
indemnify Buyer pursuant to Article XIII; provided, however, that such
supplement or amendment of the Schedules shall not modify the representations
and warranties made by the Company and the Shareholders hereunder for purposes
of satisfying the condition set forth in Section 9.1.
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49
(b) The Company Entities and the Shareholders shall, within two
weeks following the date hereof, supplement and amend (x) Schedules 4.10(a),
4.11, 4.16, 4.18, 4.22(a) and 4.22(c) with respect to Contracts to which Annabel
Lee, L.P. is a party or by which it or its assets or properties are bound, (y)
Schedules 4.14(a) and 4.14(b) with respect to claims, actions, suits,
proceedings or investigations pending or, to the Company's knowledge, threatened
by or against Annabel Lee, L.P., and (z) Schedule 4.19 with respect to
environmental matters relating to Annabel Lee, L.P., in each case as of the date
of delivery of each such supplemented or amended Schedule and with respect to
any such matter which, if existing or known at the date of this Agreement, would
have been required to be set forth in such Schedules. Such supplement or
amendment shall modify the representations and warranties made by the Company
hereunder for purposes of the obligations of the Shareholders to indemnify Buyer
pursuant to Article XIII; provided, however, that such supplement or amendment
shall not modify the representations and warranties made hereunder for purposes
of satisfying the condition set forth in Section 9.1.
Section 6.8 Shareholders' Agreement. The Company and each of
the Shareholders hereby (i) agrees that the provisions of Article II of the
Amended Shareholders Agreement, dated August 27, 1991, between the Company and
the Shareholders, as amended (the "Shareholders' Agreement"), are not applicable
to the transactions contemplated by this Agreement, (ii) waives any rights
thereunder with respect to such transactions, (iii) agrees that as of the
Closing the Shareholders' Agreement shall terminate and (iv) releases as of the
Closing any and all claims arising thereunder against the Company.
Section 6.9 S Corporation Status. The status of the
Company as an S corporation for federal and state income Tax purposes will be
maintained.
Section 6.10 Monthly Financial Statements; Weekly Gaming
Revenue Reports; Employment Information Updates. (a) The Company will deliver to
Buyer, promptly after they become available and in any case within 30 days after
the end of each calendar month, an unaudited balance sheet of each of the
Company and EPHLP as of the end of such month and unaudited statements of income
of each of the Company and EPHLP for the one-month period then ending and the
period since January 1, 1996. Such balance sheets and
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statements of income of the Company shall be in the form currently prepared by
the Company except that such balance sheets and statements of income shall not
consolidate the applicable financial data of EPHLP with that of the Company. All
such balance sheets and statements of income shall be prepared in good faith and
derived from the books and records of the Company Entities.
(b) The Company will deliver to Buyer, promptly after they
become available and in any case within five (5) days after the end of each
week, reports setting forth the gross gaming win of the Company during such
week. Such reports shall be prepared in good faith and derived from the books
and records of the Company.
(c) The Company will deliver to Buyer monthly reports setting
forth all terminations of and resignations by employees of the Company Entities,
which reports shall specify (i) the age, gender and race (if known to the
Company) of each employee, (ii) the date of termination or resignation and (iii)
the stated reason or cause (if known to the Company) for such termination or
resignation.
Section 6.11 Other Transactions. Except as expressly
contemplated by this Agreement, from the date of this Agreement to the Closing,
none of the Shareholders, the Company or (to the extent within the control of
the Shareholders or the Company) any of their Affiliates shall, nor shall they
permit any of their respective officers, directors, stockholders, equityholders
or other representatives to, directly or indirectly, encourage, solicit,
initiate or participate in discussions or negotiations with, or provide any
information or assistance to, any person or group (other than Buyer and its
representatives) concerning any merger, sale of securities, sale of substantial
assets or similar transaction involving any of the Continuing Company Entities.
In the event that any of the Shareholders, the Company or any of such Affiliates
receives a proposal relating to any such transaction, the Shareholders or the
Company shall promptly notify Buyer of such proposal.
Section 6.12 Interest Periods. The Company will ensure that any
Indebtedness of the Company outstanding at Closing, to the extent such
Indebtedness bears interest at a rate based on the London interbank offered
rate, does not have an interest period in excess of one month.
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51
Section 6.13 Owner's Affidavits. The Company Entities shall
deliver to the title insurance companies issuing title commitments to Buyer (or
Buyer's designee) with respect to any part of the Property owned by any
Continuing Company Entity such customary owner's affidavits as will enable such
title insurance companies to (a) delete or modify as customary the so-called
"standard-printed exceptions" from the title insurance policies to be issued to
Buyer (or Buyer's designee) on the Closing Date and (b) attach a non-imputation
endorsement to such policies to be issued on the Closing Date.
Section 6.14 Confidentiality of Information. Each of the
Shareholders, the Company and EPH acknowledge that the terms and provisions of
the Buyer Confidentiality Agreement are in full force and effect and apply to
any and all information furnished by Buyer pursuant to this Agreement. In the
event that this Agreement is terminated and the transactions contemplated hereby
are not consummated, the Buyer Confidentiality Agreement shall continue to be in
full force and effect in accordance with its terms.
ARTICLE VII
COVENANTS OF BUYER
Buyer covenants and agrees with the Shareholders that from the
date hereof until the Closing:
Section 7.1 Performance. Buyer will perform all acts to be
performed by it pursuant to this Agreement and will refrain from taking or
omitting to take any action that would violate its representations and
warranties hereunder or render them inaccurate as of the date hereof or the
Closing Date or that in any way would prevent or adversely affect the
consummation of the transactions contemplated hereby. Buyer will use
commercially reasonable efforts to satisfy or cause to be satisfied all the
conditions to the obligations of the Shareholders set forth in Article X.
Section 7.2 Governmental Filings. Buyer will, as promptly as
practicable, make any required governmental filings required of Buyer, including
filings pursuant to the Illinois Riverboat Gambling Act and the HSR Act, and
comply with any applicable governmental waiting periods or notification or other
procedures required to be complied
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with by it in connection with the transactions contemplated by this Agreement.
Buyer's filings with the Illinois Gaming Board in connection with the
transactions contemplated hereby shall be true, complete and correct in all
material respects.
Section 7.3 Confidentiality of Information. Buyer acknowledges
that the terms and provisions of the Confidentiality Agreement are in full force
and effect and apply to any and all information furnished to Buyer pursuant to
this Agreement. In the event that this Agreement is terminated and the
transactions contemplated hereby are not consummated, the Confidentiality
Agreement shall continue to be in full force and effect in accordance with its
terms.
Section 7.4 Shareholder Releases. At the Closing, Buyer shall
deliver, or cause to be delivered, documentation, in form and substance
reasonably satisfactory to the Shareholders' Representative, (a) releasing the
Shareholders from their obligations pursuant to the agreements listed on
Schedule 7.4 or (b) evidencing the termination of such agreements (the
"Shareholder Releases").
ARTICLE VIII
ENVIRONMENTAL MATTERS
Section 8.1 Site Access. Commencing no later than the date, the
Continuing Company Entities will make the Property located in East Peoria (the
"East Peoria Property") reasonably available to Buyer and/or Buyer's consultants
for purposes of conducting a subsurface investigation of the former landfill
area, reasonably tailored in scope, including, but not limited to, trenching
areas where, in Buyer's reasonable judgment, Materials of Environmental Concern
could reasonably be expected to exist, all at Buyer's cost and expense, to
determine whether and to what extent Materials of Environmental Concern are
present at, on or under the East Peoria Property ("Buyer's Environmental
Investigation"). The Continuing Company Entities will cooperate with Buyer
and/or Buyer's consultants during Buyer's Environmental Investigation.
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ARTICLE IX
CONDITIONS TO OBLIGATIONS OF BUYER
The obligation of Buyer to purchase the Shares at the Closing
is subject to the satisfaction or waiver by Buyer of the following conditions on
or before the Closing Date:
Section 9.1 Representations and Warranties Correct. Each
representation and warranty of each of the Shareholders and the Company made
herein, and the statements contained in the Exhibits and Schedules hereto or in
any instrument, list, certificate or writing delivered by the Company or the
Shareholders pursuant to this Agreement shall if qualified as to materiality be
true and correct and, if not so qualified, be true and correct in all material
respects, in each case as of the date made and, except to the extent such
representation, warranty or statement relates solely to the date hereof or an
earlier date, at and as of the Closing Date, with the same force and effect as
though made at and as of the Closing Date.
Section 9.2 Performance; No Default. Each of the
Shareholders and the Company Entities will have performed and complied in all
material respects with all the obligations, agreements and conditions required
by this Agreement to be performed or complied with by them at or prior to the
Closing.
Section 9.3 Delivery of Certificate. The Company shall
have delivered to Buyer a certificate, dated the Closing Date, executed by an
executive officer certifying to the fulfillment of the conditions set forth in
Sections 9.1 and 9.2.
Section 9.4 Opinion of Counsel to the Shareholders and the
Company. The Company will have delivered to Buyer (i) an opinion of David Daley,
Esq., General Counsel of the Company, dated the Closing Date, and (ii) an
opinion of Mayer, Brown & Platt, special counsel to the Company, dated the
Closing Date, containing the opinions set forth on Exhibit 9.4.
Section 9.5 Good Standing Certificates. Buyer shall
have received the following certificates for each Company Entity, in form and
substance reasonably satisfactory to Cravath, Swaine & Moore, special counsel to
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Buyer: (a) from the Secretary of State of its state of organization evidencing
its continued existence and its good standing as a corporation or limited
partnership organized under the laws of such state; (b) from each jurisdiction
in which it is qualified or licensed to do business as a foreign corporation or
limited partnership, evidencing its continued good standing as a corporation or
limited partnership as licensed or qualified; and (c) from each applicable
jurisdiction referred to in clauses (a) and (b) above, evidencing its current
payment of income and other taxes.
Section 9.6 Consents. Buyer shall have received executed
counterparts of the consents referred to in Section 6.4, all of which consents
shall be in form and substance reasonably satisfactory to Buyer.
Section 9.7 Governmental Approvals. All consents,
authorizations and approvals (including, without limitation, approval from the
Illinois Gaming Board) from, and all declarations, filings and registrations
with, any governmental authority required to consummate the transactions
contemplated by this Agreement, including those set forth in Schedule 5.3, shall
have been obtained or made without the imposition of any material conditions,
and all applicable waiting periods under the HSR Act shall have expired or been
terminated.
Section 9.8 No Material Adverse Change. No change, event,
development or combination of developments (other than a Specified Illinois
Gaming Industry Development) shall have occurred which, individually or in the
aggregate, has resulted in or could reasonably be expected to result in a
Material Adverse Effect.
Section 9.9 Absence of Litigation. There will be no suit,
action or other proceeding pending or threatened seeking to enjoin, restrain,
hinder or delay the purchase and sale of the Shares or the other transactions
contemplated hereby, or to impose limitations on the ability of Buyer to acquire
or hold, or exercise full rights of ownership of, the Shares, or to prohibit
Buyer or any of its Affiliates from effectively controlling in any material
respects the business or operations of the Continuing Company Entities, at law
or in equity before any federal, state, municipal or other governmental court,
department, commission, board, agency, instrumentality or authority or
arbitration body, nor shall any injunction or order of any
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such court or other entity be in effect as of the Closing which restrains or
prohibits the purchase and sale of the Shares or the other transactions
contemplated hereby.
Section 9.10 FIRPTA Certificates. Buyer shall have received
from each Shareholder an affidavit, in the form attached hereto as Exhibit 9.10.
Notwithstanding anything to the contrary set forth herein, if any Shareholder
fails to provide Buyer with such affidavit, Buyer shall be entitled to withhold
the requisite amounts from the Purchase Price in accordance with Section 1445 of
the Code.
Section 9.11 Termination of Certain Contracts. Buyer shall have
received evidence (in form and substance satisfactory to Buyer) as to the
termination of the Contracts referred to in Section 2.3 and the release of Buyer
and the Continuing Company Entities from any liability, restriction or required
performance thereunder.
Section 9.12 Post-Closing Escrow Agreement. The Shareholders
shall have duly executed and delivered to Buyer the Post-Closing Escrow
Agreement substantially in the form of Exhibit 13.3.
Section 9.13 Coordination Agreement. The Shareholders shall
have duly executed and delivered to each other the Coordination Agreement
substantially in the form of Exhibit 1.7.
Section 9.14 RPTA Certificate. Not later than thirty (30) days
prior to the Closing, the Company shall have delivered to Buyer an environmental
disclosure statement duly executed and acknowledged by all applicable Continuing
Company Entities as required under the Illinois Responsible Property Transfer
Act of 1988 ("RPTA"), or, if no such disclosure statement is required, then the
Company shall have delivered to Buyer a certificate, in form and substance
reasonably acceptable to Buyer and signed by an environmental engineer or
industrial hygienist, certifying that the East Peoria Property is exempt from
the provisions of RPTA.
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ARTICLE X
CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS
The obligation of the Shareholders to sell the Shares on the
Closing Date is subject to the satisfaction or waiver by the Shareholders'
Representative of the following conditions, on or before the Closing Date:
Section 10.1 Representations and Warranties Correct. Each
representation and warranty of Buyer made herein, and the statements contained
in the Exhibits and Schedules hereto or in any instrument, list, certificate or
writing delivered by Buyer pursuant to this Agreement shall if qualified as to
materiality be true and correct and, if not so qualified, be true and correct in
all material respects, in each case as of the date made and at and as of the
Closing Date, with the same force and effect as though made at and as of the
Closing Date.
Section 10.2 Performance; No Default. Buyer will have performed
and complied in all material respects with all the obligations, agreements and
conditions required by this Agreement to be performed or complied with by it at
or prior to the Closing.
Section 10.3 Delivery of Certificate. Buyer shall have
delivered to the Shareholders' Representative a certificate, dated the Closing
Date, executed by an executive officer, certifying to the fulfillment of the
conditions set forth in Sections 10.1 and 10.2.
Section 10.4 Opinion of Counsel to Buyer. Buyer will have
delivered to the Shareholders' Representative (i) an opinion of McDonald,
Carano, Wilson, McCune, Bergin, Frankovich & Hicks, counsel to Buyer, dated the
Closing Date, and (ii) an opinion of Cravath, Swaine & Moore, special counsel to
Buyer, dated the Closing Date, containing the opinions set forth on Exhibit
10.4.
Section 10.5 Governmental Approvals. All consents,
authorizations and approvals (including, without limitation, approval from the
Illinois Gaming Board) from, and all declarations, filings and registrations
with, any governmental authority required to consummate the transactions
contemplated by this Agreement, including those set forth in Schedules 3.3 and
4.4, shall have been obtained or made without the imposition of any material
conditions,
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and all applicable waiting periods under the HSR Act shall have expired or been
terminated.
Section 10.6 Absence of Litigation. There will be no suit,
action or other proceeding pending or threatened against any of the Company
Entities or any of the Shareholders (other than any such suit, action or
proceeding initiated or threatened by a Company Entity or Shareholder) seeking
to enjoin, restrain, hinder or delay the purchase and sale of the Shares or the
other transactions contemplated hereby at law or in equity before any federal,
state, municipal or other governmental court, department, commission, board,
agency, instrumentality or authority or arbitration body, nor shall any
injunction or order of any such court or other entity be in effect as of the
Closing which restrains or prohibits the purchase and sale of the Shares or the
other transactions contemplated hereby.
Section 10.7 Shareholder Releases. The Shareholders'
Representative shall have received the Shareholder Releases.
ARTICLE XI
CERTAIN ADDITIONAL COVENANTS
Section 11.1 Section 338 Elections. (a) The Shareholders and
Buyer shall jointly make the elections provided for by Sections 338(g) and
338(h)(10) of the Code and treasury regulation section 1.338(h)(10)-1 (and any
comparable election under state or local tax law) with respect to the purchase
of the Shares by Buyer (each, an "Election"). At the Closing, the Shareholders
shall deliver Forms 8023-A to Buyer, with Sections 2a through 6h completed and
signed by each Shareholder. Also, Buyer and the Shareholders shall cooperate
with each other to take all actions necessary and appropriate (including filing
such additional forms, returns, elections, schedules and other documents as may
be required to effect and preserve a timely Election in accordance with the
provisions of treasury regulation section 1.338(h)(10)-1 (or any comparable
provisions of state or local tax law) or any successor provisions. The
Shareholders and Buyer shall report the purchase by Buyer of the Shares pursuant
to this Agreement consistent with the Elections (and any comparable elections
under state or local tax laws) and shall take no position
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inconsistent therewith in any Tax Return, any proceeding before any taxing
authority or otherwise.
(b) In connection with the Elections, not later than the
Closing, the Shareholders' Representative and Buyer shall act together in good
faith to (i) determine and agree upon the "Modified Aggregate Deemed Sale Price"
of the Company's and EPH's respective assets (within the meaning of, and in
accordance with, treasury regulation section 1.338(h) (10)-1(f)) and (ii)
determine and agree upon the proper allocations (the "Allocations") of the
"Modified Aggregate Deemed Sale Price" among the respective assets of the
Company and EPH (in accordance with Section 338(b)(5) of the Code and the
treasury regulations promulgated thereunder). The Shareholders and Buyer shall
(i) be bound by such determinations and such Allocations for purposes of
determining any Taxes, (ii) prepare and file their Tax Returns on a basis
consistent with such determinations and such Allocations and (iii) take no
position inconsistent with such determinations and Allocations on any applicable
Tax Return, in any proceeding before any taxing authority or otherwise. In the
event that any such allocation is disputed by any taxing authority, the party
receiving notice of the dispute shall promptly notify the other party hereto
concerning resolution of the dispute. Any liability for Taxes arising from the
Elections shall be borne by the Shareholders.
Section 11.2 Noncompetition. For a period of three (3) years
following the Closing, without the written consent of Buyer, the Shareholders
and their Affiliates shall not, directly or indirectly, through equity ownership
or otherwise, own, operate or make an Investment (collectively, "Engage" or an
"Engagement") in a business engaged in one or more or all of riverboat,
land-based, barge or dockside casino-style gaming anywhere (a) within a 150-mile
radius of East Peoria or (b) in the Greater Chicago Area (a "Gaming Business");
provided, however, this Section 11.2 shall not apply to (i) existing Engagements
by the Shareholders or their Affiliates as set forth in Schedule 11.2, (ii)
Investments in publicly traded companies in which the Shareholders and their
Affiliates, in the aggregate, do not own and, following such Investment, will
not own, more than 10% of the voting securities, (iii) Engagements by Jeffrey D.
Goldstein, Richard A. Goldstein or Robert S. Goldstein (the "Goldsteins") or
their respective Affiliates (other than the other Shareholders and their
Affiliates and excluding Engagements by the other
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Shareholders and their Affiliates in Affiliates of the Goldsteins) in (A) Casino
America, Inc., a Delaware corporation ("Casino America"), (B) Lady Luck
Bettendorf, L.C., an Iowa limited liability company ("LLB"), (C) the State of
Iowa and (D) Gaming Businesses within a 10-mile radius of any of Moline, East
Moline or Rock Island, Illinois, and Engagements by Casino America anywhere and
Engagements by LLB in Iowa, (iv) Engagements in Gaming Businesses within a
10-mile radius of any of Moline, East Moline or Rock Island, Illinois or
Bettendorf or Davenport, Iowa which, together with all other Engagements in
Gaming Businesses within such radii (other than Engagements expressly permitted
pursuant to clause (iii) above) by the Shareholders, do not in the aggregate
exceed $25 million or (v) passive Investments made following the date hereof
with the written consent of Buyer, which shall not be unreasonably withheld.
Section 11.3 Certain Hotel-Related Matters. (a) The
Shareholders and, on behalf of themselves and EPHLP, EPH and the Company, hereby
appoint Buyer as construction manager (the "Construction Manager") for the
construction and development of the Hotel and authorize the Construction Manager
to act as their sole agent in all matters relating to construction and
development of the Hotel. Buyer hereby accepts such appointment and agrees to
use commercially reasonable efforts to construct and develop the Hotel in a
timely manner in accordance with the Scope of the Hotel set forth in Exhibit
11.3(a).
(b) The Construction Manager hereby is granted sole and
exclusive authority to manage the construction and development of the Hotel in
accordance with the Scope of the Hotel. The Construction Manager shall have the
power and authority to enter into contracts and sign purchase orders binding
EPHLP, and the Shareholders, EPH and the Company shall cause EPHLP to promptly
pay as directed all invoices or other payment requests submitted by the
Construction Manager, subject to Section 11.3(f). The Construction Manager shall
have the sole and exclusive right to make any and all decisions relating to the
construction and development of the Hotel, including the right to execute change
orders on behalf of EPHLP; provided that all such change orders and decisions
may not without the Company's consent result in a material adverse departure
from the Scope of the Hotel. Neither EPHLP nor EPH nor the Company shall have
any right or power to authorize any change orders. Notwithstanding any contrary
provision of this
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Section 11.3, the Construction Manager will consult with the Company or EPHLP
prior to entering into any written amendment of, or taking any other action with
the intent of amending, revising or terminating, any Contract with a contractor
that could result in material liability to the Company that would not be
included in the Post-Signing Hotel Construction Amount.
(c) The Construction Manager may exercise any of its rights or
duties hereunder by or through agents. The Construction Manager's rights and
powers shall also include (i) unrestricted access at all times to all areas of
the Hotel site (the "Site") and to the books and records and other documents of
the Company Entities relating to the Hotel; (ii) the inspection of any or all
goods and materials delivered to or to be used at the Site; and (iii) exclusive
control of all proposed Contracts (including all purchase orders) relating to
construction and development of the Hotel.
(d) The Construction Manager shall, if requested by EPHLP or
the Company, hold weekly or monthly meetings to apprise EPHLP and/or the Company
of the progress of the construction and development of the Hotel.
(e) Commencing on the date hereof, the Company shall have the
right to present the Construction Manager with evidence of payments made by
EPHLP or the Company prior to the date hereof in connection with the
construction and development of the Hotel. The sum of the amount of such
payments is referred to herein as the "Pre-Signing Hotel Construction Amount". A
payment will be included in the Pre-Signing Hotel Construction Amount only if
(i) the making of such payment prior to the date hereof has been verified and
(ii) such payment corresponds to a line item set forth in Schedule 4.28
(regardless whether the work for which such payment was made was adequately
performed, or whether such payment constituted payment in full for such work);
provided, however, that a payment may qualify for inclusion in
the Pre-Signing Hotel Construction Amount only to the extent it is equal to or
less than the amount set forth under "Construction Expense" in Schedule
4.28 with respect to the applicable line item; and provided
further that the Pre-Signing Hotel Construction Amount shall not exceed
$9,591,100. The Company, EPH and the Shareholders shall cooperate, and cause
EPHLP to cooperate, with the Construction Manager's verification of payments in
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connection with determination of the Pre-Signing Hotel Construction Amount.
(f) The sum of the amount of payments made by the Company, EPH
or EPHLP as directed by the Construction Manager pursuant to Section 11.3(b) is
referred to herein as the "Post-Signing Hotel Construction Amount"; provided
that the Post-Signing Hotel Construction Amount shall not include any payments
made on or after the date of this Agreement unless made with the prior written
approval of the Construction Manager; provided further, however, that the
Post-Signing Hotel Construction Amount shall not include any contractor fees
pursuant to any Contract entered into prior to the date of this Agreement which
fees are not set forth in Schedule 4.28 (other than increases in such fees
agreed to by the Construction Manager unless such increases arise from events or
actions occurring or agreements made prior to the date hereof or from the
settlement of a dispute with respect to any such events, actions or agreements)
or any amounts payable pursuant to any Contract entered into prior to the date
of this Agreement and not disclosed in Schedule 4.22, it being understood and
agreed by the parties that any such fees or amounts shall be paid by EPHLP or
the Company, as applicable, prior to the Closing as directed by the Construction
Manager and shall not be liabilities of Buyer or, after the Closing, the
Continuing Company Entities. If the Post-Signing Hotel Construction Amount,
together with the Pre-Signing Hotel Construction Amount (as determined pursuant
to Section 11.3(e)), exceeds the Hotel Construction Amount, the Company, EPH and
EPHLP shall have no further obligation to make payments as directed pursuant to
Section 11.3(b).
(g) The appointment of the Construction Manager as construction
manager and agent shall terminate upon the Closing or, if earlier (or if this
Agreement is terminated pursuant to Section 12.1), upon completion of the Hotel
in accordance with the Scope of the Hotel. In the event of termination of this
Agreement pursuant to Section 12.1, the Construction Manager shall use
commercially reasonable efforts to complete the Hotel in accordance with the
Scope of the Hotel and shall bear any costs of such completion in excess of the
Hotel Construction Amount; provided that if the cost of such completion
is less than the Hotel Construction Amount the Company shall promptly pay the
amount of such difference to Buyer. For purposes of the preceding sentence, the
cost of such completion shall be an amount equal to the sum of the Pre-Signing
Hotel
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Construction Amount and the Post-Signing Hotel Construction Amount.
(h) The Shareholders, EPH and the Company agree, and shall
cause EPHLP to agree, to indemnify, defend and hold harmless the Construction
Manager and its Affiliates and their respective directors, officers, agents and
employees (the "Construction Manager Group") from and against, and release and
waive any liability to the Shareholders, the Company, EPHLP or EPH of the
Construction Manager Group (or any member thereof) for, any Indemnifiable Losses
asserted against, resulting to, imposed upon or incurred by the Construction
Manager Group (or any member thereof), directly or indirectly, by reason of or
resulting from the appointment of the Construction Manager hereunder or its
conduct in connection therewith or any other action or failure to act, except
with respect to any Indemnifiable Losses that are finally judicially determined
to have resulted primarily from the Construction Manager's gross negligence or
wilful misconduct or a breach of its obligations set forth in this Section 11.3
(solely in its capacity as Construction Manager).
(i) The Company, EPH and the Shareholders will, and will cause
EPHLP to, use commercially reasonable efforts to pursue the prompt opening of
the Hotel as the Hotel nears completion. Such efforts shall include hiring and
training Hotel employees, marketing the Hotel and purchasing Hotel Operating
Supplies.
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
Section 12.1 Termination of Agreement. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual written consent of Buyer and the Company;
(b) by Buyer, if there has been a material violation in or
breach by any of the Company Entities or any of the Shareholders of any
of the agreements, representations or warranties contained herein which
has not been waived by Buyer in writing;
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(c) by the Company, if there has been a material violation or
breach by Buyer of any of the agreements, representations or warranties
contained herein which has not been waived by the Company in writing;
(d) by Buyer or the Company if the Closing shall not have
occurred on or before December 31, 1996; provided, however, that
neither Buyer nor the Company shall be entitled to terminate this
Agreement pursuant to this Section 12.1(d) if such party's (including,
in the case of the Company, any Shareholder's) knowing or willful
breach of this Agreement has prevented the consummation of the
transactions contemplated hereby; or
(e) by Buyer if any of the conditions to the obligations of
Buyer set forth in Article IX shall have become incapable of
fulfillment and shall not have been waived by Buyer in writing, or by
the Company if any of the conditions to the obligations of the
Shareholders set forth in Article X shall have become incapable of
fulfillment and shall not have been waived by the Company in writing;
provided, however, that neither Buyer nor the Company shall be entitled
to terminate this Agreement pursuant to this Section 12.1(e) if such
party (including, in the case of the Company, the Shareholders) is in
breach in any material respect of its representations, warranties,
covenants or agreements contained in this Agreement.
Section 12.2 Effect of Termination. In the event of termination
of this Agreement by either Buyer or the Company as provided in Section 12.1,
this Agreement shall forthwith become void and of no further force and effect
(other than this Section 12.2, Section 6.14, Section 7.3, Section 11.3, Section
14.3, Section 14.9 and Section 14.11) and there shall be no liability on the
part of Buyer, the Company or the Shareholders (or their respective
shareholders, officers, directors, employees, affiliates or representatives) to
one another, except for any liability of the breaching party for any breaches of
this Agreement prior to the time of such termination.
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ARTICLE XIII
SURVIVAL; ESCROW; INDEMNIFICATION
Section 13.1 Survival of Representations. All representations
and warranties contained in this Agreement, and agreements made by any party to
this Agreement, shall survive the Closing and any investigation at any time made
by or on behalf of any party hereto for a period ending on the later of (a)
December 31, 1997 and (b) the date twelve (12) months after the Closing Date;
provided, however, that all representations and warranties contained in Section
3.1 (Ownership of Shares), Section 3.6 (Tax Matters), Section 4.3
(Capitalization) and Section 4.8(a) (Tax Matters), the indemnification for which
shall not be limited to the Escrowed Funds, shall survive the Closing
indefinitely. All covenants and agreements in this Agreement relating to periods
after the Closing Date shall survive the Closing indefinitely (except as
provided therein); provided, however, that the covenants contained in Sections
6.6 and 7.1 with respect to refraining from taking or omitting to take action
that would violate or render inaccurate a party's representations or warranties
shall survive with respect to any particular representation or warranty only for
so long as such representation or warranty survives pursuant to this Section
13.1.
Section 13.2 Statements as Representations. All statements
contained herein or in any Schedule, Exhibit or closing certificate delivered
pursuant hereto or in connection with the transactions contemplated hereby shall
be deemed representations and warranties within the meaning of Sections 9.1,
10.1 and 13.1.
Section 13.3 Escrow. At the Closing, the Company, Buyer, the
Shareholders and an escrow agent selected by Buyer and reasonably satisfactory
to the Company ("Escrow Agent") shall enter into an escrow agreement (the
"Post-Closing Escrow Agreement") substantially in the form of Exhibit 13.3.
Pursuant to Section 1.6, Buyer will place into an escrow account (the "Escrow
Account") the Escrowed Funds to be held by the Escrow Agent pursuant to the
terms of this Agreement and the Post-Closing Escrow Agreement, for a term
ending, subject to the final determination of each Escrow Statement (as defined
in Section 13.11) submitted hereunder and after giving effect to any resulting
change in the amount of Reimbursable Losses (as defined in Section 13.11)
hereunder and further subject to any amounts
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held in the Escrow Account as reasonable reserves for any Indemnifiable Losses
from pending Indemnification Events (as defined in Section 13.6), on the later
of (a) December 31, 1997 and (b) the date twelve (12) months after the Closing
Date (the "Claims Period"). The fees and expenses of the Escrow Agent shall be
paid by Buyer annually and 50% of all such fees and expenses shall be deemed
Reimbursable Losses which are includable on an Escrow Statement pursuant to
Section 13.11. For purposes of this Agreement, the term "Escrowed Funds" shall
include any interest or other income earned with respect thereto.
Section 13.4 Release of Reimbursable Losses. After an Escrow
Statement is finally determined as provided in Section 13.11, Buyer and the
Shareholders' Representative shall jointly submit such Escrow Statement to the
Escrow Agent. Within ten (10) days of the receipt of each such Escrow Statement,
the Escrow Agent shall record the total dollar amount of Reimbursable Losses (as
defined in Section 13.11) on the books and records of the Escrow Agent and shall
deliver by wire transfer of immediately available funds to the account or
accounts specified by Buyer an aggregate amount equal to the Reimbursable Losses
shown on such Escrow Statement (an "Indemnity Payment"), together with the pro
rata portion of the interest and earnings on the Escrowed Funds.
Section 13.5 Release of Escrowed Funds to Shareholders. To the
extent the amount of Escrowed Funds in the Escrow Account after Buyer has
indicated in writing that it will submit no more Escrow Statements pursuant to
Section 13.11 (or, if earlier, the last day for delivery by Buyer pursuant to
Section 13.11(a) of an Escrow Statement) is greater than the Maximum Escrow
Amount, the Escrow Agent shall record the total dollar amount of such excess on
the books and records of the Escrow Agent and shall deliver by wire transfer of
immediately available funds to the account or accounts specified by the
Shareholders' Representative an aggregate amount equal to such excess, together
with the pro rata portion of the interest and earnings on the Escrowed Funds.
Section 13.6 Indemnification Events. An "Indemnification Event"
means either a General Indemnification Event or a Tax Indemnification Event.
Section 13.7 General Indemnification Event. A "General
Indemnification Event" means any and all claims,
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demands, actions or causes of action, assessments, losses, damages, liabilities,
costs and expenses, including, without limitation, interest, penalties and
attorneys' fees and expenses (individually and collectively "Indemnifiable
Losses"), asserted against, resulting to, imposed upon or incurred by any member
of the Buyer Group, directly or indirectly, by reason of or resulting from (i) a
breach of any agreement, covenant, representation or warranty of the
Shareholders or any of the Company Entities contained in or made pursuant to
this Agreement, or any facts or circumstances constituting such a breach, (ii)
any Excluded Liability, (iii) any claim against a Continuing Company Entity
arising under the Jones Act or Federal admiralty or maritime law and based on
events occurring in 1993 or 1994 or (iv) a Specified Contract.
Section 13.8 Tax Indemnification Event. (a) A "Tax
Indemnification Event" means any and all Indemnifiable Losses asserted against,
resulting to, imposed upon or incurred by any member of the Buyer Group,
directly or indirectly, by reason of or resulting from any and all Taxes imposed
upon the Company Entities or the Shareholders, other than Excluded Taxes, (i)
with respect to any taxable period (or any portion thereof) ending on or before
the Closing Date (such Taxes are hereinafter referred to as "Pre-Closing Taxes"
and such periods as "Pre-Closing Periods") and (ii) with respect to any taxable
period beginning before the Closing Date and ending after the Closing Date (such
Taxes are hereinafter referred to as "Straddle Taxes" and such periods as
"Straddle Periods") but only with respect to the portion of such Straddle Period
ending on the close of the Closing Date and in the manner provided in Section
13.8(d).
(b) Without limiting the generality of Section 13.8(a) above,
"Tax Indemnification Event" shall include any and all Indemnifiable Losses
asserted against, resulting to, imposed upon or incurred by any member of the
Buyer Group, directly or indirectly, to the extent not reserved for on the
Balance Sheet, by reason of any and all Taxes (other than Excluded Taxes)
imposed upon the Company, EPH or the Shareholders arising directly or indirectly
from (i) the failure of the Company or EPH to be an S corporation or the
termination of the Company's or EPH's status as an S corporation, (ii) the
imposition of any Taxes on the Company or EPH for any taxable period in which
the Company's or EPH's election of subchapter S status was in effect (including
but not limited to those Taxes described in Sections 1374 and 1375 of the Code)
and (iii) the imposition of any Taxes on any Continuing Company Entity as a
result of
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(x) the transfer of the Excluded Assets described in Section 2.1 or (y) the
Elections.
(c) Buyer shall indemnify, defend and hold each of the
Shareholders harmless, at any time after the Closing, from and against any and
all Indemnifiable Losses, asserted against, resulting to, imposed upon or
incurred by the Shareholder Group, directly or indirectly, by reason of or
resulting from any and all Taxes imposed upon the Company or EPH with respect to
(i) any taxable period beginning after the Closing Date (such Taxes are
hereinafter referred to as "Post-Closing Taxes" and such periods as
"Post-Closing Periods"); (ii) any Straddle Taxes for any Straddle Period, but
only with respect to the portion of such Straddle Period beginning on the day
after the Closing Date and in the manner provided for in Section 13.8(d) and
(iii) notwithstanding Section 13.8(a), any Taxes incurred as a result of
transactions that occur on the Closing Date but after the Closing (other than
any Taxes incurred in connection with the Elections or the transfer of Excluded
Assets).
(d) For purposes of determining the amount of Taxes for or
which relate to a Straddle Period, the Closing Date shall be treated as the last
day of a taxable period, and the portion of any such Tax that is allocable to
the taxable period that is so deemed to end on and include the Closing Date: (i)
in the case of Taxes that are either (x) based upon or related to income or
receipts or (y) imposed in connection with any sale or other transfer or
assignment of property (real or personal, tangible or intangible), shall be
deemed equal to the amount which would be payable if the period for which such
tax is assessed ended on and included the Closing Date and (ii) in the cases of
Taxes other than Taxes described in clause (i) hereof, shall be computed on a
per diem basis.
(e) If a notice of deficiency, proposed adjustment, adjustment,
assessment, audit, examination, suit, dispute or other claim (a "Tax Claim")
shall be delivered, sent, commenced or initiated to or against a Company Entity
by any taxing authority with respect to Taxes for which one party to this
Agreement is entitled to indemnification from another party, the Company shall
promptly notify the Shareholders' Representative in writing of the Tax Claim. If
a Tax Claim with respect to Taxes for which one party to this Agreement is
entitled to indemnification from another party shall be delivered, sent,
commenced or initiated to or against the Shareholders by the
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68
relevant taxing authority, the Shareholders shall promptly notify the Company in
writing of such Tax Claim.
(f) The Shareholders' Representative may assume and control the
defense of a Tax Claim at the Shareholders' own cost and expense and with their
own counsel if the Shareholders' Representative notifies the Company of its
intent to do so within thirty (30) calendar days of receipt of notice of the
asserted Tax liability (but not less than five (5) days before the due date of
any protest or other claim in respect thereof) and acknowledges in writing, in
form and substance satisfactory to the Company, that such Tax Claim involves
only Pre-Closing Taxes or Straddle Taxes for which the Shareholders are
responsible pursuant to this Section 13.8. If the Shareholders' Representative
elects to assume the defense of any such Tax Claim, notwithstanding anything to
the contrary contained herein, (i) the Shareholders' Representative shall
consult with the Company and shall not enter into any settlement with respect to
any such Tax Claim without the Company's prior written consent if the effect of
such settlement would be to increase the liability for Taxes of the Company
under this Section 13.8 for periods after the Closing Date; (ii) the
Shareholders shall keep the Company informed of all material developments and
events relating to such Tax Claim; and (iii) the Company shall have the right to
participate, at its own cost and expense, in (but not to control) the defense of
such Tax Claim.
(g) If the Shareholders' Representative (i) does not timely
assume control of a Tax Claim involving only Pre-Closing Period Taxes or
Straddle Taxes for which the Shareholders are responsible pursuant to this
Section 13.8 or (ii) where notice is received by the Shareholders, does not
provide the Company with the notice of a Tax Claim involving Taxes for which the
Company is entitled to indemnification pursuant to this Section 13.8, the
Company shall have the full right to contest such Tax Claim and shall be
entitled to settle or pay in full such Tax Claim (in its sole discretion) and
thereafter pursue its right to indemnification under this Section 13.8 without
prejudice. Without limiting anything in this Section 13.8, the Shareholders
shall reimburse Buyer and the Company for all reasonable legal fees, costs and
expenses incurred by such parties in connection with the defense, contest or
settlement of any Tax Claim referred to in this Section 13.8(g).
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(h) With respect to any Tax Claim involving Taxes for which
both the Company and the Shareholders are responsible, the Company and the
Shareholders shall attempt to separate such Tax Claim into two Tax Claims, one
involving only Taxes for which the Company is solely responsible and another
involving only Taxes for which the Shareholders are solely responsible pursuant
to this Section 13.8; provided, however, that, if the Shareholders'
Representative agrees, the Company shall control the defense of such Tax Claim
without separation, and Section 13.8(g) shall apply to such Tax Claim. If the
Company and the Shareholders do not succeed in separating such Tax Claim, each
shall cooperate reasonably in the defense of such Tax Claim, neither the Company
nor the Shareholders shall take any action with respect to such Tax Claim
without the other's written consent (which shall not be unreasonably withheld)
and the Company and the Shareholders shall agree as to any settlement or
compromise of such Tax Claim.
(i) A Tax Indemnification Event shall be deemed to have
occurred with respect to any amount which is described in Section 13.8(a)
immediately after the Indemnifiable Loss giving rise to the obligation is
incurred. The Company shall pay to the Shareholders any amount which the Company
agrees is payable pursuant to Section 13.8(c) within ten (10) days after receipt
of written notice from the Shareholders of an Indemnifiable Loss giving rise to
an obligation of the Shareholders.
Section 13.9 Preparation and Filing of Tax Returns. (a) The
Shareholders shall cause the Company Entities to prepare and file (in each case,
at the Company's cost and expense and in a manner consistent with past practice)
on a timely basis all Tax Returns of the Company Entities for all Pre-Closing
Periods, which Tax Returns are due (giving effect to any extensions thereto) on
or before the Closing Date. The Shareholders shall cause the Company Entities to
pay all Taxes shown to be due and payable thereon that are Excluded Taxes and
the Shareholders shall pay all Taxes shown to be due and payable thereon in
excess of, or other than, Excluded Taxes.
(b) Buyer shall cause the Company Entities to prepare and file
(in each case, at the Company's Entities cost and expense and in a manner
consistent with past practice) on a timely basis all Tax Returns of the Company
Entities other than those provided for in Section 13.9(a). Subject to Section
13.8, Buyer shall cause the Company
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Entities to pay all Taxes shown to be due and payable thereon. With respect to
Tax Returns for Straddle Periods, no later than ten (10) Business Days before
such Tax Returns are filed, Buyer shall provide drafts of such Tax Returns to
the Shareholders' Representative for his reasonable review and consent.
Section 13.10 Defense of Claims. (a) Except as otherwise
provided in this Agreement or as provided in Section 13.10(b), the appropriate
member of the Buyer Group will control the defense or settlement of all claims,
actions or proceedings made or brought by any Person or group who is not a party
to this Agreement ("Independent Party Claims") which may give rise to an
Indemnifiable Loss constituting an Indemnification Event or a claim for
indemnification arising under Section 13.12. Buyer shall provide notice of any
such claim, action or proceeding to the Shareholders' Representative, who shall
be entitled to participate, through counsel selected by him, at the
Shareholders' expense, in the defense of such claim. Buyer shall consult with
the Shareholders' Representative prior to settling any such claim (if such
settlement will be satisfied, in part or in whole, from Escrowed Funds) and will
not settle such claim without the consent of the Shareholders' Representative,
if the Shareholders undertake to indemnify Buyer for all Indemnifiable Losses
arising from such claim thereafter on terms (including escrows of additional
amounts) reasonably satisfactory to Buyer.
(b) In the event of an Independent Party Claim relating to
criminal action or civil fraud by any of the Shareholders or Company Entities,
or relating to any of the other events giving rise to an obligation of the
Shareholders to indemnify the Buyer Group pursuant to Section 13.12, Buyer will
provide such Shareholder with notice of such claim. Such Shareholder may, by
giving written notice to Buyer, elect to assume at its own expense the defense
of such Independent Party Claim if such Shareholder acknowledges in writing its
obligation to indemnify Buyer pursuant to this Agreement with respect to (and in
the full amount of) such Independent Party Claim and the Independent Party Claim
involved seeks (and continues to seek) primarily monetary damages; provided,
however, that counsel selected by such Shareholder shall be satisfactory to
Buyer. Notwithstanding such Shareholder's election to assume the defense, the
Buyer Group shall have the right to employ separate counsel (including local
counsel), and such Shareholder will pay the reasonable fees, costs and expenses
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of such separate counsel if (i) the use of counsel chosen by such Shareholder
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both a member of
the Buyer Group and such Shareholder and the member of the Buyer Group shall
have reasonably concluded that there may be legal defenses available to it
and/or other members of the Buyer Group which are different from or additional
to those available to such Shareholder (in which case, if such member of the
Buyer Group notifies such Shareholder in writing that it elects to employ
separate counsel at the expense of such Shareholder, such Shareholder shall not
have the right to assume the defense of such action on behalf of such member of
the Buyer Group), (iii) such Shareholder shall not have employed counsel
reasonably satisfactory to the member of the Buyer Group to represent the member
of the Buyer Group within 30 days after notice of the institution of such action
or (iv) such Shareholder shall authorize the member of the Buyer Group to employ
separate counsel at the expense of such Shareholder. Without obtaining a
complete and unconditional release of the Buyer Group from all liability in
respect of such Independent Party Claim, such Shareholder will not enter into
any settlement of such Independent Party Claim without the consent of the Buyer
Group, which consent will not be unreasonably withheld. Notwithstanding the
above, the Buyer Group, during the period the Shareholder is determining whether
to elect to assume the defense of a matter covered by this Section 13.10(b)
(which period shall not exceed 30 days), may take such reasonable actions as are
necessary to preserve any and all rights with respect to such matter, without
such actions being construed as a waiver of the Buyer Group's rights to defense
and indemnification pursuant to this Section 13.10(b) and Section 13.12.
Section 13.11 Escrow Statement. (a) During the Claims
Period or within 90 days after the end of the Claims Period (or as soon
thereafter as is practicable), Buyer may at any time or from time to time
deliver, on behalf of the Buyer Group, to the Shareholders' Representative a
statement (an "Escrow Statement") setting forth with reasonable specificity the
amount and nature of Indemnifiable Losses from Indemnification Events incurred
or allocated during the Claims Period (whether or not liquidated during the
Claims Period), together with such invoices, bills, statements and other
documentation as shall reasonably verify the amounts so claimed. If Buyer does
not submit any Escrow Statement
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during the period referred to in the preceding sentence, the amount of
Indemnifiable Losses shall be deemed to be $0.00.
(b) On or prior to the thirtieth (30th) day following the
delivery of an Escrow Statement, the Shareholders' Representative may deliver to
Buyer a written statement (a "Shareholders' Escrow Statement") on behalf of the
Shareholders setting forth with reasonable specificity any disagreement with any
of the amounts contained in such Escrow Statement which could affect the
necessity or amount of any release of Escrowed Funds to any member of the Buyer
Group pursuant to Section 13.4. The sole basis for any disagreement with an
Escrow Statement shall be either (i) the losses allocated are not Indemnifiable
Losses included in the definition of an Indemnification Event or (ii) there has
been an arithmetical error in adding the Indemnifiable Losses. If the
Shareholders' Representative does not submit a Shareholders' Escrow Statement on
or prior to such thirtieth (30th) day then such Escrow Statement shall be deemed
to have been finally determined for purposes of this Agreement. If the
Shareholders' Representative does submit a Shareholders' Escrow Statement on or
prior to such thirtieth (30th) day, any amounts contained in such Escrow
Statement which are not disputed by the Shareholders' Escrow Statement shall be
deemed to have been finally determined for purposes of this Agreement.
(c) For a period of sixty (60) days, Buyer and the
Shareholders' Representative shall attempt to resolve in good faith any dispute
or disagreement between an Escrow Statement and the Shareholders' Escrow
Statement. Amounts contained on an Escrow Statement and resolved by such
attempts shall be deemed to have been finally determined for purposes of this
Agreement. After such sixty (60) day period, either party may commence legal
proceedings to resolve any such dispute.
Section 13.12 Indemnification by the Shareholders for Certain
Matters. (a) Notwithstanding anything in this Agreement to the contrary, and
subject to the limitations contained in Section 13.12(b), the Shareholders
hereby agree, jointly and severally, to indemnify, defend and hold harmless the
Buyer Group, from and after the Closing, from and against each General
Indemnification Event, each Tax Indemnification Event and each Specified
Indemnifiable Loss.
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(b) Each Shareholder's liability under Section 13.12(a) shall
be limited as follows:
(i) Except with respect to Specified Indemnifiable Losses, the
Buyer Group's monetary recourse shall be limited to the Escrowed Funds
and the Buyer Group shall have no monetary recourse against the
Shareholders or any of them in the event the Escrowed Funds are
insufficient to reimburse Buyer or other members of the Buyer Group for
any General Indemnification Event or Tax Indemnification Event.
(ii) The Buyer Group's monetary recourse against any
Shareholder with respect to a Specified Indemnifiable Loss asserted
against, resulting to, imposed upon or incurred by the Buyer Group (or
any member thereof), directly or indirectly, by reason of or resulting
from any Excluded Liability, a breach by the Company Entities or the
Shareholders, as the case may be, of their respective obligations set
forth in Article II or a breach by the Shareholders of any of their
representations and warranties, covenants, agreements and obligations
hereto relating to the Excluded Assets or the Excluded Liabilities
shall include recourse against the Escrowed Funds and the Shareholders'
Escrow Account Funds and recourse against such Shareholder, provided,
that the Buyer Group's monetary recourse against such Shareholder in
excess of the Escrowed Funds and the Shareholders' Escrow Account Funds
shall not exceed the lesser of (A) such Shareholder's Percentage
Interest of such Specified Indemnifiable Loss and (B) such
Shareholder's Percentage Interest of the Shares Purchase Price (in each
case taking into account such Shareholder's Percentage Interest of any
portion of the Escrowed Funds and the Shareholders' Escrow Account
Funds recovered by the Buyer Group with respect to such Specified
Indemnifiable Loss).
(iii) The Buyer Group's monetary recourse against any
Shareholder with respect to a Specified Indemnifiable Loss asserted
against, resulting to, imposed upon or incurred by the Buyer Group (or
any member thereof), directly or indirectly, by reason of or resulting
from (A) any breach by such Shareholder of Section 3.5, (B) any wilful
or negligent failure by such Shareholder to disclose to the Buyer Group
herein any breach of any representation or warranty to Buyer
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contained herein of which breach (or any facts or circumstances
constituting such a breach) such Shareholder has actual knowledge as of
the date hereof or on or prior to the Closing Date, or (C) or any
criminal action or civil fraud by such Shareholder shall include
recourse against the Escrowed Funds and the Shareholders' Escrow
Account Funds and recourse against such Shareholder, provided, that the
Buyer Group's monetary recourse against such Shareholder in excess of
the Escrowed Funds and the Shareholders' Escrow Account Funds shall not
exceed such Shareholder's Percentage Interest of the Shares Purchase
Price (taking into account such Shareholder's Percentage Interest of
any portion of the Escrowed Funds and the Shareholders' Escrow Account
Funds recovered by the Buyer Group with respect to such Specified
Indemnifiable Loss); provided, however, that the liability of any such
Shareholder shall be several and not joint.
(iv) The Buyer Group's monetary recourse against any
Shareholder with respect to a Specified Indemnifiable Loss asserted
against, resulting to, imposed upon or incurred by the Buyer Group (or
any member thereof), directly or indirectly, by reason of or resulting
from any breach of Section 3.1, 3.6, 4.3(a), 4.8(a), 4.26 or 6.9 shall
include recourse against the Escrowed Funds and the Shareholders'
Escrow Account Funds and recourse against such Shareholder,
provided that the Buyer Group's monetary recourse against such
Shareholder in excess of the Escrowed Funds and the Shareholders'
Escrow Account Funds shall not exceed such Shareholder's Percentage
Interest of the Shares Purchase Price (taking into account such
Shareholder's Percentage Interest of any portion of the Escrowed Funds
and the Shareholders' Escrow Account Funds recovered by the Buyer Group
with respect to such Specified Indemnifiable Loss).
(v) The Buyer Group's monetary recourse against any
Shareholders with respect to any other Specified Indemnifiable Loss
shall not be limited hereunder.
(vi) Except as otherwise provided herein, the Buyer Group shall
have no recourse against any Shareholder (or the Escrowed Funds or the
Shareholders' Escrow Account Funds) with respect to any General
Indemnification Event or any Tax Indemnification Event
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to the extent that (A) the Buyer Group has already fully recovered the
applicable Indemnifiable Loss from a third party, (B) such recourse
would be inconsistent with the express provisions of Section 1.7
(including Schedule 1.7) or (C) the applicable Indemnifiable Loss
arises by reason of or results from a breach of a representation or
warranty that has expired at the time a claim for indemnification is
made.
(c) The parties hereto acknowledge and agree that in connection
with each Specified Indemnifiable Loss, the Buyer Group (or any member thereof)
shall have the right to pursue any and all remedies in equity or at law,
including, without limitation, the following remedies:
(i) bring an action at law for any and all losses, damages,
liabilities, costs and expenses, including, without limitation,
interest, penalties and attorneys' fees and expenses (individually and
collectively, "Losses") asserted against, resulting to, imposed upon or
incurred by the Buyer Group (or any member thereof), directly or
indirectly, by reason of or resulting from each Specified Indemnifiable
Loss, whether or not the Buyer Group (or any member thereof) has taken
or will have recourse for such Losses against the Escrowed Funds or the
Shareholders' Escrow Account Funds; and
(ii) take recourse pursuant to this Article XIII for
Indemnifiable Losses asserted against, resulting to, imposed upon or
incurred by the Buyer Group (or any member thereof), directly or
indirectly, by reason of or resulting from each Specified Indemnifiable
Loss against the Escrowed Funds or the Shareholder's Escrow Account
Funds.
(d) Except as provided in this Section 13.12, the
indemnification provisions of this Article XIII shall provide the sole and
exclusive monetary remedy to the Buyer Group, following the Closing, with
respect to or in connection with any breach by any of the Company Entities or
the Shareholders of any of their respective representations, warranties,
covenants or agreements contained herein, and (except as set forth above) the
Buyer Group shall have no monetary recourse against the Shareholders or any of
them in the event the Escrowed Funds are insufficient to reimburse Buyer or
other members of the Buyer Group for Reimbursable Losses.
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Section 13.13 Indemnification by Buyer. Buyer hereby agrees to
indemnify, defend and hold harmless any member of the Shareholders Group, from
and after the Closing, from and against any and all Indemnifiable Losses
asserted against, resulting to, imposed upon or incurred by any member of the
Shareholders Group, directly or indirectly, by reason of or resulting from any
breach of any agreement, covenant, representation or warranty of Buyer contained
herein or made pursuant to this Agreement, or any facts or circumstances
constituting such a breach, or any Environmental Claim arising from a Known
Environmental Matter.
Section 13.14 Subrogation. Upon an Indemnifying Party making
any payment to an Indemnitee pursuant to this Article XIII, such Indemnifying
Party will, to the extent of such payment, be subrogated to all rights of such
Indemnitee against any third party in respect of the Indemnifiable Loss to which
the payment relates; provided, however, that, until such Indemnitee recovers
full payment of its Indemnifiable Loss, any and all claims of the Indemnifying
Party against any such third party on account of said payment are hereby made
expressly subordinated and subjected in right of payment to the Indemnitee's
rights against such third party. Without limiting the generality of any other
provision, the Indemnitee and the Indemnifying Party will duly execute upon
request all instruments reasonably necessary to evidence and perfect the
above-described subrogation and subordination rights.
Section 13.15 Adjustment to Purchase Price. Except to the
extent otherwise provided by law, the parties hereto covenant and agree that
each party shall treat each payment, if any, made pursuant to this Article XIII
as an adjustment to the Purchase Price.
Section 13.16 Environmental Remediation Matters If and to the
extent that an Indemnifiable Loss includes claims arising from the obligation to
conduct environmental investigation and/or remediation:
(a) Indemnifiable Losses for environmental investigation and/or
remediation activities (i) shall be limited to those activities
required by law and arising from or related to the release or
threatened release, as those terms are used in Environmental Law, of
any Material of Environmental Concern or the violation of any
Environmental Law and (ii) shall be
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subject to the limitations provided in Sections 13.12 and 13.13;
(b) For matters for which the Shareholders are obligated to
indemnify Buyer, Buyer shall notify the Shareholders' Representative in
a timely manner in writing of any known condition or event or notice
that may form the basis of any Indemnifiable Loss. Costs incurred in
investigation, monitoring, cleaning up or otherwise addressing a claim
hereunder (the "Work") will qualify as Indemnifiable Losses only if
Buyer obtains the Shareholders' Representative's prior approval of the
Work, which approval shall not be unreasonably withheld or delayed;
(c) For Known Environmental Matters for which Buyer is
obligated to indemnify the Shareholders, the Shareholders'
Representative shall notify Buyer in a timely manner in writing of any
known condition or event or notice which may form the basis of any
Indemnifiable Loss. Costs incurred in the Work will qualify as
Indemnifiable Losses only if the Shareholders' Representative obtains
Buyer's prior approval of the Work, which approval shall not be
unreasonably withheld or delayed; and
(d) Buyer and the Shareholders' Representative shall cooperate
fully with each other and act in good faith in implementing this
Section, including using commercially reasonable efforts to:
(i) share in a timely manner all non-privileged
correspondence and other information relevant to any material
leak, discharge, spill or release by or affecting the
Continuing Company Entities;
(ii) afford timely access to, and an opportunity to
comment on, before submission any material non-privileged
correspondence, study protocols and results, drawings, charts,
remediation plans or reports, or other documentation relating
to such environmental matters to governmental entities;
(iii) provide timely notice of, and opportunity to
attend and participate in, any meetings or hearings with
governmental entities
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relating to any environmental matters that could result in an
Indemnifiable Loss;
(iv) prepare all material investigation and
remediation plans in consultation with the other party and
using appropriate cost-effective technology and clean-up
criteria, including risk-based clean-up standards where
permitted in accordance with applicable Environmental Laws;
(v) select the most cost-effective remediation
plan and perform the Work in compliance with all applicable
Environmental Laws;
(vi) conduct the Work in a manner reasonably
calculated not to interfere with, or disrupt in any material
manner, on-going operations at the Property;
(vii) permit reasonable inspection of all equipment,
monitoring devices, transportation vehicles and facilities used
or to be used or samples taken and to observe activities
related to any work under this Section 13.16; and
(viii) permit reasonable post-Closing access as
necessary to implement this Section.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 Remedies Cumulative. Except as herein
expressly provided, the remedies provided herein shall be cumulative and shall
not preclude assertion by any party hereto of any other rights or the seeking of
any other remedies against any other party hereto.
Section 14.2 [Intentionally Omitted.]
Section 14.3 Expenses. Except as otherwise expressly
provided in this Agreement, the Company, EPH and Buyer shall each pay its own
legal, accounting and other miscellaneous expenses incident to this Agreement.
The Company and Buyer shall each pay 50% of the filing fee required under the
HSR Act. Buyer shall promptly reimburse the Company prior to the Closing Date or
the Shareholders
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79
after the Closing Date for charges and expenses imposed on the Company by the
Illinois Gaming Board prior to the Closing Date in respect of its investigative
expenses incurred in connection with its approval of the transfer of the Shares
to Buyer. The premium and auxiliary costs, if any, of obtaining title insurance
(including the cost of all endorsements reasonably requested by Buyer) and ALTA
surveys for the Owned Real Property (other than the Virginia Assets) shall, to
the extent not in excess of $25,000, be borne and paid by the Company prior to
the Closing, and any such costs in excess of $25,000 shall be borne and paid by
Buyer.
Section 14.4 Transfer Taxes. All transfer, sales, use,
documentary or other similar Taxes arising out of or related to the sale of the
Shares or the Elections pursuant to this Agreement shall be borne and paid by
the Company prior to the Closing.
Section 14.5 Press Releases and Announcements. After the date
of this Agreement and prior to the Closing, no party to this Agreement will
directly or indirectly make or cause to be made any public announcement or
disclosure, or issue any notice with respect to this Agreement or the
transactions contemplated by this Agreement without the prior consent of the
other parties to this Agreement; provided, however, the Company may disclose
such information, upon the prior consultation with Buyer of the means of such
disclosure and the specific items to be disclosed, to East Peoria, FOLEPI,
Annabel Lee, L.P. and its partners and the applicable gaming authorities in the
State of Illinois and Buyer may disclose such information, upon the prior
consultation with the Company of the means of such disclosure and the specific
items to be disclosed, to the applicable gaming authorities in the States of
Illinois, Louisiana, Mississippi, Missouri and Nevada, and further provided that
any party to this Agreement may make any public announcement or disclosure which
is required by law or regulation (in which case the disclosing party shall to
the extent practicable advise the other parties to this Agreement and provide
them with a copy of such proposed disclosure prior to making the disclosure).
Section 14.6 Entire Agreement. This Agreement and the
Exhibits and Schedules and other writings referred to herein or delivered
pursuant hereto which form a part hereof contain the entire understanding of the
parties with respect to its subject matter.
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Section 14.7 Amendment, Extension and Waiver. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to its subject matter. This Agreement may not be amended except by an
instrument in writing signed on behalf of all of the parties hereto. Any
agreement on the part of a party hereto to any extension or waiver under this
Section 14.7 shall be valid only if set forth in an instrument in writing signed
on behalf of such party. Except as expressly provided in this Agreement, no
delay on the part of any party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder operate as a
waiver of any other right, power or privilege hereunder, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder.
Section 14.8 Headings. The Article and Section headings
contained herein are for reference purposes only and will not affect in any way
the meaning or interpretation of this Agreement.
Section 14.9 Notices. All notices, requests, demands and other
communications made under or by reason of the provisions of this Agreement will
be in writing and will be given by hand delivery, certified or registered mail,
return receipt requested, telecopier (with a copy also sent by hand delivery or
air courier, which shall not alter the time at which the telecopier notice is
deemed received) or air courier to the parties at the addresses set forth below.
Such notices shall be deemed given: at the time personally delivered, if
delivered by hand with receipt acknowledged; at the time received, if sent by
certified or registered mail; upon transmission thereof by the sender and
issuance by the transmitting machine of a confirmation slip that the number of
pages constituting the notice have been transmitted without error, if
telecopied; and the first Business Day after timely delivery to the courier, if
sent by air courier.
If to the Company or EPH:
Prior to the Closing:
Par-A-Dice Gaming Corporation
21 Blackjack Boulevard
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East Peoria, Illinois 61611
Attention: David Daley
Telephone: (309) 694-5865
Fax: (309) 698-1519
With a copy (which shall not constitute notice) given in the
manner prescribed above to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Jeffrey Gordon
Telephone: (312) 701-7071
Fax: (312) 701-7711
After the Closing:
Boyd Gaming Corporation
2950 South Industrial Road
Las Vegas, Nevada 89109
Attention: Ellis Landau
Bryan Wright
Telephone: (702) 792-7200
Fax: (702) 792-7313
If to the Shareholders' Representative:
O'Brien Steel Service
1800 N.E. Adams Street
Peoria, Illinois 61601
Attention: Joseph E. O'Brien
Telephone: (309) 671-5800
Fax: (309) 671-5213
With a copy (which shall not constitute notice) given in the
manner prescribed above to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Jeffrey Gordon
Telephone: (312) 701-7071
Fax: (312) 701-7711
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If to Buyer:
Boyd Gaming Corporation
2950 South Industrial Road
Las Vegas, Nevada 89109
Attention: Ellis Landau
Bryan Wright
Telephone: (702) 792-7200
Fax: (702) 792-7313
With a copy (which shall not constitute notice) given in the
manner prescribed above to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Attention: Marc S. Rosenberg
Telephone: (212) 474-1000
Fax: (212) 474-3700
Section 14.10 Assignment. This Agreement will be binding upon
and inure to the benefit of the parties hereto and their respective successors,
legal representatives and assigns, but this Agreement may not be assigned by any
party without the written consent of the other party; provided, however, that
Buyer may assign all or any portion of its respective rights hereunder without
the prior written consent of the Shareholders or any of the Company Entities to
an Affiliate of Buyer, but such assignment shall not relieve Buyer of its
obligations hereunder. Any attempted assignment in violation of this Section
14.10 shall be void.
Section 14.11 Applicable Law. This Agreement will be governed
by and construed and enforced in accordance with the laws of the State of New
York applicable to agreements made and to be performed entirely within such
State, without giving effect to the conflict of laws provisions thereof.
Section 14.12 Words in Singular and Plural Form. Words used in
the singular form in this Agreement shall be deemed to import the plural, and
vice versa, as the sense may require.
Section 14.13 Further Assurances; Antitrust Notification. (a)
Each of the Shareholders, the Company Entities and Buyer will use its
commercially reasonable efforts to do or cause to be done all things necessary,
<PAGE> 91
83
proper or advisable to consummate the transactions contemplated by this
Agreement. Without limiting the foregoing, the Shareholders and Buyer will
reasonably cooperate, and will cause their respective Affiliates, officers,
employees, agents, auditors and representatives reasonably to cooperate, in (i)
preparing and filing all Tax Returns (including amended returns and claims for
refund), including maintaining and making available to each other all records
necessary in connection with Taxes and in resolving all disputes and audits with
respect to all taxable periods relating to Taxes and (ii) providing to each
other all information and customary consents pertinent to the transactions
contemplated by this Agreement, including information as to their, if
applicable, ownership structure, corporate structure, officers and directors,
shareholders and partners' identity, financing, transfers of interest and other
information, as shall be required by any regulatory authority with jurisdiction
over such parties in connection with the consummation of the transactions
contemplated hereby or with respect to any federal or state securities law
requirements in any state in which such parties have an interest.
(b) Each of the Company, EPH, the Shareholders and Buyer will
as promptly as practicable, but in no event later than 10 business days
following the execution and delivery of this Agreement, file or cause to be
filed with the United States Federal Trade Commission (the "FTC") and the United
States Department of Justice (the "DOJ") the notification and report form
required for the transactions contemplated hereby and any supplemental
information requested in connection therewith pursuant to the HSR Act. Any such
notification and report form and supplemental information will be in substantial
compliance with the requirements of the HSR Act. Each of Buyer, EPH, the Company
and the Shareholders will furnish to the others such necessary information and
reasonable assistance as the others may request in connection with the
preparation of any filing or submission which is necessary under the HSR Act.
Each of the Company, EPH, the Shareholders and Buyer will keep each other
apprised of the status of any communications with, and inquiries or requests for
additional information addressed to the entity that filed a notification and
report form as an acquired or acquiring person from, the FTC or the DOJ and
shall comply or cause its respective filing person to comply promptly with any
such inquiry or request. Each of the Company, EPH, the Shareholders and Buyer
will use commercially reasonable efforts to obtain any clearance
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84
required under the HSR Act for the purchase and sale of the Shares.
Section 14.14 Counterparts. This Agreement may be executed in
several counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
Section 14.15 Shareholders' Representative. The Shareholders
hereby appoint each and any of Charles Smith, Joseph O'Brien and Dale E.
Burklund as the Shareholders' Representative. The Shareholders' Representative
shall have full authority to exercise (or refrain from exercising) all rights
and powers of each Shareholder hereunder, and each Shareholder agrees to be
bound by any and all actions taken by the Shareholders' Representative in his
capacity as such. The Shareholders agree to indemnify and hold the Shareholders'
Representative harmless for all actions taken by him in such capacity.
Section 14.16 No Third-Party Beneficiaries. This Agreement is
for the sole benefit of the parties hereto and their permitted assigns and
nothing herein expressed or implied shall give or be construed to give to any
person, other than the parties hereto and such assigns, any legal or equitable
rights hereunder.
Section 14.17 Severability. If any provision of this Agreement
or the application of any such provision to any person or circumstance shall be
held invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof (or the remaining portion thereof) or the application
of such provision to any other persons or circumstance.
Section 14.18 Consent to Jurisdiction. Buyer irrevocably
submits to the non-exclusive jurisdiction of (i) the Supreme Court of the State
of New York, New York County, and (ii) the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
The Company, EPH and each of the Shareholders irrevocably submits to the
non-exclusive jurisdiction of (i) the circuit court of the State of Illinois,
Cook County, and (ii) the United States District Court for the Northern District
of Illinois, Eastern Division, for the purposes of any suit, action or
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85
other proceeding arising out of this Agreement or any transaction contemplated
hereby. Buyer, the Company, EPH and each of the Shareholders further agrees that
service of any process, summons, notice or document by U.S. registered mail to
the Buyer's, the Company's, EPH's or the Shareholders' Representative's
respective address set forth above shall be effective service of process for any
action, suit or proceeding in New York or Illinois with respect to any matters
to which it has submitted to jurisdiction in such jurisdiction as set forth
above in this Section 14.18. Buyer irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or other proceeding arising
out of this Agreement or the transactions contemplated hereby in (x) the Supreme
Court of the State of New York, New York County, or (y) the United States
District Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum. The Company, EPH and each of the
Shareholders irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or other proceeding arising out of this Agreement
or the transactions contemplated hereby in (i) the circuit courts of the State
of Illinois, Cook County, or (ii) the United States District Court for the
Northern District of Illinois, Eastern Division, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
ARTICLE XV
CERTAIN DEFINITIONS
"Accounting Firm" shall have the meaning ascribed to such term
in Section 1.7(d).
"Affiliate" has the meaning defined in the rules and
regulations of the Securities and Exchange Commission under the Securities Act
of 1933, as amended.
"Allocations" shall have the meaning ascribed to such term in
Section 11.1(b).
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86
"Annabel Lee, L.P." means Annabel Lee, L.P., a Virginia limited
partnership.
"Associate" has the meaning defined in the rules and
regulations of the Securities and Exchange Commission under the Securities Act
of 1933, as amended.
"Balance Sheet" shall have the meaning ascribed to such term in
Section 4.5.
"Benefit Plan" shall have the meaning ascribed to such term in
Section 4.18(a).
"Business Day" means any day (other than a Saturday or
Sunday) on which banks are permitted to be open and transact business in the
City of New York.
"Business Know-How" means all books, records, technology,
formulas, know-how, quality control records, finished product specifications,
packaging supplies specifications, product registrations, records relating to
the adoption and use of the Intellectual Property (as defined herein), marketing
plans, sales records and histories, market research data, promotional
advertising and marketing materials, radio and television commercials, print
advertisements, customer lists, label and shipping carton dies, designs, films,
earthwork, photography, mechanical art, color separations, prints, plates, and
graphic materials, permits and licenses, and inventory records, used in or
necessary to conduct the Company Entities' businesses as currently conducted, in
any jurisdiction in which any of the Company Entities operates or does business.
"Buyer" shall have the meaning ascribed to such term in the
Preamble to this Agreement.
"Buyer Confidentiality Agreement" means the confidentiality
agreement between the Company and Buyer dated as of April 16, 1996.
"Buyer's Environmental Investigation" shall have the meaning
ascribed to such term in Section 8.1.
"Buyer Group" means, at any time after the Closing, Buyer, EPH,
the Company, EPHLP or any of their respective Affiliates (excluding FOLEPI).
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87
"Buyer's Indebtedness Amount" shall have the meaning ascribed
to such term in Section 1.8(b).
"Buyer's Indebtedness Statement" shall have the meaning
ascribed to such term in Section 1.8(b).
"Buyer's Working Capital Amount" shall have the meaning
ascribed to such term in Section 1.7(b).
"Buyer's Working Capital Statement" shall have the meaning
ascribed to such term in Section 1.7(b).
"CFSC Loan Documents" means the Loan Agreement between the
Company and Caterpillar Financial Services Corporation ("CFSC") dated as of May
16, 1994, as amended through January 29, 1996, the promissory notes relating
thereto, the Security Agreement dated as of May 16, 1994, between the Company
and CFSC and the Preferred Ship Mortgage dated May 16, 1994, between the Company
and CFSC, as amended through January 29, 1996.
"Claims Period" shall have the meaning ascribed to such term in
Section 13.3.
"Closing" shall have the meaning ascribed to such term in
Section 1.3.
"Closing Date" shall have the meaning ascribed to such term in
Section 1.3.
"Closing Date Indebtedness Amount" shall have the meaning
ascribed to such term in Section 1.8(b).
"Closing Date Indebtedness Statement" shall have the meaning
ascribed to such term in Section 1.8(f).
"Closing Date Working Capital Amount" shall have the meaning
ascribed to such term in Section 1.7(b).
"Closing Date Working Capital Statement" shall have the meaning
ascribed to such term in Section 1.7(f).
"Closing Payment" shall have the meaning ascribed to such term
in Section 1.2.
"Code" means the Internal Revenue Code of 1986, as amended and
reference to any Section of the Code shall refer to that Section as in effect at
the date or, if such
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88
Section has been modified, corresponding provisions of subsequent Federal tax
law in effect at the relevant time.
"Common Stock" shall have the meaning ascribed to such term in
the recitals to this Agreement.
"Company" shall have the meaning ascribed to such term in the
Preamble to this Agreement.
"Company Entities" means the Company, EPH, EPHLP, Annabel Lee,
L.P. and their respective Subsidiaries required to be set forth on Schedule
4.1(b).
"Company Shares" shall have the meaning ascribed to such term
in Section 1.1.
"Confidentiality Agreement" means the confidentiality agreement
between the Company and Buyer dated as of February 5, 1996.
"Construction Manager Group" shall have the meaning ascribed to
such term in Section 11.3(h).
"Continuing Company Entities" means the Company Entities other
than Annabel Lee, L.P.
"Contract" or "Contracts" means any agreement or understanding,
whether written or oral, including, without limitation, any mortgage, indenture,
note, guarantee, lease, license, contract, deed of trust, purchase, sale or
other agreement, together with any amendments thereto.
"DOJ" shall have the meaning ascribed to such term in Section
14.13(b).
"East Peoria" means the City of East Peoria, Illinois and any
political subdivision or governmental authority thereof.
"East Peoria Property" shall have the meaning ascribed to such
term in Section 8.1.
"Election" shall have the meaning ascribed to such term in
Section 11.1(a).
"Engage" and "Engagement" shall have the meanings ascribed to
such terms in Section 11.2.
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89
"Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup and removal costs, governmental enforcement and
response costs, natural resources damages, property damages, economic loss,
personal injuries, or penalties) arising out of, based on or resulting from (a)
the presence, discharge or release or threatened discharge or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by the Company or (b) circumstances forming the basis
of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all Federal, state, local and
foreign laws and regulations relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata), navigable waters,
waters of Contiguous and Exclusive Economic Zones, ocean waters and
international waters, including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened discharge or releases
of Materials of Environmental Concern or the dredging, handling and disposal of
river sediments, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
"Environmental Permits" shall have the meaning ascribed to such
term in Section 4.19(a).
"EPH" means East Peoria Hotel, Inc., an Illinois corporation.
"EPH Common Stock" shall have the meaning ascribed to such term
in the recitals to this Agreement.
"EPH Shares" shall have the meaning ascribed to such
term in Section 1.1.
"EPHLP" means East Peoria Hotel Limited Partnership, an
Illinois limited partnership.
"EPHLP Partnership Agreement" means the Agreement of Limited
Partnership dated as of April 1995, among EPH, as General Partner, the Company,
as Class A Limited Partner,
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and FOLEPI, as Class B Limited Partner, as in effect on the date.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall have the meaning ascribed to
such term in Section 4.18(a).
"Escrow Account" shall have the meaning ascribed to such term
in Section 13.3.
"Escrow Agent" shall have the meaning ascribed to such term in
Section 13.3.
"Escrow Statement" shall have the meaning ascribed to such term
in Section 13.11(a).
"Excluded Assets" shall have the meaning ascribed to such term
in Section 2.1.
"Excluded Liabilities" shall have the meaning ascribed
to such term in Section 2.2.
"Excluded Taxes" means those Taxes reserved for on the Balance
Sheet in the amount that would have been shown on a Closing Date balance sheet
if a Closing Date balance sheet had been prepared on a basis consistent with the
Balance Sheet; provided, however, such Excluded Taxes shall not include Taxes
resulting from the Elections.
"Financial Statements" shall have the meaning ascribed to such
term in Section 4.5.
"FOLEPI" means FOLEPI Foundation, Inc., an Illinois
not-for-profit corporation.
"FTC" shall have the meaning ascribed to such term in Section
14.13(b).
"GAAP" means generally accepted accounting principles.
"Gaming Business" shall have the meaning ascribed to such term
in Section 11.2.
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"Gaming Laws" shall have the meaning ascribed to such term in
Section 4.23(a).
"General Indemnification Event" shall have the meaning
ascribed to such term in Section 13.7.
"Greater Chicago Area" means DuPage, Kane, Lake, Cook, Kendall,
Will, McHenry, DeKalb, Grundy, Kankakee and La Salle Counties, Illinois and Lake
and Porter Counties, Indiana.
"Hotel" means the Par-A-Dice Hotel.
"Hotel Construction Amount" means $21,098,000.
"Hotel Operating Supplies" means operating supplies of the
Hotel including china, glassware, uniforms, silver, linen, towels, menus,
brochures, other paper products, food and beverage.
"HSR Act" shall have the meaning ascribed to such term in
Section 3.3.
"Illinois Riverboat Gambling Act" shall have the meaning
ascribed to such term in Section 3.3.
"Including" means including, without limitation.
"Income Tax" or "Income Taxes" means any federal, state, local
or foreign income, franchise or similar Tax.
"Indebtedness" shall have the meaning ascribed to such term in
Section 1.8(a).
"Indemnifiable Losses" shall have the meaning ascribed to such
term in Section 13.7.
"Indemnification Event" shall have the meaning ascribed to such
term in Section 13.6.
"Indemnitee" means any Person or group entitled to
indemnification under this Agreement.
"Indemnity Payment" shall have the meaning ascribed to such
term in Section 13.4.
"Indemnifying Party" means any person or group required to
provide indemnification under this Agreement.
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"Independent Party Claims" shall have the meaning ascribed to
such term in Section 13.10(a).
"Intellectual Property" means all registered and unregistered:
trademarks, service marks, trade names, corporate names, company names,
fictitious business names, trade styles, trade dress, logos, and other source or
business identifiers (the "Trademarks"); patents; copyrights; proprietary
formulas, recipes, technology, know-how and other trade secrets (the "Trade
Secrets") used in or necessary to conduct the Continuing Company Entities'
business as currently conducted, and all registrations and recordings thereof,
all applications for registration pending therefor, all extensions and renewals
thereof, all goodwill associated therewith, and all proprietary rights therein,
in any jurisdiction in which any of the Continuing Company Entities operates or
does business.
"Interest Rate" means the prime rate in effect from time to
time as reported in The Wall Street Journal.
"Investment" in any person means any direct or indirect
loan, advance or other extension of credit, or capital contribution to, or
purchase or acquisition of capital stock or indebtedness or similar instrument
of, or equity investment in, such person.
"IRS" means the Internal Revenue Service.
"Jamaica Entities" means New Concepts Incorporated (Jamaica)
Limited, Worldwide Gaming Partnership, Viking Gaming Technology, Ltd., James
McClelland, Melvyn Bernstein and Thomas Rielly.
"Jamaica Litigation" means the pending litigation entitled
Viking Gaming Technology, Ltd. v. Par-A-Dice Gaming Corporation, New Concepts
Incorporated (Jamaica) Limited, Melvyn Bernstein, Joseph E. O'Brien, Mark
Sterbens, William D. Niemeyer and Thomas Patrick Rielly, complaint number 94L
01507, filed September 30, 1994, in the Circuit Court of the Eighteenth Judicial
District, State of Illinois, Dupage County, or any successor litigation or
litigation or arbitration arising out of the subject matter.
"Jones Act" means 46 U.S.C. Section 688, as amended.
"Laws" shall have the meaning ascribed to such term in Section
4.23(a).
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"Leased Property" shall have the meaning ascribed to such term
in Section 4.9(b).
"License" shall have the meaning ascribed to such term in
Section 4.23(c).
"License Agreements" shall have the meaning ascribed to such
term in Section 4.13(a).
"Liens" means all mortgages, pledges, security interests,
liens, charges, options, conditional sales agreements, claims, restrictions,
covenants, easements, rights of way, title defects or other encumbrances or
restrictions of any nature whatsoever.
"Known Environmental Matter" means any environmental matter set
forth in Schedule 4.19 or, if known to Buyer on the date hereof, any violation
of Environmental Law or any other fact, circumstance or condition that could
reasonably be expected to require notification, investigation or remediation
under any Environmental Law.
"Material Adverse Effect" means a material adverse effect on or
change in, directly or indirectly, (i) the business, property, condition,
financial position or operations of the Company (other than such an effect or
change arising solely as a result of decisions made or actions taken by the
Construction Manager (solely in its capacity as Construction Manager) pursuant
to Section 11.3 without the consent of the Company or the Shareholders'
Representative (it being understood that such consent shall not be deemed to
have been given solely as a result of the taking of an action by the Company or
EPHLP at the direction of the Construction Manager as required pursuant to
Section 11.3)) or (ii) on the ability of any of the Shareholders or the Company
Entities to perform their obligations under this Agreement or to consummate the
transactions contemplated by this Agreement.
"Materials of Environmental Concern" means chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum and petroleum
products, including, without limitation, oil as defined in the Oil Pollution Act
of 1990, 33 U.S.C. Section 2701 et seq., and any material or substance that is
designated as a hazardous material, contaminant, pollutant or hazardous
substance under the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq., the Federal Water
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Pollution Control Act, 33 U.S.C. Section 1221 et seq., or the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 et seq.
"Maximum Escrow Amount" as of any date of determination shall
mean an amount equal to the sum of the amount of all Indemnifiable Losses
claimed by Buyer on Escrow Statements which have not yet been resolved pursuant
to Section 13.11 (to the extent not resolved) plus the amount of all
Reimbursable Losses with respect to which Indemnity Payments have not yet been
made to Buyer (in each case together with the applicable pro rata portion of the
interest and earnings on the Escrowed Funds).
"Missouri Litigation" means the pending litigation entitled (i)
Hillsboro Title Company, Inc. v. Par-A-Dice Corporation, an Illinois corporation
licensed to do business in Missouri, and Tiara Properties, Inc., a Missouri
corporation, Case No. 683791, filed in the Circuit Court of the County of St.
Louis, State of Missouri, Equity Division, and (ii) Par-A-Dice Gaming
Corporation v. Hillsboro Title Co. and Clyde "Skip" Johnson and Florence R.
Johnson, individuals, and d/b/a Tiara Properties, no Case No. available, filed
in the United States District Court for the Eastern District of Missouri, or any
successor litigation or litigation or arbitration arising out of the subject
matter thereof.
"Owned Property" shall have the meaning ascribed to such term
in Section 4.9(a).
"Pavilion Documents" means the plans and specifications,
contracts, capital budget and time schedule for the renovation and expansion of
the pavilion set forth in Exhibit 6.1(c).
"Percentage Interest" of any Shareholder means the percentage
of the Company Shares owned by such Shareholder on the date hereof as set forth
on Schedule 3.1.
"Permits" shall have the meaning ascribed to such term in
Section 4.23(b).
"Permitted Liens" means (i) liens shown on the Balance Sheet as
securing specified liabilities (with respect to which no default exists), (ii)
liens for current taxes not yet due and (iii) minor imperfections of title and
encumbrances, if any, which are not substantial in amount,
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do not detract from the value of the property subject thereto or impair the
operations of the Continuing Company Entities, have arisen only in the ordinary
course of business and consistent with past practice and do not preclude or
materially adversely affect the continued use of the property to which they
relate as used in the operation of the business of the Continuing Company
Entities as currently conducted.
"Person" means any corporation, individual, joint stock
company, joint venture, partnership, unincorporated association, governmental
regulatory entity, country, state or political subdivision thereof, trust or
other entity.
"Plan" shall have the meaning ascribed to such term in Section
4.18(a).
"Post-Closing Escrow Agreement" shall have the meaning ascribed
to such term in Section 13.3.
"Post-Closing Periods" shall have the meaning ascribed
to such term in Section 13.8(c).
"Post-Closing Taxes" shall have the meaning ascribed to such
term in Section 13.8(c).
"Pre-Closing Taxes" shall have the meaning ascribed to such
term in Section 13.8(a).
"Preliminary Indebtedness Amount" shall have the meaning
ascribed to such term in Section 1.8(a).
"Preliminary Working Capital Amount" shall have the meaning
ascribed to such term in Section 1.7(a).
"Property" shall have the meaning ascribed to such term in
Section 4.9(b).
"Purchase Price" shall have the meaning ascribed to such term
in Section 1.2.
"Reimbursable Losses" means all Indemnifiable Losses which are
finally determined to be allocable to the Shareholders pursuant to Section
13.11.
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"Replacement Tax" means alternative or replacement tax under
Illinois Compiled Statutes ch. 35, art. 5, section 201(c).
"RPTA" shall have the meaning ascribed to such term in Section
9.17.
"Riverboat" means that certain vessel named Par-A-Dice, home
port of St. Louis, Missouri and number 1020343, with all its components, duly
documented in the name of the Company under the laws of the United States,
together with all its engines, boilers, machinery, masts, boats, anchors,
cables, chains, rigging, tackle, apparel, furniture, capstans, outfit, tools,
pumps, gears, furnishings, appliances, fittings, spare and replacement parts and
all other appurtenances thereto appertaining or belonging, whether now owned or
hereafter acquired, whether on board or not on board, and also any and all
additions, improvements and replacements hereinafter made in or to such vessel
or any part thereof, including all items and appurtenances as aforesaid.
"Scope of the Hotel" shall mean the Scope of the Hotel set
forth in Exhibit 11.3(a).
"Shareholders" shall have the meaning ascribed to such term in
the Preamble to this Agreement.
"Shareholders' Agreement" shall have the meaning ascribed to
such term in Section 6.8.
"Shareholders' Escrow Account" shall have the meaning
ascribed to such term in Section 1.7(f).
"Shareholders' Escrow Account Funds" means funds contained in
the Shareholders' Escrow Account.
"Shareholders' Escrow Statement" shall have the meaning
ascribed to such term in Section 13.11(b).
"Shareholders Group" means, at any time after the Closing, the
Shareholders and their Affiliates.
"Shareholders' Indebtedness Statement" shall have the meaning
ascribed to such term in Section 1.8(b).
"Shareholder Releases" shall have the meaning ascribed
to such term in Section 7.4.
<PAGE> 105
97
"Shareholders' Representative" means each and any of the
persons appointed as such pursuant to Section 14.15, each a representative of
the Shareholders with respect to the matters expressly set forth herein, until
such time as the Shareholders shall designate successor representatives in
writing to the Company.
"Shareholders' Working Capital Statement" shall have the
meaning ascribed to such term in Section 1.7(b).
"Shares" shall have the meaning ascribed to such term in
Section 1.1.
"Shares Purchase Price" shall mean $174.6 million as adjusted
to reflect prior payments made pursuant to Article XIII (other than payments
arising out of breaches of or adjustments pursuant to Section 1.7 or 1.8).
"Sister Companies" means Par-A-Dice Riverboat Casino, Inc., a
Delaware corporation, Par-A-Dice Gaming Corporation, a Delaware corporation,
MHC, Inc., an Illinois corporation, and JHC Holdings, Inc., an Illinois
corporation.
"Site" shall have the meaning ascribed to such term in Section
11.3(a).
"Specified Contracts" means the Management Agreement dated June
30, 1990, by and between Casino Cruises, Inc., a Florida corporation and East
Peoria Riverboat Corporation, an Illinois corporation; the Agreement dated as of
June 29, 1990, by and among East Peoria Riverboat Corporation, an Illinois
corporation, and Casino Cruises, Inc., a Florida corporation; the Agreement
dated April 26, 1991, by and among Greater Peoria Riverboat Corporation (f/k/a
East Peoria Riverboat Corporation), an Illinois corporation, and Casino Cruises,
Inc., a Florida corporation; and the Agreement dated July 24, 1991, by and among
Greater Peoria Riverboat Corporation (f/k/a East Peoria Riverboat Corporation),
an Illinois corporation, and Casino Cruises, Inc., a Florida corporation.
"Specified Illinois Gaming Industry Development" means (i) an
increase in the effective Illinois tax rate on adjusted gross gaming receipts
(excluding the effect of the head tax as currently legislated) to 23% or below
or, if combined with the elimination of the head tax, to 27% or
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98
below, or (ii) the relocation of the existing "Silver Eagle" riverboat from
Galena, Illinois to Danville, Illinois.
"Specified Indemnifiable Loss" means each Indemnifiable Loss
asserted against, resulting to, imposed upon or incurred by any member of the
Buyer Group, directly or indirectly, by reason of or resulting from (i) any and
all criminal action or civil fraud of any of the Shareholders or any of the
Company Entities on or prior to the Closing Date, (ii) any breach of Section
3.1, 3.5, 3.6, 4.3(a), 4.8(a), 4.26 or 6.9, (iii) any wilful or negligent
failure by any Shareholder to disclose to the Buyer Group herein any breach or
any representation or warranty to Buyer contained herein of which breach (or any
facts or circumstances constituting such a breach) such Shareholder has actual
knowledge as of the date hereof or on or prior to the Closing Date, (iv) any
Excluded Liability, breach by the Company Entities or any of the Shareholders of
their respective obligations set forth in Article II or breach by the
Shareholders of any of their representations and warranties, covenants,
agreements and obligations hereto relating to the Excluded Assets or the
Excluded Liabilities, (v) any liability under Section 11.1, (vi) the imposition
of any Taxes on any of the Continuing Company Entities or Buyer (A) as a result
of the Elections or the transfer of Excluded Assets, (vii) the imposition of any
Taxes on any of the Continuing Company Entities in respect of Replacement Tax
attributable to the income of any of the Continuing Company Entities or the
deemed sale of assets pursuant to the Elections in excess of amounts allocated
therefor pursuant to Section 1.7 or (viii) the failure of the Shareholders to
deliver to Buyer the full amount of any shortfall pursuant to Section 1.7(f) or
any excess pursuant to Section 1.8(f) or the failure of the Company to
accurately set forth the Indebtedness pursuant to Section 1.8.
"Straddle Periods" shall have the meaning ascribed to such term
in Section 13.8(a).
"Straddle Taxes" shall have the meaning ascribed to
such term in Section 13.8(a).
"Subsidiary" or "Subsidiaries" means as to any
Person, a corporation, partnership or other entity of which shares of stock or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is
<PAGE> 107
99
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, or of which a majority in equity ownership interest is held, by such
Person.
"Tangible Personal Property" shall have the meaning ascribed to
such term in Section 4.12.
"Tax Claim" shall have the meaning ascribed to such term in
Section 13.8(e).
"Tax Indemnification Event" shall have the meaning ascribed to
such term in Section 13.8(a) and (b).
"Taxes" means all taxes, charges, fees, levies or other
assessments, including, without limitation, income, gross receipts, excise,
gaming, property, sales, withholding, social security, occupation, use, service,
service use, license, payroll, franchise, transfer and recording taxes, fees and
charges, including estimated taxes, imposed by the United States or any taxing
authority (domestic or foreign), whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest,
fines, penalties or additional amounts attributable to, or imposed upon, or with
respect to any such taxes, charges, fees, levies or other assessments.
"Tax Return" means any return, report or other document or
information required to be supplied to a taxing authority in connection with
Taxes.
"Trust Agreement" means Trust Agreement dated June 18, 1991 and
known as Trust Number 49-6791-00-5 (Commerce Bank, N.A., Successor Trustee).
"Virginia Assets" means (i) the entire ownership interest of
the Company in Annabel Lee, L.P. at any particular time, including the rights of
the Company as a Limited Partner to any and all benefits to which such Partner
may be entitled as provided in the Agreement of Limited Partnership of Annabel
Lee, L.P., dated as of October 1, 1993, together with the obligations of such
Partner to comply with all of the terms and provisions of such Agreement; (ii)
the Riverboat Term Loan and Security Agreement dated November 1, 1993, between
the Company and Annabel Lee, L.P.; (iii) the Secured Non-Recourse Note from
Annabel Lee, L.P. to the Company for $800,000 due November 1, 1998; (iv) the
Secured Non-Recourse Note from
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100
Annabel Lee, L.P. to the Company for $400,000, due December 23, 1998; (v) the
First Preferred Mortgage made by Annabel Lee, L.P. (as Mortgagor) to the Company
(as Mortgagee) dated November 1, 1993; (vi) the Credit Line Leasehold Deed of
Trust and Security Agreement dated December 23, 1993, from Annabel Lee, L.P. to
the Company; and (vii) the Credit Line Deed of Trust and Security Agreement
dated December 23, 1993, from Annabel Lee, L.P. to the Company.
"Virginia Contracts" means all Contracts to which Annabel Lee,
L.P. is a party or by which it or its assets or properties may be bound or
affected.
"WARN Act" shall have the meaning ascribed to such term in
Section 4.17.
"Welfare Plan" shall have the meaning ascribed to such term in
Section 4.18(g).
"Working Capital" shall have the meaning ascribed to
such term in Section 1.7(a) hereof and Schedule 1.7.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by a duly authorized officer of the
Company, EPH, Buyer and each of the Shareholders as of the day and year first
above written.
PAR-A-DICE GAMING CORPORATION
By:
\s\ Lee Kissner
----------------------------
Name: Lee Kissner
Title: Chairman and Chief
Operating Officer
EAST PEORIA HOTEL, INC.
By:
\s\ Albert S. Zeller
----------------------------
Name: Albert S. Zeller
Title: President
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101
SHAREHOLDERS:
\s\ Monte J. Brannan \s\ James J. Heinz
- ------------------------------------ -------------------------------
Monte J. Brannan James J. Heinz
\s\ Dale E. Burklund \s\ Janice M. Heinz
- ------------------------------------ -------------------------------
Dale E. Burklund Janice M. Heinz
\s\ Duane Cassano \s\ Osamu Kasuya
- ------------------------------------ -------------------------------
Duane Cassano Osamu Kasuya
\s\ James R. DeBord, M.D. \s\ John D. Miller
- ------------------------------------ -------------------------------
James R. DeBord, M.D. John D. Miller
\s\ Richard Dickens \s\ William D. Niemeyer
- ------------------------------------ -------------------------------
Richard Dickens William D. Niemeyer
\s\ Robert F. Ellis, M.D. \s\ Joseph E. O'Brien
- ------------------------------------ -------------------------------
Robert F. Ellis, M.D. Joseph E. O'Brien
\s\ Jeffrey D. Goldstein \s\ William O'Neill
- ------------------------------------ -------------------------------
Jeffrey D. Goldstein William O'Neill
\s\ Richard A. Goldstein \s\ Charles A. Smith
- ------------------------------------ -------------------------------
Richard A. Goldstein Charles A. Smith
\s\ Robert S. Goldstein \s\ Albert S. Zeller
- ------------------------------------ -------------------------------
Robert S. Goldstein Albert S. Zeller
\s\ James R. Goldstone, M.D.
- ------------------------------------
James R. Goldstone, M.D.
BOYD GAMING CORPORATION
By:
\s\ William S. Boyd
-------------------------------
Name: William S. Boyd
Title: Chairman of the
Board and Chief
Executive Officer
